10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

                         For the quarter ended November 3, 2003

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

                         For the transition period from           to          .

Commission file number 1-11313

CKE RESTAURANTS, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or Other Jurisdiction of Incorporation or Organization)	33-0602639 (I.R.S. Employer Identification No.)
6307 Carpinteria Avenue, Ste. A, Carpinteria, CA (Address of Principal Executive Offices)	93013 (Zip Code)

Registrant’s telephone number, including area code: (805) 745-7500

Former Name, Former Address and Former Fiscal Year, if changed since last report.

     Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

     Indicate by checkmark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes x No o

     As of December 1, 2003, 57,613,086 shares of the Registrant’s Common Stock were outstanding.

TABLE OF CONTENTS

PART 1. FINANCIAL INFORMATION
	ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
	CONDENSED CONSOLIDATED BALANCE SHEETS
	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
	CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures about Market Risk
	Item 4. Controls and Procedures
Part II. Other Information.
	Item 2. Changes in Securities and Use of Proceeds.
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
EXHIBIT 4.6
EXHIBIT 4.8
EXHIBIT 10.50
EXHIBIT 10.51
EXHIBIT 10.52
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

CKE RESTAURANTS, INC. AND SUBSIDIARIES

INDEX

		Page
Part I. Financial Information
Item 1	Condensed Consolidated Financial Statements (unaudited):
	Condensed Consolidated Balance Sheets as of November 3, 2003 and January 31, 2003		3
	Condensed Consolidated Statements of Operations for the twelve weeks and forty weeks ended		4
	November 3, 2003 and November 4, 2002
	Condensed Consolidated Statement of Stockholders' Equity for the forty weeks ended		5
	November 3, 2003
	Condensed Consolidated Statements of Cash Flows for the forty weeks ended November 3, 2003		6
	and November 4, 2002
	Notes to Condensed Consolidated Financial Statements		7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
Item 3	Quantitative and Qualitative Disclosures about Market Risk		46
Item 4	Controls and Procedures		47
Part II. Other Information
Item 2	Changes in Securities and Use of Proceeds		48
Item 6	Exhibits and Reports on Form 8-K		49

2

PART 1. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CKE RESTAURANTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)
(Unaudited)

			November 3, 2003			January 31, 2003
ASSETS
Current assets:
	Cash and cash equivalents		$	25,680		$	18,440
	Accounts receivable, net			27,558			40,593
	Related party trade receivables			6,254			5,106
	Inventories			17,877			19,224
	Prepaid expenses			11,622			16,325
	Assets held for sale			16,734			21,170
	Other current assets			1,500			1,492
		Total current assets		107,225			122,350
Notes receivable				3,622			3,891
Property and equipment, net				537,943			553,325
Property under capital leases, net				55,693			59,014
Goodwill				56,708			56,708
Other assets				36,889			48,185
		Total assets	$	798,080		$	843,473
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Bank indebtedness		$	—		$	25,000
	Convertible subordinated notes			22,319			—
	Current portion of capital lease obligations			8,103			9,782
	Accounts payable			44,649			56,968
	Other current liabilities			105,943			102,052
		Total current liabilities		181,014			193,802
Capital lease obligations, less current portion				59,073			62,518
Senior subordinated notes				200,000			200,000
Convertible subordinated notes due 2004				—			122,319
Convertible subordinated notes due 2023				105,000			—
Other long-term liabilities				55,691			71,260
		Total liabilities		600,778			649,899
Stockholders’ equity:
	Preferred stock, $.01 par value; authorized 5,000,000 shares; none issued and outstanding			—			—
	Common stock, $.01 par value; authorized 100,000,000 shares; issued and outstanding 59,193,000 and 58,868,000 shares at November 3, 2003 and January 31, 2003, respectively			592			589
	Additional paid-in capital			464,598			463,474
	Non-employee director and officer notes receivable			(2,530	)		(2,530	)
	Accumulated deficit			(254,952	)		(257,553	)
	Treasury stock at cost, 1,585,000 shares			(10,406	)		(10,406	)
		Total stockholders’ equity		197,302			193,574
		Total liabilities and stockholders’ equity	$	798,080		$	843,473

See Accompanying Notes to Condensed Consolidated Financial Statements

3

CKE RESTAURANTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)
(Unaudited)

				Twelve Weeks Ended						Forty Weeks Ended
				November 3, 2003			November 4, 2002			November 3, 2003			November 4, 2002
Revenue:
	Company-operated restaurants			$	271,026		$	255,865		$	881,237		$	867,144
	Franchised and licensed restaurants and other				63,751			56,964			206,817			197,653
			Total revenue		334,777			312,829			1,088,054			1,064,797
Operating costs and expenses:
	Restaurant operations:
		Food and packaging			81,600			73,735			262,549			249,549
		Payroll and other employee benefit expenses			86,687			81,402			284,232			277,565
		Occupancy and other operating expenses			60,465			59,491			201,356			191,141
					228,752			214,628			748,137			718,255
	Franchised and licensed restaurants and other				49,962			43,105			163,376			150,561
	Advertising expenses				16,719			16,710			54,302			55,472
	General and administrative expenses				25,777			27,271			82,232			88,292
	Facility action charges, net				1,301			765			3,193			5,827
			Total operating costs and expenses		322,511			302,479			1,051,240			1,018,407
Operating income					12,266			10,350			36,814			46,390
Interest expense					(9,947	)		(9,588	)		(31,149	)		(32,321	)
Other income (expense), net					(76	)		3,904			(487	)		11,806
Income before income taxes, discontinued operations and cumulative effect of accounting change for goodwill					2,243			4,666			5,178			25,875
Income tax expense (benefit)					192			(5,393	)		622			(8,143	)
Income from continuing operations					2,051			10,059			4,556			34,018
Income (loss) from operations of discontinued segment (net of income tax benefit of $21, $30, $47 and $26 for the twelve-week periods ended November 3, 2003 and November 4, 2002, and the forty-week periods ended November 3, 2003 and November 4, 2002, respectively)					111			(556	)		(1,955	)		(568	)
Income before cumulative effect of accounting change for goodwill					2,162			9,503			2,601			33,450
Cumulative effect of accounting change for goodwill					—			—			—			(175,780	)
Net income (loss)				$	2,162		$	9,503		$	2,601		$	(142,330	)
Basic income (loss) per common share:
	Continuing operations			$	0.04		$	0.18		$	0.07		$	0.60
	Discontinued operations (including loss on discontinued segment)				—			(0.01	)		(0.03	)		(0.01	)
	Income before cumulative effect of accounting change for goodwill				0.04			0.17			0.04			0.59
	Cumulative effect of accounting change for goodwill				—			—			—			(3.11	)
	Net income (loss)			$	0.04		$	0.17		$	0.04		$	(2.52	)
Diluted income (loss) per common share:
	Continuing operations			$	0.04		$	0.17		$	0.07		$	0.59
	Discontinued operations (including loss on discontinued segment)				—			(0.01	)		(0.03	)		(0.01	)
	Income before cumulative effect of accounting change for goodwill				0.04			0.16			0.04			0.58
	Cumulative effect of accounting change for goodwill				—			—			—			(3.03	)
	Net income (loss)			$	0.04		$	0.16		$	0.04		$	(2.45	)
Weighted-average common shares outstanding:
	Basic				59,183			57,243			59,096			56,483
	Dilutive effect of stock options				1,304			1,896			1,063			1,610
	Diluted				60,487			59,139			60,159			58,093

See Accompanying Notes to Condensed Consolidated Financial Statements

4

CKE RESTAURANTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(In thousands)
(Unaudited)

		Forty Weeks Ended November 3, 2003
			Common Stock												Treasury Stock
									Non-
									Employee
							Additional		Director and												Total
			Number of				Paid-In		Officer Notes			Accumulated			Number of						Stockholders'
			Shares		Amount		Capital		Receivable			Deficit			Shares			Amount			Equity
Balance at January 31, 2003				58,868	$	589	$	463,474	$	(2,530	)	$	(257,553	)		(1,585	)	$	(10,406	)	$	193,574
	Exercise of stock options			325		3		1,124		—			—			—			—			1,127
	Net income			—		—		—		—			2,601			—			—			2,601
Balance at November 3, 2003				59,193	$	592	$	464,598	$	(2,530	)	$	(254,952	)		(1,585	)	$	(10,406	)	$	197,302

See Accompanying Notes to Condensed Consolidated Financial Statements

5

CKE RESTAURANTS, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

					Forty Weeks Ended
					November 3, 2003			November 4, 2002
Cash flow from operating activities:
		Net income (loss)			$	2,601		$	(142,330	)
		Adjustments to reconcile net income (loss) to cash provided by operating activities (excluding effects of acquisition in 2002):
			Cumulative effect of accounting change for goodwill			—			175,780
			Depreciation and amortization			49,347			48,013
			Amortization of loan fees			3,618			3,199
			Provision (recovery) for losses on accounts and notes receivable			1,980			(793	)
			(Gain) loss on investments, sale of property and equipment, capital leases and extinguishment of debt			541			(10,811	)
			Facility action charges, net			3,193			5,827
			Other non-cash items			(383	)		8
			Income tax refund accrued			—			(8,852	)
			Income tax refund received			723			12,724
			Change in estimated liability for closing restaurants, estimated liability for self-insurance and other long-term liabilities			(4,694	)		(14,732	)
			Net change in accounts receivable, inventories, prepaid expenses and other current assets			10,592			(875	)
			Net change in accounts payable and other current liabilities			(6,133	)		7,780
			Loss from operations of discontinued segment			1,955			568
			Cash provided to discontinued segment			(237	)		(2,234	)
				Cash provided by operating activities		63,103			73,272
Cash flow from investing activities:
		Purchases of property and equipment				(32,995	)		(43,768	)
		Proceeds from sale of:
			Marketable securities and long-term investments			—			8,959
			Property and equipment			12,451			16,051
		Collections on notes receivable and related party receivables				4,884			960
		Cash received from acquisition, net of payments made to acquire SBRG				—			1,368
		Net change in other assets				968			322
				Cash used in investing activities		(14,692	)		(16,108	)
Cash flow from financing activities:
		Net change in bank overdraft				(7,566	)		(9,874	)
		Long-term borrowings				149,500			74,500
		Repayments of long-term debt				(274,500	)		(101,540	)
		Repayments of capital lease obligations				(7,868	)		(8,163	)
		Collections on non-employee director and officer notes receivable				—			1,555
		Payment of deferred financing costs				(968	)		(5,366	)
		Net change in other long-term liabilities				(2,484	)		(1,667	)
		Proceeds from issuance of convertible debt				101,588			—
		Proceeds from exercise of stock options				1,127			1,250
				Cash used in financing activities		(41,171	)		(49,305	)
				Increase in cash and cash equivalents		7,240			7,860
				Cash and cash equivalents at beginning of period		18,440			24,642
				Cash and cash equivalents at end of period	$	25,680		$	32,502
Supplemental disclosures of cash flow information:
	Cash (paid) received during the period for:
		Interest			$	(33,397	)	$	(34,265	)
		Income taxes			$	(1,521	)	$	11,854
Non-cash investing and financing activities:
		Gain recognized on sale and leaseback transactions			$	232		$	237

See Accompanying Notes to Condensed Consolidated Financial Statements

6

CKE RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)

NOTE (1) BASIS OF PRESENTATION

CKE Restaurants, Inc. (“CKE” or the “Company”), through its wholly-owned subsidiaries, owns, operates, franchises and licenses the Carl’s Jr.®, Hardee’s®, The Green Burrito® (“Green Burrito”) and La Salsa Fresh Mexican Grill® (“La Salsa”) concepts. Carl’s Jr. restaurants are primarily located in the Western United States. Hardee’s restaurants are located throughout the Southeastern and Midwestern United States. Green Burrito restaurants are located in California, primarily in dual-brand Carl’s Jr. restaurants. La Salsa restaurants are primarily located in California. As of November 3, 2003, the Company’s system-wide restaurant portfolio consisted of:

	Carl's Jr.		Hardee's		La Salsa		Other		Total
Company-operated		440		721		60		4		1,225
Franchised and licensed		563		1,413		40		17		2,033
Total		1,003		2,134		100		21		3,258

The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of CKE and its wholly-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America, the instructions to Form 10-Q, and Article 10 of Regulation S-X. These statements should be read in conjunction with the audited consolidated financial statements presented in the Company’s Annual Report on Form 10-K for the fiscal year ended January 27, 2003. In the opinion of management, all adjustments consisting of normal recurring accruals necessary for a fair presentation of financial position and results of operations for the interim periods presented have been reflected herein. The results of operations for such interim periods are not necessarily indicative of results for the full year or for any future period.

For clarity of presentation, the Company generally labels all fiscal year ends as fiscal year ended January 31.

Prior year amounts in the consolidated financial statements have been reclassified to conform with current year presentation.

Stock-Based Compensation

The Company has various stock-based compensation plans that provide options for certain employees and outside directors to purchase common shares of the Company. The Company accounts for stock-based compensation in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees. In December 2002, the FASB issued Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure (“SFAS 148”). SFAS 148 amends Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (“SFAS 123”), to provide alternative methods of transition for a voluntary change to the fair-value method for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results.

For purposes of the following pro forma disclosures required by SFAS 148 and SFAS 123, the fair value of each option has been estimated on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that do not have vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company’s stock options have characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the value of an estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

7

CKE RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)

The assumptions used for grants in the twelve week and forty week periods ended November 3, 2003 and November 4, 2002 are as follows:

		November 3, 2003			November 4, 2002
Annual dividends		$	—		$	—
Expected volatility			140.0	%		69.5	%
Risk-free interest rate (matched to the expected term of the outstanding option)			2.99	%		3.64	%
Expected life of all options outstanding (years)			5.45			5.45
Weighted-average fair value of each option granted
	Twelve weeks ended	$	6.08		$	—
	Forty weeks ended	$	5.20		$	6.90

The assumptions used to determine the fair value of each option granted are highly subjective. Changes in the assumptions used would affect the fair value of the options granted as follows:

	Increase (Decrease) in Fair Value of Options Granted
	Twelve Weeks Ended			Forty Weeks Ended			Forty Weeks Ended
Change in Assumption	November 3, 2003			November 3, 2003			November 4, 2002
10% increase in expected volatility	$	0.14		$	0.12		$	0.64
1% increase in risk-free interest rate	$	0.02		$	0.01		$	0.12
10% decrease in expected volatility	$	(0.17	)	$	(0.14	)	$	(0.69	)
1% decrease in risk-free interest rate	$	(0.02	)	$	(0.02	)	$	(0.12	)

The following tables reconcile reported net income (loss) to pro forma net income (loss) assuming compensation expense for stock-based compensation had been recognized in accordance with SFAS 123:

		Twelve Weeks Ended
		November 3, 2003			November 4, 2002
Net income, as reported		$	2,162		$	9,503
Add: Stock-based employee compensation expense included in reported net income			—			—
Deduct: Total stock-based employee compensation expense determined under fair value based method, net of related tax effects			(892	)		(729	)
Net income — pro forma		$	1,270		$	8,774
Income per common share:
	Basic — as reported	$	0.04		$	0.17
	Basic — pro forma	$	0.02		$	0.15
	Diluted — as reported	$	0.04		$	0.16
	Diluted — pro forma	$	0.02		$	0.15

8

CKE RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)

		Forty Weeks Ended
		November 3, 2003			November 4, 2002
Net income (loss), as reported		$	2,601		$	(142,330	)
Add: Stock-based employee compensation expense included in reported net income (loss)			—			—
Deduct: Total stock-based employee compensation expense determined under fair value based method, net of related tax effects			(2,520	)		(2,141	)
Net income (loss) — pro forma		$	81		$	(144,471	)
Income (loss) per common share:
	Basic — as reported	$	0.04		$	(2.52	)
	Basic — pro forma	$	0.00		$	(2.56	)
	Diluted — as reported	$	0.04		$	(2.45	)
	Diluted — pro forma	$	0.00		$	(2.49	)

NOTE (2) ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS

During the first quarter of fiscal 2004, the Company adopted Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations (“SFAS 143”). SFAS 143 addresses the financial accounting and reporting for obligations related to the retirement of tangible long-lived assets and the associated asset retirement costs. The adoption of SFAS 143 did not have a material effect on the Company’s consolidated financial statements.

During the first quarter of fiscal 2004, the Company adopted Statement of Financial Accounting Standards No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement 13 and Technical Corrections (“SFAS 145”). As permitted, the Company had previously implemented the provisions of SFAS 145 regarding debt extinguishment in the first quarter of fiscal 2003. SFAS 145 eliminates the presumption of classification of debt extinguishment activity as an extraordinary item, eliminates inconsistencies in lease modification treatment and makes various technical corrections or clarifications of other existing authoritative pronouncements. The adoption of SFAS 145 did not have a material effect on the Company’s consolidated financial statements.

During the first quarter of fiscal 2004, the Company adopted Emerging Issues Task Force No. 02-16, Accounting by a Reseller for Cash Consideration Received from a Vendor (“EITF 02-16”). EITF 02-16 provides guidance on the recognition of cash consideration received by a customer from a vendor and is effective for transactions entered into or modified after December 31, 2002. The Company’s initial adoption of EITF 02-16 did not have a material effect on the Company’s consolidated financial statements.

During the third quarter of fiscal 2004, the Company adopted Statement of Financial Accounting Standards No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities (“SFAS 149”). SFAS 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (“SFAS 133”). The statement requires that contracts with comparable characteristics be accounted for similarly and clarifies when a derivative contains a financing component that warrants special reporting in the statement of cash flows. SFAS 149 is effective for contracts entered into or modified after June 30, 2003, except in certain circumstances, and for hedging relationships designated after June 30, 2003. The adoption of this standard did not have a material effect on the Company’s financial position or results of operations.

In May 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (“SFAS 150”). SFAS 150 establishes standards for how an issuer classifies and measures in its statement of financial position certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances) because that financial instrument embodies an obligation of the issuer. This Statement was originally effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatorily redeemable financial instruments of nonpublic

9

CKE RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)

entities. For mandatorily redeemable non-controlling interests, the measurement provisions of SFAS 150 have been deferred indefinitely. The adoption of this standard did not have a material effect on the Company’s financial position or results of operations.

NOTE (3) ACQUISITION

On March 1, 2002, the Company acquired Santa Barbara Restaurant Group, Inc. (“SBRG”). SBRG owns, operates and franchises the Green Burrito, La Salsa and Timber Lodge restaurant chains. At the time of acquisition, as a result of the Company’s dual-branding relationship with GB Franchise Corporation, an indirect wholly-owned subsidiary of SBRG, Carl’s Jr. had been SBRG’s largest franchisee. The Company acquired SBRG for strategic purposes, which included gaining control of the Green Burrito brand, eliminating the payment of royalties on franchised Green Burrito restaurants, investing in the fast-casual segment, which is an emerging competitor to the quick-service restaurant segment, and providing the Company with a growth opportunity in the “Fresh Mex” segment with La Salsa. The results of operations of SBRG are included in the operating results for the twelve week and forty week periods ended November 3, 2003, the twelve week period ended November 4, 2002 and the period from March 1, 2002 (date of acquisition) through November 4, 2002. The purchase price consisted of 6,352,000 shares of the Company’s common stock, warrants to purchase 982,000 shares of the Company’s common stock and options to purchase 1,679,000 shares of the Company’s common stock, valued in total at $78,815 as of the closing, plus transaction costs of $1,465.

The final allocation of the purchase price to the assets acquired, including the goodwill and liabilities assumed in the acquisition of SBRG are as follows:

	Initial					Final
	Purchase Price		Adjustments to the			Purchase Price
	Allocation		Initial Allocation			Allocation
Current assets	$	5,173	$	(2,099	)	$	3,074
Property and equipment		33,722		(22,699	)		11,023
Goodwill		32,225		12,504			44,729
Net assets held for sale		—		9,835			9,835
Other assets		30,566		(6,784	)		23,782
Total assets acquired		101,686		(9,243	)		92,443
Current liabilities		13,141		(7,670	)		5,471
Long-term debt, excluding current portion		6,500		—			6,500
Other long-term liabilities		2,230		(2,038	)		192
Total liabilities assumed		21,871		(9,708	)		12,163
Net assets acquired	$	79,815	$	465		$	80,280

The Company has made adjustments to the initial purchase price allocation, the impact of which was immaterial to the Company’s results of operations, as follows:

Increase in net assets held for sale due to plan to divest Timber Lodge	$	9,835
Decrease in property and equipment due to adjustments for capital leases, leasehold improvements, other property and equipment, and reclass to net assets held for sale		(22,699	)
Decrease in current assets due to reclassification to net assets held for sale		(2,099	)
Decrease in other assets due to adjustments for prepaid expenses and net assets held for sale		(6,784	)
Increase in goodwill due to adjustments listed above		12,504
Decrease in current liabilities due to adjustments for leases at Timber Lodge and reclassification to net assets held for sale		7,670
Decrease in other long-term liabilities due to adjustments to record additional estimated liabilities for closing restaurants and reclass to net assets held for sale		2,038
Change in purchase price	$	465

10

CKE RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)

The Company acquired identifiable intangible assets as a result of the acquisition of SBRG. The intangible assets acquired, included in other assets above, excluding goodwill, are classified and valued as follows:

					Adjustments to
					the Initial
	Amortization		Initial Balance		Balance Sheet			Final Balance
Intangible Asset	Period		Sheet Allocation		Allocation			Sheet Allocation
Trademarks	20 years		$	17,000	$	171		$	17,171
Franchise agreements	20 years			1,700		80			1,780
Favorable leases		6 to 15 years		9,600		(6,468	)		3,132
Other intangible assets	20 years			46		(46	)		—
Total intangible assets acquired			$	28,346	$	(6,263	)	$	22,083

Amortization expense related to identifiable intangible assets acquired as a result of the acquisition of SBRG was approximately $322, $1,074, $317 and $925 for the twelve week and forty week periods ended November 3, 2003, the twelve week period ended November 4, 2002 and the period from March 1, 2002 (the date of acquisition) through November 4, 2002, respectively.

Selected unaudited pro forma combined results of operations for the forty weeks ended November 4, 2002, assuming the SBRG acquisition occurred on January 30, 2002, using actual restaurant-level margins and general and administrative expenses prior to the acquisition, are as follows:

		Forty Weeks Ended
		November 4, 2002
Total revenue		$	1,066,138
Income from continuing operations		$	32,963
Loss from discontinued operations			(722	)
Income before cumulative effect of accounting change for goodwill			32,241
Cumulative effect of accounting change for goodwill			(175,780	)
Net loss		$	(143,539	)
Basic income (loss) per common share:
	Income from continuing operations	$	0.56
	Loss from discontinued operations		(0.01	)
	Income before cumulative effect of accounting change for goodwill		0.55
	Cumulative effect of accounting change for goodwill		(3.02	)
	Net loss	$	(2.47	)
Diluted income (loss) per common share:
	Income from continuing operations	$	0.55
	Loss from discontinued operations		(0.01	)
	Income before cumulative effect of accounting change for goodwill		0.54
	Cumulative effect of accounting change for goodwill		(2.94	)
	Net loss	$	(2.40	)
Weighted-average common shares outstanding:
	Basic		58,220
	Dilutive effect of stock options and awards		1,610
	Diluted		59,830

NOTE (4) INDEBTEDNESS AND RELATED INTEREST EXPENSE

As of November 3, 2003, the Company’s senior credit facility (“Facility”) consisted of a $100,000 revolving credit facility, which included a $75,000 letter of credit sub-facility, and was scheduled to mature December 14, 2003. As of November 3, 2003, the total cash borrowings outstanding under the Facility were $0, outstanding letters of credit

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CKE RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)

were $62,481 and the availability was $37,519. On November 12, 2003, the Company amended and restated the Facility. The new Facility consists of a $150,000 revolving credit facility and a $25,000 term loan. The revolving portion of the Facility includes an $80,000 letter of credit sub-facility and matures November 15, 2006. The principal amount of the term loan portion of the Facility will be repaid in quarterly installments maturing on April 1, 2008, and will be used to repay the still-outstanding portion of the Company’s 4.25% Convertible Subordinated Notes due 2004 (“2004 Convertible Notes”) at their maturity on March 15, 2004. The Facility includes certain restrictive covenants, including restrictions on the Company’s ability to incur debt, incur liens on its assets, dispose of assets or make any significant changes to its corporate structure or the nature of its business. Additionally, the Facility includes financial covenants requiring minimum earnings before interest, taxes, depreciation and amortization (“EBITDA”) and limiting the amount available to the Company for capital expenditures.

On September 29, 2003, the Company completed an offering of $105,000 of its 4% Convertible Subordinated Notes due 2023 (“2023 Convertible Notes”). Nearly all of the net proceeds of the offering of $101,588 were used to repurchase $100,000 of the 2004 Convertible Notes. The 2023 Convertible Notes bear interest at the annual rate of 4.0%, payable in semiannual installments due April 1 and October 1 each year. The 2023 Convertible Notes are unsecured general obligations of the Company and are contractually subordinate in right of payment to certain other Company obligations, including the Facility and the Company’s 9.125% Senior Subordinated Notes due 2009 (“Senior Notes”). On October 1 of 2008, 2013 and 2018, holders of the 2023 Convertible Notes have the right to require the Company to repurchase all or a portion of the notes at prices specified in the related indenture. The 2023 Convertible Notes are convertible into the Company’s common stock at a conversion rate of 112.4859 shares per one thousand dollars principal balance of the 2023 Convertible Notes upon the conditions set forth in the related indenture, which is being filed with the Securities and Exchange Commission as an exhibit to this report. The 2023 Convertible Notes were not convertible during the period September 29, 2003 through November 3, 2003.

During the twelve and forty week periods ended November 3, 2003, the Company repurchased $100,000 (face value) of the 2004 Convertible Notes for $100,708, which included a call premium of $708. That transaction resulted in the recognition of a loss on the retirement of debt of $708, which is recorded as other expense, net in the consolidated financial statements.

During the twelve weeks ended November 4, 2002, the Company repurchased $5,545 (face value) of the 2004 Convertible Notes for $4,817, at various prices ranging from $85.25 to $91.75. Those transactions resulted in the recognition of a gain on the retirement of debt of $728. During the forty weeks ended November 4, 2002, the Company repurchased $22,741 (face value) of the 2004 Convertible Notes for $20,299, at various prices ranging from $85.25 to $91.75. Those transactions resulted in the recognition of a gain on the retirement of debt in the amount of $2,442.

Gains and losses on the retirement of debt are recorded as other income (expense), net in the accompanying Condensed Consolidated Statements of Operations.

Interest expense consists of the following:

		Twelve Weeks Ended				Forty Weeks Ended
		November 3, 2003		November 4, 2002		November 3, 2003		November 4, 2002
Facility		$	81	$	121	$	988	$	690
Senior Notes			4,212		4,212		14,039		14,038
Capital lease obligations			2,443		2,069		6,671		6,955
2004 Convertible Notes			1,188		1,379		3,572		4,837
2023 Convertible Notes			415		—		415		—
Amortization of loan fees			1,159		1,034		3,618		3,199
Letter of credit fees and other			449		773		1,846		2,602
	Total interest expense	$	9,947	$	9,588	$	31,149	$	32,321

NOTE (5) FACILITY ACTION CHARGES, NET

In late fiscal 2000, the Company embarked on a refranchising initiative to reduce outstanding borrowings under the Facility, as well as to increase the number of franchise-operated restaurants. In addition, the Company identified and

12

CKE RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)

closed under-performing restaurants. The results of these strategies have caused the following transactions to be recorded in the Condensed Consolidated Financial Statements as facility action charges, net:

(i) impairment of long-lived assets for restaurants the Company closes;

(ii) impairment of long-lived assets for restaurants with net asset values in excess of estimated fair value;

(iii) restaurant closure costs (primarily reflecting the estimated liability to terminate leases); and

(iv) gains (losses) on the sale of restaurants and surplus properties.

On a quarterly basis, the Company evaluates the adequacy of its estimated liability for closing restaurants and subsidizing restaurant lease payments to franchisees and modifies the assumptions used based on actual results from selling surplus properties and terminating leases, and estimated property values obtained from a related party real estate broker. The Company closed nine Hardee’s company-operated restaurants and three Carl’s Jr. company-operated restaurants during the twelve weeks ended November 3, 2003. The Company closed 13 Hardee’s, two La Salsa and four Carl’s Jr. company-operated restaurants during the forty weeks ended November 3, 2003. The Company closed three Hardee’s company-operated restaurants during the twelve weeks ended November 4, 2002. The Company closed 17 Hardee’s company-operated restaurants and three Carl’s Jr. company-operated restaurants during the forty weeks ended November 4, 2002.

The components of facility action charges, net are as follows:

		Twelve Weeks Ended						Forty Weeks Ended
		November 3, 2003			November 4, 2002			November 3, 2003			November 4, 2002
Hardee’s
	New decisions regarding closing restaurants	$	264		$	137		$	698		$	876
	Favorable dispositions of leased property		(588	)		(988	)		(3,066	)		(1,112	)
	Impairment of assets to be disposed of		248			296			3,562			2,121
	Impairment of assets to be held and used		778			820			1,632			3,684
	(Gain) loss on sales of restaurants and surplus properties, net		130			(134	)		(526	)		(2,829	)
	Amortization of discount related to estimated liability for closing restaurants		548			531			1,828			1,743
			1,380			662			4,128			4,483
Carl’s Jr.
	New decisions regarding closing restaurants		131			5			145			178
	Favorable dispositions of leased property		(292	)		—			(537	)		—
	Impairment of assets to be disposed of		—			—			—			477
	Impairment of assets to be held and used		—			—			562			641
	Gain on sales of restaurants and surplus properties, net		(60	)		(56	)		(889	)		(323	)
	Amortization of discount related to estimated liability for closing restaurants		68			154			263			371
			(153	)		103			(456	)		1,344

13

CKE RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)

Other
	New decisions regarding closing restaurants		73			—			73			—
	Favorable dispositions of leased property								(846	)
	Impairment of assets to be disposed of		1			—			1			—
	Impairment of assets to be held and used		—			—			429			—
	Gain on sales of restaurants and surplus properties, net		—			—			(136	)		—
			74			—			(479	)		—
Total
	New decisions regarding closing restaurants		468			142			916			1,054
	Favorable dispositions of leased property		(880	)		(988	)		(4,449	)		(1,112	)
	Impairment of assets to be disposed of		249			296			3,563			2,598
	Impairment of assets to be held and used		778			820			2,623			4,325
	(Gain) loss on sales of restaurants and surplus properties, net		70			(190	)		(1,551	)		(3,152	)
	Amortization of discount related to estimated liability for closing restaurants		616			685			2,091			2,114
		$	1,301		$	765		$	3,193		$	5,827

The following table is a summary of the activity in the estimated liability for closing restaurants:

Balance at January 31, 2003		$	36,390
	New decisions regarding closing restaurants		916
	Usage		(11,403	)
	Favorable dispositions of leased surplus properties		(4,449	)
	Discount amortization		2,091
Balance at November 3, 2003			23,545
Less current portion, included in Other current liabilities			13,652
Long-term portion, included in Other long-term liabilities		$	9,893

The following table summarizes sales and operating losses related to the restaurants the Company closed during the twelve weeks ended November 3, 2003:

		Twelve Weeks Ended				Forty Weeks Ended
		November 3, 2003		November 4, 2002		November 3, 2003		November 4, 2002
Sales
	Hardee’s	$	402	$	997	$	2,446	$	3,482
	Carl’s Jr.	$	269	$	359	$	1,065	$	1,241
Operating loss
	Hardee’s	$	143	$	60	$	547	$	179
	Carl’s Jr.	$	93	$	55	$	238	$	168

14

CKE RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)

The following table summarizes sales and operating losses related to the restaurants the Company closed during the forty weeks ended November 3, 2003:

		Twelve Weeks Ended				Forty Weeks Ended
		November 3, 2003		November 4, 2002		November 3, 2003		November 4, 2002
Sales
	Hardee’s	$	402	$	1,517	$	2,192	$	5,264
	Carl’s Jr.	$	269	$	512	$	1,305	$	1,715
Operating loss
	Hardee’s	$	143	$	129	$	747	$	379
	Carl’s Jr.	$	93	$	62	$	286	$	201

NOTE (6) INCOME (LOSS) PER SHARE

The Company presents “basic” income or loss per share, which represents net income or loss divided by the weighted average shares outstanding, and “diluted” income or loss per share, which includes the effect of all potentially dilutive common shares. Potentially dilutive common shares are considered in the computation of diluted net loss per share for the forty weeks ended November 4, 2002, because they are dilutive to income before the cumulative effect of accounting change for goodwill.

The following table presents the number of potentially dilutive shares, in thousands, of the Company’s common stock excluded from the computation of diluted earnings per share:

	Twelve Weeks Ended				Forty Weeks Ended
	November 3, 2003		November 4, 2002		November 3, 2003		November 4, 2002
2004 Convertible Notes		2,764		2,986		2,783		3,344
2023 Convertible Notes		4,821		—		1,446		—
Stock Options		4,543		5,146		5,297		4,038
Warrants		982		982		982		898

Potentially dilutive shares related to the 2004 Convertible Notes, stock options and warrants were excluded as their effect would have been anti-dilutive. Potentially dilutive shares related to the 2023 Convertible Notes were excluded because the notes were not convertible during the period and their effect would have been anit-dilutive.

NOTE (7) SEGMENT INFORMATION

The Company principally is engaged in developing, operating and franchising its Carl’s Jr., Hardee’s and La Salsa quick-service restaurants, each of which is considered an operating segment that is managed and evaluated separately. Management evaluates the performance of its segments and allocates resources to them based on several factors, of which the primary financial measure is segment operating income or loss. General and administrative expenses are allocated to each segment based on management’s analysis of the resources applied to each segment. Interest expense related to the Facility, Senior Notes, 2004 Convertible Notes and 2023 Convertible Notes is allocated to Hardee’s based on the use of funds. Certain amounts that the Company does not believe would be proper to allocate to the operating segments are included in “Other” (i.e., gains or losses on sales of long-term investments). The accounting policies of the segments are the same as those described in the summary of significant accounting policies (see Note 1 of Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended January 31, 2003).

15

CKE RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)

		Carl's Jr.		Hardee's			La Salsa			Other			Total
Twelve Weeks Ended November 3, 2003
	Revenue	$	166,740	$	157,449		$	10,187		$	401		$	334,777
	Operating income (loss)		13,019		77			(641	)		(189	)		12,266
	Interest expense		2,080		7,886			(18	)		(1	)		9,947
	Total assets		261,221		437,799			68,104			30,956			798,080
	Capital expenditures		3,677		4,188			1,060			912			9,837
	Goodwill		22,649		—			34,059			—			56,708
	Depreciation and amortization		6,281		8,237			720			41			15,279
Twelve Weeks Ended November 4, 2002
	Revenue	$	153,992	$	148,361		$	10,002		$	474		$	312,829
	Operating income (loss)		10,558		(94	)		14			(128	)		10,350
	Interest expense		1,573		8,001			14			—			9,588
	Total assets		288,268		458,334			45,768			38,462			830,832
	Capital expenditures		6,444		10,244			553			879			18,120
	Goodwill		22,649		—			34,059			—			56,708
	Depreciation and amortization		5,910		7,797			652			41			14,400
Forty Weeks Ended November 3, 2003
	Revenue	$	553,764	$	498,784		$	34,158		$	1,348		$	1,088,054
	Operating income (loss)		46,895		(9,580	)		(802	)		301			36,814
	Interest expense		4,960		26,243			(45	)		(9	)		31,149
	Total assets		261,221		437,799			68,104			30,956			798,080
	Capital expenditures		9,305		15,745			4,636			3,309			32,995
	Goodwill		22,649		—			34,059			—			56,708
	Depreciation and amortization		19,657		26,918			2,632			140			49,347
Forty Weeks Ended November 4, 2002
	Revenue	$	533,964	$	499,539		$	29,850		$	1,444		$	1,064,797
	Operating income (loss)		45,402		674			535			(221	)		46,390
	Interest expense		5,114		27,189			18			—			32,321
	Total assets		288,268		458,334			45,768			38,462			830,832
	Capital expenditures		12,388		29,322			1,386			672			43,768
	Goodwill		22,649		—			34,059			—			56,708
	Depreciation and amortization		19,968		25,987			1,932			126			48,013

NOTE (8) NET ASSETS HELD FOR SALE

In conjunction with the acquisition of SBRG, the Company made the decision to divest Timber Lodge as the concept does not fit with the Company’s core concepts of quick-service and fast-casual restaurants. During the first quarter of fiscal 2004, the Company received an offer to purchase Timber Lodge in a transaction that would generate net proceeds of approximately $10,000. We continue to negotiate with the interested party. We are currently evaluating our plans for Timber Lodge, including an assessment of whether to continue active efforts to divest. Net assets held for sale consisted of the following at November 3, 2003:

16

CKE RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)

ASSETS
	Current assets		$	1,366
	Property and equipment, net			8,958
	Other assets			6,410
		Total assets	$	16,734
LIABILITIES
	Current liabilities		$	5,203
	Other long-term liabilities			1,731
	Total liabilities (included in Other current liabilities in the Company’s Condensed Consolidated Balance Sheet)		$	6,934
Assets in excess of liabilities			$	9,800

The operating results of Timber Lodge included in the Condensed Consolidated Statements of Operations as income (loss) from operations of discontinued segment are as follows:

		Twelve Weeks Ended						Forty			Period from
								Weeks Ended			March 1, 2002 to
		November 3, 2003			November 4, 2002			November 3, 2003			November 4, 2002
Revenue		$	9,486		$	9,901		$	32,783		$	29,635
Operating income (loss)		$	72		$	(554	)	$	(706	)	$	(523	)
Interest expense (income)			(1	)		33			23			93
Other income (expense), net
	Loss on discontinuance of segment		—			—			(1,421	)		—
	Other, net		17			1			148			22
Income tax benefit			(21	)		(30	)		(47	)		(26	)
Net income (loss)		$	111		$	(556	)	$	(1,955	)	$	(568	)

NOTE (9) RELATED PARTY TRANSACTIONS

In the past we have made relocation loans to officers of the Company, and we occasionally make relocation loans to other employees (excluding officers and directors). Relocation loans are forgiven over time if the employee remains an employee of the Company for a specific term, typically three to five years.

As of November 3, 2003, there were eight relocation loans outstanding with an aggregate balance of $205. For the twelve and forty weeks ended November 3, 2003, the amount forgiven, including interest, for all such employees, was approximately $26 and $174, respectively. Additionally, one outstanding loan in the amount of $64 was repaid in cash during the forty weeks ended November 3, 2003.

As of November 4, 2002, there were nine relocation loans outstanding with an aggregate balance of $440. During the twelve and forty weeks ended November 3, 2003, the amount forgiven, including interest, for all such employees was approximately $0 and $141, respectively.

During the forty weeks ended November 4, 2002, certain loans made under the Employee Stock Purchase Loan Plan and the Non-Employee Director Stock Purchase Loan Program (collectively the “Programs”), were fully collected in cash. The amounts repaid totaled $1,555.

17

CKE RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)

NOTE (10) OTHER INCOME (EXPENSE), NET

Other income (expense), net consists of the following:

		Twelve Weeks Ended					Forty Weeks Ended
		November 3, 2003			November 4, 2002		November 3, 2003			November 4, 2002
Gain on the sale of Checkers stock		$	—		$	3,134	$	—		$	8,959
Gain (loss) on the repurchase of convertible subordinated notes			(708	)		728		(708	)		2,442
Other			632			42		221			405
	Total other income (expense), net	$	(76	)	$	3,904	$	(487	)	$	11,806

NOTE (11) INCOME TAXES

Income taxes for the interim periods were computed using the effective tax rate estimated for the full fiscal year.

For the twelve weeks and forty weeks ended November 3, 2003, the Company recorded an income tax expense of $192 and $622, respectively, which consisted of foreign taxes.

During the twelve weeks and forty weeks ended November 4, 2002, the Company recorded income tax benefits of $5,393 and $8,143, respectively. The income tax benefits were a result of changes in existing tax laws whereby the Company was allowed to carry back certain operating losses to prior years in which the Company had taxable income.

At November 3, 2003, the Company had a federal net operating loss (“NOL”) carryforward of approximately $83,400, expiring in varying amounts in the years 2021 through 2023 and state NOL carryforwards in the amount of $71,500 expiring in the years 2006 through 2023. The Company has a federal NOL carryforward for alternative minimum tax purposes of approximately $61,235. Additionally, the Company has an alternative minimum tax credit carryforward of approximately $7,300. The Company has generated general business credit carryforwards of approximately $9,700, expiring in varying amounts in the years 2020 through 2023, and foreign tax credits in the amount of $1,400, which expire in the years 2005 through 2008.

NOTE (12) NEW ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED

During January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities, an interpretation of ARB No. 51 (“FIN 46”). FIN 46 addresses the consolidation of entities whose equity holders have either (a) not provided sufficient equity at risk to allow the entity to finance its own activities or (b) do not possess certain characteristics of a controlling financial interest. FIN 46 requires the consolidation of these entities, known as variable interest entities (“VIE’s”), by the primary beneficiary of the entity. The primary beneficiary is the entity, if any, that is subject to a majority of the risk of loss from the VIE’s activities, entitled to receive a majority of the VIE’s residual returns, or both. FIN 46 applies immediately to variable interests in VIEs created or obtained after January 31, 2003. The Company has not entered into any material variable interest arrangements since January 31, 2003. As amended by FASB Staff Position (“FSP”) No. FIN 46-6, FIN 46 is effective for variable interests in a VIE created before February 1, 2003 at the end of the first interim or annual period ending after December 15, 2003 (the end of fiscal 2004, or January 26, 2004, for the Company). FIN 46 requires certain disclosures in financial statements issued after January 31, 2003 if it is reasonably possible that the Company will consolidate or disclose information about variable interest entities when FIN 46 becomes effective.

The Company utilizes various advertising funds (“Funds”) to administer its advertising programs. The Carl’s Jr. National Advertising Fund (“CJNAF”) is Carl’s Jr.’s sole cooperative advertising program. The Company consolidates CJNAF into its financial statements on a net basis, whereby contributions from franchisees, when received, are recorded as offsets to the Company’s reported advertising expenses. The Hardee’s cooperative advertising funds consist of the Hardee’s National Advertising Fund (“HNAF”) and many local advertising cooperative funds

18

CKE RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)

(“Co-op Funds”). Each of these funds is a separate non-profit association with all proceeds segregated and managed by a third-party accounting service company. The Company has determined that consolidation of all of its advertising funds is appropriate under FIN 46. The Company has historically consolidated the Carl’s Jr. advertising fund. However, the Hardee’s advertising funds will be newly consolidated.

The Company has determined the impact of the consolidation of HNAF and the Co-op Funds will be an increase of approximately $20,000 to current assets and current liabilities. The Company does not anticipate the consolidation of the funds will have a material impact to the Company’s results of operations or stockholders’ equity.

As of the date of this filing, the Company understands the FASB is in the process of modifying and/or clarifying certain provisions of FIN 46. Additionally, one FSP relating to FIN 46 is currently being deliberated. These modifications and the FSP when finalized, could impact the Company’s analysis of the applicability of FIN 46 to entities that are franchisees of our concepts. The Company is aware of certain interpretations of FIN 46 by some parties during its continuing evolution, which could have applicability when certain conditions exist that are not representative of a typical franchise relationship. These conditions include the franchisor possessing an equity or other financial interest in or providing significant levels of financial support to a franchisee. We do not possess any equity interests in our franchisees. Also, we do not provide financial support to a franchisee in our typical franchise relationship. We continue to monitor and analyze developments regarding FIN 46 that would impact its applicability to franchise relationships. We cannot predict the impact FIN 46 will have on our financial statements.

NOTE (13) SUBSEQUENT EVENT

Subsequent to November 3, 2003, a franchisee owning and operating 33 Hardee’s restaurants filed a voluntary petition for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Ohio. As of November 3, 2003, the Company had fully reserved all accounts and notes receivable from this franchisee. The Company remains liable for lease obligations on 15 properties for which it has either guarantied the franchisee’s lease or entered into subleases to the franchisee. At November 3, 2003, the present value of the remaining lease obligation on these 15 properties is $5,791. The Company maintained an accrual of $344 at November 3, 2003 associated with its previous agreement to subsidize one of these leases.

As of November 3, 2003, the franchisee had closed 5 of the 15 Hardee’s restaurants that were located on properties that the Company is ultimately liable for the lease obligations. The Company had not provided for the lease obligations as the franchisee continued to make timely lease payments. The franchisee continues to operate Hardee’s restaurants at 10 of the 15 leased properties for which the Company remains liable for the lease obligations and, to the best of the Company’s knowledge, the franchisee will seek to retain the 10 related leases after emerging from bankruptcy. If the franchisee rejects its sublease obligations under some or all of the 15 property leases as part of its bankruptcy reorganization, the Company would be liable for the full obligation under the rejected leases.

19

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction and Safe Harbor Disclosure

CKE Restaurants, Inc. and its subsidiaries (collectively referred to as the “Company”) is comprised of the operations of Carl’s Jr., Hardee’s, La Salsa Fresh Mexican Grill (“La Salsa”), and The Green Burrito (“Green Burrito”), which is primarily operated as a dual-brand concept with Carl’s Jr. quick-service restaurants. The following Management’s Discussion and Analysis should be read in conjunction with the unaudited Condensed Consolidated Financial Statements contained herein, and our Annual Report on Form 10-K for the fiscal year ended January 31, 2003. All note references herein refer to the accompanying Notes to Condensed Consolidated Financial Statements.

Matters discussed in this Form 10-Q contain forward-looking statements relating to future plans and developments, financial goals, and operating performance that are based on our current beliefs and assumptions. Such statements are subject to risks and uncertainties. Factors that could cause our results to differ materially from those described include, but are not limited to, whether or not restaurants will be closed and the number of restaurant closures, consumers’ concerns or adverse publicity regarding our products, effectiveness of operating initiatives and advertising and promotional efforts (particularly at the Hardee’s brand), changes in economic conditions, changes in the price or availability of commodities, availability and cost of energy, workers’ compensation and general liability premiums and claims experience, changes in our suppliers’ ability to provide quality and timely products to us, delays in opening new restaurants or completing remodels, severe weather conditions, the operational and financial success of our franchisees, franchisees’ willingness to participate in our strategy, availability of financing for us and our franchisees, unfavorable outcomes on litigation, changes in accounting policies and practices, new legislation or government regulation (including environmental laws), the availability of suitable locations and terms for the sites designed for development, and other factors as discussed in our filings with the Securities and Exchange Commission.

Forward-looking statements speak only as of the date they are made. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law or the rules of the New York Stock Exchange.

New Accounting Pronouncements Not Yet Adopted

See Note (12) of Notes to Condensed Consolidated Financial Statements.

Critical Accounting Policies

Our reported results are impacted by the application of certain accounting policies that require us to make subjective or complex judgments. These judgments involve making estimates about the effect of matters that are inherently uncertain and may significantly impact our quarterly or annual results of operations and financial condition. Specific risks associated with these critical accounting policies are described in the following paragraphs.

For all of these policies, we caution that future events rarely develop exactly as expected, and the best estimates routinely require adjustment. Our most significant accounting policies require:

• estimation of future cash flows used to assess the recoverability of long-lived assets, assess the recoverability of goodwill, and establish the estimated liability for closing restaurants and subsidizing lease payments of franchisees;

• estimation, using actuarially determined methods, of our self-insured claim losses under our workers’ compensation, fire and general liability insurance programs;

• determination of appropriate estimated liabilities for litigation;

• determination of the appropriate allowances associated with franchise and license receivables and estimated liabilities for franchise subleases;

20

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

• determination of the appropriate assumptions to use to estimate the fair value of stock-based compensation for purposes of pro forma disclosures of net income; and

• estimation of our net deferred income tax asset valuation allowance.

Descriptions of these critical accounting policies follow.

Impairment of Property and Equipment Held and Used, Held for Sale or To Be Disposed of Other Than By Sale

Each quarter we evaluate the carrying value of individual restaurants when the operating results have reasonably progressed to a point to adequately evaluate the probability of continuing operating losses or a current expectation that a restaurant will be sold or otherwise disposed of before the end of its previously estimated useful life. In making these judgments, we consider the period of time since the restaurant was opened or remodeled, and the trend of operations and expectations for future sales growth. For restaurants selected for review, we estimate the future estimated cash flows from operating the restaurant over its estimated useful life. We make judgments about future same-store sales and the operating expenses and estimated useful life that we would expect with such level of same-store sales. We employ a probability-weighted approach wherein we estimate the effectiveness of future sales and marketing efforts on same-store sales and related estimated useful life. In general, in expected same-store sales scenarios where sales are not expected to increase, we generally assume a shorter than previously estimated useful life.

Quarterly, we update our model for estimating future cash flows based upon experience gained, current intentions about refranchising restaurants and closures, expected sales trends, internal plans, and other relevant information. In prior fiscal years, because we were significantly engaged in refranchising restaurants to generate cash to repay bank indebtedness, we had assumed, in some cases, estimated lives that were less than the estimated useful life for certain restaurants. As our financial position has improved such that refranchising activities are less likely, we estimated cash flows over their remaining estimated useful life of the restaurants. Additionally, commencing with the second quarter of fiscal 2003, we reduced the probability weighting for the occurrence of future same-store sales from the higher end of our strategic business plan in light of our actual same-store sales results. As the operations of restaurants opened or remodeled in recent years progress to the point that their profitability and future prospects can adequately be evaluated, additional restaurants will become subject to review and the possibility that impairments exist. Most likely, this would arise in new markets the Company expanded into in recent years.

Same-store sales are the key indicator used to estimate future cash flow for evaluating recoverability. To provide a sensitivity analysis of the impairment that could arise were the actual same-store sales of all mature restaurants we owned to grow at only the assumed rate of inflation for our operating costs (same-store sales sensitivity), for no real growth, the aggregate additional impairment loss would be approximately $11,819. The inflation rate assumed in making this calculation is 2.0% for both revenue and expenses.

Additionally, restaurants are operated for three years before we test them for impairment. Restaurants are also not tested for either two or three years following a major remodel (contingent upon the extent of the remodel). We believe this provides the restaurant sufficient time to establish its presence in the market and build a customer base. If we were to test all restaurants for impairment without regard to the amount of time the restaurants were operating, the total asset impairment would increase substantially. Assuming all restaurants were tested under the same assumptions used in the same-store sales sensitivity analysis, without regard for the length of time open (time open sensitivity), we would be required to record additional impairment losses of approximately $12,454.

The following tables summarize the sensitivity analyses, as classified by restaurants with positive or negative cash flow during the trailing thirteen periods, for both same-store sales sensitivity and time open sensitivity:

21

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

Carl’s Jr.

		Net Book		Number of		Impairment Under
		Value		Restaurants		Sensitivity Test
Same-store sales sensitivity
	Restaurants with positive cash flow	$	86,021		348	$	—
	Restaurants with negative cash flow		11,259		32		2,672
			97,280		380		2,672
Time open sensitivity
	Restaurants with positive cash flow		13,703		21		—
	Restaurants with negative cash flow		6,263		39		1,281
			19,966		60		1,281
Total
	Restaurants with positive cash flow		99,724		369		—
	Restaurants with negative cash flow		17,522		71		3,953
		$	117,246		440	$	3,953

Hardee’s

		Net Book		Number of		Impairment Under
		Value		Restaurants		Sensitivity Test
Same-store sales sensitivity
	Restaurants with positive cash flow	$	133,770		290	$	568
	Restaurants with negative cash flow		45,916		119		8,328
			179,686		409		8,896
Time open sensitivity
	Restaurants with positive cash flow		86,213		176		492
	Restaurants with negative cash flow		34,116		136		9,999
			120,329		312		10,491
Total
	Restaurants with positive cash flow		219,983		466		1,060
	Restaurants with negative cash flow		80,032		255		18,327
		$	300,015		721	$	19,387

La Salsa

		Net Book		Number of		Impairment Under
		Value		Restaurants		Sensitivity Test
Same-store sales sensitivity
	Restaurants with positive cash flow	$	5,080		41	$	—
	Restaurants with negative cash flow		512		2		251
			5,592		43		251
Time open sensitivity
	Restaurants with positive cash flow		1,791		7		—
	Restaurants with negative cash flow		1,700		10		682
			3,491		17		682
Total
	Restaurants with positive cash flow		6,871		48		—
	Restaurants with negative cash flow		2,212		12		933
		$	9,083		60	$	933

22

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

Core Concepts Combined

		Net Book		Number of		Impairment Under
		Value		Restaurants		Sensitivity Test
Same-store sales sensitivity
	Restaurants with positive cash flow	$	224,871		679	$	568
	Restaurants with negative cash flow		57,687		153		11,251
			282,558		832		11,819
Time open sensitivity
	Restaurants with positive cash flow		101,707		204		492
	Restaurants with negative cash flow		42,079		185		11,962
			143,786		389		12,454
Total
	Restaurants with positive cash flow		326,578		883		1,060
	Restaurants with negative cash flow		99,766		338		23,213
		$	426,344		1,221	$	24,273

Impairment of Goodwill

At the reporting unit level, goodwill is tested for impairment at least annually during the first quarter of our fiscal year, and on an interim basis if an event or circumstance indicates that it is more likely than not impairment may have occurred. We consider the reporting unit level to be the brand level since the components (e.g., restaurants) within each brand have similar economic characteristics, including products and services, production processes, types or classes of customers and distribution methods. The impairment, if any, is measured based on the estimated fair value of the brand. Fair value can be determined based on discounted cash flows, comparable sales or valuations of other restaurant brands. Impairment occurs when the carrying amount of goodwill exceeds its estimated fair value.

The most significant assumptions we use in this analysis are those made in estimating future cash flows. In estimating future cash flows, we use the assumptions in our strategic plan for items such as same-store sales growth rates and the discount rate we consider to be the market discount rate for acquisitions of restaurant companies and brands.

If our assumptions used in performing the impairment test prove insufficient, the fair value of the brands may ultimately prove to be significantly lower, thereby causing the carrying value to exceed the fair value and indicating an impairment has occurred. We perform our annual impairment test during the first quarter of each fiscal year. During the first quarter of fiscal year 2004, we engaged an outside party to assist us in performing a valuation of the La Salsa and Carl’s Jr. brands. As a result, we concluded that the current value of the goodwill associated with La Salsa exceeds the carrying value of that goodwill. Accordingly, no impairment charge was required. Additionally, we concluded that the current value of the goodwill of Carl’s Jr. exceeded the carrying value and no impairment charge was required. During the first quarter of fiscal year 2003, we engaged an outside party to assist us in performing a valuation of the Hardee’s brand, through which we concluded that the value of the goodwill associated with the acquisition of Hardee’s was $0. Accordingly, we recorded a transitional impairment charge to write-off all of the goodwill related to the Hardee’s brand of $175,780. As of November 3, 2003, we have $56,708 in goodwill recorded on the balance sheet, $34,059 and $22,649 related to La Salsa and Carl’s Jr., respectively.

We regularly evaluate under-performing restaurants to determine the likelihood we can return them to profitability. In the event that we determine we cannot return an under-performing restaurant to an acceptable level of profitability, we close the restaurant (absent any contractual restrictions preventing us from doing so). We believe the potential closing of any restaurants currently identified as under-performing would not have a material impact on the valuation of either the Carl’s Jr. or La Salsa goodwill.

23

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

Estimated Liability for Closing Restaurants

We make decisions to close restaurants based on prospects for estimated future profitability and sometimes we are forced to close restaurants due to circumstances beyond our control (e.g., a landlord’s refusal to negotiate a new lease). Our restaurant operators evaluate each restaurant’s performance every quarter. When restaurants continue to perform poorly, we consider the demographics of the location, as well as the likelihood of being able to improve an unprofitable restaurant. Based on the operator’s judgment, we estimate the future cash flows. If we determine that the restaurant will not, within a reasonable period of time, operate at break-even cash flow or be profitable, and there are no contractual requirements to continue operating the restaurant, we close the restaurant. Additionally, franchisees may close restaurants for which we are the primary lessee. If the franchisee cannot make payments on the lease, we continue making the lease payments and establish an estimated liability for the closed restaurant if we decide not to operate it as a company-operated restaurant. We establish the estimated liability on the actual closure date. Prior to the adoption of Statement of Financial Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities (“SFAS 146”) on January 1, 2003, we established the estimated liability when we identified a restaurant for closure, which may or may not have been the actual closure date.

The estimated liability for closing restaurants on properties vacated is generally based on the term of the lease and the lease termination fee we expect to pay, as well as estimated maintenance costs until the lease has been abated. The amount of the estimated liability established is generally the present value of these estimated future payments. The interest rate used to calculate the present value of these liabilities is based on our incremental borrowing rate at the time the liability is established. The related discount is amortized and shown in facility action charges, net in our Condensed Consolidated Statements of Operations.

A significant assumption used in determining the amount of the estimated liability for closing restaurants is the amount of the estimated liability for future lease payments on vacant restaurants, which we determine based on our broker’s (a related party) assessment of its ability to successfully negotiate an early termination of our lease agreements with the lessors. Additionally, we estimate the cost to maintain leased and owned vacant properties until the lease has been abated. If the costs to maintain properties increase, or it takes longer than anticipated to sell properties or terminate leases, we may need to record additional estimated liabilities. If the leases on the vacant restaurants are not terminated on the terms we used to estimate the liabilities, we may be required to record losses in future periods. Conversely, if the leases on the vacant restaurants are terminated on more favorable terms than we used to estimate the liabilities, we reverse previously established estimated liabilities, resulting in an increase in operating income. The present value of lease payments on all closed restaurants is approximately $49,899, which represents the discounted amount we would be required to pay if we are unable to terminate the leases prior to the terms required in the lease agreements or enter into sublease agreements. However, it is our experience that we can terminate those leases for less than that amount and, accordingly, we have recorded an estimated liability for lease obligations of $18,369 as of November 3, 2003.

Estimated Liability for Self-Insurance

We are self-insured for a portion of our current and prior years’ losses related to workers’ compensation, fire and general liability insurance programs. We have obtained stop loss insurance for individual workers’ compensation claims, property claims and individual general liability claims over $500. Insurance liabilities and reserves are accounted for based on the present value of actuarial estimates of the amount of loss incurred. These estimates rely on actuarial observations of historical claim loss development. The actuary, in determining the estimated liability, bases the assumptions on the average historical losses on claims we have incurred. The actual loss development may be better or worse than the development estimated by the company in conjunction with the actuary. In that event, we modify the reserve. As such, if we experience a higher than expected number of claims or the costs of claims rise more than expected, the we may, in conjunction with the actuary, adjust the expected losses upward and our future self-insurance expenses will rise. Consistent with trends the restaurant industry has experienced in recent years, particularly in California where claim cost trends are among the highest in the country, workers’ compensation liability costs continue to increase.

24

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

Loss Contingencies

We maintain accrued liabilities for contingencies related to litigation. We account for contingent obligations in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 5, Accounting for Contingencies, which requires that we assess each contingency to determine estimates of the degree of probability and range of possible settlement. Those contingencies that are deemed to be probable and where the amount of such settlement is reasonably estimable are accrued in our consolidated financial statements. If only a range of loss can be determined, we accrue to the low end of the range. As of November 3, 2003, we have recorded an accrued liability for contingencies related to litigation in the amount of $3,351. The assessment of contingencies is highly subjective and requires judgments about future events. Contingencies are reviewed at least quarterly to determine the adequacy of the accruals and related consolidated financial statement disclosure. The ultimate settlement of contingencies may differ materially from amounts we have accrued in our consolidated financial statements.

We estimate the liability for those losses related to litigation claims that we believe are reasonably possible to result in an adverse outcome to be in the range of $800 to $2,600. In accordance with Statement of Financial Accounting Standards No. 5, we have not recorded a liability for those losses.

Franchised and Licensed Operations

We monitor the financial condition of certain franchisees and record provisions for estimated losses on receivables when we believe that our franchisees are unable to make their required payments to us. Each quarter we perform an analysis to develop estimated bad debts for each franchisee. We then compare the aggregate result of that analysis to the amount recorded in our consolidated financial statements as the allowance for doubtful accounts and adjust the allowance as appropriate. Additionally, we cease accruing royalty income from franchisees that are materially delinquent in paying or in default for other reasons and reverse any royalties accrued during the last 90 days. Over time our assessment of individual franchisees may change. For instance, we have had some franchisees, who in the past we had determined required an estimated loss equal to the total amount of the receivable, who have paid us in full or established a consistent record of payments (generally one year) such that we determined an allowance was no longer required.

Depending on the facts and circumstances, there are a number of different actions we and/or our franchisees may take to resolve franchise collections issues. These actions may include the purchase of franchise restaurants by us or by other franchisees, a modification to the franchise agreement which may include a provision to defer certain royalty payments or reduce royalty rates in the future (if royalty rates are not sufficient to cover our costs of service over the life of the franchise agreement, we record an estimated loss at the time we modify the agreements), a restructuring of the franchisee’s business and/or finances (including the restructuring of leases for which we are the primary obligee — see further discussion below) or, if necessary, the termination of the franchise agreement. The allowance established is based on our assessment of the most probable course of action that will occur. If we believe we will operate the restaurants as company-operated restaurants, the allowance for loss is recorded net of the estimated fair value of the related restaurant assets that are not pledged as collateral to third parties.

Many of the restaurants that we sold to Hardee’s and Carl’s Jr. franchisees as part of our refranchising program were on leased sites. Generally, we remain principally liable for the lease and have entered into a sublease with the franchisee on the same terms as the primary lease. We account for the sublease payments received as franchising rental income. Our payments on the leases are accounted for as rental expense in franchised and licensed restaurants and other expense in our condensed consolidated statements of operations. As of November 3, 2003, the present value of our total obligation on such lease arrangements with Hardee’s and Carl’s Jr. franchisees was $46,449 and $95,758, respectively. We do not expect Carl’s Jr. franchisees to experience the same level of financial difficulties as Hardee’s franchisees have encountered in the past or may encounter in the future. However, we can provide no assurance that this will not occur.

In addition to the sublease arrangements with franchisees described above, we also lease land and buildings to franchisees. As of November 3, 2003, the net book value of property under lease to Hardee’s and Carl’s Jr. franchisees was $30,256 and $9,629, respectively. Troubled franchisees are those with whom we have entered into workout agreements and who may have liquidity problems in the future. In the event that a troubled franchisee

25

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

closes a restaurant for which we own the property, our options are to operate the restaurant as a Company-owned restaurant, lease the property to another tenant or sell the property. These circumstances would cause us to consider whether the carrying value of the land and building was impaired. If we determined the property value was impaired, we would record a charge to operations for the amount the carrying value of the property exceeds its fair value. As of November 3, 2003, the net book value of land and buildings under lease to Hardee’s franchisees that are considered to be troubled franchisees was approximately $21,579 and is included in the amount above. We believe that, during fiscal 2004, some of these franchisees will probably close restaurants and, accordingly, we may record an impairment loss in connection with some of these closures.

Prior to adoption of Statement of Financial Accounting Standards No. 146, Accounting for the Costs Associated with Exit or Disposal Activities (“SFAS 146”) (see Note 1 of Notes to Consolidated Financial Statements of our Annual Report on Form 10-K for the fiscal year ended January 27, 2003), the determination of when to establish an estimated liability for future lease obligations on restaurants operated by franchisees for which we are the primary obligee was based on the date that either of the following events occurred:

(1) the franchisee and we mutually decided to close a restaurant and we assumed the responsibility for the lease, usually after a franchise agreement was terminated or the franchisee declared bankruptcy; or

(2) we entered into a workout agreement with a financially troubled franchisee, wherein we agreed to make part or all of the lease payments for the franchisee.

In accordance with SFAS 146, which we adopted on January 1, 2003, an estimated liability for future lease obligations on restaurants operated by franchisees for which we are the primary obligee is established on the date the franchisee closes the restaurant. We record an estimated liability for subsidized lease payments when we sign a sublease agreement committing us to the subsidy.

The amount of the estimated liability is established using the methodology described in “Estimated Liability for Closing Restaurants” above. Consistent with SFAS 146, we have not established an additional estimated liability for potential losses not yet incurred. The present value of the lease obligations for which we remain principally liable and have entered into subleases to troubled franchisees is approximately $27,223 (six franchisees represent substantially all of this amount). As disclosed in Note 13 of Notes to Condensed Consolidated Financial Statements contained herein, subsequent to November 3, 2003, one of these six franchisees filed voluntary petition for Chapter 11 bankruptcy protection. If sales trends/economic conditions worsen for our franchisees, their financial health may worsen, our collection rates may decline and we may be required to assume the responsibility for additional lease payments on franchised restaurants. Entering into restructured franchise agreements may result in reduced franchise royalty rates in the future (see discussion below). The likelihood of needing to increase the estimated liability for future lease obligations is related to the success of our Hardee’s concept (i.e., if our Hardee’s concept results improve from the execution of our comprehensive plan, we would reasonably expect that the financial performance of our franchisees would improve).

Stock-Based Compensation

As discussed in Note 1 of Notes to Condensed Consolidated Financial Statements, we have various stock-based compensation plans that provide options for certain employees and outside directors to purchase common shares of stock. We have elected to account for stock-based compensation in accordance with APB Opinion No. 25, Accounting for Stock Issued to Employees, which utilizes the intrinsic value method of accounting for stock-based compensation, as opposed to using the fair-value method prescribed in SFAS 123, Accounting for Stock-Based Compensation. Because of this election, we are required to make certain pro forma disclosures of net income assuming we had adopted SFAS 123. We determine the estimated fair value of stock-based compensation on the date of the grant using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires the input of highly subjective assumptions, including the historical stock price volatility, expected life of the option and the risk-free interest rate. A change in one or more of the assumptions used in the Black-Scholes option-pricing model may result in a material change to the estimated fair value of the stock-based compensation (see Note 1 of Notes to Condensed Consolidated Financial Statements for analysis of the effect of certain changes in assumptions used to determine the fair value of stock-based compensation).

26

Valuation Allowance for Net Deferred Tax Asset

As disclosed in Note 20 of Notes to Consolidated Financial Statements of our Annual Report Form 10-K for the fiscal year ended January 31, 2003, we have recorded a 100% valuation allowance against our net deferred tax assets. If our business turnaround is successful, we have been profitable for a number of years and our prospects for the realization of our deferred tax assets are more likely than not, we would then reverse our valuation allowance and credit income tax expense. In assessing the prospects for future profitability, many of the assessments of same-store sales and cash flows mentioned above become relevant. When circumstances warrant, we assess the likelihood that our net deferred tax assets will more likely than not be recovered from future taxable income. As of January 31, 2003, our net deferred tax assets and related valuation allowance totaled approximately $164,000.

Significant Known Events, Trends, or Uncertainties Expected to Impact Fiscal 2004 Comparisons with Fiscal 2003

The factors discussed below impact comparability of operating performance for the twelve and forty weeks ended November 3, 2003, to the twelve and forty weeks ended November 4, 2002, or could impact comparisons for the remainder of fiscal 2004.

Acquisition of Santa Barbara Restaurant Group, Inc.

As discussed in Note 3 of Notes to Condensed Consolidated Financial Statements, we acquired SBRG on March 1, 2002 (“Acquisition Date”). The operations of SBRG subsequent to the Acquisition Date are included in our consolidated financial statements.

A significant amount of goodwill was recorded in connection with the acquisition of SBRG. The recoverability of that goodwill is dependent on future operations and the development of new La Salsa restaurants (see discussion of financing new restaurants under “Liquidity and Capital Resources” below). The acquisition of new restaurant sites is highly competitive.

Divestiture of Timber Lodge

As discussed in Note 8 of Notes to Condensed Consolidated Financial Statements, Timber Lodge is accounted for as a discontinued operation. The operations of Timber Lodge, which are included in the Condensed Consolidated Statements of Operations as income (loss) from operations of discontinued segment, are as follows:

		Twelve Weeks Ended						Forty			Period from
								Weeks Ended			March 1, 2002 to
		November 3, 2003			November 4, 2002			November 3, 2003			November 4, 2002
Operating income (loss)		$	72		$	(554	)	$	(706	)	$	(523	)
Interest expense (income)			(1	)		33			23			93
Other income (expense), net
	Loss on discontinuance of segment		—			—			(1,421	)		—
	Other, net		17			1			148			22
Income tax benefit			(21	)		(30	)		(47	)		(26	)
Net income (loss)		$	111		$	(556	)	$	(1,955	)	$	(568	)

New Accounting Pronouncements

See Note 2 and Note 12 of Notes to Condensed Consolidated Financial Statements.

27

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

Seasonality

We operate on a retail accounting calendar. Our fiscal year has 13 four-week accounting periods and ends the last Monday in January. The first quarter of our fiscal year has four periods, or 16 weeks. All other quarters have three periods, or 12 weeks.

Our restaurant sales, and therefore our profitability, are subject to seasonal fluctuations and are traditionally higher during the spring and summer months because of factors such as increased travel and improved weather conditions, which affect the public’s dining habits.

Turnaround Strategy

Hardee’s is in the midst of a turnaround program that is targeted at improving Hardee’s same-store sales and returning the Hardee’s brand to prominence in the quick-service restaurant (“QSR”) sector. The key elements of the turnaround program are to:

• improve restaurant operations by streamlining the menu and returning to restaurant fundamentals — quality, service and cleanliness;

• remodel Hardee’s restaurants to the “Star Hardee’s” format and upgrade the condition of the facilities so that our Hardee’s customers enjoy comfortable surroundings and a pleasant dining experience;

• transform Hardee’s from a discount variety brand to a premium product brand that appeals to what we believe to be the QSR industry’s most attractive demographic segment, 18- to 35-year old males; and

• grow the lunch and dinner portion of Hardee’s business while maintaining Hardee’s already strong breakfast business.

Pursuant to this program, Hardee’s remodeled 85% of its company-operated restaurants and recently rolled out its new menu, which we refer to as the “Revolution,” discussed further under “Hardee’s Revolution” below.

If we are unable to grow sales and operating margins at Hardee’s, it will significantly affect our future profitability and cash flows. Such circumstances could affect our ability to access sufficient financing in the future (See “Liquidity and Capital Resources” below).

Our strategy has emphasized premium products, as well as routine price increases prompted by increases in food, labor and utility costs. The impact of this strategy has been an increase in average guest check. That strategy also has likely resulted in a decrease in transaction counts. Many of our competitors offer lower prices on discounted fare and have increased their efforts in this regard over the past two years, which may have impacted our transaction counts. We generally have experienced negative transaction counts at Hardee’s since our acquisition of the brand and at Carl’s Jr. for nearly two years, which we believe is due, in part, to other QSR companies offering products at discounted prices and the economic slowdown during this time. We note that others in the QSR industry have experienced negative same-store sales trends during portions of this time. We cannot quantify how much of our declines are related to the QSR segment and how much are related to circumstances involving our own brands.

As shown in the tables on pages 32 — 35, the operating margins for Hardee’s and La Salsa have decreased from the prior year period. Occupancy costs, which are primarily fixed or semi-fixed in nature, are a component of operating margins. The fixed nature of those costs allows margins to increase when sales are rising — an occurrence referred to as sales leverage. If costs increase or sales decrease, we would have to increase the prices of our products to preserve the operating margin. Historically, we have been successful at implementing such price increases, but this likely has had an impact on transaction counts as described above. During April 2003, we increased prices at our company-operated Carl’s Jr. restaurants by approximately 1%. The sensitivity analysis for the recoverability of restaurants (see “Impairment of Property and Equipment Held and Used, Held for Sale or To Be Disposed of Other Than By Sale”) assumes that our same-store sales in the future grow at the same rate as inflation (i.e. our costs for food, labor, utilities, etc.). If we are unable to pass along such cost increases, and at the same time do not increase

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CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

our transaction counts, our operating results would decline and the recoverability of the carrying value of our restaurants would be negatively impacted.

Hardee’s Revolution

We have implemented a comprehensive plan to reposition Hardee’s as a premium burger restaurant, and recently rolled out its new menu, which we refer to as the “Revolution.” As part of the Revolution, we eliminated a significant number of menu items with the goal of simplifying the Hardee’s menu and improving restaurant operations. The Hardee’s menu now features a premium Angus beef line of 1/3 lb., 1/2 lb. and 2/3 lb. burgers called “Thickburgers.” We believe Thickburgers will help increase Hardee’s sales because burgers still represent the largest QSR segment, and the 18- to 35-year old male demographic segment we target shows a strong preference for burgers. We believe the taste and quality of our Thickburgers are unparalleled in the QSR industry. Hardee’s focus on burgers marks a return to its roots offering superior tasting charbroiled burgers, which we believe will increase the average customer check and average unit volumes.

We began introducing Thickburgers at Hardee’s at the end of last year, and as of November 3, 2003, all of our company-operated Hardee’s restaurants and approximately 94% of our franchise-operated Hardee’s restaurants had been converted to the Revolution menu.

After converting Hardee’s restaurants to the Revolution menu format, we anticipated an initial decrease in same-store sales because of menu eliminations and customers’ lack of experience with the new product line. There was indeed an initial negative impact to earnings due to increased crew training costs and our discounting the new items to encourage customers to try the new offerings. As the training, implementation and introduction period has now been completed, restaurant labor has now returned to pre-Revolution levels and same-store sales increased 1.0% and 6.8% during the second and third quarters of fiscal 2004, respectively. While we expect these trends to continue, we can provide no assurance that this will occur.

Franchise Operations

Like others in the QSR industry, some of our franchise operations experience financial difficulties from time to time. Our approach to dealing with financial and operational issues that arise from these situations is described above (see discussion under Critical Accounting Policies — Franchised and Licensed Operations). Some franchisees in the Hardee’s system have experienced significant financial problems. As discussed above, there are a number of potential resolutions of these financial issues.

We continue to work with franchisees in an attempt to maximize our future franchising income. Our franchising income is dependent on both the number of restaurants operated by franchisees and their operational and financial success, such that they can make their royalty and lease payments to us. Although we quarterly review the allowance for doubtful accounts and the estimated liability for closed franchise restaurants (see discussion under Critical Accounting Policies — Franchised and Licensed Operations), there can be no assurance that the number of franchisees or franchised restaurants experiencing financial difficulties will not increase from our current assessments, nor can there be any assurance that we will be successful in resolving financial issues relating to any specific franchisee. As of November 3, 2003, our consolidated allowance for doubtful accounts of notes receivable was 74% of the gross balance of notes receivable and our consolidated allowance for doubtful accounts on accounts receivable was 8% of the gross balance of accounts receivable. We still experience specific problems with troubled franchisees (see Critical Accounting Policies — Franchise and Licensed Operations) and may be required to increase the amount of our allowances for doubtful accounts and/or increase the amount of our estimated liability for future lease obligations. The result of increasing the allowance for doubtful accounts is an effective royalty rate lower than our standard contractual royalty rate.

Effective royalty rate reflects royalties deemed collectible as a percent of franchise generated revenue for all franchisees for which we are recognizing revenue. For the trailing 13 periods ended November 3, 2003, the effective royalty rates for domestic Carl’s Jr. and Hardee’s were 3.7% and 3.6%, respectively.

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CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

Repositioning Activity

In late fiscal 2000, we embarked on a refranchising initiative to generate cash to reduce outstanding borrowings on our senior credit facility, as well as increase the number of franchise-operated restaurants. Additionally, as sales trends for the Hardee’s restaurants and certain Carl’s Jr. restaurants (primarily in the Oklahoma area) continued to decline in fiscal 2000 through fiscal 2001, we determined that it was necessary to close certain restaurants for which a return to profitability was not likely. We have made reductions to operating expenses in an effort to bring them to levels commensurate with our re-balanced restaurant portfolio.

During the twelve week periods ended November 3, 2003 and November 4, 2002, and the forty week periods ended November 3, 2003 and November 4, 2002, we recorded repositioning charges of $1,301, $765, $3,193 and $5,827, respectively, which were primarily non-cash in nature and are classified in the Condensed Consolidated Statements of Operations as facility action charges, net.

We have completed substantial repositioning activities, including the closure of under-performing restaurants, and are now able to focus on the operations of our core brands, Carl’s Jr., Hardee’s and La Salsa. However, we may determine in the future that additional repositioning activities will be necessary or we may take advantage of opportunities to generate funds through additional restaurant asset sales, which could result in material losses.

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CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

Financial Comparison

Our results reflect the substantial changes we have made in executing our business turnaround including the sale and closure of under-performing restaurants and efforts to contain corporate overhead, improve margins and pay down bank indebtedness. The table below is a condensed presentation of those activities, and other changes in the components of income, designed to facilitate the discussion of results in this Form 10-Q.

			(All amounts are approximate and in millions)
			Third Fiscal Quarter			Year-To-Date
Current Year:
	Net income (A)		$	2.2		$	2.6
Prior Year:
	Net income (loss)		$	9.5		$	(142.3	)
		Cumulative effect of accounting change for goodwill		—			175.8
	Income before cumulative effect of accounting change for goodwill (B)		$	9.5		$	33.5
	Decrease in income before cumulative effect of accounting change for goodwill (A-B)		$	(7.3	)	$	(30.9	)

		(All amounts are approximate and in millions)
		Third Quarter
		Fiscal Year 2004 vs.			Year-To-Date Fiscal Year
		Third Quarter			2004 vs. Year - To-Date
		Fiscal Year 2003			Fiscal Year 2003
Items causing earnings to increase (decrease) from the prior year to the current year:
	Approximate impact of sales increases and restaurant margin rate reduction in restaurants operated (other than SBRG brands) at November 3, 2003	$	1.5		$	(14.6	)
	Gain on sales of investments and repurchases of convertible subordinated notes		(4.6	)		(12.1	)
	Decrease in corporate overhead		1.1			6.5
	Prior year income tax credits and other changes in provision for income tax		(5.6	)		(8.8	)
	Increase (decrease) in net franchising income and distribution centers, excluding provision for doubtful accounts		0.3			(2.6	)
	Increase in provision for doubtful accounts		(0.2	)		(2.8	)
	(Increase) decrease in facility action charges		(0.5	)		2.6
	Increase/(decrease) in income/(loss) from discontinued operations		0.7			(1.4	)
	(Increase) decrease in costs of insurance programs		0.6			(0.2	)
	(Increase) decrease in interest expense		(0.4	)		1.2
	Increase in litigation claims expense		(0.1	)		(0.9	)
	Operating loss of SBRG restaurants		(0.6	)		(1.3	)
	Decrease in advertising expenses, excluding restaurants involved in facility actions		0.9			1.1
	Operating income of restaurants involved in facility actions, including related field general and administrative expenses and advertising costs		—			0.3
	All other, net		(0.4	)		2.1
Decrease in income before cumulative effect of accounting change for goodwill		$	(7.3	)	$	(30.9	)

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CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

Operating Review

The following tables are presented to facilitate Management’s Discussion and Analysis and are presented in the same format in which we present segment information (See Note 7 of Notes to Condensed Consolidated Financial Statements).

			Twelve Weeks Ended November 3, 2003
			Carl’s Jr.			Hardee’s			La Salsa			Other (A)			Total
Company-operated revenue			$	120,926		$	139,944		$	9,827		$	329		$	271,026
Company-operated average unit volume (trailing 13 periods)				1,172			771			723
Franchise-operated average unit volume (trailing 13 periods)				1,069			815			689
Average check (B)				5.53			4.35			8.80
Company-operated same-store sales increase (decrease) (C)				5.4	%		6.8	%		(2.6	)%
Company-operated same-store transactions decrease (D)				(1.2	)%		(3.5	)%		(1.9	)%
Franchise-operated same-store sales increase (C)				2.6	%		6.3	%		1.3	%
Operating costs as a % of company-operated revenue
	Food and packaging			28.7	%		31.5	%		27.5	%
	Payroll and employee benefits			29.0	%		34.5	%		33.5	%
	Occupancy and other operating costs			21.6	%		22.1	%		32.8	%
	Restaurant level margin			20.7	%		11.9	%		6.2	%
Advertising as a percentage of company-operated revenue				6.4	%		6.1	%		4.9	%
Franchising revenue:
	Royalties		$	5,054		$	9,273		$	360		$	72		$	14,759
	Distribution centers			35,859			6,459			—			—			42,318
	Rent			4,606			1,666			—			—			6,272
	Other			295			107			—			—			402
		Total franchising revenue		45,814			17,505			360			72			63,751
Franchising expense:
	Administrative expense (including provision for bad debts)			549			1,947			312			—			2,808
	Distribution centers			35,255			6,027			—			—			41,282
	Rent & other occupancy			4,787			1,085			—			—			5,872
		Total franchising expense		40,591			9,059			312			—			49,962
Net franchising income			$	5,223		$	8,446		$	48		$	72		$	13,789
Facility action charges (gains), net			$	(153	)	$	1,380		$	—		$	74		$	1,301
Operating income (loss)			$	13,019		$	77		$	(641	)	$	(189	)	$	12,266

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CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

			Twelve Weeks Ended November 4, 2002
			Carl’s Jr.			Hardee’s			La Salsa			Other (A)			Total
Company-operated revenue			$	113,783		$	131,987		$	9,701		$	394		$	255,865
Company-operated average unit volume (trailing 13 periods)				1,146			775			779
Franchise-operated average unit volume (trailing 13 periods)				1,050			819			819
Average check (B)				5.14			3.94			8.80
Company-operated same-store sales increase (decrease) (C)				(5.0	)%		(3.5	)%		0.8	%
Company-operated same-store transactions increase (decrease) (D)				(5.8	)%		(8.2	)%		1.3	%
Franchise-operated same-store sales increase (decrease) (C)				(6.2	)%		(4.7	)%		4.2	%
Operating costs as a % of company-operated revenue
	Food and packaging			27.8	%		29.8	%		27.4	%
	Payroll and employee benefits			29.2	%		34.1	%		30.8	%
	Occupancy and other operating costs			23.2	%		23.0	%		27.8	%
	Restaurant level margin			19.8	%		13.1	%		14.0	%
Advertising as a percentage of company-operated revenue				6.8	%		6.5	%		3.3	%
Franchising revenue:
	Royalties		$	4,679		$	8,728		$	301		$	80		$	13,788
	Distribution centers			31,956			4,723			—			—			36,679
	Rent			3,453			2,718			—			—			6,171
	Other			121			205			—			—			326
		Total franchising revenue		40,209			16,374			301			80			56,964
Franchising expense:
	Administrative expense (including provision for bad debts)			598			1,350			86			—			2,034
	Distribution centers			31,066			4,682			—			—			35,748
	Rent & other occupancy			3,178			2,145			—			—			5,323
		Total franchising expense		34,842			8,177			86			—			43,105
Net franchising income			$	5,367		$	8,197		$	215		$	80		$	13,859
Facility action charges, net			$	103		$	662		$	—		$	—		$	765
Operating income (loss)			$	10,558		$	(94	)	$	14		$	(128	)	$	10,350

33

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

				Forty Weeks Ended November 3, 2003
				Carl’s Jr.			Hardee’s			La Salsa			Other (A)			Total
Company-operated revenue				$	401,002		$	446,168		$	32,962		$	1,105		$	881,237
Average check (B)					5.46			4.28			9.10
Company-operated same-store sales increase (decrease) (C)					2.2	%		0.8	%		(2.1	)%
Company-operated same-store transactions decrease (D)					(1.5	)%		(7.2	)%		(3.7	)%
Franchise-operated same-store sales increase (decrease) (C)					(0.3	)%		(0.5	)%		1.6	%
Operating costs as a % of company-operated revenue
	Food and packaging				28.5	%		31.2	%		26.5	%
	Payroll and employee benefits				28.8	%		35.4	%		31.7	%
	Occupancy and other operating costs				21.6	%		23.2	%		32.4	%
		Restaurant-level margin			21.1	%		10.2	%		9.4	%
Advertising as a percentage of company-operated revenue					6.4	%		6.2	%		2.9	%
Franchising revenue:
		Royalties		$	16,701		$	28,937		$	1,196		$	243		$	47,077
		Distribution centers			118,780			17,526			—			—			136,306
		Rent			16,629			5,865			—			—			22,494
		Other			652			288			—			—			940
			Total franchising revenue		152,762			52,616			1,196			243			206,817
Franchising expense:
		Administrative expense (including provision for bad debts)			2,885			5,010			576			—			8,471
		Distribution centers			116,026			17,284			—			—			133,310
		Rent & other occupancy			16,440			5,155			—			—			21,595
			Total franchising expense		135,351			27,449			576			—			163,376
Net franchising income				$	17,411		$	25,167		$	620		$	243		$	43,441
Facility action charges (gains), net				$	(456	)	$	4,128		$	194		$	(673	)	$	3,193
Operating income (loss)				$	46,894		$	(9,580	)	$	(802	)	$	302		$	36,814

34

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

				Forty Weeks Ended November 4, 2002
				Carl’s Jr.			Hardee’s			La Salsa			Other (A)			Total
Company-operated revenue				$	391,009		$	446,153		$	28,813		$	1,169		$	867,144
Average check (B)					5.25			3.95			8.90
Company-operated same-store sales increase (decrease) (C)					0.3	%		(1.3	)%		1.2	%
Company-operated same-store transactions decrease (D)					(4.4	)%		(6.9	)%		(0.5	)%
Franchise-operated same-store sales increase (decrease) (C)					0.5	%		(2.1	)%		1.8	%
Operating costs as a % of company-operated revenue
	Food and packaging				27.9	%		29.7	%		27.0	%
	Payroll and employee benefits				28.7	%		35.0	%		31.5	%
	Occupancy and other operating costs				21.2	%		22.5	%		26.6	%
	Restaurant level margin				22.2	%		12.8	%		14.9	%
Advertising as a percentage of company-operated revenue					6.8	%		6.2	%		3.3	%
Franchising revenue:
	Royalties			$	15,704		$	30,228		$	1,037		$	275		$	47,244
	Distribution centers				111,796			13,619			—			—			125,415
	Rent				14,939			9,141			—			—			24,080
	Other				516			398			—			—			914
			Total franchising revenue		142,955			53,386			1,037			275			197,653
Franchising expense:
	Administrative expense (including provision for bad debts)				1,914			3,806			302			—			6,022
	Distribution centers				108,837			13,495			—			—			122,332
	Rent & other occupancy				14,603			7,604			—			—			22,207
		Total franchising expense			125,354			24,905			302			—			150,561
Net franchising income				$	17,601		$	28,481		$	735		$	275		$	47,092
Facility action charges, net				$	1,344		$	4,483		$	—		$	—		$	5,827
Operating income (loss)				$	45,402		$	674		$	535		$	(221	)	$	46,390

(A) “Other” consists of Green Burrito. Additionally, amounts that we do not believe would be proper to allocate to the operating segments are included in “Other” (i.e., gains or losses on sales of long-term investments).

(B) Average check represents total restaurant sales divided by total transactions for any given period. The average check is viewed in conjunction with same-store sales and same-store transactions, as defined below. This indicator, when viewed with other measures, may illustrate revenue growth or decline resulting from a change in menu or price offering. When we introduce menu items or pricing initiatives with higher or lower price points than the existing menu base, the average check may reflect the benefit or impact from these new items or pricing on the average price paid by the consumer.

(C) Same-store sales is a key performance indicator in our industry. This indicator is a measure of revenue growth on the existing comparable store base of a multi-unit chain company such as ours and is measured as a percentage variance over the same fiscal period in the prior year. Same-store sales illustrate how competitive forces and external economic conditions benefit or impact us, as well as any benefit from the diverse value propositions and marketing initiatives undertaken by us. In calculating same-store sales, we include restaurants open for 14 full accounting periods, which allows for a year-over-year comparison.

(D) Same-store transactions represent the number of consumer visits to our restaurants. Transactions are viewed on the same basis as same-store sales above and are another key performance indicator in our industry. This indicator is a measure of consumer frequency in the existing comparable store base and is measured as a percentage variance over the same fiscal period in the prior year. Same-store transactions are another measure of the effects of competitive forces and economic conditions on consumer behavior and resulting benefit, or

35

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

impact, to us. Transactions also reflect any benefit from the diverse value propositions and marketing initiatives undertaken by us.

Presentation of Non-GAAP Measurements

EBITDA

EBITDA is a typical non-GAAP measurement for companies that issue public debt. We believe EBITDA is useful to our investors as an indicator of earnings available to service debt. EBITDA is not a recognized term under GAAP and does not purport to be an alternative to income from operations, an indicator of cash flow from operations or a measure of liquidity. We calculate EBITDA as income (loss) from continuing operations before interest expense, income taxes, depreciation and amortization. Because not all companies calculate EBITDA identically, this presentation of EBITDA may not be comparable to similarly titled measures of other companies. Additionally, EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as interest expense, income taxes and debt service payments.

	Twelve Weeks Ended November 3, 2003
	Carl’s Jr.		Hardee’s			La Salsa			Other			Total
Income (loss) from continuing operations	$	11,080	$	(8,523	)	$	(652	)	$	146		$	2,051
Interest expense		2,080		7,886			(18	)		(1	)		9,947
Income tax (benefit) expense		39		(34	)		—			187			192
Depreciation and amortization		6,281		8,237			720			41			15,279
EBITDA	$	19,480	$	7,566		$	50		$	373		$	27,469

	Twelve Weeks Ended November 4, 2002
	Carl’s Jr.			Hardee’s			La Salsa		Other			Total
Income (loss) from continuing operations	$	10,482		$	(3,393	)	$	—	$	2,970		$	10,059
Interest expense		1,573			8,001			14		—			9,588
Income tax benefit		(1,029	)		(4,342	)		—		(22	)		(5,393	)
Depreciation and amortization		5,910			7,797			652		41			14,400
EBITDA	$	16,936		$	8,063		$	666	$	2,989		$	28,654

	Forty Weeks Ended November 3, 2003
	Carl’s Jr.		Hardee’s			La Salsa			Other			Total
Income (loss) from continuing operations	$	42,570	$	(37,726	)	$	(812	)	$	524		$	4,556
Interest expense		4,960		26,243			(45	)		(9	)		31,149
Income tax (benefit) expense		99		79			—			444			622
Depreciation and amortization		19,657		26,918			2,632			140			49,347
EBITDA	$	67,286	$	15,514		$	1,775		$	1,099		$	85,674

	Forty Weeks Ended November 4, 2002
	Carl’s Jr.			Hardee’s			La Salsa		Other			Total
Income (loss) from continuing operations	$	43,630		$	(18,843	)	$	517	$	8,714		$	34,018
Interest expense		5,114			27,189			18		—			32,321
Income tax benefit		(2,393	)		(5,721	)		—		(29	)		(8,143	)
Depreciation and amortization		19,968			25,987			1,932		126			48,013
EBITDA	$	66,319		$	28,612		$	2,467	$	8,811		$	106,209

36

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

The following table reconciles EBITDA (a non-GAAP measurement) to cash flow provided by operating activities (a GAAP measurement):

	Twelve Weeks Ended						Forty Weeks Ended
	November 3, 2003			November 4, 2002			November 3, 2003			November 4, 2002
Cash flow provided by operating activities	$	17,278		$	9,514		$	63,103		$	73,272
Interest expense		9,947			9,588			31,149			32,321
Income tax expense (benefit)		192			(5,393	)		622			(8,143	)
Amortization of loan fees		(1,082	)		(1,034	)		(3,618	)		(3,199	)
(Provision for) recovery of losses on accounts and notes receivable		114			554			(1,980	)		793
Gain (loss) on investments, sales of property and equipment, capital leases and extinguishment of debt		(452	)		4,314			(541	)		10,811
Facility action charges, net		(1,301	)		(765	)		(3,193	)		(5,827	)
Other non-cash items		225			418			383			(8	)
Income tax refund accrued		—			5,131			—			8,852
Change in estimated liability for closing restaurants and estimated liability for self-insurance		(1,108	)		4,416			4,694			14,732
Income tax refund received		(84	)		(5,703	)		(723	)		(12,724	)
Net change in receivables, inventories, prepaid expenses and other current assets		(4,772	)		1,548			(10,592	)		875
Net change in accounts payable and other current liabilities		8,490			5,737			6,133			(7,780	)
EBITDA from discontinued operations		90			(586	)		(2,002	)		(594	)
Cash provided to discontinued segment		22			329			237			2,234
EBITDA		27,559			28,068			83,672			105,615
EBITDA from discontinued operations		(90	)		586			2,002			594
EBITDA provided by continuing operations	$	27,469		$	28,654		$	85,674		$	106,209

Carl’s Jr.

During the twelve weeks ended November 3, 2003, we closed three Carl’s Jr. restaurants and opened one Carl’s Jr. restaurant. During the same period, Carl’s Jr. franchisees and licensees opened nine restaurants and closed four restaurants. During the forty weeks ended November 3, 2003, we opened four Carl’s Jr. restaurants and closed four Carl’s Jr. restaurants. During the same period, Carl’s Jr. franchisees and licensees opened 24 restaurants and closed eight restaurants. The following table shows the change in the Carl’s Jr. restaurant portfolio, as well as the change in revenue for both the current quarter and the year-to-date:

	Restaurant Portfolio						Revenue
	Third Fiscal Quarter						Third Fiscal Quarter						Year-to-Date
	2004		2003		Change		2004		2003		Change		2004		2003		Change
Company		440		439		1	$	120,926	$	113,783	$	7,143	$	401,002	$	391,009	$	9,993
Franchised and licensed		563		542		21		45,814		40,209		5,605		152,762		142,955		9,807
Total		1,003		981		22	$	166,740	$	153,992	$	12,748	$	553,764	$	533,964	$	19,800

Same-store sales for company-operated Carl’s Jr. restaurants increased 5.4% during the twelve weeks ended November 3, 2003. Revenue from company-operated restaurants increased $7,143, or 6.3%, during that period. The increase in company-operated restaurant revenue is due to the increase in same-store sales and the opening of five new restaurants during the past year, partially offset by the closure of two restaurants during that time. The average check during the twelve weeks ended November 3, 2003 was $5.53, as compared to $5.14 during the twelve weeks

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CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

ended November 4, 2002, primarily due to our shift to premium products and a small price increase implemented earlier in the year.

Same-store sales for company-operated Carl’s Jr. restaurants increased 2.2% during the forty weeks ended November 3, 2003. Revenue from company-operated restaurants increased $9,993, or 2.6%, during that period. The increase in company-operated restaurant revenue is due to the increase in same-store sales and the increase in restaurant count during the past year.

Net franchising income decreased $144, or 2.7%, to $5,223 during the twelve weeks ended November 3, 2003, from $5,367 during the twelve weeks ended November 4, 2002. The decrease is primarily due to a decrease in net rental income from properties subleased to franchisees and a slight decrease in our distribution business operating margin due to increased commodity costs, partially offset by an increase in royalty revenue.

Net franchising income decreased $190, or 1.1%, to $17,411 during the forty weeks ended November 3, 2003, from $17,601 during the forty weeks ended November 4, 2002. The decrease is the result of a slight decrease in our distribution center operating margin due to increased commodity costs and increased administrative expenses, significantly offset by an increase in royalty revenue.

Although not required to do so, approximately 98% of Carl’s Jr. franchised and licensed restaurants purchase food, paper and other supplies from us.

The changes in restaurant-level margins are explained as follows:

		Twelve			Forty
		Weeks Ended			Weeks Ended
		November 3, 2003			November 3, 2003
Restaurant-level margins for the period ended November 4, 2002			19.8	%		22.2	%
	Increase in food and packaging costs		(0.9	)%		(0.6	)%
	(Increase) decrease in utility costs		0.7	%		(0.3	)%
	(Increase) decrease rent expense, property taxes and licenses		0.4	%		(0.2	)%
	Decrease in salaries, wages and incentive compensation		0.5	%		0.1	%
	(Increase) decrease in general liability insurance expense		0.2	%		(0.4	)%
	Increase in workers’ compensation insurance expense		(0.1	)%		(0.2	)%
	Decrease in equipment lease expense		0.1	%		0.3	%
	Other, net		—	%		0.2	%
Restaurant-level margins for the period ended November 3, 2003			20.7	%		21.1	%

Food and packaging costs increased over the prior year comparable periods as percents of sales primarily due to increases in the cost of beef and other commodities. We expect that, over time, commodity prices will decrease; however, we can provide no assurance that this will occur. The current quarter decrease and year-to-date increase in utility costs reflects the higher electricity rates incurred during the transition from Enron to our new energy supplier in the prior year third quarter and the overall increase in electricity expenses discussed further below.

Rent, property tax and license expenses decreased primarily due to the designation of certain leases as capital leases during the current year third quarter. Salaries, wages and incentive compensation decreased in the current quarter mainly due to leverage from increased sales, partially offset by higher general manager bonus expense.

General liability insurance expense increased during the forty weeks ended November 3, 2003 over the prior year comparable period as a percent of sales primarily due to a $1,700 credit during the prior year, compared to an approximate $500 credit during the current year. These decreases are based on actuarial analyses of our reserves and reflect dispositions of general liability claims more favorable than previously anticipated.

Previously, we had a fixed-rate contract with Enron to supply energy to a majority of our California Carl’s Jr. restaurants. As part of its bankruptcy reorganization, Enron rejected that contract during the third quarter of fiscal 2003. In connection with Enron rejecting our fixed-rate contract, we have filed bankruptcy court claims totaling

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CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

$14,204 against Enron. At this time, we cannot make a determination as to the potential recovery, if any, with respect to these claims, and accordingly, no recognition of this uncertainty has been recorded in our condensed consolidated financial statements.

To replace the Enron contract, we entered into a fixed-rate contract with another energy supplier, which took full effect in the fourth quarter of fiscal 2003. During the third quarter of fiscal 2003, while neither of the two fixed-rated contracts was in effect and we experienced transitional billing complications, we temporarily incurred energy costs exceeding the rates for either of the two contracts.

The new fixed-rate contract resulted in an annual energy cost increase of approximately $1,200. In addition, our energy costs have increased further over the prior year due to State of California efforts to recoup higher prices paid to energy suppliers following California’s electricity crisis in 2001. We believe the incremental charges from the State of California will increase our fiscal 2004 energy costs by up to $2,000. We are uncertain what effect, if any, incremental charges from the State of California will have in years after fiscal 2004.

California Assembly Bill No. 749, signed into law during fiscal 2003 relating to workers’ compensation claims, includes benefit payment increases that will phase in through 2006. We estimate the impact of this legislation will be increased annual costs of approximately $1,000 — $2,000 (see discussion of price increases under “Turnaround Strategy”).

On October 5, 2003, the Governor of California signed Senate Bill 2, known as the “Health Insurance Act of 2003” (“SB 2”), which will require certain California businesses either to pay at least 80% of the premiums for a basic individual health insurance package for its employees who work over 100 hours per month and their families, or to pay a fee into a state fund for the purchase of health insurance for uninsured, low-income workers. California businesses that employ 200 or more employees must comply with the new law beginning on January 1, 2006. We currently do not offer health insurance benefits to our hourly employees. We continue to evaluate the impact of this legislation, which could be material to our results of operations.

Hardee’s

During the twelve weeks ended November 3, 2003, we closed nine Hardee’s restaurants and opened one restaurant. During the same period, Hardee’s franchisees and licensees opened three restaurants and closed 15 restaurants. During the forty weeks ended November 3, 2003, we opened four Hardee’s restaurants and closed 13 restaurants. During the same period, Hardee’s franchisees and licensees opened 12 restaurants and closed 98 restaurants. The following table shows the change in the Hardee’s restaurant portfolio, as well as the change in revenue for both the current quarter and the year-to-date:

	Restaurant Portfolio							Revenue
	Third Fiscal Quarter							Third Fiscal Quarter						Year-to-Date
	2004		2003		Change			2004		2003		Change		2004		2003		Change
Company		721		731		(10	)	$	139,944	$	131,987	$	7,957	$	446,168	$	446,153	$	15
Franchised and licensed		1,413		1,524		(111	)		17,505		16,374		1,131		52,616		53,386		(770	)
Total		2,134		2,255		(121	)	$	157,449	$	148,361	$	9,088	$	498,784	$	499,539	$	(755	)

Same-store sales for company-operated Hardee’s restaurants increased 6.8% during the twelve weeks ended November 3, 2003. Revenue from company-operated Hardee’s restaurants increased $7,957, or 6.0%, during the twelve weeks ended November 3, 2003, as compared to the twelve weeks ended November 4, 2002. This increase is due to the increase in same-store sales and the opening and acquisition of nine restaurants during the past year, partially offset by the closure of 19 restaurants during that time. The average check during the twelve weeks ended November 3, 2003 was $4.35, as compared to $3.94 during the twelve weeks ended November 4, 2002, primarily due to our shift to premium products.

Same-store sales for company-operated Hardee’s restaurants increased 0.8% during the forty weeks ended November 3, 2003. Revenue from company-operated Hardee’s restaurants increased $15, or 0.0%, during the forty

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CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

weeks ended November 3, 2003, as compared to the forty weeks ended November 4, 2002. The increase in company-operated revenue is due to the same-store sales increase, partially offset by the net closure of ten restaurants.

Net franchising income increased $249, or 3.0%, to $8,446 during the twelve weeks ended November 3, 2003, from $8,197 during the twelve weeks ended November 4, 2002, due to increased equipment sales to franchisees and increased royalty revenue, partially offset by increased administrative expenses.

Net franchising income decreased $3,314, or 11.6%, to $25,167 during the forty weeks ended November 3, 2003, from $28,481 during the forty weeks ended November 3, 2002. Royalty revenue and net rental income decreased due to 111 fewer franchise restaurants operating. Royalty revenue was further impacted by reduced sales at franchise restaurants. Additionally, at the end of fiscal 2003, a few franchisees who own and operate a large number of restaurants, and who sublease some of those restaurants from us, became delinquent in their rental and royalty obligations to us. As a result, we did not recognize rental revenue related to these franchisees at the beginning of the current fiscal year. We are currently receiving payments and are therefore recognizing revenue, both rents and royalties, related to most of these large franchisees.

As discussed above (see “Hardee’s Revolution”), we introduced a new menu at Hardee’s during the fourth quarter of fiscal 2003. We determined that significant management and staff training would be required to properly execute the new menu. We also invested in additional labor in the restaurants to ensure outstanding customer service during the training stage of the Revolution. As the training, implementation and introduction of the Revolution have been achieved, we have returned to pre-Revolution staffing levels.

The changes in restaurant-level margins are explained as follows:

		Twelve Weeks			Forty Weeks
		Ended			Ended
		November 3, 2003			November 3, 2003
Restaurant-level margins for the period ended November 4, 2002			13.1	%		12.8	%
	Increase in food and packaging costs		(1.7	)%		(1.5	)%
	Increase in general liability insurance expenses		(0.7	)%		(0.3	)%
	Increase in salaries, benefits, direct labor and bonus expense		—	%		(0.3	)%
	Increase in workers’ compensation insurance expense		(0.4	)%		(0.1	)%
	Decrease in repair and maintenance expenses		0.5	%		0.1	%
	(Increase) decrease in electricity expense		0.3	%		(0.2	)%
	(Increase) decrease in rent, common area maintenance and property taxes		0.2	%		(0.1	)%
	Other, net		0.6	%		(0.2	)%
Restaurant-level margins for the period ended November 3, 2003			11.9	%		10.2	%

Food and packaging costs increased over the prior year comparable periods as percents of sales primarily due to increased beef and other commodity costs and the increased emphasis on premium products associated with the Revolution. General liability and workers compensation insurance expenses increased over the prior year comparable periods primarily due to increased property insurance rates based on claims experience and higher overall insurance costs.

Salaries, benefits, direct labor and bonus expense decreased as a percent of sales during the twelve weeks ended November 3, 2003 primarily due to higher general manager bonuses due to achievement of sales-based bonus goals during the quarter, offset by a slight decrease in benefit costs and labor costs returning to normal levels upon completion of Revolution management and staff training. Labor costs during the forty weeks ended November 3, 2003 include periods earlier in the year during which significant Revolution training costs were being incurred.

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CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

La Salsa

During the twelve weeks ended November 3, 2003, La Salsa franchisees opened one restaurant and closed one restaurant. During the forty weeks ended November 3, 2003, we opened five La Salsa restaurants and closed two La Salsa restaurants. During the same period, La Salsa franchisees opened five restaurants and closed seven restaurants. The following table shows the change in the La Salsa component of our restaurant portfolio, as well as the change in revenue at La Salsa for the current quarter:

		Restaurant Portfolio							Revenue
		Third Fiscal Quarter							Third Fiscal Quarter						Year-To-Date
		2004		2003		Change			2004		2003		Change		2004		2003(1)		Change
Company			60		57		3		$	9,827	$	9,701	$	126	$	32,962	$	28,813	$	4,149
Franchised and licensed			40		41		(1	)		360		301		59		1,196		1,037		159
	Total		100		98		2		$	10,187	$	10,002	$	185	$	34,158	$	29,850	$	4,308

(1) For the period March 1, 2002 through November 4, 2002.

Same-store sales for company-operated La Salsa restaurants decreased 2.6% during the twelve weeks ended November 3, 2003. Revenue from company-operated La Salsa restaurants increased $126, or 1.3%, when compared to the twelve weeks ended November 4, 2002, primarily due to the opening of five new restaurants, partially offset by the closing of two restaurants during the past year and the decrease in same-store sales.

Restaurant-level margins were 6.2% and 14.0% as a percent of company-operated restaurant revenues for the twelve-week periods ended November 3, 2003 and November 4, 2002, respectively. Margins were negatively impacted by approximately 270 basis points as a result of increased labor related to higher costs associated with new restaurant openings and the fixed nature of labor on lower sales at more labor-intensive full service locations. Margins also decreased by approximately 125 basis points as a result of higher repairs and maintenance costs due to completion of maintenance deferred from the prior year and increased utilities and grand opening expenses. Occupancy and other expenses further negatively impacted margins by approximately 360 basis points due to scheduled rent escalations, increased property insurance costs passed through by landlords, higher license costs to obtain full service liquor licenses at several locations, increased depreciation from recent capital expenditures and increased amortization of favorable lease rights.

Same-store sales from company-operated La Salsa restaurants decreased 2.1% during the forty weeks ended November 3, 2003. During the forty weeks ended November 3, 2003, revenue from company-operated La Salsa restaurants increased $4,149, or 14.4%, when compared to the forty weeks ended November 4, 2002, as a result of recording 31 additional days of revenue during that period (we acquired La Salsa on March 1, 2002, resulting in our recording of less than a full forty weeks of revenue during the first three quarters of fiscal 2003) and the opening of five new restaurants, partially offset by the closing of two restaurants during the past year and the decrease in same-store sales.

Restaurant-level margins were 9.4% and 14.9% as a percent of company-operated restaurant revenues for the forty-week period ended November 3, 2003 and the period from March 1, 2002 to November 4, 2002, respectively. Margins were negatively impacted by approximately 260 basis points due to higher repairs and maintenance, due to completion of maintenance deferred from the prior year, and increased utilities and grand opening expenses. Occupancy and other expenses further negatively impacted margins by approximately 320 basis points due to scheduled rent escalations, increased property insurance costs passed through by landlords, and increased depreciation from recent capital expenditures and increased amortization of favorable lease rights. The margin impacts discussed above were partially offset by lower food costs due to discounting activity during the prior year.

Decreases in same-store sales and restaurant level margins may impact the recoverability of the carrying value of a restaurant. We regularly evaluate under-performing restaurants to determine the likelihood we can return them to profitability. In the event that we determine we cannot return an under-performing restaurant to an acceptable level of profitability, we close the restaurant (absent any contractual restrictions preventing us from doing so). We believe

41

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

the potential closing of any restaurants currently identified as under-performing would not have a material impact on the valuation of the goodwill associated with the acquisition of La Salsa.

Advertising Expense

Advertising expenses increased $9, or 0.1%, to $16,719 during the twelve weeks ended November 3, 2003, and decreased $1,170, or 2.1%, to $54,302 during the forty weeks ended November 3, 2003. Advertising expenses as a percentage of company-operated restaurant revenue decreased marginally from 6.5% to 6.2% during the twelve weeks ended November 3, 2003, and decreased marginally from 6.4% to 6.2% during the forty weeks ended November 4, 2003, as compared to the prior year periods, primarily due to the management decision to slightly reduce advertising spending as a percentage of sales.

General and Administrative Expense

General and administrative expenses were 7.7% of total revenue during the twelve weeks ended November 3, 2003, as compared to 8.7% during the twelve weeks ended November 4, 2002. General and administrative expenses decreased $1,494, or 5.5%, to $25,777 during the twelve weeks ended November 3, 2003, as compared to the same period last year. This decrease is primarily due to reduced incentive compensation expense and relocation expense partially offset by increased regional general and administrative costs and supply costs.

General and administrative expenses were 7.6% of total revenue during the forty weeks ended November 3, 2003, as compared to 8.3% during the forty weeks ended November 4, 2002. General and administrative expenses decreased $6,060, or 6.9%, to $82,232 during the forty weeks ended November 3, 2003, as compared to the forty weeks ended November 4, 2002. This decrease is primarily due to reduced salary expense, incentive compensation, relocation and telephone expense, partially offset by increased regional general and administrative costs and legal expense.

Interest Expense

During the twelve weeks ended November 3, 2003, interest expense increased $359, or 3.7%, to $9,947, as compared to the twelve weeks ended November 4, 2002, primarily as a result of increased interest under capital lease obligations. During the forty weeks ended November 3, 2003, interest expense decreased $1,172, or 3.6%, to $31,149, as compared to the forty weeks ended November 4, 2002, primarily due to the prior year repurchase of our 4.25% convertible subordinated notes due 2004 and a lower average balance on our senior credit facility.

Other Income (Expense), Net

Other income (expense), net, consists of the following:

	Twelve Weeks Ended					Forty Weeks Ended
	November 3, 2003			November 4, 2002		November 3, 2003			November 4, 2002
Gain on the sale of Checkers stock	$	—		$	3,134	$	—		$	8,959
Gain (loss) on the repurchase of convertible subordinated notes		(708	)		728		(708	)		2,442
Other		632			42		221			405
Total other income (expense), net	$	(76	)	$	3,904	$	(487	)	$	11,806

During the twelve weeks ended November 3, 2003, we repurchased $100,000 of our 4.25% Convertible Subordinated Notes due 2004 for $100,708, which included a call premium of $708. As a result, we recorded a loss on repurchase of convertible subordinated notes as listed in the table above.

During fiscal year 2003, we divested our investment in Checkers resulting in gains on the sale of those securities as listed in the table above.

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CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

Additionally, during fiscal year 2003, we repurchased a portion of our 4.25% Convertible Subordinated Notes due 2004. The repurchases of those notes also resulted in the recognition of gains as listed in the table above.

Income Taxes

We recorded income tax expense for the twelve and forty weeks ended November 3, 2003, of $192 and $622, respectively. We recorded an income tax benefit for the twelve and forty weeks ended November 4, 2002, of $5,393 and $8,143, respectively. The income tax benefits were a result of changes in existing tax laws whereby the Company was allowed to carry back certain operating losses to prior years in which the Company had taxable income. We believe that our net operating loss carryforward is such that we will not be required to pay federal income taxes on this fiscal year’s taxable earnings, if any, and have only provided for foreign income taxes. Our deferred tax assets net to $0 due to our valuation allowance of approximately $164,000 at January 31, 2003.

At November 3, 2003, we had a federal net operating loss (“NOL”) carryforward of approximately $83,400, expiring in varying amounts in the years 2021 through 2023 and state NOL carryforwards totalling $71,500 expiring in the years 2006 through 2023. We have federal NOL carryforwards for alternative minimum tax purposes of approximately $61,235. Additionally, we have an alternative minimum tax credit carryforward of approximately $7,300. We have generated general business credit carryforwards of approximately $9,700, expiring in varying amounts in the years 2020 through 2023, and foreign tax credits in the amount of $1,400, which expire in the years 2005 through 2008.

Liquidity and Capital Resources

We have historically financed our business through cash flow from operations, borrowings under our credit facility and the sale of restaurants. Our most significant cash uses during the next 12 months will arise primarily from funding of our capital expenditures. The revolving credit facility portion of our senior credit facility (“Facility”), as amended and restated on November 12, 2003, matures on November 15, 2006. We anticipate that existing cash balances, availability under the Facility and cash generated from operations will be sufficient to service existing debt and to meet our operating and capital requirements for the next 12 months. Additionally, we are able to sell restaurants as a source of liquidity, although we have no intention to do so significantly at this time. We have no potential mandatory payments of principal on our $105,000 of 4% Convertible Subordinated Notes due 2023 until October 1, 2008 (see discussion below). We have no mandatory payments of principal on the $200,000 of 9.125% Senior Subordinated Notes due 2009 outstanding prior to their final maturity in 2009.

We, and the restaurant industry in general, maintain relatively low levels of accounts receivable and inventories, and vendors grant trade credit for purchases such as food and supplies. We also continually invest in our business through the addition of new sites and the refurbishment of existing sites, which are reflected as long-term assets and not as part of working capital. As a result, we typically maintain current liabilities in excess of current assets, resulting in a working capital deficit. As of November 3, 2003, our current ratio was .6 to 1.

We use the Facility to fund letters of credit required for our self-insurance programs. Additionally, the Facility provides working capital during those periods when seasonality affects our cash flow. The Facility currently permits borrowings of up to $175,000, including a $25,000 term loan issued on that date and due April 1, 2008, and an $80,000 letter of credit sub-facility. The principal amount of the term loan will be repaid in quarterly installments maturing on April 1, 2008. As of November 3, 2003 (prior to amendment and restatement of the Facility), we had $0 in cash borrowings outstanding under our Facility and $62,481 outstanding on standby letters of credit. Upon the closing of the amended and restated facility, we had $25,000 outstanding under the term loan, $63,502 of outstanding letters of credit and borrowing availability of $86,498. Borrowings bear interest at either the LIBOR rate plus an applicable margin or the Prime Rate plus an applicable margin, with interest due monthly. The applicable interest rate on the Facility at November 3, 2003 is the Prime Rate plus 2.25%, or 6.25% per annum. The applicable interest rate on the term loan portion of the newly amended and restated Facility is LIBOR plus 3.75%, or 4.86%.

The agreement underlying the Facility includes certain restrictive covenants. Among other things, these covenants restrict our ability to incur debt, incur liens on our assets, make any significant change in our corporate structure or the nature of our business, dispose of assets in the collateral pool securing the Facility, prepay certain debt, engage

43

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

in a change of control transaction without the member banks’ consents, pay dividends and make investments or acquisitions.

Subject to the terms of the agreement, we may make capital expenditures of $55,000 during the current fiscal year. In future years, we may make capital expenditures in the amount of $45,000 plus 80% of the amount of actual EBITDA (as defined in the Facility) in excess of $110,000. Additionally, we may carryforward any unused capital expenditure amounts to the following year.

The full text of the contractual requirements imposed by this financing is set forth in the Fifth Amended and Restated Credit Agreement, dated as of November 12, 2003, which we are filing with the Securities and Exchange Commission as an exhibit to this report. We were in compliance with the requirements of the then-existing Facility as of November 3, 2003. Subject in certain instances to cure periods, the lenders under our Facility may demand repayment of borrowings prior to stated maturity upon certain events, including if we breach the terms of the agreement, suffer a material adverse change, engage in a change of control transaction, suffer certain adverse legal judgments, in the event of specified events of insolvency or if we default other significant obligations. In the event the Facility is declared accelerated by the lenders (which can occur only if we are in default under the Facility), our 9.125% Senior Subordinated Notes due 2009 (“Senior Notes”), our 4.25% Convertible Subordinated Notes due 2004 (“2004 Convertible Notes”) and our 4% Convertible Subordinated Notes due 2023 (“2023 Convertible Notes”) may also become accelerated under certain circumstances and after all cure periods have expired.

The 2004 Convertible Notes, which are our unsecured general obligations, are governed by an indenture. The indenture requires that we pay interest at a rate of 4.25% per annum in semiannual installments due each March 15 and September 15, with all outstanding principal due and payable March 15, 2004. We have the right to prepay the notes at any time for an amount equal to principal, accrued interest and a premium, subject to a notice requirement. On November 3, 2003 we prepaid $100,000 of the notes. We intend to repay the remaining outstanding principal balance of $22,319 at their maturity on March 15, 2004, using the proceeds of the term loan portion of the Facility.

On September 29, 2003, we issued $105,000 principal amount of 4% Convertible Subordinated Notes due 2023 (“2023 Convertible Notes”). The 2023 Convertible Notes, which are our unsecured general obligations, are governed by an indenture. The indenture requires that we pay interest at a rate of 4.00% per annum in semiannual coupons due each April 1 and October 1, with all outstanding principal due and payable October 1, 2023. We have the right to prepay the notes after October 1, 2008 for an amount equal to 100% of the principal amount of the notes redeemed plus accrued interest, subject to a notice requirement. The full text of the contractual requirements imposed by this financing is set forth in the related indenture, which we are filing with the Securities and Exchange Commission as an exhibit to this report. The indenture contains certain restrictive covenants. We were in compliance with the covenants of the 2023 Convertible Notes as of November 3, 2003. Subject in certain instances to cure periods, the holders of the 2023 Convertible Notes may demand repayment of these borrowings prior to stated maturity upon certain events, including if we breach the terms of the indenture, in the event of specified events of insolvency, or if other significant obligations are accelerated. On October 1 of 2008, 2013 and 2018, holders of the 2023 Convertible Notes have the right to require us to repurchase all or a portion of the notes at prices specified in the related indenture. The notes are convertible into our common stock on the conditions set forth in the related indenture. The notes were not convertible during the period September 29, 2003 through November 3, 2003. The net proceeds from the issuance of these notes were used to repay a portion of the 2004 Convertible Notes.

The Senior Notes, which are unsecured obligations but are guaranteed by our subsidiaries, are governed by an indenture. The indenture requires that we pay interest at a rate of 9.125% per annum in semi-annual coupons due on each May 1 and November 1, with all outstanding principal due and payable May 1, 2009. We do not have the right to prepay the notes until May 1, 2004, at which time we may prepay the notes for an amount equal to principal, accrued interest and a premium, subject to a notice requirement. The premium from May 1, 2004 to May 1, 2005, is 4.56% of the principal amount redeemed, but reduces annually through May 2007, at which point no premium is payable. The indenture includes certain restrictive covenants, including limitations on our ability to incur debt, incur liens on our assets, make any significant change in our corporate structure or the nature of our business, pay dividends, make investments, dispose of assets and make restricted payments. Restricted payments include certain loans, treasury stock repurchases and voluntary repurchases of outstanding debt. As of November 3, 2003, the remaining amount of permitted restricted payments is $28,183. The full text of the contractual requirements imposed

44

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

by this financing is set forth in the indenture, which has been filed with the Securities and Exchange Commission. We were in compliance with such requirements as of November 3, 2003. Subject in certain instances to cure periods, the holders of the Senior Notes may demand repayment of these borrowings prior to stated maturity upon certain events, including if we breach the terms of the indenture, specified events of insolvency, if we suffer certain adverse legal judgments or if other significant obligations are accelerated.

The terms of the Facility, the 2004 Convertible Notes and the Senior Notes are not dependent on any change in our credit rating. The 2023 Convertible Notes contain a convertibility trigger based on the credit ratings of the notes (see discussion above). We believe the key company-specific factors affecting our ability to maintain our existing debt financing relationships and to access such capital in the future are our present and expected levels of profitability and cash flow from operations, asset collateral bases and the level of our equity capital relative to our debt obligations. In addition, as noted above, our existing agreements include significant restrictions on future financings including, among others, limits on the amount of indebtedness we may incur or which may be secured by any of our assets.

During the forty weeks ended November 3, 2003, cash provided by operating activities was $63,103. Cash used in investing activities during the forty weeks ended November 3, 2003, totaled $14,692, which principally consisted of purchases of property and equipment, partially offset by proceeds from the sale of property and equipment and collections on notes receivable and related party receivables. Cash used in financing activities during the forty weeks ended November 3, 2003, totaled $41,171, which principally consisted of redemption of $100,000 of our 2004 Convertible Notes and repayments of other short-term debt, partially offset by proceeds from the issuance of our 2023 Convertible Notes.

Capital expenditures for the forty weeks ended November 3, 2003 were:

New restaurants (including restaurants under development)
	Carl’s Jr.	$	4,002
	Hardee’s		3,251
	La Salsa		2,834
Remodels/Dual-branding (including construction in process)
	Carl’s Jr.		2,477
	Hardee’s		8,365
Other restaurant additions
	Carl’s Jr.		2,826
	Hardee’s		4,129
	La Salsa		1,802
Capitalized interest			350
Corporate/other			2,959
Total		$	32,995

As of November 3, 2003, we had remodeled 85% of the Hardee’s company-operated restaurants to the Star Hardee’s format and had installed charbroilers in 99% of the company-operated restaurants.

In an effort to improve operations we have relocated several of our corporate facilities. During 2002, we began relocating our executive headquarters to the Santa Barbara, California area. We entered into an agreement to lease a facility in Carpinteria through December 2007. During 2001, we relocated Hardee’s corporate offices to St. Louis, Missouri and entered into a five-year agreement to lease a portion of the facility.

Contractual Obligations

We enter into purchasing contracts and pricing arrangements to control costs for commodities and other items that are subject to price volatility. These arrangements result in unconditional purchase obligations (see further discussion regarding these obligations in “Item 3 — Quantitative and Qualitative Disclosures About Market Risk”) which, as of November 3, 2003, totaled $39,035.

45

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands)

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

Our principal exposure to financial market risks relates to the impact that interest rate changes could have on our Facility. As of November 3, 2003, we had $0 of borrowings and $62,481 of letters of credit outstanding under the Facility. Borrowings under the Facility bear interest at the prime rate or LIBOR plus an applicable margin. A hypothetical increase of 100 basis points in short-term interest rates would result in a reduction in the Company’s annual pre-tax earnings of $625. The estimated reduction is based upon the outstanding balance of the Facility (including outstanding letters of credit) and the weighted-average interest rate for the quarter and assumes no change in the volume, index or composition of debt as in effect November 3, 2003. Substantially all of our business is transacted in U.S. dollars. Accordingly, foreign exchange rate fluctuations have not had a significant impact on us and are not expected to in the foreseeable future.

Commodity Price Risk

We purchase certain products which are affected by commodity prices and are, therefore, subject to price volatility caused by weather, market conditions and other factors which are not considered predictable or within our control. Although many of the products purchased are subject to changes in commodity prices, certain purchasing contracts or pricing arrangements contain risk management techniques designed to minimize price volatility. The purchasing contracts and pricing arrangements we use may result in unconditional purchase obligations, which are not reflected in the consolidated balance sheet. Typically, we use these types of purchasing techniques to control costs as an alternative to directly managing financial instruments to hedge commodity prices. In many cases, we believe we will be able to address material commodity cost increases by adjusting our menu pricing or changing our product delivery strategy. However, increases in commodity prices, without adjustments to our menu prices (see “Turnaround Strategy”), could result in lower restaurant-level operating margins for our restaurant concepts.

46

CKE RESTAURANTS, INC. AND SUBSIDIARIES
CONTROLS AND PROCEDURES

Item 4. Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s “disclosure controls and procedures” as of the end of the period covered by this report, pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 as amended. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this report, were effective in timely alerting them to material information relating to the Company required to be included in the Company’s periodic filings.

There has been no change in the Company’s internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to affect, the Company’s internal control over financial reporting.

47

CKE RESTAURANTS, INC. AND SUBSIDIARIES
OTHER INFORMATION
(Dollars in Thousands)

Part II. Other Information.

Item 2. Changes in Securities and Use of Proceeds.

On September 29, 2003, the Company issued $105,000 principal amount of 4% Convertible Subordinated Notes due 2023 (“2023 Convertible Notes”) in a private placement in reliance upon the exemptions from registration provided by Rule 144A (in that the initial purchasers of the notes met the conditions set forth therein) and Regulation S (in that the notes may be sold in foreign country transactions) promulgated under the Securities Act of 1933, as amended. The initial purchasers of the 2023 Convertible Notes were Citigroup Global Markets, Inc., and BNP Paribas Securities Corp. The aggregate offering price of the 2023 Convertible Notes was $105,000, and the initial purchasers purchased the notes from us at a discount equal to 325 basis points, or $101,588. The 2023 Convertible Notes are convertible into shares of our common stock at an initial conversion rate of 112.4859 shares per $1 principal balance of the notes upon the conditions set forth in the related indenture, which is being filed with the Securities and Exchange Commission as an exhibit to this report. The conversion price is subject to adjustment as described in the indenture.

48

CKE RESTAURANTS, INC. AND SUBSIDIARIES
EXHIBITS AND REPORTS ON FORM 8-K

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits:

Exhibit #	Description
4.6	Indenture, dated as of September 29, 2003, by and between the Company and J.P. Morgan Trust Company, National Association, as Trustee.
4.7	Form of Notes (included in Exhibit 4.6)
4.8	Registration Rights Agreement, dated as of September 29, 2003, by and among the Company and Citigroup Global Markets, Inc., for itself and the other initial purchasers.
10.50	Director Fee Agreement, effective as of April 1, 2003, by and between the Company and William P. Foley, II.*
10.51	Distribution Service Agreement, dated as of November 7, 2003, by and between La Salsa, Inc. and McCabe’s Quality Foods.
10.52	Fifth Amended and Restated Credit Agreement, dated as of November 12, 2003, by and among the Company, the Lenders party thereto, and BNP Paribas, a bank organized under the laws of France acting through its Chicago Branch (as successor in interest to Paribas), as Agent.
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* A management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 15(a)(3) of Form 10-K.

(b) Reports on Form 8-K:

A Current Report on Form 8-K, dated September 17, 2003, was filed during the third quarter of 2004, furnishing the Company’s financial results for the second quarter ended August 11, 2003.

A Current Report on Form 8-K, dated September 22, 2003, was filed during the third quarter of 2004, announcing the Company’s proposed offering of convertible subordinated notes.

A Current Report on Form 8-K, dated September 23, 2003, was filed during the third quarter of 2004, announcing the pricing of the Company’s convertible subordinated notes.

A Current Report on Form 8-K, dated September 29, 2003, was filed during the third quarter of 2004, announcing the closing of $105.0 million of convertible subordinated notes.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CKE RESTAURANTS, INC. (Registrant)
Date: December 10, 2003	/s/ Theodore Abajian
	Theodore Abajian Executive Vice President Chief Financial Officer

49 EX-4.6 3 a94967exv4w6.txt EXHIBIT 4.6 EXHIBIT 4.6 EXECUTION COPY CKE RESTAURANTS, INC. AND ---------------- J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION AS TRUSTEE ---------------- $90,000,000 4% Convertible Subordinated Notes due 2023* ---------------- INDENTURE Dated as of September 29, 2003 - ------------------- * Plus an option to purchase up to $15,000,000 aggregate principal amount of 4% Convertible Subordinated Notes due 2023. TABLE OF CONTENTS

PAGE ---- ARTICLE 1 DEFINITIONS 1 Section 1.01 Definitions................................................ 1 Section 1.02 Other Definitions.......................................... 8 Section 1.03 Incorporation by Reference of Trust Indenture Act.......... 9 Section 1.04 Rules of Construction...................................... 9 ARTICLE 2 THE CONVERTIBLE SUBORDINATED NOTES 10 Section 2.01 Form and Dating............................................ 10 Section 2.02 Execution and Authentication............................... 11 Section 2.03 Registrar, Paying Agent and Conversion Agent............... 12 Section 2.04 Paying Agent to Hold Money in Trust........................ 12 Section 2.05 Holder Lists............................................... 12 Section 2.06 Transfer and Exchange...................................... 13 Section 2.07 Replacement Convertible Subordinated Notes................. 15 Section 2.08 Outstanding Convertible Subordinated Notes................. 15 Section 2.09 When Treasury Convertible Subordinated Notes Disregarded... 16 Section 2.10 Temporary Convertible Subordinated Notes; Transfers of Global Security to Beneficial Owners....................... 16 Section 2.11 Cancellation............................................... 18 Section 2.12 Defaulted Interest......................................... 18 Section 2.13 CUSIP Number............................................... 18 Section 2.14 Regulation S............................................... 19 ARTICLE 3 REDEMPTION AND PURCHASES 19 Section 3.01 Optional Redemption........................................ 19 Section 3.02 Notices to Trustee......................................... 19 Section 3.03 Selection of Convertible Subordinated Notes to Be Redeemed. 19 Section 3.04 Notice of Redemption....................................... 20 Section 3.05 Effect of Notice of Redemption............................. 21 Section 3.06 Deposit of Redemption Price................................ 21 Section 3.07 Convertible Subordinated Notes Redeemed in Part............ 22 Section 3.08 Conversion Arrangement on Call for Redemption.............. 22 Section 3.09 Repurchase of Convertible Subordinated Notes at Option of the Holder................................................. 23

i TABLE OF CONTENTS (CONTINUED)

PAGE ---- Section 3.10 Repurchase Upon Fundamental Change......................... 26 ARTICLE 4 COVENANTS 28 Section 4.01 Payment of Convertible Subordinated Notes.................. 28 Section 4.02 Commission Reports......................................... 29 Section 4.03 Compliance Certificate..................................... 29 Section 4.04 Maintenance of Office or Agency............................ 29 Section 4.05 Continued Existence........................................ 29 Section 4.06 Appointments to Fill Vacancies in Trustee's Office......... 30 Section 4.07 Stay, Extension and Usury Laws............................. 30 Section 4.08 Taxes...................................................... 30 Section 4.09 Investment Company Act..................................... 30 ARTICLE 5 SUCCESSORS 30 Section 5.01 When the Company May Merge, Etc............................ 30 Section 5.02 Successor Corporation Substituted.......................... 31 Section 5.03 Purchase Option on Change of Control....................... 32 ARTICLE 6 DEFAULTS AND REMEDIES 32 Section 6.01 Events of Default.......................................... 32 Section 6.02 Acceleration............................................... 34 Section 6.03 Other Remedies............................................. 34 Section 6.04 Waiver of Past Defaults.................................... 35 Section 6.05 Control by Majority........................................ 35 Section 6.06 Limitation on Suits........................................ 35 Section 6.07 Rights of Holders to Receive Payment....................... 36 Section 6.08 Collection Suit by Trustee................................. 36 Section 6.09 Trustee May File Proofs of Claim........................... 36 Section 6.10 Priorities................................................. 36 Section 6.11 Undertaking for Costs...................................... 37

ii TABLE OF CONTENTS (CONTINUED)

PAGE ---- ARTICLE 7 THE TRUSTEE 37 Section 7.01 Duties of the Trustee...................................... 37 Section 7.02 Rights of the Trustee...................................... 38 Section 7.03 Individual Rights of the Trustee........................... 40 Section 7.04 Trustee's Disclaimer....................................... 40 Section 7.05 Notice of Defaults......................................... 40 Section 7.06 Reports by the Trustee to Holders.......................... 40 Section 7.07 Compensation and Indemnity................................. 41 Section 7.08 Replacement of the Trustee................................. 42 Section 7.09 Successor Trustee by Merger, etc........................... 43 Section 7.10 Eligibility, Disqualification.............................. 43 Section 7.11 Preferential Collection of Claims Against Company.......... 43 ARTICLE 8 SATISFACTION AND DISCHARGE OF INDENTURE 43 Section 8.01 Discharge of Indenture..................................... 43 Section 8.02 Deposited Monies to Be Held in Trust by Trustee............ 44 Section 8.03 Paying Agent to Repay Monies Held.......................... 44 Section 8.04 Return of Unclaimed Monies................................. 44 Section 8.05 Reinstatement.............................................. 45 ARTICLE 9 AMENDMENTS 45 Section 9.01 Without the Consent of Holders............................. 45 Section 9.02 With the Consent of Holders................................ 46 Section 9.03 Compliance With the Trust Indenture Act.................... 47 Section 9.04 Revocation and Effect of Consents.......................... 47 Section 9.05 Notation on or Exchange of Convertible Subordinated Notes.. 48 Section 9.06 Trustee Protected.......................................... 48 ARTICLE 10 GENERAL PROVISIONS 48 Section 10.01 Trust Indenture Act Controls............................... 48 Section 10.02 Notices.................................................... 49 Section 10.03 Communication by Holders With Other Holders................ 49

iii TABLE OF CONTENTS (CONTINUED)

PAGE ---- Section 10.04 Certificate and Opinion as to Conditions Precedent......... 49 Section 10.05 Statements Required in Certificate or Opinion.............. 50 Section 10.06 Rules by Trustee and Agents................................ 50 Section 10.07 Legal Holidays............................................. 51 Section 10.08 No Recourse Against Others................................. 51 Section 10.09 Counterparts............................................... 51 Section 10.10 Other Provisions........................................... 51 Section 10.11 Governing Law.............................................. 52 Section 10.12 No Adverse Interpretation of Other Agreements.............. 52 Section 10.13 Successors................................................. 52 Section 10.14 Severability............................................... 52 Section 10.15 Table of Contents, Headings, etc........................... 52 ARTICLE 11 SUBORDINATION 52 Section 11.01 Agreement to Subordinate................................... 52 Section 11.02 Liquidation; Dissolution; Bankruptcy....................... 53 Section 11.03 Default on Senior Debt and/or Designated Senior Indebtedness............................................... 53 Section 11.04 Acceleration of Convertible Subordinated Notes............. 54 Section 11.05 When Distribution Must Be Paid Over........................ 54 Section 11.06 Notice by Company.......................................... 55 Section 11.07 Subrogation................................................ 55 Section 11.08 Relative Rights............................................ 55 Section 11.09 Subordination May Not Be Impaired by Company............... 56 Section 11.10 Distribution or Notice to Representative................... 56 Section 11.11 Rights of Trustee and Paying Agent......................... 56 Section 11.12 Authorization to Effect Subordination...................... 56 Section 11.13 Article Applicable to Paying Agents........................ 57 Section 11.14 Senior Debt Entitled to Rely............................... 57 Section 11.15 Permitted Payments......................................... 57 ARTICLE 12 CONVERSION OF CONVERTIBLE SUBORDINATED NOTES 57 Section 12.01 Right to Convert........................................... 57 Section 12.02 Exercise of Conversion Privilege; Issuance of Common Stock on Conversion; No Adjustment for Interest or Dividends..... 58 Section 12.03 Cash Payments in Lieu of Fractional Shares................. 60 Section 12.04 Taxes on Shares Issued..................................... 60 Section 12.05 Reservation of Shares; Shares to Be Fully Paid; Listing of Common Stock............................................... 60

iv TABLE OF CONTENTS (CONTINUED)

PAGE ---- Section 12.06 Adjustment for Change in Capital Stock..................... 61 Section 12.07 [Reserved]................................................. 66 Section 12.08 [Reserved]................................................. 66 Section 12.09 When Adjustment May Be Deferred............................ 66 Section 12.10 When No Adjustment is Required............................. 67 Section 12.11 Notice of Adjustment....................................... 67 Section 12.12 Voluntary Increase......................................... 67 Section 12.13 Notice of Certain Transactions............................. 67 Section 12.14 Reorganization of Company; Special Distributions........... 68 Section 12.15 Company Determination Final................................ 69 Section 12.16 Trustee's Adjustment Disclaimer............................ 69 Section 12.17 Simultaneous Adjustments................................... 69 Section 12.18 Successive Adjustments..................................... 69 Section 12.19 Restriction on Common Stock Issuable Upon Conversion....... 69 EXHIBITS Exhibit A Form of Convertible Subordinated Note...................... A-1 Exhibit B Form of Transfer Certificate for Transfer of Restricted Common Stock............................................... B-1

v CROSS-REFERENCE TABLE*

Trust Indenture Indenture Act Section Section ----------- ------- 310(a)(1)............................................................ 7.10 (a)(2).......................................................... 7.10 (a)(3).......................................................... n/a (a)(4).......................................................... n/a (b)............................................................. 7.08, 7.10, 10.02 (c)............................................................. n/a 311(a)............................................................... 7.11 (b)............................................................. 7.11 (c)............................................................. n/a 312(a)............................................................... 2.05 (b)............................................................. 10.03 (c)............................................................. 10.03 313(a)............................................................... 7.06 (b)(1).......................................................... n/a (b)(2).......................................................... 5.7, 7.06 (c)............................................................. 7.06, 10.02 (d)............................................................. 7.06 314(a)............................................................... 4.02, 10.02, 10.05 (b)............................................................. n/a (c)(1).......................................................... 10.04 (c)(2).......................................................... 10.04 (c)(3).......................................................... n/a (d)............................................................. n/a (e)............................................................. 10.05 (f)............................................................. n/a 315(a)............................................................... 7.01(b) (b)............................................................. 7.05, 10.02 (c)............................................................. 7.01(a) (d)............................................................. 7.01(c) (e)............................................................. 6.11 316(a)(last sentence)................................................ 2.09 (a)(1)(A)....................................................... 6.05 (a)(1)(B)....................................................... 6.04 (a)(2).......................................................... n/a (b)............................................................. 11.08 (c)............................................................. 9.04 317(a)(1)............................................................ 6.08 (a)(2).......................................................... 6.09 (b)............................................................. 2.04 318(a)............................................................... 10.01 (b)............................................................. n/a (c)............................................................. 10.01

- ------------------ "n/a" means not applicable. *This Cross-Reference Table shall not, for any purpose, be deemed to be a part of the Indenture. vi THIS INDENTURE, dated as of September 29, 2003, is between CKE Restaurants, Inc., a Delaware corporation (the "Company"), and J.P. Morgan Trust Company, National Association (the "Trustee"). The Company has duly authorized the creation of its 4% Convertible Subordinated Notes due 2023 (the "Convertible Subordinated Notes"), and to provide therefor the Company and the Trustee have duly authorized the execution and delivery of this Indenture. Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the holders from time to time of the Convertible Subordinated Notes: ARTICLE 1 DEFINITIONS SECTION 1.01 Definitions. "Affiliate" means, when used with reference to any person, any other person directly or indirectly controlling, controlled by, or under direct or indirect common control of, the referent person. For the purposes of this definition, "control" when used with respect to any specified person means the power to direct or cause the direction of management or policies of the referent person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. The terms "controlling" and "controlled" have meanings correlative of the foregoing. "Agent" means any Registrar, Paying Agent, Conversion Agent or co-registrar. "Agent Member" means any member of, or participant in, the Depositary. "Business Day" means any day on which banking institutions in the State of New York or the State of California are open for business. "Board of Directors" means the Board of Directors of the Company or any authorized committee of the Board of Directors. "Capital Stock" of any person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such person, but excluding any debt securities convertible into such equity. "Change of Control" means the occurrence of one or more of the following events: (a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of shares representing more than 50% of the combined voting power of the then outstanding Voting Stock of the Company, (b) the Company consolidates with or merges into any other corporation, any other corporation merges into the Company, or the Company effects a share exchange, and, in the case of any such transaction, the outstanding Common Stock of the Company is reclassified into or exchanged for any other property or securities, unless the shareholders of the Company immediately before such transaction own, directly or indirectly immediately following such transaction, at least a majority of the combined voting power of the then outstanding Voting Stock of the corporation resulting from such transaction in substantially the same respective proportions as their ownership of the Voting Stock of the Company immediately before such transaction, (c) the Company or the Company and its subsidiaries, taken 1 as a whole, sells, assigns, conveys, transfers or leases all or substantially all assets of the Company or of the Company and its subsidiaries, taken as a whole, as applicable (other than to one or more wholly-owned subsidiaries of the Company), or (d) any time the Continuing Directors do not constitute a majority of the full Board of Directors of the Company (or, if applicable, a successor corporation to the Company); provided, that a Change of Control under (a), (b) and (c) above shall not be deemed to have occurred if either (y) the Closing Sale Price per share of Common Stock for any five trading days within the period of ten consecutive trading days ending immediately after the later of the Change of Control or the public announcement of the Change of Control (in the case of a Change of Control under clause (a) above) or the period of ten consecutive trading days ending immediately before the Change of Control (in the case of a Change of Control under clause (b) or (c) above) shall equal or exceed 110% of the conversion price in effect on the date of such Change of Control or the public announcement of such Change of Control, as applicable or (z) at least 90% of the consideration (excluding cash payments for fractional shares) in the transaction or transactions constituting the Change of Control consists of shares of common stock that are, or upon issuance will be, traded on the New York Stock Exchange or quoted on The Nasdaq National Market and, as a result of the transaction, the Convertible Subordinated Notes become convertible solely into such common stock. "Closing Sale Price" of a security on any trading day means (a) the last reported per share sale price (or, if the last sale price is not reported, the average bid and ask prices or, if more than one in either case, the average of the bid and the average ask prices) on such date as reported on The New York Stock Exchange or if such security is not then listed on The New York Stock Exchange, then as reported by the principal U.S. exchange or quotation system on which such security is then listed or quoted or (b) in the absence of such quotation, such price as the Company shall determine on the basis of such quotations as the Company considers appropriate. "Commission" means the Securities and Exchange Commission. "Common Stock" means any stock of any class of the Company which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which is not subject to redemption by the Company. Subject to the provisions of Section 12.14, however, shares issuable on conversion of Convertible Subordinated Notes shall include only shares of the class designated as Common Stock of the Company at the date of this Indenture or shares of any class or classes resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which are not subject to redemption by the Company; provided that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications. "Company" means the party named as such above until a successor replaces it in accordance with Article 5 and thereafter means the successor. References to the Company shall not include any subsidiary. 2 "Continuing Directors" means, as of any date of determination, any member of the Board of Directors who (i) was a member of such Board of Directors on the date of this Indenture or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election. "conversion price" has the meaning specified in paragraph 9 of the Convertible Subordinated Notes. "Convertible Subordinated Notes" means the 4% Convertible Subordinated Notes due 2023 issued, authenticated and delivered under this Indenture. "Corporate Trust Office" means the corporate trust office of the Trustee at which at any particular time the trust created by this Indenture shall principally be administered; as of the date hereof, the Corporate Trust Office is located at 560 Mission St., Floor 13, San Francisco, CA 94105. "Default" means any event that is, or after notice or passage of time, or both, would be, an Event of Default. "Depositary" means, with respect to any Global Securities, a clearing agency that is registered as such under the Exchange Act and is designated by the Company to act as Depositary for such Global Securities (or any successor securities clearing agency so registered), which shall initially be DTC. "Designated Senior Indebtedness" means (a) the Senior Credit Facility and (ii) any particular Senior Debt which has at the time of the giving of the Payment Blockage Notice an aggregate outstanding principal amount in excess of $25 million, if the instrument creating or evidencing the same or the assumption or guarantee thereof (or related agreements or documents to which the Company is a party) expressly provides that such Indebtedness shall be "Designated Senior Indebtedness" for purposes of the Indenture (provided that such instrument, agreement or other document may place limitations and conditions on the right of such Senior Debt to exercise the rights of Designated Senior Indebtedness.) "DTC" means The Depository Trust Company, a New York corporation. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "Ex-Dividend Date" for any issuance or distribution means the date immediately prior to the commencement of "ex-dividend" trading for such issuance or distribution on The New York Stock Exchange or the principal U.S. exchange or quotation system on which the Common Stock is then listed or quoted. "fair market value" means the amount which a willing buyer would pay an unaffiliated willing seller in an arm's length transaction. 3 "Fundamental Change" means the occurrence of a Change of Control or a Termination of Trading. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, which are in effect from time to time. "Global Securities Legend" means the legend labeled as such and that is set forth in Exhibit A hereto. "Indebtedness" means, with respect to any person, all obligations, whether or not contingent, of such person (i) (a) for borrowed money (including, but not limited to, any indebtedness secured by a security interest, mortgage or other lien on the assets of the Company that is (1) given to secure all or part of the purchase price of property subject thereto, whether given to the vendor of such property or to another, or (2) existing on property at the time of acquisition thereof), (b) evidenced by a note, debenture, bond or other written instrument, (c) under a lease required to be capitalized on the balance sheet of the lessee under GAAP or under any lease or related document (including a purchase agreement) that provides that the Company is contractually obligated to purchase or cause a third party to purchase and thereby guarantee a minimum residual value of the lease property to the lessor and the obligations of the Company under such lease or related document to purchase or to cause a third party to purchase such leased property, (d) in respect of letters of credit, bank guarantees or bankers' acceptances (including reimbursement obligations with respect to any of the foregoing), (e) with respect to indebtedness secured by a mortgage, pledge, lien, encumbrance, charge or adverse claim affecting title or resulting in an encumbrance to which the property or assets of such person are subject, whether or not the obligation secured thereby shall have been assumed by or shall otherwise be such person's legal liability, (f) in respect of the balance of deferred and unpaid purchase price of any property or assets, (g) under interest rate or currency swap agreements, cap, floor and collar agreements, spot and forward contracts and similar agreements and arrangements; (ii) with respect to any obligation of others of the type described in the preceding clause (i) or under clause (iii) below assumed by or guaranteed in any manner by such person through an agreement to purchase (including, without limitation, "take or pay" and similar arrangements), contingent or otherwise (and the obligations of such person under any such assumptions, guarantees or other such arrangements); and (iii) any and all deferrals, renewals, extensions, refinancings and refundings of, or amendments, modifications or supplements to, any of the foregoing. "Indenture" means this Indenture as amended or supplemented from time to time. "Initial Purchasers" means Citigroup Global Markets Inc. and BNP Paribas Securities Corp. "Interest Payment Date" means April 1 and October 1 of each year, beginning April 1, 2004. 4 "Issue Date" means the date on which Convertible Subordinated Notes are first issued and authenticated under this Indenture. "Maturity Date" means October 1, 2023, unless earlier redeemed, repurchased or converted. "Note Custodian" means J.P. Morgan Trust Company, National Association, as custodian for the Depositary with respect to any Global Security, or any successor entity thereto. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Offering Memorandum" means the offering memorandum dated September 23, 2003, relating to the Convertible Subordinated Notes, including all amendments thereto. "Officer" means the Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial Officer, the Chief Accounting Officer, any Executive Vice President, Senior Vice President or Vice President (whether or not designated by a number or numbers or word or words before or after the title "Vice President"), the Treasurer and the Secretary of the Company. "Officers' Certificate" means a certificate signed by two Officers, one of whom is the Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial Officer or the Treasurer of the Company. "Opinion of Counsel" means a written opinion from legal counsel who may be an employee of or counsel to the Company or the Trustee except to the extent otherwise indicated in this Indenture. A "person" means any individual, corporation, partnership, joint venture, trust, estate, unincorporated organization, limited liability company or government or any agency or political subdivision thereof. "Principal Amount" of each Convertible Subordinated Note means the principal amount as set forth on the face of the Convertible Subordinated Note. "Redemption Date" when used with respect to any of the Convertible Subordinated Notes to be redeemed, means the date fixed by the Company for such redemption pursuant to Article 3 of this Indenture and the Convertible Subordinated Notes. "Redemption Price" when used with respect to any of the Convertible Subordinated Notes to be redeemed, means the price fixed for such redemption pursuant to Article 3 of this Indenture and the Convertible Subordinated Notes. "Registrable Securities" has the meaning specified in paragraph 18 of the Convertible Subordinated Note. 5 "Registration Default Damages" has the meaning specified in paragraph 18 of the form of Convertible Subordinated Note, which is attached as Exhibit A hereto. "Registration Rights Agreement" means the Registration Rights Agreement relating to the Convertible Subordinated Notes and Common Stock issuable upon conversion of such Convertible Subordinated Notes dated September 29, 2003, between the Company and the Initial Purchasers, as such agreement may be amended, modified or supplemented from time to time. "Regular Record Date" means the March 15 or September 15 immediately preceding each Interest Payment Date. "Representative" means (a) the indenture trustee or other trustee, agent or representative for any Senior Debt or (b) with respect to any Senior Debt that does not have any such trustee, agent or other representative, (i) in the case of such Senior Debt issued pursuant to an agreement providing for voting arrangements as among the holders or owners of such Senior Debt, any holder or owner of such Senior Debt acting with the consent of the required persons necessary to bind such holders or owners of such Senior Debt and (ii) in the case of all other such Senior Debt, the holder or owner of such Senior Debt. "Restricted Securities Legend" means the legend labeled as such and that is set forth in Exhibit A hereto. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Senior Credit Facility" means the Fourth Amended and Restated Credit Agreement dated as of January 31, 2002 among the Company, as borrower, the lenders identified therein, and BNP Paribas, as administrative agent and including any related notes, guarantee agreements and other instruments and agreements executed in connection therewith, in each case including any deferrals, renewals, extensions, replacements, refinancings or refundings thereof, or amendments, modifications or supplements thereto and any agreement providing therefor whether by or with the same or any other lender, creditor, group of lenders or group of creditors. "Senior Debt" means the principal of, premium, if any, and interest on, rent under, fees, costs, expenses and any other amounts payable on or in respect of any Indebtedness of the Company (including, without limitation, any Obligations in respect of such Indebtedness and any interest accruing after the filing of a petition by or against the Company under any bankruptcy law, whether or not allowed as a claim after such filing in any proceeding under such bankruptcy law), whether outstanding on the date of this Indenture or thereafter created, incurred, assumed, guaranteed or in effect guaranteed by the Company (including all deferrals, renewals, extensions, refinancings or refundings of, or amendments, modifications or supplements to the foregoing); provided, however, that Senior Debt does not include (u) Indebtedness evidenced by the Convertible Subordinated Notes, (v) the Company's 4 1/4% Convertible Subordinated Notes Due 2004, (w) any liability for federal, state, local or other taxes owed or owing by the Company, (x) Indebtedness of the Company to any subsidiary of the Company except to the extent such Indebtedness is of a type described in clause (ii) of the definition of Indebtedness, (y) trade payables of the Company for goods, services or materials purchased in the ordinary course of 6 business (other than, to the extent they may otherwise constitute trade payables, any obligations of the type described in clause (ii) of the definition of Indebtedness), and (z) any particular Indebtedness in which the instrument creating or evidencing the same expressly provides that such Indebtedness shall not be senior in right of payment to, or is pari passu with, or is subordinated or junior to, the Convertible Subordinated Notes. "Shelf Registration Statement" shall have the meaning set forth in the Registration Rights Agreement. A "subsidiary" means, with respect to any person, (i) any corporation, association or other business entity of which more than 50% of the total voting power of shares of capital stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such person or one or more of the other subsidiaries of that person (or a combination thereof) and (ii) any partnership (a) the sole general partner or managing general partner of which is such person or a subsidiary of such person or (b) the only general partners of which are such person or of one or more subsidiaries of such person (or any combination thereof). "Termination of Trading" will be deemed to have occurred if the Common Stock (or other common stock into which the Convertible Subordinated Notes are then convertible) is neither listed for trading on the New York Stock Exchange nor approved for trading on The Nasdaq National Market. "TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as in effect on the date of execution of this Indenture, except as provided in Sections 9.03 and 12.06. "trading day" means any day on which The New York Stock Exchange is open for trading or, if the applicable security is then quoted on the Nasdaq National Market, any day on which trades may be made on the Nasdaq National Market or, if the applicable security is not so listed, admitted for trading or quoted, any Business Day. "Trading Price" has the meaning specified in paragraph 9 of the Convertible Subordinated Notes. "Trustee" means the party named as such above until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor. "Trust Officer" means an officer in the Corporate Trust Office of the Trustee and having direct responsibility for the administration of this Indenture or, with respect to a particular trust matter, any other officer to whom such matter is referred because of such officer's knowledge and familiarity with the particular subject. "U.S. Government Obligations" means direct obligations of the United States of America for the payment of which the full faith and credit of the United States of America is pledged. In order to have money available on a payment date to pay principal or interest on the Convertible Subordinated Notes, the U.S. Government Obligations shall be payable as to principal or interest on or before such payment date in such amounts as will provide the necessary money. U.S. Government Obligations shall not be callable at the issuer's option. 7 "Voting Stock" of a corporation means all classes of Capital Stock of such corporation then outstanding and normally entitled to vote in the election of directors. SECTION 1.02 Other Definitions.

Defined in Section "Accepted Purchase Shares"............................................................... 12.06 "Agent Members".......................................................................... 2.01 "Bankruptcy Law"......................................................................... 6.01 "Business Day"........................................................................... 10.07 "Clearstream"............................................................................ 2.01 "Commencement Date"...................................................................... 12.06 "Conversion Agent"....................................................................... 2.03 "Conversion Date"........................................................................ 12.02 "Conversion Rate"........................................................................ 12.01 "Conversion Shares"...................................................................... 12.02 "Current market price"................................................................... 12.06 "Custodian".............................................................................. 6.01 "Determination Date"..................................................................... 12.06 "Distribution Date"...................................................................... 12.06 "Euroclear".............................................................................. 2.01 "Event of Default"....................................................................... 6.01 "Expiration Time"........................................................................ 12.06 "Fundamental Change Date"................................................................ 3.10 "Fundamental Change Offer"............................................................... 3.10 "Fundamental Change Offer Termination Date".............................................. 3.10 "Fundamental Change Payment"............................................................. 3.10 "Fundamental Change Payment Date"........................................................ 3.10 "Global Security"........................................................................ 2.01 "Investment Company Act"................................................................. 4.09 "Legal Holiday".......................................................................... 10.07 "Measurement Date"....................................................................... 12.06 "Non-Payment Default".................................................................... 11.03 "Offer Expiration Time".................................................................. 12.06 "Paying Agent"........................................................................... 2.03 "Payment Blockage Notice"................................................................ 11.03 "Payment Default"........................................................................ 6.01 "Purchase Agreement"..................................................................... 2.01 "Purchased Shares"....................................................................... 12.06 "Registrar".............................................................................. 2.03 "Register"............................................................................... 2.03 "Regulation S"........................................................................... 2.01 "Repurchase Date"........................................................................ 3.09 "Repurchase Notice"...................................................................... 3.09 "Repurchase Price"....................................................................... 3.09

8 "Restricted Common Stock Legend"......................................................... 12.19 "Rights"................................................................................. 12.06 "Rule 144A".............................................................................. 2.01 SECTION 1.03 Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "Commission" means the Commission; "indenture securities" means the Convertible Subordinated Notes; "indenture security holder" means a holder of a Convertible Subordinated Note; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the Convertible Subordinated Notes means the Company or any other obligor on the Convertible Subordinated Notes. All other terms in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by Commission rule under the TIA have the meanings so assigned to them. SECTION 1.04 Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) words in the singular include the plural, and in the plural include the singular; and (5) the male, female and neuter genders include one another. 9 ARTICLE 2 THE CONVERTIBLE SUBORDINATED NOTES SECTION 2.01 Form and Dating. (a) GLOBAL SECURITIES. The Convertible Subordinated Notes are being offered and sold by the Company pursuant to a Purchase Agreement relating to the Convertible Subordinated Notes, dated September 23, 2003, among the Company and the Initial Purchasers (the "Purchase Agreement"). The Convertible Subordinated Notes are being offered and sold (i) in reliance on Regulation S under the Securities Act ("Regulation S") or (ii) to "qualified institutional buyers" as defined in Rule 144A in reliance on Rule 144A under the Securities Act ("Rule 144A"), each as provided in the Purchase Agreement, and shall be issued in the form of one or more permanent global securities in definitive, fully registered form without interest coupons with the Global Securities Legend and Restricted Securities Legend set forth in Exhibit A hereto (each, a "Global Security"). Any Global Security shall be deposited on behalf of the purchasers of the Convertible Subordinated Notes represented thereby with the Trustee, as Note Custodian, and registered in the name of the Depositary or a nominee of the Depositary for the accounts of participants in the Depositary (and, in the case of Convertible Subordinated Notes held in accordance with Regulation S, registered with the Depositary for the accounts of designated agents holding on behalf of the Euroclear System ("Euroclear") or Clearstream Banking, societe anonyme ("Clearstream")), duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of a Global Security may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee as hereinafter provided. (b) BOOK-ENTRY PROVISIONS. This Section 2.01(b) shall apply only to a Global Security deposited with or on behalf of the Depositary. The Company shall execute and the Trustee shall, in accordance with this Section 2.01(b) and the written order of the Company, authenticate and deliver initially one or more Global Securities that (i) shall be registered in the name of Cede & Co. or other nominee of such Depositary and (ii) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's instructions or held by the Trustee as Note Custodian pursuant to a FAST Balance Certificate Agreement between the Depositary and the Trustee. Except as provided in Section 2.10, members of, or participants in, the Depositary ("Agent Members") shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depositary or by the Trustee as the Note Custodian of the Depositary or under such Global Security, and the Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, the registered holder of a Global Security may grant proxies and otherwise authorize any person, including Agent Members and persons that may hold interests through Agent Members, to take any action that a Holder is entitled to take under this Indenture or the Convertible Subordinated Notes, and nothing herein 10 shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices of such Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Security. The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "Management Regulations and Instructions to Participants" of Clearstream shall be applicable to interests in any Global Securities that are held by participants through Euroclear or Clearstream. The Trustee shall have no obligation to notify holders of any such procedures or to monitor or enforce compliance with the same. (c) DEFINITIVE SECURITIES. Except as provided in Section 2.10, owners of beneficial interests in Global Securities will not be entitled to receive physical delivery of certificated Convertible Subordinated Notes in definitive form. If applicable, certificated Convertible Subordinated Notes in definitive form will bear the Restricted Securities Legend set forth on Exhibit A unless removed in accordance with Section 2.06(c). SECTION 2.02 Execution and Authentication. One Officer shall sign the Convertible Subordinated Notes for the Company by manual or facsimile signature. If an Officer whose signature is on a Convertible Subordinated Note no longer holds that office at the time the Convertible Subordinated Note is authenticated, the Convertible Subordinated Note shall nevertheless be valid. A Convertible Subordinated Note shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Convertible Subordinated Note has been authenticated under this Indenture. Upon a written order of the Company signed by an Officer of the Company, the Trustee shall authenticate Convertible Subordinated Notes for original issue up to an aggregate Principal Amount of $90,000,000 (plus up to $15,000,000 aggregate Principal Amount of Convertible Subordinated Notes that may be sold by the Company pursuant to the option to purchase additional Convertible Subordinated Notes granted to the Initial Purchasers pursuant to the Purchase Agreement) to the Initial Purchasers. The aggregate Principal Amount of Convertible Subordinated Notes outstanding at any time may not exceed that amount except as provided in Section 2.07. The Convertible Subordinated Notes shall be issuable only in registered form without coupons and only in denominations of $1,000 or any integral multiple thereof. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Convertible Subordinated Notes. An authenticating agent may authenticate Convertible Subordinated Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An 11 authenticating agent has the same right as an Agent to deal with the Company or an Affiliate of the Company. SECTION 2.03 Registrar, Paying Agent and Conversion Agent. The Company shall maintain or cause to be maintained in such locations as it shall determine, which may be the Corporate Trust Office, an office or agency: (i) where securities may be presented for registration of transfer or for exchange ("Registrar"); (ii) where Convertible Subordinated Notes may be presented for payment ("Paying Agent"); (iii) an office or agency where Convertible Subordinated Notes may be presented for conversion (the "Conversion Agent"); and (iv) where notices and demands to or upon the Company in respect of Convertible Subordinated Notes and this Indenture may be served by the holders of the Convertible Subordinated Notes. The Registrar shall keep a Register ("Register") of the Convertible Subordinated Notes and of their transfer and exchange. The Company may appoint one or more co-registrars, one or more additional paying agents and one or more additional conversion agents. The term "Paying Agent" includes any additional paying agent, and the term "Conversion Agent" includes any additional Conversion Agent. The Company may change any Paying Agent, Registrar, Conversion Agent or co-registrar without prior notice. The Company shall notify the Trustee of the name and address of any Agent not a party to this Indenture and shall enter into an appropriate agency agreement with any Registrar, Paying Agent, Conversion Agent or co-registrar not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such Agent. The Company or any of its subsidiaries may act as Paying Agent, Registrar, Conversion Agent or co-registrar, except that for purposes of Articles 3 and 8, neither the Company nor any of its subsidiaries shall act as Paying Agent. If the Company fails to appoint or maintain another entity as Registrar, or Paying Agent or Conversion Agent, the Trustee shall act as such, and the Trustee shall initially act as such. SECTION 2.04 Paying Agent to Hold Money in Trust. The Company shall require each Paying Agent (other than the Trustee, who hereby so agrees), to agree in writing that the Paying Agent will hold in trust for the benefit of holders of the Convertible Subordinated Notes or the Trustee all money held by the Paying Agent for the payment of principal or interest and Registration Default Damages, if any, on the Convertible Subordinated Notes, and will notify the Trustee of any default by the Company in respect of making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a subsidiary of the Company) shall have no further liability for the money. If the Company or a subsidiary of the Company acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the holders of the Convertible Subordinated Notes all money held by it as Paying Agent. SECTION 2.05 Holder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of holders of Convertible Subordinated Notes and shall otherwise comply with TIA Section 312(a). If the Trustee is not the Registrar, the 12 Company shall furnish to the Trustee at least seven Business Days before each Interest Payment Date, and as the Trustee may request in writing within fifteen (15) days after receipt by the Company of any such request (or such lesser time as the Trustee may reasonably request in order to enable it to timely provide any notice to be provided by it hereunder), a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of holders of Convertible Subordinated Notes. SECTION 2.06 Transfer and Exchange. (a) When Convertible Subordinated Notes are presented to the Registrar or a co-registrar with a request to register a transfer or to exchange them for an equal Principal Amount of Convertible Subordinated Notes for other denominations, the Registrar shall register the transfer or make the exchange if its requirements for such transactions are met. To permit registrations of transfers and exchanges, the Company shall issue and the Trustee shall authenticate Convertible Subordinated Notes at the Registrar's request, bearing registration numbers not contemporaneously outstanding. No service charge shall be made to a holder for any registration of transfer or exchange (except as otherwise expressly permitted herein), but the Company and the Registrar may require payment of a sum sufficient to cover any transfer tax or other governmental charge payable upon exchanges pursuant to Sections 2.10, 3.07, 9.05 or 12.02. The Company or the Registrar shall not be required (i) to issue, register the transfer of or exchange Convertible Subordinated Notes during a period beginning at the opening of business fifteen (15) days before the day of any selection of Convertible Subordinated Notes for redemption under Section 3.03 and ending at the close of business on the day of selection, (ii) to register the transfer or exchange of any Convertible Subordinated Note so selected for redemption in whole or in part, except the unredeemed portion of any Convertible Subordinated Note being redeemed in part or (iii) to register the transfer of any Convertible Subordinated Notes surrendered for repurchase pursuant to Section 3.09 or Section 3.10. All Convertible Subordinated Notes issued upon any transfer or exchange of Convertible Subordinated Notes in accordance with this Indenture shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture as the Convertible Subordinated Notes surrendered upon such registration of transfer or exchange. (b) Notwithstanding any provision to the contrary herein, so long as a Global Security remains outstanding and is held by or on behalf of the Depositary, transfers of a Global Security, in whole or in part, or of any beneficial interest therein, shall only be made in accordance with Sections 2.01(b) and 2.10; provided, however, that beneficial interests in a Global Security may be transferred to persons who take delivery thereof in the form of a beneficial interest in the Global Security in accordance with the transfer restrictions set forth under the heading "Notice to Investors" in the Offering Memorandum and, if applicable, in the Restricted Securities Legend. Except for transfers or exchanges made in accordance with Section 2.10, transfers of a Global Security shall be limited to transfers of such Global Security in whole, but not in part, to nominees of the Depositary or to a successor of the Depositary or such successor's nominee. 13 In the event that a Global Security is exchanged for Convertible Subordinated Notes in definitive form pursuant to Section 2.10 prior to the effectiveness of a Shelf Registration Statement with respect to such Convertible Subordinated Notes, such exchange may occur, and such Convertible Subordinated Notes may be further exchanged or transferred, only upon receipt by the Registrar and the Trustee of (1) such Global Security or such Convertible Subordinated Notes in definitive form, duly endorsed as provided herein, as applicable, (2) instructions from the holder directing the Trustee to authenticate and deliver one or more Convertible Subordinated Notes in definitive form of the same aggregate Principal Amount as the Global Security or the Convertible Subordinated Notes in definitive form (or portion thereof), as applicable, to be transferred, such instructions to contain the name or names of the designated transferee or transferees, the authorized denomination or denominations of the Convertible Subordinated Notes in definitive form to be so issued and appropriate delivery instructions, and (3) such certifications or other information and, in the case of transfers pursuant to Rule 144 under the Securities Act, legal opinions as the Company, the Registrar and the Trustee may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act (including the certification requirements intended to ensure that such transfers comply with Rule 144A or Regulation S under the Securities Act, as the case may be), and upon compliance with such other procedures as may from time to time be adopted by the Company and the Registrar. (c) Except in connection with a Shelf Registration Statement contemplated by and in accordance with the terms of the Registration Rights Agreement, if Convertible Subordinated Notes are issued upon the registration of transfer, exchange or replacement of Convertible Subordinated Notes bearing a Restricted Securities Legend, or if a request is made to remove such a Restrictive Securities Legend on Convertible Subordinated Notes, the Convertible Subordinated Notes so issued shall bear the Restricted Securities Legend, or a Restricted Securities Legend shall not be removed, as the case may be, unless there is delivered to the Company such satisfactory evidence, which, in the case of a transfer made pursuant to Rule 144 under the Securities Act, may include an opinion of counsel given in accordance with the laws in the State of New York, as may be reasonably required by the Company, that neither the legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereof comply with the provisions of Rule 144A, Rule 144 or Regulation S under the Securities Act or that such Convertible Subordinated Notes are not "restricted" within the meaning of Rule 144 under the Securities Act. Upon provision to the Company of such satisfactory evidence, the Trustee, at the written direction of the Company, shall authenticate and deliver Convertible Subordinated Notes that do not bear the legend. The Company shall not otherwise be entitled to require the delivery of a legal opinion in connection with any transfer or exchange of Securities. (d) Neither the Trustee nor any Agent shall have any responsibility for any actions taken or not taken by the Depositary. (e) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Convertible Subordinated Notes (including any transfers between or among the Depositary's participants or beneficial owners of interests in any Global Security) other than to require delivery of such certificates and other documentation as is expressly required by, and to do so if and when expressly required by, the terms of this 14 Indenture and to examine the same to determine substantial compliance as to form with the express requirements hereof. SECTION 2.07 Replacement Convertible Subordinated Notes. If the holder of a Convertible Subordinated Note claims that its Convertible Subordinated Note has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Convertible Subordinated Note if the Trustee's and the Company's requirements are met. If required by the Trustee or the Company as a condition of receiving a replacement Convertible Subordinated Note, the holder of a Convertible Subordinated Note must provide a certificate of loss and an indemnity and/or an indemnity bond sufficient, in the judgment of both the Company and the Trustee, to fully protect the Company, the Trustee, any Agent and any authenticating agent from any loss, liability, cost or expense which any of them may suffer or incur if the Convertible Subordinated Note is replaced. The Company and the Trustee may charge the relevant holder for their expenses in replacing any Convertible Subordinated Note. The Trustee or any authenticating agent may authenticate any such substituted Convertible Subordinated Note, and deliver the same upon the receipt of such security or indemnity as the Trustee, the Company and, if applicable, such authenticating agent may require. Upon the issuance of any substituted Convertible Subordinated Note, the Company and the Trustee may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses connected therewith. In case any Convertible Subordinated Note which has matured or is about to mature, or has been called for redemption pursuant to Article 3, submitted for repurchase pursuant to Section 3.09 or Section 3.10 or is about to be converted into Common Stock pursuant to Article 12, shall become mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a substitute Convertible Subordinated Note, pay or authorize the payment of or convert or authorize the conversion of the same (without surrender thereof except in the case of a mutilated Convertible Subordinated Note), as the case may be, if the applicant for such payment or conversion shall furnish to the Company, to the Trustee and, if applicable, to the authenticating agent such security or indemnity as may be required by them to save each of them harmless for any loss, liability, cost or expense caused by or connected with such substitution, and, in case of destruction, loss or theft, evidence satisfactory to the Company, the Trustee and, if applicable, any paying agent or conversion agent of the destruction, loss or theft of such Convertible Subordinated Note and of the ownership thereof. Every replacement Convertible Subordinated Note is an additional obligation of the Company and shall be entitled to all the benefits provided under this Indenture equally and proportionately with all other Convertible Subordinated Notes duly issued, authenticated and delivered hereunder. SECTION 2.08 Outstanding Convertible Subordinated Notes. The Convertible Subordinated Notes outstanding at any time are all the Convertible Subordinated Notes properly authenticated by the Trustee except for those canceled by the 15 Trustee, those delivered to it for cancellation, and those described in this Section as not outstanding. If a Convertible Subordinated Note is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Convertible Subordinated Note is held by a bona fide purchaser. If Convertible Subordinated Notes are considered paid under Section 4.01 or converted under Article 12, they cease to be outstanding, and interest on them ceases to accrue. Subject to Section 2.09 hereof, a Convertible Subordinated Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Convertible Subordinated Note. SECTION 2.09 When Treasury Convertible Subordinated Notes Disregarded. In determining whether the holders of the required principal amount of Convertible Subordinated Notes have concurred in any direction, waiver or consent, Convertible Subordinated Notes owned by the Company or an Affiliate of the Company shall be considered as though they are not outstanding except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Convertible Subordinated Notes which a Trust Officer of the Trustee actually knows are so owned shall be so disregarded. SECTION 2.10 Temporary Convertible Subordinated Notes; Transfers of Global Security to Beneficial Owners. (a) Until definitive Convertible Subordinated Notes are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Convertible Subordinated Notes. Temporary Convertible Subordinated Notes shall be substantially in the form of definitive Convertible Subordinated Notes but may have variations that the Company considers appropriate for temporary Convertible Subordinated Notes and shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Convertible Subordinated Notes in exchange for temporary Convertible Subordinated Notes. (b) A Global Security deposited with the Depositary or with the Trustee as Note Custodian for the Depositary pursuant to Section 2.01 shall be transferred to the beneficial owners thereof in the form of certificated Convertible Subordinated Notes in definitive form only if such transfer complies with Section 2.06 and (i) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for such Global Security or if at any time such Depositary ceases to be a "clearing agency" registered under the Exchange Act at a time when the Depositary is required to be so registered in order to act as depositary and in each case a successor Depositary is not appointed by the Company within 90 days of such notice, or (ii) the Company executed and delivers to the Trustee and Registrar an Officer's Certificate stating that such Global Security shall be so exchangeable. 16 In connection with the exchange of an entire Global Security for certificated Convertible Subordinated Notes pursuant to this subsection (b), such Global Security shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, and upon Company order the Trustee shall authenticate and deliver, to each beneficial owner identified by the Depositary in exchange for its beneficial interest in such Global Security, an equal aggregate Principal Amount of certificated Convertible Subordinated Notes of authorized denominations. In addition, the owner of a beneficial interest in a Global Security will be entitled to receive a certificated Convertible Subordinated Note in exchange for such interest if an Event of Default has occurred and is continuing. Upon receipt by the Note Custodian and Registrar of instructions from the Holder of a Global Security directly the Note Custodian and Registrar to (x) issue one or more certificate Convertible Subordinated Notes in the amounts specified to the owner of a beneficial interest in such Global Security and (y) debit or cause to be debited an equivalent amount of beneficial interest in such Global Security, subject to the rules and procedures of the Depositary: (i) the Note Custodian and Registrar shall notify the Company and the Trustee of such instructions, identifying the owner and amount of such beneficial interest in such Global Security; (ii) the Company shall promptly execute, and upon Company order the Trustee shall authenticate and deliver, to such beneficial owner certificated Convertible Subordinated Notes in an equivalent amount to such beneficial interest in such Global Security; and (iii) the Registrar shall decrease such Global Security by such amount in accordance with the foregoing. In the event that the certificated Convertible Subordinated Notes are not issued to each such beneficial owner promptly after the Registrar has received a request from the Holder of a Global Security to issue such certificated Convertible Subordinated Notes, the Company expressly acknowledges, with respect to the right of any holder to pursue a remedy pursuant to Sections 6.06 or 6.07 hereof, the right of any beneficial owner of the Convertible Subordinated Notes to pursue such remedy with respect to the portion of the Convertible Subordinated Notes that represents such beneficial owner's Convertible Subordinated Notes as if such certificated Convertible Subordinated Notes had been issued. (c) Any Global Security or interest thereon that is transferable to the beneficial owners thereof in the form of certificated Convertible Subordinated Notes in definitive form shall, if held by the Depository, be surrendered by the Depositary to the Trustee, without charge, and the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Security, an equal aggregate Principal Amount of Convertible Subordinated Notes of authorized denominations in the form of certificated Convertible Subordinated Notes in definitive form. Any portion of a Global Security transferred pursuant to this Section shall be executed, authenticated and delivered only in denominations of $1,000 of Principal Amount and any integral multiple thereof and registered in such names as the Depositary shall direct. Any Convertible Subordinated Notes in the form of certificated Convertible Subordinated Notes in 17 definitive form delivered in exchange for an interest in the Global Security shall, except as otherwise provided by Section 2.06(c), bear the Restricted Securities Legend. (d) Prior to any transfer pursuant to Section 2.10(b), the registered holder of a Global Security may grant proxies and otherwise authorize any person, including Agent Members and persons that may hold interests through Agent Members, to take any action that a holder is entitled to take under this Indenture or the Convertible Subordinated Notes. SECTION 2.11 Cancellation. The Company at any time may deliver Convertible Subordinated Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Convertible Subordinated Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else may cancel Convertible Subordinated Notes surrendered for registration of transfer, exchange, payment, replacement, conversion, redemption, repurchase or cancellation. Upon written instructions of the Company, the Trustee shall destroy and dispose of canceled Convertible Subordinated Notes as the Company directs and, after such destruction, shall deliver a certificate of destruction to the Company. The Company may not issue new Convertible Subordinated Notes to replace Convertible Subordinated Notes that it has paid, redeemed or repurchased or that have been delivered to the Trustee for cancellation or that any holder has (i) converted pursuant to Article 12 hereof, (ii) submitted for redemption pursuant to Article 3 hereof or (iii) submitted for repurchase pursuant to Section 3.09 or Section 3.10 hereof (unless revoked). SECTION 2.12 Defaulted Interest. If the Company fails to make a payment of interest on the Convertible Subordinated Notes, it shall pay such defaulted interest plus, to the extent lawful, any interest payable on the defaulted interest. It may pay such defaulted interest, plus any such interest payable on it, to the persons who are holders of Convertible Subordinated Notes on a subsequent special record date. The Company shall fix any such record date and payment date. At least 15 days before any such record date, the Company shall mail to holders of the Convertible Subordinated Notes a notice that states the record date, payment date and amount of such interest to be paid. SECTION 2.13 CUSIP Number. The Company in issuing the Convertible Subordinated Notes may use a "CUSIP" number, and if so, such CUSIP number shall be included in notices of redemption, repurchase or exchange as a convenience to holders of Convertible Subordinated Notes; provided, however, that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP number printed in the notice or on the Convertible Subordinated Notes and that reliance may be placed only on the other identification numbers printed on the Convertible Subordinated Notes. The Company will promptly notify the Trustee of any change in the CUSIP number. 18 SECTION 2.14 Regulation S. The Company agrees that it will refuse to register any transfer of Convertible Subordinated Notes or any shares of Common Stock issued upon conversion of Convertible Subordinated Notes that is not made in accordance with the provisions of Regulation S under the Securities Act, pursuant to a registration statement which has been declared effective under the Securities Act or pursuant to an available exemption from the registration requirements of the Securities Act; provided that the provisions of this paragraph shall not be applicable to any Convertible Subordinated Notes which do not bear a Restricted Securities Legend or to any shares of Common Stock evidenced by certificates which do not bear a Restricted Common Stock Legend. ARTICLE 3 REDEMPTION AND PURCHASES SECTION 3.01 Optional Redemption. The Company, at its option, may redeem all or any portion of the Convertible Subordinated Notes upon the terms and at the Redemption Prices set forth in each of the Convertible Subordinated Notes. Any redemption shall be made in accordance with the provisions of Paragraph 6 the Convertible Subordinated Notes and this Article 3. SECTION 3.02 Notices to Trustee. If the Company elects to redeem Convertible Subordinated Notes pursuant to the optional redemption provisions of paragraph 6 of the Convertible Subordinated Notes, it shall furnish to the Trustee, at least 30 (45 if less than all of the then outstanding Convertible Subordinated Notes are to be redeemed) days but not more than 60 days before a Redemption Date (unless a shorter period shall be satisfactory to the Trustee), an Officers' Certificate setting forth (i) the Section of this Indenture pursuant to which the redemption shall occur, (ii) the Redemption Date, (iii) the principal amount of Convertible Subordinated Notes (if less than all) to be redeemed, (iv) the Redemption Price and (v) the CUSIP number of the Convertible Subordinated Notes being redeemed. SECTION 3.03 Selection of Convertible Subordinated Notes to Be Redeemed. If less than all the Convertible Subordinated Notes are to be redeemed, the Trustee shall select the Convertible Subordinated Notes to be redeemed pro rata or by lot or by any other method the Trustee considers fair and appropriate (so long as such method is not prohibited by the rules of any stock exchange on which the Securities are then listed). The Trustee shall make the selection at least 30 days but not more than 60 days before a Redemption Date from outstanding Convertible Subordinated Notes not previously called for redemption. Convertible Subordinated Notes and any portions thereof that the Trustee selects shall be in Principal Amounts of $1,000 or an integral multiple of $1,000. Provisions of this Indenture that apply to Convertible Subordinated Notes called for redemption also apply to portions of Convertible Subordinated Notes called for redemption. The Trustee shall notify the Company 19 promptly of the Convertible Subordinated Notes or portions of Convertible Subordinated Notes to be redeemed. If any Convertible Subordinated Note selected for partial redemption is converted in part before termination of the conversion right with respect to the portion of the Convertible Subordinated Note so selected, the converted portion of such Convertible Subordinated Note shall be deemed (so far as may be) to be the portion selected for redemption. The Convertible Subordinated Notes (or portion thereof) so selected shall be deemed duly selected for redemption for all purposes hereof, notwithstanding that any such Convertible Subordinated Note is converted in whole or in part before the mailing of the notice of redemption. SECTION 3.04 Notice of Redemption. The Company shall mail by first-class mail a notice of redemption to each holder whose Convertible Subordinated Notes are to be redeemed, at such holder's registered address. The Company will not give fewer than 30 days' notice of redemption by first class mail to holders of notes. The notice shall identify the Convertible Subordinated Notes to be redeemed and shall state: (1) the Redemption Date; (2) the Redemption Price and accrued and unpaid interest, if any, payable on the Redemption Date; (3) the Conversion Rate; (4) the name and address of the Paying Agent and Conversion Agent; (5) that Convertible Subordinated Notes called for redemption may be converted at any time prior to the close of business on the last trading day immediately preceding the Redemption Date and if not converted prior to the close of business on such date, the right of conversion will be lost; (6) that holders who want to convert Convertible Subordinated Notes must satisfy the requirements set forth in Paragraph 9 of the Convertible Subordinated Notes; (7) that Convertible Subordinated Notes called for redemption must be surrendered to the Paying Agent to collect the Redemption Price and accrued and unpaid interest and Registration Default Damages, if any; (8) if fewer than all the outstanding Convertible Subordinated Notes are to be redeemed, the certificate number and Principal Amounts of the particular Convertible Subordinated Notes to be redeemed; 20 (9) that, unless the Company defaults in making payment of such Redemption Price and any interest or Registration Default Damages which are due and payable, interest and Registration Default Damages, if any, will cease to accrue on and after the Redemption Date; (10) the CUSIP number of the Convertible Subordinated Notes; (11) that in the case of Convertible Subordinated Notes or portions thereof called for redemption on a date that is also an Interest Payment Date, the interest payment and Registration Default Damages, if any, due on such date shall be paid to the person in whose name the Convertible Subordinated Notes are registered at the close of business on the relevant Regular Record Date; and (12) any other information that the Company wants to present. The notice if mailed in the manner herein provided shall be conclusively presumed to have been given, whether or not the holder receives such notice. In any case, failure to give such notice by mail or any defect in the notice to the holder of any Convertible Subordinated Note designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any Convertible Subordinated Note. At the Company's request, the Trustee shall give the notice of redemption to holders in the Company's name and at the Company's expense, provided that the Company makes such request at least three Business Days (unless a shorter period shall be satisfactory to the Trustee) prior to the date such notice of redemption must be mailed. SECTION 3.05 Effect of Notice of Redemption. Once notice of redemption is given, Convertible Subordinated Notes called for redemption become due and payable on the Redemption Date and at the Redemption Price (together with accrued and unpaid interest and Registration Default Damages, if any) stated in the notice except for Convertible Subordinated Notes which are converted in accordance with the terms of this Indenture. Upon surrender to the Paying Agent, such Convertible Subordinated Notes shall be paid at the Redemption Price, together with accrued and unpaid interest and Registration Default Damages, if any, as stated in the notice. SECTION 3.06 Deposit of Redemption Price. On or before the Redemption Date, the Company shall deposit with the Paying Agent (or if the Company or a subsidiary or an Affiliate of either of them is the Paying Agent, shall segregate and hold in trust) in immediately available funds sufficient to pay the Redemption Price of, and any accrued and unpaid interest and any Registration Default Damages on, all Convertible Subordinated Notes to be redeemed on that date other than Convertible Subordinated Notes or portions of Convertible Subordinated Notes called for redemption which on or prior thereto have been delivered by the Company to the Trustee for cancellation or have been converted. The Paying Agent shall as promptly as practicable return to the Company any money not required for that purpose. 21 On and after the Redemption Date, unless the Company shall default in the payment of the Redemption Price, interest and Registration Default Damages, if applicable, will cease to accrue on the Principal Amount of the Convertible Subordinated Notes or portions thereof called for redemption and for which funds have been set apart for payment, and such Convertible Subordinated Notes, or portions thereof, shall cease after the close of business on the trading day immediately preceding the Redemption Date to be convertible into Common Stock and, except as provided in this Section 3.06 and Section 8.04, to be entitled to any benefit or security under this Indenture, and the holders thereof shall have no right in respect of such Convertible Subordinated Notes, or portions thereof, except the right to receive the Redemption Price thereof and unpaid interest and Registration Default Damages, if any, to (but excluding) the Redemption Date. In the case of Convertible Subordinated Notes or portions thereof redeemed on a Redemption Date which is also an Interest Payment Date, the interest payment and Registration Default Damages, if any, due on such date shall be paid to the person in whose name the Convertible Subordinated Note is registered at the close of business on the relevant Regular Record Date. SECTION 3.07 Convertible Subordinated Notes Redeemed in Part. Upon surrender of a Convertible Subordinated Note that is redeemed in part only, the Company shall issue and the Trustee shall authenticate and deliver to the holder of a Convertible Subordinated Note a new Convertible Subordinated Note equal in Principal Amount to the unredeemed portion of the Convertible Subordinated Note surrendered, at the expense of the Company, except as specified in Section 2.06 or 2.07. SECTION 3.08 Conversion Arrangement on Call for Redemption. In connection with any redemption of Convertible Subordinated Notes, the Company may arrange for the purchase and conversion of any Convertible Subordinated Notes by an arrangement with one or more investment banks or other purchasers to purchase such Convertible Subordinated Notes by paying to the Trustee in trust for the holders, on or before 10:00 a.m. New York City time on the Redemption Date, an amount not less than the applicable Redemption Price, together with interest and Registration Default Damages, if any, accrued to the Redemption Date, of such Convertible Subordinated Notes. Notwithstanding anything to the contrary contained in this Article 3, the obligation of the Company to pay the Redemption Price of such Convertible Subordinated Notes, together with interest and Registration Default Damages, if any, accrued to the Redemption Date, shall be deemed to be satisfied and discharged to the extent such amount is so paid by such purchasers. If such an agreement is entered into, a copy of which will be filed with the Trustee prior to the Redemption Date, and any Convertible Subordinated Notes not duly surrendered for conversion by the holders thereof may, at the option of the Company, be deemed, to the fullest extent permitted by law, acquired by such purchasers from such holders and (notwithstanding anything to the contrary contained in Article 12) surrendered by such purchasers for conversion, all as of immediately prior to the close of business on the Redemption Date (and the right to convert any such Convertible Subordinated Notes shall be deemed to have been extended through such time), subject to payment of the above amount as aforesaid. At the direction of the Company, the Trustee shall hold and dispose of any such amount paid to it in the same manner as it would monies deposited with it by the Company for the redemption of Convertible Subordinated Notes. Without the Trustee's prior 22 written consent, no arrangement between the Company and such purchasers for the purchase and conversion of any Convertible Subordinated Notes shall increase or otherwise affect any of the powers, duties, responsibilities or obligations of the Trustee as set forth in this Indenture, and the Company agrees to indemnify the Trustee from, and defend and hold it harmless against, any loss, liability or expense arising out of or in connection with any such arrangement for the purchase and conversion of any Convertible Subordinated Notes between the Company and such purchasers to which the Trustee has not consented in writing, including the reasonable costs and expenses incurred by the Trustee in the defense of any claim or liability arising out of or in connection with the exercise or performance of any of its powers, duties, responsibilities or obligations under this Indenture. SECTION 3.09 Repurchase of Convertible Subordinated Notes at Option of the Holder. (a) Convertible Subordinated Notes shall be purchased by the Company pursuant to the terms of the Convertible Subordinated Notes at the option of the holder on October 1 of 2008, 2013 and 2018 (each, a "Repurchase Date"), at a purchase price of 100% of the Principal Amount plus any accrued and unpaid interest and any Registration Default Damages (the "Repurchase Price"), in each case, to, but excluding, such Repurchase Date, subject to the provisions of this Section 3.09(a). Notice of an upcoming Repurchase Date shall be mailed by or at the direction of the Company to the holders of Convertible Subordinated Notes as shown on the Register of such holders maintained by the Registrar not less than 20 Business Days prior to the Repurchase Date at the addresses as shown on the Register of holders maintained by the Registrar. The Company will also give notice to beneficial owners as required by applicable law. Such notice will describe, among other things, the repurchase right at the option of the holder, the Repurchase Date, the Repurchase Price, that the holder must exercise the repurchase right at any time from the opening of business on the date that is 20 Business Days prior to the Repurchase Date until the close of business on the Business Day prior to the Repurchase Date, that the holder shall have the right to withdraw any Convertible Subordinated Notes surrendered prior to the close of business on the Repurchase Date, the procedures that a holder of Convertible Subordinated Notes must follow in order to require the Company to repurchase such holder's Convertible Subordinated Notes and to withdraw any surrendered Convertible Subordinated Notes, the place or places where the holder is to surrender such holder's Convertible Subordinated Notes, the amount of interest and Registration Default Damages, if any, accrued on each Convertible Subordinated Note to (but excluding) the Repurchase Date, and the CUSIP number or numbers of the Convertible Subordinated Notes (if then generally in use). No failure of the Company to give the foregoing notices and no defect therein shall limit the Convertible Subordinated Note holders' repurchase rights or affect the validity of the proceedings for the repurchase of the Convertible Subordinated Notes pursuant to this Section 3.09. Repurchases of Convertible Subordinated Notes under this Section 3.09 shall be made, at the option of the holder thereof, upon: 23 (1) delivery to the Paying Agent by a holder of a written notice (a "Repurchase Notice") during the period beginning at any time from the opening of business on the date that is 20 Business Days prior to the applicable relevant Repurchase Date until the close of business on the Business Day prior to such Repurchase Date stating: (A) if certificated Convertible Subordinated Notes have been issued, the certificate numbers of the Convertible Subordinated Notes which the holder will deliver to be purchased (or if a holder's Convertible Subordinated Notes are not certificated, such holder's Repurchase Notice must comply with appropriate Depositary procedures), (B) the portion of the Principal Amount of the Convertible Subordinated Notes which the holder will deliver to be purchased, which portion must be a Principal Amount of $1,000 or an integral multiple thereof, (C) that such Convertible Subordinated Note shall be purchased as of the Repurchase Date pursuant to the terms and conditions specified in paragraph 7 of the Convertible Subordinated Notes and in this Indenture, and (2) delivery or book-entry transfer of the Convertible Subordinated Notes to Paying Agent at any time after delivery of the applicable Repurchase Notice (together with all necessary endorsements) at the office of the Paying Agent, such delivery being a condition to receipt by the holder of the Repurchase Price therefor; provided that such Repurchase Price shall be so paid pursuant to this Section 3.09 only if the Convertible Subordinated Note so delivered to Paying Agent shall conform in all respects to the description thereof in the related Repurchase Notice. The Company shall purchase from the holder thereof, pursuant to this Section 3.09, a portion of a Convertible Subordinated Note if the Principal Amount of such portion is $1,000 or an integral multiple of $1,000. Provisions of this Indenture that apply to the purchase of all of a Convertible Subordinated Note also apply to the purchase of such portion of such Convertible Subordinated Note. The Paying Agent shall promptly notify the Company of the receipt by it of any Repurchase Notice or written notice of withdrawal thereof. (b) Upon receipt by the Paying Agent of the Repurchase Notice specified in Section 3.09(a), the holder of the Convertible Subordinated Note in respect of which such Repurchase Notice was given shall (unless such Repurchase Notice is validly withdrawn) thereafter be entitled to receive solely the Repurchase Price with respect to such Convertible Subordinated Note. Such Repurchase Price shall be paid to such holder, subject to receipt of funds and/or Convertible Subordinated Notes by the Paying Agent, promptly following the later of (x) the Repurchase Date with respect to such Convertible Subordinated Note (provided the holder has satisfied the conditions in Section 3.09(a)) and (y) the time of delivery of such Convertible 24 Subordinated Note to the Paying Agent by the holder thereof in the manner required by Section 3.09(a). Notwithstanding anything herein to the contrary, Convertible Subordinated Notes in respect of which a Repurchase Notice has been given by the holder thereof may not be converted pursuant to Article 12 hereof on or after the date of the delivery of such Repurchase Notice unless such Repurchase Notice has first been validly withdrawn. A Repurchase Notice may be withdrawn by means of a written notice of withdrawal delivered to the office of the Paying Agent in accordance with the Repurchase Notice at any time prior to the close of business on the Repurchase Date so long as delivery or book-entry transfer of the Convertible Subordinated Notes in exchange for the Repurchase Price has not occurred, specifying: (1) the certificate number, if any, of the Convertible Subordinated Note in respect of which such notice of withdrawal is being submitted, or the appropriate Depositary information if the Convertible Subordinated Note in respect of which such notice of withdrawal is being submitted is represented by a Global Security, (2) the Principal Amount of the Convertible Subordinated Note with respect to which such notice of withdrawal is being submitted, and (3) the Principal Amount, if any, of such Convertible Subordinated Note which remains subject to the original Repurchase Notice and which has been or will be delivered for purchase by the Company. (a) On or prior to the Repurchase Date, the Company shall deposit with the Paying Agent (or, if the Company or a subsidiary or an Affiliate of either of them is acting as the Paying Agent, shall segregate and hold in trust as provided in Section 2.04) an amount of cash (in immediately available funds if deposited on such Business Day) sufficient to pay the aggregate Repurchase Price of all the Convertible Subordinated Notes or portions thereof that are to be purchased as of the Repurchase Date. (b) Upon presentation of any Convertible Subordinated Note repurchased only in part, the Company shall execute and the Trustee shall authenticate and make available for delivery to the holder thereof, at the expense of the Company, a new Convertible Subordinated Note or Convertible Subordinated Notes, of any authorized denomination, in aggregate Principal Amount equal to the unrepurchased portion of the Convertible Subordinated Notes presented. (c) The Paying Agent shall return to the Company any cash that remains unclaimed, together with interest, if any, thereon, held by them for the payment of the Repurchase Price; provided that to the extent that the aggregate amount of cash deposited by the Company pursuant to Section 3.09 exceeds the aggregate Repurchase Price of the Convertible Subordinated Notes or portions thereof which the Company is obligated to purchase as of the Repurchase Date then, unless otherwise agreed in writing with the Company, promptly after the Business Day following the Repurchase Date, the Paying Agent shall return any such excess to the Company together with interest, if any, thereon. If the Paying Agent holds money sufficient to pay the Repurchase Price of a Convertible Subordinated Note on the Business Day following the Repurchase Date, then on or after that date, such Convertible Subordinated Note shall cease to be outstanding, and 25 interest and Registration Default Damages, if applicable, will cease to accrue on the Principal Amount of the Convertible Subordinated Note and the holders thereof shall have no right in respect of such Convertible Subordinated Note except the right to receive the Repurchase Price thereof and unpaid interest and Registration Default Damages, if any, to (but excluding) the Repurchase Date. SECTION 3.10 Repurchase Upon Fundamental Change. Following a Fundamental Change (the date of each such occurrence being the "Fundamental Change Date"), the Company shall notify the holders of Convertible Subordinated Notes in writing of such occurrence and shall make an offer (the "Fundamental Change Offer") to repurchase all Convertible Subordinated Notes then outstanding at a repurchase price in cash equal to 100% of the Principal Amount thereof, plus accrued and unpaid interest and Registration Default Damages, if any (the "Fundamental Change Payment"), to, but excluding, the Fundamental Change Payment Date (as defined below). Notice of a Fundamental Change shall be mailed by or at the direction of the Company to the holders of Convertible Subordinated Notes as shown on the Register of such holders maintained by the Registrar not more than 20 days after the applicable Fundamental Change Date at the addresses as shown on the Register of holders maintained by the Registrar, with a copy to the Trustee and the Paying Agent. The Fundamental Change Offer shall remain open until a specified date (the "Fundamental Change Offer Termination Date") which is at least 20 Business Days from the date such notice is mailed. During the period specified in such notice, holders of Convertible Subordinated Notes may elect to tender their Convertible Subordinated Notes in whole or in part in integral multiples of $1,000 of Principal Amount in exchange for cash. Payment shall be made by the Company in respect of Convertible Subordinated Notes properly tendered pursuant to this Section on a specified Business Day (the "Fundamental Change Payment Date") which shall be no later than 60 days after the applicable Fundamental Change. The notice, which shall govern the terms of the Fundamental Change Offer, shall include such disclosures as are required by law and shall state: (a) that a Fundamental Change Offer is being made pursuant to this Section 3.10 and that all Convertible Subordinated Notes will be accepted for payment; (b) the event, transaction or transactions that constitute the Fundamental Change; (c) the Fundamental Change Payment for each Convertible Subordinated Note, the Fundamental Change Offer Termination Date and the Fundamental Change Payment Date; (d) that any Convertible Subordinated Note not properly tendered will continue to accrue interest (including Contingent Interest, if any) and Registration Default Damages, if applicable, in accordance with the terms thereof; (e) that, unless the Company defaults on making the Fundamental Change Payment, any Convertible Subordinated Note properly tendered pursuant to the Fundamental Change Offer shall cease to accrue interest and Registration Default Damages, if applicable, on the 26 Fundamental Change Payment Date and no further interest (including Contingent Interest, if any) or Registration Default Damages shall accrue on or after such date; (f) that holders electing to have Convertible Subordinated Notes repurchased pursuant to a Fundamental Change Offer will be required to surrender their Convertible Subordinated Notes to the Paying Agent at the address specified in the notice prior to 5:00 p.m., New York City time, on the Fundamental Change Offer Termination Date and must complete any form letter of transmittal proposed by the Company and acceptable to the Trustee and the Paying Agent; (g) that holders of Convertible Subordinated Notes will be entitled to withdraw their election if the Paying Agent receives, not later than 5:00 p.m., New York City time, on the Fundamental Change Offer Termination Date, a facsimile transmission or letter setting forth the name of the holder, the principal amount of Convertible Subordinated Notes the holder delivered for purchase, the Convertible Subordinated Note certificate number (if any) and a statement that such holder is withdrawing his election to have such Convertible Subordinated Notes purchased; (h) that holders whose Convertible Subordinated Notes are tendered for repurchase in part will be issued Convertible Subordinated Notes equal in Principal Amount to the unpurchased portion of the Convertible Subordinated Notes surrendered; (i) the instructions that holders must follow in order to tender their Convertible Subordinated Notes; and (j) that in the case of a Fundamental Change Offer Termination Date that is also an Interest Payment Date, the interest payment (including Contingent Interest, if any) and Registration Default Damages, if any, due on such date shall be paid to the person in whose name the Convertible Subordinated Note is registered at the close of business on the relevant Fundamental Change Offer Termination Date. On the Fundamental Change Offer Termination Date, the Company shall (i) accept for payment all Convertible Subordinated Notes or portions thereof properly tendered pursuant to the Fundamental Change Offer, (ii) deposit with the Paying Agent money sufficient to pay the Fundamental Change Payment with respect to all Convertible Subordinated Notes or portions thereof so tendered and (iii) deliver or cause to be delivered to the Trustee the Convertible Subordinated Notes so tendered together with an Officers' Certificate setting forth the aggregate principal amount of Convertible Subordinated Notes or portions thereof tendered to the Company. On the Fundamental Change Payment Date, the Paying Agent shall send or deliver the Fundamental Change Payment to the holders of Convertible Subordinated Notes so tendered and the Trustee shall promptly authenticate and send or cause to be transferred by book entry to such holders a new Convertible Subordinated Note equal in principal amount to any unpurchased portion of the Convertible Subordinated Note surrendered, if any; provided that such new Convertible Subordinate Notes will be in a Principal Amount of $1,000 or an integral multiple thereof. Any Convertible Subordinated Notes not properly tendered shall be promptly mailed or delivered by the Company to the holder thereof. 27 In the case of any reclassification, change, consolidation, merger, share exchange, combination or sale or conveyance to which Section 12.14 applies in which the Common Stock of the Company is changed or exchanged as a result into the right to receive stock, securities or other property or assets (including cash) which includes shares of common stock of the Company or another person that are, or upon issuance will be, traded on a United States national securities exchange or approved for trading on an established automated over-the-counter trading market in the United States and such shares constitute at the time such change or exchange becomes effective in excess of 50% of the aggregate fair market value of such stock, securities other property and assets (including cash) (as determined by the Company, which determination shall be conclusive and binding), then the person formed by such consolidation or resulting from such merger or share exchange or which acquires such assets, as the case may be, shall execute and deliver to the Trustee a supplemental indenture (which shall comply with the TIA as in force at the date of execution of such supplemental indenture) modifying the provisions of this Indenture relating to the right of holders of Convertible Subordinated Notes to cause the Company to repurchase Convertible Subordinated Notes following a Fundamental Change, including the applicable provisions of this Section 3.10 and the definitions of Fundamental Change, Change of Control and Termination of Trading, as appropriate, as determined in good faith by the Company (which determination shall be conclusive and binding), to make such provision apply to such common stock and the issuer thereof if different from the Company and Common Stock of the Company (in lieu of the Company and the Common Stock of the Company). The Fundamental Change Offer shall be made by the Company in compliance with all applicable provisions of the Exchange Act, and all applicable tender offer rules promulgated thereunder, to the extent such laws and regulations are then applicable and shall include all instructions and materials that the Company shall reasonably deem necessary to enable such holders of Convertible Subordinated Notes to tender their Convertible Subordinated Notes. ARTICLE 4 COVENANTS SECTION 4.01 Payment of Convertible Subordinated Notes. The Company shall pay the principal of and interest and Registration Default Damages, if any, on the Convertible Subordinated Notes on the dates and in the manner provided in the Convertible Subordinated Notes. Principal, interest and Registration Default Damages, if any, the Redemption Price, Repurchase Price and the Fundamental Change Payment shall be considered paid on the date due if the Trustee or Paying Agent (other than the Company or a subsidiary of the Company) holds as of 10:00 a.m., New York City time, on that date immediately available funds designated for and sufficient to pay all principal, interest, Registration Default Damages, if any, the Redemption Price, Repurchase Price or the Fundamental Change Payment then due, provided, however, that money held by the Agent for the benefit of holders of Senior Debt pursuant to the provisions of Article 11 hereof or the payment of which to the holders of the Convertible Subordinated Notes is prohibited by Article 11 shall not be considered to be designated for the payment of any principal of or interest or any Registration Default Damages on the Convertible Subordinated Notes within the meaning of this Section 4.01. 28 To the extent lawful, the Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on (i) overdue principal, at the rate borne by Convertible Subordinated Notes, compounded semiannually; and (ii) overdue installments of interest (without regard to any applicable grace period) at the same rate, compounded semiannually. SECTION 4.02 Commission Reports. The Company shall comply with Section 314(a) of the TIA. SECTION 4.03 Compliance Certificate. The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company, an Officers' Certificate stating that a review of the activities of the Company and its subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has fully performed its obligations under this Indenture and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge, the Company is not in default in the performance or observance of any of the terms and conditions hereof (or, if any Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge) and, that to the best of his or her knowledge, no event has occurred and remains in existence by reason of which payments on account of the principal of or interest or Registration Default Damages, if any, on the Convertible Subordinated Notes are prohibited. The Company shall, so long as any of the Convertible Subordinated Notes are outstanding, deliver to the Trustee, forthwith upon becoming aware of any Default or Event of Default, an Officers' Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. SECTION 4.04 Maintenance of Office or Agency. The Company shall maintain or cause to be maintained the office or agency required under Section 2.03. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency not maintained by the Trustee. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, presentations, surrenders, notices and demands with respect to the Convertible Subordinated Notes may be made or served at the Corporate Trust Office of the Trustee. The Company may also from time to time designate one or more other offices or agencies where the Convertible Subordinated Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designation. SECTION 4.05 Continued Existence. Subject to Article 5, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence. 29 SECTION 4.06 Appointments to Fill Vacancies in Trustee's Office. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 7.08, a Trustee, so that there shall at all times be a Trustee hereunder. SECTION 4.07 Stay, Extension and Usury Laws. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter enforced, that may affect the Company's obligation to pay the Convertible Subordinated Notes; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law insofar as such law applies to the Convertible Subordinated Notes, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law has been enacted. SECTION 4.08 Taxes. The Company shall, and shall cause each of its subsidiaries to, pay prior to delinquency all taxes, assessments and government levies; provided, however, that the Company shall not be required to pay or cause to be paid any such tax, assessment or levy (A) if the failure to do so will not, in the aggregate, have a material adverse impact on the Company and its subsidiaries taken as a whole, or (B) if the amount, applicability or validity is being contested in good faith by appropriate proceedings. SECTION 4.09 Investment Company Act. As long as any Convertible Subordinated Notes are outstanding, the Company will conduct its business and operations so as not to become an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the "Investment Company Act"), and will take all steps required in order for it to continue not to be an "investment company" and not to be required to be registered under the Investment Company Act, including, if necessary, redeployment of the assets of the Company. ARTICLE 5 SUCCESSORS SECTION 5.01 When the Company May Merge, Etc. The Company may not, in a single transaction or series of related transactions, consolidate or merge with or into or effect a share exchange with (whether or not the Company is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets to, any person as an entirety or substantially as an entirety unless: 30 (a) either (i) the Company shall be the surviving or continuing corporation or (ii) the person formed by or surviving any such consolidation or share exchange or into which the Company is merged (if other than the Company) or the person which acquires by sale, assignment, transfer, lease, conveyance or other disposition the properties and assets of the Company substantially as an entirety (1) shall be a corporation organized and validly existing under the laws of the United States or any State thereof and (2) shall expressly assume, by supplemental indenture the due and punctual payment of the principal of, any premium on, and any interest on, all of the Company's outstanding debt securities and the performance of every covenant in this Indenture and the Registration Rights Agreement and any other agreement related to the Company's outstanding debt securities on the part of the Company to be performed or observed, including, without limitation, with respect to this Indenture, modifications to rights of holders to cause the repurchase of Convertible Subordinated Notes upon a Fundamental Change in accordance with the penultimate paragraph of Section 3.10 and conversion rights in accordance with Section 12.14 to the extent required by such Sections; (b) immediately after giving effect to such transaction no Default and no Event of Default, after notice or lapse of time or both, shall have occurred and be continuing; (c) in case of any such consolidation, merger, conveyance or transfer, such successor corporation will succeed to and be substituted for the Company as obligor on the Convertible Subordinated Notes, with the same effect as if it had been named in the Indenture as the obligor and (d) the Company or such person shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that such consolidation, merger, share exchange, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with this provision of this Indenture and that all conditions precedent in this Indenture relating to such transaction have been satisfied. For purposes of this Section 5.01, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more subsidiaries of the Company, the capital stock of which constitutes all or substantially all of the properties and assets of the Company, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company. SECTION 5.02 Successor Corporation Substituted. Upon any such consolidation, merger, share exchange, sale, assignment, conveyance, lease, transfer or other disposition in accordance with Section 5.01, the successor person formed by such consolidation, or share exchange or into which the Company is merged or to which such 31 assignment, conveyance, lease, transfer or other disposition is made will succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor had been named as the Company therein, and thereafter (except in the case of a sale, assignment, transfer, lease, conveyance or other disposition) the predecessor corporation will be relieved of all further obligations and covenants under this Indenture and the Convertible Subordinated Notes. SECTION 5.03 Purchase Option on Change of Control. This Article 5 does not affect the obligations of the Company (including without limitation any successor to the Company) under Section 3.10. ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.01 Events of Default. An "Event of Default" with respect to any Convertible Subordinated Notes occurs if: (a) the Company defaults in the payment (whether or not such payment is prohibited by the subordination provisions set forth in Article 11 of this Indenture) of any interest on or Registration Default Damages on the Convertible Subordinated Notes when due (including any interest or Registration Default Damages, if any, payable in connection with a repurchase pursuant to Section 3.09 or Section 3.10 or in connection with any optional redemption payment pursuant to Article 3) and continuance of such default for 30 days or more; (b) the Company defaults in the payment (whether or not such payment is prohibited by the subordination provisions set forth in Article 11 of this Indenture) of principal of or premium, if any, on the Convertible Subordinated Notes when due and payable, including, without limitation, failure of the Company to make any optional redemption payment when required pursuant to Article 3; (c) the Company defaults in the payment of the Fundamental Change Payment or the Repurchase Price in respect of the Convertible Subordinated Notes on the date therefor, whether or not such payment is prohibited by the subordination provisions set forth in Article 11 of this Indenture; (d) the Company fails to provide timely notice of any Fundamental Change in accordance with Section 3.10; (e) a default in the Company's obligation to redeem the Convertible Subordinated Notes after it has exercised its redemption option, whether or not such payment is prohibited by the subordination provisions set forth in Article 11 of this Indenture; (f) a default in the Company's obligation to satisfy its conversion obligation pursuant to Article 12 of this Indenture upon exercise of a holder's conversion right; 32 (g) the Company defaults (other than a default set forth in clauses (a), (b), (c) and (d) above) in the performance of, or breaches, any other covenant or warranty of the Company set forth in this Indenture or the Convertible Subordinated Notes and fails to remedy such default or breach within a period of 30 days after the receipt of written notice to the Company from the Trustee or to the Company and the Trustee from the holders of at least 25% in aggregate Principal Amount of the then outstanding Convertible Subordinated Notes; (h) a default under any credit agreement, mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any subsidiary of the Company (or the payment of which is guaranteed by the Company or any of its subsidiaries), whether such Indebtedness or guarantee exists on the date of this Indenture or is created thereafter, which default (i) is caused by a failure to pay when due any principal of or interest on such Indebtedness within the grace period provided for in such Indebtedness (which failure continues beyond any applicable grace period) (a "Payment Default") or (ii) results in the acceleration of such Indebtedness prior to its express maturity (without such acceleration being rescinded or annulled) and, in each case, the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness under which there is a Payment Default or the maturity of which has been so accelerated, aggregates $5,000,000 or more; (i) a final, non-appealable judgment or final, non-appealable judgments (other than any judgment as to which a reputable insurance company has accepted full liability) for the payment of money are entered by a court or courts of competent jurisdiction against the Company or any subsidiaries of the Company and remain unstayed, unbonded or undischarged for a period (during which execution shall not be effectively stayed) of 60 days, provided that the aggregate amount of all such judgments exceeds $5,000,000; (j) the Company or any subsidiary, pursuant to or within the meaning of any Bankruptcy Law: (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a Custodian of it or for all or substantially all of its property, (iv) makes a general assignment for the benefit of its creditors, (v) makes the admission in writing that it generally is unable to pay its debts as the same become due; or (k) a court of competent jurisdiction enters a judgment, order or decree under any Bankruptcy Law that: (i) is for relief against the Company or any subsidiary in an involuntary case, 33 (ii) appoints a Custodian of the Company or any subsidiary, and the order or decree remains unstayed and in effect for 90 days or (iii) orders the liquidation of the Company or any subsidiary, and the order or decree remains unstayed and in effect for 90 days. The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal or state law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. SECTION 6.02 Acceleration. If an Event of Default (other than an Event of Default with respect to the Company specified in clauses (j) and (k) of Section 6.01) occurs and is continuing, then and in every such case the Trustee, by written notice to the Company, or the holders of at least 25% in aggregate Principal Amount of the then outstanding Convertible Subordinated Notes, by written notice to the Company and the Trustee, may declare the unpaid Principal Amount of, premium, if any, and accrued and unpaid interest and Registration Default Damages, if any, on all the Convertible Subordinated Notes to be due and payable. Upon such declaration such Principal Amount, premium, if any, and accrued and unpaid interest and Registration Default Damages, if any, shall become immediately due and payable, notwithstanding anything contained in this Indenture or the Convertible Subordinated Notes to the contrary, but subject to the provisions of Article 11 hereof. If any Event of Default with respect to the Company specified in clauses (j) or (k) of Section 6.01 occurs, all unpaid Principal Amount of and premium, if any, and accrued and unpaid interest and Registration Default Damages, if any, on the Convertible Subordinated Notes then outstanding shall become automatically due and payable subject to the provisions of Article 11 hereof, without any declaration or other act on the part of the Trustee or any holder of Convertible Subordinated Notes. The holders of a majority in aggregate Principal Amount of the then outstanding Convertible Subordinated Notes by notice to the Trustee may rescind an acceleration of the Convertible Subordinated Notes and its consequences if all existing Events of Default including payment of the Trustee's fees and expenses (other than nonpayment of principal of or premium, if any, and interest and Registration Default Damages, if any, on the Convertible Subordinated Notes which has become due solely by virtue of such acceleration) have been cured or waived and if the rescission would not conflict with any judgment or decree of any court of competent jurisdiction. No such rescission shall affect any subsequent Default or Event of Default or impair any right consequent thereto. SECTION 6.03 Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of Principal Amount of or interest or Registration Default Damages, if applicable, on the Convertible Subordinated Notes or to enforce the performance of any provision of the Convertible Subordinated Notes or this Indenture, subject to the provisions of Article 11 hereof. The Trustee may maintain a proceeding even if it does not possess any of the Convertible Subordinated Notes or does not produce any of 34 them in the proceeding. A delay or omission by the Trustee or any holder of a Convertible Subordinated Note in exercising any right or remedy occurring upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. SECTION 6.04 Waiver of Past Defaults. The holders of a majority in aggregate Principal Amount of the Convertible Subordinated Notes then outstanding may, on behalf of the holders of all the Convertible Subordinated Notes, waive an existing Default or Event of Default and its consequences, except a Default or Event of Default in the payment of the principal of, premium, if any, or interest or Registration Default Damages, if applicable, on the Convertible Subordinated Notes (other than the non-payment of principal of and premium, if any, and interest and Registration Default Damages, if any, on the Convertible Subordinated Notes which has become due solely by virtue of an acceleration which has been duly rescinded as provided above), or in respect of a covenant or provision of this Indenture which cannot be modified or amended without the consent of all holders of Convertible Subordinated Notes. When a Default or Event of Default is waived, it is cured and stops continuing. No waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. SECTION 6.05 Control by Majority. The holders of a majority in aggregate Principal Amount of the then outstanding Convertible Subordinated Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture that the Trustee determines may be unduly prejudicial to the rights of other holders of Convertible Subordinated Notes or that may involve the Trustee in personal liability; provided that the Trustee shall have no duty or obligation (subject to Section 7.01) to ascertain whether or not such actions of forebearances are unduly prejudicial to such holders; provided, further, that the Trustee may take any other action the Trustee deems proper that is not inconsistent with such directions. SECTION 6.06 Limitation on Suits. A holder of a Convertible Subordinated Note may not pursue any remedy with respect to this Indenture or the Convertible Subordinated Notes unless: (1) the holder gives to the Trustee notice of a continuing Event of Default; (2) the holders of at least 25% in Principal Amount of the then outstanding Convertible Subordinated Notes make a request to the Trustee to pursue the remedy; (3) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity; and 35 (4) during such 60-day period the holders of a majority in Principal Amount of the then outstanding Convertible Subordinated Notes do not give the Trustee a direction inconsistent with the request. A holder of a Convertible Subordinated Note may not use this Indenture to prejudice the rights of another holder or to obtain a preference or priority over another holder. SECTION 6.07 Rights of Holders to Receive Payment. Subject to the provisions of Article 11 hereof, notwithstanding any other provision of this Indenture, the right of any holder of a Convertible Subordinated Note to receive payment of principal, premium, if any, and interest and Registration Default Damages, if any, on the Convertible Subordinated Note, on or after the respective due dates expressed in the Convertible Subordinated Note, or to bring suit for the enforcement of any such payment on or after such respective dates, or to bring suit for the enforcement of the right to convert the Convertible Subordinated Note shall not be impaired or affected without the consent of the holder of a Convertible Subordinated Note. SECTION 6.08 Collection Suit by Trustee. Subject to the provisions of Article 11 hereof, if an Event of Default specified in Section 6.01(a), (b), or (e) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal and interest and Registration Default Damages, if any, remaining unpaid on the Convertible Subordinated Notes and interest on overdue principal and interest and Registration Default Damages, if any, and such further amount as shall be sufficient to cover the costs and, to the extent lawful, expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. SECTION 6.09 Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the holders of Convertible Subordinated Notes allowed in any judicial proceedings relative to the Company, its creditors or its property. Nothing contained herein shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any holder of a Convertible Subordinated Note any plan of reorganization, arrangement, adjustment or composition affecting the Convertible Subordinated Notes or the rights of any holder thereof, or to authorize the Trustee to vote in respect of the claim of any holder in any such proceeding. The Trustee may participate as a member of any official committee of creditors appointed in matters as it deems necessary or advisable. SECTION 6.10 Priorities. If the Trustee collects any money pursuant to this Article, it shall pay out the money in the following order: 36 First: to the Trustee for amounts due under Section 7.07, including payment of all compensation, expenses and liabilities incurred, and all advances made, by the Trustee, and the costs and expenses of collection; Second: to holders of Senior Debt to the extent required by Article 11; Third: to holders of Convertible Subordinated Notes for amounts due and unpaid on the Convertible Subordinated Notes for principal, premium, if any, and interest and Registration Default Damages, if any, ratably, without preference or priority of any kind, according to the amounts due and payable on the Convertible Subordinated Notes for principal, premium, if any, and interest and Registration Default Damages, if any, respectively; and Fourth: to the Company. Except as otherwise provided in Section 2.12, the Trustee may fix a record date and payment date for any payment to holders of Convertible Subordinated Notes. SECTION 6.11 Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit, other than the Trustee, of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a holder pursuant to Section 6.07 or a suit by holders of more than 10% in aggregate Principal Amount of the then outstanding Convertible Subordinated Notes. ARTICLE 7 THE TRUSTEE The Trustee hereby accepts the trust imposed upon it by this Indenture and covenants and agrees to perform the same, as herein expressed. Whether or not herein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Article 7. SECTION 7.01 Duties of the Trustee. (a) If an Event of Default known to a Trust Officer of the Trustee has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (b) Except during the continuance of an Event of Default actually known to the Trustee: 37 (1) The duties of the Trustee shall be determined solely by the express provisions of this Indenture, and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any statements, certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the form required by this Indenture. (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: (1) This paragraph does not limit the effect of paragraph (b) of this Section; (2) The Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05. (d) Whether or not therein expressly so provided, every provision of this Indenture that is in any way related to the Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01. (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any financial liability in the performance of any of its duties or the exercise of any of its rights and powers hereunder, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk of liability is not reasonably assured to it. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. SECTION 7.02 Rights of the Trustee. (a) The Trustee may rely on and shall be protected in acting or refraining from acting upon any resolution, Officers' Certificate, or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, security or other document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter contained therein. (b) Any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by an Officers' Certificate (unless other evidence in respect thereof is 38 herein specifically prescribed). In addition, before the Trustee acts or refrains from acting, it may require an Officers' Certificate, an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through its attorneys and agents and other persons not regularly in its employ and shall not be responsible for the misconduct or negligence of any attorney or agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith without negligence or willful misconduct which it believes to be authorized or within its discretion, rights or powers. (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by Officers of the Company. (f) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder. (g) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or discretion of any of the holders of Convertible Subordinated Notes pursuant to the provisions of this Indenture, unless such holders have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities which might be incurred therein or thereby. (h) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, security or other document unless requested in writing to do so by the holders of not less than a majority in aggregate Principal Amount of the Convertible Subordinated Notes then outstanding, provided that if the Trustee determines in its discretion to make any such investigation, then it shall be entitled, upon reasonable prior notice and during normal business hours, to examine the books and records and the premises of the Company, personally or by agent or attorney, and the reasonable expenses of every such examination shall be paid by the Company or, if paid by the Trustee or any predecessor Trustee, shall be reimbursed by the Company upon demand. (i) The permissive rights of the Trustee to do things enumerated in this Indenture shall not be construed as a duty, and the Trustee shall not be answerable for other than its negligence or willful misconduct. (j) The Trustee shall not be responsible for the computation of any adjustment to the Conversion Rate or for any determination as to whether an adjustment is required and shall not be deemed to have knowledge of any adjustment unless and until it shall have received the notice from the Company contemplated by Section 12.11. 39 SECTION 7.03 Individual Rights of the Trustee. Subject to Sections 7.10 and 7.11, the Trustee in its individual or any other capacity may become the owner or pledgee of Convertible Subordinated Notes with the same rights it would have if it were not the Trustee and may otherwise deal with the Company or an Affiliate of the Company and receive, collect, hold and retain collections from the Company with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. SECTION 7.04 Trustee's Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Convertible Subordinated Notes. It shall not be accountable for the Company's use of the proceeds from the Convertible Subordinated Notes or any money paid to the Company or upon the Company's direction under any provision of this Indenture. It shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Convertible Subordinated Notes or any other document in connection with the sale of the Convertible Subordinated Notes or pursuant to this Indenture other than its certificate of authentication. SECTION 7.05 Notice of Defaults. If a Default or Event of Default occurs and is continuing and if it is known to a Trust Officer of the Trustee, the Trustee shall mail to each holder of a Convertible Subordinated Note a notice of the Default or Event of Default within 60 days after it occurs. A Default or an Event of Default shall not be considered known to a Trust Officer of the Trustee unless it is a Default or Event of Default in the payment of principal, interest or Registration Default Damages, if any, when due under Section 6.01(a), (b), (c) or (e), as applicable, or a Trust Officer of the Trustee shall have received notice thereof, in accordance with this Indenture, from the Company or from the holders of a majority in aggregate Principal Amount of the outstanding Convertible Subordinated Notes. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest or Registration Default Damages, if any, on any Convertible Subordinated Note, the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is in the interest of the holders of the Convertible Subordinated Notes. SECTION 7.06 Reports by the Trustee to Holders. Within 60 days after the reporting date stated in Section 10.10, the Trustee shall mail to holders of Convertible Subordinated Notes a brief report dated as of such reporting date that complies with TIA Section 313(a) (but if no event described in TIA Section 313(a) has occurred within twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA Section 313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA Section 313(c) and TIA Section 313(d). A copy of each report at the time of its mailing to holders of Convertible Subordinated Notes shall be filed, at the expense of the Company, by the Trustee with the Commission and each stock exchange or securities market, if any, on which the Convertible Subordinated Notes 40 are listed. The Company shall timely notify the Trustee when the Convertible Subordinated Notes are listed or quoted on any stock exchange or securities market. SECTION 7.07 Compensation and Indemnity. The Company shall pay to the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation for its acceptance of this Indenture and its services hereunder. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by or on behalf of it in addition to the compensation for its services. Such expenses may include the reasonable compensation, disbursements and expenses of the Trustee's agents, counsel and other persons not regularly in its employ. The Company shall indemnify the Trustee (including in each of its capacities hereunder) against, and defend and hold the Trustee harmless from, any loss, liability or expense incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture and the trusts hereunder, including the costs and expenses of defending itself against or investigating any claim of liability in the premises, except as set forth in the next paragraph. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder, except to the extent such failure of notice materially adversely affects the Company. The Company shall defend the claim with counsel designated by the Company, who may be outside counsel to the Company but shall in all events be reasonably satisfactory to the Trustee, and the Trustee shall cooperate in the defense. The indemnification herein extends to any settlement, provided that the Company will not be liable for any settlement made without its consent, provided, further, that such consent will not be unreasonably withheld. The Company need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee through its own negligence or willful misconduct. The Trustee shall have a lien prior to the Convertible Subordinated Notes on all money or property held or collected by the Trustee to secure the Company's payment obligations in this Section 7.07, except that held in trust to pay principal, interest and Registration Default Damages, if any, on Convertible Subordinated Notes. Such liens and the Company's obligations under this Section 7.07 shall survive the satisfaction and discharge of this Indenture. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(h) or (i) occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. The provisions of this Section 7.07 shall survive the termination of this Indenture, and shall extend to each agent, Custodian and other person employed by the Trustee consistent with the terms of this Indenture. 41 SECTION 7.08 Replacement of the Trustee. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section 7.08. The Trustee may resign at any time and be discharged from the trust hereby created by so notifying the Company. The holders of a majority in aggregate Principal Amount of the then outstanding Convertible Subordinated Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if: (1) the Trustee fails to comply with Section 7.10; (2) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (3) a Custodian or public officer takes charge of the Trustee or its property; or (4) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the holders of a majority in aggregate Principal Amount of the then outstanding Convertible Subordinated Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the holders of at least 10% in aggregate Principal Amount of the then outstanding Convertible Subordinated Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee after written request by any holder of a Convertible Subordinated Note who has been a holder for at least six months fails to comply with Section 7.10, such holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to holders of Convertible Subordinated Notes. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, provided that all sums owing to the retiring Trustee hereunder have been paid and subject to the lien provided for in Section 7.07. Notwithstanding the replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 shall continue for the benefit of the retiring Trustee with respect to expenses and liabilities incurred by it prior to such replacement. 42 Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in the preceding paragraph. SECTION 7.09 Successor Trustee by Merger, etc. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business (including the trust created by this Indenture) to, another corporation or national banking association, the resulting, surviving or transferee corporation or national banking association without any further act shall be the successor Trustee with the same effect as if the successor Trustee had been named as the Trustee herein. SECTION 7.10 Eligibility, Disqualification. This Indenture shall always have a Trustee who satisfies the requirements of TIA Section 310(a)(1). The Trustee shall always have a combined capital and surplus as stated in Section 10.10. The Trustee is subject to TIA Section 310(b) regarding the disqualification of a trustee upon acquiring a conflicting interest. SECTION 7.11 Preferential Collection of Claims Against Company. The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship set forth in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein. ARTICLE 8 SATISFACTION AND DISCHARGE OF INDENTURE SECTION 8.01 Discharge of Indenture. When (a) the Company delivers to the Trustee for cancellation all Convertible Subordinated Notes theretofore authenticated (other than any other Convertible Subordinated Notes which have been destroyed, lost or stolen and in lieu of or in substitution for which other Convertible Subordinated Notes have been authenticated and delivered) and not theretofore canceled, or (b) all the Convertible Subordinated Notes not theretofore canceled or delivered to the Trustee for cancellation have become due and payable, or are by their terms will become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and the Company deposits with the Trustee (after the Company obtains the necessary consents under the Senior Credit Facility to make such deposit if the Senior Credit Facility is then in effect and such deposit is then prohibited by the Senior Credit Facility), in trust, amounts sufficient to pay at maturity or upon redemption of all of the Convertible Subordinated Notes (other than any Convertible Subordinated Notes which have been mutilated, destroyed, lost or stolen and in lieu of or in substitution for which other Convertible Subordinated Notes have been authenticated and delivered) not theretofore canceled or delivered to the Trustee for cancellation, including principal and premium, if any, interest and Registration Default Damages, if any, due or to become due to such Maturity Date or Redemption Date, as the case may be, and if in either case 43 the Company also pays, or causes to be paid, all other sums payable hereunder by the Company, then this Indenture shall cease to be of further effect (except as to (i) rights of registration of transfer, substitution, replacement and exchange and conversion of Convertible Subordinated Notes, (ii) rights hereunder of holders of Convertible Subordinated Notes to receive payments of principal of and premium, if any, interest and Registration Default Damages, if any, on, the Convertible Subordinated Notes, (iii) the obligations under Sections 2.03 and 8.05 hereof and (iv) the rights, obligations and immunities of the Trustee hereunder), and the Trustee, on demand of the Company accompanied by an Officers' Certificate and an Opinion of Counsel as required by Section 10.04 and at the Company's cost and expense, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture; the Company, however, hereby agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred by the Trustee and to compensate the Trustee for any services thereafter reasonably and properly rendered by the Trustee in connection with this Indenture or the Convertible Subordinated Notes. SECTION 8.02 Deposited Monies to Be Held in Trust by Trustee. Subject to Section 8.04, all monies deposited with the Trustee pursuant to Section 8.01 shall be held in trust and applied by it to the payment, notwithstanding the provisions of Article 11, either directly or through the Paying Agent, to the holders of the particular Convertible Subordinated Notes for the payment or redemption of which such monies have been deposited with the Trustee, of all sums due and to become due thereon for principal, interest and Registration Default Damages, if any, and premium, if any. SECTION 8.03 Paying Agent to Repay Monies Held. Upon the satisfaction and discharge of this Indenture, all monies then held by any Paying Agent (other than the Trustee) shall, upon the Company's demand, be repaid to it or paid to the Trustee, and thereupon such Paying Agent shall be released from all further liability with respect to such monies. SECTION 8.04 Return of Unclaimed Monies. Subject to the requirements of applicable law, any monies deposited with or paid to the Trustee for payment of the principal of, premium, if any, interest or Registration Default Damages, if any, on Convertible Subordinated Notes and not applied but remaining unclaimed by the holders thereof for two years after the date upon which the principal of, premium, if any, interest or Registration Default Damages, if any, on such Convertible Subordinated Notes, as the case may be, have become due and payable, shall be repaid to the Company by the Trustee on demand; provided, however, that the Company, or the Trustee at the request of the Company, shall have first caused notice of such payment to the Company to be mailed to each holder of a Convertible Subordinated Note entitled thereto no less than 30 days prior to such payment and all liability of the Trustee shall thereupon cease with respect to such monies; and the holder of any of the Convertible Subordinated Notes shall thereafter look only to the Company for any payment which such holder may be entitled to collect unless an applicable abandoned property law designates another person. 44 SECTION 8.05 Reinstatement. If the Trustee or the Paying Agent is unable to apply any money in accordance with Section 8.02 by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Convertible Subordinated Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.01 until such time as the Trustee or the Paying Agent is permitted to apply all such money in accordance with Section 8.02; provided, however, that if the Company makes any payment of interest or Registration Default Damages, if any, on or principal of any Convertible Subordinated Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the holders thereof to receive such payment from the money held by the Trustee or Paying Agent. ARTICLE 9 AMENDMENTS SECTION 9.01 Without the Consent of Holders. The Company and the Trustee may amend this Indenture or the Convertible Subordinated Notes without notice to or the consent of any holder of a Convertible Subordinated Note for the purposes of: (a) curing any ambiguity or correcting or supplementing any defective or inconsistent provision contained in this Indenture or making any other changes in the provisions of this Indenture which the Company and the Trustee may deem necessary or desirable provided such amendment does not materially and adversely affect the legal rights under the Indenture of the holders of Convertible Subordinated Notes. (b) providing for uncertificated Convertible Subordinated Notes in addition to or in place of certificated Convertible Subordinated Notes; (c) evidencing the succession of another person to the Company and providing for the assumption by such successor of the covenants and obligations of the Company thereunder and in the Convertible Subordinated Notes as permitted by Section 5.01; (d) providing for conversion rights and/or repurchase rights of holders of Convertible Subordinated Notes in the event of consolidation, merger, share exchange or sale of all or substantially all of the assets of the Company as required to comply with Sections 5.01 and/or 12.14; (e) increasing the Conversion Rate; (f) evidence and provide for the acceptance of appointment under this Indenture of a successor Trustee; 45 (g) making any changes that would provide the holders of the Convertible Subordinated Notes with any additional rights or benefits or that does not adversely affect the legal rights under this Indenture of any such holder; (h) modifying the subordination provisions of the Indenture in a manner adverse to the holders of the Convertible Subordinated Notes; or (i) complying with the requirements of the Commission in order to effect or maintain the qualification of the Indenture under the TIA. SECTION 9.02 With the Consent of Holders. Subject to Section 6.07, the Company and the Trustee may amend this Indenture or the Convertible Subordinated Notes with the written consent of the holders of at least a majority in aggregate Principal Amount of the then outstanding Convertible Subordinated Notes (including consents obtained in connection with a tender offer or exchange offer for Convertible Subordinated Notes). Subject to Sections 6.04 and 6.07, the holders of a majority in aggregate Principal Amount of the Convertible Subordinated Notes then outstanding may also waive compliance in a particular instance by the Company with any provision of this Indenture or the Convertible Subordinated Notes. However, without the consent of each holder of a Convertible Subordinated Note affected, an amendment or waiver under this Section may not (with respect to any Convertible Subordinated Notes held by a non-consenting holder): (a) reduce the principal amount of Convertible Subordinated Notes whose holders must consent to an amendment, supplement or waiver; (b) reduce the principal of or premium on or change the fixed maturity of any Convertible Subordinated Note or, except as permitted pursuant to Section 9.01(a), (d), (g) or (h), alter the redemption or repurchase provisions with respect thereto; (c) reduce the rate of, or change the time for payment of, interest, including defaulted interest or Registration Default Damages on any Convertible Subordinated Note; (d) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest or Registration Default Damages, if any, on the Convertible Subordinated Notes (except a rescission of acceleration of the Convertible Subordinated Notes by the holders of at least a majority in aggregate Principal Amount of the Convertible Subordinated Notes then outstanding and a waiver of the payment default that resulted from such acceleration); (e) make any Convertible Subordinated Note payable in money other than as provided for herein and in the Convertible Subordinated Notes; (f) make any change in the provisions of this Indenture relating to waivers of past Defaults or Events of Default or the rights of holders of Convertible Subordinated Notes to 46 receive payments of principal of, or interest or Registration Default Damages, if any, on the Convertible Subordinated Notes; (g) except as permitted herein (including Section 9.01(a)), decrease the Conversion Rate or modify the provisions contained herein relating to conversion of the Convertible Subordinated Notes in a manner adverse to the holders thereof; (h) make any change to the ability of holder of Convertible Subordinated Notes to enforce their rights under the Indenture or the provisions of clauses (a) through (i) of Section 9.02 of the Indenture; (i) reduce the Redemption Price, Repurchase Price or Fundamental Change Purchase Price of the Convertible Subordinated Notes; (j) modify the subordination provisions of this Indenture as set forth in Article 11 a manner adverse to the holders of the Convertible Subordinated Notes; or (k) make any change that adversely affects the right to convert the Convertible Subordinated Notes. To secure a consent of the holders of Convertible Subordinated Notes under this Section, it shall not be necessary for such holders to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment or waiver under this Section becomes effective, the Company shall mail to holders of Convertible Subordinated Notes a notice briefly describing the amendment or waiver. SECTION 9.03 Compliance With the Trust Indenture Act. Every amendment to this Indenture or the Convertible Subordinated Notes shall be set forth in a supplemental indenture that complies with the TIA as then in effect. SECTION 9.04 Revocation and Effect of Consents. Until an amendment or waiver becomes effective, a consent to it by a holder of a Convertible Subordinated Note is a continuing consent by the holder and every subsequent holder of a Convertible Subordinated Note or portion of a Convertible Subordinated Note that evidences the same debt as the consenting holder's Convertible Subordinated Note, even if notation of the consent is not made on any Convertible Subordinated Note. However, any such holder or subsequent holder may revoke the consent as to his or her Convertible Subordinated Note or portion of a Convertible Subordinated Note if the Trustee receives the notice of revocation before the date on which the Trustee receives an Officers' Certificate certifying that the holders of the requisite principal amount of Convertible Subordinated Notes have consented to the amendment or waiver. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the holders of Convertible Subordinated Notes entitled to consent to any amendment 47 or waiver. If a record date is fixed, then notwithstanding the provisions of the immediately preceding paragraph, those persons who were holders of Convertible Subordinated Notes at such record date (or their duly designated proxies), and only those persons, shall be entitled to consent to such amendment or waiver or to revoke any consent previously given, whether or not such persons continue to be holders after such record date. No consent shall be valid or effective for more than 90 days after such record date unless consents from holders of the principal amount of Convertible Subordinated Notes required hereunder for such amendment or waiver to be effective shall have also been given and not revoked within such 90-day period. After an amendment or waiver becomes effective it shall bind every holder of a Convertible Subordinated Note, unless it is of the type described in clauses (a) - (j) of Section 9.02. In such case, the amendment or waiver shall bind each holder of a Convertible Subordinated Note who has consented to it and every subsequent holder of a Convertible Subordinated Note or portion of a Convertible Subordinated Note that evidences the same debt as the consenting holder's Convertible Subordinated Note. SECTION 9.05 Notation on or Exchange of Convertible Subordinated Notes. Convertible Subordinated Notes authenticated and delivered after the execution of any supplemental indenture pursuant to this Article 9 may, and shall if required by the Trustee, bear a notation in the form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Convertible Subordinated Notes so modified as to conform, in the opinion of the Company and the Trustee, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for outstanding Convertible Subordinated Notes without charge to the holders of the Convertible Subordinated Notes, except as specified in Section 2.06. SECTION 9.06 Trustee Protected. The Trustee shall sign any amendment or supplemental indenture authorized pursuant to this Article 9 if such amendment or supplemental indenture does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If such amendment or supplemental indenture does adversely affect the rights, duties, liabilities or immunities of the Trustee, the Trustee may, but need not, sign it. In signing such amendment or supplemental indenture, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel as conclusive evidence that such amendment or supplemental indenture is authorized or permitted by this Indenture, that it is not inconsistent herewith, and that it will be valid and binding upon the Company in accordance with its terms. ARTICLE 10 GENERAL PROVISIONS SECTION 10.01 Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA Section 318(c), such duties imposed by such section of the TIA shall control. If any provision of this Indenture expressly modifies or excludes any provision of the TIA that may be so modified 48 or excluded, the Indenture provision so modifying or excluding such provision of the TIA shall be deemed to apply. SECTION 10.02 Notices. Any notice or communication by the Company or the Trustee to the other is duly given if in writing and delivered in person or mailed by first-class mail, with postage prepaid (registered or certified, return receipt requested), or sent by facsimile or overnight air couriers guaranteeing next day delivery, to the other's address as stated in Section 10.10. The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. All notices and communications (other than those sent to holders of Convertible Subordinated Notes) shall be deemed to have been duly given at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when transmission is confirmed, if transmitted by facsimile; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any notice or communication to a holder of a Convertible Subordinated Note shall be mailed by first-class mail, with postage prepaid, to his or her address shown on the Register kept by the Registrar. Failure to mail a notice or communication to a holder or any defect in it shall not affect its sufficiency with respect to other holders. If a notice or communication to a holder of a Convertible Subordinated Note is sent in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. If the Company sends a notice or communication to holders of Convertible Subordinated Notes, it shall send a copy to the Trustee and each Agent at the same time. All notices or communications shall be in writing. SECTION 10.03 Communication by Holders With Other Holders. Holders may communicate pursuant to TIA Section 312(b) with other holders with respect to their rights under this Indenture or the Convertible Subordinated Notes. The Company, the Trustee, the Registrar and the paying agent shall have the protection of TIA Section 312(c). SECTION 10.04 Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (1) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 10.05) stating that, in the opinion of such person, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been complied with; and 49 (2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 10.05) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been complied with. SECTION 10.05 Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA Section 314(a)(4)) shall include: (1) a statement that the person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. Any Officers' Certificate may be based, insofar as it relates to legal matters, upon an Opinion of Counsel, unless such Officer knows that the opinion with respect to the matters upon which his or her certificate may be based as aforesaid is erroneous. Any Opinion of Counsel may be based, insofar as it relates to factual matters, upon certificates, statements or opinions of, or representations by an officer or officers of the Company, or other persons or firms deemed appropriate by such counsel, unless such counsel knows that the certificates, statements or opinions or representations with respect to the matters upon which his or her opinion may be based as aforesaid are erroneous. Any Officers' Certificate, statement or Opinion of Counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representation by an accountant (who may be an employee of the Company), or firm of accountants, unless such Officer or counsel, as the case may be, knows that the certificate or opinion or representation with respect to the accounting matters upon which his or her certificate, statement or opinion may be based as aforesaid is erroneous. SECTION 10.06 Rules by Trustee and Agents. The Trustee may make reasonable rules for action by, or a meeting of, holders of Convertible Subordinated Notes. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. 50 SECTION 10.07 Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday or a day on which banking institutions in the City of New York or the city in which the Corporate Trust Office of the Trustee is located are not required to be open, and a "Business Day" is any day that is not a Legal Holiday. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. If any date specified in this Indenture, including, without limitation, a Redemption Date under Paragraph 6 of the Convertible Subordinated Notes or a purchase by the Company under paragraph 7 of the Convertible Subordinated Notes, is a Legal Holiday, then such date shall be the next succeeding Business Day. SECTION 10.08 No Recourse Against Others. No director, officer, employee, shareholder or Affiliate, as such, of the Company from time to time shall have any liability for any obligations of the Company under the Convertible Subordinated Notes or this Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each holder by accepting a Convertible Subordinated Note waives and releases all such liability. This waiver and release are part of the consideration for the Convertible Subordinated Notes. Each of such directors, officers, employees, shareholders and Affiliates is a third party beneficiary of this Section 10.08. SECTION 10.09 Counterparts. This Indenture may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. SECTION 10.10 Other Provisions. The Company initially appoints the Trustee as Paying Agent, Registrar and authenticating agent. The reporting date for Section 7.06 is April 30 of each year. The first reporting date is the April 30 following the issuance of Convertible Subordinated Notes hereunder. The Trustee shall always have, or shall be a subsidiary of a bank or bank holding company which has, a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. The Company's address is: CKE Restaurants, Inc. 6307 Carpinteria Avenue, Suite A, Carpinteria, CA 93013 Attention: Chief Financial Officer Facsimile: (714) 780-6311 Telephone: (805) 745-7725 51 The Trustee's address is: J.P. Morgan Trust Company, National Association 560 Mission St., Floor 13 San Francisco, CA 94105 Attention: Mitch Gardner Facsimile: (415) 315-7745 Telephone: (415) 315-7585 SECTION 10.11 Governing Law. The internal laws of the State of New York shall govern this Indenture and the Convertible Subordinated Notes, without regard to the conflict of laws provisions thereof. SECTION 10.12 No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or a subsidiary. Any such other indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 10.13 Successors. All agreements of the Company in this Indenture and the Convertible Subordinated Notes shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor. SECTION 10.14 Severability. In case any provision in this Indenture or in the Convertible Subordinated Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 10.15 Table of Contents, Headings, etc. The Table of Contents, Cross-Reference Table and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms or provisions hereof. ARTICLE 11 SUBORDINATION SECTION 11.01 Agreement to Subordinate. The Company agrees, and each holder of Convertible Subordinated Notes by accepting a Convertible Subordinated Note agrees, that the Obligations evidenced by the Convertible Subordinated Note are subordinated in right of payment, to the extent and in the manner provided in this Article 11, to the prior payment in full when due, in cash or other payment satisfactory to holders of Senior Debt of all Senior Debt (whether outstanding on the date hereof 52 or hereafter created, incurred, assumed or guaranteed), and that the subordination is for the benefit of the holders of Senior Debt. SECTION 11.02 Liquidation; Dissolution; Bankruptcy. Upon any distribution to creditors of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property, in an assignment for the benefit of creditors or any marshaling of the Company's assets and liabilities: (1) holders of Senior Debt shall be entitled to receive payment in full of all Obligations due or to become due in respect of such Senior Debt (including interest after the commencement of any such proceeding at the rate specified in the applicable Senior Debt) in cash or other payment satisfactory to the holders of the Senior Debt before holders of Convertible Subordinated Notes shall be entitled to receive any payment with respect to the Convertible Subordinated Notes; and (2) until all Obligations due in respect of Senior Debt is paid in full in cash or other payment satisfactory to the holders of the Senior Debt, any distribution to which holders of Convertible Subordinated Notes would be entitled but for this Article 11 shall be made to holders of Senior Debt, as their interests may appear. SECTION 11.03 Default on Senior Debt and/or Designated Senior Indebtedness. Anything in this Indenture to the contrary notwithstanding, no payment on account of principal of or premium, if any, interest or Registration Default Damages, if any, on or other amounts due on the Convertible Subordinated Notes (including without limitation the making of a deposit pursuant to Section 3.06, 3.09 or 3.10), and no redemption, repurchase, or other acquisition of the Convertible Subordinated Notes, shall be made by or on behalf of the Company if: (1) a default in the payment of any Senior Debt Obligations occurs, whether at maturity, a date is fixed for prepayment or by declaration of acceleration or otherwise, and is continuing beyond any applicable period of grace, unless and until such payment default shall have been cured or waived or shall have ceased to exist; or (2) a default, other than a payment default described in clause (1) above, on any Designated Senior Indebtedness occurs and is continuing that then permits holders of such Designated Senior Indebtedness to accelerate its maturity and the Trustee receives a written notice of the default (a "Payment Blockage Notice") from the holders of Designated Senior Indebtedness or their representative (a "Non-Payment Default"). If the Trustee receives a Payment Blockage Notice that there has occurred and is continuing a Non-Payment Default under a Designated Senior Indebtedness, or any agreement under which such Designated Senior Indebtedness is issued, no subsequent Payment Blockage Notice shall be effective for purposes of this Section 11.03 unless and until at least 365 days shall have elapsed since the initial effectiveness of the immediately prior Payment Blockage Notice and all scheduled payment on the Convertible Subordinated Notes that have come due 53 have been paid in full in cash. No Non-Payment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice. The Company may and shall resume payments on and distributions in respect of the Notes upon the earlier of: (1) in the case of a payment default under clause (1) above, the date upon which any such payment default is cured or waived or ceases to exist, or (2) in the case of a Non-Payment Default, the earlier of (x) the date upon which such default is cured or waived or ceases to exist or (y) 179 days after the date on which the applicable Payment Blockage Notice is received if the maturity of such Designated Senior Indebtedness has not been accelerated. SECTION 11.04 Acceleration of Convertible Subordinated Notes. In the event of the acceleration of the Convertible Subordinated Notes because of an Event of Default, the Company may not make any payment or distribution to the Trustee or any holder of Convertible Subordinated Notes in respect of Obligations with respect to Convertible Subordinated Notes and may not acquire or purchase from the Trustee or any holder of Convertible Subordinated Notes any Convertible Subordinated Notes until all of the Obligations due in respect of Senior Debt have been paid in full in cash or other payment satisfactory to the holders of Senior Debt or such acceleration is rescinded in accordance with the terms of this Indenture. If payment of the Convertible Subordinated Notes is accelerated because of an Event of Default, the Company or the Trustee shall promptly notify holders of Senior Debt or trustee(s) of such Senior Debt of the acceleration. SECTION 11.05 When Distribution Must Be Paid Over. In the event that the Trustee, any holder of Convertible Subordinated Notes or any other person receives any payment or distributions of assets of the Company of any kind with respect to the Convertible Subordinated Notes in contravention of any terms contained in this Indenture, whether in cash, property or securities, including, without limitation by way of set-off or otherwise, then such payment shall be held by the recipient in trust for the benefit of holders of Senior Debt, and shall be immediately paid over and delivered to the holders of Senior Debt or their representative(s), to the extent necessary to make payment in full of all Obligations due in respect of Senior Debt remaining unpaid, after giving effect to any concurrent payment or distribution or provision therefor, to or for the holders of Senior Debt; provided that the foregoing shall apply to the Trustee only if a Trust Officer of the Trustee has knowledge (as determined in accordance with Section 11.11) that such payment or distribution is prohibited by this Indenture. With respect to the holders of Senior Debt, the Trustee undertakes to perform only such obligations on the part of the Trustee as are specifically set forth in this Article 11, and no implied covenants or obligations with respect to the holders of Senior Debt shall be read into this 54 Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Debt, and shall not be liable to any such holders if the Trustee shall pay over or distribute to or on behalf of holders of Convertible Subordinated Notes or the Company or any other person money or assets to which any holders of Senior Debt shall be entitled by virtue of this Article 11, except if such payment is made as a result of the willful misconduct or gross negligence of the Trustee. SECTION 11.06 Notice by Company. The Company shall promptly notify the Trustee of any facts known to the Company that would cause a payment of any Obligations with respect to the Convertible Subordinated Notes or the purchase of any Convertible Subordinated Notes by the Company to violate this Article, but failure to give such notice shall not affect the subordination of the Convertible Subordinated Notes to the Senior Debt as provided in this Article. SECTION 11.07 Subrogation. After all Obligations due in respect of Senior Debt are paid in full and until the Convertible Subordinated Notes are paid in full, holders of Convertible Subordinated Notes shall be subrogated (equally and ratably with all other indebtedness pari passu with the Convertible Subordinated Notes) to the rights of holders of Senior Debt to receive distributions applicable to Senior Debt to the extent that distributions otherwise payable to the holders of Convertible Subordinated Notes have been applied to the payment of Senior Debt. A distribution made under this Article to holders of Senior Debt that otherwise would have been made to holders of Convertible Subordinated Notes is not, as between the Company and holders of Convertible Subordinated Notes, a payment by the Company on the Convertible Subordinated Notes. SECTION 11.08 Relative Rights. This Article 11 defines the relative rights of holders of Convertible Subordinated Notes and holders of Senior Debt. Nothing in this Indenture shall: (1) impair, as between the Company and holders of Convertible Subordinated Notes, the obligation of the Company, which is absolute and unconditional, to pay principal of, premium, if any, interest and Registration Default Damages, if any, on the Convertible Subordinated Notes in accordance with their terms; (2) affect the relative rights of holders of Convertible Subordinated Notes and creditors (other than with respect to Senior Debt) of the Company, other than their rights in relation to holders of Senior Debt; or (3) prevent the Trustee or any holder of Convertible Subordinated Notes from exercising its available remedies upon a Default or Event of Default, subject to the rights of holders and owners of Senior Debt to receive distributions and payments otherwise payable to holders of Convertible Subordinated Notes. 55 If the Company fails because of this Article 11 to pay principal of or interest and Registration Default Damages, if any, on a Convertible Subordinated Note on the due date, the failure is still a Default or Event of Default. SECTION 11.09 Subordination May Not Be Impaired by Company. No right of any holder of Senior Debt to enforce the subordination of the indebtedness evidenced by the Convertible Subordinated Notes as herein provided shall be prejudiced or impaired by any act or failure to act by the Company or any holder of Convertible Subordinated Notes or by the failure of the Company or any such holder to comply with this Indenture, regardless of any knowledge thereof any such holder may have or otherwise be charged with. SECTION 11.10 Distribution or Notice to Representative. Whenever a distribution is to be made or a notice given to holders of Senior Debt, the distribution may be made and the notice given to their Representative(s). Upon any payment or distribution of assets of the Company referred to in this Article 11, the Trustee and the holders of Convertible Subordinated Notes shall be entitled to rely upon any order or decree made by any court of competent jurisdiction or upon any certificate of such Representative or of the liquidating trustee or agent or other person making any distribution to the Trustee or to the holders of Convertible Subordinated Notes for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Debt and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 11. SECTION 11.11 Rights of Trustee and Paying Agent. Notwithstanding the provisions of this Article 11 or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment or distribution by the Trustee (other than pursuant to Section 11.04), and the Trustee may continue to make payments on the Convertible Subordinated Notes, unless a Trust Officer shall have received at least two Business Days prior to the date of such payment or distribution written notice of facts that would cause such payment or distribution with respect to the Convertible Subordinated Notes to violate this Article. Only the Company or a Representative may give the notice. Nothing in this Article 11 shall impair the claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof. The Trustee in its individual or any other capacity may hold Senior Debt with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. SECTION 11.12 Authorization to Effect Subordination. Each holder of a Convertible Subordinated Note by the holder's acceptance thereof authorizes and directs the Trustee on the holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in this Article 11, and appoints the 56 Trustee to act as the holder's attorney-in-fact for any and all such purposes. If the Trustee does not file a proper proof of claim or proof of debt in the form required in any proceeding referred to in Section 6.09 hereof at least 30 days before the expiration of the time to file such claim, the holders of any Senior Debt or their Representatives are hereby authorized to file an appropriate claim for and on behalf of the holders of the Convertible Subordinated Notes. SECTION 11.13 Article Applicable to Paying Agents. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article in addition to or in place of the Trustee; provided, however, that the second and third paragraphs of Section 11.11 shall not apply to the Company or any subsidiary of the Company if it or such subsidiary acts as Paying Agent. SECTION 11.14 Senior Debt Entitled to Rely. The holders of Senior Debt shall have the right to rely upon this Article 11, and no amendment or modification of the provisions contained herein shall diminish the rights of such holders unless such holders shall have agreed in writing thereto. SECTION 11.15 Permitted Payments. Notwithstanding anything to the contrary in this Article 11, the holders of Convertible Subordinated Notes may receive and retain at any time on or prior to the Maturity Date (i) securities that are subordinated to at least the same extent as the Convertible Subordinated Notes to (a) Senior Debt and (b) any securities issued in exchange for Senior Debt, (ii) payments and other distributions made from any trust created pursuant to Section 8.01 hereof and (iii) cash payments in lieu of fractional shares pursuant to Section 12.03. ARTICLE 12 CONVERSION OF CONVERTIBLE SUBORDINATED NOTES SECTION 12.01 Right to Convert. A holder of a Convertible Subordinated Note may convert such Convertible Subordinated Note into shares of Common Stock at any time during the periods and subject to the conditions stated in paragraph 9 of the Convertible Subordinated Notes, subject to the provisions of this Article 12. The number of shares of Common Stock issuable upon conversion of a Convertible Subordinated Note per $1,000 of Principal Amount thereof (the "Conversion Rate") shall be determined in accordance with the provisions of paragraph 9 of the Convertible Subordinated Notes. The initial Conversion Rate shall equal 112.4859 shares of Common Stock per $1,000 of Principal Amount of Convertible Subordinated Notes, subject to adjustment as described in this Article 12. 57 A holder may convert a portion of the Principal Amount of a Convertible Subordinated Note if the portion is $1,000 or an integral multiple of $1,000. Provisions of this Indenture that apply to conversion of all of a Convertible Subordinated Note also apply to conversion of a portion of a Convertible Subordinated Note. The Trustee (or other conversion agent appointed by the Company) shall, on behalf of the Company, determine whether the Convertible Subordinated Notes shall be convertible as a result of the occurrence of an event specified above and, if the Convertible Subordinated Notes shall be convertible, the Trustee (or other conversion agent appointed by the Company) shall promptly deliver to the Company and the Trustee (if the Trustee is not the conversion agent) written notice thereof. Whenever the Convertible Subordinated Notes shall become convertible pursuant to the foregoing condition, the Company or, at the Company's request, the Trustee in the name and at the expense of the Company, shall notify the holders of the event triggering such convertibility in the manner provided herein, and, in connection with providing such notice, the Company will issue a press release containing information regarding the event triggering such convertibility or publish such information on the Company's then existing website or through such other public medium as the Company shall determine. Any notice so given shall be conclusively presumed to have been duly given, whether or not the holder receives such notice. In determining whether the Convertible Subordinated Notes shall be convertible, the Trustee shall only be deemed to have knowledge of any credit rating event or the occurrence of any corporate transaction which would cause the Convertible Subordinated Notes to become convertible pursuant to paragraph 9 of the Convertible Subordinated Notes if it receives written notice thereof. The Company shall promptly notify the Trustee upon the occurrence of any event described in the third and fifth paragraph of paragraph 9 of the Convertible Subordinated Notes. SECTION 12.02 Exercise of Conversion Privilege; Issuance of Common Stock on Conversion; No Adjustment for Interest or Dividends. To convert a Convertible Subordinated Note into Common Stock (the shares of Common Stock issuable upon such conversion, the "Conversion Shares"), a holder must satisfy the requirements in paragraph 9 of the Convertible Subordinated Notes. The date on which the holder satisfies all those requirements is the conversion date (the "Conversion Date"). Following the Conversion Date, the Company shall deliver to the holder through the Conversion Agent, a certificate for the number of full shares of Common Stock issuable upon the conversion and cash in lieu of any fractional share determined pursuant to Section 12.03. The Company shall determine such full number of shares and the amounts of the required cash with respect to any fractional share, and shall set forth such information in an Officers' Certificate delivered to the Conversion Agent. The Conversion Agent shall have no duties under this paragraph unless and until it has received such certificate. The Person in whose name the certificate is registered shall be treated as a stockholder of record on and after the Conversion Date; provided, however, that no surrender of a Convertible Subordinated Note on any date when the stock transfer books of the Company shall be closed shall be effective to constitute the Person or Persons entitled to receive the shares of Common Stock upon such conversion as the record holder or holders of such shares of Common Stock on such date, but such surrender shall be effective to constitute the Person or Persons entitled to receive such shares of Common Stock as the record holder or holders thereof 58 for all purposes at the close of business on the next succeeding day on which such stock transfer books are open; such conversion shall be at the Conversion Rate in effect on the date that such Security shall have been surrendered for conversion, as if the stock transfer books of the Company had not been closed. Upon conversion of a Convertible Subordinated Note, such Person shall no longer be a holder of such Convertible Subordinated Note. Holders may surrender a Convertible Subordinated Note for conversion by means of book-entry delivery in accordance with paragraph 9 of the Convertible Subordinated Notes and the regulations of the applicable book-entry facility. No payment or adjustment will be made for dividends on, or other distributions with respect to, any Common Stock except as provided in this Article 12. On conversion of a Convertible Subordinated Note, the increases in Principal Amount and accrued interest attributable to the period from the Issue Date of the Convertible Subordinated Note through the Conversion Date, with respect to the converted Convertible Subordinated Note shall not be cancelled, extinguished or forfeited, but rather shall be deemed to be paid in full to the holder thereof through delivery of the Common Stock (together with the cash payment, if any, in lieu of fractional shares) in exchange for the Convertible Subordinated Note being converted pursuant to the provisions hereof; and the fair market value of such shares of Common Stock (together with any such cash payment in lieu of fractional shares) shall be treated as issued, to the extent thereof, first in exchange for the increases in Principal Amount and accrued interest through the Conversion Date, and the balance, if any, of such fair market value of such Common Stock (and any such cash payment) shall be treated as issued in exchange for the Issue Price of the Convertible Subordinated Note being converted pursuant to the provisions hereof. Notwithstanding the foregoing, accrued interest will be payable upon conversion of Convertible Subordinated Notes made concurrently with or after acceleration of Convertible Subordinated Notes following an Event of Default. If the holder converts more than one Convertible Subordinated Note at the same time, the number of shares of Common Stock issuable upon conversion shall be based on the aggregate Principal Amount of the Convertible Subordinated Notes converted. A Convertible Subordinated Note surrendered for conversion based on (a) the Common Stock price may be surrendered for conversion until the close of business on September 30, 2023, (b) the Convertible Subordinated Note being called for redemption may be surrendered for conversion at any time prior to the close of business on the Business Day immediately preceding the Redemption Date, even if it is not otherwise convertible at such time, and (c) the occurrence of certain corporate transactions more fully described in paragraph 9 of the Convertible Subordinated Notes under clause (a) of "Conversion Upon Occurrence of Certain Corporate Transactions" may be surrendered for conversion at any time from and after the date which is 15 days prior to the anticipated effective date of such transaction until 15 days after the actual date of such transaction, and if such day is not a Business Day, the next occurring Business Day following such day. Upon surrender of a Convertible Subordinated Note that is converted in part, the Company shall execute, and the Trustee shall authenticate and deliver to the holder, a new 59 Convertible Subordinated Note in an authorized denomination equal in Principal Amount to the unconverted portion of the Convertible Subordinated Note surrendered. Convertible Subordinated Note or portion thereof surrendered for conversion during the period from the close of business on the Regular Record Date next preceding any Interest Payment Date to the opening of business on such Interest Payment Date (except for Convertible Subordinated Notes to be redeemed within the period) shall be accompanied by payment, in funds acceptable to the Company, of an amount equal to the interest otherwise payable on such Interest Payment Date on the Principal Amount being converted; provided however, that no such payment need be made if (1) the Company has specified a Redemption Date that is after a record date and on or prior to the corresponding Interest Payment Date, (2) the Company has specified a Repurchase Date following a Fundamental Change that is during such period, or (3) any overdue interest exists at the time of conversion with respect to such Convertible Subordinated Notes, to the extent of such overdue interest. The holders of the Convertible Subordinated Notes will continue to be entitled to receive Registration Default Damages in accordance with the Registration Rights Agreement. SECTION 12.03 Cash Payments in Lieu of Fractional Shares. The Company will not issue a fractional share of Common Stock upon conversion of a Convertible Subordinated Note. Instead, the Company will deliver cash for the current market value of the fractional share. The current market value of a fractional share shall be determined, to the nearest 1/1,000th of a share, by multiplying the per share Closing Sale Price of the Common Stock, on the last trading day prior to the Conversion Date, by the fractional amount and rounding the product to the nearest whole cent. SECTION 12.04 Taxes on Shares Issued. If a holder converts a Convertible Subordinated Note, the Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon the conversion. However, the holder shall pay any such tax which is due because the holder requests the shares to be issued in a name other than the holder's name and any income tax which is imposed on the holder as a result of the conversion. The Conversion Agent may refuse to deliver the certificates representing the Common Stock being issued in a name other than the holder's name until the Conversion Agent receives a sum sufficient to pay any tax which will be due because the shares are to be issued in a name other than the holder's name. Nothing herein shall preclude the Company from any tax withholding or directing the withholding of any tax required by law or regulations. SECTION 12.05 Reservation of Shares; Shares to Be Fully Paid; Listing of Common Stock. The Company shall provide, free from preemptive rights, out of its authorized but unissued shares or shares held in treasury, sufficient shares to provide for the conversion of the Convertible Subordinated Notes from time to time as such Convertible Subordinated Notes are presented for conversion. Before taking any action which would cause an adjustment reducing the Conversion Rate below the then par value, if any, of the shares of Common Stock issuable upon conversion of the 60 Convertible Subordinated Notes, the Company shall take all corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue shares of such Common Stock at such adjusted Conversion Rate. The Company covenants that all shares of Common Stock issued upon conversion of Convertible Subordinated Notes shall be newly issued shares or treasury shares, shall be duly and validly issued and fully paid and nonassessable and shall be free from preemptive rights and free of any tax, lien or adverse claim created by the Company. The Company further covenants that as long as the Common Stock is listed on the New York Stock Exchange, or its successor, the Company shall cause all Common Stock issuable upon conversion of the Convertible Subordinated Notes to be eligible for such quotation in accordance with, and at the times required under, the requirements of such market, and if at any time the Common Stock becomes listed any other national securities exchange, the Company shall cause all Common Stock issuable upon conversion of the Convertible Subordinated Notes to be so listed and kept listed. SECTION 12.06 Adjustment for Change in Capital Stock. The Conversion Rate shall be subject to adjustment from time to time as follows: (a) In case the Company shall (1) pay a dividend in shares of Common Stock to all holders of Common Stock, (2) make a distribution in shares of Common Stock to all or substantially all holders of Common Stock, (3) subdivide the outstanding shares of Common Stock into a greater number of shares of Common Stock or (4) combine the outstanding shares of Common Stock into a smaller number of shares of Common Stock or (5) reclassify its outstanding Common Stock, the Conversion Rate in effect immediately prior to such action shall be adjusted so that the holder of any Convertible Subordinated Note thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock which he would have owned immediately following such action had such Convertible Subordinated Notes been converted immediately prior thereto. Any adjustment made pursuant to this Section 12.06(a) shall become effective immediately after the record date in the case of a dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination, or reclassification. (b) In case the Company shall issue rights, options or warrants to all or substantially all holders of Common Stock, as the case may be, entitling them (for a period commencing no earlier than the record date for the determination of holders of Common Stock entitled to receive such rights, options or warrants and expiring not more than 60 days after such record date) to subscribe for or purchase shares of Common Stock (or securities convertible into Common Stock), at a price per share less than the then current market price (as determined pursuant to Section 12.06(h) below) of Common Stock at the time of the announcement of the distribution, the Conversion Rate shall be increased by multiplying the Conversion Rate in effect immediately prior to such record date by a fraction of which the numerator shall be the number of shares of Common Stock outstanding on such record date, plus the number of shares of Common Stock so offered for subscription or purchase, and the denominator of which shall be the number of shares of Common Stock outstanding at the close of business on such record date plus the number of shares 61 of Common Stock which the aggregate of the offering price of the total number of shares of Common Stock so offered for subscription or purchase would purchase at such current market price. Such adjustments shall become effective immediately after such record date. To the extent that shares of Common Stock are not delivered pursuant to such rights, options or warrants, upon the expiration or termination of such rights, options or warrants the Conversion Rate shall be readjusted to be the Conversion Rate which would then be in effect had the adjustments made upon the issuance of such rights, options or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered. If such rights, options or warrants are not so issued, the Conversion Rate shall again be adjusted to be the Conversion Rate which would then be in effect if such date fixed for the determination of shareholders entitled to receive such rights, options or warrants had not been fixed. In determining whether any rights, options or warrants entitle the holders to subscribe for or purchase shares of Common Stock at less than such current market price, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received for such rights, options or warrants, with the value of such consideration, if other than cash, to be determined by the Board of Directors. (c) In case the Company shall distribute to all holders of Common Stock shares of capital stock of the Company, evidences of indebtedness or other assets (including cash and securities), or shall distribute to all holders of Common Stock rights, options or warrants to subscribe for securities (in each case other than those referred to in Section 12.06(a) and (b) above and Section 12.06(d) and Section 12.14 below), then in each such case the Conversion Rate shall be increased by multiplying the Conversion Rate in effect immediately prior to the close of business on the record date for the determination of shareholders entitled to such distribution by a fraction of which the numerator shall be the current market price of Common Stock (determined as provided in Section 12.06(h) below) on such date and the denominator shall be such current market price less the fair market value (as determined by the Board of Directors whose determination shall be conclusive and described in a Board Resolution) on such date of the portion of the evidences of indebtedness, shares of capital stock, cash and other assets to be distributed or of such subscription rights, options or warrants applicable to one share of Common Stock, such increase to become effective immediately prior to the opening of business on the day following such record date. Notwithstanding the foregoing, in the event that the Company shall distribute rights, options or warrants (other than those referred to in Section 12.06(b) above) ("Rights") pro rata to holders of Common Stock, the Company may, in lieu of making any adjustment pursuant to this Section 12.06(c), make proper provision so that each holder of a Convertible Subordinated Note who converts such Convertible Subordinated Note (or any portion thereof) after the record date for such distribution and prior to the expiration or redemption of the Rights shall be entitled to receive upon such conversion, in addition to the Conversion Shares, a number of Rights to be determined as follows: (i) if such conversion occurs on or prior to the date for the distribution to the holders of Rights of separate certificates evidencing such Rights (the "Distribution Date"), the same number of Rights to which a holder of a number of shares of Common Stock equal to the number of shares of Conversion Shares is entitled at the time of such conversion in accordance with the terms and provisions of and applicable to the Rights; and (ii) if such conversion occurs after the Distribution Date, the same number of Rights to which a holder of the number of shares of Common Stock into which the principal amount of the Convertible Subordinated Note so converted was convertible immediately prior to the Distribution Date 62 would have been entitled on the Distribution Date in accordance with the terms and provisions of and applicable to the Rights. (d) In case the Company shall make a distribution consisting exclusively of cash to all or substantially all holders of Common Stock, then the Conversion Rate shall be increased by multiplying the Conversion Rate in effect immediately prior to the close of business on the record date for the determination of shareholders entitled to such distribution by a fraction of which the numerator shall be the current market price of Common Stock (determined as provided in Section 12.06(h) below) on such date and the denominator shall be such current market price less the amount of cash to be distributed per share of Common Stock, such increase to become effective immediately prior to the opening of business on the day following such record date. (e) If, after the Issue Date of the Convertible Subordinated Notes, the Company or any subsidiary of the Company pays holders of the Company's Common Stock in respect of a repurchase of (including a tender or exchange offer for) the Company's Common Stock consideration per share of Common Stock having a fair market value, as determined in good faith by the Board of Directors of the Company, whose determination shall be conclusive, in excess of the current market price of the Common Stock as of the first Business Day (the "Measurement Date") next succeeding the last Business Day tenders or exchanges may be made pursuant to the offer (the "Expiration Time"), the Conversion Rate shall be increased so that the same shall equal the rate determined by multiplying the Conversion Rate in effect immediately prior to the effectiveness of the Conversion Rate adjustment contemplated by this Section 12.06(e) by a fraction, the numerator of which shall be the sum of (x) the fair market value of the aggregate consideration payable to stockholders based on the acceptance of all shares validly tendered or exchanged and not withdrawn as of the Expiration Time up to the maximum specified in the tender or exchange offer (the "Purchased Shares") and (y) the product of the number of shares of Common Stock outstanding (less any Purchased Shares) at the Expiration Time and the Closing Sale Price of a share of Common Stock on the Measurement Date, and the denominator of which shall be the number of shares of Common Stock outstanding (including any tendered or exchanged shares) at the Expiration Time (including the Purchased Shares) multiplied by the Closing Sale Price of one share of Common Stock on the Measurement Date. Such reduction shall become effective immediately prior to the opening of business on the day following the Measurement Date. To the extent such repurchase or such tender or exchange offer described in Section 12.06(e) does not occur, the Conversion Rate shall be readjusted to eliminate any adjustment made to the Conversion Rate on account of such purchase pursuant to such tender or exchange offer. If the application of this Section 12.06(e) to any repurchase (including by way of tender offer or exchange offer) would result in a decrease in the Conversion Rate, no adjustment shall be made for such repurchase under this Section 12.06(e). (f) In case of a tender or exchange offer made by a Person other than the Company or any of its subsidiaries for an amount which increases the offeror's ownership of Common Stock to more than 35% of the Common Stock outstanding and shall involve the payment by such Person of consideration per share of Common Stock having a fair market value (as determined by the Board of Directors, or to the extent permitted by applicable law, a duly authorized committee thereof, whose determination shall be conclusive, and described in a resolution of the 63 Board of Directors) at the last time (the "Offer Expiration Time") tenders or exchanges may be made pursuant to such tender or exchange offer (as it shall have been amended) that exceeds the current market price of the Common Stock on the Trading Day next succeeding the Offer Expiration Time, and in which, as of the Offer Expiration Time the Board of Directors is not recommending rejection of the offer, the Conversion Rate shall be increased so that the same shall equal the rate determined by multiplying the Conversion Rate in effect immediately prior to the Offer Expiration Time by a fraction of which the numerator shall be the sum of (x) the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Offer Expiration Time (the shares deemed so accepted, up to any such maximum being referred to as the "Accepted Purchased Shares") and (y) the product of the number of shares of Common Stock outstanding (less any Accepted Purchased Shares) on the Offer Expiration Time and the current market price of the Common Stock on the Trading Day next succeeding the Offer Expiration Time, and the denominator shall be the number of shares of Common Stock outstanding (including any tendered or exchanged shares) on the Offer Expiration Time multiplied by the current market price of the Common Stock on the Trading Day next succeeding the Offer Expiration Time, such increase to become effective immediately prior to the opening of business on the day following the Offer Expiration Time. In the event that such Person is obligated to purchase shares pursuant to any such tender or exchange offer, but such Person is permanently prevented by applicable law from effecting any such purchases or all such purchases are rescinded, the Conversion Rate shall again be adjusted to be the Conversion Rate which would then be in effect if such tender or exchange offer had not been made. Notwithstanding the foregoing, the adjustment described in this subsection (f) shall not be made if, as of the Offer Expiration Time, the offering documents with respect to such offer disclose a plan or intention to cause the Company to engage in a consolidation or merger involving the Company or a sale of all or substantially all of its assets. (g) In case the Company shall issue Common Stock or securities convertible into, or exchangeable for, Common Stock at a price per share (or having a conversion or exchange price per share) that is less than the then current market price of the Common Stock (but excluding, among other things, issuances: (i) pursuant to any bona fide plan for the benefit of employees, directors, consultants or other individuals in connection with employee incentive plans of the Company now or hereafter in effect; (ii) to acquire all or any portion of a business in an arm's-length transaction between the Company and an unaffiliated third party including, if applicable, issuances upon exercise of options or warrants assumed in connection with such an acquisition; (iii) in a bona fide public offering pursuant to a firm commitment underwriting (or a similar type of offering made pursuant to Rule 144A and/or Regulation S under the Securities Act) or sales at the market pursuant to a continuous offering stock program; (iv) pursuant to the exercise of warrants, rights (including, without limitation, earnout rights) or options, or upon the conversion of convertible securities, which are issued and outstanding on the date hereof, or which may be issued in the future at fair value and with an exercise price or conversion price at least equal to the current market price of the Common Stock at the time of issuance of such warrant, right, option or convertible security; and (v) pursuant to a dividend reinvestment plan or other plan hereafter adopted for the reinvestment of dividends or interest provided that such Common Stock is issued at a price at least equal to current market price of the Common Stock at the time of such issuance.) The Conversion Rate shall be increased so that the holder of each Convertible 64 Subordinated Note shall be entitled to receive, upon the conversion thereof, the number of shares of Common Stock determined by multiplying (i) the Conversion Rate on the day immediately prior to such date of issuance by (ii) a fraction, the numerator of which shall be the sum of (A) the number of shares of Common Stock outstanding on such date and (B) the number of additional shares of Common Stock issued (or into which the convertible securities may convert) and the denominator of which shall be the sum of (x) the number of shares of Common Stock outstanding on such date and (y) the number of shares of Common Stock which the aggregate consideration receivable by the Company for the total number of shares of Common Stock so issued (or into which the convertible securities may convert) would purchase at the current market price on such date. An adjustment made pursuant to this subsection (g) shall be made on the next Business Day following the date on which any such issuance is made and shall be effective retroactively immediately after the close of business on such date. For purposes of this subsection (g), the aggregate consideration receivable by the Company in connection with the issuance of shares of Common Stock or of securities convertible into shares of Common Stock shall be deemed to be equal to the sum of the aggregate offering price (before deduction of underwriting discounts or commissions and expenses payable to third parties) of all such securities plus the minimum aggregate amount, if any, payable upon conversion of any such convertible securities into shares of Common Stock. (h) For the purpose of any computation under subsections (a), (b), (c), (d) and (g) above of this Section 12.06, the "current market price" per share of Common Stock on the date fixed for determination of the stockholders entitled to receive the issuance or distribution requiring such computation (the "Determination Date") shall be deemed to be the average of the Closing Sale Price for the ten consecutive trading days immediately preceding the Determination Date; provided, however, that (i) if the "ex" date for any event (other than the issuance or distribution requiring such computation) that requires an adjustment to the Conversion Rate pursuant to subsection (a), (b), (c), (d), (e), (f) or (g) above occurs on or after the tenth trading day prior to the Determination Date and prior to the "ex" date for the issuance or distribution requiring such computation, the Closing Sale Price for each trading day prior to the "ex" date for such other event shall be adjusted by multiplying such Closing Sale Price by the reciprocal of the fraction by which the Conversion Rate is so required to be adjusted as a result of such other event, (ii) if the "ex" date for any event (other than the issuance or distribution requiring such computation) that requires an adjustment to the Conversion Rate pursuant to subsection (a), (b), (c), (d), (e), (f) or (g) above occurs on or after the "ex" date for the issuance or distribution requiring such computation and on or prior to the Determination Date, the Closing Sale Price for each Business Day on and after the "ex" date for such other event shall be adjusted by multiplying such Closing Sale Price by the same fraction by which the Conversion Rate is so required to be adjusted as a result of such other event, and (iii) if the "ex" date for the issuance or distribution requiring such computation is on or prior to the Determination Date, after taking into account any adjustment required pursuant to clause (i) or (ii) of this proviso, the Closing Sale Price for each trading day on and after the "ex" date shall be adjusted by adding thereto the amount of any cash and the fair market value (as determined by the Board of Directors in a manner consistent with any determination of such value for the purposes of this Section 12.06, whose determination shall be conclusive and described in a Resolution of the Board of Directors) of the evidences of indebtedness, shares of capital stock or other securities or assets being distributed (in the distribution requiring such computation) applicable to one share of Common Stock as of the close of business on the day before such "ex" date. For the purpose of any 65 computation under subsection (e) and (f) of this Section 12.06, the current market price per share of Common Stock at the expiration time for the repurchase or tender or exchange offer, as the case may be, requiring such computation shall be deemed to be the average of the Closing Sale Price for the ten consecutive trading days commencing on the Business Day immediately following the expiration time of such repurchase or exchange or tender offer, as the case may be (the "Commencement Date"); provided, however, that if the "ex" date for any event (other than the repurchase requiring such computation) that requires an adjustment to the Conversion Rate pursuant to subsection (a), (b), (c), (d), (e), (f) or (g) above occurs on or after the expiration time for the repurchase requiring such computation and prior to the day in question, the Closing Sale Price for each trading day on or after the "ex" date for such other event shall be adjusted by multiplying such Closing Sale Price by the same fraction by which the Conversion Rate is so required to be adjusted as a result of such other event. For purposes of this subsection, the term "ex" date, (i) when used with respect to any issuance or distribution, means the first date on which the Common Stock trades regular way on the relevant exchange or in the relevant market from which the Closing Sale Price was obtained without the right to receive such issuance or distribution, (ii) when used with respect to any subdivision or combination of shares of Common Stock, means the first date on which the Common Stock trades regular way on such exchange or in such market after the time at which such subdivision or combination becomes effective, and (iii) when used with respect to any repurchase means the first date on which the Common Stock trades regular way on such exchange or in such market after the expiration time of such repurchase (as it may be amended or extended). (i) In case the Company shall have a rights plan in effect, upon conversion of the Convertible Subordinated Notes into Common Stock, holders will receive, in addition to the Common Stock, the rights under the rights plan, unless the rights have separated from the Common Stock at the time of conversion, in which case the Conversion Rate will be adjusted as if the Company distributed to all holders of Common Stock shares of the Company's Capital Stock, evidence of the Company's indebtedness or other assets, subject to readjustment in the event of the expiration, termination or redemption of such rights. SECTION 12.07 [Reserved]. SECTION 12.08 [Reserved]. SECTION 12.09 When Adjustment May Be Deferred. No adjustment in the Conversion Rate need be made unless the adjustment would require an increase or decrease of at least 1% in the Conversion Rate. Any adjustments that are not made shall be carried forward and taken into account in any subsequent adjustment and all adjustments that are made and carried forward shall be taken in the aggregate in order to determine if the 1% threshold is met. All calculations under this Article 12 shall be made to the nearest cent or to the nearest 1/1,000th of a share, as the case may be. 66 SECTION 12.10 When No Adjustment is Required. No adjustment need be made for a transaction referred to in Section 12.06 or 12.14 if Convertible Subordinated Note holders are to participate in the transaction on a basis and with notice that the Board of Directors determines to be fair and appropriate in light of the basis and notice on which holders of Common Stock participate in the transaction. Such participation by holders may include participation upon conversion provided that an adjustment shall be made at such time as the holders are no longer entitled to participate. No adjustment need be made for rights to purchase Common Stock pursuant to a Company plan for reinvestment of dividends or interest. No adjustment need be made for a change in the par value of the Common Stock. No adjustment will be made pursuant to this Article 12 that would result, through the application of two or more provisions hereof, in the duplication of any adjustment. SECTION 12.11 Notice of Adjustment. Whenever the Conversion Rate is adjusted, the Company shall promptly mail to Convertible Subordinated Note holders and the Trustee a notice of the adjustment. The Company shall file with the Trustee and the Conversion Agent such notice and a certificate from the Company's independent public accountants briefly stating the facts requiring the adjustment and the manner of computing it. Upon receipt by it of such notice, and at the written request of the Company, the Conversion Agent will promptly mail such notice to Convertible Subordinated Note holders at the Company's expense. The certificate shall be conclusive evidence that the adjustment is correct. Neither the Trustee nor any Conversion Agent shall be under any duty or responsibility with respect to any such certificate except to exhibit the same to any holder desiring inspection thereof. SECTION 12.12 Voluntary Increase. The Company from time to time may increase the Conversion Rate by any amount for any period of time. Whenever the Conversion Rate is increased, the Company shall mail to Convertible Subordinated Note holders and deliver to the Trustee and the Conversion Agent a notice of the increase. The Company shall mail the notice at least 20 days before the date the increased Conversion Rate takes effect. The notice shall state the increased Conversion Rate and the period it will be in effect. A voluntary increase of the Conversion Rate does not change or adjust the Conversion Rate otherwise in effect for purposes of Section 12.06 or 12.14. SECTION 12.13 Notice of Certain Transactions. If: (a) the Company takes any action that would require an adjustment in the Conversion Rate pursuant to Section 12.06 (unless no adjustment is to occur pursuant to Section 12.10); or 67 (b) the Company takes any action that would require a supplemental indenture pursuant to Section 12.14; or (c) there is a liquidation or dissolution of the Company; then the Company shall mail to Convertible Subordinated Note holders and deliver to the Trustee and the Conversion Agent a notice stating the proposed record date for a dividend or distribution or the proposed effective date of a subdivision, combination, reclassification, consolidation, merger, binding share exchange, transfer, liquidation or dissolution. The Company shall so deliver and mail the notice at least 20 days before such date. Failure to deliver or mail the notice or any defect in it shall not affect the validity of the transaction, but the Trustee and the Conversion Agent shall not be deemed to have notice of the above transaction until they receive such notice. SECTION 12.14 Reorganization of Company; Special Distributions. If the Company is a party to a transaction subject to Article 5 (other than a sale of all or substantially all of the assets of the Company in a transaction in which the holders of Common Stock immediately prior to such transaction do not receive securities, cash, property or other assets of the Company or any other Person) or a merger or binding share exchange which reclassifies or changes its outstanding Common Stock, the Person obligated to deliver securities, cash or other assets upon conversion of Securities shall enter into a supplemental indenture. If the issuer of securities deliverable upon conversion of Convertible Subordinated Notes is an Affiliate of the successor Company, that issuer shall join in the supplemental indenture. The supplemental indenture shall provide that the holder of a Convertible Subordinated Note may convert it into the kind and amount of securities, cash or other assets which such holder would have received immediately after the consolidation, merger, binding share exchange or transfer if such holder had converted the Convertible Subordinated Note immediately before the effective date of the transaction, assuming (to the extent applicable) that such holder (i) was not a constituent Person or an Affiliate of a constituent Person to such transaction; (ii) made no election with respect thereto; and (iii) was treated alike with the plurality of non-electing holders. The supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practical to the adjustments provided for in this Article 12. The successor Company shall mail to Convertible Subordinated Note holders a notice briefly describing the supplemental indenture. If this Section applies, Section 12.06 does not apply. If the Company makes a distribution to all holders of its Common Stock of any of its assets, or debt securities or any rights, warrants or options to purchase securities of the Company that would otherwise result in an adjustment in the Conversion Rate pursuant to the provisions of Section 12.06, then, from and after the record date for determining the holders of Common Stock entitled to receive the distribution, a holder of a Convertible Subordinated Note that converts such Convertible Subordinated Note in accordance with the provisions of this Indenture shall upon such conversion be entitled to receive, in addition to the shares of Common Stock into which the Convertible Subordinated Note is convertible, the kind and amount of securities, cash or other assets comprising the distribution that such holder would have received if such holder had 68 converted the Convertible Subordinated Note immediately prior to the record date for determining the holders of Common Stock entitled to receive the distribution. SECTION 12.15 Company Determination Final. Any determination that the Company or the Board of Directors must make pursuant to Section 12.03, 12.06, 12.09, 12.10, 12.14 or 12.17 is conclusive. SECTION 12.16 Trustee's Adjustment Disclaimer. The Trustee has no duty to determine when an adjustment under this Article 12 should be made, how it should be made or what it should be. The Trustee has no duty to determine whether a supplemental indenture under Section 12.14 need be entered into or whether any provisions of any supplemental indenture are correct. The Trustee shall not be accountable for and makes no representation as to the validity or value of any securities or assets issued upon conversion of Convertible Subordinated Notes. The Trustee shall not be responsible for the Company's failure to comply with this Article 12. Each Conversion Agent (other than the Company or an Affiliate of the Company) shall have the same protection under this Section 12.16 as the Trustee. SECTION 12.17 Simultaneous Adjustments. In the event that this Article 12 requires adjustments to the Conversion Rate under more than one clause of Section 12.06, and the record dates for the distributions giving rise to such adjustments shall occur on the same date, then such adjustments shall be made by applying, first, the provisions of clause (a), second, the provisions of clause (c) and, third, the provisions of Section clause (b). SECTION 12.18 Successive Adjustments. After an adjustment to the Conversion Rate under this Article 12, any subsequent event requiring an adjustment under this Article 12 shall cause an adjustment to the Conversion Rate as so adjusted. SECTION 12.19 Restriction on Common Stock Issuable Upon Conversion. (a) Shares of Common Stock to be issued upon conversion of the Convertible Subordinated Notes prior to the effectiveness of a Shelf Registration Statement shall be physically delivered in certificated form to the holders converting such Convertible Subordinated Notes, and the certificate representing such shares of Common Stock shall bear the following legend (the "Restricted Common Stock Legend") unless removed in accordance with Section 12.19(c): THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE ISSUER THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE 69 ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN "AFFILIATE" (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES ACT) OF THE ISSUER AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE ISSUER, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (3) IN AN OFFSHORE TRANSACTION (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. PRIOR TO A TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER PURSUANT TO CLAUSE (5) ABOVE), THE HOLDER OF THIS SECURITY MUST FURNISH TO THE ISSUER AND THE TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE ISSUER THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER OR (2) NOT A U.S. PERSON AND IS OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2) OF RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE THE HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS SECURITY EXCEPT AS PERMITTED BY THE SECURITIES ACT. (b) If (i) shares of Common Stock to be issued upon conversion of a Convertible Subordinated Note prior to the effectiveness of a Shelf Registration Statement are to be registered in a name other than that of the holder of such Convertible Subordinated Note or (ii) shares of Common Stock represented by a certificate bearing the Restricted Common Stock Legend are transferred subsequently by such holder, then, unless the Shelf Registration Statement has become effective and such shares are being transferred pursuant to the Shelf Registration Statement, the holder must deliver to the transfer agent for the Common Stock a certificate in substantially the form of Exhibit B as to compliance with the restrictions on transfer applicable to such shares of Common Stock, and neither the transfer agent nor the registrar for the Common Stock shall be required to register any transfer of such Common Stock not so accompanied by a properly completed certificate. 70 (c) Except for transfers in connection with a Shelf Registration Statement, if certificates representing shares of Common Stock are issued upon the registration of transfer, exchange or replacement of any other certificate representing shares of Common Stock bearing the Restricted Common Stock Legend, or if a request is made to remove such Restricted Common Stock Legend from certificates representing shares of Common Stock, the certificates so issued shall bear the Restricted Common Stock Legend, or the Restricted Common Stock Legend shall not be removed, as the case may be, unless there is delivered to the Company, the Conversion Agent and the Transfer Agent such satisfactory evidence, which, in the case of a transfer made pursuant to Rule 144 under the Securities Act, may include an opinion of counsel as may be reasonably required by the Company, that neither the legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereof comply with the provisions of Rule 144A, Rule 144 or Regulation S under the Securities Act or that such shares of Common Stock are securities that are not "restricted" within the meaning of Rule 144 under the Securities Act. Upon provision to the Company of such reasonably satisfactory evidence, the Company shall cause the transfer agent for the Common Stock to countersign and deliver certificates representing shares of Common Stock that do not bear the legend. 71 IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed and attested, all as of the date first above written, signifying their agreements contained in this Indenture. CKE RESTAURANTS, INC. By ___________________________ Name: _____________________ Title: ____________________ J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION By ___________________________ Name: _____________________ Title: ____________________ 72 EXHIBIT A (Face of Security) The following legend shall appear on the face of each Global Security: UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL NOTES REPRESENTED HEREBY, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. The following legend shall appear on the face of each Global Security for which The Depository Trust Company is to be the Depositary: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. [Restricted Securities Legend] THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE ISSUER THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN "AFFILIATE" (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES ACT) OF THE ISSUER AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE ISSUER, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (3) IN AN OFFSHORE TRANSACTION (AS DEFINED IN REGULATIONS A-1 UNDER THE SECURITIES ACT) IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. PRIOR TO A TRANSFER OF THIS SECURITY, (OTHER THAN A TRANSFER PURSUANT TO CLAUSE (5) ABOVE) THE HOLDER OF THIS SECURITY MUST FURNISH TO THE ISSUER AND THE TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE ISSUER THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER OR (2) NOT A U.S. PERSON AND IS OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2) OF RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE THE HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS SECURITY OR ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY EXCEPT AS PERMITTED BY THE SECURITIES ACT. A-2 CKE RESTAURANTS, INC. 4% Convertible Subordinated Note due 2023 No. ___ CUSIP: 12561E AF 2 Issue Date: September 29, 2003 Principal Amount: $__________ Issue Price: $1,000.00 (for each $1,000 Principal Amount) CKE Restaurants, Inc., a Delaware corporation, promises to pay to ______________ or registered assigns, on October 1, 2023, the Principal Amount of this Convertible Subordinated Note on such date. This Convertible Subordinated Note is issued with a Principal Amount of ________________________ DOLLARS ($____________). This Convertible Subordinated Note shall not bear interest except as specified on the other side of this Convertible Subordinated Note. The Principal Amount of this Convertible Subordinated Note will accrue as specified on the other side of this Convertible Subordinated Note. This Convertible Subordinated Note is convertible as specified on the other side of this Convertible Subordinated Note. Additional provisions of this Convertible Subordinated Note are set forth on the other side of this Convertible Subordinated Note. A-3 IN WITNESS WHEREOF, the Company has caused this Note to be duly executed. Dated: CKE Restaurants, Inc. By: _______________________ Name: Title: TRUSTEE'S CERTIFICATE OF AUTHENTICATION J.P. Morgan Trust Company, National Association as Trustee, certifies that this is one of the Convertible Subordinated Notes referred to in the within-mentioned Indenture. By:________________________ Authorized Officer Dated: A-4 (Back of Security) 4% CONVERTIBLE SUBORDINATED NOTE DUE 2023 1. Interest. (a) The Convertible Subordinated Notes will bear interest on the Principal Amount at the rate of 4% per year from the Issue Date, or from the most recent date to which interest has been paid or provided for, until October 1, 2023. During such period, the Company will pay interest semiannually in arrears on each Interest Payment Date to holders of record at the close of business on each Regular Record Date immediately preceding such Interest Payment Date. Each payment of interest on the Convertible Subordinated Notes will include interest and Registration Default Damages, if any, accrued through the day immediately preceding the most recent Interest Payment Date (or the Repurchase Date, Redemption Date, the Fundamental Change Payment Date or, in certain circumstances, the Conversion Date, as the case may be). Any payment required to be made on any day that is not a Business Day will be made on the next succeeding Business Day. (b) Interest on any Convertible Subordinated Note that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the person in whose name that Convertible Subordinated Note is registered at the close of business on the Regular Record Date for such interest, at the office or agency of the Company maintained for such purpose. (c) The amount of interest payable for any period shall be computed on the basis of a 360-day year of twelve 30-day months. The amount of interest payable for any partial period shall be computed on the basis of a 360-day year of twelve 30-day months and the days elapsed in any partial month. In the event that any date on which interest is payable on a Convertible Subordinated Note is not a Business Day, then a payment of the interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay) with the same force and effect as if made on the date the payment was originally payable. 2. Method of Payment. Subject to the terms and conditions of the Indenture, the Company will make payments in respect of Principal Amount, Redemption Prices, Repurchase Prices, Fundamental Change Payment and on the Maturity Date to holders who surrender Convertible Subordinated Notes to a Paying Agent to collect such payments in respect of the Convertible Subordinated Notes. In addition, the Company will pay interest beginning September 29, 2003 until October 1, 2023, as more fully described in paragraph 1 hereof. The Company will pay any cash amounts in money of the United States that at the time of payment is legal tender for payment of public and private debts. However, the Company may make such cash payments by check payable in such money. 3. Paying Agent, Conversion Agent and Registrar. Initially, J.P. Morgan Trust Company, National Association (the "Trustee") will act as Paying Agent, Conversion Agent and Registrar. The Company may appoint and change any A-5 Paying Agent, Conversion Agent and Registrar or co-registrar without notice, other than notice to the Trustee except that the Company will maintain at least one Paying Agent in the State of New York, City of New York, Borough of Manhattan, which shall initially be an office or agency of the Trustee located at 4 New York Plaza, 15th Floor, New York, New York 10004. The Company or any of its subsidiaries or any of their Affiliates may act as Paying Agent, Conversion Agent, Registrar or co-registrar. 4. Indenture. The Company issued the Convertible Subordinated Notes pursuant to an Indenture dated as of September 29, 2003 (the "Indenture"), between the Company and the Trustee. The terms of the Convertible Subordinated Notes include those stated in the Indenture and those made part of the Indenture by reference to the Convertible Subordinated Notes themselves and the Trust Indenture Act of 1939, as in effect from time to time (the "TIA"). Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Indenture. The Convertible Subordinated Notes are subject to all such terms, and Convertible Subordinated Note holders are referred to the Indenture and the TIA for a statement of those terms. In the event of any inconsistency between the terms hereof and the terms of the Indenture, the terms of the Indenture shall prevail. The Convertible Subordinated Notes are unsecured and subordinated obligations of the Company limited to $90,000,000 aggregate Principal Amount (plus up to $15,000,000 aggregate Principal Amount that may be sold by the Company to the Initial Purchasers pursuant to the option to purchase additional Convertible Subordinated Notes granted to the Initial Purchasers pursuant to the Purchase Agreement). The Indenture does not limit other indebtedness of the Company, secured or unsecured. 5. [Reserved]. 6. Redemption at the Option of the Company. No sinking fund is provided for the Convertible Subordinated Notes. The Convertible Subordinated Notes are redeemable as a whole, or from time to time in part, at any time at the option of the Company in accordance with the Indenture at 100% of the Principal Amount of such Convertible Subordinated Notes, plus accrued and unpaid interest and Registration Default Damages, if any, to but not including the Redemption Dates, provided that the Convertible Subordinated Notes are not redeemable prior to October 1, 2008. 7. Purchase by the Company at the Option of the Holder. Subject to the terms and conditions of the Indenture, the Company shall become obligated to purchase, at the option of the holder, the Convertible Subordinated Notes held by such holder on October 1 of 2008, 2013 and 2018 at a Repurchase Price equal to 100% of the Principal Amount of such Convertible Subordinated Notes on the applicable Repurchase Date plus accrued and unpaid interest and Registration Default Damages, if any, to but not including the Repurchase Date, upon delivery of a Repurchase Notice containing the information set forth in the Indenture at any time from the opening of business on the date that is 20 Business Days prior to such Repurchase Date until the close of business on the Business Day prior to such A-6 Repurchase Date and upon delivery of the Convertible Subordinated Notes to the Paying Agent by the holder as set forth in the Indenture. At the option of the holder and subject to the terms and conditions of the Indenture, the Company shall become obligated to purchase in cash all or a portion of the Convertible Subordinated Notes in integral multiples of $1,000 Principal Amount held by such holder no later than 60 Business Days after the occurrence of a Fundamental Change of the Company for a Fundamental Change Payment equal to 100% of the Principal Amount of such Convertible Subordinated Notes plus accrued and unpaid interest and Registration Default Damages, if any, to but not including the Fundamental Change Payment Date, which Fundamental Change Payment shall be paid in cash. Holders have the right to withdraw any Repurchase Notice or Fundamental Change notice, as the case may be, by delivering to the Paying Agent a written notice of withdrawal in accordance with the provisions of the Indenture. Payment of the Repurchase Price for a Convertible Subordinated Note for which a Repurchase Notice has been delivered and not withdrawn is conditioned upon book-entry transfer or delivery of such Convertible Subordinated Note, together with any necessary endorsements, to the Paying Agent at its office in the Borough of Manhattan, The City of New York, or any other office or the Paying Agent, at any time after delivery of the Repurchase Notice. If cash sufficient to pay the Repurchase Price or Fundamental Change Payment, as the case may be, of all Convertible Subordinated Notes or portions thereof to be purchased as of the Repurchase Date or the Fundamental Change Payment Date, as the case may be, is deposited with the Paying Agent on the Business Day immediately following the Repurchase Date or on the Fundamental Change Payment Date, as the case may be, such Convertible Subordinated Notes (or portions thereof) will cease to be outstanding, the Principal Amount shall cease to increase, and interest and Registration Default Damages, if any, shall cease to accrue on such Convertible Subordinated Notes (or portions thereof) on such Repurchase Date or Fundamental Change Payment Date, as the case may be, and the holder thereof shall have no other rights as such (other than the right to receive the Repurchase Price or Fundamental Change Payment, as the case may be, if any, upon surrender of such Convertible Subordinated Notes). This will be the case whether or not book-entry transfer of the Convertible Subordinated Note has been made or the Convertible Subordinated Note has been delivered to the Paying Agent. 8. [Reserved]. 9. Conversion. Conversion Based on Common Stock Price. Subject to the provisions of this paragraph 9 and notwithstanding the fact that any other condition to conversion described below has not been satisfied, holders may convert the Convertible Subordinated Notes into Common Stock on a Conversion Date at any time starting with the first day of any calendar quarter commencing after December 31, 2003 if the Closing Sale Price of the Common Stock for at least 20 trading days in a period of 30 consecutive trading days ending on the last trading day of the calendar quarter A-7 prior to such calendar quarter is greater than 110% of the conversion price per share of Common Stock on the last trading day of the prior calendar quarter. If the foregoing condition is satisfied, then the Convertible Subordinated Notes will be convertible at any time at the option of the holder, through their maturity. The "conversion price" per share of Common Stock as of any day equals the quotient of $1,000 divided by the Conversion Rate in effect at that time. Conversion Based on Trading Price of Convertible Subordinated Notes. Subject to the provisions of this paragraph 9 and notwithstanding the fact that any other condition to conversion described below has not been satisfied, Holders may convert the Convertible Subordinated Notes into Common Stock during each of the five Business Day periods after any ten consecutive trading day period in which the Trading Price per $1,000 Principal Amount of the Convertible Subordinated Notes for each day of such ten day period was less than 98% of the product of (i) the average of the Closing Sale Price of the Common Stock over the same ten trading day period and (ii) the number of shares of Common Stock issuable upon conversion of $1,000 Principal Amount of the Convertible Subordinated Notes. The "Trading Price" means, on any date of determination, the average of the secondary market bid quotations for the Convertible Subordinated Notes obtained by the Trustee per $1,000 Principal Amount of the Convertible Subordinated Notes for $5,000,000 Principal Amount of Convertible Subordinated Notes at approximately 3:30 p.m., New York City time, on such determination date from three independent nationally recognized securities dealers selected by the Company; provided that if at least three such bids cannot reasonably be obtained by the Trustee, but two such bids are obtained, then the average of the two bids shall be used, and if only one such bid can reasonably be obtained by the Trustee, one bid shall be used; and provided further that if the Trustee cannot reasonably obtain at least one bid for $5,000,000 Principal Amount of Convertible Subordinated Notes from a nationally recognized securities dealer or in the Company's reasonable judgment, the bid quotations are not indicative of the secondary market value of the Convertible Subordinated Notes, then the Trading Price per $1,000 Principal Amount of Convertible Subordinated Notes shall be deemed to be less than 98% of the product of (a) the number of shares of Common Stock issuable upon conversion of $1,000 Principal Amount of Convertible Subordinated Notes and (b) the Closing Sale Price on such date. The Trustee (or other conversion agent appointed by the Company) shall have no obligation to determine the Trading Price unless the Company has requested such a determination; and the Company shall have no obligation to make such request unless a holder provides it with reasonable evidence that the Trading Price per $1,000 Principal Amount of Convertible Subordinated Notes would be less than 98% of the product of the Closing Sale Price of Common Stock and the number of shares of Common Stock issuable upon conversion of $1,000 Principal Amount of Convertible Subordinated Notes. If such evidence is provided, the Company shall instruct the Trustee (or other conversion agent) to determine the Trading Price of the Convertible Subordinated Notes beginning on the next trading day and on each successive trading day until the Trading Price per $1,000 Principal Amount of Convertible Subordinated Notes is greater than 98% of the product of the average of the Closing Sale Price of the Common Stock over a ten trading day period and the number of shares issuable upon conversion of $1,000 Principal Amount of the Convertible Subordinated Notes. A-8 Conversion upon Credit Rating Event. Subject to the provisions of this paragraph 9 and notwithstanding the fact that any other condition described herein to conversion has not been satisfied, a holder may convert the Convertible Subordinated Notes into Common Stock during any period in which the Convertible Subordinated Notes are rated below CCC by Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors, or below Caa1 by Moody's Investors Services and its successors, or the notes are no longer rated by either one of these ratings services, or if the ratings for the notes have been withdrawn or been suspended by either one of these ratings services. Conversion upon Redemption. Subject to the provisions of this paragraph 9 and notwithstanding the fact that any other condition described herein to conversion has not been satisfied, a holder may convert into Common Stock a Convertible Subordinated Note or portion of a Convertible Subordinated Note which has been called for redemption pursuant to paragraph 6 hereof, provided such Convertible Subordinated Notes are surrendered for conversion prior to the close of business on the Business Day immediately preceding the Redemption Date. Conversion Upon Occurrence of Certain Corporate Transactions. (a) Subject to the provisions of this paragraph 9 and notwithstanding the fact that any other condition described herein to conversion has not been satisfied, in the event the Company is a party to a consolidation, merger or binding share exchange or a transfer of all or substantially all of the Company's assets pursuant to which the Common Stock would be converted into cash, securities or other property as set forth in Section 12.14 of the Indenture, the Convertible Subordinated Notes may be surrendered for conversion at any time from and after the date which is 15 days prior to the date announced by the Company as the anticipated effective time until 15 days after the actual effective date of such transaction, and at the effective time of such transaction the right to convert a Convertible Subordinated Note into Common Stock will be deemed to have changed into a right to convert it into the kind and amount of cash, securities or other assets of the Company or another person which the holder would have received if the holder had converted its Convertible Subordinated Note into Common Stock immediately prior to the transaction. If such transaction also constitutes a Fundamental Change, a holder will be able to require the Company to purchase all or a portion of such holder's Convertible Subordinated Notes pursuant to Paragraph 7 and Section 3.10 of the Indenture. (a) Subject to the provisions of this paragraph 9 and notwithstanding the fact that any other condition to conversion has not been satisfied, in the event that the Company declares a dividend or distribution described in Section 12.06(b) of the Indenture, or a dividend or a distribution described in Section 12.06(c) of the Indenture where, the fair market value, per share, of such dividend or distribution per share of Common Stock, as determined in the Indenture, exceeds 10% of the Closing Sale Price of the Common Stock on the Business Day immediately preceding the date of declaration for such dividend or distribution or a Fundamental Change occurs other than pursuant to a transaction described in clause (a) hereof, the Convertible Subordinated Notes may be surrendered for conversion beginning on the date the Company gives notice to the holders of such right, which shall not be less than 20 days prior to the Ex-Dividend Date for such dividend or distribution or which shall be within 20 days of the occurrence of such Fundamental Change, as the case may be, and Convertible Subordinated Notes may be surrendered for conversion at any time thereafter until the earlier of the close of business on the Business Day prior to the Ex-Dividend Date or until the Company announces that such dividend A-9 or distribution will not take place, with respect to a dividend or distribution, or within 30 days of such Fundamental Change notice, in the case of such a Fundamental Change. No adjustment to the Conversion Rate or the ability of the holders to convert this Convertible Subordinated Note will be made if the Company provides, as permitted in the Indenture, for holders to participate in the transaction without conversion or in other cases specified in the Indenture. A Convertible Subordinated Note in respect of which a holder has delivered a Repurchase Notice or notice of a Fundamental Change exercising the option of such holder to require the Company to purchase such Convertible Subordinated Note may be converted only if such notice of exercise is withdrawn in accordance with the terms of the Indenture. The initial Conversion Rate is 112.4859 shares of Common Stock per $1,000 Principal Amount of each Convertible Subordinated Note, subject to adjustment for certain events described in the Indenture. The Company will deliver cash or a check in lieu of any fractional share of Common Stock. The ability to surrender Convertible Subordinated Notes for conversion will expire at the close of business on September 30, 2023. Increases in the Principal Amount and interest will not be paid on Convertible Subordinated Notes that are converted, except accrued interest will be payable upon conversion of Convertible Subordinated Notes made concurrently with or after acceleration of Convertible Subordinated Notes following an Event of Default. Holders of Convertible Subordinated Notes at the close of business on a Regular Record Date will receive payments of interest payable on the corresponding Interest Payment Date notwithstanding the conversion of such notes at any time after the close of business on such Regular Record Date. Notes surrendered for conversion by a holder during the period from the close of business on any Regular Record Date to the opening of business on the corresponding Interest Payment Date must be accompanied by payment of an amount equal to the interest that the holder is to receive on the Convertible Subordinated Notes; provided, however, that no such payment need be made if (1) the Company has specified a Redemption Date that is after a Regular Record Date and on or prior to the corresponding Interest Payment Date, (2) the Company has specified a Repurchase Date following a Fundamental Change that is during such period, or (3) any overdue interest exists at the time of conversion with respect to such Convertible Subordinated Notes, to the extent of such overdue interest. The holders of the Convertible Subordinated Notes will continue to be entitled to receive Registration Default Damages in accordance with the Registration Rights Agreement. To exercise its conversion right, a holder must (1) complete and manually sign the conversion notice (or complete and manually sign a facsimile of such notice) and deliver such notice to the Conversion Agent, (2) surrender the Convertible Subordinated Note to the Conversion Agent, (3) furnish appropriate endorsements and transfer documents if required by the Conversion Agent, the Company or the Trustee and (4) pay any transfer or similar taxes, if required. A holder may convert a portion of a Convertible Subordinated Note if the Principal Amount of such portion is $1,000 or an integral multiple of $1,000. No payment or adjustment will be made for dividends on the Common Stock except as provided in the Indenture. On conversion of a Convertible Subordinated Note, increases in the Principal Amount or interest attributable to the period from the Issue Date through the Conversion Date shall not be cancelled, A-10 extinguished or forfeited, but rather shall be deemed to be paid in full to the holder thereof through the delivery of the Common Stock (together with the cash payment, if any, in lieu of fractional shares) in exchange for the Convertible Subordinated Note being converted pursuant to the terms hereof; and the fair market value of such shares of Common Stock (together with any such cash payment in lieu of fractional shares) shall be treated as issued, to the extent thereof, first in exchange for increases in the Principal Amount or interest accrued through the Conversion Date, and the balance, if any, of such fair market value of such Common Stock (and any such cash payment) shall be treated as issued in exchange for the Issue Price of the Convertible Subordinated Note being converted pursuant to the provisions hereof. The Conversion Rate will be adjusted for dividends or distributions on Common Stock payable in Common Stock or other Capital Stock of the Company; subdivisions, combinations or certain reclassifications of Common Stock; distributions to all holders of Common Stock of certain rights to purchase Common Stock for a period expiring within 60 days of the record date for such distribution at less than the current market price of the Common Stock at the time of the announcement of the distribution; distributions to such holders of assets or debt securities of the Company or certain rights to purchase securities of the Company (including cash dividends or distributions); payments in respect of a repurchase of (including a tender offer or exchange offer for) the Company's Common Stock; payments in respect of a tender offer or exchange offer made by a Person other than the Company or any of its subsidiaries which increases the offeror's ownership of Common Stock to more than 35% of the Common Stock outstanding; and any issuance by the Company of Common Stock or securities convertible into, or exchangeable for, Common Stock at a price per share (or having a conversion or exchange price per share) that is less than the then current market price of the Common Stock (but excluding without limitation those exceptions listed in Section 12.06(g). However, no adjustment need be made if Convertible Subordinated Note holders may participate in the transaction or in certain other cases. The Company from time to time may voluntarily increase the Conversion Rate. If the Company is a party to a consolidation, merger or binding share exchange or a transfer of all or substantially all of its assets, or upon certain distributions described in the Indenture, the right to convert a Convertible Subordinated Note into Common Stock may be changed into a right to convert it into securities, cash or other assets of the Company or another person. The Conversion Rate will not be adjusted for increases in the Principal Amount or accrued interest or Registration Default Damages, if any. 10. Conversion Arrangement on Call for Redemption. Any Convertible Subordinated Notes called for redemption, unless surrendered for conversion before the close of business on the Redemption Date, may be deemed to be purchased from the holders of such Convertible Subordinated Notes at an amount not less than the Redemption Price, by one or more investment bankers or other purchasers who may agree with the Company to purchase such Convertible Subordinated Notes from the holders, to convert them into Common Stock of the Company and to make payment for such Convertible Subordinated Notes to the Trustee in trust for such holders. A-11 11. [Reserved] 12. Defaulted Interest. Except as otherwise specified with respect to the Convertible Subordinated Notes, any defaulted interest on any Convertible Subordinated Note shall forthwith cease to be payable to the registered holder thereof on the relevant Regular Record Date or accrual date, as the case may be, by virtue of having been such holder, and such defaulted interest may be paid by the Company as provided for in Section 2.12 of the Indenture. 13. Denominations; Transfer; Exchange. The Convertible Subordinated Notes are in fully registered form, without coupons, in denominations of $1,000 of Principal Amount and integral multiples of $1,000. A holder may transfer or exchange Convertible Subordinated Notes in accordance with the Indenture. The Registrar may require a holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not transfer or exchange any Convertible Subordinated Notes selected for redemption (except, in the case of a Convertible Subordinated Note to be redeemed in part, the portion of the Convertible Subordinated Note not to be redeemed) or any Convertible Subordinated Notes in respect of which a Repurchase Notice or Fundamental Change notice has been given and not withdrawn (except, in the case of a Convertible Subordinated Note to be purchased in part, the portion of the Convertible Subordinated Note not to be purchased) or any Convertible Subordinated Notes for a period of 15 days before the mailing of a notice of redemption of Convertible Subordinated Notes to be redeemed. 14. Persons Deemed Owners. The registered holder of this Convertible Subordinated Note may be treated as the owner of this Convertible Subordinated Note for all purposes. 15. Unclaimed Money or Securities. The Trustee and the Paying Agent shall return to the Company, upon written request any money or securities held by them for the payment of any amount with respect to the Convertible Subordinated Notes that remains unclaimed for two years, subject to applicable unclaimed property laws. After return to the Company holders entitled to the money or securities must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person. 16. Amendment; Waiver. Subject to certain exceptions, the Indenture or the Convertible Subordinated Notes may be amended or supplemented with the consent of the holders of at least a majority in principal amount of the then outstanding Convertible Subordinated Notes, and any existing default may be waived with the consent of the holders of a majority in aggregate Principal Amount of the then outstanding Convertible Subordinated Notes. A-12 Without the consent of any holder, the Indenture or the Convertible Subordinated Notes may be amended to: (a) cure any ambiguity or correct or supplement any defective or inconsistent provision contained in the Indenture, or make any other changes in the provisions of the Indenture which the Company and the Trustee may deem necessary or desirable provided such amendment does not materially and adversely affect the legal rights under the Indenture of the holders of Convertible Subordinated Notes; (b) provide for uncertificated Convertible Subordinated Notes in addition to or in place of certificated Convertible Subordinated Notes; (c) evidence the succession of another person to the Company and providing for the assumption by such successor of the covenants and obligations of the Company thereunder and in the Convertible Subordinated Notes as permitted by Section 5.01 of the Indenture; (d) provide for exchange rights of holders of Convertible Subordinated Notes in the event of consolidation, merger, share exchange or sale of all or substantially all of the assets of the Company as required to comply with Sections 5.01 and/or 12.14 of the Indenture; (e) increase the Conversion Rate; (f) evidence and provide for the acceptance of the appointment under the Indenture of a successor Trustee; (g) make any change that would provide any additional rights or benefits to the holders of Convertible Subordinated Notes or that does not adversely affect the legal rights under the Indenture of any such holder; or (h) comply with the requirements of the Commission in order to effect or maintain the qualification of the Indenture under the TIA. Without the consent of each holder affected, an amendment or waiver may not (with respect to any Convertible Subordinated Notes held by a non-consenting holder): (a) reduce the principal amount of Convertible Subordinated Notes whose holders must consent to an amendment, supplement or waiver; (b) reduce the principal of or change the fixed maturity of any Convertible Subordinated Note; (c) reduce the rate of or change the time for payment of interest on any Convertible Subordinated Notes; (d) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest or Registration Default Damages, if any, on the Convertible Subordinated Notes (except a rescission of acceleration of the Convertible Subordinated Notes by the holders of at least a majority in aggregate Principal Amount of the Convertible Subordinated Notes and a waiver of the payment default that resulted from such acceleration); (e) make any Convertible Subordinated Note payable in money other than as provided for in the Indenture and in the Convertible Subordinated Notes; (f) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of holders of Convertible Subordinated Notes to receive payments of principal of or interest or Registration Default Damages, if any, on the Convertible Subordinated Notes; (g) except as permitted by the Indenture (including Section 9.01(a)), decrease the Conversion Rate or modify the provisions of the Indenture relating to conversion of the Convertible Subordinated Notes in a manner adverse to the holders thereof; (h) make any change to the ability of holder of Convertible Subordinated Notes to enforce their rights under the Indenture or the provisions of clauses (a) through (i) of Section 9.02 of the Indenture; (i) reduce the Redemption Price, purchase price or Fundamental Change purchase price of the Convertible Subordinated Notes; (j) modify the subordination provisions of the Indenture in a manner adverse to the holders of the Convertible Subordinated Notes; or (k) make any change that adversely affects the right to convert the Convertible Subordinated Notes. A-13 17. Defaults and Remedies. An Event of Default is: (a) default for 30 days or more in payment of any installment of interest or Registration Default Damages, if any, on the Convertible Subordinated Notes, whether or not such payment is prohibited by the subordination provisions of the Indenture; (b) default in payment of the principal of or premium, if any, on the Convertible Subordinated Notes, when due and payable, whether or not such payment is prohibited by the subordination provisions of the Indenture; (c) default in the payment of the Fundamental Change Payment in respect of the Convertible Subordinated Notes on the date therefor, whether or not such payment is prohibited by the subordination provisions of the Indenture; (d) failure to provide timely notice of a Fundamental Change; a default in the Company's obligation to redeem the Convertible Subordinated Notes after it has exercised its redemption option, whether or not such payment is prohibited by the subordination provisions of the indenture; (e) a default in its obligation to satisfy its conversion obligation upon exercise of a holder's conversion right; (f) the Company defaults (other than a default set forth in clauses (a), (b), (c) and (d) above) in the performance of, or breaches, any other covenant or warranty of the Company set forth in this Indenture or the Convertible Subordinated Notes and fails to remedy such default or breach within a period of 30 days after the receipt of written notice from the Trustee or the holders of at least 25% in aggregate Principal Amount of the then outstanding Convertible Subordinated Notes; (g) a default under any credit agreement, mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any subsidiary of the Company (or the payment of which is guaranteed by the Company or any of its subsidiaries), whether such Indebtedness or guarantee exists on the date of this Indenture or is created thereafter, which default (i) is caused by a Payment Default or (ii) results in the acceleration of such Indebtedness prior to its express maturity (without such acceleration being rescinded or annulled) and, in each case, the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness under which there is a Payment Default or the maturity of which has been so accelerated, aggregates $5,000,000 or more; (h) a final, non-appealable judgment or final, non-appealable judgments (other than any judgment as to which a reputable insurance company has accepted full liability) for the payment of money are entered by a court or courts of competent jurisdiction against the Company or any subsidiaries of the Company and remain unstayed, unbonded or undischarged for a period (during which execution shall not be effectively stayed) of 60 days, provided that the aggregate amount of all such judgments exceeds $5,000,000; (i) the Company or any subsidiary, pursuant to or within the meaning of any Bankruptcy Law commences a voluntary case, consents to the entry of an order for relief against it in an involuntary case, consents to the appointment of a Custodian of it or for all or substantially all of its property, makes a general assignment for the benefit of its creditors, makes the admission in writing that it generally is unable to pay its debts as the same become due; (j) a court of competent jurisdiction enters a judgment, order or decree under any Bankruptcy Law that is for relief against the Company or any subsidiary in an involuntary case, appoints a Custodian of the Company or any subsidiary, and the order or decree remains unstayed and in effect for 90 days or orders the liquidation of the Company or any subsidiary, and the order or decree remains unstayed and in effect for 90 days. If an Event of Default occurs and is continuing, the Trustee or the holders of at least 25% in aggregate Principal Amount of the then outstanding Convertible Subordinated Notes may declare the unpaid principal of, premium, if any, and accrued and unpaid interest and Registration Default Damages, if any, on all Convertible Subordinated Notes then outstanding to be due and payable A-14 immediately, except that in the case of an Event of Default arising from certain events of bankruptcy, insolvency, or reorganization with respect to the Company or any of its subsidiaries, all outstanding Convertible Subordinated Notes become due and payable without further action or notice. Holders of Convertible Subordinated Notes may not enforce the Indenture or the Convertible Subordinated Notes except as provided in the Indenture. The Trustee may require an indemnity satisfactory to it before it enforces the Indenture or the Convertible Subordinated Notes. Subject to certain limitations, holders of a majority in principal amount of the then outstanding Convertible Subordinated Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from holders notice of any continuing default (except a default in payment of principal, premium, if any, or interest or Registration Default Damages, if applicable) if it determines that withholding notice is in their interests. The Company must furnish annual compliance certificates to the Trustee. 18. Registration Rights Agreement. The holder of this Convertible Subordinated Note is entitled to the benefits of a Registration Rights Agreement, dated September 29, 2003, between the Company and the Initial Purchasers (the "Registration Rights Agreement"). Pursuant to the Registration Rights Agreement the Company has agreed for the benefit of the holders of the Convertible Subordinated Notes and the Common Stock issued and issuable upon conversion of the Convertible Subordinated Notes, that (i) it will, at its cost, within 90 days after the Issue Date, file a shelf registration statement (the "Shelf Registration Statement") with the Securities and Exchange Commission (the "Commission") with respect to resales of the Convertible Subordinated Notes and the Common Stock issuable upon conversion thereof, (ii) the Company will use its reasonable best efforts to cause such Shelf Registration Statement to be declared effective by the Commission under the Securities Act within 180 days after the Issue Date and (iii) subject to its rights to suspend use of the shelf registration statement and prospectus under certain circumstances described below, the Company will use its reasonable best efforts to keep such Shelf Registration Statement continuously effective under the Securities Act until the earliest of (a) the second anniversary of the Issue Date or, if later, the second anniversary of the last date on which any Convertible Subordinated Notes are issued upon exercise of the Initial Purchasers' option to purchase additional Convertible Subordinated Notes, (b) the date on which the Convertible Subordinated Notes or the Common Stock issuable upon conversion thereof may be sold to persons who are not "affiliates" (as defined in Rule 144) of the Company pursuant to paragraph (k) of Rule 144 (or any successor provision) promulgated by the Commission under the Securities Act and (c) the date as of which all the Convertible Subordinated Notes or the Common Stock issuable upon conversion thereof have been sold pursuant to such Shelf Registration Statement. If the Shelf Registration Statement (i) is not filed with the Commission on or prior to 90 days, or has not been declared effective by the Commission within 180 days, after the Issue Date or (ii) is filed and declared effective but shall thereafter cease to be effective (without being succeeded immediately by a replacement shelf registration statement filed and declared effective) or cease to be usable (including, without limitation, as a result of a Suspension Period as defined below) for the offer and sale of Registrable Securities (as defined below) for a period of time (including any Suspension Period) which shall exceed 30 days within any three-month period or 60 days in the aggregate in any 12-month period (each such event referred to in clauses A-15 (i) and (ii) being referred to herein as a "Registration Default"), the Company will pay liquidated damages ("Registration Default Damages") to each holder of Registrable Securities which has complied with its obligations under the Registration Rights Agreement. The amount of Registration Default Damages payable during any period in which a Registration Default shall have occurred and be continuing is that amount which is equal to one-quarter of one percent (25 basis points) per annum per $1,000 principal amount of Securities or $2.50 per annum per 112.4859 shares of Common Stock (subject to adjustment from time to time in the event of a stock split, stock recombination, stock dividend and the like) constituting Registrable Securities for the first 90 days during which a Registration Default has occurred and is continuing and one-half of one percent (50 basis points) per annum per $1,000 principal amount of Securities and $5.00 per annum per 112.4859 shares of Common Stock (subject to adjustment as set forth above) constituting Registrable Securities for any additional days during which such Registration Default has occurred and is continuing. The Company will pay all accrued Registration Default Damages by wire transfer of immediately available funds or by federal funds check on each Damages Payment Date (as defined in the Registration Rights Agreement), and Registration Default Damages will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Following the cure of a Registration Default, Registration Default Damages will cease to accrue with respect to such Registration Default. "Registrable Securities" means each Convertible Subordinated Note and the Common Stock issuable or issued upon conversion thereof until the date on which such Convertible Subordinated Note or Common Stock (i) has been transferred pursuant to the shelf registration statement or another registration statement covering such note or share of common stock which has been filed with the SEC pursuant to the Securities Act, in either case after such registration statement has become, and while such registration statement is, effective under the Securities Act, (ii) has been transferred pursuant to Rule 144 under the Securities Act (or any similar provision then in force), or (iii) may be sold or transferred by non-affiliates of the Company's pursuant to paragraph (k) of Rule 144 under the Securities Act (or any successor provision promulgated by the SEC)). Pursuant to the Registration Rights Agreement, the Company may suspend the use of the prospectus which is a part of the Shelf Registration Statement for a period not to exceed 30 days in any three-month period or an aggregate of 60 days in any twelve-month period under certain circumstances (each, a "Suspension Period"); provided that the existence of a Suspension Period will not prevent the occurrence of a Registration Default or otherwise limit the obligation of the Company to pay Registration Default Damages. The above description of certain provisions of the Registration Rights Agreement is qualified by reference to, and is subject in its entirety to, the more complete description thereof contained in the Registration Rights Agreement. 19. Trustee Dealings with the Company. Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Convertible Subordinated Notes and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. A-16 20. No Recourse Against Others. A director, officer, employee, agent, representative, stockholder or equity holder, as such, of the Company shall not have any liability for any obligations of the Company under the Convertible Subordinated Notes or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Convertible Subordinated Note, each Convertible Subordinated Note holder shall waive and release all such liability. The waiver and release shall be part of the consideration for the issue of the Convertible Subordinated Notes. 21. Authentication. This Convertible Subordinated Note shall not be valid until an authorized signatory of the Trustee manually signs the Trustee's Certificate of Authentication on the other side of this Convertible Subordinated Note. 22. Abbreviations. Customary abbreviations may be used in the name of a Convertible Subordinated Note holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with right of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 23. GOVERNING LAW. THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THIS CONVERTIBLE SUBORDINATED NOTE. A-17 The Company will furnish to any Convertible Subordinated Note holder upon written request and without charge a copy of the Indenture that has in it the text of this Convertible Subordinated Note in larger type. Requests may be made to: CKE Restaurants, Inc. 6307 Carpinteria Avenue, Suite A, Carpinteria, CA 93013 Attention: Chief Financial Officer A-18

ASSIGNMENT FORM CONVERSION NOTICE To assign this Convertible Subordinated Note, To convert this Convertible Subordinated fill in the form below: Note into Common Stock of the Company, check the box: [ ] I or we assign and transfer this Convertible Subordinated Note to: ____________________________________________ To convert only part of this Convertible Subordinated Note, state the Original ____________________________________________ Principal Amount to be converted (which must be $1,000 or an integral multiple of (Insert assignee's soc. sec. or tax ID no.) $1,000): ____________________________________________ $ _________________________________________ ____________________________________________ If you want the stock certificate made out in another person's name, fill in the form ____________________________________________ below: (Print or type assignee's name, address and ___________________________________________ zip code) ___________________________________________ (Insert other person's soc. sec. or tax ID no.) and irrevocably appoint __________________________ agent to transfer ___________________________________________ this Convertible Subordinated Note on the books of the Company. The agent may ___________________________________________ substitute another to act for him. ___________________________________________ ___________________________________________ (Print or type other person's name, address and zip code) ___________________________________________

___________________________________________ Date: ____________________________ Your Signature: _____________________________ ________________________________________________________________________________ (Sign exactly as your name appears on the other side of this Convertible Subordinated Note) A-19 OPTION OF HOLDER TO ELECT REPURCHASE If you wish to have this Convertible Subordinated Note repurchased by the Company pursuant to Section 3.09 of the Indenture, check the Box: [ ] If you wish to have a portion of this Convertible Subordinated Note purchased by the Company pursuant to Section 3.09 of the Indenture, state the amount (in multiples of $1,000): $_____. Date: ___________ Your Signature: ____________________________________________ (Sign exactly as your name appears on the other side of this Convertible Subordinated Note) Medallion Signature Guarantee: _________________________________________________ A-20 EXHIBIT B FORM OF TRANSFER CERTIFICATE FOR TRANSFER OF RESTRICTED COMMON STOCK (Transfers pursuant to Section 12.19(c) of the Indenture) [NAME AND ADDRESS OF COMMON STOCK TRANSFER AGENT] Re: CKE Restaurants, Inc. 4% Convertible Subordinated Notes due 2023 (the "Convertible Subordinated Notes") Reference is hereby made to the Indenture dated as of September 29, 2003 (the "Indenture") between CKE Restaurants, Inc. and J.P. Morgan Trust Company, National Association, as Trustee. Capitalized terms used but not defined herein shall have the meanings given them in the Indenture. This letter relates to _________ shares of Common Stock represented by the accompanying certificate(s) that were issued upon conversion of Convertible Subordinated Notes and which are held in the name of [name of transferor] (the "Transferor") to effect the transfer of such Common Stock. In connection with the transfer of such shares of Common Stock, the undersigned confirms that such shares of Common Stock are being transferred: CHECK ONE BOX BELOW (1) [ ] to the Company; or (2) [ ] pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or (3) [ ] pursuant to and in compliance with Regulation S under the Securities Act of 1933; or (4) [ ] pursuant to an exemption from registration under the Securities Act of 1933 provided by Rule 144 thereunder. B-1 Unless one of the boxes is checked, the transfer agent will refuse to register any of the Common Stock evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (3) or (4) is checked, the transfer agent may require, prior to registering any such transfer of the Common Stock such certifications and other information, and if box (4) is checked such legal opinions, as the Company has reasonably requested in writing, by delivery to the transfer agent of a standing letter of instruction, to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933. [Name of Transferor], By ___________________________________ Name: ________________________________ Title: _______________________________ Dated: B-2 UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL NOTES REPRESENTED HEREBY, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR AN NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE ISSUER THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN "AFFILIATE" (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES ACT) OF THE ISSUER AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE ISSUER, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (3) IN AN OFFSHORE TRANSACTION (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. PRIOR TO A TRANSFER OF THIS SECURITY, (OTHER THAN A TRANSFER PURSUANT TO CLAUSE (5) ABOVE) THE HOLDER OF THIS SECURITY MUST FURNISH TO THE ISSUER AND THE TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE ISSUER THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER OR (2) NOT A U.S. PERSON AND IS OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2) OF RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE THE HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS SECURITY OR ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY EXCEPT AS PERMITTED BY THE SECURITIES ACT. CKE RESTAURANTS, INC. 4% Convertible Subordinated Note due 2023 No. 1 CUSIP: 12561E AF 2 Issue Date: September 29, 2003 Principal Amount: $105,000,000 Issue Price: $1,000.00 (for each $1,000 Principal Amount) CKE Restaurants, Inc., a Delaware corporation, promises to pay to CEDE & CO. or registered assigns, on October 1, 2023, the Principal Amount of this Convertible Subordinated Note on such date. This Convertible Subordinated Note is issued with a Principal Amount of ONE HUNDRED AND FIVE MILLION DOLLARS ($105,000,000). This Convertible Subordinated Note shall not bear interest except as specified on the other side of this Convertible Subordinated Note. The Principal Amount of this Convertible Subordinated Note will accrue as specified on the other side of this Convertible Subordinated Note. This Convertible Subordinated Note is convertible as specified on the other side of this Convertible Subordinated Note. Additional provisions of this Convertible Subordinated Note are set forth on the other side of this Convertible Subordinated Note. IN WITNESS WHEREOF, the Company has caused this Note to be duly executed. Dated: CKE Restaurants, Inc. By:______________________________ Name: Title: TRUSTEE'S CERTIFICATE OF AUTHENTICATION J.P. Morgan Trust Company, National Association as Trustee, certifies that this is one of the Convertible Subordinated Notes referred to in the within-mentioned Indenture. By:_____________________________ Authorized Officer Dated: (Back of Security) 4% CONVERTIBLE SUBORDINATED NOTE DUE 2023 1. Interest. (a) The Convertible Subordinated Notes will bear interest on the Principal Amount at the rate of 4% per year from the Issue Date, or from the most recent date to which interest has been paid or provided for, until October 1, 2023. During such period, the Company will pay interest semiannually in arrears on each Interest Payment Date to holders of record at the close of business on each Regular Record Date immediately preceding such Interest Payment Date. Each payment of interest on the Convertible Subordinated Notes will include interest and Registration Default Damages, if any, accrued through the day immediately preceding the most recent Interest Payment Date (or the Repurchase Date, Redemption Date, the Fundamental Change Payment Date or, in certain circumstances, the Conversion Date, as the case may be). Any payment required to be made on any day that is not a Business Day will be made on the next succeeding Business Day. (b) Interest on any Convertible Subordinated Note that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the person in whose name that Convertible Subordinated Note is registered at the close of business on the Regular Record Date for such interest, at the office or agency of the Company maintained for such purpose. (c) The amount of interest payable for any period shall be computed on the basis of a 360-day year of twelve 30-day months. The amount of interest payable for any partial period shall be computed on the basis of a 360-day year of twelve 30-day months and the days elapsed in any partial month. In the event that any date on which interest is payable on a Convertible Subordinated Note is not a Business Day, then a payment of the interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay) with the same force and effect as if made on the date the payment was originally payable. 2. Method of Payment. Subject to the terms and conditions of the Indenture, the Company will make payments in respect of Principal Amount, Redemption Prices, Repurchase Prices, Fundamental Change Payment and on the Maturity Date to holders who surrender Convertible Subordinated Notes to a Paying Agent to collect such payments in respect of the Convertible Subordinated Notes. In addition, the Company will pay interest beginning September 29, 2003 until October 1, 2023, as more fully described in paragraph 1 hereof. The Company will pay any cash amounts in money of the United States that at the time of payment is legal tender for payment of public and private debts. However, the Company may make such cash payments by check payable in such money. 3. Paying Agent, Conversion Agent and Registrar. Initially, J.P. Morgan Trust Company, National Association (the "Trustee") will act as Paying Agent, Conversion Agent and Registrar. The Company may appoint and change any 1 Paying Agent, Conversion Agent and Registrar or co-registrar without notice, other than notice to the Trustee except that the Company will maintain at least one Paying Agent in the State of New York, City of New York, Borough of Manhattan, which shall initially be an office or agency of the Trustee located at 4 New York Plaza, 15th Floor, New York, New York 10004. The Company or any of its subsidiaries or any of their Affiliates may act as Paying Agent, Conversion Agent, Registrar or co-registrar. 4. Indenture. The Company issued the Convertible Subordinated Notes pursuant to an Indenture dated as of September 29, 2003 (the "Indenture"), between the Company and the Trustee. The terms of the Convertible Subordinated Notes include those stated in the Indenture and those made part of the Indenture by reference to the Convertible Subordinated Notes themselves and the Trust Indenture Act of 1939, as in effect from time to time (the "TIA"). Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Indenture. The Convertible Subordinated Notes are subject to all such terms, and Convertible Subordinated Note holders are referred to the Indenture and the TIA for a statement of those terms. In the event of any inconsistency between the terms hereof and the terms of the Indenture, the terms of the Indenture shall prevail. The Convertible Subordinated Notes are unsecured and subordinated obligations of the Company limited to $90,000,000 aggregate Principal Amount (plus up to $15,000,000 aggregate Principal Amount that may be sold by the Company to the Initial Purchasers pursuant to the option to purchase additional Convertible Subordinated Notes granted to the Initial Purchasers pursuant to the Purchase Agreement). The Indenture does not limit other indebtedness of the Company, secured or unsecured. 5. [Reserved]. 6. Redemption at the Option of the Company. No sinking fund is provided for the Convertible Subordinated Notes. The Convertible Subordinated Notes are redeemable as a whole, or from time to time in part, at any time at the option of the Company in accordance with the Indenture at 100% of the Principal Amount of such Convertible Subordinated Notes, plus accrued and unpaid interest and Registration Default Damages, if any, to but not including the Redemption Dates, provided that the Convertible Subordinated Notes are not redeemable prior to October 1, 2008. 7. Purchase by the Company at the Option of the Holder. Subject to the terms and conditions of the Indenture, the Company shall become obligated to purchase, at the option of the holder, the Convertible Subordinated Notes held by such holder on October 1 of 2008, 2013 and 2018 at a Repurchase Price equal to 100% of the Principal Amount of such Convertible Subordinated Notes on the applicable Repurchase Date plus accrued and unpaid interest and Registration Default Damages, if any, to but not including the Repurchase Date, upon delivery of a Repurchase Notice containing the information set forth in the Indenture at any time from the opening of business on the date that is 20 Business Days prior to such Repurchase Date until the close of business on the Business Day prior to such 2 Repurchase Date and upon delivery of the Convertible Subordinated Notes to the Paying Agent by the holder as set forth in the Indenture. At the option of the holder and subject to the terms and conditions of the Indenture, the Company shall become obligated to purchase in cash all or a portion of the Convertible Subordinated Notes in integral multiples of $1,000 Principal Amount held by such holder no later than 60 Business Days after the occurrence of a Fundamental Change of the Company for a Fundamental Change Payment equal to 100% of the Principal Amount of such Convertible Subordinated Notes plus accrued and unpaid interest and Registration Default Damages, if any, to but not including the Fundamental Change Payment Date, which Fundamental Change Payment shall be paid in cash. Holders have the right to withdraw any Repurchase Notice or Fundamental Change notice, as the case may be, by delivering to the Paying Agent a written notice of withdrawal in accordance with the provisions of the Indenture. Payment of the Repurchase Price for a Convertible Subordinated Note for which a Repurchase Notice has been delivered and not withdrawn is conditioned upon book-entry transfer or delivery of such Convertible Subordinated Note, together with any necessary endorsements, to the Paying Agent at its office in the Borough of Manhattan, The City of New York, or any other office or the Paying Agent, at any time after delivery of the Repurchase Notice. If cash sufficient to pay the Repurchase Price or Fundamental Change Payment, as the case may be, of all Convertible Subordinated Notes or portions thereof to be purchased as of the Repurchase Date or the Fundamental Change Payment Date, as the case may be, is deposited with the Paying Agent on the Business Day immediately following the Repurchase Date or on the Fundamental Change Payment Date, as the case may be, such Convertible Subordinated Notes (or portions thereof) will cease to be outstanding, the Principal Amount shall cease to increase, and interest and Registration Default Damages, if any, shall cease to accrue on such Convertible Subordinated Notes (or portions thereof) on such Repurchase Date or Fundamental Change Payment Date, as the case may be, and the holder thereof shall have no other rights as such (other than the right to receive the Repurchase Price or Fundamental Change Payment, as the case may be, if any, upon surrender of such Convertible Subordinated Notes). This will be the case whether or not book-entry transfer of the Convertible Subordinated Note has been made or the Convertible Subordinated Note has been delivered to the Paying Agent. 8. [Reserved]. 9. Conversion. Conversion Based on Common Stock Price. Subject to the provisions of this paragraph 9 and notwithstanding the fact that any other condition to conversion described below has not been satisfied, holders may convert the Convertible Subordinated Notes into Common Stock on a Conversion Date at any time starting with the first day of any calendar quarter commencing after December 31, 2003 if the Closing Sale Price of the Common Stock for at least 20 trading days in a period of 30 consecutive trading days ending on the last trading day of the calendar quarter 3 prior to such calendar quarter is greater than 110% of the conversion price per share of Common Stock on the last trading day of the prior calendar quarter. If the foregoing condition is satisfied, then the Convertible Subordinated Notes will be convertible at any time at the option of the holder, through their maturity. The "conversion price" per share of Common Stock as of any day equals the quotient of $1,000 divided by the Conversion Rate in effect at that time. Conversion Based on Trading Price of Convertible Subordinated Notes. Subject to the provisions of this paragraph 9 and notwithstanding the fact that any other condition to conversion described below has not been satisfied, Holders may convert the Convertible Subordinated Notes into Common Stock during each of the five Business Day periods after any ten consecutive trading day period in which the Trading Price per $1,000 Principal Amount of the Convertible Subordinated Notes for each day of such ten day period was less than 98% of the product of (i) the average of the Closing Sale Price of the Common Stock over the same ten trading day period and (ii) the number of shares of Common Stock issuable upon conversion of $1,000 Principal Amount of the Convertible Subordinated Notes. The "Trading Price" means, on any date of determination, the average of the secondary market bid quotations for the Convertible Subordinated Notes obtained by the Trustee per $1,000 Principal Amount of the Convertible Subordinated Notes for $5,000,000 Principal Amount of Convertible Subordinated Notes at approximately 3:30 p.m., New York City time, on such determination date from three independent nationally recognized securities dealers selected by the Company; provided that if at least three such bids cannot reasonably be obtained by the Trustee, but two such bids are obtained, then the average of the two bids shall be used, and if only one such bid can reasonably be obtained by the Trustee, one bid shall be used; and provided further that if the Trustee cannot reasonably obtain at least one bid for $5,000,000 Principal Amount of Convertible Subordinated Notes from a nationally recognized securities dealer or in the Company's reasonable judgment, the bid quotations are not indicative of the secondary market value of the Convertible Subordinated Notes, then the Trading Price per $1,000 Principal Amount of Convertible Subordinated Notes shall be deemed to be less than 98% of the product of (a) the number of shares of Common Stock issuable upon conversion of $1,000 Principal Amount of Convertible Subordinated Notes and (b) the Closing Sale Price on such date. The Trustee (or other conversion agent appointed by the Company) shall have no obligation to determine the Trading Price unless the Company has requested such a determination; and the Company shall have no obligation to make such request unless a holder provides it with reasonable evidence that the Trading Price per $1,000 Principal Amount of Convertible Subordinated Notes would be less than 98% of the product of the Closing Sale Price of Common Stock and the number of shares of Common Stock issuable upon conversion of $1,000 Principal Amount of Convertible Subordinated Notes. If such evidence is provided, the Company shall instruct the Trustee (or other conversion agent) to determine the Trading Price of the Convertible Subordinated Notes beginning on the next trading day and on each successive trading day until the Trading Price per $1,000 Principal Amount of Convertible Subordinated Notes is greater than 98% of the product of the average of the Closing Sale Price of the Common Stock over a ten trading day period and the number of shares issuable upon conversion of $1,000 Principal Amount of the Convertible Subordinated Notes. 4 Conversion upon Credit Rating Event. Subject to the provisions of this paragraph 9 and notwithstanding the fact that any other condition described herein to conversion has not been satisfied, a holder may convert the Convertible Subordinated Notes into Common Stock during any period in which the Convertible Subordinated Notes are rated below CCC by Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors, or below Caa1 by Moody's Investors Services and its successors, or the notes are no longer rated by either one of these ratings services, or if the ratings for the notes have been withdrawn or been suspended by either one of these ratings services. Conversion upon Redemption. Subject to the provisions of this paragraph 9 and notwithstanding the fact that any other condition described herein to conversion has not been satisfied, a holder may convert into Common Stock a Convertible Subordinated Note or portion of a Convertible Subordinated Note which has been called for redemption pursuant to paragraph 6 hereof, provided such Convertible Subordinated Notes are surrendered for conversion prior to the close of business on the Business Day immediately preceding the Redemption Date. Conversion Upon Occurrence of Certain Corporate Transactions. (a) Subject to the provisions of this paragraph 9 and notwithstanding the fact that any other condition described herein to conversion has not been satisfied, in the event the Company is a party to a consolidation, merger or binding share exchange or a transfer of all or substantially all of the Company's assets pursuant to which the Common Stock would be converted into cash, securities or other property as set forth in Section 12.14 of the Indenture, the Convertible Subordinated Notes may be surrendered for conversion at any time from and after the date which is 15 days prior to the date announced by the Company as the anticipated effective time until 15 days after the actual effective date of such transaction, and at the effective time of such transaction the right to convert a Convertible Subordinated Note into Common Stock will be deemed to have changed into a right to convert it into the kind and amount of cash, securities or other assets of the Company or another person which the holder would have received if the holder had converted its Convertible Subordinated Note into Common Stock immediately prior to the transaction. If such transaction also constitutes a Fundamental Change, a holder will be able to require the Company to purchase all or a portion of such holder's Convertible Subordinated Notes pursuant to Paragraph 7 and Section 3.10 of the Indenture. (a) Subject to the provisions of this paragraph 9 and notwithstanding the fact that any other condition to conversion has not been satisfied, in the event that the Company declares a dividend or distribution described in Section 12.06(b) of the Indenture, or a dividend or a distribution described in Section 12.06(c) of the Indenture where, the fair market value, per share, of such dividend or distribution per share of Common Stock, as determined in the Indenture, exceeds 10% of the Closing Sale Price of the Common Stock on the Business Day immediately preceding the date of declaration for such dividend or distribution or a Fundamental Change occurs other than pursuant to a transaction described in clause (a) hereof, the Convertible Subordinated Notes may be surrendered for conversion beginning on the date the Company gives notice to the holders of such right, which shall not be less than 20 days prior to the Ex-Dividend Date for such dividend or distribution or which shall be within 20 days of the occurrence of such Fundamental Change, as the case may be, and Convertible Subordinated Notes may be surrendered for conversion at any time thereafter until the earlier of the close of business on the Business Day prior to the Ex-Dividend Date or until the Company announces that such dividend 5 or distribution will not take place, with respect to a dividend or distribution, or within 30 days of such Fundamental Change notice, in the case of such a Fundamental Change. No adjustment to the Conversion Rate or the ability of the holders to convert this Convertible Subordinated Note will be made if the Company provides, as permitted in the Indenture, for holders to participate in the transaction without conversion or in other cases specified in the Indenture. A Convertible Subordinated Note in respect of which a holder has delivered a Repurchase Notice or notice of a Fundamental Change exercising the option of such holder to require the Company to purchase such Convertible Subordinated Note may be converted only if such notice of exercise is withdrawn in accordance with the terms of the Indenture. The initial Conversion Rate is 112.4859 shares of Common Stock per $1,000 Principal Amount of each Convertible Subordinated Note, subject to adjustment for certain events described in the Indenture. The Company will deliver cash or a check in lieu of any fractional share of Common Stock. The ability to surrender Convertible Subordinated Notes for conversion will expire at the close of business on September 30, 2023. Increases in the Principal Amount and interest will not be paid on Convertible Subordinated Notes that are converted, except accrued interest will be payable upon conversion of Convertible Subordinated Notes made concurrently with or after acceleration of Convertible Subordinated Notes following an Event of Default. Holders of Convertible Subordinated Notes at the close of business on a Regular Record Date will receive payments of interest payable on the corresponding Interest Payment Date notwithstanding the conversion of such notes at any time after the close of business on such Regular Record Date. Notes surrendered for conversion by a holder during the period from the close of business on any Regular Record Date to the opening of business on the corresponding Interest Payment Date must be accompanied by payment of an amount equal to the interest that the holder is to receive on the Convertible Subordinated Notes; provided, however, that no such payment need be made if (1) the Company has specified a Redemption Date that is after a Regular Record Date and on or prior to the corresponding Interest Payment Date, (2) the Company has specified a Repurchase Date following a Fundamental Change that is during such period, or (3) any overdue interest exists at the time of conversion with respect to such Convertible Subordinated Notes, to the extent of such overdue interest. The holders of the Convertible Subordinated Notes will continue to be entitled to receive Registration Default Damages in accordance with the Registration Rights Agreement. To exercise its conversion right, a holder must (1) complete and manually sign the conversion notice (or complete and manually sign a facsimile of such notice) and deliver such notice to the Conversion Agent, (2) surrender the Convertible Subordinated Note to the Conversion Agent, (3) furnish appropriate endorsements and transfer documents if required by the Conversion Agent, the Company or the Trustee and (4) pay any transfer or similar taxes, if required. A holder may convert a portion of a Convertible Subordinated Note if the Principal Amount of such portion is $1,000 or an integral multiple of $1,000. No payment or adjustment will be made for dividends on the Common Stock except as provided in the Indenture. On conversion of a Convertible Subordinated Note, increases in the Principal Amount or interest attributable to the period from the Issue Date through the Conversion Date shall not be cancelled, 6 extinguished or forfeited, but rather shall be deemed to be paid in full to the holder thereof through the delivery of the Common Stock (together with the cash payment, if any, in lieu of fractional shares) in exchange for the Convertible Subordinated Note being converted pursuant to the terms hereof; and the fair market value of such shares of Common Stock (together with any such cash payment in lieu of fractional shares) shall be treated as issued, to the extent thereof, first in exchange for increases in the Principal Amount or interest accrued through the Conversion Date, and the balance, if any, of such fair market value of such Common Stock (and any such cash payment) shall be treated as issued in exchange for the Issue Price of the Convertible Subordinated Note being converted pursuant to the provisions hereof. The Conversion Rate will be adjusted for dividends or distributions on Common Stock payable in Common Stock or other Capital Stock of the Company; subdivisions, combinations or certain reclassifications of Common Stock; distributions to all holders of Common Stock of certain rights to purchase Common Stock for a period expiring within 60 days of the record date for such distribution at less than the current market price of the Common Stock at the time of the announcement of the distribution; distributions to such holders of assets or debt securities of the Company or certain rights to purchase securities of the Company (including cash dividends or distributions); payments in respect of a repurchase of (including a tender offer or exchange offer for) the Company's Common Stock; payments in respect of a tender offer or exchange offer made by a Person other than the Company or any of its subsidiaries which increases the offeror's ownership of Common Stock to more than 35% of the Common Stock outstanding; and any issuance by the Company of Common Stock or securities convertible into, or exchangeable for, Common Stock at a price per share (or having a conversion or exchange price per share) that is less than the then current market price of the Common Stock (but excluding without limitation those exceptions listed in Section 12.06(g). However, no adjustment need be made if Convertible Subordinated Note holders may participate in the transaction or in certain other cases. The Company from time to time may voluntarily increase the Conversion Rate. If the Company is a party to a consolidation, merger or binding share exchange or a transfer of all or substantially all of its assets, or upon certain distributions described in the Indenture, the right to convert a Convertible Subordinated Note into Common Stock may be changed into a right to convert it into securities, cash or other assets of the Company or another person. The Conversion Rate will not be adjusted for increases in the Principal Amount or accrued interest or Registration Default Damages, if any. 10. Conversion Arrangement on Call for Redemption. Any Convertible Subordinated Notes called for redemption, unless surrendered for conversion before the close of business on the Redemption Date, may be deemed to be purchased from the holders of such Convertible Subordinated Notes at an amount not less than the Redemption Price, by one or more investment bankers or other purchasers who may agree with the Company to purchase such Convertible Subordinated Notes from the holders, to convert them into Common Stock of the Company and to make payment for such Convertible Subordinated Notes to the Trustee in trust for such holders. 7 11. [Reserved] 12. Defaulted Interest. Except as otherwise specified with respect to the Convertible Subordinated Notes, any defaulted interest on any Convertible Subordinated Note shall forthwith cease to be payable to the registered holder thereof on the relevant Regular Record Date or accrual date, as the case may be, by virtue of having been such holder, and such defaulted interest may be paid by the Company as provided for in Section 2.12 of the Indenture. 13. Denominations; Transfer; Exchange. The Convertible Subordinated Notes are in fully registered form, without coupons, in denominations of $1,000 of Principal Amount and integral multiples of $1,000. A holder may transfer or exchange Convertible Subordinated Notes in accordance with the Indenture. The Registrar may require a holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not transfer or exchange any Convertible Subordinated Notes selected for redemption (except, in the case of a Convertible Subordinated Note to be redeemed in part, the portion of the Convertible Subordinated Note not to be redeemed) or any Convertible Subordinated Notes in respect of which a Repurchase Notice or Fundamental Change notice has been given and not withdrawn (except, in the case of a Convertible Subordinated Note to be purchased in part, the portion of the Convertible Subordinated Note not to be purchased) or any Convertible Subordinated Notes for a period of 15 days before the mailing of a notice of redemption of Convertible Subordinated Notes to be redeemed. 14. Persons Deemed Owners. The registered holder of this Convertible Subordinated Note may be treated as the owner of this Convertible Subordinated Note for all purposes. 15. Unclaimed Money or Securities. The Trustee and the Paying Agent shall return to the Company, upon written request any money or securities held by them for the payment of any amount with respect to the Convertible Subordinated Notes that remains unclaimed for two years, subject to applicable unclaimed property laws. After return to the Company holders entitled to the money or securities must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person. 16. Amendment; Waiver. Subject to certain exceptions, the Indenture or the Convertible Subordinated Notes may be amended or supplemented with the consent of the holders of at least a majority in principal amount of the then outstanding Convertible Subordinated Notes, and any existing default may be waived with the consent of the holders of a majority in aggregate Principal Amount of the then outstanding Convertible Subordinated Notes. 8 Without the consent of any holder, the Indenture or the Convertible Subordinated Notes may be amended to: (a) cure any ambiguity or correct or supplement any defective or inconsistent provision contained in the Indenture, or make any other changes in the provisions of the Indenture which the Company and the Trustee may deem necessary or desirable provided such amendment does not materially and adversely affect the legal rights under the Indenture of the holders of Convertible Subordinated Notes; (b) provide for uncertificated Convertible Subordinated Notes in addition to or in place of certificated Convertible Subordinated Notes; (c) evidence the succession of another person to the Company and providing for the assumption by such successor of the covenants and obligations of the Company thereunder and in the Convertible Subordinated Notes as permitted by Section 5.01 of the Indenture; (d) provide for exchange rights of holders of Convertible Subordinated Notes in the event of consolidation, merger, share exchange or sale of all or substantially all of the assets of the Company as required to comply with Sections 5.01 and/or 12.14 of the Indenture; (e) increase the Conversion Rate; (f) evidence and provide for the acceptance of the appointment under the Indenture of a successor Trustee; (g) make any change that would provide any additional rights or benefits to the holders of Convertible Subordinated Notes or that does not adversely affect the legal rights under the Indenture of any such holder; or (h) comply with the requirements of the Commission in order to effect or maintain the qualification of the Indenture under the TIA. Without the consent of each holder affected, an amendment or waiver may not (with respect to any Convertible Subordinated Notes held by a non-consenting holder): (a) reduce the principal amount of Convertible Subordinated Notes whose holders must consent to an amendment, supplement or waiver; (b) reduce the principal of or change the fixed maturity of any Convertible Subordinated Note; (c) reduce the rate of or change the time for payment of interest on any Convertible Subordinated Notes; (d) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest or Registration Default Damages, if any, on the Convertible Subordinated Notes (except a rescission of acceleration of the Convertible Subordinated Notes by the holders of at least a majority in aggregate Principal Amount of the Convertible Subordinated Notes and a waiver of the payment default that resulted from such acceleration); (e) make any Convertible Subordinated Note payable in money other than as provided for in the Indenture and in the Convertible Subordinated Notes; (f) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of holders of Convertible Subordinated Notes to receive payments of principal of or interest or Registration Default Damages, if any, on the Convertible Subordinated Notes; (g) except as permitted by the Indenture (including Section 9.01(a)), decrease the Conversion Rate or modify the provisions of the Indenture relating to conversion of the Convertible Subordinated Notes in a manner adverse to the holders thereof; (h) make any change to the ability of holder of Convertible Subordinated Notes to enforce their rights under the Indenture or the provisions of clauses (a) through (i) of Section 9.02 of the Indenture; (i) reduce the Redemption Price, purchase price or Fundamental Change purchase price of the Convertible Subordinated Notes; (j) modify the subordination provisions of the Indenture in a manner adverse to the holders of the Convertible Subordinated Notes; or (k) make any change that adversely affects the right to convert the Convertible Subordinated Notes. 9 17. Defaults and Remedies. An Event of Default is: (a) default for 30 days or more in payment of any installment of interest or Registration Default Damages, if any, on the Convertible Subordinated Notes, whether or not such payment is prohibited by the subordination provisions of the Indenture; (b) default in payment of the principal of or premium, if any, on the Convertible Subordinated Notes, when due and payable, whether or not such payment is prohibited by the subordination provisions of the Indenture; (c) default in the payment of the Fundamental Change Payment in respect of the Convertible Subordinated Notes on the date therefor, whether or not such payment is prohibited by the subordination provisions of the Indenture; (d) failure to provide timely notice of a Fundamental Change; a default in the Company's obligation to redeem the Convertible Subordinated Notes after it has exercised its redemption option, whether or not such payment is prohibited by the subordination provisions of the indenture; (e) a default in its obligation to satisfy its conversion obligation upon exercise of a holder's conversion right; (f) the Company defaults (other than a default set forth in clauses (a), (b), (c) and (d) above) in the performance of, or breaches, any other covenant or warranty of the Company set forth in this Indenture or the Convertible Subordinated Notes and fails to remedy such default or breach within a period of 30 days after the receipt of written notice from the Trustee or the holders of at least 25% in aggregate Principal Amount of the then outstanding Convertible Subordinated Notes; (g) a default under any credit agreement, mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any subsidiary of the Company (or the payment of which is guaranteed by the Company or any of its subsidiaries), whether such Indebtedness or guarantee exists on the date of this Indenture or is created thereafter, which default (i) is caused by a Payment Default or (ii) results in the acceleration of such Indebtedness prior to its express maturity (without such acceleration being rescinded or annulled) and, in each case, the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness under which there is a Payment Default or the maturity of which has been so accelerated, aggregates $5,000,000 or more; (h) a final, non-appealable judgment or final, non-appealable judgments (other than any judgment as to which a reputable insurance company has accepted full liability) for the payment of money are entered by a court or courts of competent jurisdiction against the Company or any subsidiaries of the Company and remain unstayed, unbonded or undischarged for a period (during which execution shall not be effectively stayed) of 60 days, provided that the aggregate amount of all such judgments exceeds $5,000,000; (i) the Company or any subsidiary, pursuant to or within the meaning of any Bankruptcy Law commences a voluntary case, consents to the entry of an order for relief against it in an involuntary case, consents to the appointment of a Custodian of it or for all or substantially all of its property, makes a general assignment for the benefit of its creditors, makes the admission in writing that it generally is unable to pay its debts as the same become due; (j) a court of competent jurisdiction enters a judgment, order or decree under any Bankruptcy Law that is for relief against the Company or any subsidiary in an involuntary case, appoints a Custodian of the Company or any subsidiary, and the order or decree remains unstayed and in effect for 90 days or orders the liquidation of the Company or any subsidiary, and the order or decree remains unstayed and in effect for 90 days. If an Event of Default occurs and is continuing, the Trustee or the holders of at least 25% in aggregate Principal Amount of the then outstanding Convertible Subordinated Notes may declare the unpaid principal of, premium, if any, and accrued and unpaid interest and Registration Default Damages, if any, on all Convertible Subordinated Notes then outstanding to be due and payable 10 immediately, except that in the case of an Event of Default arising from certain events of bankruptcy, insolvency, or reorganization with respect to the Company or any of its subsidiaries, all outstanding Convertible Subordinated Notes become due and payable without further action or notice. Holders of Convertible Subordinated Notes may not enforce the Indenture or the Convertible Subordinated Notes except as provided in the Indenture. The Trustee may require an indemnity satisfactory to it before it enforces the Indenture or the Convertible Subordinated Notes. Subject to certain limitations, holders of a majority in principal amount of the then outstanding Convertible Subordinated Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from holders notice of any continuing default (except a default in payment of principal, premium, if any, or interest or Registration Default Damages, if applicable) if it determines that withholding notice is in their interests. The Company must furnish annual compliance certificates to the Trustee. 18. Registration Rights Agreement. The holder of this Convertible Subordinated Note is entitled to the benefits of a Registration Rights Agreement, dated September 29, 2003, between the Company and the Initial Purchasers (the "Registration Rights Agreement"). Pursuant to the Registration Rights Agreement the Company has agreed for the benefit of the holders of the Convertible Subordinated Notes and the Common Stock issued and issuable upon conversion of the Convertible Subordinated Notes, that (i) it will, at its cost, within 90 days after the Issue Date, file a shelf registration statement (the "Shelf Registration Statement") with the Securities and Exchange Commission (the "Commission") with respect to resales of the Convertible Subordinated Notes and the Common Stock issuable upon conversion thereof, (ii) the Company will use its reasonable best efforts to cause such Shelf Registration Statement to be declared effective by the Commission under the Securities Act within 180 days after the Issue Date and (iii) subject to its rights to suspend use of the shelf registration statement and prospectus under certain circumstances described below, the Company will use its reasonable best efforts to keep such Shelf Registration Statement continuously effective under the Securities Act until the earliest of (a) the second anniversary of the Issue Date or, if later, the second anniversary of the last date on which any Convertible Subordinated Notes are issued upon exercise of the Initial Purchasers' option to purchase additional Convertible Subordinated Notes, (b) the date on which the Convertible Subordinated Notes or the Common Stock issuable upon conversion thereof may be sold to persons who are not "affiliates" (as defined in Rule 144) of the Company pursuant to paragraph (k) of Rule 144 (or any successor provision) promulgated by the Commission under the Securities Act and (c) the date as of which all the Convertible Subordinated Notes or the Common Stock issuable upon conversion thereof have been sold pursuant to such Shelf Registration Statement. If the Shelf Registration Statement (i) is not filed with the Commission on or prior to 90 days, or has not been declared effective by the Commission within 180 days, after the Issue Date or (ii) is filed and declared effective but shall thereafter cease to be effective (without being succeeded immediately by a replacement shelf registration statement filed and declared effective) or cease to be usable (including, without limitation, as a result of a Suspension Period as defined below) for the offer and sale of Registrable Securities (as defined below) for a period of time (including any Suspension Period) which shall exceed 30 days within any three-month period or 60 days in the aggregate in any 12-month period (each such event referred to in clauses 11 (i) and (ii) being referred to herein as a "Registration Default"), the Company will pay liquidated damages ("Registration Default Damages") to each holder of Registrable Securities which has complied with its obligations under the Registration Rights Agreement. The amount of Registration Default Damages payable during any period in which a Registration Default shall have occurred and be continuing is that amount which is equal to one-quarter of one percent (25 basis points) per annum per $1,000 principal amount of Securities or $2.50 per annum per 112.4859 shares of Common Stock (subject to adjustment from time to time in the event of a stock split, stock recombination, stock dividend and the like) constituting Registrable Securities for the first 90 days during which a Registration Default has occurred and is continuing and one-half of one percent (50 basis points) per annum per $1,000 principal amount of Securities and $5.00 per annum per 112.4859 shares of Common Stock (subject to adjustment as set forth above) constituting Registrable Securities for any additional days during which such Registration Default has occurred and is continuing. The Company will pay all accrued Registration Default Damages by wire transfer of immediately available funds or by federal funds check on each Damages Payment Date (as defined in the Registration Rights Agreement), and Registration Default Damages will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Following the cure of a Registration Default, Registration Default Damages will cease to accrue with respect to such Registration Default. "Registrable Securities" means each Convertible Subordinated Note and the Common Stock issuable or issued upon conversion thereof until the date on which such Convertible Subordinated Note or Common Stock (i) has been transferred pursuant to the shelf registration statement or another registration statement covering such note or share of common stock which has been filed with the SEC pursuant to the Securities Act, in either case after such registration statement has become, and while such registration statement is, effective under the Securities Act, (ii) has been transferred pursuant to Rule 144 under the Securities Act (or any similar provision then in force), or (iii) may be sold or transferred by non-affiliates of the Company's pursuant to paragraph (k) of Rule 144 under the Securities Act (or any successor provision promulgated by the SEC)). Pursuant to the Registration Rights Agreement, the Company may suspend the use of the prospectus which is a part of the Shelf Registration Statement for a period not to exceed 30 days in any three-month period or an aggregate of 60 days in any twelve-month period under certain circumstances (each, a "Suspension Period"); provided that the existence of a Suspension Period will not prevent the occurrence of a Registration Default or otherwise limit the obligation of the Company to pay Registration Default Damages. The above description of certain provisions of the Registration Rights Agreement is qualified by reference to, and is subject in its entirety to, the more complete description thereof contained in the Registration Rights Agreement. 19. Trustee Dealings with the Company. Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Convertible Subordinated Notes and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. 12 20. No Recourse Against Others. A director, officer, employee, agent, representative, stockholder or equity holder, as such, of the Company shall not have any liability for any obligations of the Company under the Convertible Subordinated Notes or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Convertible Subordinated Note, each Convertible Subordinated Note holder shall waive and release all such liability. The waiver and release shall be part of the consideration for the issue of the Convertible Subordinated Notes. 21. Authentication. This Convertible Subordinated Note shall not be valid until an authorized signatory of the Trustee manually signs the Trustee's Certificate of Authentication on the other side of this Convertible Subordinated Note. 22. Abbreviations. Customary abbreviations may be used in the name of a Convertible Subordinated Note holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with right of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 23. GOVERNING LAW. THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THIS CONVERTIBLE SUBORDINATED NOTE. 13 The Company will furnish to any Convertible Subordinated Note holder upon written request and without charge a copy of the Indenture that has in it the text of this Convertible Subordinated Note in larger type. Requests may be made to: CKE Restaurants, Inc. 6307 Carpinteria Avenue, Suite A, Carpinteria, CA 93013 Attention: Chief Financial Officer 14

ASSIGNMENT FORM CONVERSION NOTICE To assign this Convertible Subordinated To convert this Convertible Note, fill in the form below: Subordinated Note into Common Stock of the Company, check the box: [ ] I or we assign and transfer this Convertible Subordinated Note to: _______________________________________ To convert only part of this Convertible Subordinated Note, state _______________________________________ the Original Principal Amount to be converted (which must be $1,000 or an (Insert assignee's soc. sec. or tax ID integral multiple of $1,000): no.) _______________________________________ $______________________________________ _______________________________________ If you want the stock certificate made out in another person's name, fill in _______________________________________ the form below: (Print or type assignee's name, address _______________________________________ and zip code) _______________________________________ (Insert other person's soc. sec. or tax ID no.) and irrevocably appoint _______________________________________ _____________________ agent to transfer this Convertible Subordinated Note on _______________________________________ the books of the Company. The agent may substitute another to act for him. _______________________________________ _______________________________________ (Print or type other person's name, address and zip code) _______________________________________

_______________________________________ Date:______________________________ Your Signature: ____________________________ ________________________________________________________________________________ (Sign exactly as your name appears on the other side of this Convertible Subordinated Note) 15 OPTION OF HOLDER TO ELECT REPURCHASE If you wish to have this Convertible Subordinated Note repurchased by the Company pursuant to Section 3.09 of the Indenture, check the Box: [ ] If you wish to have a portion of this Convertible Subordinated Note purchased by the Company pursuant to Section 3.09 of the Indenture, state the amount (in multiples of $1,000): $_____. Date: _____________ Your Signature:_____________________________________________ (Sign exactly as your name appears on the other side of this Convertible Subordinated Note) Medallion Signature Guarantee:__________________________________________________ 16 EX-4.8 4 a94967exv4w8.txt EXHIBIT 4.8 EXHIBIT 4.8 CKE RESTAURANTS, INC. 4% Convertible Subordinated Notes due 2023 REGISTRATION RIGHTS AGREEMENT September 29, 2003 Citigroup Global Markets Inc. As Representatives of the Initial Purchasers c/o Citigroup Global Markets Inc. 388 Greenwich Street New York, New York 10013 Ladies and Gentlemen: CKE Restaurants, Inc., a corporation organized under the laws of Delaware (the "Company"), proposes to issue and sell to certain purchasers (the "Initial Purchasers"), for whom you (the "Representatives") are acting as representatives, its 4% Convertible Subordinated Notes due 2023 (the "Securities"), upon the terms set forth in the Purchase Agreement between the Company and the Initial Purchasers dated September 23, 2003 (the "Purchase Agreement") relating to the initial placement (the "Initial Placement") of the Securities. To induce the Initial Purchasers to enter into the Purchase Agreement and to satisfy a condition to your obligations thereunder, the Company agrees with you for your benefit and the benefit of the holders from time to time of the Securities and the Common Stock (as defined herein) issuable upon conversion of the Securities (including the Initial Purchasers) (each a "Holder" and, collectively, the "Holders"), as follows: 1. Definitions. Capitalized terms used herein without definition shall have their respective meanings set forth in the Purchase Agreement. As used in this Agreement, the following capitalized defined terms shall have the following meanings: "Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "Affiliate" shall have the meaning specified in Rule 405 under the Act and the terms "controlling" and "controlled" shall have meanings correlative thereto. "Broker-Dealer" shall mean any broker or dealer registered as such under the Exchange Act. "Business Day" shall mean any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions or trust companies are authorized or obligated by law to close in New York City. "Closing Date" shall mean the date of the first issuance of the Securities. "Commission" shall mean the Securities and Exchange Commission. "Common Stock" means the Common Stock, par value $.01 per share, of the Company, as it exists on the date of this Agreement and any other shares of capital stock or other securities of the Company into which such Common Stock may be reclassified or changed, together with any and all other securities which may from time to time be issuable upon conversion of the Securities. "Damages Payment Date" means, with respect to the Securities or the Common Stock issuable upon conversion thereof, as applicable, each Interest Payment Date; and in the event that any Security, or portion thereof, is called for redemption or surrendered for purchase by the Company and not withdrawn pursuant to a Fundamental Change Offer (as defined in the Indenture), the relevant redemption date or Fundamental Change Payment Date (as defined in the Indenture), as the case may be, shall also be a Damages Payment Date with respect to such Security, or portion thereof, unless the Indenture provides that accrued and unpaid interest on the Security (or portion thereof) to be redeemed or repurchased, as the case may be, is to be paid to the person who was the Record Holder thereof on a record date prior to such redemption date or Fundamental Change Payment Date, as the case may be, in which case the relevant Damages Payment Date shall be the date on which interest is payable to such Record Holder. "Default Rate" means the rate of interest payable with respect to overdue amounts on the Securities pursuant to Section 4.01 of the Indenture. "Deferral Period" shall have the meaning indicated in Section 3(i) hereof. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. "Final Memorandum" shall mean the offering memorandum, dated September 29, 2003 relating to the Securities, including any and all exhibits thereto and any information incorporated by reference therein as of such date. "Holder" shall have the meaning set forth in the preamble hereto. "Indenture" shall mean the Indenture relating to the Securities, dated as of September 29, 2003, between the Company and J.P. Morgan Trust Company, National Association, as trustee, as the same may be amended from time to time in accordance with the terms thereof. "Initial Placement" shall have the meaning set forth in the preamble hereto. "Initial Purchasers" shall have the meaning set forth in the preamble hereto. 2 "Interest Payment Date" shall mean April 1 and October 1. "Losses" shall have the meaning set forth in Section 5(d) hereof. "Majority Holders" shall mean, on any date, Holders of a majority of the aggregate principal amount of Securities registered under a Registration Statement provided that Holders of Common Stock issued upon conversion of Securities shall be deemed to be Holders of the aggregate principal amount of Securities from which such Common Stock was converted; and provided, further, that Securities or Common Stock which have been sold or otherwise transferred pursuant to the Shelf Registration Statement shall not be included in the calculation of Majority Holders. "Managing Underwriters" shall mean the investment banker or investment bankers and manager or managers that administer an underwritten offering, if any, conducted pursuant to Section 6 hereof. "NASD Rules" shall mean the Conduct Rules and the By-Laws of the NASD, Inc. "Notice and Questionnaire" shall mean a written notice delivered to the Company substantially in the form attached as Annex A to the Final Memorandum. "Notice Holder" shall mean, on any date, any Holder of Registrable Securities that has delivered a Notice and Questionnaire to the Company on or prior to such date. "Prospectus" shall mean a prospectus included in the Shelf Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Securities or Common Stock issuable upon conversion thereof covered by the Shelf Registration Statement, and all amendments and supplements thereto, including any and all exhibits thereto and any information incorporated by reference therein. "Purchase Agreement" shall have the meaning set forth in the preamble hereto. "Record Holder" means (i) with respect to any Damages Payment Date which occurs on an Interest Payment Date, each person who is registered on the books of the registrar as the holder of Securities at the close of business on the record date with respect to such Interest Payment Date and (ii) with respect to any Damages Payment Date relating to the Common Stock issued upon conversion thereof, each person who is a holder of record of such Common Stock fifteen days prior to the Damages Payment Date. "Registrable Securities" shall mean Securities and the Common Stock issuable or issued upon conversion thereof other than those that (i) have been transferred pursuant to the Shelf Registration Statement or another registration statement covering such Securities or shares of Common Stock, which has been filed with the Commission pursuant to the Act, in either case after such Shelf Registration Statement has become, and while such Shelf Registration Statement is, effective under the Act or (ii) have been distributed to the public pursuant to Rule 144 under 3 the Act (or any similar provision then in force) or (iii) may be sold or transferred by non-Affiliates of the Company pursuant to paragraph (k) of Rule 144 under the Act (or any similar provision then in force). "Registration Default Damages" shall have the meaning set forth in Section 7 hereof. "Securities" shall have the meaning set forth in the preamble hereto. "Shelf Registration Period" shall have the meaning set forth in Section 2(c) hereof. "Shelf Registration Statement" shall mean a "shelf" registration statement of the Company pursuant to the provisions of Section 2 hereof which covers some or all of the Securities and the Common Stock issuable upon conversion thereof, as applicable, on an appropriate form under Rule 415 under the Act, or any similar rule that may be adopted by the Commission, amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "Trustee" shall mean the trustee with respect to the Securities under the Indenture. "Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as amended, and the rules and regulations of the Commission promulgated thereunder. "underwriter" shall mean any underwriter of Securities or Common Stock issuable or issued upon conversion thereof in connection with an offering thereof under the Shelf Registration Statement. 2. Shelf Registration. (a) The Company shall as promptly as practicable (but in no event more than 90 days after the Closing Date) file with the Commission a Shelf Registration Statement providing for the registration of, and the sale on a continuous or delayed basis by the Holders of, all of the Registrable Securities, from time to time in accordance with the methods of distribution elected by such Holders, pursuant to Rule 415 under the Act or any similar rule that may be adopted by the Commission. (b) The Company shall use its reasonable best efforts to cause the Shelf Registration Statement to become or be declared effective under the Act no later than 180 days after the Closing Date. (c) The Company shall use its reasonable best efforts to keep the Shelf Registration Statement continuously effective, supplemented and amended as required by the Act, in order to permit the Prospectus forming part thereof to be usable by Holders for a period (the "Shelf Registration Period") from the date the Shelf Registration Statement is declared effective by the Commission until the earlier of (i) the second anniversary of the Closing Date or if later, the second anniversary of the last date on which any Securities are issued upon exercise of the Initial Purchasers' option to purchase additional Securities; (ii) the date on which Registrable Securities may be sold by non-Affiliates of the Company pursuant to paragraph (k) 4 of Rule 144 (or any successor provision) promulgated by the Commission under the Act; or (iii) the date as of which all of the Registrable Securities have been sold pursuant to the Shelf Registration Statement. The Company shall be deemed not to have used its reasonable best efforts to keep the Shelf Registration Statement effective during the Shelf Registration Period if it voluntarily takes any action that would result in Holders of Registrable Securities not being able to offer and sell such Registrable Securities at any time during the Shelf Registration Period, unless such action is (x) required by applicable law or otherwise undertaken by the Company in good faith and for valid business reasons (not including avoidance of the Company's obligations hereunder), including the acquisition or divestiture of assets, and (y) permitted by Section 3(i) hereof. (d) The Company shall cause the Shelf Registration Statement and the related Prospectus and any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement or such amendment or supplement, (i) to comply in all material respects with the applicable requirements of the Act; and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein (in the case of the Prospectus, in the light of the circumstances under which they were made) not misleading. (e) (i) Not less than 30 calendar days prior to the effectiveness of the Shelf Registration Statement, the Company shall mail the Notice and Questionnaire to the Holders of Registrable Securities. The Company shall take action to name each Holder that is a Notice Holder as of the date that is five Business Days prior to the effectiveness of the Shelf Registration Statement as a selling securityholder in the Shelf Registration Statement at the time of its effectiveness so that such Holder is permitted to deliver the Prospectus forming a part thereof as of such time to purchasers of such Holder's Registrable Securities in accordance with applicable law. (i) After the Shelf Registration Statement has become effective, the Company shall, upon the request of any Holder of Registrable Securities, promptly send a Notice and Questionnaire to such Holder. Each Holder of Registrable Securities agrees to deliver a Notice and Questionnaire to the Company at least five Business Days prior to any distribution by it of Registrable Securities under the Shelf Registration Statement. From and after the date the Shelf Registration Statement is declared effective, the Company shall, as promptly as is practicable after the date a Notice and Questionnaire is delivered, and in any event within five Business Days after such date, (i) if required by applicable law, file with the Commission a post-effective amendment to the Shelf Registration Statement or prepare and, if required by applicable law, file a supplement to the related Prospectus or an amendment or supplement to any document incorporated therein by reference or file any other required document so that the Holder delivering such Notice and Questionnaire is named as a selling holder in the Shelf Registration Statement and the related Prospectus and so that such Holder is permitted to deliver such Prospectus to purchasers of the Registrable Securities in accordance with applicable law and, if the Company shall file a post-effective amendment to the Shelf Registration Statement, use 5 reasonable best efforts to cause such post-effective amendment to be declared effective under the Act as promptly as is practicable; (ii) provide such Holder copies of any documents filed pursuant to clause (i) above; and (iii) notify such Holder as promptly as practicable after the effectiveness under the Act of any post-effective amendment filed pursuant to clause (i) above; provided, that if such Notice and Questionnaire is delivered during a Deferral Period, the Company shall so inform the Holder delivering such Notice and Questionnaire and shall take the actions set forth in clauses (i), (ii) and (iii) above upon expiration of the Deferral Period in accordance with Section 3(i) hereof. Notwithstanding anything contained herein to the contrary, the Company shall be under no obligation to name any Holder that is not a Notice Holder as a selling holder in the Shelf Registration Statement or related Prospectus; provided, however, that any Holder that becomes a Notice Holder pursuant to the provisions of this Section 2(e) (whether or not such Holder was a Notice Holder at the time the Shelf Registration Statement was declared effective) shall be named as a selling holder in the Shelf Registration Statement or related Prospectus in accordance with the requirements of this Section 2(e). 3. Registration Procedures. The following provisions shall apply in connection with the Shelf Registration Statement. (a) The Company shall: (i) furnish to each of the Representatives and to counsel for the Notice Holders, not less than five Business Days prior to the filing thereof with the Commission, a copy of the Shelf Registration Statement and each amendment thereof and each amendment or supplement, if any, to the Prospectus included therein (including all documents incorporated by reference therein after the initial filing) and shall use its best efforts to reflect in each such document, when so filed with the Commission, such comments as the Representatives reasonably propose; and (ii) include information regarding the Notice Holders and the methods of distribution they have elected for their Registrable Securities provided to the Company in Notices and Questionnaires as necessary to permit such distribution by the methods specified therein. (b) The Company shall ensure that: (i) the Shelf Registration Statement and any amendment thereto and any Prospectus forming part thereof and any amendment or supplement thereto comply in all material respects with the Act; and (ii) the Shelf Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. 6 (c) The Company shall advise the Representatives, the Notice Holders and any underwriter that has provided in writing to the Company a telephone or facsimile number and address for notices, and confirm such advice by notice in writing (which notice pursuant to clauses (ii)-(v) hereof shall be accompanied by an instruction to suspend the use of the Prospectus until the Company shall have remedied the basis for such suspension): (i) when the Shelf Registration Statement and any amendment thereto has been filed with the Commission and when the Shelf Registration Statement or any post-effective amendment thereto has become effective; (ii) of any request by the Commission for any amendment or supplement to the Shelf Registration Statement or the Prospectus or for additional information; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Shelf Registration Statement or the institution or threatening of any proceeding for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities included therein for sale in any jurisdiction or the institution or threatening of any proceeding for such purpose; and (v) of the determination by the Company that a post-effective amendment to the Shelf Registration Statement would be appropriate or of the happening of any event that requires any change in the Shelf Registration Statement or the Prospectus, in each case so that, as of such date, they (A) do not contain any untrue statement of a material fact and (B) do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in the light of the circumstances under which they were made) not misleading. (d) The Company shall use its best efforts to prevent the issuance of any order suspending the effectiveness of the Shelf Registration Statement or the qualification of the securities therein for sale in any jurisdiction and, if issued, to obtain as soon as possible the withdrawal thereof. (e) Upon written request by a Notice Holder, the Company shall furnish to each Notice Holder, without charge, at least one copy of the Shelf Registration Statement and any post-effective amendment thereto, including all material incorporated therein by reference, and, if a Notice Holder so requests in writing, all exhibits thereto (including exhibits incorporated by reference therein). (f) During the Shelf Registration Period, the Company shall promptly deliver to each Initial Purchaser, each Notice Holder, and any sales or placement agents or underwriters acting on their behalf, without charge, as many copies of the Prospectus (including the preliminary Prospectus) included in the Shelf Registration Statement and any amendment or supplement thereto as any such person may reasonably request. The Company consents to the 7 use of the Prospectus or any amendment or supplement thereto by each of the foregoing in connection with the offering and sale of Registrable Securities. (g) Prior to any offering of Registrable Securities pursuant to the Shelf Registration Statement, the Company shall arrange for the qualification of such Registrable Securities for sale under the laws of such jurisdictions as any Notice Holder shall reasonably request and shall maintain such qualification in effect so long as required; provided that in no event shall the Company be obligated to qualify to do business in any jurisdiction where it is not then so qualified or to take any action that would subject it to service of process in suits, other than those arising out of the Initial Placement or any offering pursuant to the Shelf Registration Statement, in any jurisdiction where it is not then so subject. (h) Upon the occurrence of any event contemplated by subsections (c)(ii) through (v) above, the Company shall promptly (or within the time period provided for by Section 3(i) hereof, if applicable) prepare a post-effective amendment to the Shelf Registration Statement or an amendment or supplement to the related Prospectus or file any other required document so that, as thereafter delivered to Initial Purchasers of the securities included therein, the Prospectus will not include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (i) Upon the occurrence or existence of any pending corporate development or any other material event that, in the reasonable judgment of the Company, makes it appropriate to suspend the availability of the Shelf Registration Statement and the related Prospectus, the Company shall give notice (without notice of the nature or details of such events) to the Notice Holders that the availability of the Shelf Registration is suspended and, upon actual receipt of any such notice, each Notice Holder agrees not to sell any Registrable Securities pursuant to the Shelf Registration until such Notice Holder's receipt of copies of the supplemented or amended Prospectus provided for in Section 3(i) hereof, or until it is advised in writing by the Company that the Prospectus may be used, and has received copies of any additional or supplemental filings that are incorporated or deemed incorporated by reference in such Prospectus. The period during which the availability of the Shelf Registration and any Prospectus is suspended (the "Deferral Period") shall not exceed 30 days in any three-month period or 60 days in any twelve-month period. (j) Not later than the effective date of the Shelf Registration Statement, the Company shall provide CUSIP numbers for the Registrable Securities registered under the Shelf Registration Statement and provide the Trustee with printed certificates for the Securities, free of any restrictive legends, in a form eligible for deposit with The Depository Trust Company. (k) The Company shall comply with all applicable rules and regulations of the Commission and shall make generally available to its security holders an earnings statement satisfying the provisions of Section 11(a) of the Act as soon as practicable after the effective date of the Shelf Registration Statement and in any event no later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the Shelf Registration Statement. 8 (l) The Company shall cause the Indenture to be qualified under the Trust Indenture Act in a timely manner and cause all Common Stock issued or issuable upon conversion of the Securities to be listed on each securities exchange or quotation system on which the Common Stock is then listed no later than the date the applicable Shelf Registration Statement is declared effective and, in connection therewith, to make such filings as may be required under the Exchange Act and to have such filings declared effective as and when required thereunder. (m) The Company may require each Holder of Registrable Securities to furnish to the Company such information regarding the Holder and the distribution of such Registrable Securities as the Company may from time to time reasonably require for inclusion in the Shelf Registration Statement. The Company may exclude from the Shelf Registration Statement the Registrable Securities of any Holder that fails to furnish such information within a reasonable time after receiving such request. (n) The Company shall enter into customary agreements (including, if requested, an underwriting agreement in customary form) and take all other appropriate actions in order to expedite or facilitate the registration or the disposition of the Registrable Securities, and in connection therewith, if an underwriting agreement is entered into, cause the same to contain indemnification provisions and procedures no less favorable than those set forth in Section 5 hereof. The plan of distribution in the Shelf Registration Statement and the Prospectus included therein shall permit resales of Registrable Securities to be made by selling securityholders through underwriters, brokers and dealers, and shall also include such other information as the Representative may reasonably request. (o) The Company shall: (i) make reasonably available for inspection by a representative of Holders of Registrable Securities, any underwriter participating in any disposition pursuant to the Shelf Registration Statement, and any attorney, accountant or other agent retained by such representatives of Holders or any such underwriter all relevant financial and other records and pertinent corporate documents of the Company and its subsidiaries; (ii) cause the Company's officers, directors, employees, accountants and auditors to supply all relevant information reasonably requested by the representative of the Holders or any such underwriter, attorney, accountant or agent in connection with any the Shelf Registration Statement as is customary for similar due diligence examinations; (iii) make such representations and warranties to the Holders of Registrable Securities and the underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in primary underwritten offerings and covering matters including, but not limited to, those set forth in the Purchase Agreement; 9 (iv) obtain opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the Managing Underwriters, if any) addressed to each selling Holder and the underwriters, if any, covering such matters as are customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such Holders and underwriters; (v) obtain "comfort" letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Shelf Registration Statement), addressed to each selling Holder and the underwriters, if any, in customary form and covering matters of the type customarily covered in "comfort" letters in connection with primary underwritten offerings; and (vi) deliver such documents and certificates as may be reasonably requested by the Majority Holders or the Managing Underwriters, if any, including those to evidence compliance with Section 3(i) hereof and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company. The actions set forth in clauses (iii), (iv), (v) and (vi) of this paragraph (o) shall be performed at (A) the effectiveness of the Shelf Registration Statement and each post-effective amendment thereto; and (B) each closing under any underwriting or similar agreement as and to the extent required thereunder. (p) The Company shall use its best efforts, if the Securities have been rated prior to the initial sale of such Securities, to confirm such ratings will apply to the Securities covered by the Shelf Registration Statement. (q) In the event that any Broker-Dealer shall underwrite any Registrable Securities or participate as a member of an underwriting syndicate or selling group or "assist in the distribution" (within the meaning of the NASD Rules) thereof, whether as a Holder of such Registrable Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Company shall assist such Broker-Dealer in complying with the NASD Rules. (r) The Company shall use its reasonable best efforts to take all other steps necessary to effect the registration of the Registrable Securities. 4. Registration Expenses. The Company shall bear all expenses incurred in connection with the performance of its obligations under Sections 2 and 3 hereof and shall reimburse the Holders for the reasonable fees and disbursements of one firm or counsel (which shall initially be Cleary, Gottlieb, Steen & Hamilton but which may be another nationally recognized law firm experienced in securities matters designated by the Majority Holders to act as counsel for the Holders in connection therewith). 10 5. Indemnification and Contribution. (a) The Company agrees to indemnify and hold harmless each Holder of Registrable Securities covered by the Shelf Registration Statement, each Initial Purchaser, the directors, officers, employees, Affiliates and agents of each such Holder or Initial Purchaser and each person who controls any such Holder or Initial Purchaser within the meaning of either the Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Shelf Registration Statement as originally filed or in any amendment thereof, or in any preliminary Prospectus or the Prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of any preliminary Prospectus or the Prospectus, in the light of the circumstances under which they were made) not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company by or on behalf of the party claiming indemnification specifically for inclusion therein. This indemnity agreement shall be in addition to any liability that the Company may otherwise have. The Company also agrees to indemnify as provided in this Section 5(a) or contribute as provided in Section 5(d) hereof to Losses of each underwriter, if any, of Registrable Securities registered under the Shelf Registration Statement, its directors, officers, employees, Affiliates or agents and each person who controls such underwriter on substantially the same basis as that of the indemnification of the Initial Purchasers and the selling Holders provided in this paragraph (a) and shall, if requested by any Holder, enter into an underwriting agreement reflecting such agreement, as provided in Section 3(n) hereof. (b) Each Holder of Registrable Securities covered by the Shelf Registration Statement (including each Initial Purchaser that is a Holder, in such capacity) severally and not jointly agrees to indemnify and hold harmless the Company, each of its directors, each of its officers who signs the Shelf Registration Statement and each person who controls the Company within the meaning of either the Act or the Exchange Act, to the same extent as the foregoing indemnity from the Company to each such Holder, but only with reference to written information relating to such Holder furnished to the Company by or on behalf of such Holder specifically for inclusion in the documents referred to in the foregoing indemnity. This indemnity agreement shall be acknowledged by each Notice Holder that is not an Initial Purchaser in such Notice Holder's Notice and Questionnaire and shall be in addition to any liability that any such Notice Holder may otherwise have. (c) Promptly after receipt by an indemnified party under this Section 5 or notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 5, notify the indemnifying party in 11 writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses; and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel (including local counsel) of the indemnifying party's choice at the indemnifying party's expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel, other than local counsel if not appointed by the indemnifying party, retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be satisfactory to the indemnified party. Notwithstanding the indemnifying party's election to appoint counsel (including local counsel) to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest; (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties that are different from or additional to those available to the indemnifying party; (iii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action; or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. An indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding. (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 5 is unavailable to or insufficient to hold harmless an indemnified party for any reason, then each applicable indemnifying party shall have a joint and several obligation to contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending loss, claim, liability, damage or action) (collectively "Losses") to which such indemnified party may be subject in such proportion as is appropriate to reflect the relative benefits received by such indemnifying party, on the one hand, and such indemnified party, on the other hand, from the Initial Placement and the Shelf Registration Statement which resulted in such Losses; provided, however, that in no case shall any Initial Purchaser be responsible, in the aggregate, for any amount in excess of the purchase discount or commission applicable to such Security, as set forth in the Final Memorandum, nor shall any underwriter be responsible for any amount in excess of the underwriting discount or commission applicable to the securities purchased by such underwriter under the Shelf Registration Statement which resulted in such Losses. If the allocation provided by the immediately preceding sentence is unavailable for any reason, the indemnifying party and the indemnified party shall contribute in such proportion as is appropriate to reflect not only such 12 relative benefits but also the relative fault of such indemnifying party, on the one hand, and such indemnified party, on the other hand, in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. Benefits received by the Company shall be deemed to be equal to the total net proceeds from the Initial Placement (before deducting expenses) as set forth in the Final Memorandum. Benefits received by the Initial Purchasers shall be deemed to be equal to the total purchase discounts and commissions as set forth on the cover page of the Final Memorandum, and benefits received by any other Holders shall be deemed to be equal to the value of receiving Registrable Securities registered under the Act. Benefits received by any underwriter shall be deemed to be equal to the total underwriting discounts and commissions, as set forth on the cover page of the Prospectus forming a part of the Shelf Registration Statement which resulted in such Losses. Relative fault shall be determined by reference to, among other things, whether any untrue or any alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information provided by the indemnifying party, on the one hand, or by the indemnified party, on the other hand, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The parties agree that it would not be just and equitable if contribution were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 5, each person who controls a Holder or underwriter within the meaning of either the Act or the Exchange Act and each director, officer, employee and agent of such Holder or underwriter shall have the same rights to contribution as such Holder, and each person who controls the Company within the meaning of either the Act or the Exchange Act, each officer of the Company who shall have signed the Shelf Registration Statement and each director of the Company shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this paragraph (d). (e) The provisions of this Section 5 shall remain in full force and effect, regardless of any investigation made by or on behalf of any Holder or the Company or any of the indemnified persons referred to in this Section 5, and shall survive the sale by a Holder of Registrable Securities covered by the Shelf Registration Statement. 6. Underwritten Registrations. (a) If any of the Registrable Securities are to be sold in an underwritten offering, the Managing Underwriters shall be selected by the Majority Holders participating in such underwritten offering. (b) No person may participate in any underwritten offering pursuant to the Shelf Registration Statement unless such person (i) agrees to sell such person's Registrable Securities on the basis reasonably provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements; and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. 13 7. Registration Defaults. If any of the following events shall occur, then the Company shall pay liquidated damages (the "Registration Default Damages") to the Holders of Registrable Securities in respect of the Registrable Securities as follows (it being understood that Registration Default Damages may not accrue under more than one of the following clauses (a), (b), (c), or (d) at any one time: (a) if the Shelf Registration Statement is not filed with the Commission on or prior to the 90th day following the Closing Date, then commencing on the 91st day after the Closing Date, Registration Default Damages shall accrue on the Registrable Securities at a rate of .25% per annum per $1,000 principal amount of Securities and $2.50 per annum per 112.4859 shares of Common Stock (subject to adjustments to the conversation rate as described in the Final Memorandum) constituting Registrable Securities for the first 90 days from and including such 91st day and .50% per annum thereafter; or (b) if the Shelf Registration Statement is not declared effective by the Commission on or prior to the 180th day following the Closing Date, then commencing on the 181st day after the Closing Date, Registration Default Damages shall accrue on the Registrable Securities at a rate of .25% per annum per $1,000 principal amount of Securities and $2.50 per annum per 112.4859 shares of Common Stock (subject to adjustments to the conversation rate as described in the Final Memorandum) constituting Registrable Securities for the first 90 days from and including such 181st day and .50% per annum thereafter; or (c) if the Shelf Registration Statement has been declared effective but ceases to be effective (other than pursuant to Section 3(i) hereof) at any time during the Shelf Registration Period, then commencing on the day the Shelf Registration Statement ceases to be effective, Registration Default Damages shall accrue on the Registrable Securities at a rate of .25% per annum per $1,000 principal amount of Securities and $2.50 per annum per 112.4859 shares of Common Stock (subject to adjustments to the conversation rate as described in the Final Memorandum) constituting Registrable Securities for the first 90 days from and including such date on which the Shelf Registration Statement ceases to be effective and .50% per annum thereafter; or (d) if the aggregate duration of Deferral Periods in any period exceeds the number of days permitted in respect of such period pursuant to Section 3(i) hereof, then commencing on the day the aggregate duration of Deferral Periods in any period exceeds the number of days permitted in respect of such period, Registration Default Damages shall accrue on the Registrable Securities at a rate of .25% per annum per $1,000 principal amount of Securities and $2.50 per annum per 112.4859 shares of Common Stock (subject to adjustments to the conversation rate as described in the Final Memorandum) constituting Registrable Securities for the first 90 days from and including such date and ..50% per annum thereafter; provided, however, that (1) upon the filing of the Shelf Registration Statement (in the case of paragraph (a) above), (2) upon the effectiveness of the Shelf Registration Statement (in the case of paragraph (b) above), (3) upon the effectiveness of the Shelf Registration Statement which had ceased to remain effective (in the case of paragraph (c) above), or (4) upon the termination of the Deferral Period that caused the limit on the aggregate duration of Deferral Periods in a period set forth in Section 3(i) to be exceeded (in the case of paragraph (d) above), Registration 14 Default Damages shall cease to accrue. All Registration Default Damages shall be paid by wire transfer of immediately available funds or by federal funds check by the Company on each Damage Payment Date and Registration Default Damages will be calculated on the basis of a 360-day year consisting of twelve 30-day months. In the event that any Registration Default Damages are not paid when due, then to the extent permitted by law, such overdue Registration Default Damages, if any, shall bear interest until paid at the Default Rate, compounded semi-annually. The parties hereto agree that the Registration Default Damages provided for in this Section 7(d) constitute a reasonable estimate of the damages that may be incurred by Holders by reason of a Registration Default. (e) All of the Company's obligations (including, without limitation, the obligation to pay Registration Default Damages) set forth in the preceding paragraphs which are outstanding or exist with respect to any Registrable Security at the time such security ceases to be a Registrable Security shall survive until such time as all such obligations with respect to such security shall have been satisfied in full. (f) Within two business days following the occurrence or the termination of a Registration Default, the Company shall give the Trustee, in the case of notice with respect to the Securities, and the transfer and paying agent for the Common Stock, in the case of notice with respect to Common Stock issued or issuable upon conversion thereof, notice of such commencement or termination, of the obligation to pay Registration Default Damages with regard to the Securities and Common Stock and the amount thereof and of the event giving rise to such commencement or termination (such notice to be contained in an Officers' Certificate (as such term is defined in the Indenture)), and prior to receipt of such Officers' Certificate the Trustee and such transfer and paying agent shall be entitled to assume that no such commencement or termination has occurred, as the case may be. 8. No Inconsistent Agreements. The Company has not entered into, and agrees not to enter into, any agreement with respect to its securities that is inconsistent with the rights granted to the Holders herein or that otherwise conflicts with the provisions hereof. 9. Amendments and Waivers. The provisions of this Agreement may not be amended, qualified, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of the Majority Holders; provided that, with respect to any matter that directly or indirectly affects the rights of any Initial Purchaser hereunder, the Company shall obtain the written consent of each such Initial Purchaser against which such amendment, qualification, supplement, waiver or consent is to be effective; provided, further, that no amendment, qualification, supplement, waiver or consent with respect to Section 7 hereof shall be effective as against any Holder of Registrable Securities unless consented to in writing by such Holder; and provided, further, that the provisions of this Article 9 may not be amended, qualified, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of the Initial Purchasers and each Holder. 10. Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, telex, telecopier or air courier guaranteeing overnight delivery: 15 (a) if to a Holder, at the most current address given by such holder to the Company in accordance with the provisions of the Notice and Questionnaire, which address initially is, with respect to each Holder, the address of such Holder maintained by the Registrar under the Indenture; (b) if to the Initial Purchasers or the Representatives, initially at the address or addresses set forth in the Purchase Agreement; and (c) if to the Company, initially at its address set forth in the Purchase Agreement. All such notices and communications shall be deemed to have been duly given when received. The Initial Purchasers or the Company by notice to the other parties may designate additional or different addresses for subsequent notices or communications. 11. Remedies. Each Holder, in addition to being entitled to exercise all rights provided to it herein, in the Indenture or in the Purchase Agreement or granted by law, including recovery of liquidated or other damages, will be entitled to specific performance of its rights under this Agreement. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive in any action for specific performance the defense that a remedy at law would be adequate. 12. Successors. This Agreement shall inure to the benefit of and be binding upon the parties hereto, their respective successors and assigns, including, without the need for an express assignment or any consent by the Company thereto, subsequent Holders, and the indemnified persons referred to in Section 5 hereof. The Company hereby agrees to extend the benefits of this Agreement to any Holder and underwriters, and any such Holder or underwriter may specifically enforce the provisions of this Agreement as if an original party hereto. 13. Counterparts. This Agreement may be signed in one or more counterparts, each of which shall constitute an original and all of which together shall constitute one and the same agreement. 14. Headings. The section headings used herein are for convenience only and shall not affect the construction hereof. 15. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed in the State of New York. The parties hereto each hereby waive any right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement. 16. Severability. In the event that any one of more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected 16 thereby, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law. 17. Securities Held by the Company, etc. Whenever the consent or approval of Holders of a specified percentage of principal amount of Securities or the Common Stock issuable upon conversion thereof is required hereunder, Securities or the Common Stock issued upon conversion thereof held by the Company or its Affiliates (other than subsequent Holders of Securities or the Common Stock issued upon conversion thereof if such subsequent Holders are deemed to be Affiliates solely by reason of their holdings of such Securities or Common Stock) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. 17 If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall represent a binding agreement between the Company and the several Initial Purchasers. Very truly yours, CKE RESTAURANTS, INC. By: ______________________ Name: Title: The foregoing Agreement is hereby confirmed and accepted as of the date first above written. Citigroup Global Markets Inc. By ____________________ Name: Title: For itself and the other several Initial Purchasers named in Schedule I to the Purchase Agreement. EX-10.50 5 a94967exv10w50.txt EXHIBIT 10.50 EXHIBIT 10.50 DIRECTOR FEE AGREEMENT THIS DIRECTOR FEE AGREEMENT (the "Agreement") is effective as of April 1, 2003 (the "Effective Date"), by and between CKE RESTAURANTS, INC., a Delaware corporation (the "Company"), and WILLIAM P. FOLEY, II (the "Director"). In consideration of the mutual covenants and agreements set forth herein, the parties agree as follows. Recitals WHEREAS, the Director is the Chairman of the Board of Directors of the Company; WHEREAS, the Company and the Director are parties to that certain Employment Agreement, dated as of April 9, 1999; WHEREAS, during the tenure of the Employment Agreement, the Director has devoted a significant amount of his time to the strategic, financial and operational affairs of the Company; WHEREAS, the Director now desires to devote more of his attention to other business ventures, and correspondingly less of his time to the strategic, financial and operational affairs of the Company; and WHEREAS, in recognition of the change in the relationship of the Company and the Director, the Company and the Director desire to terminate the Employment Agreement and enter into this Agreement; NOW, THEREFORE, the Company and the Director hereby agree as follows. Agreement 1. Termination of Employment Agreement. As of the Effective Date, the Employment Agreement is hereby terminated and of no further force and effect; provided, however, that the Company and the Director shall each continue to be bound by the terms of the Employment Agreement with respect to any obligations incurred by either of them prior to the Effective Date, and Director shall continue to be bound by Section 10 regarding "Confidential Information".. 2. Duties of the Director. The Company agrees to continue to retain the Director as its Chairman of the Board, and the Director accepts such service. As Chairman of the Board, Director shall perform such reasonable responsibilities and duties, commensurate with such position, as directed by the Company's Board of Directors or as set forth in the Articles of Incorporation and the Bylaws of the Company. 3. Term. The term of this Agreement shall commence on the Effective Date and shall continue until terminated by the Director, on the one hand, or the Board of Directors of the Company, on the other hand (the "Term"). 4. Director Fees. During the Term, the Company shall pay the Director an amount, before deducting all applicable withholdings, of $150,000 per year, payable quarterly. The amount of such compensation may be periodically reviewed and increased at the discretion of the Compensation Committee of the Board of Directors. 5. Other Compensation and Fringe Benefits. In addition to any pension, deferred compensation and stock option plans which the Company may from time to time make available to the Director upon mutual agreement, the Director shall be entitled to the following: (a) the standard Company benefits enjoyed by the Company's top executives; (b) payment by the Company of the Director's initiation and membership dues in a social and/or recreational club as deemed necessary and appropriate by the Director (and pre-approved by the Company at the Company's discretion) to maintain various business relationships on behalf of the Company; provided, however, that the Company shall not be obligated to pay for any of the Director's personal purchases and expenses at such club; (c) provision by the Company during the Term and any extensions thereof to the Director and his dependents of the medical and other insurance coverage provided by the Company to its top executives; and (d) provision by the Company of supplemental disability insurance sufficient to provide two-thirds of the Director's pre-disability annual compensation for a two year period. The Company shall deduct from all compensation payable under this Agreement to the Director any taxes or withholdings the Company is required to deduct pursuant to state and federal laws or by mutual agreement between the parties. 6. Expense Reimbursement. In addition to the compensation and benefits provided herein, the Company shall, upon receipt of appropriate documentation, reimburse the Director each month for his reasonable travel, lodging, entertainment, promotion and other ordinary and necessary business expenses in accordance with the Company's policies then in effect, all such expense reimbursements to be approved in writing by the Company's President. 7. Non-Delegation of Director's Rights. The obligations, rights and benefits of the Director hereunder are personal and may not be delegated, assigned or transferred in any manner whatsoever, nor are such obligations, rights or benefits subject to involuntary alienation, assignment or transfer. 8. Amendment. This Agreement contains, and its terms constitute, the entire agreement of the parties, and it may be amended only by a written document signed by both parties to this Agreement. 9. Governing Law. California law shall govern the construction and enforcement of this Agreement and the parties agree that any litigation pertaining to this Agreement shall be adjudicated in courts located in California. 10. Attorneys' Fees. If any party finds it necessary to employ legal counsel or to bring an action at law or other proceedings against the other party to enforce any of the terms hereof, the party prevailing in any such action or other proceeding shall be paid by the other party its reasonable attorneys' fees as well as court costs, all as determined by the court and not a jury. 11. Severability. If any section, subsection or provision hereof is found for any reason whatsoever, to be invalid or inoperative, that section, subsection or provision shall be deemed severable and shall not affect the force and validity of any other provision of this Agreement. If any 2 covenant herein is determined by a court to be overly broad thereby making the covenant unenforceable, the parties agree and it is their desire that such court shall substitute a reasonable judicially enforceable limitation in place of the offensive part of the covenant and that as so modified the covenant shall be as fully enforceable as if set forth herein by the parties themselves in the modified form. The covenants of the Director in this Agreement shall each be construed as an agreement independent of any other provision in this Agreement, and the existence of any claim or cause of action of the Director against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants in this Agreement. 12. Notices. Any notice, request, or instruction to be given hereunder shall be in writing and shall be deemed given when personally delivered or three (3) days after being sent by United States certified mail, postage prepaid, with return receipt requested, to the parties at their respective addresses set for the below: To the Company: CKE Restaurants, Inc. 3916 State Street, Suite 300 Santa Barbara, CA 93105 Attention: Andrew F. Puzder, Chief Executive Officer To the Director: William P. Foley, II 4181 Creciente Drive Santa Barbara, California 93110 13. Waiver of Breach. The waiver by any party of any provisions of this Agreement shall not operate or be construed as a waiver of any prior or subsequent breach by the other party. 14. Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. [signature page to follow] 3 IN WITNESS WHEREOF the parties have executed this Agreement to be effective as of the date first set forth above. CKE RESTAURANTS, INC. By: /s/ Andrew F. Puzder ---------------------- Its: President and Chief DIRECTOR /s/ William P. Foley, II --------------------------- William P. Foley, II 4 EX-10.51 6 a94967exv10w51.txt EXHIBIT 10.51 EXHIBIT 10.51 DISTRIBUTION SERVICE AGREEMENT THIS DISTRIBUTION SERVICE AGREEMENT ("Agreement") is entered into and made effective as of the 7th day of November 2003, between McCabe's QUALITY FOODS ("McCabe's") and LA SALSA, INC. ("Buyer"). RECITALS WHEREAS, McCabe's operates certain distribution centers in California and Oregon from which it distributes food, packaging, and related supplies to food service operations which are located within the service area of such distribution centers (the "Service Area"): and WHEREAS, Buyer presently operates certain restaurants listed on Exhibit A in which it or an affiliate owns a controlling interest (hereinafter the "Company Units") and licenses others to operate certain restaurants listed on Exhibit A-I (hereinafter the "Franchised Units") under the service marks "La Salsa Fresh Mexican Grill", "La Salsa", and "La Salsa Cantina", The Company Units and the Franchised Units shall include additional locations opened during the term of this Agreement within the Service Area. The Company Units and the Franchised Units, including any such additional locations, are sometimes hereinafter collectively referred to as the "Restaurants". NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the value and sufficiency of which are hereby acknowledged, the parties agree as follows: I BASIC AGREEMENT McCabe's will purchase, warehouse, and distribute for sale to Restaurants, and Restaurants will purchase from McCabe's all Buyer approved products including, but not limited to, the following categories: dairy, frozen and refrigerated items, poultry, beef, pork, seafood, canned and dry goods, beverages, soft drink syrup products, paper and disposables, janitorial supplies including cleaning chemicals and other non-food products requiring frequent replacement (collectively the "Products"), II PRODUCT DESIGNATION Buyer shall designate the brands and/or suppliers of Products it requires and may negotiate with designated suppliers the price and terms at which McCabe's shall procure Products from such suppliers for resale to the Restaurants, which shall be based upon volume requirements that are supported by the historical usage over the previous twelve (12) month period. III INVENTORY MANAGEMENT A. Inventory Management -- During the term of this Agreement, McCabe's shall maintain an inventory of the Products in quantities necessary to provide the Restaurants with an adequate supply of such Products. McCabe's shall use reasonable, good faith efforts to minimize the risk of inventory obsolescence. McCabe's shall not buy or stock more than four weeks supply unless authorized by Buyer. McCabe's will provide Buyer with monthly status reports of slow moving items. Buyer will communicate with McCabe's regarding menu changes and Product mix changes. IV SERVICES A. Delivery Frequency - McCabe's will determine Order and delivery schedules. McCabe's will make two deliveries per week to each Restaurant unless otherwise mutually agreed in writing between Buyer and McCabe's. Under certain circumstances, individual Restaurants may only require one weekly delivery due to less than average volume. Delivery schedule and route changes shall have Buyer's approval four weeks before implementation. Major route changes shall be limited to three times a year. B. Service Area - Subject to and in accordance with the terms of this Agreement, McCabe's shall deliver Products to all current and future Restaurants located in the Service Area, defined as "within a 350 mile radius of the Distribution Center". C. Scheduling Access - McCabe's may make such deliveries on any day of the week, at any time of day, except between 11:00 a.m. -- 1:30 p.m. Buyer agrees to provide keys and security codes for its Restaurants to facilitate night deliveries where necessary. It is understood that either Buyer or McCabe's may have particular scheduling needs for specific Restaurants where unusual circumstances may exist, and each party agree to address such needs in good faith. 1 D. Order Balancing - It is understood that Restaurants receiving two deliveries per week will use reasonable, good faith efforts to balance the orders such that each delivery consists of approximately the same number of cases. E. In-store Delivers at Restaurants - McCabe's delivery drivers will bring all Products into those Restaurants where it is possible to safely roll a two-wheel cart. McCabe's delivery drivers will separate and deliver the order to the Restaurants freezer, cooler and dry storeroom. McCabe's delivery driver will not put Products on the shelves. McCabe's delivery drivers shall use caution and care in using access driveways, hallways, and pathways. McCabe's shall repair damages (other than reasonable wear and tear) caused by McCabe's delivery drivers within a reasonable time. F. On-time Delivery - Deliveries within sixty (60) minutes of a. scheduled delivery are considered to be "on time," McCabe's will maintain a monthly average of no less than eighty-percent (85%") on-time delivery. G. Service Level - Service level is defined as the calculation of the total number of items actually received at the time of delivery divided by the total number of cases ordered. McCabe's will maintain a Service level of no less than ninety-nine and one-half percent (99.5%). H. Order Entry - Restaurant shall fax order to McCabe's by 4:00 PM two days prior to scheduled delivery. Restaurant may place orders electronically to McCabe's when available systems are in place at both Restaurant and McCabe's. I. Shortages - McCabe's shall promptly notify Restaurants of shorted items prior to delivery. McCabe's shall arrange delivery of shorted items within twenty-four (24) hours from the time of delivery. McCabe's shall reimburse the Restaurants for related expenses incurred for retail purchases to cover shorted items. V TERM OF AGREEMENT AND IMPLEMENTATION The term of this Agreement will be three (3) years and shall commence as of October 1,2003 and terminate on September 31, 2006 unless sooner terminated as hereinafter provided. Such term shall be extended for consecutive periods of one (1) year from the expiration thereof and from the expiration of each subsequent extension period, as the case may be, unless McCabe's or Buyer shall have given, either to the other, not less than one hundred twenty (120) days prior written notice of its desire to terminate this Agreement as of such expiration. VI PRICING A. Sell Price - The Sell Price to Restaurant for all Products sold under this Agreement will be the manufacturer FOB cost (excluding any "prompt payment" discount), less any promotional allowances reflected or, invoices to the distribution centers, plus applicable Freight Charges (collectively referred to hereafter as "Cost"), plus a distribution fee. Freight rates shall not exceed those negotiated and guaranteed by the Product supplier. B. McCabe's Fee Per Case - The Sell Price of each Product sold under this Agreement will equal the cost ("Cost") of each Product delivered to all McCabe's distribution centers on a period basis, or a weekly basis for commodity items, plus a distribution fee that will equal a prescribed dollar amount per case of Product. (the "Fee Per Case") as stated in the following table.

Payment Terms Days Agreed Fee Per Case - ------------------ ------------------- 0 $1.90 7 $1.95 14 $2.00 21 $2.05 28 $2.10

1. For example, a Product with a Cost of $20.00 and a Fee Per Case of $1.90 will have a sell price calculated as follows: $20.00+$1.90=$21.90 2. Fee Per Case shall be adjusted after the end of the second (2nd) year of the term (September 31, 2005) of this Agreement by multiplying the most recent Fee Per Case by the "Percentage Change" (hereinafter defined) in the "Price Index" (hereinafter defined). 2 a) "Price Index" as used herein shall mean the Consumer Price Index for All Urban Consumers (CR1-U), West Coast City Average, All Items (Base Year 1982-84=100) ("CPI"). b) "Percentage Change" as used herein shall mean the percentage increase in the Price Index represented by a fraction, the numerator of which shall be the latest Price Index available and the denominator of which shall he the Price Index reported for the month which was twenty-four (24) months before the month used in the numerator. c) There shall he no Fee Per Case increase until the CPI Percentage Change has increased by 3.5%. Furthermore, the CPI mark-up increase shall be capped at 3.5% per year. C. Cola Supplier Products. Soft drink syrup products and bottled water products will be priced according to the national account-pricing program provided to McCabe's by cola supplier less applicable discounts. There will be a 1% discount, less national pricing (i.e., sell price $40.99 per case for 2003). D. Minimum Drop Size -- In the event the combined average shipment of Product (cases per delivery), measured annually, falls below 75 cases of Product per shipment, McCabe's is entitled to a $0.10 per case increase. Buyer shall have the option to go with once a week delivery for low volume units in order to maintain the existing markup structure. E. Fuel Price Adjustment -- The Fee Per Case shall be adjusted every six months (6) to reflect the increases or decreases in fuel costs per gallon, on a one month lagged basis, in the following fashion: The October 1,2003 West Coast fuel price published on the 1st day of October or first date of publication following the 1st day of October (which is compiled by Energy Information Administration, Retail On-Highway Diesel Prices, National Average as shown on their Website:http:www.cia.doe.gov/pub/oil_gas/ petroleum/data_publications/weekly_on_highway_diesel_prices/current/html/ html/diesel.html) will be subtracted From the West Coast fuel price for subsequent bi-annual adjustment. For every $0.10 per gallon increase or decrease in fuel prices the markup per case will increase or decrease by $0.01. Fuel cost adjustments shall be added to or subtracted from the Fee Per Case at the beginning of the accounting period following the first of the month fuel cost posting. F. Cost Verification -- Within thirty (30) days of the first, second, and third anniversaries of the agreement and upon written notice, a representative of the Buyer has the right to verify the Cost of Products sold under this Agreement. McCabe's will furnish documentation verifying Costs, subject to the following limitations: 1. Date and time of verification must be mutually agreed. 2. All verifications must be done at McCabe's premises. 3. The period for which pricing is verified shall be the twelve (12) months prior to the date of Cost Verification. VII PROMPT PAYMENT A. McCabe's shall periodically invoice the Company (which may be affected by electronic transmission of the invoice to the Company) at the address of its corporate headquarters, Attention: Director of Cash Management following delivery to the Company Restaurants for all Products supplied by McCabe's and accepted by the Company Restaurants hereunder. The prices on invoices for all Products supplied by McCabe's and accepted by the Company Restaurants shall be in accordance with Section X hereof. The terms of payment of each invoice shall be zero days as outlined in Section VI.B. (the "Payment Terms"). All payments made by the Company to McCabe's pursuant to that Agreement shall be made by wire transfer of immediately available funds to a bank account designated by McCabe's not fewer than two days prior to such payment, or the last bank account used for any such transfer, as the case may be, B. McCabe's shall periodically invoice the operator of each Franchised Restaurant it accordance with its usual practices, provided, however, that each Franchised Restaurant shall be offered the Payment Terms if such Franchised Restaurants meets McCabe's credit standards as they may from time to time be amended in good faith. VIII TERMINATION A. Notwithstanding Section V of this Agreement, if any party fails or refuses to comply with one or more of its material obligations hereunder resulting in a material default which is incapable of being cured or which is capable of being cured and is not cured within a reasonable period of time following its receipt of oral or written notice of such default (a "Breach"), the nonbreaching party shall provide the breaching party written notice thereof describing the Breach 3 and specifying a date, not less than sixty (60) days following the breaching party's receipt of such notice, on which this Agreement shall be terminable at the option of the nonbreaching party unless the Breach has by that date been substantially cured. This procedure and remedy of termination is in addition to any and all other remedies available to a party by contract, law or otherwise, including without limitation McCabe's right to immediately modify payment terms or stop shipment under Section VTI of this Agreement for non-payment. B. Any party's failure to terminate this Agreement, or to take any other action, upon the occurrence of one or more breaches shall not constitute a waiver or otherwise affect the right of such party to terminate the Agreement for any subsequent Breach. C. The obligations of McCabe's pursuant to this Agreement shall be terminable, at McCabe's option, if any of the following events shall occur and be continuing: (i) if a proceeding is instituted (and not dismissed within sixty (60) days) by or against Buyer under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law to he adjudicated as bankrupt or insolvent: (ii) the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or similar official of all or a substantial part of the assets of buyer; (iii) any assignment for the benefit of creditors of Buyer; or (iv) if Buyer shall admit in writing its inability to pay its debts as they became due. D Upon termination of this Agreement by the Buyer, Buyer shall he responsible for purchasing all Products approved by and purchased by McCabe's solely for Buyer within sixty (60) days. IX ASSIGNMENT A. McCabe's may not assign this Agreement without the prior written consent of Buyer, which consent shall not be unreasonably withheld or delayed; provided, however, that nothing in this Section shall preclude McCabe's from employing common carriers, contract carriers, public warehousemen or other similar parties to temporarily perform its services hereunder. B. Notwithstanding subsection VIII A above, McCabe's may not assign its rights and obligations under this Agreement without Buyer's consent to any subsidiary or affiliate of McCabe's or to any purchaser of all or substantially all of its distribution business or assets. For purposes of this Section, a change of control or majority ownership of McCabe's shall not be deemed to be an assignment of rights under this Agreement for which Buyer's consent is required. C. McCabe's may assign accounts receivable payable by Buyer. D. Any permitted assignment of this Agreement by either party shall, except as otherwise agreed, be deemed an assignment of all of the assignor's rights and liabilities under this Agreement accruing, arising or relating to any period on or after the date of such assignment E. Any assignment made in violation of this Section shall be null and void. X TITLE AND RISK OF LOSS Except in the case of night deliveries or so-called "key drop" deliveries, title to all Products shall pass upon a Restaurant's acceptance, subject to the rejection of certain items by notation on the delivery ticket, of such Products for delivery. With respect to "key drop" deliveries, title to all goods shall pass at the close of business on the immediately succeeding business day, unless rejected by the Restaurant prior thereto. In the event the product is picked-up by McCabe's in original condition and a credit is due the Restaurant, McCabe's shall provide credits for Product(s) within seven (7) days of pickup. Restaurant shall make arrangements through McCabe's order department before close of business the next day for the pickup of any goods not accepted by Restaurant. Pickups are typically made on the next scheduled delivery day. Credits for highly perishable items can be issued without waiting for the next delivery, providing that the Restaurant has the advance agreement of McCabe's. McCabe's shall promptly issue a receipt to Restaurant for any Products determined acceptable by McCabe's for return and ensure that, Buyer receives a proper credit therefor within seven (7) days of pickup. McCabe's shall bear all risk of loss, damage, or destruction until title passes to Buyer. Credits will be automatically processed after ten (10) days if McCabe s fails to make the customer pickup as agreed with the Restaurant. XI REPORT REQUIREMENTS Within five (5) days of the commencement of a McCabe's Accounting Period, McCabe's will provide Buyer with an Accounting Period Order Guide and Price List. For purposes of determining commodity Sell Prices, McCabe's will provide a Weekly Price Change Notice. McCabe's agrees to provide rolling twelve (12) month usage reports, monthly gross margin report, fill rate report by unit and roll up, on-time delivery report by unit and rollup to Buyer. Buyer may reasonably request additional reports that may be useful as a management tool. 4 XII INSURANCE McCabe's agrees to maintain, during the entire term of the Agreement, insurance coverage against such risks as may he reasonably specified by Buyer, in such minimum amounts as may be reasonably satisfactory to Buyer. XIII FORCE MAJEURE Either party is excused from performance hereunder (other than payment obligations, which shall not be excused under this Section XIII) if such non-performance results from any acts of God, war, riots, terrorism, sabotage, subversion, acts of governmental authorities (interruption in supply, strike lockout, labor dispute), or any other cause outside the reasonable control of the non-performing party. Both parties shall use their best efforts to terminate or cause the expiration of any Force Majeure as soon as practical following its occurrence. XIV CONFIDENTIALITY Buyer and McCabe's each agree that they will keep all terms of this Agreement completely confidential, and that neither party will disclose any information concerning this Agreement to any person or entity without the prior express written consent of the other party; provided, however, that neither party will be in breach of this requirement if such party reasonably believes such disclosure is required based on the advise of counsel under applicable law, regulation or court order. In the event that such disclosure is required by applicable law, regulation or court order, however, Buyer and McCabe's each agree that, if reasonably practicable, such disclosure will not be made to, any person or entity until after such time as the other party has received written notice with regard to any required disclosure, and tile other party has had a reasonable opportunity to contest the basis for disclosure and review the content of any disclosure proposed to he made to any person or entity. Buyer and McCabe's further agree that disclosure of the terms and conditions of this Agreement in violation of this Section constitutes a material breach of the Agreement. XV NOTICES All notices required or permitted to be given hereunder shall be in writing and delivered personally or sent by United States registered or certified mail, postage prepaid, return receipt requested, or by express delivery service which provides for return receipts, addressed to the parties as follows: (A) If to McCabe's: McCabe's Quality Foods. 17600 E, San Rafael Portland, OR 91230 Attention: Joe Kemetz - President/CEO With Copy to: Services Group of America, Inc 4025 Delridge Way SW, Suite 500 Seattle WA 98106 Attention: Peter K. Smith. CFO Jeffrey R. Masi, General Counsel 5 (B) If to Buyer: La Salsa. Inc. 3916 State Street Santa Barbara, CA 93105 Attn: Michele Rushing Vice- President Purchasing With Copy to: La Salsa. Inc. 6307 Carpinteria Avenue Carpinteria, CA 93013-2901 Attn: General Counsel XVI GOVERNING LAW AND VENUE This agreement shall be governed by, and construed in accordance with, the laws of the state of California without reference to the choice of law principles thereof. Each party hereto agrees that it shall bring any action or proceeding in respect of any claim arising out of or related to this agreement or the transactions contained or contemplated by this agreement, whether in tort or contract or at law or in equity, exclusively in the Superior Court of Orange County, California (the "chosen court") and (i) irrevocably submits to the exclusive jurisdiction of the chosen court, (ii) waives any objection to laying venue in any such action or proceeding in the chosen court. (iii) waives any objection that the chosen court is an inconvenient forum or does not have jurisdiction over any party hereto and (iv) agrees that service of process upon such party in any such action or proceeding shall be effective if notice is given in accordance with section xv of this agreement. XVII CAPTIONED HEADINGS The section headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. XVIII COMPLIANCE WITH LA\VS McCabe's warrants that all Products distributed by it to the Restaurants shall be received, handled, stored, shipped, delivered and sold by McCabe's in compliance with all applicable federal, state and local laws, ordinances, rules and regulations. XIX NO PARTNERSHIP McCabe's acknowledges that it is an independent contractor and no party is or shall be construed as an agent, partner, joint venturer or employee of another. No party shall have the authority to bind or otherwise obligate any other palm in any manner and no party shall represent to anyone that it has a right to do so, XX WAIVERS No waiver or waivers by any party of any provision of this Agreement, whether by conduct or otherwise, shall be deemed to be a further or continuing waiver of the provision or any other provision of this Agreement. XXI ATTORNEYS' FEES If it is necessary for either party to institute stilt to enforce any of be provisions of this Agreement, then the prevailing party in such suit shall be entitled to collect and receive reasonable outside attorneys' fees and court costs, XXII SEVERABILITY The provisions of this agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. XXIII THIRD-PARTY RIGHTS Notwithstanding any other provision of this Agreement, this Agreement shall not create benefits on behalf of any third party or person other than the parties hereto or their permitted assignees (including without limitation any broker, finder, supplier or customer), and this Agreement shall be effective only as between the parties hereto, their successors and permitted assigns. 6 XXIV ENTIRE. AGREEMENT/AMENDMENT'S The parties expressly acknowledge that this Agreement contains the entire agreement of the parties with respect to the relationship specified in this Agreement and supersedes any prior arrangements or understandings, verbal or written, between the parties with respect to such relationship. This Agreement may only be amended by a written document signed by each of the parties hereto. XXV COUNTERPARTS This Agreement and any amendments hereto may be executed in one or more counterparts, each of which shall be deemed to be an original by the parties executing such counterpart, but all of which shall be considered one and the same instrument. IN WITNESS WHEREOF, this Agreement has been signed on behalf of each of the parties hereto as of the date first written above.

McCabe's BUYER BUYER BY McCabe's Quality Foods La Salsa, Inc. La Salsa Inc. Signature /s/ Joe Kemetz /s/ Michele Rushing /s/ Michael W. Liby -------------- ------------------- ------------------- It's: President/CEO VP Purchasing Executive Vice President Chief Operating Officer Date: 11/7/03 11/10/03 11/10/03

7 Exhibit A La Salsa, Inc. Company Restaurant Listing

PS# Old Phone Fax Unit Name Address 1 City St Zip Unit # - ------- ---- ------------ ------------ ------------------- -------------------------- ----------------- --- ---------- 1610001 1 310-479-0919 310-477-2388 PICO 11077 W. Pico Blvd. Los Angeles CA 90064 1610005 5 310-276-2373 310-273-2375 BEVERLY HILLS 9631 Santa Monica Blvd. Beverly Hills CA 90210 1610006 6 949-640-4289 640-640-2761 NEWPORT BEACH 401 Newport Center Dr. Newport Beach CA 92660 A-107 1610008 8 619-234-6906 619-234-6214 NORTON PLAZA 415 Horton Plaza San Diego CA 92101 1610009 9 760-747-6605 760-747-8051 NO. COUNTY FAIR 200 E. Via Rancho Pkwy Escondido CA 92025 1610016 16 310-826-7337 310-826-7704 BRENTWOOD 11740 San Vicente Blvd. Brentwood CA 90049 #102 1610019 19 619-435-7778 619-435-3664 CORONADO 1360 Orange Avenue Coronado Island CA 92118 1610027 27 310-473-7880 310-312-0638 VINCI PLAZA 11901 Santa Monica Blvd. Los Angeles CA 90025 Ste 111 1610035 35 805-963-1001 805-963-1660 STATE ST 1131 State Street Santa Barbara CA 93101 1610037 37 818-760-7797 818-760-1970 STUDIO CITY 12048 Ventura Blvd. Studio City CA 91604 1610039 39 805-964-1146 805-964-5766 FIVE POINTS 3987 State St. Suite D Santa Barbara CA 93104 1610040 40 310-208-7083 310-208-3176 WESTWOOD 1154 Westwood Blvd. Los Angeles CA 90024 1610041 41 213-892-8227 213-892-8415 ROOSEVELT 727 W. 7th Street Los Angeles CA 90017 1610044 44 310-587-0755 310-587-3515 PROMENADE 1401 3rd Street Promenade Santa Monica CA 90401 1610064 64 916-446-7133 916-446-1316 SACRAMENTO 545 Downtown Plaza Ste. Sacramento CA 95814 2095 1610067 67 818-789-8587 818-789-8589 SHERMAN OAKS 14006 Riverside Dr. Space Sherman Oaks CA 91423 #256 1610068 68 949-786-7692 949-786-7694 IRVINE 3850 Barranca Pkwy. Ste D Irvine CA 92606 1610069 69 408-946-6696 408-946-6586 MILPITAS 602 Great Mall Drive #447 Milpitas CA 95035 1610070 70 510-352-9095 510-352-9098 SAN LEANDRO 1207 Marina Blvd. San Leandro CA 94577 1610071 71 650-917-8290 650-917-9293 MOUNTAIN VIEW 660 San Antonio Road Ste A Mountain View CA 94040 1610072 72 916-565-0144 916-565-1006 ARDEN FAIR 1689 Arden Way #2012 Sacramento CA 95815 1610073 73 650-588-9722 650-588-9725 SAN BRUNO 1230 El Camino Real Ste. Q San Bruno CA 94066 1610074 74 650-579-3684 650-579-4754 BURLINGAME 1125 Burlingame Avenue Burlingame CA 94010 1610075 75 510-834-3422 510-834-3420 OAKLAND 501 14th Street Ste 24 Oakland CA 94612 1610076 76 702-735-8228 702-735-1145 CAESARS 3500 S. Las Vegas Blvd. Las Vegas NV 89109 SPE7 1610077 77 702-369-1234 702-369-8632 BOULEVARD MALL 3840 S. Maryland Parkway Las Vegas NV 89109 FC#108 1610078 78 805-777-0090 805-777-0190 WESTLAKE 180 Promenade Way Ste E Westlake Village CA 91362 1610079 79 310-318-5904 310-318-2634 REDONDO SHORES 409 N. Pacific Coast Hwy Redondo Beach CA 90277 E#110 1610080 80 213-683-8815 213-683-8817 UNION BANK 445 S. Figueroa St Space Los Angeles CA 90071 #104 1610082 82 213-623-6390 213-623-4161 BUNKER HILL 601 W. 5th Street Los Angeles CA 90071 Ste.#R-201 1610084 84 818-343-6744 818-343-6867 TARZANA 18660 Ventura Blvd Los Angeles CA 91356 1610085 85 415-771-7848 415-771-7835 FILLMORE 2401 California Street San Francisco CA 94115 1610090 90 510-339-9311 510-339-9235 MOTCLAIR 2064 Antioch Street Oakland CA 94611 1610091 91 818-591-7787 818-591-1785 CALABASAS 4799 Commons Way Ste. G Calabasas CA 91302 1610093 93 760-735-8253 760-735-8645 AUTO PARKWAY 1290 Auto Parkway Escondido CA 92029 1610094 94 760-436-9266 760-436-4580 ENCINITAS 219 N. El Camino Real Encinitas CA 92024 1610095 95 619-589-6696 619-589-2547 LA MESA 4990 Baltimore Drive La Mesa CA 91941 1610096 96 310-317-9466 310-317-9416 MALIBU 22800 Pacific Coast Hwy Malibu CA 90265 1610097 97 858-483-1007 858-483-1080 PACIFIC BEACH 980 Grand Avenue Pacific Beach CA 92109 1610098 98 818-888-2246 818-888-8097 TOPANGA 6600 Topanga Canyon Blvd. Canoga Park CA 91303-2678 Ste. 1-E 1610099 99 702-739-1776 702-739-1796 LUXOR 3900 Las Vegas Blvd South Las Vegas NV 89119 1610100 100 510-477-0141 510-477-0128 UNION LANDING 32248 Dyer Street Union City CA 94587 1610101 101 925-803-9200 925-803-9201 DUBLIN 4930 Dublin Blvd. Dublin CA 94568 1610102 102 949-475-2506 949-475-2508 MAC ARTHUR 4341 Mac Arthur Blvd. Ste Newport Beach CA 92660 F 610104 104 310-453-7551 310-828-3171 ARBORETUM 2200 Colorado Avenue Santa Monica CA 90404 610105 105 310-234-8338 310-234-8320 W. SIDE PLAZA 10800 W. Pico Blvd. Los Angeles CA 90064 610106 106 949-574-1315 949-5741-1318 COSTA MESA 279 E 17th Street Costa Mesa CA 92627 610107 107 714-685-1840 714-685-1468 ORANGE VILLA 2094 N. Tustin Avenue A-2 Orange CA 92865-3928 610108 108 858-350-8307 858-350-6579 CARMEL COUNTRY ROAD 12880 Carmel Country Rd San Diego CA 92130 Ste D-100 610109 109 310-265-5570 310-265-5560 ROLLING HILLS 55-A Peninsula Center Rolling Hills CA 90274 Estate 610110 110 949-888-8530 949-888-8641 SANTA MARGARITA 30642 Santa Margarita Pkwy Rancho Santa CA 92688 Margarita 610111 111 949-450-8511 949-450-8510 IRVINE CENTER 8673 Irvine Center Drive Irvine CA 92618 610112 112 909-517-3560 909-517-2171 CHINO HILLS 13089 Peyton Dr. Bldg. 3A Chino CA 91709 Ste. J 610117 117 858-974-1305 858-974-1487 CLAIREMONT 9211 Clairemont Mesa San Diego CA 92123-1211 Blvd. #106 610118 118 760-724-8170 760-724-8170 OCEANSIDE 4111 Oceanside Blvd. Ste Oceanside CA 92056-6004 102 610119 119 415-291-0717 415-291-0817 PIER 39 Pier 39 Bldg. P San Francisco CA 94133 610120 120 805-981-2276 805-981-4867 ESPLANADE 641 W. Esplanade Drive Oxnard CA 93030 610121 121 562-529-3570 562-529-3764 LAKEWOOD 500 Lakewood Center Mall Lakewood CA 90712 FC-10 610122 122 714-838-8253 714-838-8235 TUSTIN 535 E. Main Street Tustin CA 92780 610123 123 949-551-6680 949-551-6685 TRABUCO GROVE 14171 Jeffrey Road Irvine CA 92620

8

Name Unit# Owner/Operator Name Street Address St Zip Phone Fax - -------- ----- --------------------- ------------- ------------------------------ --- ---------- ------------ ------------ La Salsa 24 Anthony Luis, Inc. San Diego 1010 University Ave. #101 CA 92103 619-543-0777 619-297-2127 La Salsa 501 Bing & Connie Magpayo Hayward 792 B St. CA 94541-5008 510-940-3737 510-940-3663 La Salsa 405 Bravo Group, LLC Tucson 4881 E. Grant Road #101 AZ 85712 520-325-2200 520-325-2200 La Salsa 421 Bravo Group, LLC Tucson 7090 N. Oracle Road #128 AZ 85704 520-531-1211 520-531-8188 La Salsa 422 Bravo Group, LLC Tucson 1800 E. Fort Lowell Road #156 AZ 85719 520-325-0082 520-325-0089 La Salsa 492 Bravo Group, LLC Tucson 1021 N. Wilmot Road AZ 85711 520-747-0066 520-747-3855 La Salsa 431 Campico, Inc. Primm 129 Stateline Road NV 89102 702-874-2340 702-874-2340 La Salsa 485 Campico, Inc. Las Vegas 2901 S. Las Vegas Blvd. NV 89109 702-697-4401 000-000-0000 La Salsa 20 Goldmex Glendale 1144 Glendale Galleria CA 91210 818-548-5341 818-548-5341 La Salsa 401 Goldmex Northridge 9301 Tampa Avenue Space FC5 CA 91324 818-700-1501 818-700-1501 La Salsa 415 Host Marriott #2 Ontario 1 Mills Circle #F11 CA 91764 909-476-1313 909-476-1316 La Salsa 416 Host Marriott #4 Los Angeles Airport 201 World Way CA 90045 310-646-6470 310-646-8058 La Salsa 428 Host Marriott #5 Sacramento 6850 Airport Blvd. Ste 28 CA 95837 916-929-9596 918-929-3543 La Salsa 427 John Ricci Thousand Oaks 488 W. Hillcrest Drive CA 91360 805-496-1327 805-496-7760 La Salsa 488 LTS Enterprises, Inc. Las Vegas - Alladin 3863 S. Las Vegas Blvd. #380 NV 89109 702-892-0645 702-892-9741 La Salsa 489 LTS Enterprises, Inc. Las Vegas - 450 Freemont Street Ste. 195 NV 89101 702-384-1720 702-384-1734 Neonopolis La Salsa 420 Marco Garcia San Diego 3707 N. Harbor Drive CA 92101 619-296-3789 619-296-4187 La Salsa 497 Nevada Franchise, LLC/DBA Bola VI, LLC Las Vegas 3785 S. Las Vegas Blvd. Ste NV 89109 702-240-6944 702-644-6946 1500 La Salsa 32 Northern Restaurants Scottsdale 7014 E. Camelback Road AZ 85258 480-994-4112 000-000-0000 La Salsa 408 Northern Restaurants Phoenix 10855 N. Tatum Blvd. AZ 85028 480-948-2600 480-948-8282 La Salsa 484 Northern Restaurants Glendale 7700 W. Arrowhead Town Center AZ 85308 623-412-8803 623-412-8810 #2073 La Salsa 487 QSR Enterprises, Inc. Upland 960-A Mountain Avenue CA 91786-3657 909-946-6949 909-946-6948 La Salsa 21 R&R Enterprises San Diego 8750 Genesee Avenue #240 CA 92122 858-455-7229 858-455-5305 La Salsa 435 Sodexho-Marriott Burbank Riverside Commissary Mail Code CA 91521 818-460-5777 818-460-5266 Services 5019 La Salsa 502 Sodexho-Marriott San Diego Main Exchange Foodcourt MCAS CA 92101 858-695-7303 858-689-9615 Services Miramar La Salsa 414 USC Hospitality Los Angeles 830 W. 36th Place CA 90089 213-740-5544 213-740-8831 La Salsa 38 YSJA America, Inc. Redondo Beach 2790 Manhattan Beach Blvd. CA 90278 310-793-9444 310-793-1472 La Salsa 46 YSJA America, Inc. Torrance 24223 Crenshaw Blvd CA 90505 310-326-1444 310-326-2529 La Salsa 403 YSJA America, Inc. Cerritos 137 Los Cerritos Center CA 90703 562-809-4034 562-809-0583 La Salsa 406 YSJA America, Inc. Redondo Beach 1759 South Elena Avenue CA 90277 310-543-2448 310-5433144

9 EXHIBIT B ACCEPTANCE AGREEMENT This Acceptance Agreement is entered into as of the ____ day of ______________________________________,, by and between the undersigned owner (the "Owner") of the establishments described on the attached Exhibit A (the `Subject Locations") and McCabe's on behalf of itself and certain of its operating companies (collectively, "McCabe's") that are approved to provide distribution services to the Owner, as a franchisee of La Salsa, Inc. (the "Master Organization"). RECITALS A. The Owner and the Master Organization dense that McCabe's provide distribution services to the Subject Locations under substantially similar terms and conditions (the "Standard Tents") as set forth in the distribution agreement entered into by and between McCabe's and the Master Organization dated as of _______________________ [date of Master Distribution Services Agreement] (the "Distribution Agreement"). In certain cases, the Distribution Agreement permits variances in the Standard Terms to address the specific delivery requirements, credit terms, and/or other unique circumstances relating to or requirements of the Owner or the Subject Locations. B. McCabe's, as a condition to providing distribution services to the Subject Locations, requires that the Owner execute this Agreement, evidencing the Owner's agreement to the terms and conditions of the Distribution Agreement, as modified and/or supplemented by the Location Specific Terms, as set forth in Exhibit B attached to and hereby incorporated by reference within this Agreement. All capitalized terms not otherwise defined in this Agreement shall have the meanings ascribed to them under the Distribution Agreement. Therefore, in consideration of the premises and the mutual covenants, the sufficiency of which is acknowledged by than, the Owner and McCabe's agree as follows: 1. Binding Nature of Distribution Agreement By his/her/its signature below, the Owner specifically acknowledges and agrees: (A) that the distribution services that McCabe's provides to the Subject Locations shall to subject to the terms and conditions of the Distribution Agreement, as the same may be modified upon. Agreement by and between McCabe's and the Master Organization, from time to time, pursuant to its terms, and further subject to the Location Specific Tents: (B) to be bound by any adjustments in the pricing terms permitted under the Distribution Agreement and/or negotiated and agreed to by the Master Organization. The Owner specifically acknowledges and agrees that the "Cost" or `Contracted Cost' that shall be utilized in determining the sell price of Products distributed to the Subject Locations shall be determined in the manner provided in the Distribution Agreement The Owner specifically recognizes and agrees that McCabe's shall be entitled to compensation for its performance of merchandising and other value-added services to or for the benefit of suppliers, as provided in the Distribution Agreement, and that such compensation shall not be deducted from or otherwise offset against the "Cost or Contracted Cost' utilized in determining the sell price of Products. Provided that McCabe's has indicated its acceptance hereof through the signature of its authorized representative below, McCabe's shall provide distribution services to the Subject Locations in accordance with the terms and conditions of the Distribution Agreement, as amended and/or supplemented by the Location Specific Terms. 2. Pricing Delivery and Credit Terms. Delivery frequencies and credit terms and other supplemental and/or modified terms applicable to the Subject Locations are set forth in Exhibit "B" attached to this Agreement, and incorporated herein by reference or if not addressed therein, shall he the same as set forth in the Distribution Agreement. 10 3. Confidentiality. Owner agrees that it will keep all terms of this Agreement and Financial information completely confidential, and that it will not disclose any information concerning this Agreement to any person or entity without the prior express written consent of McCabe's; provided, however, that such information may be provided by Owner to .its auditors, consultants, and advisors who agree to maintain such confidentiality or are otherwise bound to restrictions or disclosures and to any prospective purchasers of all or part of their respective businesses, provided that such prospective purchasers shall have executed and delivered a confidentiality agreement in form and substance approved by McCabe's, which approval shall not unreasonably be withheld or delayed. Owner will not be in breach of this requirement if Owner reasonably believes such disclosure is required based on the advice of counsel under applicable law, regulation, or court order. In. the event that such disclosure is required by applicable law. regulation, or court order, however, Owner agrees that, if reasonably practicable, such disclosure will not be made to any person or entity until after such time as McCabe's has received written notice with regard to any required disclosure (provided that notice of the requited disclosure is not prohibited by lax;'), and McCabe's has had a reasonable opportunity to contest the basis for disclosure and review the content of any disclosure proposed to be made to any person or entity. Owner further agrees that disclosure of the terms and conditions of this Agreement in violation of this Section constitutes a material breach of the Agreement. 4. Financial Reports. The continuing credit worthiness of Owner is of central importance to McCabe's. If the Owner's accounts payable balance due McCabe's exceeds $12,000 at anytime, the Owner will provide quarterly and annual financial statements consisting of a balance sheet, income statement and cash flow statement and the financial condition of the Owner must continually support the extension of credit granted in this Agreement. Alternatively, if the Owner is not a natural person, the Owner [may, in lieu of quarterly financial statements, provide personal guaranties of the payment of Owner's obligations under the Agreement from the owners of legal or beneficial interests in the Owner and annual personal financial statements of such guarantors, provided that the financial condition of such guarantors continues to support the credit extended to the Owner. In such event, the Owner shall continue to provide annual financial statements relating tote Owner. 5. Termination/Delivery Stoppage. (a) This Agreement and McCabe's obligation to provide distribution services to the Subject Locations may be terminated: (i) By McCabe's upon site termination of the Distribution Agreement, or by reason of the circumstances permitting termination of the Distribution Agreement, even if not exercised, by McCabe's; (ii) By Owner upon the termination of Owner's franchise agreement with the Master Organization; (iii) By either Party, upon thirty (30) days prior written notice to the other Party, if the other Party breaches the terms and conditions of this Agreement and fails to cure such breach within such thirty (30) day cure period; (iv) By McCabe's open written notice to Owner In the event that McCabe's reasonably determines that Owner has suffered a material adverse change it his/her/or its financial condition; (v) By either Party, if the other Party is adjudicated insolvent by any court or tribunal, or files a voluntary petition in bankruptcy, or enters into an arrangement with its creditors or applies for or consents to the appointment of a receiver or trustee of itself or its property, or makes an assignment for the benefit of creditors or suffers or permits the entry of an order adjudicating it to be bankrupt or insolvent or appointing a receiver or trustee of itself or its property, in which event no notice to the defaulting Party shall he required and this Agreement shall immediately terminate; or 11 (vi) By either Party, if the oilier Party permits or suffers on involuntary petition in bankruptcy filed against it to remain undischarged or stayed for a period of sixty (60) days in which event no notice TO the other Party shall be required and this Agreement shall immediately terminate. Absent such earlier termination, this Agreement shall remain, in full force and effect until the expiration 0f the Distribution Agreement. (b) In the event Owner fails to pay for any Products delivered to any Subject Locations within the approved payment terms established pursuant to this Agreement, McCabe's shall be entitled to, forthwith upon notice to Owner, withhold any future deliveries of Products to the Subject Locations until McCabe's receives payment in full of the Sell Price with respect to such Products and any finance or law charges permitted under the Distribution Agreement. In addition, in the event that Owner fails to timely pay for Products delivered to any 0f the Subject Locations or upon the occurrence of any of the events described in clauses (iii), (iv), and (s') above with respect to Owner, McCabe's shall be entitled to condition future deliveries of Products to the Subject Locations upon more stringent credit and/or payment terms, such as, without limitation, shortened payment periods, cash on delivery, cash in advance, the receipt of satisfactory guaranties that guaranty payment to McCabe's for such Products, and/or the pledging of collateral to secure such payments. 6. Release. Owner agrees that McCabe's ability to perform distribution services for Owner under the terms of the Distribution Agreement as modified herein, is expressly contingent upon the Master Organization's approval for McCabe's to do so. Accordingly, Owner hereby releases McCabe's it's affiliates, and each of their respective officers, employees, and directors from any and all losses, damages, or claims that Owner may have or suffer as a result of McCabe's discontinuance of services to Owner as a result of express instructions from the Master Organization to cease such services. Effective as of the date first above written. OWNER By: -------------------- Name: ------------------ Title: ----------------- 12 EX-10.52 7 a94967exv10w52.txt EXHIBIT 10.52 EXHIBIT 10.52 FIFTH AMENDED AND RESTATED CREDIT AGREEMENT among CKE RESTAURANTS, INC., THE LENDERS NAMED HEREIN and BNP PARIBAS, As Agent DATED AS OF NOVEMBER 12, 2003 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT TABLE OF CONTENTS

Page ---- SECTION 1. DEFINITIONS................................................................. 1 Section 1.1 Definitions........................................................ 1 SECTION 2. AMOUNT AND TERMS OF CREDIT FACILITIES....................................... 23 Section 2.1 Term Loans......................................................... 23 Section 2.2 Revolving Loans.................................................... 24 Section 2.3 Notice of Borrowing................................................ 25 Section 2.4 Disbursement of Funds.............................................. 25 Section 2.5 Notes.............................................................. 26 Section 2.6 Interest........................................................... 26 Section 2.7 Interest Periods................................................... 28 Section 2.8 Minimum Amount of Eurodollar Loans................................. 28 Section 2.9 Conversion or Continuation......................................... 28 Section 2.10 Voluntary Reduction of Commitments................................. 29 Section 2.11 Voluntary Prepayments.............................................. 29 Section 2.12 Mandatory Prepayments.............................................. 29 Section 2.13 Application of Prepayments......................................... 31 Section 2.14 Method and Place of Payment........................................ 31 Section 2.15 Fees............................................................... 32 Section 2.16 Interest Rate Unascertainable, Increased Costs, Illegality......... 32 Section 2.17 Funding Losses..................................................... 34 Section 2.18 Increased Capital.................................................. 34 Section 2.19 Taxes.............................................................. 35 Section 2.20 Use of Proceeds.................................................... 36 Section 2.21 Collateral Security................................................ 36 Section 2.22 Replacement of Certain Lenders..................................... 38 SECTION 3. LETTERS OF CREDIT........................................................... 39 Section 3.1 Issuance of Letters of Credit, etc................................. 39 Section 3.2 Letter of Credit Fees.............................................. 40 Section 3.3 Obligation of Borrower Absolute, etc............................... 41 SECTION 4. CONDITIONS PRECEDENT........................................................ 43 Section 4.1 Conditions Precedent to the Effectiveness of this Agreement........ 43 Section 4.2 Conditions Precedent to All Loans.................................. 48 SECTION 5. REPRESENTATIONS AND WARRANTIES.............................................. 49 Section 5.1 Corporate Status................................................... 49 Section 5.2 Corporate Power and Authority...................................... 50 Section 5.3 No Violation....................................................... 50 Section 5.4 Litigation......................................................... 50 Section 5.5 Financial Statements; Financial Condition; etc..................... 50 Section 5.6 Solvency........................................................... 50 Section 5.7 Projections........................................................ 50 Section 5.8 Material Adverse Change............................................ 51 Section 5.9 Use of Proceeds; Margin Regulations................................ 51

i CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT Section 5.10 Governmental and Other Approvals................................... 51 Section 5.11 Security Interests and Liens....................................... 51 Section 5.12 Tax Returns and Payments........................................... 51 Section 5.13 ERISA.............................................................. 51 Section 5.14 Investment Company Act; Public Utility Holding Company Act......... 52 Section 5.15 Dissolved Subsidiaries; Previously Material Subsidiaries, etc...... 52 Section 5.16 Representations and Warranties in Subordinated Debt Documents...... 52 Section 5.17 True and Complete Disclosure....................................... 53 Section 5.18 Corporate Structure; Capitalization................................ 53 Section 5.19 Environmental Matters.............................................. 53 Section 5.20 Intellectual Property.............................................. 54 Section 5.21 Ownership of Property; Restaurants................................. 54 Section 5.22 No Default......................................................... 55 Section 5.23 Licenses, etc...................................................... 55 Section 5.24 Compliance with Law................................................ 55 Section 5.25 No Burdensome Restrictions......................................... 55 Section 5.26 Brokers' Fees...................................................... 55 Section 5.27 Labor Matters...................................................... 55 Section 5.28 Indebtedness of the Borrower and Its Subsidiaries.................. 55 Section 5.29 Other Agreements................................................... 55 Section 5.30 Immaterial Subsidiaries............................................ 56 Section 5.31 Franchise Agreements and Franchisees............................... 56 SECTION 6. AFFIRMATIVE COVENANTS....................................................... 56 Section 6.1 Information Covenants.............................................. 56 Section 6.2 Books, Records and Inspections..................................... 60 Section 6.3 Maintenance of Insurance........................................... 60 Section 6.4 Taxes.............................................................. 60 Section 6.5 Corporate Franchises............................................... 61 Section 6.6 Compliance with Law................................................ 61 Section 6.7 Performance of Obligations......................................... 61 Section 6.8 Maintenance of Properties.......................................... 61 Section 6.9 Compliance with Terms of Leaseholds................................ 61 Section 6.10 Compliance with Environmental Laws................................. 61 Section 6.11 Subsidiary Guarantors.............................................. 62 Section 6.12 Immaterial Subsidiaries............................................ 62 Section 6.13 Additional Mortgages............................................... 62 Section 6.14 Collateral Account................................................. 62 SECTION 7. NEGATIVE COVENANTS.......................................................... 63 Section 7.1 Financial Covenants................................................ 63 Section 7.2 Indebtedness....................................................... 66 Section 7.3 Liens.............................................................. 68 Section 7.4 Restriction on Fundamental Changes................................. 70 Section 7.5 Sale of Assets..................................................... 70 Section 7.6 Contingent Obligations............................................. 72 Section 7.7 Dividends.......................................................... 72 Section 7.8 Advances, Investments and Loans.................................... 72 Section 7.9 Transactions with Affiliates....................................... 75 ii CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT Section 7.10 Limitation on Voluntary Payments and Modifications of Certain Documents.................................................. 75 Section 7.11 Changes in Business................................................ 77 Section 7.12 Certain Restrictions............................................... 77 Section 7.13 Lease Obligations.................................................. 77 Section 7.14 Hedging Agreements................................................. 78 Section 7.15 Plans.............................................................. 78 Section 7.16 Fiscal Year; Fiscal Quarter........................................ 79 Section 7.17 Partnerships....................................................... 79 Section 7.18 Excluded Resales................................................... 79 Section 7.19 Designated Senior Indebtedness..................................... 79 Section 7.20 Instruments........................................................ 79 Section 7.21 Real Estate Collateral Value....................................... 79 SECTION 8. EVENTS OF DEFAULT........................................................... 79 Section 8.1 Events of Default.................................................. 79 Section 8.2 Rights and Remedies................................................ 82 SECTION 9. THE AGENT................................................................... 83 Section 9.1 Appointment........................................................ 83 Section 9.2 Delegation of Duties............................................... 83 Section 9.3 Exculpatory Provisions............................................. 83 Section 9.4 Reliance by Agent.................................................. 83 Section 9.5 Notice of Default.................................................. 84 Section 9.6 Non-Reliance on Agent and Other Lenders............................ 84 Section 9.7 Indemnification.................................................... 84 Section 9.8 Agent in its Individual Capacity................................... 85 Section 9.9 Successor Agent.................................................... 85 SECTION 10. MISCELLANEOUS............................................................... 85 Section 10.1 Payment of Expenses, Indemnity, etc................................ 85 Section 10.2 Right of Setoff.................................................... 86 Section 10.3 Notices............................................................ 87 Section 10.4 Successors and Assigns; Participation; Assignments................. 87 Section 10.5 Amendments and Waivers............................................. 89 Section 10.6 No Waiver; Remedies Cumulative..................................... 91 Section 10.7 Sharing of Payments................................................ 91 Section 10.8 Application of Collateral Proceeds................................. 92 Section 10.9 Governing Law; Submission to Jurisdiction.......................... 92 Section 10.10 Counterparts....................................................... 93 Section 10.11 Financial Advisor.................................................. 93 Section 10.12 Amendment and Restatement.......................................... 93 Section 10.13 Headings Descriptive............................................... 94 Section 10.14 Marshalling; Recapture............................................. 94 Section 10.15 Severability....................................................... 94 Section 10.16 Independence of Covenants.......................................... 94 Section 10.17 Survival........................................................... 94 Section 10.18 Domicile of Loans.................................................. 94 Section 10.19 Limitation of Liability............................................ 94 iii CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT Section 10.20 Calculations; Computations......................................... 94 Section 10.21 Waiver Of Trial By Jury............................................ 95 Section 10.22 References......................................................... 95 iv CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT Exhibits, Schedules and Annexes Exhibit A - Form of Term Note Exhibit B - Form of Revolving Note Exhibit C - Form of Borrower Pledge Agreement Exhibit D - Form of Borrower Security Agreement Exhibit E - Form of Guaranty Exhibit F - Form of Subsidiary Pledge Agreement Exhibit G - Form of Subsidiary Security Agreement Exhibit H - Form of Opinion of Stradling, Yocca, Carlson and Rauth Exhibit I - Form of Assignment Agreement Exhibit J - Form of Notice of Borrowing Schedule 1.1 - Commitments Schedule 4.1(b) - Local Counsel Schedule 5.10 - Governmental Approvals Schedule 5.11 - Prior Liens Schedule 5.13 - ERISA Schedule 5.15 - Dissolved Entities Schedule 5.18 - Capital Structure Schedule 5.19 - Phase I Environmental Reports Schedule 5.21 - Real Property Schedule 5.27 - Labor Matters Schedule 5.29 - Joint Ventures; Non-Competition Agreements Schedule 5.30 - Immaterial Subsidiaries Schedule 5.31 - Franchisees/Licensees Schedule 7.2 - Existing Indebtedness Schedule 7.3 - Existing Liens Schedule 7.6 - Existing Contingent Obligations Schedule 7.8 - Existing Investments Schedule 7.17 - Existing Partnerships Annex I - Lending Offices v CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT FIFTH AMENDED AND RESTATED CREDIT AGREEMENT FIFTH AMENDED AND RESTATED CREDIT AGREEMENT, dated as of November 12, 2003, among CKE Restaurants, Inc., a Delaware corporation (the "BORROWER"), the Lenders (as hereinafter defined) and BNP Paribas, a bank organized under the laws of France acting through its Chicago branch (as successor in interest to Paribas) ("BNP PARIBAS"), as acting in its capacity as agent for the Lenders. SECTION 1. DEFINITIONS. Section 1.1 Definitions. As used herein, the following terms shall have the meanings herein specified unless the context otherwise requires. Defined terms in this Agreement shall include in the singular number the plural and in the plural number the singular. "ACQUIRING SUBSIDIARY" shall have the meaning provided in Section 2.21(b). "ACQUISITION" shall mean any transaction, or any series of related transactions, consummated after the Closing Date, by which the Borrower or any of its Subsidiaries (i) acquires any going business or assets of any Person or division thereof (other than assets acquired by the Borrower or any of its Subsidiaries in the ordinary course of its business), whether through purchase of assets, merger or otherwise or (ii) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of related transactions) at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors or a majority (by percentage or voting power) of the outstanding partnership interests of a partnership or of the outstanding equity interests of a limited liability company or other corporate entity. "ADJUSTED LEVERAGE RATIO" shall mean with respect to the Borrower on a consolidated basis with its Subsidiaries, at any date, the ratio of (a)(i) Consolidated Total Debt plus (ii) the product of (A) eight multiplied by (B) an amount equal to Consolidated Rentals for the period of four (4) consecutive fiscal quarters of the Borrower (taken as one accounting period) most recently ended on or prior to such date to (b) Consolidated EBITDAR for the period of four (4) consecutive fiscal quarters most recently ended on or prior to such date. "AFFECTED LENDER" shall have the meaning provided in Section 2.22. "AFFILIATE" shall mean, with respect to any Person, any other Person directly or indirectly controlling (including but not limited to all directors and officers of such Person), controlled by, or under direct or indirect common control with such Person. A Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power to (i) vote 10% or more of the Voting Stock of such other Person or (ii) direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise. No Lender shall be deemed to be an Affiliate of the Borrower as a result of its being a party to this Agreement. "AGENT" shall mean BNP Paribas (and its successors) acting in its capacity as agent for the Lenders and any successor agent appointed in accordance with Section 9.9. "AGENT'S OFFICE" shall mean the office of the Agent located at Chicago, Illinois, or such other office as the Agent may hereafter designate in writing as such to the other parties hereto. CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT "AGREEMENT" shall mean this Fifth Amended and Restated Credit Agreement, as the same may from time to time hereafter be modified, restated, supplemented or amended. "APPLICABLE MARGIN" shall mean, with respect to the Commitment Fee and each Eurodollar Loan or Base Rate Loan that is a Revolving Loan, the rate of interest per annum shown below for the range of Leverage Ratio specified below:

Leverage Ratio Eurodollar Loans Base Rate Loans Commitment Fee - ------------------------------------------------------------------------------------------------ less than or equal to 3.5 to 1.0 3.50% 2.25% 0.50% greater than 3.5 3.75% 2.50% 0.50%

The Leverage Ratio shall be calculated as of the end of each fiscal quarter of the Borrower, commencing with the fiscal quarter ending November 3, 2003 and shall be reported to the Agent pursuant to a Compliance Certificate delivered by the Borrower in accordance with Section 6.1(e). Not later than two (2) Business Days after receipt by the Agent of each Compliance Certificate delivered by the Borrower in accordance with Section 6.1(e) for each fiscal quarter or fiscal year of the Borrower, as applicable, the Agent shall determine the Leverage Ratio for the applicable period and shall promptly notify the Borrower and the Lenders of such determination and of any change in each Applicable Margin resulting therefrom. Each Applicable Margin shall be adjusted (upwards or downwards, as appropriate), if necessary, based on the Leverage Ratio as of the end of the fiscal quarter immediately preceding the date of determination; PROVIDED, HOWEVER, that for the period commencing on the Closing Date and ending on the date of the delivery of a Compliance Certificate in accordance with Section 6.1(e) for the second fiscal quarter of the Borrower ending after the Closing Date, the Leverage Ratio shall be deemed to be greater than 3.5 to 1. The adjustment, if any, to the Applicable Margin shall be effective commencing on the third (3rd) Business Day after the receipt by the Agent of such quarterly or annual financial statements delivered in accordance with Sections 6.1(a) and 6.1(b) and such related Compliance Certificate of the Borrower delivered in accordance with Section 6.1(e) and shall be effective from and including the third (3rd) Business Day after the date the Agent receives such Compliance Certificate to but excluding the third (3rd) Business Day after the date on which the next Compliance Certificate is required to be delivered pursuant to Section 6.1(e); provided, however, that, in the event that the Borrower shall fail at any time to furnish to the Lenders such financial statements and any such Compliance Certificate required to be delivered pursuant to Sections 6.1(a), 6.1(b) and 6.1(e), for purposes of determining the Applicable Margin, the Leverage Ratio shall be deemed to be greater than 3.5 to 1 at all times until the third (3rd) Business Day after such time as all such financial statements and each such Compliance Certificate are so received by the Agent and the Lenders. Each determination of the Leverage Ratio and each Applicable Margin by the Agent in accordance with this definition shall be conclusive and binding on the Borrower and the Lenders absent manifest error. "ASSET DISPOSITION" shall mean any conveyance, sale, lease, license, transfer or other disposition by the Borrower or any of its Subsidiaries subsequent to the Closing Date of any asset (including by way of (i) a sale and leaseback transaction, (ii) the sale or other transfer of any of the capital stock or other equity interest of any Subsidiary of the Borrower and (iii) any total or partial loss, destruction or condemnation of any asset), but excluding (A) sales of inventory in the ordinary 2 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT course of business, (B) licenses of intellectual property to franchisees in the ordinary course of business, (C) leases and subleases of real and personal property of the Borrower or any of its Subsidiaries to any of their respective franchisees in the ordinary course of business and consistent with past practices, and (D) sales, transfers or other dispositions of any property or assets by the Borrower or any of its wholly-owned Subsidiaries to the Borrower or any of its wholly-owned Domestic Subsidiaries, PROVIDED, that (i) all documents or opinions required to be delivered to the Agent pursuant to Section 2.21 have been delivered to the Agent and the Borrower has provided the Agent with written notice of such sale, transfer or other disposition at least ten (10) days prior to the date of any such sale, transfer or other disposition and (ii) the Agent and Lenders shall not be deemed to have released their security interest in any such property or assets. "ASSIGNEE" shall have the meaning provided in Section 10.4(c). "ASSIGNMENT AGREEMENT" shall have the meaning provided in Section 10.4(d). "AUTHORIZED OFFICER" of any Person shall mean any of the President, the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer, any Senior Vice President, any Executive Vice President, any Vice President, the Controller, the Treasurer or Assistant Treasurer of such Person, acting singly. "BANKRUPTCY CODE" shall mean Title 11 of the United States Code entitled "Bankruptcy", as amended from time to time, and any successor statute or statutes. "BASE RATE" shall mean, at any particular date, the higher of (i) the rate of interest publicly announced by BNP Paribas in its office in New York, New York from time to time as its "base rate" changing as and when such base rate changes and (ii) the Federal Funds Rate plus 0.50%. The base rate is not intended to be the lowest rate of interest charged by BNP Paribas in connection with extensions of credit to debtors. "BASE RATE LOANS" shall mean Loans made and/or being maintained at a rate of interest based upon the Base Rate. "BLOCKED ACCOUNT AGREEMENT" shall mean an agreement that grants the Agent "control" within the meaning of the UCC of the Collateral Account, provides that the Agent may make withdrawals from, and otherwise direct the disposition of the funds deposited or credited to, the Collateral Account and is otherwise satisfactory in form and substance to the Agent. "BORROWER" shall have the meaning provided in the first paragraph of this Agreement. "BORROWER PLEDGE AGREEMENT" shall mean a pledge agreement substantially in the form of the Third Amended and Restated Borrower Pledge Agreement set forth as Exhibit C hereto, as the same may be amended, restated, modified or supplemented from time to time. "BORROWER SECURITY AGREEMENT" shall mean a security agreement substantially in the form of the Third Amended and Restated Borrower Security Agreement set forth as Exhibit D hereto duly executed and delivered to the Agent by the Borrower, as the same may be amended, restated, modified or supplemented from time to time. 3 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT "BORROWING" shall mean the incurrence of one Type of Loan of one Facility from all the Lenders on a given date (or resulting from conversions or continuations on a given date) having, in the case of Eurodollar Loans, the same Interest Period. "BUSINESS DAY" shall mean (i) for all purposes other than as covered by clause (ii) below, any day excluding Saturday, Sunday and any day which shall be in Chicago, Los Angeles or New York City a legal holiday or a day on which banking institutions are authorized or required by law or other government actions to close and (ii) with respect to all notices and determinations in connection with, and payments of principal and interest on, Eurodollar Loans, any day which is a Business Day described in clause (i) and which is also a day for trading by and between banks for U.S. dollar deposits in the relevant London interbank Eurodollar market. "CAPITAL EXPENDITURES" shall mean, for any period, all expenditures (whether paid in cash or accrued as a liability, including the portion of Capitalized Leases of the Borrower and its Subsidiaries originally incurred during such period that is capitalized on the consolidated balance sheet of the Borrower and its Subsidiaries) by the Borrower and its Subsidiaries during such period that, in conformity with GAAP, are included in "capital expenditures", "additions to property, plant or equipment" or comparable items in the consolidated financial statements of the Borrower and its Subsidiaries (excluding any expenditures for assets that would be included in "capital expenditures," "additions to property, plant or equipment" or in comparable items in the consolidated financial statements of the Borrower and its Subsidiaries in conformity with GAAP which assets are acquired in a Permitted Acquisition). "CAPITAL STOCK" shall mean any and all shares of, or interests or participations in, corporate stock (or other instruments or securities evidencing ownership). "CAPITALIZED LEASE" shall mean with respect to any Person, (i) any lease of property, real or personal, the obligations under which are capitalized on the consolidated balance sheet of such Person, and (ii) any other such lease of such Person to the extent that the then present value of the minimum rental commitment thereunder should, in accordance with GAAP, be capitalized on a balance sheet of the lessee. "CAPITALIZED LEASE OBLIGATIONS" with respect to any Person, shall mean at any time of determination all obligations of such Person under or in respect of Capitalized Leases of such Person. "CASH COLLATERALIZE" shall mean the pledge and deposit with or delivery to the Agent, for the benefit of the Agent, the Issuing Bank and the Lenders, cash or deposit account balances pursuant to documentation in form and substance reasonably satisfactory to the Agent and the Issuing Bank; such documentation shall irrevocably authorize the Agent to apply such cash collateral to reimbursement of the Issuing Bank for draws under Letters of Credit as and when occurring, and in all cases to payment of other Obligations as and when due. Cash collateral shall be maintained in blocked deposit accounts at the Agent or a Lender. "CASH EQUIVALENTS" shall mean (i) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (PROVIDED that the full faith and credit of the United States of America is pledged in support thereof) having maturities of not more than 360 days from the date of acquisition, (ii) time deposits and certificates of deposit of any Lender or any domestic commercial bank of recognized standing having capital and surplus in excess of $200,000,000 with maturities of not more than 180 days from the date of acquisition, 4 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT (iii) fully secured repurchase obligations with a term of not more than 7 days for underlying securities of the types described in clause (i) entered into with any bank meeting the qualifications specified in clause (ii) above, and (iv) commercial paper issued by the parent corporation of any Lender or any domestic commercial bank of recognized standing having capital and surplus in excess of $500,000,000 and commercial paper rated at least A-1 or the equivalent thereof by Standard & Poor's Ratings Group or at least P-1 or the equivalent thereof by Moody's Investor Services, Inc. and in each case maturing within 180 days after the date of acquisition. "CLOSING DATE" shall mean November 12, 2003. "CLOSING EBITDA" shall mean, with respect to the Borrower and its Subsidiaries for the 13 Retail Periods ended immediately prior to the Closing Date and all determined on a consolidated basis and in accordance with GAAP, the sum of (i) Consolidated Net Income for such period, plus (ii) to the extent deducted in the calculation of Consolidated Net Income for such period, Consolidated Interest Expense for such period, plus (iii) to the extent deducted in the calculation of Consolidated Net Income for such period, federal and state income taxes for such period, plus (iv) to the extent deducted in the calculation of Consolidated Net Income for such period, depreciation and amortization expense for such period, plus (v) to the extent deducted in the calculation of Consolidated Net Income for such period, all extraordinary losses for such period, minus (vi) to the extent included in the calculation of Consolidated Net Income for such period, all extraordinary gains for such period. "CODE" shall mean the Internal Revenue Code of 1986, as amended from time to time, and any successor statute. "COLLATERAL" shall mean all property and interests in property now owned or hereafter acquired in or upon which a Lien has been or is purported or intended to have been granted to the Agent or any Lender or any Interest Rate Hedge Provider under any of the Security Documents. "COLLATERAL ACCOUNT" shall have the meaning set forth in the Borrower Security Agreement." "COMMITMENT FEE" shall have the meaning provided in Section 2.15(b). "COMMITMENTS" shall mean, collectively, the Term Loan Commitments and the Revolving Loan Commitments and "COMMITMENT" shall mean either of such Commitments. "COMPLIANCE CERTIFICATE" shall have the meaning provided in Section 6.1(e). "CONSENTS" shall have the meaning provided in Section 4.1(r). "CONSOLIDATED CASH INTEREST EXPENSE" shall mean, for any period, Consolidated Interest Expense for such period minus the amount of such Consolidated Interest Expense for such period not paid or payable in cash. "CONSOLIDATED EBITDA" shall mean, for any Person during any period, the sum of (i) Consolidated Net Income for such period, plus (ii) to the extent deducted in the calculation of Consolidated Net Income for such period, Consolidated Interest Expense for such period, plus (iii) to the extent deducted in the calculation of Consolidated Net Income for such period, federal and state income taxes for such period, plus (iv) to the extent deducted in the calculation of Consolidated Net Income for such period, depreciation and amortization expense for such period, plus (v) to the extent 5 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT deducted in the calculation of Consolidated Net Income for such period, all extraordinary losses for such period, PROVIDED, HOWEVER, that up to $3,000,000 of any extraordinary loss incurred in connection with the disposition of Timber Lodge shall be excluded from the calculation of Consolidated EBDITA, minus (vi) to the extent included in the calculation of Consolidated Net Income for such period, all extraordinary gains for such period, all determined on a consolidated basis for such Person and its Subsidiaries in accordance with GAAP. "CONSOLIDATED EBITDAR" shall mean, during any period (i) Consolidated EBITDA for the Borrower and its Subsidiaries for such period plus (ii) to the extent deducted in the calculation of Consolidated Net Income of the Borrower and its Subsidiaries for such period, Consolidated Rentals for such period. "CONSOLIDATED INTEREST EXPENSE" shall mean, for any Person and for any period, the total interest expense (including, without limitation, interest expense attributable to Capitalized Leases in accordance with GAAP, but excluding any non-cash interest expense attributable to the amortization or write-off of deferred financing costs) of such Person and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP. "CONSOLIDATED NET INCOME" shall mean for any Person and for any period the net income (or loss) of such Person and its Subsidiaries on a consolidated basis for such period (taken as a single accounting period) as determined in accordance with GAAP minus to the extent included in the calculation of Consolidated Net Income for such period, gains for such period (net of any applicable state or federal expense) resulting from any sale by the Borrower or any of its Subsidiaries of a Restaurant of the Borrower or such Subsidiary plus to the extent included in the calculation of Consolidated Net Income for such period, losses for such period (net of any applicable state or federal tax benefit) resulting from any sale by the Borrower or any of its Subsidiaries of a Restaurant of the Borrower or such Subsidiary, plus any reserves (net of any applicable state or federal tax benefit) established in accordance with GAAP for closures of Restaurants or non-cash reductions in the carrying value of Restaurant-related assets (including goodwill and other intangible assets). "CONSOLIDATED RENTALS" shall mean, for the Borrower and its Subsidiaries for any period, the aggregate rent expense for the Borrower and its Subsidiaries for such period, minus rental income received from franchisees and third parties pursuant to (i) subleases to such franchisees or third parties, as the case may be, and (ii) leases that have been assigned to such franchisees or third parties, as the case may be, in which the Borrower or its Subsidiary, as applicable, remains liable for the payment of rent under such lease to the extent that rent payments are actually made, all as determined on a consolidated basis in accordance with GAAP. "CONSOLIDATED TANGIBLE NET WORTH" shall mean, at any time, the excess of (i) the total assets of the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP, minus goodwill and any other items that are classified as intangibles in accordance with GAAP, minus (ii) all liabilities of the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP; PROVIDED, HOWEVER, that solely for the purpose of determining Consolidated Tangible Net Worth hereunder, any loans and advances to directors and officers of the Borrower and its Subsidiaries permitted by this Agreement shall be accounted for as assets and included in the calculation of total assets in clause (i) hereof. 6 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT "CONSOLIDATED TOTAL DEBT" shall mean, at any time, all Indebtedness of the Borrower and its Subsidiaries (other than undrawn amounts under letters of credit issued for the account of the Borrower or any of its Subsidiaries) as determined on a consolidated basis. "CONTINGENT OBLIGATION" as to any Person shall mean any obligation of such Person guaranteeing or intended to guarantee any Indebtedness, leases, dividends or other obligations ("PRIMARY OBLIGATIONS") of any other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (x) for the purchase or payment of any such primary obligation or (y) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of such primary obligation against loss in respect thereof; PROVIDED, HOWEVER, that the term Contingent Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith. "CONTROLLING STOCKHOLDERS" shall mean (i) William P. Foley II, (ii) Fidelity National Financial, Inc., a Delaware corporation and (iii) any other Person that, directly or indirectly, controls, is controlled by or is under common control with any of the foregoing. For purposes of this definition, the term "control" (including the terms "controlled by" and "under common control with") of a Person means the possession, directly or indirect, of (A) the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by contract or otherwise or (B) the power to vote 51% or more of the Voting Stock of such Person. No Lender shall be deemed to be a Controlling Stockholder as a result of its being a party to this Agreement. "CONVERSION" shall have the meaning provided in Section 2.21(b). "CONVERTIBLE SUBORDINATED NOTE INDENTURE" shall mean that certain Indenture between the Borrower and Chase Manhattan Bank and Trust Company, N.A., as trustee, dated as of March 13, 1998, as the same may be amended, restated, supplemented or otherwise modified in accordance with the terms of this Agreement. "CONVERTIBLE SUBORDINATED NOTES" shall mean the Convertible Subordinated Notes issued by the Borrower pursuant to the Convertible Subordinated Note Indenture, in the original aggregate principal amount of $197,225,000, as the same may be amended, restated, supplemented or otherwise modified in accordance with the terms of this Agreement; PROVIDED that such Convertible Subordinated Notes shall at all times be subordinated in respect of the Obligations on subordination terms contained in the Convertible Subordinated Note Indenture. "CREDIT EXPOSURE" shall have the meaning provided in Section 10.4(b). 7 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT "DEFAULT" shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default. "DEFAULT RATE" shall have the meaning provided in Section 2.6(c). "DIVIDENDS" shall have the meaning provided in Section 7.7. "DOMESTIC LENDING OFFICE" shall mean, as to any Lender, the office of such Lender designated as such on Annex I, or such other office designated by such Lender from time to time by written notice to the Agent and the Borrower. "DOMESTIC SUBSIDIARY" shall mean any wholly-owned Subsidiary of the Borrower that is organized under the laws of a state of the United States of America, and which is a party to the Subsidiary Security Agreement, the Guaranty and, if required pursuant to Section 2.21, a Subsidiary Pledge Agreement. "EBITDA CAPEX AMOUNT" shall mean, for any fiscal year of the Borrower, an amount, if positive, equal to (i) .80 multiplied by (ii) the difference, if any, between Consolidated EBITDA for such fiscal year and $110,000,000. "EMPLOYEE STOCK LOAN" shall mean a loan made by the Borrower or any of its Subsidiaries to an employee or director of the Borrower or any of its Subsidiaries, the purpose of which is to finance the acquisition by such employee or director of the capital stock of the Borrower. "ENVIRONMENTAL AFFILIATE" shall mean, with respect to any Person, any other Person whose liability for any Environmental Claim such Person has or may have retained, assumed or otherwise become liable for (contingently or otherwise), either contractually or by operation of law. "ENVIRONMENTAL APPROVALS" shall mean any permit, license, approval, ruling, variance, exemption or other authorization required under applicable Environmental Laws. "ENVIRONMENTAL CLAIM" shall mean, with respect to any Person, any notice, claim, demand or similar communication (written or oral) by any other Person alleging potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, fines or penalties arising out of, based on or resulting from (i) the presence, or release into the environment, of any Material of Environmental Concern at any location, whether or not owned by such Person or (ii) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law. "ENVIRONMENTAL LAWS" shall mean all federal, state, local and foreign laws and regulations relating to pollution or protection of human health, safety or the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata), including without limitation, laws and regulations relating to emissions, discharges, releases or threatened releases of Materials of Environmental Concern, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Materials of Environmental Concern. "EQUITY INTERESTS" shall mean Capital Stock and warrants, options or other rights to acquire Capital Stock. 8 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. Section references to ERISA are to ERISA, as in effect at the Closing Date and any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor. "ERISA CONTROLLED GROUP" means a group consisting of any ERISA Person and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control with such Person that, together with such Person, are treated as a single employer under regulations of the PBGC. "ERISA PERSON" shall have the meaning set forth in Section 3(9) of ERISA for the term "person." "ERISA PLAN" means (i) any Plan that (x) is not a Multiemployer Plan and (y) has Unfunded Benefit Liabilities in excess of $2,000,000 and (ii) any Plan that is a Multiemployer Plan. "EUROCURRENCY RESERVE REQUIREMENTS" shall mean, with respect to each day during an Interest Period for Eurodollar Loans, that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Federal Reserve Board or other governmental authority or agency having jurisdiction with respect thereto for determining the maximum reserves (including, without limitation, basic, supplemental, marginal and emergency reserves) for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D) maintained by a member bank of the Federal Reserve System. "EURODOLLAR BASE RATE" shall mean, with respect to each day during an Interest Period for Eurodollar Loans, the rate per annum (rounded upwards, if necessary, to the nearest whole multiple of one-sixteenth of one percent) appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in United States Dollars at approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period. If for any reason such rate is not available, the term "Eurodollar Base Rate" shall mean, for any Eurodollar Loan for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest whole multiple of one-sixteenth of one percent) appearing on Reuters Screen LIBO Page as the London interbank offered rate for deposits in United States Dollars at approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; PROVIDED, HOWEVER, if more than one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates (rounded upwards, if necessary, to the nearest whole multiple of one-sixteenth of one percent). If, for any reason, neither of such rates is available, then "Eurodollar Base Rate" shall mean the rate per annum at which deposits in United States Dollars, as determined by the Agent, are being offered by the principal office of each of the Reference Banks in London, England to prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period in an amount substantially equal to such Reference Bank's Eurodollar Loan comprising part of such Borrowing to be outstanding during such Interest Period and for a period equal to such Interest Period and the Eurodollar Base Rate for any Interest Period for each Eurodollar Loan comprising part of the same Borrowing shall be determined by the Agent on the basis of applicable rates furnished to and received by the Agent from the Reference Banks two Business Days before the first day of such Interest Period, subject, however, to the provisions of Section 2.7. 9 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT "EURODOLLAR LENDING OFFICE" shall mean, as to any Lender, the office of such Lender designated as such on Annex I, or such other office designated by such Lender from time to time by written notice to the Agent and the Borrower. "EURODOLLAR LOANS" shall mean Loans made and/or being maintained at a rate of interest based upon the Eurodollar Rate. "EURODOLLAR RATE" shall mean with respect to each day during an Interest Period for Eurodollar Loans, a rate per annum determined for such day in accordance with the following formula (rounded upwards to the nearest whole multiple of 1/100th of one percent): Eurodollar Base Rate ---------------------------------------- 1.00 - Eurocurrency Reserve Requirements "EVENT OF DEFAULT" shall have the meaning provided in Section 8.1. "EXCESS AVAILABILITY" shall mean, as of any time the same is to be determined, the amount (if any) by which (a) the Total Revolving Loan Commitment as then determined exceeds (b) the aggregate principal amount of the Revolving Loans and L/C Obligations then outstanding. "EXCLUDED RESALES" shall mean any sale by the Borrower or any of its Subsidiaries of a Restaurant of the Borrower or such Subsidiary so long as (i) such Restaurant was acquired by the Borrower or such Subsidiary from a franchisee with the intent of reselling such Restaurant and (ii) such sale occurs within twelve (12) months of the acquisition of such Restaurant by the Borrower or such Subsidiary. "EXISTING DEBT" shall have the meaning provided in Section 4.1(o). "EXISTING PROPERTY SALE AND LEASEBACK TRANSACTION" shall have the meaning provided in Section 7.13(a)(i). "FACILITY" shall mean either or both of the Term Loans and the Revolving Loans. "FEDERAL FUNDS RATE" shall mean, for any day, an interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago time) on such day on such transactions received by the Agent from three (3) Federal funds brokers of recognized standing selected by the Agent in its sole discretion. "FEDERAL RESERVE BOARD" shall mean the Board of Governors of the Federal Reserve System as constituted from time to time. "FEE LETTER" shall mean that certain fee letter entered into between the Borrower and the Agent dated September 12, 2003, as amended, restated or otherwise modified from time to time. "FEES" shall have the meaning set forth in Section 2.15(c). 10 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT "FINAL MATURITY DATE" shall mean the later of the Revolving Loan Maturity Date and the Term Loan Maturity Date. "FINANCIAL ADVISOR" has the meaning set forth in Section 10.11. "FIXED CHARGES" shall mean, without duplication, with respect to the Borrower and its Subsidiaries for any period, (i) all Consolidated Cash Interest Expense (excluding in respect of Capitalized Leases of the Borrower and its Subsidiaries) for such period, plus (ii) scheduled payments due in such period for principal of the Term Loans (including only such payments made due to scheduled reductions in the Commitments during such period), plus (iii) all scheduled amortization during such period (including principal and interest) of Capitalized Leases under which the Borrower or any of its Subsidiaries is the lessee, all determined on a consolidated basis for the Borrower and its Subsidiaries for such period, plus (iv) the net usage of the Borrower's store closure reserve for such period, determined in accordance with GAAP. "FRANCHISE AGREEMENTS" shall mean any and all agreements that create a franchise or license to which the Borrower or any of its Subsidiaries is a party (as franchisee, licensee, franchisor or licensor) relating to the operation or development of any Restaurant or Restaurants, including such franchise and/or license agreements to which any of Borrower or any of its Subsidiaries is a party as of the Closing Date and such franchise and/or license agreements entered into from time to time after the Closing Date by the Borrower or any of its Subsidiaries and shall include all other rights under such agreements regardless of their nature. "FRANCHISEE CONSTRUCTION DEBT" shall have the meaning provided in Section 7.2(j). "GAAP" shall mean (i) for purposes of determining compliance with the covenants set forth in Section 7 hereof, United States generally accepted accounting principles as in effect on the Closing Date and consistent with those utilized in the preparation of the financial statements referred to in Section 5.5 and (ii) for all other purposes, United States generally accepted accounting principles as in effect as of the date of determination. "GREEN BURRITO" shall mean GB Franchise Corporation, a California corporation. "GUARANTOR" shall mean each Subsidiary of the Borrower that shall be required by the terms of this Agreement to enter into a Guaranty from time to time. "GUARANTY" shall mean a guaranty substantially in the form of the Third Amended and Restated Guaranty set forth as Exhibit E hereto duly executed and delivered to the Agent for itself, the Lenders and any Interest Rate Hedge Providers by each Subsidiary of the Borrower (other than Immaterial Subsidiaries which are not Subordinated Guarantors), as the same may be amended, restated, modified or supplemented from time to time. "HARDEE'S" shall mean Hardee's Food Systems, Inc., a North Carolina corporation or any successor entity permitted pursuant to the terms of this Agreement. "HART-SCOTT-RODINO ACT" shall mean the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended. "HEDGING AGREEMENTS" shall mean any interest rate protection agreements (including, without limitation, any interest rate swaps, caps, floors, collars, options, futures and similar 11 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT agreements) and swaps (including, without limitation, any caps, floors, collars, options, futures and similar agreements) relating to currencies, commodities or securities, and similar agreements. "IMMATERIAL INVESTMENTS" shall mean, at any time, (a) any Investment owned by the Borrower or any Subsidiary consisting of Capital Stock of any Person that is not a Subsidiary of the Borrower and which, when added to all other Investments held by the Borrower and/or its Subsidiaries consisting of Capital Stock of such Person does not exceed $1,000,000 at any one time outstanding and (b) any Investment owned by the Borrower or any Subsidiary consisting of an Instrument payable by any Person that is not a Subsidiary of the Borrower and which, when added to all other Investments held by the Borrower and/or its Subsidiaries consisting of Instruments payable by such Person does not exceed $2,000,000 at any one time outstanding. "IMMATERIAL SUBSIDIARIES" shall mean any Subsidiary of the Borrower with assets of less than $1,500,000 (as determined in accordance with GAAP), which is designated by the Borrower as an Immaterial Subsidiary on Schedule 5.30 or pursuant to Section 6.12; provided that the aggregate amount of assets of all Subsidiaries designated as Immaterial Subsidiaries shall not at any time exceed $10,000,000 (as determined in accordance with GAAP). "INDEBTEDNESS" of any Person shall mean, without duplication, (i) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (other than trade payables on terms of 90 days or less incurred in the ordinary course of business of such Person), (ii) all indebtedness of such Person evidenced by a note, bond, debenture, acceptance or similar instrument, (iii) the principal component of all Capitalized Lease Obligations of such Person, (iv) the face amount of all letters of credit issued for the account of such Person and, without duplication, all unreimbursed amounts drawn thereunder, and all obligations of such Person, contingent or otherwise, under acceptances or similar facilities, (v) all indebtedness of any other Person secured by any Lien on any property owned by such Person, whether or not such indebtedness has been assumed in an amount equal to the lesser of the fair market value at such date of such property subject to such Lien securing such Indebtedness and the amount of the Indebtedness secured by such Lien, (vi) all indebtedness of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even if the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (vii) all Contingent Obligations of such Person, (viii) all payment obligations, whether absolute or contingent, matured or unmatured, present or future, due or to become due, now existing or hereafter arising, of such Person under any Hedging Agreements, (ix) all Redeemable Stock and (x) all indebtedness and other obligations of the types specified in clauses (i) through (ix) above of any joint venture or partnership for which such Person is liable. "INDEMNITEE" shall have the meaning provided in Section 10.1(c). "INS" shall mean the United States Immigration and Naturalization Service or any governmental body succeeding to its functions. "INSTRUMENT" shall have the meaning ascribed thereto in the UCC. "INTELLECTUAL PROPERTY" has the meaning set forth in Section 5.20. "INTEREST PERIOD" shall have the meaning provided in Section 2.7. 12 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT "INTEREST RATE AGREEMENTS" shall mean any and all interest rate protection agreements, including, without limitation, any interest rate swaps, caps, collars, floors and similar agreements. "INTEREST RATE HEDGE PROVIDERS" shall mean any Lender or Affiliate of any Lender that provides an Interest Rate Agreement to the Borrower as permitted pursuant to Section 7.14(a) and that executes and delivers an agency agreement, in form and substance satisfactory to the Agent. "INVESTMENT" of a Person shall mean any loan, advance, extension of credit or commitment to make any such loan, advance or extension of credit (other than accounts receivable arising in the ordinary course of business), deposit account or contribution of capital by such Person to any other Person or any investment in, or purchase or other acquisition (whether by purchase, merger, consolidation or otherwise) of, the stock, partnership interests, notes, bonds, debentures or other securities, including options and warrants, of, or other ownership interests in, any other Person made by such Person (whether for cash, property, services, securities or otherwise). "ISSUE" shall mean, with respect to any Letter of Credit, to issue or to extend the expiry of, or to renew or increase the amount of, such Letter of Credit; and the terms "Issued," "Issuing" and "Issuance" have corresponding meanings. "ISSUING BANK" shall mean BNP Paribas or, with the consent of BNP Paribas, any other Revolving Lender (and their respective successors) that agrees to be an Issuing Bank hereunder, in its capacity as issuer of one or more Letters of Credit hereunder. "LA SALSA" shall mean, collectively, La Salsa, Inc., a California corporation, La Salsa Franchise, Inc., a California corporation, and La Salsa of Nevada, Inc., a Nevada corporation. "L/C AMENDMENT APPLICATION" shall mean an application form for amendment of outstanding Letters of Credit as shall at any time be in use at the Issuing Bank, as the Issuing Bank shall request. "L/C APPLICATION" shall mean an application form for issuance of Standby Letters of Credit or Trade Letters of Credit, as appropriate, as shall at any time be in use at the Issuing Bank, as the Issuing Bank shall request. "L/C COMMITMENT" shall mean the commitment of the Issuing Bank to Issue, and the commitment of the Revolving Lenders severally to participate in, Letters of Credit from time to time Issued or outstanding under Section 3, in an aggregate amount not to exceed on any date the amount of $80,000,000, PROVIDED, that the L/C Commitment is part of the Total Revolving Loan Commitment, rather than a separate, independent commitment. "L/C OBLIGATIONS" shall mean at any time the sum of (a) the aggregate undrawn amount of all Letters of Credit then outstanding, plus (b) the amount of all unreimbursed drawings under all Letters of Credit. "L/C RELATED DOCUMENTS" shall mean the Letters of Credit, the L/C Applications, the L/C Amendment Applications and any other document relating to any Letter of Credit, including any of the Issuing Bank's standard form documents for standby or commercial letter of credit issuances, as appropriate. 13 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT "LENDER AFFILIATE" shall mean, with respect to any Lender that is a fund that invests in bank loans, any other fund that invests in bank loans and similar extensions of credit in the ordinary course of its business and is managed or advised by the same investment advisor as such Lender or by an Affiliate of such Lender or advisor. "LENDERS" shall mean the persons listed on Schedule 1.1 hereto and the persons which from time to time become a party hereto in accordance with Section 10.4(d). "LETTERS OF CREDIT" shall mean any letters of credit Issued by the Issuing Bank pursuant to Section 3. "LEVERAGE RATIO" shall mean, with respect to the Borrower on a consolidated basis with its Subsidiaries, at any date, the ratio of (a) Consolidated Total Debt of the Borrower and its Subsidiaries to (b) Consolidated EBITDA of the Borrower and its Subsidiaries for the period of four (4) consecutive fiscal quarters most recently ended on or prior to such date, all determined on a consolidated basis for the Borrower and its Subsidiaries for such period. "LIEN" shall mean any mortgage, deed of trust, pledge, charge, security interest, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), or preference, priority or other security agreement of any kind or nature whatsoever, whether or not filed, recorded or otherwise perfected under applicable law, including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same effect as any of the foregoing and the filing of any financing statement or similar instrument under the Uniform Commercial Code or comparable law of any jurisdiction, domestic or foreign. "LIQUIDATING DISTRIBUTION" shall mean any extraordinary, liquidating or other distribution in return of capital with respect to any Equity Interest of any Person (other than a Subsidiary of any Domestic Subsidiary) owned by a Loan Party which Equity Interest is pledged pursuant to any of the Security Documents. "LOAN DOCUMENTS" shall mean this Agreement, the Notes, the Guaranty, each Letter of Credit, each L/C Related Document, the Fee Letter, the Security Documents, each Interest Rate Agreement permitted to be entered into pursuant to Section 7.14(a) and all other documents, instruments and agreements executed and/or delivered in connection herewith or therewith or required or contemplated hereunder or thereunder, as the same may be amended, restated, modified or supplemented and in effect from time to time. "LOAN PARTY" shall mean and include the Borrower and each Guarantor. "LOANS" shall mean and include the Term Loans and the Revolving Loans. "MARGIN STOCK" shall have the meaning provided such term in Regulation U of the Federal Reserve Board. "MATERIAL ADVERSE EFFECT" shall mean a material adverse effect upon (i) the business, operations, properties, assets, performance, prospects or condition (financial or otherwise) of the Borrower and its Subsidiaries, taken as a whole, or (ii) the ability of any Loan Party to perform, or of the Agent or any of the Lenders to enforce, any of such Loan Party's material Obligations under any 14 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT Loan Document to which it is or is to be a party, or (iii) the validity, perfection or priority of any Lien in favor of the Agent for the benefit of the Lenders on any material portion of the Collateral. "MATERIAL LEASES" shall have the meaning provided in Section 6.9. "MATERIALS OF ENVIRONMENTAL CONCERN" shall mean and include chemicals, pollutants, contaminants, wastes, toxic substances, petroleum and petroleum products, asbestos and radioactive materials. "MORTGAGES" shall mean collectively, each mortgage, deed of trust, leasehold mortgage, leasehold deed of trust or other similar instrument executed and delivered by the Borrower or any of its Subsidiaries to the Agent for the benefit of the Lenders from time to time (including, without limitation, all Mortgages delivered prior to the Closing Date) and granting or purporting to grant a Lien on the real property of the Borrower or such Subsidiary identified therein, as the same may be amended, restated, supplemented or otherwise modified. "MULTIEMPLOYER PLAN" shall mean a Plan which is a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA. "NET DEBT PROCEEDS" means all cash proceeds received by the Borrower or any of its Subsidiaries from the incurrence of, or the issuance of any instruments relating to, any Indebtedness (other than (i) Indebtedness borrowed by the Borrower under this Agreement, (ii) Indebtedness permitted to be incurred pursuant to Section 7.2(g), (iii) Indebtedness permitted to be incurred pursuant to Section 7.2(i) (including the New Convertible Subordinated Notes) and (iv) Indebtedness permitted to be incurred pursuant to Section 7.2(m) with respect to Sale and Leaseback Transactions) net of reasonable and customary underwriting fees and discounts, brokerage commissions and other similar reasonable and customary costs and expenses directly attributable to such issuance or incurrence. "NET EQUITY PROCEEDS" shall mean all cash proceeds received by the Borrower or any of its Subsidiaries from any capital contribution or the issuance of any Equity Interests or other equity securities of the Borrower or any of its Subsidiaries (other than the issuance of common stock (A) of the Borrower issued to employees, consultants or directors of the Borrower or any of its Subsidiaries pursuant to an employee stock option or purchase plan approved by the Board of Directors of the Borrower or (B) of any Subsidiary of the Borrower to the Borrower or any wholly-owned Subsidiary of the Borrower), net of any reasonable and customary brokerage commissions, underwriting fees and discounts and any other similar reasonable and customary costs or expenses directly attributable to such issuance. "NET SALE PROCEEDS" shall mean, with respect to (a) any Asset Disposition, all proceeds in the form of cash or cash equivalents received by the Borrower or any of its Subsidiaries from or in respect of such Asset Disposition (including any cash proceeds received as income or other proceeds of any noncash proceeds of such Asset Disposition and including any insurance payment or condemnation award in respect of any assets of the Borrower or any of its Subsidiaries) and (b) any Liquidating Distribution, all proceeds in the form of cash or cash equivalents received by the Borrower or any of its Subsidiaries from or in respect of any Liquidating Distribution, in the case of the foregoing clauses (a) and (b), net of (i) reasonable and customary expenses incurred or reasonably expected to be incurred in connection with such Asset Disposition or Liquidating Distribution, (ii) any income, franchise, transfer or other tax payable by the Borrower or such 15 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT Subsidiary in connection with such Asset Disposition or Liquidating Distribution and (iii) any Indebtedness secured by a Lien on such property or assets and required to be repaid as a result of such Asset Disposition, in each case with respect to the foregoing clause (i) to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of such cash or cash equivalents, actually paid to a Person that is not an Affiliate and are properly attributable to such transaction or to the asset that is the subject thereof; PROVIDED, HOWEVER, that Net Sale Proceeds shall not include any such proceeds from Excluded Resales. "NEW CONVERTIBLE SUBORDINATED NOTE INDENTURE" shall mean that certain Indenture between the Borrower and J.P. Morgan Trust Company, National Association, as Trustee, dated as of September 29, 2003, as the same may be amended, restated, supplemented or otherwise modified in accordance with the terms of this Agreement. "NEW CONVERTIBLE SUBORDINATED NOTES" shall mean the convertible subordinated notes issued by the Borrower pursuant to the New Convertible Subordinated Note Indenture, in the maximum aggregate principal amount not to exceed $105,000,000, as the same may be amended, restated, supplemented or otherwise modified in accordance with the terms of this Agreement; PROVIDED that such New Convertible Subordinated Notes shall at all times be subordinated in respect of the Obligations on subordination terms contained in the New Convertible Subordinated Note Indenture. "NEW PROPERTY SALE AND LEASEBACK TRANSACTION" shall have the meaning provided in Section 7.13(a)(i). "NEW RETAIL UNIT" shall mean a retail unit of the Borrower or any of its Subsidiaries purchased from a franchisee or constructed by the Borrower or such Subsidiary after the Closing Date. "NEW SUBORDINATED NOTE INDENTURE" shall mean that certain Indenture among the Borrower, certain Subsidiaries of the Borrower, and Chase Manhattan Bank and Trust Company, National Association, as trustee, dated as of March 4, 1999, as the same may be amended, restated, supplemented or otherwise modified in accordance with the terms of this Agreement. "NEW SUBORDINATED NOTES" shall mean the Senior Subordinated Notes issued by the Borrower pursuant to the New Subordinated Note Indenture, in a maximum principal amount not to exceed $200,000,000 in the aggregate at the rate of 9-1/8% and due 2009 (the "ORIGINAL NOTES"), as the same may be amended, restated, supplemented or otherwise modified in accordance with the terms of this Agreement; PROVIDED, that such New Subordinated Notes shall at all times be subordinated in respect of the Obligations on subordination terms contained in the New Subordinated Note Indenture; PROVIDED, FURTHER, that the term "New Subordinated Notes" shall include any notes or instruments exchanged for then outstanding New Subordinated Notes pursuant to the New Subordinated Note Indenture. "NEW UNIT CAPITAL EXPENDITURES" shall mean Capital Expenditures incurred in any period of four consecutive fiscal quarters for the construction or purchase of a New Retail Unit constructed or purchased during such period or the remodeling of a New Retail Unit constructed or purchased during such period. "NOTE" shall mean a Revolving Note or a Term Note. 16 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT "NOTES" shall mean and include each Revolving Note and each Term Note. "NOTICE OF BORROWING" shall have the meaning provided in Section 2.3(a). "NOTICE OF CONVERSION OR CONTINUATION" shall have the meaning provided in Section 2.9(b). "OBLIGATIONS" shall mean all obligations, liabilities and indebtedness of every kind, nature and description of the Borrower and the other Loan Parties from time to time owing to the Agent or any Lender or any Indemnitee under or in connection with this Agreement or any other Loan Document, whether direct or indirect, primary or secondary, joint or several, absolute or contingent, due or to become due, now existing or hereafter arising and however acquired and shall include, without limitation, all principal and interest on the Loans and, to the extent chargeable under any Loan Document, all charges, expenses, fees and attorney's fees. "ORIGINAL CREDIT AGREEMENT" shall mean that certain Fourth Amended and Restated Credit Agreement dated as of January 31, 2002, among the Borrower, the lenders party thereto and BNP Paribas, as Agent, as amended prior to the date hereof. "OTHER TAXES" shall have the meaning provided in Section 2.19(c). "PARTICIPANT" shall have the meaning provided in Section 10.4(b). "PAYMENT DATE" shall mean the fifteenth day of each March, June, September and December of each year. "PBGC" shall mean the Pension Benefit Guaranty Corporation established under ERISA, or any successor thereto. "PERMITTED ACQUISITION" shall mean any Acquisition by the Borrower or any of its Subsidiaries of a Carl's Jr., a Hardee's, a Green Burrito or a La Salsa Restaurant from a franchisee that has been approved by the board of directors (or other governing body, if applicable) of the Person which is the subject of such Acquisition. "PERMITTED SUBORDINATED DEBT" shall mean Indebtedness of the Borrower or any Subsidiary of the Borrower incurred after the Closing Date, (A) with respect to which no principal payments are due prior to the date which is one year and one day after the Final Maturity Date and (B) which is subordinated as to exercise of remedies and in right of payment to the Borrower's Obligations and such Subsidiary's Obligations, respectively, under the Loan Documents on, and is otherwise subject to, terms and conditions (including, without limitation, terms in respect of maturities, covenants, defaults and remedies and interest rates) approved in writing by the Agent and in any event shall not include Indebtedness issued pursuant to the Subordinated Notes. "PERSON" shall mean and include any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust or other enterprise or any government or political subdivision or agency, department or instrumentality thereof. "PLAN" means any employee benefit plan covered by Title IV of ERISA, the funding requirements of which: 17 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT (i) were the responsibility of the Borrower or a member of its ERISA Controlled Group at any time within the six years immediately preceding the Closing Date, (ii) are currently the responsibility of the Borrower or a member of its ERISA Controlled Group, or (iii) hereafter become the responsibility of the Borrower or a member of its ERISA Controlled Group, including any such plans as may have been, or may hereafter be, terminated for whatever reason. "PREPAYMENT" shall have the meaning provided in Section 7.10(a)(i). "PRO RATA SHARE" as to any Lender shall mean: (a) with respect to all payments, computations and determinations relating to the Term Loan Commitment or the Term Loan of any Lender, the percentage obtained by dividing (i) the outstanding principal balance of such Lender's Term Loan by (ii) the aggregate outstanding principal balance of the Term Loans; (b) with respect to all payments, computations and determinations relating to the Revolving Loan Commitment or the Revolving Loans of any Lender, or such Lender's interest in Letters of Credit (including, without limitation, determinations of the Commitment Fee under Section 2.15(b) and letter of credit fees under Section 3.2), the percentage obtained by dividing (i) such Lender's Revolving Loan Commitment (or the aggregate outstanding principal balance of such Lender's Revolving Loans and all L/C Obligations in which such Lender has an interest, if the Revolving Loan Commitments have been terminated pursuant to the terms of this Agreement) by (ii) the Total Revolving Loan Commitment (or the aggregate outstanding principal balance of the Revolving Loans and all L/C Obligations, if the Revolving Loan Commitments have been terminated pursuant to the terms of this Agreement); and (c) for all other purposes with respect to each Lender, the percentage obtained by dividing (i) the sum of (A) the outstanding principal balance of such Lender's Term Loan and (B) such Lender's Revolving Loan Commitment (or the aggregate outstanding principal balance of such Lender's Revolving Loans and all L/C Obligations in which such Lender has an interest, if the Revolving Loan Commitments have been terminated pursuant to the terms of this Agreement) by (ii) the sum of (A) the aggregate outstanding principal balance of the Term Loans and (B) the Total Revolving Loan Commitment (or the aggregate outstanding principal balance of the Revolving Loans and all L/C Obligations, if the Revolving Loan Commitments have been terminated pursuant to the terms of this Agreement). "PURCHASING LENDERS" shall have the meaning provided in Section 10.4(d). "RATE HEDGING OBLIGATIONS" shall mean any and all obligations of any Loan Party to any Interest Rate Hedge Provider under Interest Rate Agreements permitted pursuant to Section 7.14(a). "REAL ESTATE COLLATERAL" shall mean Collateral subject to or purported to be subject to the Lien of the Mortgages. 18 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT "REAL ESTATE COLLATERAL VALUE" shall mean, at any time, the sum of (i) the fair market values of all Real Estate Collateral then subject to the Lien of the Mortgages, plus (ii) all amounts then on deposit or credited to the Collateral Account, PROVIDED, that the Collateral Account is subject to a Blocked Account Agreement. The fair market values of the Real Estate Collateral for the purpose of calculating Real Estate Collateral Value shall be (i) for Real Estate Collateral subject to the Lien of the Mortgages on or prior to July 8, 2002, as determined by appraisals delivered to the Agent on or prior to July 8, 2002 and (ii) for Real Estate Collateral that becomes subject to the Lien of the Mortgages after July 8, 2002, as determined by appraisals delivered to the Agent on or prior to July 8, 2002 or, if no such appraisals have been delivered to the Agent on or prior to such date, then by an appraisal or appraisals satisfactory to the Agent, prepared by a firm satisfactory to the Agent and delivered to the Agent prior to such Real Estate Collateral being included in the calculation of Real Estate Collateral Value. "REDEEMABLE STOCK" shall mean any Equity Interest which, by its terms, or upon the happening of any event matures, is mandatorily redeemable or repurchaseable (other than for Capital Stock not constituting Redeemable Stock), in whole or in part, prior to one year and one day after the Final Maturity Date, or is, by its terms or upon the happening of any event, required to be redeemed or repurchased, redeemable or repurchaseable at the option of the holder thereof, in whole or in part, at any time prior to one year and one day after the Final Maturity Date. "REDEMPTION TRANSACTIONS" shall mean, collectively, the issuance of the New Convertible Subordinated Notes, the redemption of the Convertible Subordinated Notes with the proceeds from the issuance of the New Convertible Subordinated Notes, net of customary underwriting fees and discounts, brokerage commissions and other similar reasonable and customary costs and expenses directly attributable to the issuance of the New Convertible Subordinated Notes and to the extent such proceeds are insufficient to redeem all of the Convertible Subordinated Notes outstanding on the date of the issuance of the New Convertible Subordinated Notes, the redemption of the balance of the Convertible Subordinated Notes with the proceeds of the Loans as soon as practicable, but in no event later than March 15, 2004. "REFERENCE BANKS" shall mean BNP Paribas, First Bank and Trust, Fleet National Bank, U.S. Bank National Association, Wells Fargo Bank, National Association and Union Bank of California, N.A. and their respective successors. "REGISTER" shall have the meaning provided in Section 10.4(h). "REGULATION D" shall mean Regulation D of the Federal Reserve Board as from time to time in effect and any successor to all or any portion thereof. "REPLACEMENT LENDER" shall have the meaning provided in Section 2.22. "REPORTABLE EVENT" has the meaning set forth in Section 4043(b) of ERISA (other than a Reportable Event as to which the provision of 30 days notice to the PBGC is waived under applicable regulations), or is the occurrence of any of the events described in Section 4068(f) or 4063(a) of ERISA. "REQUIRED LENDERS" shall mean all Lenders whose Pro Rata Shares, in the aggregate, are greater than 50%. 19 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT "RESTAURANT" shall mean a Timber Lodge restaurant or any quick service restaurant. "RETAIL PERIOD" shall mean any of the thirteen consecutive four week or five week periods used by the Borrower for accounting purposes which begin on or about the Tuesday after the last Monday in January of each year and ending on the last Monday in January of the next year. "REVOLVING LENDERS" shall mean, collectively, the Lenders holding the Revolving Commitments or any outstanding Revolving Loan, L/C Obligation or participation therein and "REVOLVING LENDER" means any one of them. "REVOLVING LOAN COMMITMENT" shall mean at any time, for any Lender, the amount set forth opposite such Lender's name on Schedule 1.1 hereto under the heading "Revolving Loan Commitment," as such amount may be reduced from time to time pursuant to the terms of this Agreement. "REVOLVING LOAN MATURITY DATE" shall mean November 15, 2006. "REVOLVING LOANS" shall have the meaning provided in Section 2.2(a). "REVOLVING NOTE" shall have the meaning provided in Section 2.5(a). "SALE AND LEASEBACK TRANSACTIONS" shall mean Existing Property Sale and Leaseback Transactions and New Property Sale and Leaseback Transactions, in each case, permitted to be entered into by the Borrower or any of its Subsidiaries pursuant to Section 7.13(a). "SECURED PARTIES" shall have the meaning provided in the Borrower Security Agreement and the Subsidiary Security Agreement. "SECURITY DOCUMENTS" shall mean and include the Borrower Security Agreement, the Subsidiary Security Agreement, the Guaranty, the Borrower Pledge Agreement, the Subsidiary Pledge Agreements, the Mortgages and all other security agreements, pledge agreements, mortgages, leasehold mortgages, assignments and similar agreements executed in connection with the Loan Documents. "SOLVENT" as to any Person shall mean that (i) the sum of the assets of such Person, both at a fair valuation and at present fair salable value, will exceed its liabilities, including contingent liabilities, (ii) such Person will have sufficient capital with which to conduct its business as presently conducted and as proposed to be conducted and (iii) such Person has not incurred debts, and does not intend to incur debts, beyond its ability to pay such debts as they mature. For purposes of this definition, "debt" means any liability on a claim, and "claim" means (x) a right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured, or (y) a right to an equitable remedy for breach of performance if such breach gives rise to a payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured. With respect to any such contingent liabilities, such liabilities shall be computed at the amount which, in light of all the facts and circumstances existing at the time, represents the amount which can reasonably be expected to become an actual or matured liability. 20 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT "STANDBY LETTER OF CREDIT" shall mean any standby letter of credit issued by the Issuing Bank pursuant to Section 3 and which is not a Trade Letter of Credit. "SUBORDINATED DEBT DOCUMENTS" shall mean the Subordinated Notes and the Subordinated Note Indentures. "SUBORDINATED GUARANTOR" shall mean each Subsidiary of the Borrower that guarantees any Indebtedness or other obligations of the Borrower or any Subsidiary of the Borrower under or with respect to any of the New Subordinated Notes. "SUBORDINATED NOTE INDENTURES" shall mean the Convertible Subordinated Note Indenture, the New Subordinated Note Indenture and the New Convertible Subordinated Note Indenture. "SUBORDINATED NOTES" shall mean the Convertible Subordinated Notes, the New Subordinated Notes and the New Convertible Subordinated Notes. "SUBSIDIARY" of any Person shall mean and include (i) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned or controlled by such Person directly or indirectly through one or more Subsidiaries and (ii) any partnership, limited liability company, association, joint venture or other entity in which such Person, directly or indirectly through one or more Subsidiaries, is either a general partner or has a more than 50% equity interest at the time. Unless otherwise expressly provided, all references to a "Subsidiary" shall mean a Subsidiary of the Borrower. "SUBSIDIARY PLEDGE AGREEMENT" shall mean each pledge agreement substantially in the form of the Third Amended and Restated Subsidiary Pledge Agreement set forth as Exhibit F hereto duly executed and delivered to the Agent by each Subsidiary of the Borrower which owns any equity interest of any Person, as the same may be amended, restated, modified or supplemented from time to time. "SUBSIDIARY SECURITY AGREEMENT" shall mean a security agreement substantially in the form of the Third Amended and Restated Subsidiary Security Agreement set forth as Exhibit G hereto duly executed and delivered to the Agent by each Subsidiary of the Borrower (other than Immaterial Subsidiaries), as the same may be amended, restated, modified or supplemented from time to time. "SURVIVING DEBT" shall have the meaning provided in Section 4.1(o). "TAXES" has the meaning set forth in Section 2.19(a). "TERM LOAN" shall have the meaning provided in Section 2.1. "TERM LOAN COMMITMENT" shall mean at any time, for any Lender, the amount set forth opposite such Lender's name on Schedule 1.1 hereto under the heading "Term Loan Commitment," as such amount may be reduced from time to time pursuant to the terms of this Agreement. "TERM LOAN LENDERS" means, collectively, the Lenders holding the Term Loan Commitments or any outstanding Term Loans and "TERM LOAN LENDER" means any one of them. 21 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT "TERM LOAN MATURITY DATE" shall mean April 1, 2008. "TERM LOAN PAYDOWN" shall have the meaning set forth in Section 2.1. "TERM NOTE" shall have the meaning provided in Section 2.5(a). "TERMINATION EVENT" shall mean (i) a Reportable Event, or (ii) the initiation of any action by the Borrower, any member of the Borrower's ERISA Controlled Group or any ERISA Plan fiduciary to terminate an ERISA Plan or the treatment of an amendment to an ERISA Plan as a termination under ERISA, or (iii) the institution of proceedings by the PBGC under Section 4042 of ERISA to terminate an ERISA Plan or to appoint a trustee to administer any ERISA Plan. "TIMBER LODGE" shall mean Timber Lodge Steakhouse, Inc., a Minnesota corporation. "TOTAL COMMITMENT" shall mean, at any time, the sum of the Commitments of all of the Lenders at such time. "TOTAL REVOLVING LOAN COMMITMENT" shall have the meaning set forth in Section 2.2(a). "TOTAL TERM LOAN COMMITMENT" shall have the meaning set forth in Section 2.1(a). "TRADE LETTER OF CREDIT" shall mean any Letter of Credit that is issued pursuant to Section 3 for the benefit of a supplier of inventory to the Borrower or any of its Subsidiaries to effect payment for such inventory. "TRANSACTION DOCUMENTS" shall mean the Loan Documents. "TRANSACTIONS" shall mean each of the transactions contemplated by the Transaction Documents. "TRANSFEREE" shall have the meaning provided in Section 10.4(e). "TYPE" shall mean any type of Loan determined with respect to the interest option applicable thereto, i.e., a Base Rate Loan or a Eurodollar Loan. "UCC" shall mean the Uniform Commercial Code as in effect from time to time in the applicable jurisdiction. "UNFUNDED BENEFIT LIABILITIES" shall mean with respect to any Plan at any time, the amount (if any) by which (i) the present value of all benefit liabilities under such Plan as defined in Section 4001(a)(16) of ERISA, exceeds (ii) the fair market value of all Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plan (on the basis of assumptions prescribed by the PBGC for the purpose of Section 4044 of ERISA). "UNUSED PORTION" shall mean at any time with respect to the Revolving Loans, the amount by which the Total Revolving Loan Commitment in effect at such time exceeds the sum of (i) the aggregate principal amount of the Revolving Loans outstanding at such time and (ii) the aggregate amount of L/C Obligations outstanding at such time. 22 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT "VOTING STOCK" shall mean capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of such a contingency. SECTION 2. AMOUNT AND TERMS OF CREDIT FACILITIES. Section 2.1 Term Loans. Subject to and upon the terms and conditions herein set forth, each Term Loan Lender severally and not jointly agrees to make a single loan to the Borrower on the Closing Date of a sum not exceeding the Term Loan Commitment of such Term Loan Lender (each such loan, a "TERM LOAN"). The aggregate principal amount of the Term Loan Commitments (the "TOTAL TERM LOAN COMMITMENT") shall not exceed $25,000,000. All unutilized Term Loan Commitments shall expire simultaneously with the making of the Term Loans on the Closing Date. The Term Loan of each Term Loan Lender made on the Closing Date shall be initially made as a Base Rate Loan or a Eurodollar Loan (subject to the other terms of this Agreement, including without limitation, Section 2.3 and Section 2.17) and may thereafter be maintained at the option of the Borrower as a Base Rate Loan or a Eurodollar Loan, in accordance with the provisions hereof. Once repaid, Term Loans may not be reborrowed. The Borrower shall repay the principal amounts with respect to the Term Loans on the dates and in the amounts set forth below (each, a "TERM LOAN PAYDOWN"): 23 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

DATE PAYDOWN AMOUNT ---- -------------- January 1, 2004 $ 937,500 April 1, 2004 $ 937,500 July 1, 2004 $ 937,500 October 1, 2004 $ 937,500 January 1, 2005 $ 1,250,000 April 1, 2005 $ 1,250,000 July 1, 2005 $ 1,250,000 October 1, 2005 $ 1,250,000 January 1, 2006 $ 1,250,000 April 1, 2006 $ 1,250,000 July 1, 2006 $ 1,250,000 October 1, 2006 $ 1,250,000 January 1, 2007 $ 1,250,000 April 1, 2007 $ 1,250,000 July 1, 2007 $ 1,250,000 October 1, 2007 $ 1,250,000 January 1, 2008 $ 3,125,000 April 1, 2008 $ 3,125,000

The Term Loans shall mature on the Term Loan Maturity Date and shall be repaid in full, without premium or penalty, by the Borrower, on the Term Loan Maturity Date; PROVIDED HOWEVER, that the last such installment due on the Term Loan Maturity Date shall be in the amount necessary to repay in full the aggregate unpaid principal balance of the Term Loans. Section 2.2 Revolving Loans. (a) Subject to and upon the terms and conditions herein set forth, each Lender severally and not jointly agrees, at any time and from time to time on and after the Closing Date and prior to the Revolving Loan Maturity Date, to make revolving loans (collectively, "REVOLVING LOANS") to the Borrower, which Revolving Loans shall not exceed in aggregate principal amount at any time outstanding (i) the Revolving Loan Commitment of such Lender at such time minus (ii) such Lender's Pro Rata Share of the L/C Obligations at such time; PROVIDED that at no time shall the aggregate outstanding principal amount of the Revolving Loans of all of the Lenders plus the L/C Obligations of all of the Lenders exceed the Total Revolving Loan Commitment. The sum of the Revolving Loan Commitments of all of the Lenders (the "TOTAL REVOLVING LOAN COMMITMENT") as of the date hereof is $150,000,000. The Revolving Loans of each Lender made on the Closing Date shall be initially made as a Base Rate Loan or a Eurodollar Loan (subject to the 24 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT other terms of this Agreement, including without limitation, Section 2.3 and Section 2.17) and may thereafter be maintained at the option of the Borrower as a Base Rate Loan or a Eurodollar Loan, in accordance with the provisions hereof. (b) Revolving Loans may be voluntarily prepaid pursuant to Section 2.11, and, subject to the other provisions of this Agreement, any amounts so prepaid may be reborrowed. Each Lender's Revolving Loan Commitment shall expire, and each Revolving Loan shall mature on, the Revolving Loan Maturity Date, without further action on the part of the Lenders or the Agent. (c) Each Borrowing of Revolving Loans shall be in the aggregate minimum amount of $500,000 or any integral multiple of $500,000 in excess thereof. Section 2.3 Notice of Borrowing. (a) Whenever the Borrower desires to borrow Revolving Loans hereunder, it shall give the Agent at the Agent's Office prior to 12:00 Noon, Chicago time, on the Business Day of such borrowing by telex, facsimile or telephonic notice (promptly confirmed in writing) of each Base Rate Loan, and at least three Business Days' prior telex, facsimile or telephonic notice (promptly confirmed in writing) of each Eurodollar Loan to be made hereunder. Each such notice shall be in the form of Exhibit J hereto (a "NOTICE OF BORROWING") shall be irrevocable and shall specify (i) the aggregate principal amount of the requested Revolving Loans, (ii) the date of Borrowing (which shall be a Business Day), and (iii) whether such Revolving Loans shall consist of Base Rate Loans or Eurodollar Loans and, if Eurodollar Loans, the initial Interest Period to be applicable thereto (PROVIDED, that no Eurodollar Loan may be requested or made when any Default or Event of Default has occurred and is continuing). (b) Promptly after receipt of a Notice of Borrowing, the Agent shall provide each Lender with a copy thereof and inform each Lender as to its Pro Rata Share of the Revolving Loans requested thereunder. Section 2.4 Disbursement of Funds. (a) No later than 2:00 P.M., Chicago time, on the date specified in each Notice of Borrowing, each Lender will make available its Pro Rata Share of the Revolving Loans requested to be made on such date, in U.S. dollars and immediately available funds, at the Agent's Office. After the Agent's receipt of the proceeds of such Revolving Loans, the Agent will make available to the Borrower by depositing in the Borrower's account at the Agent's Office the aggregate of the amounts so made available in the type of funds actually received. (b) Unless the Agent shall have been notified by any Lender prior to the date of a Borrowing that such Lender does not intend to make available to the Agent its portion of the Revolving Loans to be made on such date, the Agent may assume that such Lender has made such amount available to the Agent on such date and the Agent in its sole discretion may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If such corresponding amount is not in fact made available to the Agent by such Lender and the Agent has made such amount available to the Borrower, the Agent shall be entitled to recover such corresponding amount on demand from such Lender. If such Lender does not pay such corresponding amount forthwith upon the Agent's demand therefor, the Agent shall promptly notify the Borrower and the Borrower shall immediately repay such corresponding amount to the Agent. The Agent shall also be entitled to 25 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT recover from such Lender or the Borrower, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Agent to the Borrower to the date such corresponding amount is recovered by the Agent, at a rate per annum equal to the then applicable rate of interest, calculated in accordance with Section 2.6, for the respective Revolving Loans. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its commitments hereunder or to prejudice any rights which the Borrower may have against any Lender as a result of any default by such Lender hereunder. Notwithstanding anything contained herein or in any other Loan Document to the contrary, the Agent may apply all funds and proceeds of Collateral available for the payment of any Obligations first to repay any amount owing by any Lender to the Agent as a result of such Lender's failure to fund its Revolving Loans hereunder. Section 2.5 Notes. (a) The Borrower's obligation to pay the principal of, and interest on, each Lender's Loans shall be evidenced by (i) in the case of such Lender's Term Loans, a promissory note (as the same may be amended, restated, supplemented or otherwise modified from time to time, a "TERM NOTE") duly executed and delivered by the Borrower substantially in the form of Exhibit A hereto in a principal amount equal to such Lender's Term Loan with blanks appropriately completed in conformity herewith and (ii) in the case of such Lender's Revolving Loans, a promissory note (as the same may be amended, restated, supplemented or otherwise modified from time to time, a "REVOLVING NOTE") duly executed and delivered by the Borrower substantially in the form of Exhibit B hereto in a principal amount equal to such Lender's Revolving Loan Commitment, with blanks appropriately completed in conformity herewith. Each Note issued to a Lender shall (x) be payable to the order of such Lender, (y) be dated the date such Note was issued, and (z) mature on the Term Loan Maturity Date or the Revolving Loan Maturity Date, as the case may be. (b) Each Lender is hereby authorized, at its option, either (i) to endorse on the schedule attached to its Revolving Note (or on a continuation of such schedule attached to such Revolving Note and made a part thereof) an appropriate notation evidencing the date and amount of each Revolving Loan evidenced thereby and the date and amount of each principal and interest payment in respect thereof, or (ii) to record such Revolving Loans and such payments in its books and records. Such schedule or such books and records, as the case may be, shall constitute prima facie evidence of the accuracy of the information contained therein. Section 2.6 Interest. (a) (i) The Borrower agrees to pay interest in respect of the unpaid principal amount of each Revolving Loan that is a Base Rate Loan from the date of the making of such Revolving Loan until such Revolving Loan shall be paid in full at a rate per annum which shall be equal to the sum of (x) the Applicable Margin plus (y) the Base Rate in effect from time to time, such rate to change as and when the Base Rate changes, such interest to be computed on the basis of a 365 or 366 day year, as the case may be, and paid for the actual number of days elapsed, subject to the provisions of clause (c) of this Section 2.6. (ii) The Borrower agrees to pay interest in respect of the unpaid principal amount of each Term Loan that is a Base Rate Loan from the date of the making of such Loan until such Loan shall be paid in full at a rate per annum which shall be equal to the sum of (x) 2.5% plus (y) the Base Rate in effect from time to time, such rate to change as and when the Base Rate changes, 26 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT such interest to be computed on the basis of a 365 or 366-day year, as the case may be, and paid for the actual number of days elapsed, subject to the provisions of clause (c) of this Section 2.6. (b) (i) The Borrower agrees to pay interest in respect of the unpaid principal amount of each Revolving Loan that is a Eurodollar Loan from the date of the making of such Revolving Loan until such Revolving Loan shall be paid in full at a rate per annum which shall be equal to the sum of (x) the Applicable Margin plus (y) the relevant Eurodollar Rate, such interest to be computed on the basis of a 360-day year and paid for the actual number of days elapsed, subject to the provisions of clause (c) of this Section 2.6. (ii) The Borrower agrees to pay interest in respect of the unpaid principal amount of each Term Loan that is a Eurodollar Loan from the date of the making of such Term Loan until such Term Loan shall be paid in full at a rate per annum which shall be equal to the sum of (x) 3.75% plus (y) the relevant Eurodollar Rate, such interest to be computed on the basis of a 360-day year and paid for the actual number of days elapsed, subject to the provisions of clause (c) of this Section 2.6. (c) In the event that, and for so long as, any Event of Default shall have occurred and be continuing, the outstanding principal amount of all Loans and, to the extent permitted by law, overdue interest in respect of all Loans, shall bear interest at a rate per annum (the "DEFAULT RATE") equal to (i) for Revolving Loans, the sum of (x) two percent (2%) plus (y) the Applicable Margin applicable to Revolving Loans that are Base Rate Loans plus (z) the Base Rate in effect from time to time, and shall be payable on demand, and (ii) for Term Loans, the sum of (x) two percent (2%) plus (y) 2.5% plus (z) the Base Rate in effect from time to time, and shall be payable on demand. (d) Interest on each Loan shall accrue from and including the date of the Borrowing thereof to but excluding the date of any repayment thereof (PROVIDED that any Loan borrowed and repaid on the same day shall accrue one day's interest) and shall be payable (i) in respect of each Base Rate Loan, quarterly in arrears on each Payment Date, (ii) in respect of each Eurodollar Loan, on the last day of each Interest Period applicable to such Loan and, in the case of an Interest Period of six months, on the date occurring three months from the first day of such Interest Period and on the last day of such Interest Period, and (iii) in the case of all Loans, on any prepayment or conversion (on the amount prepaid or converted), at maturity (whether by acceleration or otherwise) and, after such maturity, on demand. Each determination by the Agent of an interest rate hereunder shall, except for manifest error, be final, conclusive and binding for all purposes. (e) In the event that the Eurodollar Base Rate is to be determined by reference to the Reference Banks, each Reference Bank agrees to furnish to the Agent timely information for the purpose of determining each Eurodollar Base Rate. If any one or more of the Reference Banks shall not furnish such timely information to the Agent for the purpose of determining any such interest rate, the Agent shall determine such interest rate on the basis of timely information furnished by the remaining Reference Banks. The Agent shall give prompt notice to the Borrower and the Lenders of the applicable interest rate determined by the Agent for purposes of Section 2.6(b), and the rate, if any, furnished by each Reference Bank for the purpose of determining the interest rate under Section 2.6(b). 27 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT Section 2.7 Interest Periods. (a) The Borrower shall, in each Notice of Borrowing or Notice of Conversion or Continuation in respect of the making of, conversion into or continuation of a Eurodollar Loan, select the interest period (each an "INTEREST PERIOD") applicable to such Eurodollar Loan, which Interest Period shall, at the option of the Borrower, be either a one-month, two-month, three-month or six-month period, PROVIDED that: (i) the initial Interest Period for any Eurodollar Loan shall commence on the date of the making of such Loan (including the date of any conversion from a Base Rate Loan) and each Interest Period occurring thereafter in respect of such Loan shall commence on the date on which the next preceding Interest Period expires; (ii) if any Interest Period would otherwise expire on a day which is not a Business Day, such Interest Period shall expire on the next succeeding Business Day, PROVIDED, HOWEVER, that if any Interest Period would otherwise expire on a day which is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the next preceding Business Day; (iii) if any Interest Period begins on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period, such Interest Period shall end on the last Business Day of such calendar month; (iv) no Interest Period in respect of any Revolving Loan or any Term Loan shall extend beyond the Revolving Loan Maturity Date or the Term Loan Maturity Date, as the case may be; and (v) no Interest Period in respect of a Term Loan shall extend beyond any date upon which a repayment of the Term Loans is required to be made pursuant to Section 2.1 unless the aggregate principal amount of Term Loans which are Base Rate Loans or which have Interest Periods which will expire on or before such date is equal to or in excess of the amount of the Term Loan repayment required to be made on such date. (b) If upon the expiration of any Interest Period, the Borrower has failed to elect a new Interest Period to be applicable to the respective Eurodollar Loan as provided above, the Borrower shall be deemed to have elected to convert such Eurodollar Loans into Base Rate Loans effective as of the expiration date of such current Interest Period. Section 2.8 Minimum Amount of Eurodollar Loans. All borrowings, conversions, continuations, payments, prepayments and selection of Interest Periods hereunder shall be made or selected so that, after giving effect thereto, (i) the aggregate principal amount of any Borrowing comprised of Eurodollar Loans shall not be less than $3,000,000 or an integral multiple of $500,000 in excess thereof, and (ii) there shall be no more than twelve (12) Borrowings comprised of Eurodollar Loans outstanding at any time. Section 2.9 Conversion or Continuation. (a) Subject to the other provisions hereof, the Borrower shall have the option (i) to convert at any time all or any part of outstanding Base Rate Loans which comprise part 28 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT of the same Borrowing to Eurodollar Loans, (ii) to convert all or any part of outstanding Eurodollar Loans which comprise part of the same Borrowing to Base Rate Loans, on the expiration date of the Interest Period applicable thereto, or (iii) to continue all or any part of outstanding Eurodollar Loans which comprise part of the same Borrowing as Eurodollar Loans for an additional Interest Period, on the expiration of the Interest Period applicable thereto; PROVIDED, that no Loan may be continued as, or converted into, a Eurodollar Loan when any Default or Event of Default has occurred and is continuing. (b) In order to elect to convert or continue a Loan under this Section 2.9, the Borrower shall deliver an irrevocable notice thereof (a "NOTICE OF CONVERSION OR CONTINUATION") to the Agent no later than 12:00 Noon, Chicago time, (i) on the Business Day of the proposed conversion date in the case of a conversion to a Base Rate Loan and (ii) at least three Business Days in advance of the proposed conversion or continuation date in the case of a conversion to, or a continuation of, a Eurodollar Loan. A Notice of Conversion or Continuation shall specify (w) the requested conversion or continuation date (which shall be a Business Day), (x) the amount, Facility and Type of the Loan to be converted or continued, (y) whether a conversion or continuation is requested, and (z) in the case of a conversion to, or a continuation of, a Eurodollar Loan, the requested Interest Period. Promptly after receipt of a Notice of Conversion or Continuation under this Section 2.9(b), the Agent shall provide each Lender with a copy thereof. Section 2.10 Voluntary Reduction of Commitments. Upon at least three Business Day's prior irrevocable written notice (or telephonic notice promptly confirmed in writing) to the Agent (which notice the Agent shall promptly transmit to each of the Lenders), the Borrower shall have the right, without premium or penalty, to permanently reduce each Lender's Pro Rata Share of all or part of the Total Revolving Loan Commitment, PROVIDED that any such partial reduction shall be in the minimum aggregate amount of $1,000,000 or any integral multiple of $500,000 in excess thereof. Section 2.11 Voluntary Prepayments. The Borrower shall have the right to prepay the Loans in whole or in part from time to time on the following terms and conditions: (i) the Borrower shall give the Agent written notice (or telephonic notice promptly confirmed in writing), which notice shall be irrevocable, of its intent to prepay the Loans, at least three Business Days prior to a prepayment of Eurodollar Loans and on the Business Day of a prepayment of Base Rate Loans, which notice shall specify the amount of such prepayment and what Types of Loans and which Facilities are to be prepaid and, in the case of Eurodollar Loans, the specific Borrowing(s) pursuant to which made, and which notice the Agent shall promptly transmit to each of the Lenders, (ii) each prepayment shall be in an aggregate principal amount of $1,000,000 or any integral multiple of $500,000 in excess thereof and (iii) partial prepayments of the Term Loans shall be applied to the remaining scheduled installments of principal thereof on a pro rata basis; PROVIDED that if any prepayment of Eurodollar Loans is made pursuant to this Section 2.11 on a day which is not the last day of the Interest Period applicable thereto, the Borrower shall pay to each Lender all amounts due in connection with such prepayment pursuant to Section 2.17. Section 2.12 Mandatory Prepayments. (a) Upon the consummation of any Asset Disposition or upon the receipt by any Loan Party of any Liquidating Distribution after the Closing Date, in each case within 270 days after the Borrower or any of its Subsidiaries receives any Net Sale Proceeds, the Borrower shall prepay the outstanding Loans in an amount equal to 100% of the amount of such Net Sale Proceeds, 29 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT in accordance with the provisions of Section 2.13; PROVIDED, HOWEVER, that such Net Sale Proceeds which the Borrower or such Subsidiary shall, within 270 days after receipt thereof, use to reinvest in the business of the Borrower of its Subsidiaries, shall not be included in determining the aggregate Net Sale Proceeds for such period; PROVIDED, FURTHER that, if an Event of Default shall have occurred and be continuing on the date such Net Sale Proceeds are received by the Borrower or any of its Subsidiaries or at any time during such 270 day period, then the Borrower shall prepay the outstanding Loans in an amount equal to 100% of such Net Sale Proceeds (or, if any portion of such proceeds shall have been reinvested prior to the occurrence of such Event of Default, 100% of such remaining amount of Net Sale Proceeds not so reinvested), in accordance with the provisions of Section 2.13, on the later of the date such Net Sale Proceeds are received by the Borrower or any of its Subsidiaries or the date of the occurrence of such Event of Default. (b) On each date on which the Borrower or any of its Subsidiaries receives any Net Equity Proceeds, the Borrower shall prepay the outstanding Loans in an amount equal to (i) 50% of such Net Equity Proceeds if both (A) the Leverage Ratio as of the end of the fiscal quarter immediately preceding such date as to which financial statements are required to have been delivered pursuant to Sections 6.1(a) and 6.1(b), as applicable, on a pro forma basis after giving effect to any prepayment made by the Borrower pursuant to clause (ii)(A) of this Section 2.12(b), is less than 2.0 to 1.0 and (B) no Default or Event of Default has occurred or is continuing as a result of the Borrower's failure to deliver any financial statement or Compliance Certificate as and when required pursuant to Section 6.1(a), 6.1(b) or 6.1(e), as applicable and (ii) 75% of such Net Equity Proceeds if either (A) the Leverage Ratio as of the end of the fiscal quarter immediately preceding such date as to which financial statements are required to have been delivered pursuant to Section 6.1(a) or 6.1(b), as applicable, is greater than or equal to 2.0 to 1.0 (but only until the Leverage Ratio is less than 2.0 to 1.0, at which time clause (i) of this Section 2.12(b) shall apply (unless clause (ii)(B) of this Section 2.12(b) shall then be applicable)) or (B) any Default or Event of Default has occurred and is continuing as a result of the Borrower's failure to deliver any financial statement or Compliance Certificate as and when required pursuant to Sections 6.1(a), 6.1(b) or 6.1(e), as applicable, in each case in accordance with the provisions of Section 2.13. (c) On each date on which the Borrower or any of its Subsidiaries receives any Net Debt Proceeds or becomes or remains liable with respect to Indebtedness with respect to Capitalized Leases in excess of $100,000,000 in the aggregate at any one time outstanding for the Borrower and its Subsidiaries, the Borrower shall prepay the outstanding Loans in an amount equal to 100% of such Net Debt Proceeds or 100% of the amount by which the aggregate amount of Indebtedness of the Borrower and its Subsidiaries with respect to Capitalized Leases exceeds $100,000,000 on such date, respectively, in accordance with the provisions of Section 2.13. (d) On each day on which the Total Revolving Loan Commitment is reduced pursuant to Section 2.10 the Borrower shall prepay the Revolving Loans to the extent, if any, that the outstanding principal amount of the Revolving Loans exceeds such reduced Total Revolving Loan Commitment. (e) If at any time and for any reason the aggregate principal amount of Revolving Loans plus the L/C Obligations then outstanding are greater than the Total Revolving Loan Commitment, the Borrower shall immediately prepay the Revolving Loans in an amount equal to such excess. In addition, to the extent at any time and for any reason, the Total Revolving Loan Commitment minus the aggregate principal amount of Revolving Loans then outstanding, is less than the amount of L/C Obligations outstanding at such time, the Borrower shall Cash Collateralize the 30 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT L/C Obligations in an amount equal to the amount by which such L/C Obligations exceed the amount equal to the difference between the Total Revolving Loan Commitment and such aggregate principal amount of Revolving Loans. (f) The Borrower shall make each Term Loan Paydown in accordance with Section 2.1. (g) Nothing in this Section 2.12 shall be construed to constitute the Lenders' consent to any transactions referred to in Sections 2.12(a), 2.12(b) or 2.12(c) above which transaction is not expressly permitted by the terms of this Agreement. Section 2.13 Application of Prepayments. (a) All prepayments of the Loans required by clauses (a) through (c) of Section 2.12 shall be applied first, to prepay the Term Loans until such Term Loans shall have been repaid in full, together with accrued and unpaid interest thereon, second, to prepay the Revolving Loans until such Revolving Loans shall have been repaid in full, together with accrued and unpaid interest thereon, third, to Cash Collateralize the then outstanding Letters of Credit and, fourth, to all other outstanding Obligations. If (i) at the time of any prepayment of the principal amount of the Revolving Loans pursuant to the preceding sentence (other than any prepayment required by Section 2.12(a)) either (A) the Leverage Ratio as of the end of the fiscal quarter immediately preceding such date as to which financial statements are required to have been delivered pursuant to Section 6.1(a) or 6.1(b), as applicable, is greater than or equal to 2.0 or (B) any Default has occurred and is continuing as a result of the Borrower's failure to deliver any financial statement or Compliance Certificate as and when required pursuant to Section 6.1(a), 6.1(b) or 6.1(e), as applicable, then simultaneously with any prepayment of the principal amount of the Revolving Loans pursuant to the preceding sentence, each Lender's Revolving Loan Commitment shall be permanently reduced by such Lender's Pro Rata Share of such prepayment and, (ii) at the time of any prepayment of the principal amount of the Revolving Loans pursuant to the preceding sentence (other than any prepayment required by Section 2.12(a)), both (A) the Leverage Ratio as of the end of the fiscal quarter immediately preceding such date as to which financial statements are required to have been delivered pursuant to Sections 6.1(a) and 6.1(b), as applicable, is less than 2.0 and (B) no Default has occurred or is continuing as a result of the Borrower's failure to deliver any financial statement or Compliance Certificate as and when required pursuant to Section 6.1(a), 6.1(b) or 6.1(e), as applicable, then, any Revolving Loans repaid pursuant to the preceding sentence may be reborrowed, subject to the other terms of this Agreement. (b) Simultaneously with any prepayment of the principal amount of Revolving Loans pursuant to Section 2.12(a), each Lender's Revolving Loan Commitment shall be permanently reduced by such Lender's Pro Rata Share of such prepayment. (c) All prepayments of the then remaining Term Loans required by clauses (a) through (c) of Section 2.12 shall be applied on a pro rata basis to the scheduled installments of principal thereof. Section 2.14 Method and Place of Payment. (a) Except as otherwise specifically provided herein, all payments and prepayments under this Agreement and the Notes shall be made to the Agent for the account of the 31 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT Lenders entitled thereto not later than 2:00 P.M., Chicago time, on the date when due and shall be made in lawful money of the United States of America in immediately available funds at the Agent's Office, and any funds received by the Agent after such time shall, for all purposes hereof (including the following sentence), be deemed to have been paid on the next succeeding Business Day. Except as otherwise specifically provided herein, the Agent shall thereafter cause to be distributed on the date of receipt thereof to each Lender in like funds its Pro Rata Share of payments so received. (b) Whenever any payment to be made hereunder or under any Note shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest shall be payable at the applicable rate during such extension. (c) All payments made by the Borrower hereunder and under the other Loan Documents shall be made irrespective of, and without any reduction for, any setoff or counterclaims. Section 2.15 Fees. (a) The Borrower agrees to pay the fees in the amounts and on the dates specified in the Fee Letter. (b) The Borrower agrees to pay to the Agent for the account of each Lender a commitment fee (the "COMMITMENT FEE") for each day computed at the per annum rate equal to the Applicable Margin (determined for the Commitment Fee in accordance with the definition of Applicable Margin) multiplied by each such Lender's Pro Rata Share of the average daily Unused Portion, from and including the Closing Date to the Revolving Loan Maturity Date. (c) The Commitment Fee shall accrue from and including the Closing Date to but excluding the Revolving Loan Maturity Date. Accrued fees under this Section 2.15 shall be payable on the Closing Date and payable quarterly in arrears on each Payment Date, commencing December 15, 2003, and on the Revolving Loan Maturity Date or such earlier date, if any, on which the Revolving Loan Commitments shall terminate in accordance with the terms hereof. The Commitment Fee and all other fees due under the Loan Documents (collectively the "FEES") shall be calculated on the basis of a 360-day year for the actual number of days elapsed. Section 2.16 Interest Rate Unascertainable, Increased Costs, Illegality. (a) In the event that the Agent, in the case of clause (i) below, or any Lender, in the case of clauses (ii) and (iii) below, shall have determined (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto): (i) on any date for determining the Eurodollar Rate for any Interest Period, that by reason of any changes arising after the Closing Date affecting the interbank Eurodollar market, adequate and fair means do not exist for ascertaining the applicable interest rate on the basis provided for in the definition of the Eurodollar Rate; or (ii) at any time, that the relevant Eurodollar Rate applicable to any of its Loans shall not represent the effective pricing to such Lender for funding or maintaining a Eurodollar Loan, or such Lender shall incur increased costs or reductions in the 32 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT amounts received or receivable hereunder in respect of any Eurodollar Loan, in any such case because of (x) any change since the Closing Date in any applicable law or governmental rule, regulation, guideline or order or any interpretation thereof and including the introduction of any new law or governmental rule, regulation, guideline or order (such as for example but not limited to a change in official reserve requirements, but, in all events, excluding reserves required under Regulation D of the Federal Reserve Board to the extent included in the computation of the Eurodollar Rate), whether or not having the force of law and whether or not failure to comply therewith would be unlawful, and/or (y) other circumstances affecting such Lender or the interbank Eurodollar market or the position of such Lender in such market; or (iii) at any time, that the making or continuance by it of any Eurodollar Loan has become unlawful by compliance by such Lender in good faith with any law or governmental rule, regulation, guideline or order (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) or has become impracticable as a result of a contingency occurring after the Closing Date which materially and adversely affects the interbank Eurodollar market; then, and in any such event, the Agent or such Lender shall, promptly after making such determination, give notice (by telephone promptly confirmed in writing) to the Borrower and (if applicable) the Agent of such determination (which notice the Agent shall promptly transmit to each of the other Lenders). Thereafter (x) in the case of clause (i) above, the Borrower's right to request Eurodollar Loans shall be suspended, and any Notice of Borrowing or Notice of Conversion or Continuation given by the Borrower with respect to any Borrowing of Eurodollar Loans which has not yet been made shall be deemed cancelled and rescinded by the Borrower, (y) in the case of clause (ii) above, the Borrower shall pay to such Lender, upon such Lender's delivery of a written demand therefor to the Borrower with a copy to the Agent, such additional amounts (in the form of an increased rate of interest, or a different method of calculating interest, or otherwise, as such Lender in its sole discretion shall determine) as shall be required to compensate such Lender for such increased costs or reduction in amounts received or receivable hereunder and (z) in the case of clause (iii) above, the Borrower shall take one of the actions specified in clause (b) below as promptly as possible and, in any event, within the time period required by law. The written demand provided for in clause (y) shall demonstrate in reasonable detail the calculation of the amounts demanded and shall, absent manifest error, be final and conclusive and binding upon all of the parties hereto. (b) In the case of any Eurodollar Loan or requested Eurodollar Loan affected by the circumstances described in clause (a)(ii) above, the Borrower may, and in the case of any Eurodollar Loan affected by the circumstances described in clause (a)(iii) above the Borrower shall, either (i) if any such Eurodollar Loan has not yet been made but is then the subject of a Notice of Borrowing or a Notice of Conversion or Continuation, be deemed to have cancelled and rescinded such notice, or (ii) if any such Eurodollar Loan is then outstanding, require the affected Lender to convert each such Eurodollar Loan into a Base Rate Loan at the end of the applicable Interest Period or such earlier time as may be required by law, in each case by giving the Agent notice (by telephone promptly confirmed in writing) thereof on the Business Day that the Borrower was notified by the Lender pursuant to clause (a) above; PROVIDED, HOWEVER, that all Lenders whose Eurodollar Loans are affected by the circumstances described in clause (a) above shall be treated in the same manner under this clause (b). 33 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT (c) In the event that the Agent determines at any time following its giving of notice based on the conditions described in clause (a)(i) above that none of such conditions exist, the Agent shall promptly give notice thereof to the Borrower and the Lenders, whereupon the Borrower's right to request Eurodollar Loans from the Lenders and the Lenders' obligation to make Eurodollar Loans shall be restored. (d) In the event that a Lender determines at any time following its giving of a notice based on the conditions described in clause (a)(iii) above that none of such conditions exist, such Lender shall promptly give notice thereof to the Borrower and the Agent, whereupon the Borrower's right to request Eurodollar Loans from such Lender and such Lender's obligation to make Eurodollar Loans shall be restored. Section 2.17 Funding Losses. The Borrower shall compensate each Lender, upon such Lender's delivery of a written demand therefor to the Borrower, with a copy to the Agent (which demand shall set forth the basis for requesting such amounts and shall, absent manifest error, be final and conclusive and binding upon all of the parties hereto), for all reasonable losses, expenses and liabilities (including, without limitation, any loss, expense or liability incurred by such Lender in connection with the liquidation or reemployment of deposits or funds required by it to make or carry its Eurodollar Loans), that such Lender sustains: (i) if for any reason (other than a default by such Lender) a Borrowing of, or conversion from or into, or a continuation of, Eurodollar Loans does not occur on a date specified therefor in a Notice of Borrowing or Notice of Conversion or Continuation (whether or not rescinded, cancelled or withdrawn or deemed rescinded, cancelled or withdrawn, pursuant to Section 2.16(a) or 2.16(b) or otherwise), (ii) if any prepayment or repayment (including, without limitation, payment after acceleration) or conversion of any of its Eurodollar Loans occurs on a date which is not the last day of the Interest Period applicable thereto, (iii) if any prepayment of any of its Eurodollar Loans is not made on any date specified in a notice of prepayment given by the Borrower, or (iv) as a consequence of any default by the Borrower in repaying its Eurodollar Loans or any other amounts owing hereunder in respect of its Eurodollar Loans when required by the terms of this Agreement. Calculation of all amounts payable to a Lender under this Section 2.17 shall be made on the assumption that such Lender has funded its relevant Eurodollar Loan through the purchase of a Eurodollar deposit bearing interest at the Eurodollar Rate in an amount equal to the amount of such Eurodollar Loan with a maturity equivalent to the Interest Period applicable to such Eurodollar Loan, and through the transfer of such Eurodollar deposit from an offshore office of such Lender to a domestic office of such Lender in the United States of America, PROVIDED that each Lender may fund its Eurodollar Loans in any manner that it in its sole discretion chooses and the foregoing assumption shall only be made in order to calculate amounts payable under this Section 2.17. Section 2.18 Increased Capital. If any Lender shall have determined that compliance with any applicable law, rule, regulation, guideline, request or directive (whether or not having the force of law) of any governmental authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the capital or assets of such Lender or any Person controlling such Lender as a consequence of its commitments or obligations hereunder, then from time to time, upon such Lender's delivering a written demand therefor to the Agent and the Borrower (with a copy to the Agent), the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or Person for such reduction. 34 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT Section 2.19 Taxes. (a) All payments made by the Borrower under this Agreement shall be made free and clear of, and without reduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any governmental authority excluding, in the case of the Agent and each Lender, net income and franchise taxes imposed on the Agent or such Lender by the jurisdiction under the laws of which the Agent or such Lender is organized or any political subdivision or taxing authority thereof or therein, or by any jurisdiction in which such Lender's Domestic Lending Office or Eurodollar Lending Office, as the case may be, is located or any political subdivision or taxing authority thereof or therein (all such non-excluded taxes, levies, imposts, deductions, charges or withholdings being hereinafter called "TAXES"). If any Taxes are required to be withheld from any amounts payable to the Agent or any Lender hereunder or under the Notes, the amounts so payable to the Agent or such Lender shall be increased to the extent necessary to yield to the Agent or such Lender (after payment of all Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement and the Notes. Whenever any Taxes are payable by the Borrower, as promptly as possible thereafter, the Borrower shall send to the Agent for its own account or for the account of such Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof. If the Borrower fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Agent the required receipts or other required documentary evidence, the Borrower shall indemnify the Agent and the Lenders for any incremental taxes, interest or penalties that may become payable by the Agent or any Lender as a result of any such failure. The agreements in this Section 2.19 shall survive the termination of this Agreement and the payment of the Notes and all other Obligations. (b) Each Lender that is not incorporated under the laws of the United States of America or a state thereof (including each Purchasing Lender that becomes a party to this Agreement pursuant to Section 10.4) agrees that, prior to the first date on which any payment is due to it hereunder, it will deliver to the Borrower and the Agent (i) two duly completed copies of United States Internal Revenue Service Form W-8BEN or W-8ECI or successor applicable form, as the case may be, certifying in each case that such Lender is entitled to receive payments under this Agreement and the Notes payable to it, without deduction or withholding of any United States federal income taxes, and (ii) an Internal Revenue Service Form W-8 (or W-8BEN) or W-9 or successor applicable form, as the case may be, to establish an exemption from United States backup withholding tax. Each Lender which delivers to the Borrower and the Agent a Form W-8BEN or W-8ECI and Form W-8 (or W-8BEN) or W-9 pursuant to the preceding sentence further undertakes to deliver to the Borrower and the Agent two further copies of the said letter and Form W-8BEN or W-8ECI and Form W-8 (or W-8BEN) or W-9, or successor applicable forms, or other manner of certification, as the case may be, on or before the date that any such letter or form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent letter and form previously delivered by it to the Borrower, and such extensions or renewals thereof as may reasonably be requested by the Borrower, certifying in the case of a Form W-8BEN or W-8ECI that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, unless in any such case an event (including, without limitation, any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such letter or form with respect to it and such Lender advises the Borrower that it is not capable of receiving payments without any deduction or 35 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT withholding of United States federal income tax, and in the case of a Form W-8 (or W-8BEN) or W-9, establishing an exemption from United States backup withholding tax. (c) In addition, the Borrower agrees to pay any and all present or future stamp, court or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made under any Loan Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Loan Document (hereinafter referred to as "Other Taxes"). (d) The Borrower agrees to indemnify the Agent and each Lender for (i) the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section) paid by the Agent and such Lender, (ii) amounts payable under Section 2.19 (c) and (iii) any liability (including additions to tax, penalties, interest and expenses) arising therefrom or with respect thereto, in each case whether or not such Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant governmental authority. Payment under this subsection (d) shall be made within 30 days after the date the Lender or the Agent makes a demand therefor. Section 2.20 Use of Proceeds. The proceeds of the Loans shall be used (i) to the extent the proceeds from the issuance of the New Convertible Subordinated Notes on or prior to the Closing Date, net of customary underwriting fees and discounts, brokerage commissions and other similar reasonable and customary costs and expenses directly attributable to the issuance of the New Convertible Subordinated Notes are insufficient to redeem all of the Convertible Subordinated Notes outstanding on the date of the issuance of the New Convertible Subordinated Notes, to redeem the balance of such Convertible Subordinated Notes as soon as practicable, but in no event later than March 15, 2004 and (ii) for the Borrower's working capital and general corporate purposes which shall include, but not be limited to, Restaurant renovations and Permitted Acquisitions. Section 2.21 Collateral Security. (a) As security for the payment of the Obligations, the Borrower shall cause to be granted to the Agent, for the ratable benefit of the Lenders, a first priority perfected Lien on and security interest in all of the following, whether now or hereafter existing or acquired subject only to the Liens permitted to be incurred pursuant to Section 7.3 hereof: (i) all of the shares of capital stock (or other equity interests of each Subsidiary if such Subsidiary is not a corporation) of each Subsidiary of the Borrower now or hereafter directly or indirectly owned by the Borrower and all proceeds thereof, all as more specifically described in the Borrower Pledge Agreement and the Subsidiary Pledge Agreements; (ii) certain of the assets of the Borrower and all proceeds thereof, all as more specifically described in the Borrower Security Agreement and the Mortgages; and (iii) certain of the assets of each Subsidiary now or hereafter directly or indirectly owned by the Borrower and all proceeds thereof, all as more specifically described in the Subsidiary Security Agreement and the Mortgages. To the extent the Agent for the benefit of the Lenders does not have a first priority perfected security interest in any assets of the Borrower or any other Loan Party required to be pledged as described above which is of the type described in the Borrower Security Agreement, the Borrower Pledge Agreement, the Subsidiary Pledge Agreement or the Subsidiary Security Agreement or which consists of real property of the type described in subsection (c) below, the Borrower will grant, and cause each other Loan Party to grant, to the Agent for itself and the benefit of the Lenders a first priority perfected security interest in such assets subject only to the Liens permitted pursuant to Section 7.3 hereof. In connection with any sales of assets permitted 36 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT hereunder, the Agent will release and terminate the liens and security interests granted under the Security Documents with respect to such assets and no further consent of the Lenders will be required with respect to any such release. (b) Concurrently with the consummation of any Permitted Acquisition or any other acquisition of any asset (whether by purchase, merger, contribution, license or otherwise) which is of the type described in the Borrower Security Agreement, the Subsidiary Security Agreement, the Borrower Pledge Agreement or the Subsidiary Pledge Agreement by the Borrower or any Subsidiary of the Borrower (other than a Subsidiary which, after giving effect to any such acquisition, is an Immaterial Subsidiary, except as otherwise provided in Section 6.11 or any Security Document) (an "ACQUIRING SUBSIDIARY") or the formation of any new Subsidiary (other than a Subsidiary which, after giving effect to any such acquisition, is an Immaterial Subsidiary, except as otherwise provided in Section 6.11 or any Security Document) of the Borrower or upon an Immaterial Subsidiary ceasing to qualify or be designated as an Immaterial Subsidiary (conversion from the status of an Immaterial Subsidiary to a Subsidiary which is not an Immaterial Subsidiary is hereinafter referred to as a "CONVERSION"), the Borrower shall: (i) in the case of a Permitted Acquisition of stock or other equity interest or any other acquisition of stock or other equity interest (whether by purchase, merger, contribution, license or otherwise) by the Borrower or any such Acquiring Subsidiary of the Borrower or the formation of such a new Subsidiary or a Conversion: (A) deliver or cause to be delivered to the Agent all of the certificates representing the capital stock (or other equity interest if such equity interests are represented by a certificate or certificates) of such new Subsidiary which is being acquired or formed or converted (or Investment if such Investment is not an Immaterial Investment), beneficially owned by the Borrower or such Acquiring Subsidiary, as additional collateral for the Obligations, to be held by the Agent in accordance with the terms of the Borrower Pledge Agreement or a Subsidiary Pledge Agreement, as the case may be; and (B) cause such Acquiring Subsidiary (which is not already a party thereto) or new Subsidiary which is being acquired or formed or converted to deliver to the Agent (1) duly executed counterpart signature pages to each of the Guaranty, and the Subsidiary Security Agreement, in the forms attached respectively thereto as Annex I, together with the authorization to the Agent and the Lenders to attach such signature pages to the Guaranty and the Subsidiary Security Agreement, respectively, the effect of which shall be that as of the date set forth on such signature pages such Acquiring Subsidiary or such new or converted Subsidiary, as the case may be, shall become a party to each such agreement and be bound by the terms thereof and any revisions to the schedules to the Subsidiary Security Agreement necessary in connection therewith, (2) if such new or converted Subsidiary owns any capital stock or other equity interest or if such Acquiring Subsidiary is not already a party to a Subsidiary Pledge Agreement, a Subsidiary Pledge Agreement duly executed by such new or converted Subsidiary or such Acquiring Subsidiary, as the case may be, or if such new or converted Subsidiary owns any copyrights, trademarks, patents or other intellectual property, such additional Security Documents as requested by the Agent, (3) such Uniform Commercial Code financing statements as shall be required to perfect the security interest of the Agent and the Lenders in the Collateral being pledged by such new Subsidiary pursuant to the Subsidiary Security Agreement, and (4) ten (10) days prior written notice of any such Permitted Acquisition, other acquisition, formation or Conversion. 37 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT (ii) in the case of a Permitted Acquisition of assets or any other acquisition of assets (including equity interests of a Person other than a corporation) (whether by purchase, merger, contribution, license or otherwise) by the Borrower or any such Acquiring Subsidiary which is of the type described in the Borrower Security Agreement or the Subsidiary Security Agreement or the formation of such a new Subsidiary or a Conversion into a Person which in either case is not a corporation, deliver or cause to be delivered by the Borrower or such Acquiring Subsidiary acquiring such assets or forming such new Subsidiary, (A) such Uniform Commercial Code financing statements as shall be required to perfect the security interest of the Agent and the Lenders in the assets being so acquired, (B) if such assets include copyrights, trademarks, patents or other intellectual property, such additional Security Documents as requested by the Agent, (C) any additional instruments or documents evidencing the security interest of the Agent reasonably required by the Agent and (D) ten (10) days prior written notice of any such Permitted Acquisition, other acquisition, formation or Conversion; and (iii) in any case (A) provide such other documentation, including, without limitation, one or more opinions of counsel reasonably satisfactory to the Agent, articles of incorporation, by-laws and resolutions (or equivalent organizational and authorization documents), which in the reasonable opinion of the Agent is necessary or advisable in connection with such Permitted Acquisition or formation of such new Subsidiary or other acquisition (whether by purchase, merger, contribution or otherwise) or Conversion, (B) cause any newly formed or acquired Immaterial Subsidiary which is or is to become a Subordinated Guarantor, to execute and deliver a counterpart to the Guaranty, and (C) if, as a result of the consummation of any transaction or transactions, there is a significant change in the information provided by the Borrower on Schedule 5.18, promptly provide the Agent with a new schedule which reflects the then current corporate structure of the Borrower and its Subsidiaries certified by an Authorized Officer of the Borrower. (c) Concurrently with the acquisition of any interest (including a leasehold interest) in any real property by the Borrower or any Subsidiary of the Borrower in any state that does not at the time of acquisition assess a mortgage recording tax, the Borrower shall deliver or cause to be delivered to the Agent, Mortgages with respect to such real property interest, together with title insurance policies, surveys, appraisals, opinions of counsels and such other documentation as the Agent may reasonably request. Section 2.22 Replacement of Certain Lenders. If a Lender ("AFFECTED LENDER") shall have requested compensation from the Borrower under Sections 2.16, 2.18 or 2.19 to recover Taxes or other additional costs incurred by such Lender which are not being incurred generally by the other Lenders, or delivered a notice pursuant to Section 2.16(a)(iii) claiming that such Lender is unable to extend Eurodollar Loans to the Borrower for reasons not generally applicable to the other Lenders, then, in any such case, so long as no Default or Event of Default exists, the Borrower may make written demand on such Affected Lender (with a copy to the Agent) for the Affected Lender to assign, and such Affected Lender shall assign pursuant to one or more duly executed assignment and acceptance agreements in substantially the form of Exhibit I thirty (30) Business Days after the date of such demand, to one or more financial institutions that comply with the provisions of Sections 10.4(c) and 10.4(d) (and that are reasonably acceptable to the Agent) which the Borrower shall have engaged for such purpose ("REPLACEMENT LENDER"), all of such Affected Lender's rights and obligations under this Agreement and the other Loan Documents (including its Revolving Loan Commitment, all Loans owing to it, all of its participation interests in outstanding Letters of Credit, 38 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT and its obligation to participate in additional Letters of Credit hereunder) in accordance with Sections 10.4(c) and 10.4(d). Further, with respect to any such assignment, the Affected Lender shall have concurrently received, in cash, all amounts due and owing to such Affected Lender hereunder or under any other Loan Document, including the aggregate outstanding principal amount of the Loans owed to such Lender, together with accrued interest thereon through the date of such assignment from the Replacement Lender, amounts payable under Sections 2.16, 2.18 and 2.19 with respect to such Affected Lender and compensation payable under Section 2.15; PROVIDED, that upon such Affected Lender's replacement, such Affected Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.16, 2.17, 2.18, 2.19 and 10.1 accruing with respect to such Affected Lender prior to the date such Affected Lender is replaced, as well as to any fees accrued for its account hereunder prior to being replaced and not yet paid, and shall continue to be obligated under Section 9.7. SECTION 3. LETTERS OF CREDIT. Section 3.1 Issuance of Letters of Credit, etc. (a) Subject to the terms and conditions hereof, at any time and from time to time from the Closing Date through the day prior to the Revolving Loan Maturity Date, the Issuing Bank shall issue such Letters of Credit for the account of the Borrower or any Subsidiary of the Borrower which is a party to the Guaranty as Borrower may request by an L/C Application; PROVIDED that, giving effect to such Letter of Credit, (x) the sum of the L/C Obligations then outstanding plus the then outstanding aggregate principal amount of the Revolving Loans shall not exceed the Total Revolving Loan Commitment and (y) the aggregate L/C Obligations then outstanding shall not exceed the L/C Commitment. Unless all the Revolving Lenders and the Issuing Bank otherwise consent in writing, the Borrower and its Subsidiaries shall not request any Letter of Credit (i) whose term exceeds 12 months or (ii) which expires after the Revolving Loan Maturity Date unless such Letter of Credit is Cash Collateralized at least two (2) Business Days prior to the Revolving Loan Maturity Date. No Letter of Credit shall be issued except in the ordinary course of business of the Borrower or any of its Subsidiaries or in connection with Permitted Acquisitions with respect to which the conditions set forth in Section 7.8(f) have been satisfied, each Letter of Credit shall be used solely (a) to support obligations of the Borrower and its Subsidiaries not prohibited hereunder, other than Indebtedness for borrowed money, and (b) for the purposes described in the definition of "Trade Letter of Credit". (b) The Borrower shall submit the L/C Application for the Issuance of any Letter of Credit to the Issuing Bank at least five Business Days prior to the date when required. Upon Issuance of a Letter of Credit, the Issuing Bank shall promptly notify the Revolving Lenders of the amount and terms thereof. (c) Upon the Issuance of a Letter of Credit, each Revolving Lender that has made a Revolving Loan Commitment shall be deemed to have purchased a pro rata participation, from the Issuing Bank in an amount equal to that Lender's Pro Rata Share, in the Letter of Credit. Without limiting the scope and nature of each Revolving Lender's participation in any Letter of Credit, to the extent that the Issuing Bank has not been reimbursed by the Borrower for any payment to a beneficiary of a Letter of Credit in respect of a drawing under such Letter of Credit made by the Issuing Bank under any Letter of Credit, each Revolving Lender shall, pro rata according to its Pro Rata Share, reimburse the Issuing Bank promptly upon demand for the amount of such payment. The obligation of each Revolving Lender to so reimburse the Issuing Bank shall be absolute and 39 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT unconditional and shall not be affected by the occurrence of a Default, Event of Default or any other occurrence or event. Any such reimbursement shall not relieve or otherwise impair the obligation of the Borrower to reimburse the Issuing Bank for the amount of any payment made by the Issuing Bank under any Letter of Credit together with interest as hereinafter provided. (d) Upon the making of any payment with respect to any Letter of Credit by the Issuing Bank, the Borrower shall be deemed to have submitted a Notice of Borrowing for a Revolving Loan consisting of a Base Rate Loan in the amount of such payment, and the Agent shall without notice to or the consent of Borrower cause Revolving Loans to be made by the Revolving Lenders in an aggregate amount equal to the amount paid by the Issuing Bank on that Letter of Credit, but not exceeding the Total Revolving Loan Commitment minus the then outstanding principal amount of Revolving Loans and minus all other then outstanding L/C Obligations, and for this purpose, the conditions precedent set forth in Section 4 hereof shall not apply. The proceeds of such Revolving Loans shall be paid to the Issuing Bank to reimburse it for the payment made by it under the Letter of Credit. Promptly following any Revolving Loans made under this Section 3.1(d), the Agent shall notify the Borrower thereof. (e) To the extent that any Revolving Loans made pursuant to Section 3.1(d) are insufficient to reimburse the Issuing Bank in full, the Borrower agrees to pay to the Issuing Bank with respect to each Letter of Credit, within one Business Day after demand therefor, a principal amount equal to any payment made by the Issuing Bank under that Letter of Credit, together with interest on such amount from the date of any payment made by the Issuing Bank through the date of payment by the Borrower at the Default Rate for Revolving Loans. The principal amount of any such payment made by the Borrower to the Issuing Bank shall be used to reimburse the Issuing Bank for the payment made by it under the Letter of Credit. Each Revolving Lender that has reimbursed the Issuing Bank pursuant to Section 3.1(d) for its Pro Rata Share of any payment made by the Issuing Bank under a Letter of Credit shall thereupon acquire a pro rata participation, to the extent of such reimbursement, in the claim of the Issuing Bank against the Borrower under this Section 3.1(e). (f) The Issuance of any supplement, modification, amendment, renewal or extension to or of any Letter of Credit shall be treated in all respects the same as the Issuance of a new Letter of Credit. Section 3.2 Letter of Credit Fees. The Borrower shall pay (i) a letter of credit fee to the Agent equal to (x) a per annum rate equal to the then effective Applicable Margin for Eurodollar Loans minus 0.50% times (y) the stated amount of each Standby Letter of Credit for the term of each such Letter of Credit for the account of the Lenders who have made Revolving Loan Commitments, according to their respective Pro Rata Shares, in each case payable quarterly in arrears on each Payment Date, commencing on December 15, 2003, and (ii) a letter of credit fee to the Agent equal to (x) a per annum rate equal to the then effective Applicable Margin for Eurodollar Loans minus 0.50% times (y) the stated amount of each Trade Letter of Credit as of the date of Issuance thereof, payable for the account of the Lenders who have made Revolving Loan Commitments, according to their respective Pro Rata Shares, in each case payable quarterly in arrears on each Payment Date, commencing on December 15, 2003. Upon (A) the issuance of each Letter of Credit, the Borrower shall also pay to the Agent for the account of the Issuing Bank an amount equal to the greater of (i) $500 or (ii) 0.125% of the stated amount of such Letter of Credit as an issuance fee; (B) the amendment of each Letter of Credit, the Borrower shall pay to the Agent for the account of the Issuing Bank the amendment fees, in each case, as the Issuing Bank normally 40 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT charges in connection with a Letter of Credit and activity pursuant thereto, in either case which fees shall be solely for the account of the Issuing Bank; and (C) the incurrence of any reasonable out-of-pocket costs and expenses in connection with the maintenance of any Letter of Credit, the Borrower shall pay to the Agent for the account of the Issuing Bank the amount of such out-of-pocket costs and expenses so incurred. Section 3.3 Obligation of Borrower Absolute, etc. (a) The obligation of the Borrower to pay to the Issuing Bank the amount of any payment made by the Issuing Bank under any Letter of Credit shall be absolute, unconditional and irrevocable. Without limiting the foregoing, such obligation of the Borrower shall not be affected by any of the following circumstances: (1) any lack of validity or enforceability of the Letter of Credit, this Agreement or any other agreement or instrument relating thereto; (2) any amendment or waiver of or any consent to departure from the Letter of Credit, this Agreement or any other agreement or instrument relating thereto; (3) the existence of any claim, setoff, defense or other rights which the Borrower or any Subsidiary of the Borrower may have at any time against the Issuing Bank, any Lender, the Agent, any beneficiary of the Letter of Credit (or any Persons for whom any such beneficiary may be acting) or any other Person, whether in connection with the Letter of Credit, this Agreement or any other agreement or instrument relating thereto, or any unrelated transactions; (4) any demand, statement or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect whatsoever so long as any such document appeared to comply with the terms of the Letter of Credit; (5) payment by the Issuing Bank in good faith under the Letter of Credit against presentation of a draft or any accompanying document which does not strictly comply with the terms of the Letter of Credit; (6) the existence, character, quality, quantity, condition, packing, value or delivery of any property purported to be represented by documents presented in connection with any Letter of Credit or for any difference between any such property and the character, quality, quantity, condition or value of such property as described in such documents; (7) the time, place, manner, order or contents of shipments or deliveries of property as described in documents presented in connection with any Letter of Credit or the existence, nature and extent of any insurance relative thereto; (8) the solvency or financial responsibility of any party issuing any documents in connection with a Letter of Credit; 41 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT (9) any failure or delay in notice of shipments or arrival of any property; and (10) any other circumstances whatsoever. (b) As among the Borrower, the Lenders, the Issuing Bank and the Agent, the Borrower assumes all risks of the acts and omissions of, or misuse of such Letter of Credit by, the beneficiary of any Letter of Credit. In furtherance and not in limitation of the foregoing, subject to the provisions of the Letter of Credit applications and Letter of Credit reimbursement agreements executed by the Borrower at the time it requests any Letter of Credit, the Agent, the Issuing Bank and the Lenders shall not be responsible: (i) for the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of the Letters of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) for the failure of the beneficiary of a Letter of Credit to comply duly with conditions required in order to draw upon such Letter of Credit; (iv) for errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex, or other similar form of teletransmission or otherwise; (v) for errors in interpretation of technical trade terms; (vi) for any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any Letter of Credit or of the proceeds thereof; (vii) for the misapplication by the beneficiary of a Letter of Credit of the proceeds of any drawing under such Letter of Credit; and (viii) for any consequences arising from causes beyond the control of the Agent, the Issuing Bank and the Lenders including, without limitation, any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or governmental authority. None of the above shall affect, impair, or prevent the vesting of any of the Issuing Bank's rights or powers hereunder. (c) In furtherance and extension and not in limitation of the specific provisions hereinabove set forth, any action taken or omitted by the Issuing Bank under or in connection with Letters of Credit issued by it or any related certificates shall not, in the absence of 42 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT gross negligence or willful misconduct, put the Issuing Bank under any resulting liability to the Borrower or relieve the Borrower of any of its obligations hereunder to any such Person. (d) The Issuing Bank shall be entitled to the protection accorded to the Agent pursuant to Section 9, mutatis mutandis. SECTION 4. CONDITIONS PRECEDENT. Section 4.1 Conditions Precedent to the Effectiveness of this Agreement. This Agreement shall become effective as of the Closing Date upon the satisfaction on or before the Closing Date of the following conditions precedent: (a) Loan Documents. (i) Credit Agreement. The Borrower and the Lenders shall have executed and delivered this Agreement to the Agent. (ii) Notes. The Borrower shall have executed and delivered to each of the Lenders the appropriate Notes in the amount, maturity and as otherwise provided herein. (iii) Borrower Security Agreement. The Borrower shall have executed and delivered to the Agent the Borrower Security Agreement. (iv) Subsidiary Security Agreement. Each Subsidiary of the Borrower (other than any such Subsidiary which is an Immaterial Subsidiary) shall have duly executed and delivered to the Agent the Subsidiary Security Agreement. (v) Borrower Pledge Agreement. The Borrower shall have executed and delivered to the Agent the Borrower Pledge Agreement. (vi) Subsidiary Pledge Agreements. Each Subsidiary of the Borrower that owns any Equity Interest in any Person as of the Closing Date (other than in an Immaterial Subsidiary) shall have duly executed and delivered to the Agent a Subsidiary Pledge Agreement. (vii) Guaranty. Each Subsidiary of the Borrower (other than any Immaterial Subsidiary that is not a Subordinated Guarantor) shall have executed and delivered to the Agent the Guaranty. (viii) [Intentionally Omitted.]. (ix) Borrower Trademark Security Agreement. The Borrower shall have executed and delivered to the Agent an amended and restated Borrower Trademark Security Agreement, amending and restating that certain Borrower Trademark Security Agreement, dated as of July 15, 1997, by the Borrower in favor of the Agent. (x) Subsidiary Trademark, Patent and Copyright Security Agreements. Each Subsidiary of the Borrower party to the Amended and Restated Subsidiary Trademark Security Agreement, Amended and Restated Subsidiary Patent 43 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT Security Agreement or Amended and Restated Subsidiary Copyright Security Agreement (as applicable), each dated as of January 31, 2002 in favor of the Agent, shall have executed and delivered to the Agent a second amended and restated version of each such agreement, and each Subsidiary of the Borrower not party to any of such agreements that owns any Intellectual Property shall have executed and delivered to the Agent a security agreement substantially in the form of each such previously delivered agreement (as applicable). (b) Opinions of Counsel. The Agent shall have received (A) a legal opinion, dated the Closing Date, from Stradling Yocca Carlson & Rauth, counsel to the Loan Parties, substantially in the form set forth as Exhibit H hereto, (B) legal opinions, dated the Closing Date, from each of the local counsel to the Loan Parties identified on Schedule 4.1(b), in form and substance satisfactory to the Agent and (C) such other legal opinions, each dated the Closing Date, from local counsel to the Loan Parties as requested by the Agent with respect to such matters as requested by the Agent and in form and substance satisfactory to the Agent. (c) Corporate Documents. The Agent shall have received the certificate of incorporation, certificate of limited partnership, certificate of formation or other similar organizational document of each of the Loan Parties as amended, modified or supplemented to the Closing Date, (other than in the case of a general partnership) certified to be true, correct and complete by the appropriate Secretary of State as of a date not more than ten Business Days prior to the Closing Date, together with a good standing certificate from such Secretary of State and a good standing certificate from the Secretaries of State (or the equivalent thereof) of each other State in which each of them is required to be qualified to transact business, each to be dated a date not more than ten Business Days prior to the Closing Date and a bring-down good standing certificate or telephonic confirmation from the appropriate Secretary of State in each jurisdiction of organization of each Loan Party dated the Closing Date. (d) Certified Resolutions, etc. The Agent shall have received a certificate of the Secretary or Assistant Secretary of each of the Loan Parties or of a general partner in the case of each Loan Party which is a general partnership and dated the Closing Date certifying (i) the names and true signatures of the incumbent officers of such Person authorized to sign the applicable Loan Documents, (ii) the By-Laws, partnership agreement, limited liability company agreement or other similar organizational document of such Person as in effect on the Closing Date, (iii) the resolutions of such Person's Board of Directors (or other governing body, as applicable) approving and authorizing the execution, delivery and performance of all Transaction Documents executed by such Person, and (iv) that there have been no changes in the certificate of incorporation, certificate of limited partnership, certificate of formation or other similar organizational document of such Person since the date of the most recent certification thereof by the appropriate Secretary of State or, in the case of a partnership or other similar entity, the partnership agreement or other similar organizational document. (e) Existing Indebtedness. The Agent shall have received copies of all documents relating to existing Indebtedness for borrowed money or evidenced by a note, bond, debenture, acceptance or similar instrument of the Borrower and its Subsidiaries that shall be outstanding in each case in a principal amount in excess of $2,000,000 on and after the Closing Date, including, without limitation, terms of amortization, interest, premiums, fees, expenses, maturity, amendments, covenants, events of default and remedies, certified as of the Closing Date as such by the President or Vice President of the Borrower. 44 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT (f) Process Agent. Each Loan Party shall have appointed an agent satisfactory to the Agent for service of process in connection with any action or proceeding arising under or relating to the Loan Documents, and such agent shall have accepted such appointment in writing. (g) Officer's Certificate. The Agent and the Lenders shall have received a certificate of the President or Vice President of the Borrower, dated the Closing Date, certifying that (i) the Subordinated Debt Documents are in full force and effect and no material term or condition thereof has been amended from the form thereof delivered to the Agent, or waived, except as disclosed to the Agent or its counsel prior to the execution of this Agreement, (ii) each of the Loan Parties and, to the best of his or her knowledge, the other parties to the Subordinated Debt Documents, have performed or complied in all material respects with all agreements and conditions contained in such Subordinated Debt Documents, (iii) subject to the foregoing, neither any Loan Party nor, to the best of his or her knowledge, any such other party is in default in the performance or compliance with any of the material terms or provisions thereof, except to the extent that performance thereof or compliance therewith or default has been waived with the prior written consent of the Lenders, (iv) all of the representations and warranties of the Borrower and each other Loan Party contained in the Subordinated Debt Documents and the Loan Documents are true and correct, (v) no Default or Event of Default has occurred and is continuing and no default or event of default has occurred and is continuing under the Subordinated Debt Documents and (vi) since January 31, 2002, no event or change has occurred that has caused or evidences a Material Adverse Effect. (h) Closing Compliance Certificate. The Agent shall have received a certificate signed by the chief financial officer of the Borrower (i) containing conclusions that the Borrower and its Subsidiaries are Solvent before and after giving effect to the Transactions and the Redemption Transactions and that Closing EBITDA equals at least $100,000,000 and (ii) setting forth the calculations required to establish the Leverage Ratio calculated as of the end of the Retail Period of the Borrower ending October 6, 2003. (i) Insurance. The Agent shall have received a certificate of insurance demonstrating insurance coverage in respect of each of the Loan Parties of types, in amounts, with insurers and with other terms reasonably satisfactory to the Agent and which name the Agent as an additional insured or loss payee, as applicable. (j) Lien Search Reports. The Agent shall have received satisfactory reports of UCC, tax lien, judgment and litigation searches with respect to the Borrower and each of the other Loan Parties in each of the locations requested by the Agent. (k) UCC-1 Financing Statements. The Agent shall have received originals of each UCC-1 financing statement (i) duly authorized by the Borrower naming the Borrower as debtor and the Agent as secured party and filed in the jurisdictions set forth in Schedule I to the Borrower Security Agreement and (ii) duly authorized by each other Loan Party naming such Loan Party as debtor and the Agent as secured party and filed in the appropriate jurisdictions set forth in Schedule I to the Subsidiary Security Agreement. (l) Pledged Collateral. The Agent shall have received (i) the original stock, membership interest or partnership interest certificates evidencing the Pledged Stock (as defined in the Borrower Pledge Agreement and each Subsidiary Pledge Agreement) pursuant to the 45 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT Borrower Pledge Agreement and each Subsidiary Pledge Agreement (other than certificates representing any shares of Pledged Stock of any Immaterial Subsidiary and any shares of Pledged Stock which evidence an Immaterial Investment), together with undated stock powers or similar instruments of assignment duly executed in blank in connection therewith and (ii) each original Instrument pursuant to the Borrower Pledge Agreement and each Subsidiary Pledge Agreement (other than any Instrument evidencing an Immaterial Investment). (m) Corporate and Capital Structure. The corporate and capital structure of the Loan Parties shall be satisfactory to the Lenders, and the Agent shall have received a corporate structure chart with respect to the Borrower and all of its Subsidiaries (certified by an Authorized Officer of the Borrower). (n) Funded Debt and Capitalization. The Total Revolving Loan Commitment minus the aggregate principal amount of the Revolving Loans outstanding on the Closing Date minus the amount of any L/C Obligations then outstanding including any Letters of Credit to be issued on the Closing Date shall equal at least $25,000,000. The Leverage Ratio for the four fiscal quarters ended immediately prior to the Closing Date shall not exceed 4.1 to 1. The assets and liabilities of the Borrower and its consolidated Subsidiaries shall be materially consistent with the projections dated September 26, 2003 and previously delivered by the Borrower to the Agent. (o) Existing Indebtedness. The Agent shall have received evidence satisfactory to the Agent and the Lenders that, after giving effect to the consummation of the Transactions, (i) the Borrower and its Subsidiaries shall not be liable for or have outstanding any Indebtedness which is of the type of Indebtedness which would appear as a liability on (or would be required to appear as a liability on) the consolidated balance sheet of the Borrower (and not of the type required solely to be included in the footnotes thereto) and which Indebtedness shall include, without limitation, Indebtedness for borrowed money and Capitalized Lease Obligations, other than (A) the Loans outstanding hereunder as contemplated by Section 4.1(n) and (B) Indebtedness permitted under Section 7.2 (but excluding Indebtedness described in Section 7.2(a)) (collectively, the "SURVIVING DEBT"), and (ii) the Borrower and each of its Subsidiaries shall have paid in full all other Indebtedness of the Borrower and each of its Subsidiaries existing prior to the making of the initial Loans hereunder (all of the foregoing Indebtedness described in the foregoing clause (i) and (ii) referred to collectively as "EXISTING DEBT"). The Agent shall be satisfied that the execution and delivery of, and the performance by each of the Borrower and its Subsidiaries of its respective obligations under, each Transaction Document to which it is a party and consummation of the Transactions does not violate, conflict with or cause a default under any document or instrument evidencing Existing Debt. The Agent shall have received (i) payoff and lien termination and release agreements, in form and substance satisfactory to the Agent, from each creditor of the Borrower and its Subsidiaries with respect to Existing Debt other than Surviving Debt, and (ii) such UCC Amendments (or its equivalent), intellectual property lien releases in recordable form in all applicable jurisdictions, and other lien and mortgage release and termination agreements, evidence of release of federal and state tax liens, all in form and substance satisfactory to the Agent, as the Agent shall request, duly executed by the appropriate Person in favor of which such Liens were granted. (p) Environmental Matters. The Agent shall have received, if the Agent deems it necessary, a written report of an investigation, conducted to the Agent's satisfaction, from an environmental consultant acceptable to the Agent, as to any environmental, health or safety violations, hazards or liabilities which it deems material. The Agent shall (i) be satisfied that neither the Borrower nor any of its Subsidiaries nor any other Loan Party is subject to any present or 46 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT contingent liability deemed material by the Agent in its reasonable judgment in connection with any past or present treatment, storage, recycling, disposal or release or threatened release, at any property location regardless of whether owned or operated by the Borrower or any of its Subsidiaries or any other Loan Party, of any Materials of Environmental Concern or in connection with any Environmental Law or other health or safety laws or regulations, and that their operations taken as a whole comply in all material respects (in the Agent's reasonable judgment) with all Environmental Laws or other health or safety laws or regulations, (ii) be satisfied that neither the Borrower nor any of its Subsidiaries, nor any other Loan Party nor any property owned or operated by any such Person is the subject of any federal or state investigation evaluating whether any remedial action, involving a material expenditure (in the opinion of the Agent) is needed to respond to any release or other presence of Materials of Environmental Concern and (iii) have received a list of all of the properties operated, owned or leased by the Borrower and each of its Subsidiaries as to which Phase I environmental audit reports have been completed within ten (10) years prior to the Closing Date and have received copies of those Phase I audit reports which identify, or which recommend a subsequent Phase II investigation as to, any material environmental health or safety violations, hazards or potential liabilities relating to the properties and business of the Borrower and each of its Subsidiaries, the other Loan Parties (if applicable) and each of their Environmental Affiliates of which the Borrower or any of its Subsidiaries have knowledge. (q) Fees and Expenses. The Agent shall have received, for its account and for the account of each Lender, as applicable, all Fees and other fees and expenses due and payable hereunder and under the other Loan Documents on or before the date hereof, including, without limitation, the reasonable fees and expenses accrued through the date hereof, of Skadden, Arps, Slate, Meagher & Flom (Illinois) and any other counsel retained by the Agent. (r) Consents, Licenses, Approvals; Compliance with Laws. All consents, licenses, orders, permits, authorizations, validations, certificates, filings and approvals (collectively, "CONSENTS"), if any, required in connection with the execution, delivery and performance by the Borrower or any of its Subsidiaries, and the validity and enforceability of the Transaction Documents, or in connection with any of the Transactions, including, without limitation, all shareholder Consents and all Consents required by any federal, state, local regulatory or governmental authority including, without limitation, all Consents required pursuant to the Hart-Scott-Rodino Act, shall have been obtained or made and shall be in full force and effect and copies thereof shall in each case have been delivered to the Agent. No law or Regulation shall be applicable that could reasonably be expected to restrain, prevent or otherwise impose adverse conditions on the validity and enforceability of the Transaction Documents, or the Transactions. The Borrower shall have delivered to the Agent such evidence as the Agent shall have requested, evidencing compliance by the Borrower, its Subsidiaries and the other Loan Parties with all applicable laws, rules and regulations before and after giving effect to the Transactions (including, without limitation, all applicable corporate and securities laws and all ERISA, environmental and health and safety laws, rules and regulations). (s) Management Contracts. The Borrower shall have delivered to the Agent and each Lender copies of each written agreement that it or any of its Subsidiaries has with its officers or other members of management as requested by the Agent certified by an officer of the Borrower, and each such contract shall be satisfactory in form and substance to the Agent. (t) Franchise Agreements. The Borrower shall deliver to the Agent copies of representative forms of Franchise Agreements, which represent the various forms of all 47 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT Franchise Agreements to which the Borrower or any of its Subsidiaries as of the Closing Date is the franchisor or licensor in each case certified by the general counsel of the Borrower. (u) No Material Adverse Change; No Default. No event, act or condition shall have occurred after January 31, 2003, that has had a Material Adverse Effect, or that would make the facts and other information represented by the Borrower or the other Loan Parties to the Agent prior to the Closing Date materially misleading. No Default or Event of Default shall have occurred and be continuing or shall result from the consummation of the Transactions on the Closing Date. (v) Management/Ownership. The composition of the management of the Borrower and its strategic plans shall be satisfactory to the Agent. (w) No Litigation. There shall not be any action, suit, investigation, arbitration, litigation or proceeding pending or threatened against the Borrower or any of its Subsidiaries, before any court, arbitrator or governmental or administrative body, agency or official that could reasonably be expected to have a material adverse effect on the Transactions and the Redemption Transactions, the Borrower or the other Loan Parties. (x) [Intentionally Omitted]. (y) Mortgage Amendments. The Borrower shall have executed and delivered to the Agent, and cause its Subsidiaries to execute and deliver to the Agent, such amendments to the Mortgages as the Agent shall reasonably request. (z) Financial Statements. The Agent shall have received and be satisfied with (i) audited financial statements of the Borrower and its Subsidiaries for each of the last three fiscal years, including balance sheets, income and cash flow statements, audited by independent public accountants of recognized national standing and prepared in conformity with GAAP, together with such accountants' report thereon, (ii) unaudited interim financial statements of the Borrower and its subsidiaries for the fiscal periods most recently ended prior to the Closing Date (including without limitation Retail Period financial statements for any such period), (iii) a pro forma balance sheet of the Borrower and the other Loan Parties as of the Closing Date after giving effect to the Transactions and the Redemption Transactions, and (iv) projected financial statements (including balance sheets, income and cash flow statements) of the Borrower and the other Loan Parties for the seven-year period after the Closing Date, all of the foregoing to be substantially consistent with any financial statements for the same periods delivered to the Agent prior to September 26, 2003 and, in the case of any such financial statements for subsequent periods, substantially consistent with any projected financial statements for such periods delivered to the Agent prior to September 26, 2003. (aa) Additional Matters. The Agent shall have received such other certificates, opinions, documents and instruments relating to the Transactions as may have been reasonably requested by the Agent or any Lender, and all corporate and other proceedings and all other documents (including, without limitation, all documents referred to herein and not appearing as exhibits hereto) and all legal matters in connection with the Transactions shall be satisfactory in form and substance to the Lenders. Section 4.2 Conditions Precedent to All Loans. The obligation of each Lender to make any Loan at any time on or after the date hereof and of the Issuing Bank to issue any Letter of 48 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT Credit is subject to the satisfaction on the date such Loan is made or such Letter of Credit is Issued of the following conditions precedent: (a) Representations and Warranties. The representations and warranties contained herein and in the other Loan Documents (other than representations and warranties which expressly speak only as of a different date) shall be true and correct in all material respects on such date both before and after giving effect to the making of such Loans or the Issuance of such Letter of Credit. (b) No Default or Event of Default. No Default or Event of Default shall have occurred and be continuing on such date either before or after giving effect to the making of such Loans or the Issuance of such Letter of Credit. (c) No Injunction. No law or regulation shall have been adopted, no order, judgment or decree of any governmental authority shall have been issued, and no litigation shall be pending or threatened, which in the reasonable judgment of the Lenders would enjoin, prohibit or restrain, or impose or result in the imposition of any material adverse condition upon, the making or repayment of the Loans, the Issuance of such Letter of Credit or the reimbursement of any amounts with respect thereto or the consummation of the Transactions. (d) No Material Adverse Change. No event, act or condition shall have occurred after January 31, 2003 which, in the judgment of the Required Lenders, has had or could have a Material Adverse Effect. (e) Notice of Borrowing or Issuance. The Agent or the Issuing Bank shall have received a fully executed Notice of Borrowing or L/C Application, as appropriate, in respect of the Loans to be made or Letters of Credit to be Issued, respectively, on such date. The acceptance of the proceeds of each Loan and of the Issuance of each Letter of Credit shall constitute a representation and warranty by the Borrower to the Agent and each of the Lenders that all of the conditions required to be satisfied under this Section 4 in connection with the making of such Loan or the Issuance of such Letter of Credit have been satisfied. All of the Notes, certificates, agreements, legal opinions and other documents and papers referred to in this Section 4, unless otherwise specified, shall be delivered to the Agent for the account of each of the Lenders and, except for the Notes, in sufficient counterparts for each of the Lenders, and shall be satisfactory in form and substance to the Agent and each Lender in its sole discretion. SECTION 5. REPRESENTATIONS AND WARRANTIES. In order to induce the Lenders to enter into this Agreement and to make the Loans and to induce the Issuing Bank to issue Letters of Credit, the Borrower makes the following representations and warranties, which shall survive the execution and delivery of this Agreement and the Notes and the making of the Loans and the Issuance of the Letters of Credit: Section 5.1 Corporate Status. Each Loan Party (i) is duly organized and validly existing and in good standing under the laws of the jurisdiction of its organization, (ii) has the corporate or other requisite power and authority to own its property and assets and to transact the 49 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT business in which it is engaged or presently proposes to engage and (iii) has duly qualified and is authorized to do business and is in good standing as a foreign entity in every jurisdiction in which it owns or leases real property or in which the nature of its business requires it to be so qualified, except in the case of clause (iii), where the failure to so qualify, individually or in the aggregate, could not have a Material Adverse Effect. Section 5.2 Corporate Power and Authority. Each Loan Party has the corporate or other requisite power and authority to execute, deliver and carry out the terms and provisions of each of the Transaction Documents to which it is a party and has taken all necessary corporate or other requisite action to authorize the execution, delivery and performance by it of such Transaction Documents. Each Loan Party has duly executed and delivered each such Transaction Document, and each such Transaction Document constitutes its legal, valid and binding obligation, enforceable in accordance with its terms. Section 5.3 No Violation. Neither the execution, delivery or performance by any Loan Party of the Transaction Documents to which it is a party, nor compliance by it with the terms and provisions thereof nor the consummation of the Transactions, (i) will contravene any applicable provision of any law, statute, rule, regulation, order, writ, injunction or decree of any court or governmental instrumentality or (ii) will conflict or be inconsistent with or result in any breach of, any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien (except pursuant to the Security Documents) upon any of the property or assets of any Loan Party pursuant to the terms of, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which such Loan Party is a party or by which it or any of its property or assets is bound or to which it may be subject, or (iii) will violate any provision of its certificate of incorporation, by-laws, partnership agreement or limited liability company agreement (or other relevant organizational documents) of any Loan Party. Section 5.4 Litigation. There are no actions, suits, governmental investigations, arbitrations or proceedings pending or threatened (i) with respect to any of the Transactions or the Transaction Documents or (ii) that could, individually or in the aggregate, result in a Material Adverse Effect. Section 5.5 Financial Statements; Financial Condition; etc. Each of the financial statements and financial certificates delivered pursuant to Section 4.1(z) were prepared in accordance with GAAP consistently applied and fairly present the financial condition and the results of operations of the entities covered thereby on the dates and for the periods covered thereby, except as disclosed in the notes thereto and, with respect to interim financial statements, subject to normally recurring year-end adjustments. No Loan Party has any material liability (contingent or otherwise) not reflected in such financial statements or in the notes thereto. Section 5.6 Solvency. On the Closing Date and at all times after the Closing Date, after giving effect to the Transactions, each Loan Party is and will be Solvent. Section 5.7 Projections. The projections delivered to the Lenders dated September 26, 2003, were prepared on the basis of the assumptions accompanying them, and such projections and assumptions, as of the date of preparation thereof and as of the Closing Date, are reasonable and represent the Borrower's good faith estimate of its future financial performance, it being understood that nothing contained in this Section 5.7 shall constitute a representation or warranty that such future financial performance or results of operations will in fact be achieved. 50 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT Section 5.8 Material Adverse Change. Since January 31, 2003, there has occurred no event, act, condition or liability which has had, or could have, a Material Adverse Effect. Section 5.9 Use of Proceeds; Margin Regulations. All proceeds of each Loan, and each Letter of Credit, will be used by the Borrower only in accordance with the provisions of Section 2.20. No part of the proceeds of any Loan, or any Letter of Credit, will be used by the Borrower to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock. Neither the making of any Loan, nor the Issuance of any Letter of Credit, nor the use of the proceeds thereof will violate or be inconsistent with the provisions of Regulations T, U or X of the Federal Reserve Board. Following the application of the proceeds of each Loan, less than 25% of the value (as determined by any reasonable method) of the assets of the Borrower and its Subsidiaries (on a consolidated and an unconsolidated basis) have been and will continue to be, represented by Margin Stock. Section 5.10 Governmental and Other Approvals. No order, consent, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, any governmental or public body or authority, or any subdivision thereof, or any other Person, is required to authorize, or is required in connection with (i) the execution, delivery and performance of any Transaction Document or the consummation of any of the Transactions or (ii) the legality, validity, binding effect or enforceability of any Transaction Document or the exercise by the Agent or any Lender of any of its rights under any Loan Document, except those listed on Schedule 5.10 that have already been duly made or obtained and remain in full force and effect and except for the filing of financing statements pursuant to the Security Documents. All applicable waiting periods including, without limitation, those under the Hart-Scott-Rodino Act in connection with each Permitted Acquisition and the other transactions contemplated thereby have expired without any action having been taken by any competent authority restraining, preventing or imposing materially adverse conditions upon the rights of the Loan Parties or their Subsidiaries freely to transfer or otherwise dispose of, or to create any Lien on, any properties now owned or hereafter acquired by any of them. Section 5.11 Security Interests and Liens. The Security Documents create, as security for the Obligations, valid and enforceable security interests in and Liens on all of the Collateral, in favor of the Agent for the ratable benefit of the Lenders, and subject to no other Liens (other than Liens expressly permitted by Section 7.3 hereof). Upon the satisfaction of the conditions precedent described in Sections 4.1(k) and 4.1(l), such security interests in and Liens on the Collateral shall be superior to and prior to the rights of all third parties (except as disclosed on Schedule 5.11), and no further recordings or filings are or will be required in connection with the creation, perfection or enforcement of such security interests and Liens, other than the filing of continuation statements in accordance with applicable law. Section 5.12 Tax Returns and Payments. Each Loan Party has filed all tax returns required to be filed by it and has paid all taxes and assessments payable by it which have become due, other than (i) those not yet delinquent or those that are reserved against in accordance with GAAP which are being diligently contested in good faith by appropriate proceedings or (ii) where the failure to so pay has not resulted and could not reasonably be expected to result in liability in excess of $1,000,000 in the aggregate for all of the Loan Parties. Section 5.13 ERISA. Neither the Borrower nor any of its Subsidiaries have any Plans other than those listed on Schedule 5.13. No accumulated funding deficiency (as defined in Section 412 of the Code or Section 302 of ERISA) or Reportable Event has occurred with respect to 51 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT any Plan. There are no Unfunded Benefit Liabilities under any Plan except as notified to the Agent pursuant to Section 6.1(h)(i)(E). The Borrower and each member of its ERISA Controlled Group have complied with the requirements of Section 515 of ERISA with respect to each Multiemployer Plan and is not in "default" (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan. The aggregate potential total withdrawal liability, and the aggregate potential annual withdrawal liability payments of the Borrower and the members of its ERISA Controlled Group as determined in accordance with Title IV of ERISA as if the Borrower and the members of its ERISA Controlled Group had completely withdrawn from all Multiemployer Plans is not greater than $2,000,000. To the best knowledge of the Borrower and each member of its ERISA Controlled Group, no Multiemployer Plan is or is likely to be in reorganization (as defined in Section 4241 of ERISA or Section 418 of the Code) or is insolvent (as defined in Section 4245 of ERISA). No material liability to the PBGC (other than required premium payments), the Internal Revenue Service, any Plan or any trust established under Title IV of ERISA has been, or is expected by the Borrower or any member of its ERISA Controlled Group to be, incurred by the Borrower or any member of its ERISA Controlled Group. Neither the Borrower nor any member of its ERISA Controlled Group has any contingent liability with respect to any post-retirement benefit under any "welfare plan" (as defined in Section 3(1) of ERISA), other than liability for continuation coverage under Part 6 of Title I of ERISA and other than contingent liabilities under Hardee's Retiree Medical Insurance Plan, and the aggregate present value of all post-retirement benefit liabilities of the Borrower and its Subsidiaries under Hardee's Retiree Medical Insurance Plan as of the Closing Date does not exceed $4,800,000. No lien under Section 412(n) of the Code or 302(f) of ERISA or requirement to provide security under Section 401(a)(29) of the Code or Section 307 of ERISA has been or is reasonably expected by the Borrower or any member of its ERISA Controlled Group to be imposed on the assets of the Borrower or any member of its ERISA Controlled Group. Section 5.14 Investment Company Act; Public Utility Holding Company Act. No Loan Party is (x) an "investment company" or a company "controlled" by an "investment company," within the meaning of the Investment Company Act of 1940, as amended, (y) a "holding company" or a "subsidiary company" of a "holding company" or an "affiliate" of either a "holding company" or a "subsidiary company" within the meaning of the Public Utility Holding Company Act of 1935, as amended, or (z) subject to any other federal or state law or regulation which purports to restrict or regulate its ability to borrow money. Section 5.15 Dissolved Subsidiaries; Previously Material Subsidiaries, etc. Schedule 5.15 sets forth a list of previous Subsidiaries that have been dissolved since January 31, 2002 (the "DISSOLVED ENTITIES"). All of the assets and property (including, without limitation, all real property for which title was previously vested in Leased Restaurant Partners) of each Dissolved Entity have been transferred to the Borrower or a Subsidiary of the Borrower party to the Subsidiary Security Agreement and Guaranty. In addition, substantially all of the assets and property of each of Carl's Jr. Media Fund, Inc., a California corporation, Carl's Jr. National Production Fund, Inc., a California corporation, and Hardee's Employees Hurricane Fund, Inc., a California corporation has been transferred to the Borrower or a Subsidiary of the Borrower party to the Subsidiary Security Agreement and Guaranty. None of Carl's Jr. Media Fund, Inc., a California corporation, Carl's Jr. National Production Fund, Inc., a California corporation, and Hardee's Employees Hurricane Fund, Inc., a California corporation has any obligation as a "Subsidiary Guarantor" under and as defined in the New Subordinated Note Indenture. Section 5.16 Representations and Warranties in Subordinated Debt Documents. All representations and warranties made by any Loan Party in the Subordinated Debt Documents, 52 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT and, to the best of the Borrower's knowledge, all representations made by each other Person in such Subordinated Debt Documents, are true and correct in all material respects. None of such representations and warranties is inconsistent in any material respect with the representations and warranties of any Loan Party made herein or in any other Loan Document. Section 5.17 True and Complete Disclosure. All factual information (taken as a whole) furnished by or on behalf of any Loan Party in writing to the Agent or any Lender on or prior to the Closing Date, for purposes of or in connection with this Agreement or any of the Transactions is, and all other such factual information (taken as a whole) hereafter furnished by or on behalf of any Loan Party in writing to the Agent or any Lender will be, true and accurate in all material respects on the date as of which such information is dated or furnished and not incomplete by omitting to state any material fact necessary to make such information (taken as a whole) not misleading at such time. As of the Closing Date, there are no facts, events or conditions known to any Loan Party which, individually or in the aggregate, have or could be expected to have a Material Adverse Effect. Section 5.18 Corporate Structure; Capitalization. Schedule 5.18 hereto sets forth as of the Closing Date, the jurisdiction of incorporation or organization of the Borrower, each of its Subsidiaries, each other Loan Party and each Subsidiary of such Loan Party, the number of authorized and issued shares of capital stock or other outstanding equity interests of the Borrower and each of its Subsidiaries and of each other Loan Party and each Subsidiary of such Loan Party, the par value thereof and (other than with respect to the Borrower) the registered owner(s) thereof. All of such stock has been duly and validly issued and is fully paid and non-assessable and (except for the stock of the Borrower) is, together with all such other equity interests, owned by such Loan Party free and clear of all Liens. Except for the Convertible Subordinated Notes or as disclosed in Schedule 5.18, neither any Loan Party nor any such Subsidiary has outstanding any securities convertible into or exchangeable for its capital stock or other outstanding equity interest nor does any Loan Party or any such Subsidiary have outstanding any rights to subscribe for or to purchase, or any options for the purchase of, warrants or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, its capital stock or other outstanding equity interest. Section 5.19 Environmental Matters. (a) (i) Each of the Loan Parties and their Environmental Affiliates are in compliance with all applicable Environmental Laws except where noncompliance, individually or in the aggregate, could not have a Material Adverse Effect, (ii) each of the Loan Parties and their Environmental Affiliates have all Environmental Approvals required to operate their businesses as presently conducted or as reasonably anticipated to be conducted except where the failure to obtain any such Environmental Approval, individually or in the aggregate, could not have a Material Adverse Effect, (iii) none of the Loan Parties nor any of their Environmental Affiliates has received any communication (written or oral), whether from a governmental authority, citizens group, employee or otherwise, that alleges that such Loan Party or Environmental Affiliate is not in full compliance with all Environmental Laws and where such noncompliance, individually or in the aggregate, could have a Material Adverse Effect, and (iv) to the Borrower's best knowledge after due inquiry, there are no circumstances that may prevent or interfere with such full compliance in the future except where such noncompliance, individually or in the aggregate, could not have a Material Adverse Effect. 53 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT (b) There is no Environmental Claim pending or threatened against any Loan Party or its Environmental Affiliate, which, individually or in the aggregate, could have a Material Adverse Effect. (c) There are no past or present actions, activities, circumstances, conditions, events or incidents, including, without limitation, the release, emission, discharge or disposal of any Material of Environmental Concern, that could form the basis of any Environmental Claims against any of the Loan Parties or any of their Environmental Affiliates, which Environmental Claims, individually or in the aggregate, could have a Material Adverse Effect. (d) Schedule 5.19 sets forth a list of all of the properties operated, owned or leased by the Borrower and each of its Subsidiaries as to which Phase I environmental audit reports have been completed as of the Closing Date and the Borrower has delivered copies of those Phase I audit reports which identify, or which recommend a subsequent Phase II investigation as to, any material environmental, health or safety violations, hazards or potential liabilities relating to the properties and business of the Borrower, each of its Subsidiaries, the other Loan Parties (if applicable) and each of their Environmental Affiliates of which the Borrower or any of its Subsidiaries have knowledge. (e) The Borrower has caused to be completed Phase I audit reports with respect to each property owned, operated or leased by the Borrower or any of its Subsidiaries, upon which a business or operation other than a Restaurant has been conducted at any time during the six (6) years immediately preceding the Closing Date and with respect to which a Phase I audit report had not been completed in the eleven (11) year period immediately preceding the Closing Date. The Borrower has delivered all such Phase I audit reports to the Agent which were obtained pursuant to the preceding sentence which identified, or which recommended a subsequent Phase II investigation as to, any material environmental, health or safety violations, hazards or potential liabilities relating to the properties and business of any Loan Party or any of their Environmental Affiliates. Section 5.20 Intellectual Property. Each of the Loan Parties owns or has the valid right to use all patents, trademarks, service marks, domain names, trade names, copyrights, trade secrets and other intangible rights (the "INTELLECTUAL PROPERTY"), which are used in or necessary for the operation of its business, free and clear of all Liens. Schedule V to the Borrower Security Agreement and Schedule V to the Subsidiary Security Agreement together set forth a complete and accurate list thereof with respect to each Loan Party as of the Closing Date, of all applications and registrations for Intellectual Property owned by such Loan Party and all license agreements to or from third parties to which such Loan Party is a party or is otherwise bound. Each Loan Party is the record owner of all registrations and applications which it owns and all such registrations for Intellectual Property are valid and enforceable. To the best of each Loan Party's knowledge, no service, product, process, component or other material presently offered, sold or employed by any Loan Party infringes upon or dilutes any Intellectual Property of any other Person, and no such claims have been made by any other Person against any Loan Party. There is no pending or, to the best of each Loan Party's knowledge, threatened claim or litigation against or affecting any Loan Party contesting its rights to own or use any Intellectual Property or the validity or enforceability thereof. Section 5.21 Ownership of Property; Restaurants. Schedule 5.21 sets forth all the real property owned or leased by the Loan Parties as of the Closing Date and identifies the street address, the current owner (and current record owner, if different) and whether such property is 54 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT leased or owned. The Loan Parties have good and marketable fee simple title to or valid leasehold interests in all of such real property and good title to all of their personal property subject to no Lien of any kind except Liens permitted hereby. Schedule 5.21 also sets forth a list of each Restaurant and the street address thereof which is owned or operated as of the Closing Date by any Loan Party or any of its Subsidiaries. The Loan Parties enjoy peaceful and undisturbed possession under all of their respective leases. Section 5.22 No Default. No Loan Party is in default under or with respect to any Transaction Document or any other agreement, instrument or undertaking to which it is a party or by which it or any of its property is bound in any respect which could result in a Material Adverse Effect. No Default or Event of Default exists. Section 5.23 Licenses, etc. The Loan Parties have obtained and hold in full force and effect, all franchises, licenses, permits, certificates, authorizations, qualifications, accreditations, easements, rights of way and other rights, consents and approvals which are necessary for the operation of their respective businesses as presently conducted. Section 5.24 Compliance with Law. Each Loan Party is in compliance with all applicable laws, rules, regulations, orders, judgments, writs and decrees except where such non-compliance, individually or in the aggregate, could not have a Material Adverse Effect. Section 5.25 No Burdensome Restrictions. No Loan Party is a party to any agreement or instrument or subject to any other obligation or any charter or corporate restriction or any provision of any applicable law, rule or regulation which, individually or in the aggregate, could have a Material Adverse Effect. Section 5.26 Brokers' Fees. None of the Loan Parties has any obligation to any Person in respect of any finder's, brokers, investment banking or other similar fee in connection with any of the Transactions. Section 5.27 Labor Matters. Except as set forth on Schedule 5.27, there are no collective bargaining agreements or Multiemployer Plans covering the employees of the Borrower, any of its Subsidiaries or any of the other Loan Parties, and none of such Persons has suffered any strikes, walkouts, work stoppages or other material labor difficulty within the last five years. No proceedings are pending against the Borrower or any of its Subsidiaries before the INS which could reasonably be expected to have a Material Adverse Effect. Section 5.28 Indebtedness of the Borrower and Its Subsidiaries. Set forth on Schedule 7.2 hereto is a complete and accurate list of all Indebtedness of the Borrower and each of its Subsidiaries existing as of the Closing Date, showing the principal amount outstanding thereunder as of the Closing Date. As of the Closing Date, the Borrower has redeemed or repurchased Convertible Subordinated Notes for an aggregate purchase price of $101,274,666.67 with the proceeds from the issuance of the New Convertible Subordinated Notes, and the par value of all Convertible Subordinated Notes so redeemed or repurchased is $100,000,000 as of the Closing Date. Section 5.29 Other Agreements. Schedule 5.29 sets forth a complete and accurate list as of the Closing Date of (i) all joint venture and partnership agreements to which the Borrower or any of its Subsidiaries is a party, and (ii) all covenants not to compete restricting the Borrower or 55 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT any of its Subsidiaries to which the Borrower or any of its Subsidiaries is a party or by which the Borrower or any of its Subsidiaries is bound. Section 5.30 Immaterial Subsidiaries. The Subsidiaries of the Borrower designated as Immaterial Subsidiaries on the Closing Date are set forth on Schedule 5.30. The assets of each Subsidiary of the Borrower designated as an Immaterial Subsidiary by the Borrower do not exceed $1,500,000 and the assets of all of the Subsidiaries of the Borrower designated as Immaterial Subsidiaries by the Borrower do not in the aggregate exceed $10,000,000, in each case as determined in accordance with GAAP. Section 5.31 Franchise Agreements and Franchisees. None of the Franchise Agreements to which the Borrower or any of its Subsidiaries is a party as a franchisor or a licensor prohibit or restrict in any manner the assignment of such Franchise Agreement to the Agent for the benefit of the Secured Parties or require any consent of any Person in connection with any such assignment. Schedule 5.31 sets forth a complete and accurate list of each Person who is a franchisee or licensee of the Borrower or any of its Subsidiaries as of the Closing Date. SECTION 6. AFFIRMATIVE COVENANTS. The Borrower covenants and agrees that until all of the Commitments of each of the Lenders have terminated, each of the Letters of Credit has expired or been terminated, and the Obligations are paid in full: Section 6.1 Information Covenants. The Borrower will furnish to the Agent, with sufficient copies for each Lender: (a) Quarterly Financial Statements. Within 45 days after the close of each of the first three (3) quarterly accounting periods in each fiscal year of the Borrower, the consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such quarterly period and the related consolidated statements of income and cash flow for such quarterly period and for the elapsed portion of the fiscal year ended with the last day of such quarterly period, and in each case setting forth comparative figures for the related periods in the prior fiscal year. (b) Annual Financial Statements. Within 90 days after the close of each fiscal year of the Borrower, the consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year and the related consolidated statements of income and cash flow for such fiscal year, setting forth comparative figures for the preceding fiscal year and, with respect to such consolidated financial statements, certified without qualification by KPMG LLP or other independent certified public accountants of recognized national standing reasonably acceptable to the Agent and the Required Lenders and indicating that its audit of the consolidated financial statements of the Borrower was conducted in accordance with generally accepted auditing standards. (c) Management Letters. Promptly after the Borrower's receipt thereof, a copy of any "management letter" or other material report received by the Borrower from its certified public accountants. (d) Budgets. Within 60 days after the first day of each fiscal year of the Borrower (including the fiscal year 2005 commencing on January 27, 2004), a budget and financial forecast of results of operations and sources and uses of cash (in form reasonably satisfactory to the 56 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT Agent) prepared by the Borrower for such fiscal year, accompanied by a written statement of the assumptions used in connection therewith, together with a certificate of the chief financial officer of the Borrower to the effect that such budget and financial forecast and, to the best of such officer's knowledge, assumptions, are reasonable and were prepared in good faith. The financial statements required to be delivered pursuant to clauses (a) and (b) above shall be accompanied by a comparison of the actual financial results set forth in such financial statements to those contained in the forecasts delivered pursuant to this clause (d) together with an explanation of any material variations from the results anticipated in such forecasts. (e) Officer's Certificates. At the time of the delivery of the financial statements under clauses (a) and (b) above, a certificate of the chief financial officer of the Borrower which certifies (x) that such financial statements fairly present the financial condition and the results of operations of the Borrower and its Subsidiaries on the dates and for the periods indicated, subject, in the case of interim financial statements, to normally recurring year-end adjustments, and that such financial statements were prepared in accordance with GAAP and (y) that such officer has reviewed the terms of the Loan Documents and has made, or caused to be made under his or her supervision, a review in reasonable detail of the business and condition of the Borrower and its Subsidiaries during the accounting period covered by such financial statements, and that as a result of such review such officer has concluded that no Default or Event of Default has occurred during the period commencing at the beginning of the accounting period covered by the financial statements accompanied by such certificate and ending on the date of such certificate or, if any Default or Event of Default has occurred, specifying the nature and extent thereof and, if continuing, the action the Borrower proposes to take in respect thereof (the "COMPLIANCE CERTIFICATE"). Such certificate shall set forth the calculations required to establish whether the Borrower was in compliance with the provisions of Sections 6.11, 6.12, 7.1, 7.2, 7.3, 7.7, 7.8 and 7.18 during and as at the end of the accounting period covered by the financial statements accompanied by such certificate. (f) Notice of Default. Promptly and in any event within one Business Day after any Loan Party obtains knowledge thereof, notice (i) of the occurrence of any Default or Event of Default together with a certificate of an Authorized Officer of the Borrower specifying the nature and period of existence thereof and the Borrower's proposed response thereto, (ii) that any holder of Indebtedness of the Borrower or any Subsidiary of the Borrower having an outstanding principal balance exceeding $5,000,000 has given any written notice to the Borrower or any Subsidiary of the Borrower or taken any other action with respect to a claimed default or event or condition of the type referred to in Section 8.1(d) specifying (A) the nature and period of existence of any such claimed default, condition or event, (B) the notice given or action taken by such Person in connection therewith, and (C) the Borrower's proposed response thereto and (iii) of the occurrence of any default or event of default under any Subordinated Debt Document specifying (A) the nature and period of existence of any such default, condition or event, (B) any notice given or action taken by any holder or trustee thereunder in connection therewith, and (C) the Borrower's proposed response thereto. (g) Notice of Litigation. Promptly after (i) the occurrence thereof, notice of the institution of, or any material development in, any action, suit, litigation, proceeding, investigation or arbitration, before any court or arbitrator or any governmental or administrative body, agency or official, against the Borrower, any of its Subsidiaries or any material property of any thereof which, individually or in the aggregate, could have a Material Adverse Effect, or (ii) actual knowledge thereof, notice of the threat of any such action, suit, proceeding, investigation or arbitration. 57 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT (h) ERISA. (i) As soon as possible and in any event within 10 days after the Borrower or any member of its ERISA Controlled Group knows, or has reason to know, that: (A) any Termination Event with respect to a Plan has occurred or will occur, or (B) any condition exists with respect to a Plan which presents a material risk of termination of the Plan or imposition of an excise tax or other liability on the Borrower or any member of its ERISA Controlled Group, or (C) the Borrower or any member of its ERISA Controlled Group has applied for a waiver of the minimum funding standard under Section 412 of the Code or Section 302 of ERISA, or (D) the Borrower or any member of its ERISA Controlled Group has engaged in a "prohibited transaction," as defined in Section 4975 of the Code or as described in Section 406 of ERISA, that is not exempt under Section 4975 of the Code and Section 408 of ERISA, or (E) the aggregate present value of the Unfunded Benefit Liabilities under all Plans has in any year increased by $500,000 or to an amount in excess of $2,000,000, or (F) any condition exists with respect to a Multiemployer Plan which presents a material risk of a partial or complete withdrawal (as described in Section 4203 or 4205 of ERISA) by the Borrower or any member of its ERISA Controlled Group from a Multiemployer Plan, or (G) the Borrower or any member of its ERISA Controlled Group is in "default" (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan, or (H) a Multiemployer Plan is in "reorganization" (as defined in Section 418 of the Code or Section 4241 of ERISA) or is "insolvent" (as defined in Section 4245 of ERISA), or (I) the potential withdrawal liability (as determined in accordance with Title IV of ERISA) of the Borrower and the members of its ERISA Controlled Group with respect to all Multiemployer Plans has in any year increased by $500,000 or to an amount in excess of $2,000,000, or (J) there is an action brought against the Borrower or any member of its ERISA Controlled Group under Section 502 of ERISA with respect to its failure to comply with Section 515 of ERISA, a certificate of the president or chief financial officer of the Borrower setting forth the details of each of the events described in clauses (A) through (J) above as applicable and the action which the 58 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT Borrower or the applicable member of its ERISA Controlled Group proposes to take with respect thereto, together with a copy of any notice or filing from the PBGC or which may be required by the PBGC or other agency of the United States government with respect to each of the events described in clauses (A) through (J) above, as applicable. (ii) As soon as possible and in any event within two Business Days after the receipt by the Borrower or any member of its ERISA Controlled Group of a demand letter from the PBGC notifying the Borrower or such member of its ERISA Controlled Group of its final decision finding liability and the date by which such liability must be paid, a copy of such letter, together with a certificate of the president or chief financial officer of the Borrower setting forth the action which the Borrower or such member of its ERISA Controlled Group proposes to take with respect thereto. (i) SEC Filings. Promptly upon transmission thereof, copies of all regular and periodic financial information, proxy materials and other information, regular, periodic and special reports and registration statements, if any, which any Loan Party shall file with the Securities and Exchange Commission or any governmental agencies substituted therefore or which any Loan Party shall send to its stockholders. (j) Environmental. Promptly and in any event within two Business Days after the existence of any of the following conditions, a certificate of an Authorized Officer of the Borrower specifying in detail the nature of such condition and the applicable Loan Party's or Environmental Affiliate's proposed response thereto: (i) the receipt by any Loan Party or any of its Environmental Affiliates of any communication (written or oral), whether from a governmental authority, citizens group, employee or otherwise, that alleges that such Loan Party or Environmental Affiliate is not in compliance with applicable Environmental Laws where such noncompliance, individually or in the aggregate, could have a Material Adverse Effect, (ii) any Loan Party or any of its Environmental Affiliates shall obtain actual knowledge that there exists any Environmental Claim pending or threatened against such Loan Party or such Environmental Affiliate, which, individually or in the aggregate, could have a Material Adverse Effect, or (iii) any release, emission, discharge or disposal of any Material of Environmental Concern that could form the basis of any Environmental Claim against any Loan Party or any of their Environmental Affiliates, which Environmental Claim, individually or in the aggregate could have a Material Adverse Effect. (k) Creditor Reports. Promptly after the furnishing thereof, copies of any statement or report furnished to any other holder of the securities of any Loan Party or of any of its Subsidiaries pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required to be furnished to the Lenders pursuant to any other clause of this Section 6.1. (l) Officer's Certificates and Financial Statements relating to Retail Periods. Within 45 days after the close of each Retail Period of the Borrower, a certificate of the chief financial officer of the Borrower setting forth the calculations required to establish whether the Borrower was in compliance with the provisions of Section 7.1(c) during and as at the end of such Retail Period (including, without limitation, calculations of Consolidated EBITDA, consolidated depreciation and consolidated amortization of the Borrower and its Subsidiaries for such Retail Period), which certificate shall be accompanied by (i) consolidated and consolidating (by business units) statements of income for the Borrower and its Subsidiaries for such Retail Period and for the elapsed portion of the fiscal year ended with the last day of such Retail Period, (ii) consolidated balance sheets of the Borrower and its Subsidiaries as at the end of such Retail Period and the related 59 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT consolidated statements of cash flow for such Retail Period and for the elapsed portion of the fiscal year ended with the last day of such Retail Period, (iii) comparative figures for the related periods in the prior fiscal year for the statement of income required to be delivered pursuant to this subsection (l) for such Retail Period and (iv) comparative figures for the corresponding financial results contained in the budget required to be delivered pursuant to Section 6.1(d) and prior year for the statement of income. In addition, the Borrower agrees to furnish the foregoing information within the time period specified above with respect to its Retail Periods ended September 8, 2003, October 6, 2003 and November 3, 2003. (m) Other Information. From time to time, such other information or documents (financial or otherwise) as any Lender may reasonably request. Section 6.2 Books, Records and Inspections. The Borrower shall, and shall cause each of its Subsidiaries to, keep proper books of record and account in which full, true and correct entries in conformity with GAAP and all requirements of law shall be made of all dealings and transactions in relation to its business and activities. The Borrower shall, and shall cause each of its Subsidiaries to, permit the officers and designated representatives of any Lender or the Financial Advisor to visit and inspect any of the properties of the Borrower or any of its Subsidiaries, and to examine the books of record and account of the Borrower or any of its Subsidiaries and discuss the affairs, finances and accounts of the Borrower or any of its Subsidiaries, with, and be advised as to the same by, its and their officers and independent accountants, all upon reasonable notice and at such reasonable times as such Lender or, in the case of the Financial Advisor, the Agent may desire; PROVIDED that no such prior notice shall be required if an Event of Default has occurred and is continuing. Section 6.3 Maintenance of Insurance. The Borrower shall, and shall cause each of its Subsidiaries to, (a) maintain with financially sound and reputable insurance companies insurance on itself and its properties (including all real properties leased or owned by them)in at least such amounts and against at least such risks as are customarily insured against in the same general area by companies engaged in the same or a similar business similarly situated, which insurance shall in any event not provide for materially less coverage than the insurance in effect on the Closing Date and shall name the Agent for the benefit of the Lenders as an additional insured or loss payee, as applicable, and (b) furnish to each Lender from time to time, upon written request, the policies under which such insurance is issued, certificates of insurance and such other information relating to such insurance as such Lender may request. Section 6.4 Taxes. (a) The Borrower, and shall cause each of its Subsidiaries to, timely file with the appropriate governmental authorities all required tax returns, tax reports, and information statements relating to Taxes, and all such tax returns, tax reports and information statements shall be true, correct and complete in all material respects when filed. The Borrower shall pay or cause to be paid, and shall cause each of its Subsidiaries to pay or cause to be paid, when due, all taxes, charges and assessments and all other lawful claims required to be paid by the Borrower or such Subsidiaries, except as contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves have been established with respect thereto in accordance with GAAP. 60 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT (b) The Borrower shall not, and shall not permit any of its Subsidiaries to, file or consent to the filing of any consolidated tax return with any Person (other than the Borrower and its Subsidiaries). Section 6.5 Corporate Franchises. Except as permitted by Section 7.4 below, the Borrower shall, and shall cause each of its Subsidiaries to, do or cause to be done, all things necessary to preserve and keep in full force and effect its existence and its patents, trademarks, servicemarks, tradenames, copyrights, franchises, licenses, permits, certificates, authorizations, qualifications, accreditations, easements, rights of way and other rights, consents and approvals except where the failure to so preserve any of the foregoing (other than existence) could not, individually or in the aggregate, result in a Material Adverse Effect. Section 6.6 Compliance with Law. The Borrower shall, and shall cause each of its Subsidiaries to, comply in all material respects with all applicable laws, rules, statutes, regulations, decrees and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of their business and the ownership of their property, including, without limitation, ERISA and all Environmental Laws. Section 6.7 Performance of Obligations. The Borrower shall, and shall cause each of its Subsidiaries to, perform all of its obligations under the terms of each mortgage, indenture, security agreement, debt instrument, lease, undertaking and contract by which it or any of its properties is bound or to which it is a party, except where the failure to perform such obligations individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect. Section 6.8 Maintenance of Properties. The Borrower shall, and shall cause each of its Subsidiaries to, ensure that its respective properties useful in its respective business are kept in good repair, working order and condition, normal wear and tear excepted. Section 6.9 Compliance with Terms of Leaseholds. The Borrower shall and shall cause each of its Subsidiaries to (a) make all payments and otherwise perform all obligations in respect of all leases of the Borrower and each of its Subsidiaries of real property, (b) keep all such leases that are useful or material in the conduct of the business of the Borrower and its Subsidiaries (such useful or material leases are hereinafter referred to as the "MATERIAL LEASES") in full force and effect, (c) not allow such Material Leases to lapse or be terminated or any rights to renew such leases to be forfeited or cancelled, and (d) notify the Agent of any default by any party with respect to such Material Leases and cooperate with the Agent in all respects to cure any such default. Section 6.10 Compliance with Environmental Laws. The Borrower shall, and shall cause each of its Subsidiaries and all lessees and other Persons occupying its properties to (a) comply in all material respects, with all Environmental Laws and Environmental Approvals applicable to its respective operations and properties; (b) obtain and renew all Environmental Approvals necessary for its respective operations and properties; and (c) conduct any investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other action necessary to remove and clean up all Materials of Environmental Concern from any of its respective properties, in accordance with the requirements of all Environmental Laws; PROVIDED, HOWEVER, that neither the Borrower nor any of its Subsidiaries shall be required to undertake any such cleanup, removal, remedial or other action to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances, unless the Borrower or any of its Subsidiaries is subject to an order issued by any governmental authority requiring the 61 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT Borrower or such Subsidiary to undertake any such cleanup, removal, remedial or other action, in which case this proviso shall not apply. Section 6.11 Subsidiary Guarantors. The Borrower shall cause each of its Subsidiaries now or hereafter existing, formed or acquired (other than any Immaterial Subsidiaries) to at all times be and remain a party to the Guaranty, the Subsidiary Security Agreement and, if any such Subsidiary owns any Equity Interests in any Person (other than in Boston West, L.L.C. and other than in an Immaterial Subsidiary), a Subsidiary Pledge Agreement. The Borrower shall cause each of its Immaterial Subsidiaries which is a Subordinated Guarantor to at all times be and remain a party to the Guaranty so long as each such Immaterial Subsidiary is a Subordinated Guarantor. The Borrower shall cause to be delivered to the Agent a legal opinion in form and substance reasonably satisfactory to the Agent with respect to any Subsidiary entering into the Guaranty after the Closing Date. Section 6.12 Immaterial Subsidiaries. If (i) the assets of any Subsidiary of the Borrower then designated as an Immaterial Subsidiary shall at any time exceed $1,500,000, then the Borrower shall immediately provide notice to the Agent thereof, and such Subsidiary shall immediately be deemed automatically to no longer be an Immaterial Subsidiary or (ii) the aggregate amount of assets of all Subsidiaries of the Borrower so designated as Immaterial Subsidiaries shall at any time exceed $10,000,000, then the Borrower shall immediately provide notice to the Agent thereof and notice of which of such previously designated Immaterial Subsidiaries shall no longer be deemed to be Immaterial Subsidiaries so that the aggregate amount of assets of all such Subsidiaries so designated as Immaterial Subsidiaries does not exceed $10,000,000; PROVIDED that the Borrower may from time to time designate additional Subsidiaries of the Borrower as Immaterial Subsidiaries so long as the assets of any such Subsidiary do not exceed $1,500,000 and so long as the aggregate amount of assets of all such Subsidiaries so designated as Immaterial Subsidiaries does not exceed $10,000,000 (in each case as determined in accordance with GAAP). At such time as any Subsidiary that was an Immaterial Subsidiary is no longer an Immaterial Subsidiary, the Borrower shall thereafter comply with the terms of this Agreement with respect to such Subsidiary relating to or affecting Subsidiaries that are not Immaterial Subsidiaries (in addition to those terms relating to or affecting the Borrower's Subsidiaries generally), including, without limitation, the requirements of Section 6.11 and Section 2.21. Section 6.13 Additional Mortgages. As security for the payment of the Obligations, the Borrower shall and shall cause each of its Subsidiaries to, concurrently with the acquisition thereof, grant to the Agent a first priority Lien (free and clear of all Liens other than Liens permitted to be incurred pursuant to Section 7.3) on and security interest in, all real property (including any leasehold interest) acquired by the Borrower or any such Subsidiary after the Closing Date in any jurisdiction that does not as of the date of acquisition assess a mortgage recording tax, together with title insurance policies, surveys, appraisals, opinions of counsels and such other documentation as the Agent may reasonably request. Section 6.14 Collateral Account. The Collateral Account shall, at all times during which any funds are deposited therein or credited thereto, be subject to a Blocked Account Agreement. 62 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT SECTION 7. NEGATIVE COVENANTS. The Borrower covenants and agrees that until all of the Commitments of each Lender have terminated, each of the Letters of Credit has expired or been terminated, and the Obligations are paid in full: Section 7.1 Financial Covenants. (a) Leverage Ratio. The Borrower shall not permit the Leverage Ratio at any time during each of the fiscal quarters of the Borrower ending on the date set forth below to exceed the ratio set forth opposite such date:

Quarter Ending Ratio - -------------- ----- November 3, 2003 4.10 January 26, 2004 4.00 May 17, 2004 3.90 August 9, 2004 3.90 November 1, 2004 3.80 January 31, 2005 3.60 May 23, 2005 3.40 August 15, 2005 3.30 November 7, 2005 3.20 January 30, 2006 3.10 May 22, 2006 3.00 August 14, 2006 2.90 November 6, 2006 2.80 January 29, 2007 and thereafter 2.75

(b) Fixed Charge Coverage Ratio. The Borrower shall not permit the ratio of (i) (A) Consolidated EBITDA of the Borrower, minus (B) Capital Expenditures, minus (C) all federal and state income taxes paid in cash by the Borrower or any of its Subsidiaries, plus (D) New Unit Capital Expenditures, to (ii) Fixed Charges of the Borrower for the period of four consecutive fiscal quarters of the Borrower (taken as one accounting period) as determined on the last day of each of the fiscal quarters of the Borrower ending on the dates set forth below to be less than the ratio set forth opposite such dates: 63 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

Quarter Ending Ratio - -------------- ----- January 26, 2004 1.10 May 17, 2004 and each fiscal quarter 1.25 thereafter

(c) Minimum Consolidated EBITDA. The Borrower shall not permit Consolidated EBITDA of the Borrower for the period of thirteen consecutive Retail Periods of the Borrower (taken as one accounting period) as determined on the last day of each Retail Period of the Borrower ending during each period set forth below, to be less than the amount set forth opposite such period:

Retail Periods Ending Amount --------------------- ------ November 3, 2003 through $ 100,000,000 December 29, 2003 January 26, 2004 through $ 102,500,000 April 19, 2004 May 17, 2004 through July 12, $ 105,000,000 2004 August 9, 2004 through $ 108,000,000 October 4, 2004 November 1, 2004 through $ 110,000,000 December 27, 2004 January 31, 2005 through $ 115,000,000 April 25, 2005 May 23, 2005 through July 18, $ 120,000,000 2005 August 15, 2005 through $ 122,000,000 October 10, 2005 November 7, 2005 and thereafter $ 125,000,000

(d) Adjusted Leverage Ratio. The Borrower shall not permit the Adjusted Leverage Ratio to exceed at any time during each fiscal quarter of the Borrower ending on the date set forth below, the ratio set forth opposite such date: 64 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

Quarter Ending Ratio -------------- ----- November 3, 2003 5.75 January 26, 2004 5.75 May 17, 2004 5.60 August 9, 2004 5.50 November 1, 2004 5.45 January 31, 2005 5.35 May 23, 2005 5.30 August 15, 2005 5.25 November 7, 2005 5.20 January 30, 2006 5.15 May 22, 2006 5.10 August 14, 2006 5.00 November 6, 2006 4.95 January 29, 2007 and thereafter 4.75

(e) Capital Expenditures. (i) The Borrower shall not make or incur, and shall not permit any of its Subsidiaries to make or incur, any Capital Expenditures, except, subject to subsections (ii) and (iii) below, Capital Expenditures of the Borrower and its Subsidiaries in an aggregate amount, (A) for fiscal year 2004 of the Borrower not in excess of $55,000,000 and (B) for each fiscal year of the Borrower thereafter, not in excess of the sum of (I) $45,000,000, plus (II) the EBITDA CapEx Amount for such fiscal year, plus (III) the amount of Net Sale Proceeds for Asset Dispositions occurring during such fiscal year not required to be applied to reduce the Loans pursuant to Section 2.12. If the aggregate amount of Capital Expenditures made or incurred during any fiscal year of the Borrower is less than the amount (as reduced, if applicable) permitted to be made or incurred pursuant to the immediately preceding sentence, then the maximum amount for the following fiscal year of the Borrower and its Subsidiaries (but not any subsequent fiscal year of the Borrower) shall be increased by the amount of such difference. (ii) Notwithstanding any other provision of this Section 7.1(e), for fiscal year 2005 of the Borrower and each fiscal year of the Borrower thereafter, the ability of 65 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT the Borrower and its Subsidiaries to make or incur Capital Expenditures as otherwise permitted by this Section 7.1(e) shall be subject to quarterly sublimits as follows: the Borrower shall not make or incur, and shall not permit any of its Subsidiaries to make or incur, any Capital Expenditures (A) for the first fiscal quarter of such fiscal year, in an amount that exceeds one-third (1/3) of the maximum amount of Capital Expenditures permitted for the immediately preceding fiscal year (including any increases pursuant to the last sentence of subsection (i) above), (B) for the first two fiscal quarters of such fiscal year, in an amount that exceeds two-thirds (2/3) of the maximum amount of Capital Expenditures permitted for the immediately preceding fiscal year (including any increases pursuant to the last sentence of subsection (i) above) and (C) for the first three fiscal quarters of such fiscal year, in an amount that exceeds the maximum amount of all Capital Expenditures permitted for the immediately preceding fiscal year (including any increases pursuant to the last sentence of subsection (i) above). (iii) Notwithstanding any other provision of this Section 7.1(e), if at any time the Unused Portion of the Revolving Loans shall be less than $15,000,000, and until such time as such Unused Portion has been restored to at least $15,000,000, the Borrower shall not make or incur and shall not permit any of its Subsidiaries to make or incur any Capital Expenditures (other than Capital Expenditures otherwise permitted by this Section 7.1(e) and made or incurred pursuant to contractual commitments to make or incur such Capital Expenditures entered into by the Borrower or any of its Subsidiaries at a time when such Unused Portion was at least $15,000,000). (f) Consolidated Tangible Net Worth. The Borrower shall not permit its Consolidated Tangible Net Worth at any time to be less than the sum of (i) $70,000,000; (ii) 50% of cumulative Consolidated Net Income of the Borrower and its Subsidiaries for all fiscal quarters of the Borrower ended on or after November 3, 2003 in which Consolidated Net Income is positive (and without any deduction for any fiscal quarter in which Consolidated Net Income is negative), plus (iii) 100% of the Net Equity Proceeds of any equity offering by the Borrower. (g) Excess Availability. The Borrower shall at all times prior to the redemption in full of all of the Convertible Subordinated Notes maintain Excess Availability of $15,000,000. Section 7.2 Indebtedness. The Borrower shall not, and shall not permit any of its Subsidiaries to, create, incur, assume, suffer to exist or otherwise become or remain directly or indirectly liable with respect to, any Indebtedness other than the following PROVIDED that none of the creation, incurrence, assumption or existence of any of the following result in or cause a violation or breach of, or default under, any Subordinated Debt Document: (a) Indebtedness hereunder and under the other Loan Documents; (b) Indebtedness outstanding on the Closing Date and set forth on Schedule 7.2 hereto (without duplication of any other Indebtedness permitted by the other provisions of this Section 7.2); (c) Indebtedness permitted under Sections 7.6(a), 7.6(b) and 7.6(d); 66 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT (d) Indebtedness of the Borrower of the type described in clause (viii) of the definition of Indebtedness to the extent permitted under Section 7.14; (e) Indebtedness with respect to (i) purchase money Indebtedness incurred solely to finance Capital Expenditures permitted under Section 7.1(e) and any extensions, renewals, refundings or refinancings thereof, not in excess of $5,000,000 in the aggregate at any one time outstanding for all such purchase money Indebtedness and all extensions, renewals, refundings and refinancings thereof and (ii) Capitalized Leases permitted under Section 7.13 and any extensions, renewals, refundings or refinancings thereof so long as the terms of any such Indebtedness with respect to Capitalized Leases is permitted under Section 7.13; PROVIDED, that (A) any such Indebtedness incurred pursuant to this clause (e) and any such extensions, renewals, refundings or refinancings thereof shall not exceed 85% of the lesser of the purchase price or the fair market value of the asset so financed, (B) at the time of such incurrence, no Default or Event of Default has occurred and is continuing or would result from such incurrence, and (C) such Indebtedness has a scheduled maturity and is not due on demand; (f) any extensions, renewals, refundings and refinancings of the Indebtedness described in clause (b) above, so long as the terms of any such extension, renewal, refunding or refinancing Indebtedness, and of any agreement entered into and of any instrument issued in connection therewith, are otherwise permitted by the Loan Documents; PROVIDED, FURTHER, that the principal amount of such Indebtedness shall not be increased above the principal amount thereof outstanding immediately prior to such extension, renewal, refunding or refinancing, and the direct and contingent obligors therefor shall not be changed, as a result of or in connection with such extension, renewal, refunding or refinancing; (g) Indebtedness of any Domestic Subsidiary of the Borrower owed to the Borrower or to any Domestic Subsidiary of the Borrower; (h) Permitted Subordinated Debt in an aggregate principal amount not to exceed $5,000,000 at any one time outstanding incurred in connection with a Permitted Acquisition with respect to which all of the conditions set forth in Section 7.8(f) have been satisfied and incurred to pay all or part of the purchase price thereof which Permitted Subordinated Debt, if secured, is secured only by Liens permitted pursuant to Section 7.3(i); (i) Indebtedness of the Borrower incurred pursuant to (i) the Convertible Subordinated Notes in an aggregate original principal amount not to exceed $22,319,000, (ii) the New Subordinated Notes in an aggregate original principal amount not to exceed $200,000,000 and (iii) the New Convertible Subordinated Notes in an aggregate principal amount not to exceed $105,000,000; in each case less all repayments, redemptions, prepayments, purchases, defeasances or acquisitions for value with respect thereto after the Closing Date, PROVIDED, HOWEVER, that the New Convertible Subordinated Notes shall be permitted only to the extent all of the proceeds, net of customary underwriting fees and discounts, brokerage commissions and other similar reasonable and customary costs and expenses directly attributable to the issuance of the New Convertible Subordinated Notes, are applied to redeem Convertible Subordinated Notes as permitted to be redeemed pursuant to Section 7.10(d)(vi) within 90 days of the receipt of such proceeds and pending such redemptions the Borrower shall maintain such proceeds in a segregated account restricted for such purpose; 67 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT (j) unsecured Indebtedness of the Borrower or any of its Subsidiaries consisting of guarantees of Indebtedness of a franchisee incurred to finance a remodeling, construction or purchase of a retail unit of such franchisee or capital expenditures of such franchisee ("FRANCHISEE CONSTRUCTION DEBT"); PROVIDED, that (i) the amount of the obligations of the Borrower and its Subsidiaries under or with respect to such guarantees shall not exceed $40,000,000 in the aggregate outstanding at any time; (ii) the amount of the obligations of the Borrower and its Subsidiaries under or with respect to guarantees of more than 20% of the principal amount of the Franchisee Construction Debt of a franchisee shall not exceed $5,000,000 in the aggregate outstanding at any time; and (iii) except for the guarantees described in the foregoing clause (ii), the amount of the obligations of the Borrower and its Subsidiaries under or with respect to guarantees of Franchisee Construction Debt of any franchisee shall not exceed 20% of the Franchisee Construction Debt of such franchisee; (k) unsecured Indebtedness of the Borrower or any of its Subsidiaries owing to former franchisees and representing the deferred purchase price (or a deferred portion of such purchase price) payable by the Borrower or such Subsidiary to such former franchisee in connection with the purchase by the Borrower or such Subsidiary of one or more retail outlets from such former franchisee in an aggregate principal amount for all such Indebtedness not to exceed $5,000,000 at any one time outstanding; (l) Indebtedness of any entity acquired pursuant to a Permitted Acquisition with respect to which all of the conditions set forth in Section 7.8(f) have been satisfied, which Indebtedness (i) is existing prior to such Permitted Acquisition, (ii) is assumed by the Borrower or any Subsidiary of the Borrower in connection with any such Permitted Acquisition and (iii) is not incurred in contemplation of such Permitted Acquisition; PROVIDED, that the aggregate principal amount of all such Indebtedness shall not exceed $5,000,000 at any time outstanding; and (m) Indebtedness with respect to Sale and Leaseback Transactions permitted under Section 7.13(a). Section 7.3 Liens. The Borrower shall not, and shall not permit any of its Subsidiaries to, create, incur, assume or suffer to exist, directly or indirectly, any Lien on any of its property now owned or hereafter acquired, other than the following PROVIDED, that none of the creation, incurrence, assumption or existence of any of the following result in the creation or imposition of a Lien under any Subordinated Debt Document: (a) Liens existing on the Closing Date and set forth on Schedule 7.3 hereto; (b) Liens for taxes not yet due or which are being contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves are being maintained in accordance with GAAP; (c) Statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and other Liens imposed by Law (other than any Lien imposed by ERISA or pursuant to any Environmental Law) created in the ordinary course of business for amounts not yet due or which are being contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate bonds have been posted; 68 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT (d) Liens (other than any Lien imposed by ERISA or pursuant to any Environmental Law) incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money); (e) Easements, licenses, rights-of-way, covenants, conditions and restrictions, zoning and similar restrictions and other similar charges or encumbrances not interfering with the ordinary conduct of the business of the Borrower or any of its Subsidiaries and which do not detract materially from the value of the property to which they attach or impair materially the use thereof by the Borrower or any of its Subsidiaries or materially adversely affect the security interests of the Agent or the Lenders therein; (f) Liens granted to the Agent for the benefit of the Lenders pursuant to the Security Documents securing the Obligations; (g) Liens created pursuant to Capitalized Leases and to secure other purchase-money Indebtedness permitted pursuant to Section 7.2(e), PROVIDED, that such Liens are only in respect of the property or assets subject to, and secure only, the respective Capitalized Lease or other purchase-money Indebtedness; (h) Liens arising out of the replacement, extension or renewal of any Lien permitted by clause (a) above upon or in the same property theretofore subject thereto in connection with the refunding, refinancing, extension or renewal (without increase in the amount or change in any direct or contingent obligor) of the Indebtedness secured thereby permitted pursuant to Section 7.2(f); (i) Liens securing Permitted Subordinated Debt permitted pursuant to Section 7.2(h) PROVIDED, that (i) such Liens are only in respect of the assets acquired in the applicable Permitted Acquisition, (ii) the Obligations are secured by valid first priority perfected Liens on such assets and the Liens permitted pursuant to this Section 7.3(i) are second in priority to the Liens on such assets securing the Obligations and (iii) the rights and remedies of any holder of such Liens are subordinated to the rights and remedies of the Agent and the Lenders on terms approved in writing by the Agent; (j) Liens securing Indebtedness (other than Permitted Subordinated Debt) of the Borrower and its Subsidiaries in an aggregate principal amount not to exceed $25,000,000; (k) Liens of a lessor covering only specific property leased by the Borrower or any of its Subsidiaries subject to operating leases entered into by the Borrower or any of its Subsidiaries as a lessee in the ordinary course of business; (l) Liens of a lessor covering only specific property leased by the Borrower or any of its Subsidiaries subject to a Sale and Leaseback Transaction permitted by Section 7.13(a) entered into by the Borrower or any of its Subsidiaries as a lessee; and 69 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT (m) Liens set forth as exceptions to the title policies accepted by the Agent in connection with the Real Estate Collateral. Section 7.4 Restriction on Fundamental Changes. (a) The Borrower shall not, and shall not permit any of its Subsidiaries to, enter into any merger or consolidation, or liquidate, wind-up or dissolve (or suffer any liquidation or dissolution), discontinue its business or convey, lease, sell, transfer or otherwise dispose of, in one transaction or series of transactions, all or any substantial part of its business or property, whether now or hereafter acquired, except (i) as otherwise permitted under Section 7.5, (ii) any wholly-owned Subsidiary of the Borrower may merge into or convey, sell, lease or transfer all or substantially all of its assets to, the Borrower or any other Domestic Subsidiary of the Borrower, PROVIDED, that in any such merger involving the Borrower, the Borrower shall be the surviving corporation and any such Subsidiary merging into the Borrower or any such Domestic Subsidiary shall be Solvent, (iii) any Solvent Person acquired by the Borrower or a Subsidiary of the Borrower in a Permitted Acquisition permitted hereunder may merge with the Borrower or any wholly-owned Subsidiary of the Borrower, PROVIDED, that in any such merger, the Borrower or such wholly-owned Subsidiary shall be the surviving corporation, PROVIDED, FURTHER, that in each case, (A) any such wholly-owned Subsidiary of the Borrower which is the surviving corporation of any such merger or to which any business or property is so transferred shall be a party to the Guaranty and the Subsidiary Security Agreement and if required by Section 2.21, a Subsidiary Pledge Agreement, (B) the Borrower shall give the Agent at least ten (10) days prior written notice of any such sale, merger or other transfer, (C) the Agent and Lenders shall not be deemed to have released their security interest in any assets so transferred or in any Subsidiary or the assets of any Subsidiary so merged and (D) no Default or Event of Default shall have occurred or be continuing or would occur after giving effect thereto or as a result thereof. (b) Borrower shall not and shall not permit any of its Subsidiaries to, amend its certificate of incorporation or by-laws (or other relevant organizational and governing documents) in any manner adverse to the interests of the Agent or the Lenders. Section 7.5 Sale of Assets. The Borrower shall not, and shall not permit any of its Subsidiaries to, make, consummate or effect any Asset Disposition (or agree to do so at any future time) with respect to all or any part of its property or assets, except: (a) the sale of any asset by the Borrower or any of its Subsidiaries (excluding (i) a bulk sale of inventory and a sale of receivables (other than delinquent accounts for collection purposes only) and (ii) a sale of any capital stock of Carl Karcher Enterprises, Inc. or Hardee's) so long as: (I) the purchase price paid to the Borrower or such Subsidiary for such asset shall be no less than the fair market value of such asset at the time of such sale, (II) the purchase price for such asset shall be paid to the Borrower or such Subsidiary solely in cash, Cash Equivalents or non-cash consideration in the form of promissory notes, PROVIDED, that in the case of non-cash consideration received in the form of promissory notes, (A) such consideration shall not exceed 25% of the aggregate purchase price for such asset, (B) such promissory notes shall mature no later than 3 years after the date of issuance, (C) such promissory notes shall be pledged to the Agent, for the benefit of the Lenders, pursuant to a pledge agreement in form and substance satisfactory to the Agent, 70 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT (D) all payments of principal, interest and other amounts payable under such promissory notes and that are received by the Borrower or such Subsidiary shall be applied to prepay the outstanding Loans in accordance with Section 2.12(a) hereof and (E) the aggregate principal amount of all promissory notes received as consideration for all asset sales permitted under this Section 7.5(a) shall not exceed $50,000,000 at any one time outstanding, (III) the aggregate fair market value of such asset and all other assets sold by the Borrower and its Subsidiaries during the same fiscal year of the Borrower pursuant to this clause (a) shall not exceed 10% of the total assets of the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP (PROVIDED, that Excluded Resales shall not be included in the calculation of such percentage), (IV) the Borrower shall prepay the outstanding Loans pursuant to, and in accordance with, Section 2.12 in an aggregate principal amount equal to the Net Sale Proceeds received by the Borrower or such Subsidiary from the sale, transfer or other disposition of such asset, (V) no Default or Event of Default has occurred and is continuing or would result from such asset sale, and (VI) with respect to any Asset Disposition involving Real Estate Collateral, if, after giving effect to such sale, the minimum Real Estate Collateral Value required under Section 7.21 would not be satisfied, the Borrower or such Subsidiary shall, concurrently with such sale, in substitution for the Real Estate Collateral sold, either: (i) pledge to the Agent for the benefit of the Lenders and the Interest Rate Hedge Providers additional real property of the Borrower or such Subsidiary with a fair market value, as determined by appraisals delivered to the Agent on or prior to July 8, 2002 or, if no such appraisals have been delivered to the Agent on or prior to such date, then by an appraisal satisfactory to the Agent and prepared by a firm satisfactory to the Agent, at least equal to the amount necessary to satisfy the minimum Real Estate Collateral Value required by Section 7.21 after giving effect to such sale, and deliver to the Agent such agreements, documents and instruments as the Agent shall request to create, perfect, establish the first priority nature of or otherwise protect any Lien purported to be created in favor of the Agent in the real property so substituted; or (ii) deposit cash into the Collateral Account, which shall be subject to a Blocked Account Agreement, in an amount at least equal to the amount necessary to satisfy the minimum Real Estate Collateral Value required by Section 7.21 after giving effect to such sale, deliver to the Agent such other agreements, documents and instruments as the Agent shall request to create, perfect, establish the first priority nature of or otherwise protect any Lien purported to be created in favor of the Agent in the money deposited in the Collateral Account and in the Collateral Account. At any time when funds are on deposit in the Collateral Account, so long as no Default or Event of Default has occurred and is continuing, the Agent shall, at the Borrower's request, release to the Borrower from the Collateral Account an amount equal to the lesser of (I) all amounts on deposit in the Collateral Account and (II) the amount by which the Real Estate Collateral Value exceeds $218,000,000; and 71 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT (b) so long as no Default or Event of Default shall occur and be continuing, the grant of any option or other right to purchase any asset in a transaction which would be permitted under the provisions of the preceding clause (a). Section 7.6 Contingent Obligations. The Borrower shall not, and shall not permit any of its Subsidiaries to, create or become or be liable with respect to any Contingent Obligation, except: (a) pursuant to the Guaranty or the Security Documents; (b) Contingent Obligations which are in existence on the Closing Date and which are set forth on Schedule 7.6; (c) Contingent Obligations permitted pursuant to Section 7.2(j); and (d) guarantees by Subsidiaries of the Borrower pursuant to the New Subordinated Note Indenture of obligations of the Borrower under the New Subordinated Notes, PROVIDED, that such guarantees shall at all times be subordinated in respect of the Obligations on subordination terms contained in the New Subordinated Note Indenture. Section 7.7 Dividends. The Borrower shall not, and shall not permit any of its Subsidiaries to, declare or pay any dividends, or return any capital to, its stockholders or authorize or make any other distribution, payment or delivery of property or cash to its stockholders as such, or redeem, retire, purchase, defease or otherwise acquire, directly or indirectly, any shares of any class of its Capital Stock now or hereafter outstanding (or any options, rights or warrants issued with respect to its Capital Stock), or set aside any funds for any of the foregoing purposes (all the foregoing "DIVIDENDS"), except that: (a) Dividends may be made to the Borrower or any of its wholly-owned Subsidiaries by any of its wholly-owned Subsidiaries; and (b) So long as no Default or Event of Default shall have occurred and be continuing or would result therefrom, the Borrower may declare and deliver dividends and distributions payable only in common stock of the Borrower; and (c) So long as no Default or Event of Default shall have occurred and be continuing, any Subsidiary of the Borrower that is not a wholly-owned Subsidiary of the Borrower may declare and pay cash dividends to the extent, and only to the extent, of any cumulative positive net income (after deducting any negative net income) of such Subsidiary arising after the date such Subsidiary became a Subsidiary of the Borrower so long as such dividends are payable to all of its equity holders on a ratable basis. Section 7.8 Advances, Investments and Loans. The Borrower shall not, and shall not permit any of its Subsidiaries to, make or suffer to exist, directly or indirectly any Investments (including, without limitation, loans and advances to the Borrower or any of its Subsidiaries, and other Investments in Subsidiaries of the Borrower), or commitments therefor, or to create any Subsidiary or to become or remain a partner in any partnership or joint venture, or make any Acquisition of any interest in any Person, except that the following shall be permitted PROVIDED, that none of the making, existence or creation of or becoming or remaining a partner in, any of the 72 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT following will not result in or cause a violation or breach of, or default under, any Subordinated Debt Document: (a) Investments set forth on Schedule 7.8; (b) Investments by the Borrower and its Subsidiaries in Subsidiaries of the Borrower outstanding on the Closing Date, additional Investments (other than loans and advances) by the Borrower or any Subsidiary of the Borrower in any Domestic Subsidiary of the Borrower which Subsidiary is Solvent and is a party to the Guaranty, and additional Investments by the Borrower or any wholly-owned Subsidiary of the Borrower consisting of loans and advances to wholly-owned Domestic Subsidiaries of the Borrower to the extent permitted by Section 7.2(g). (c) loans and advances by the Borrower and its Subsidiaries to their employees in the ordinary course of its business (other than Employee Stock Loans) not exceeding $2,000,000 in the aggregate at any one time outstanding; (d) the Borrower and its Subsidiaries may acquire and hold Cash Equivalents; (e) Investments consisting of promissory notes permitted to be received as consideration in connection with Asset Dispositions permitted under Section 7.5(a); (f) Permitted Acquisitions, PROVIDED, that, in the case of each Permitted Acquisition, the conditions referred to in clauses (i) through (viii) below are satisfied on or prior to the date of such Permitted Acquisition (it being understood that, for purposes of clause (ii) below, the phrase "the Borrower and its Subsidiaries" and the phrase "Consolidated" shall be deemed to include the Person (and its Subsidiaries, if any, to be acquired) or assets to be acquired as though such Person (and its Subsidiaries, if any, to be acquired) or assets were a Subsidiary of the Borrower): (i) the Person or assets to be acquired satisfy the criteria set forth in either the definition of "Permitted Acquisition" contained in Section 1; (ii) the Borrower shall have delivered to the Agent a certificate of the chief financial officer of the Borrower, in form and substance satisfactory to the Agent, demonstrating: (1) compliance by the Borrower and its Subsidiaries with the covenants set forth in Section 7.1, on a pro forma basis after giving effect to such Acquisition, for a period of four consecutive fiscal quarters after the date of such Acquisition, and (2) the Consolidated EBITDA of the Person and any of its Subsidiaries, if any, to be acquired, for the twelve-month period most recently ended shall be a positive number; (iii) the representations and warranties contained in each Loan Document are correct in all material respects on and as of the date of such Acquisition, after giving effect to such Acquisition, as though made on and as of such date, other than any such representations and warranties that by their terms are specifically made as of a date other than such date; 73 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT (iv) no event has occurred and is continuing on the date of such Acquisition, or would result from such Acquisition, that constitutes a Default or an Event of Default; (v) the Total Revolving Loan Commitment minus the aggregate principal amount of the Revolving Loans outstanding on the date of such Permitted Acquisition, minus the amount of any L/C Obligations outstanding on the date of such Permitted Acquisition shall equal at least $25,000,000; (vi) all Consents and waiting periods described in clause (vii)(3)(D) below shall have been obtained or expired; and (vii) the Borrower or such Subsidiary of the Borrower making such Acquisition shall furnish or cause to be furnished to the Agent and the Lenders the following: (1) Certified copies of the resolutions of the Board of Directors (or other governing body) of the Borrower and, if any Subsidiary of the Borrower will participate in the applicable Acquisition, of such Subsidiary (in each case, to the extent resolutions of the Board of Directors of the Borrower or such Subsidiary are required or advisable pursuant to applicable law or the Borrower's or such Subsidiary's charter documents) and of all documents evidencing other necessary corporate action or other Consents, if any, with respect to such Acquisition; (2) Such other financial, business and other information regarding the Person or assets to be acquired, as the case may be, as the Agent or the Required Lenders through the Agent shall have reasonably requested, including, without limitation, actual and pro forma financial statements and projections relating to such Person or assets; (3) In the case of each Permitted Acquisition, to the extent that such Acquisition consists of the acquisition by the Borrower or any of its Subsidiaries of stock, partnership or other Equity Interests of any Person (or assets in the case of clause (A) below): (A) All documents required to be delivered pursuant to Section 2.21 and Section 6.11; (B) A copy of the charter or other organizational document of such Person and each amendment thereto, if any, certified by the Secretary of State of its jurisdiction of organization, as of a date reasonably near the date of such Borrowing, as being a true and correct copy thereof; (C) An officer's certificate signed on behalf of such Person by an appropriate officer of such Person, certifying as to (i) the absence of any amendment to the charter or other organizational document of such Person since the date of the Secretary of State's certificate referred to in clause (B) above, (ii) a true and correct copy of the by-laws or similar organizational document of such Person, (iii) a true and correct copy of the resolutions adopted by the Board of Directors or equivalent governing body of such Person approving the documents or instruments to be delivered under this Section 7.8(f) to which such 74 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT Person is a party and the matters contemplated thereby, (iv) the incumbency and specimen signatures of the officers of such Person executing the documents and instruments to be delivered under this Section 7.8(f) to which such Person is a party, and (v) the due organization and good standing of such Person as a Person organized under the laws of its jurisdiction of organization; (D) Evidence satisfactory to the Agent and the Lenders that the Borrower, its Subsidiaries and the Person being acquired has made and obtained all necessary governmental and other Consents required in order to consummate such Acquisition and that all applicable waiting periods with respect to such Acquisition including, without limitation, those under the Hart-Scott-Rodino Act have expired without any action having been taken by any competent authority restraining, preventing or imposing materially adverse conditions upon the rights of the Loan Parties or their Subsidiaries freely to transfer or otherwise dispose of, or to create any Lien on, any properties now owned or hereafter acquired by any of them; and (viii) the total consideration, contingent or other-wise, for the Acquisition of the Person being acquired, together with the consideration paid for each other Acquisition consummated pursuant to this Section 7.8(f) during the same fiscal year does not exceed, in the aggregate, $10,000,000 (including, without limitation, securities, instruments, or promissory notes tendered or executed in connection with such acquisition), PROVIDED, that the consideration paid under this clause (viii) shall be included for purposes of calculating compliance with Section 7.1(e) and all such Acquisitions shall be permitted only to the extent they are permitted under Section 7.1(e); (g) Investments received as consideration in connection with Asset Dispositions permitted under paragraph (a) of Section 7.5; (h) Investments consisting of promissory notes evidencing past due receivables owed to the Borrower or any Subsidiary of the Borrower by an account debtor and not involving any monetary advance; (i) Employee Stock Loans not exceeding $10,000,000 in the aggregate at any one time outstanding; and (j) loans to franchisees of Green Burrito in an aggregate amount not to exceed $900,000 for all such loans made after the Closing Date. Section 7.9 Transactions with Affiliates. The Borrower shall not, and shall not permit any of its Subsidiaries to, enter into any transaction or series of related transactions, whether or not in the ordinary course of business, with any Affiliate, other than on terms and conditions substantially as favorable to the Borrower or such Subsidiary as would be obtainable at the time in a comparable arm's-length transaction with a Person other than an Affiliate; PROVIDED, HOWEVER, that Employee Stock Loans otherwise permitted by the terms hereof shall not be considered to be transactions with Affiliates for purposes of this Section 7.9. Section 7.10 Limitation on Voluntary Payments and Modifications of Certain Documents. The Borrower shall not, and shall not permit any of its Subsidiaries to: (a) make any sinking fund payment or voluntary or optional payment or prepayment on or redemption, defeasance, purchase or acquisition for value of (including, without 75 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT limitation, by way of depositing with the trustee with respect thereto money or securities before due for the purpose of paying when due) or exchange of any Indebtedness (excluding the Indebtedness hereunder and under the other Loan Documents and Indebtedness permitted to be incurred pursuant to Section 7.2(i)), PROVIDED that the Borrower may, and may permit any of its Subsidiaries to, (i) prepay, redeem, defease, purchase or acquire or exchange any (collectively, a "PREPAYMENT") Surviving Debt (other than Indebtedness permitted to be incurred pursuant to Section 7.2(i)) only if on the date of such Prepayment (x) no event or condition has occurred and is continuing, or would result from such Prepayment, that constitutes a Default or an Event of Default, and (y) after giving effect to such Prepayment, the Total Revolving Loan Commitment minus the aggregate principal amount of the Revolving Loans outstanding on the date of such Prepayment minus the amount of any L/C Obligations outstanding on the date of such Prepayment shall equal at least $20,000,000; PROVIDED, HOWEVER, that notwithstanding the foregoing, the Borrower shall not, and shall not permit any of its Subsidiaries to, make any Prepayment of any Indebtedness referred to in Section 7.2(h); and (ii) make regularly scheduled or required repayments of Indebtedness permitted pursuant to Section 7.2. (b) amend, modify or waive, or permit the amendment, modification or waiver of (i) the Surviving Debt (other than Indebtedness permitted to be incurred pursuant to Section 7.2(h) or Section 7.2(i)) in any way that would be materially adverse to the Lenders or (ii) the Permitted Subordinated Debt or the Subordinated Debt Documents; or (c) make any payment in violation of any subordination terms of any Indebtedness of the Borrower or any of its Subsidiaries; or (d) make or offer to make any sinking fund payment, payment, prepayment, redemption, defeasance, purchase or acquisition for value (including, without limitation, by way of depositing with the trustee with respect thereto money or securities before due for the purpose of paying when due) or otherwise segregate funds with respect to the Subordinated Notes other than (i) regularly scheduled semi-annual interest payments required to be made in cash, (ii) conversions of the Convertible Subordinated Notes or the New Convertible Subordinated Notes into common stock of the Borrower, (iii) redemptions of the Convertible Subordinated Notes with the proceeds of the Loans, as soon as practicable and in any event no later than March 15, 2004, PROVIDED, that any such Convertible Subordinated Notes that are redeemed by the Borrower shall then be cancelled in accordance with the terms of the Convertible Subordinated Note Indenture, and shall not be reissued and (iv) the redemption or repurchase of Subordinated Notes, PROVIDED, that (A) the purchase price paid by the Borrower for such Subordinated Notes shall not exceed in the aggregate, for the period commencing November 3, 2003, and ending the last day of the last fiscal quarter ending prior to such redemption or repurchase the sum of (1) the aggregate Net Equity Proceeds of the Borrower for such period, plus (2) 50% of Consolidated Net Income for such period (or if Consolidated Net Income for such period is a deficit, less 100% of such deficit (which deficit for purposes of subtracting such amount shall be deemed to be a positive number)), (B) the Borrower shall have delivered to the Agent a certificate of the chief financial officer of the Borrower, in form and substance satisfactory to the Agent, demonstrating that, both before and after giving effect to such repurchase and redemption, for a period of four consecutive fiscal quarters then ended, the Leverage Ratio shall be less than 3.75 and Consolidated EBITDA of the Borrower and its 76 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT Subsidiaries for the 13 Retail Period most recently ended shall at least equal $115,000,000, (C) both before and after giving effect to such redemption or repurchase, no Default or Event of Default shall have occurred and be continuing and (D) after giving effect to such redemption or repurchase, no Revolving Loans shall be outstanding. Section 7.11 Changes in Business. The Borrower shall not, and shall not permit any of its Subsidiaries to, enter into any business which is substantially different from that conducted by the Borrower or such Loan Party, as the case may be, on the Closing Date after giving effect to the Transactions. Section 7.12 Certain Restrictions. The Borrower shall not, and shall not permit any of its Subsidiaries to, enter into or permit to exist any agreement, instrument or other document which directly or indirectly restricts the ability of the Borrower or any of its Subsidiaries to (a) enter into amendments, modifications or waivers of the Loan Documents, (b) sell, transfer or otherwise dispose of its assets, (c) create, incur, assume or suffer to exist any Lien upon any of its property, (d) create, incur, assume, suffer to exist or otherwise become liable with respect to any Indebtedness, (e) make loans or advances to the Borrower, or (f) pay any Dividend or repay any Indebtedness owed to the Borrower or any of its Subsidiaries; PROVIDED, that Capitalized Leases or agreements governing purchase money Indebtedness which contain restrictions of the types referred to in clauses (b) or (c) with respect to the property covered thereby shall be permitted; PROVIDED, FURTHER, that the foregoing shall not apply to restrictions in effect on the Closing Date contained in agreements governing Surviving Debt (other than Indebtedness arising under the Subordinated Notes) and, if such Indebtedness is renewed, extended or refinanced, restrictions in the agreements governing the renewed, extended or refinanced Indebtedness (as successive renewals, extensions and refinancings thereof) if such restrictions are no more restrictive in any material respect than those contained in the agreements governing the Indebtedness being renewed, extended or refinanced and if such renewals, extensions and refinancings are permitted pursuant to Section 7.2(f). Section 7.13 Lease Obligations. The Borrower shall not, and shall not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any obligations as lessee: (a) for the rental or hire of real or personal property in connection with any sale and leaseback transaction, except: (i) the Borrower and its Subsidiaries may sell real property or equipment owned by the Borrower or any of its Subsidiaries on the Closing Date and simultaneously with such sale become liable with respect to any operating lease involving such property (each, an "EXISTING PROPERTY SALE AND LEASEBACK TRANSACTION"), and (ii) the Borrower and its Subsidiaries may sell real property which the Borrower or any of its Subsidiaries acquires after the Closing Date for the purpose of building a Restaurant which the Borrower or such Subsidiary intends to own and operate, and simultaneously with such sale become liable with respect to any operating lease involving such property if such sale and leaseback occurs on or before the date which is twelve (12) months after the date of acquisition by the Borrower or one of its Subsidiaries of such real property (each, a "NEW PROPERTY SALE AND LEASEBACK TRANSACTION") PROVIDED, that: (1) an Affiliate of the Borrower or any of its Subsidiaries is not a party to any such Sale and Leaseback Transaction (except to the extent that the Borrower or any of its Subsidiaries is the lessee); 77 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT (2) the Agent is provided with fully executed documentation of each Sale and Leaseback Transaction on or prior to the closing date of such transaction; (3) no Default or Event of Default exists on the closing date of any Sale and Leaseback Transaction or would result therefrom and the Borrower shall deliver to the Agent prior to the closing date of such transaction an officer's certificate of the chief financial officer of the Borrower certifying thereto; (4) the term of each such operating lease shall not be less than fifteen (15) years, PROVIDED, that the Borrower and its Subsidiaries may enter into Sale and Leaseback Transactions involving equipment in an amount not exceeding $5,000,000 in the aggregate where the term of the operating lease is less than fifteen (15) but greater than three (3) years; (5) the aggregate amount of all property sold after the Closing Date pursuant to a Sale and Leaseback Transaction shall not exceed $25,000,000 in the aggregate; and (6) concurrently with any Sale and Leaseback Transaction involving Real Estate Collateral, the Borrower or such Subsidiary shall, (i) in substitution for the real property sold, pledge additional fee owned real property of the Borrower or such Subsidiary to the Agent for the benefit of the Lenders with a fair market value at least equal to the then fair market value of the real property sold, as determined by an appraisal performed at the time of such sale which is satisfactory to the Agent and prepared by a firm satisfactory to the Agent and (ii) deliver to the Agent Mortgages and such title insurance policies, surveys and appraisals with respect to such substitution property and the leasehold interest created as the Agent may reasonably request, together such agreements, documents and instruments as the Agent shall request to create, perfect, establish the first priority nature of or otherwise protect any Lien purported to be created in favor of the Agent in the substitution property and the leasehold interest; (b) for the rental or hire of other real or personal property of any kind under leases or agreements to lease including Capitalized Leases except for leases (including Capitalized Leases) entered into for fair market value in the ordinary course of business of the Borrower and its Subsidiaries. Section 7.14 Hedging Agreements. The Borrower shall not, and shall not permit any of its Subsidiaries to, enter into or remain liable under any Hedging Agreement, except (a) Interest Rate Agreements with one or more of the Lenders or their respective Affiliates pursuant to which the Borrower and its Subsidiaries have hedged their reasonably estimated interest rate exposure and (b) Hedging Agreements relating to commodities pursuant to which the Borrower and its Subsidiaries have hedged their reasonably estimated commodity price exposure. Section 7.15 Plans. The Borrower shall not, nor shall it permit any member of its ERISA Controlled Group to, take any action which would increase the aggregate present value of the Unfunded Benefit Liabilities under all Plans to an amount in excess of $2,000,000. 78 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT Section 7.16 Fiscal Year; Fiscal Quarter. The Borrower shall not, and shall not permit any of its Subsidiaries to, change its fiscal year or any of its fiscal quarters. Section 7.17 Partnerships. The Borrower shall not, and shall not permit any of its Subsidiaries to, become or remain a general partner in any general or limited partnership, or permit any of its Subsidiaries to do so, except for any Subsidiary which is a corporation and the sole assets of which consist of its interest in such partnership and except with respect to the partnerships described on Schedule 7.17. Section 7.18 Excluded Resales. The Borrower shall not, and shall not permit any of its Subsidiaries to, acquire, purchase, hold or own any Restaurants which the Borrower or any such Subsidiaries acquire from a franchisee with the intent of reselling to the extent the aggregate amount of Restaurants owned or held by the Borrower and its Subsidiaries would exceed $20,000,000 at any one time outstanding, such amount to be measured by the purchase price paid by the Borrower or any such Subsidiaries for such Restaurants. Section 7.19 Designated Senior Indebtedness. The Borrower shall not designate, create or permit to exist any (a) Designated Senior Indebtedness (as defined in the Convertible Subordinated Note Indenture), (b) Designated Senior Indebtedness (as defined in the New Subordinated Note Indenture) or (c) Designated Senior Indebtedness (as defined in the New Convertible Subordinated Note Indenture), in each case other than obligations arising under the Loan Documents. Section 7.20 Instruments. The Borrower shall not permit any of its Subsidiaries to own or hold, directly or beneficially, any Instrument if such Subsidiary is not a party to a legal, valid and binding Subsidiary Pledge Agreement. Section 7.21 Real Estate Collateral Value. The Borrower shall not permit the Real Estate Collateral Value to be less than $218,000,000 at any time. SECTION 8. EVENTS OF DEFAULT Section 8.1 Events of Default. Each of the following events, acts, occurrences or conditions shall constitute an Event of Default (each an "EVENT OF DEFAULT") under this Agreement, regardless of whether such event, act, occurrence or condition is voluntary or involuntary or results from the operation of law or pursuant to or as a result of compliance by any Person with any judgment, decree, order, rule or regulation of any court or administrative or governmental body: (a) Failure to Make Payments. The Borrower shall (i) default in the payment when due of any principal of the Loans or (ii) default, and such default shall continue unremedied for two (2) or more Business Days, in the payment when due of any interest on the Loans or in the payment when due of any Fees or any other amounts owing hereunder. (b) Breach of Representation or Warranty. Any representation or warranty made by any Loan Party herein or in any other Loan Document or in any certificate or statement delivered pursuant hereto or thereto shall prove to be false or misleading in any material respect on the date as of which made or deemed made. 79 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT (c) Breach of Covenants. (i) The Borrower shall fail to perform or observe any agreement, covenant or obligation arising under Section 6.1(f) or Section 7. (ii) The Borrower shall fail to perform or observe any agreement, covenant or obligation arising under this Agreement (except those described in subsections (a), (b) and (c)(i) above), and such failure shall continue for thirty (30) days. (iii) Any Loan Party shall fail to perform or observe any agreement, covenant or obligation arising under any provision of the Loan Documents other than this Agreement, which failure shall continue after the end of the applicable grace period, if any, provided therein. (d) Default Under Other Agreements. Any Loan Party or any of its Subsidiaries shall default in the payment when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) of any amount owing in respect of any Indebtedness of such Loan Party or any of its Subsidiaries (other than the Obligations) in the aggregate principal amount of $5,000,000 or more; or any Loan Party or any of its Subsidiaries shall default in the performance or observance of any obligation or condition with respect to any such Indebtedness or any other event shall occur or condition shall exist, if the effect of such default, event or condition is to accelerate the maturity or cause a mandatory redemption of any such Indebtedness or to permit the holder or holders thereof, or any trustee or agent for such holders, to accelerate the maturity or require a redemption or other repurchase thereof of any such Indebtedness, or any such Indebtedness shall become or be declared to be due and payable prior to its stated maturity other than as a result of a regularly scheduled payment; or any such Indebtedness shall be declared to be due and payable, or shall be required to be prepaid, redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or defease such Indebtedness shall be required to be made, in each case prior to its stated maturity other than as a result of a regularly scheduled payment. (e) Bankruptcy, etc. (i) Any Loan Party or any of its Subsidiaries shall commence a voluntary case concerning itself under the Bankruptcy Code; or (ii) an involuntary case is commenced against any Loan Party or any of its Subsidiaries and the petition is not controverted within 10 days, or is not dismissed within 60 days, after commencement of the case; or (iii) a custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge of, all or substantially all of the property of any Loan Party or any of its Subsidiaries or any Loan Party or any of its Subsidiaries commences any other proceedings under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to any Loan Party or any of its Subsidiaries or there is commenced against any Loan Party or any of its Subsidiaries any such proceeding which remains undismissed for a period of 60 days; or (iv) any order of relief or other order approving any such case or proceeding is entered; or (v) any Loan Party or any of its Subsidiaries is adjudicated insolvent or bankrupt; or (vi) any Loan Party or any of its Subsidiaries suffers any appointment of any custodian or the like for it or any substantial part of its property to continue undischarged or unstayed for a period of 60 days; or (vii) any Loan Party or any of its Subsidiaries makes a general assignment for the benefit of creditors; or (viii) any Loan Party or any of its Subsidiaries shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or (ix) any Loan Party or any of its Subsidiaries shall call a meeting of its creditors with a view to arranging a composition or adjustment of its debts; or (x) any Loan Party or any of its Subsidiaries 80 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT shall by any act or failure to act consent to, approve of or acquiesce in any of the foregoing; or (xi) any corporate action is taken by any Loan Party or any of its Subsidiaries for the purpose of effecting any of the foregoing. (f) ERISA. (i) Any Termination Event shall occur, or (ii) any Plan shall incur an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived, or (iii) the Borrower or a member of its ERISA Controlled Group shall have engaged in a transaction which is prohibited under Section 4975 of the Code or Section 406 of ERISA which could result in the imposition of liability in excess of $2,000,000 on the Borrower or any member of its ERISA Controlled Group, or (iv) the Borrower or any member of its ERISA Controlled Group shall fail to pay when due an amount which it shall have become liable to pay to the PBGC, any Plan or a trust established under Title IV of ERISA, or (v) a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that an ERISA Plan must be terminated or have a trustee appointed to administer any ERISA Plan, or (vi) the Borrower or a member of its ERISA Controlled Group suffers a partial or complete withdrawal from a Multiemployer Plan or is in "default" (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan, or (vii) a proceeding shall be instituted against the Borrower or any member of its ERISA Controlled Group to enforce Section 515 of ERISA and such proceeding shall remain undismissed for 180 days, or (viii) any other event or condition shall occur or exist with respect to any Plan which could subject the Borrower or any member of its ERISA Controlled Group to any tax, penalty or other liability in excess of $2,000,000 or (ix) the aggregate present value of all post-retirement benefit liabilities of the Borrower and its Subsidiaries under any "welfare plan" (as defined in Section 3(1) of ERISA), including, without limitation, Hardee's Retiree Medical Insurance Plan, exceeds $20,000,000. (g) Security Documents. Any of the Security Documents shall for any reason cease to be in full force and effect, or shall cease to give the Agent for the benefit of the Lenders the Liens, rights, powers and privileges purported to be created thereby including, without limitation, a perfected first priority security interest in, and Lien on, any material part of the Collateral in accordance with the terms thereof or the Borrower or any of the Borrower's Subsidiaries party to any Security Document seeks to repudiate its respective obligations thereunder and the Liens created thereby are rendered, or the Borrower or any such Subsidiary of the Borrower seeks to render such Liens, invalid and unperfected. (h) Guaranty. The Guaranty or any provision thereof shall cease to be in full force and effect, or any Guarantor or any Person acting by or on behalf of a Guarantor shall deny or disaffirm all or any portion of such Guarantor's obligations under such Guaranty. (i) Change of Control. (i) Any Person or two or more Persons acting in concert other than the Controlling Stockholders shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), directly or indirectly, of Voting Stock of the Borrower (or other securities convertible into such Voting Stock) representing 20% or more of the combined voting power of all Voting Stock of the Borrower; or (ii) during any period of up to 24 consecutive months, commencing after the Closing Date, individuals who at the beginning of such 24-month period were directors of the Borrower shall cease for any reason to constitute a majority of the board of directors of the Borrower; or (iii) any Person or two or more Persons acting in concert other than the Controlling Stockholders shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation, will result in its or their acquisition of, the power to exercise control over 81 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT Voting Stock of the Borrower (or other securities convertible into such securities representing 20% or more of the combined voting power of all Voting Stock of the Borrower); (iv) a Change in Control as defined in the New Subordinated Note Indenture shall have occurred; (v) a Change of Control as defined in the Convertible Subordinated Note Indenture shall have occurred or (vi) a Change of Control as defined in the New Convertible Subordinated Note Indenture shall have occurred. (j) Judgments. One or more judgments or decrees or awards in an aggregate amount of $5,000,000 or more shall be entered by a court or courts of competent jurisdiction or in any arbitration proceeding against any Loan Party or any of its Subsidiaries and (i) any such judgments or decrees or awards shall not be stayed, discharged, paid, bonded or vacated within 30 days or (ii) enforcement proceedings shall be commenced by any creditor on any such judgment or decree or award. (k) Environmental Matters. (i) Any Environmental Claim shall have been asserted against any Loan Party or any Environmental Affiliate thereof which, if determined adversely, could have a Material Adverse Effect, (ii) any release, emission, discharge or disposal of any Material of Environmental Concern shall have occurred, and such event could form the basis of an Environmental Claim against any Loan Party or any Environmental Affiliate thereof which, if determined adversely, could have a Material Adverse Effect, or (iii) any Loan Party or its Environmental Affiliate shall have failed to obtain any Environmental Approval necessary for the management, use, control, ownership, or operation of its business, property or assets or any such Environmental Approval shall be revoked, terminated, or otherwise cease to be in full force and effect, in each case, if the existence of such condition could have a Material Adverse Effect. (l) Ownership of Certain Assets. The Borrower and/or its Subsidiaries shall sell, convey or otherwise transfer or dispose of any material intellectual property or license agreement owned by or licensed to the Borrower or any of its Subsidiaries or any material license agreement to which the Borrower or any of its Subsidiaries is a party other than (A) a sale, conveyance or other transfer (other than a Lien) to a Domestic Subsidiary, (B) licenses pursuant to Franchise Agreements pledged to the Agent pursuant to the Security Documents and (C) any Asset Disposition permitted by the terms of any of the Loan Documents. Section 8.2 Rights and Remedies. Upon the occurrence of any Event of Default described in Section 8.1(e), the Commitments shall automatically and immediately terminate and the unpaid principal amount of and any and all accrued interest on the Loans and any and all accrued Fees and other Obligations shall automatically become immediately due and payable, with all additional interest from time to time accrued thereon and without presentation, demand, or protest or other requirements of any kind (including, without limitation, valuation and appraisement, diligence, presentment, notice of intent to demand or accelerate and notice of acceleration), all of which are hereby expressly waived by Borrower, and the obligation of each Lender to make any Loan hereunder shall thereupon terminate; and upon the occurrence and during the continuance of any other Event of Default, the Agent shall at the request, or may with the consent, of the Required Lenders, by written notice to Borrower, (i) declare that the Commitments are terminated, whereupon the Commitments and the obligation of each Lender to make any Loan hereunder shall immediately terminate, (ii) require the Borrower to Cash Collateralize the L/C Obligations in an amount equal to the maximum aggregate amount that is, or at any time thereafter may become, available for drawing under any outstanding Letters of Credit (whether or not any beneficiary shall have presented, or shall be entitled at such time to present, the drafts or other documents required to draw under such Letters of Credit), and (iii) declare the unpaid principal amount of and any and all accrued and unpaid 82 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT interest on the Loans and any and all accrued Fees and other Obligations to be, and the same shall thereupon be, immediately due and payable with all additional interest from time to time accrued thereon and without presentation, demand, or protest or other requirements of any kind (including, without limitation, valuation and appraisement, diligence, presentment, notice of intent to demand or accelerate and notice of acceleration), all of which are hereby expressly waived by Borrower. SECTION 9. THE AGENT Section 9.1 Appointment. Each Lender hereby irrevocably designates and appoints BNP Paribas as the Agent of such Lender under this Agreement and each other Loan Document, and each such Lender irrevocably authorizes BNP Paribas as the Agent for such Lender, to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to the Agent by the terms of this Agreement and each other Loan Document, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities on the part of the Agent shall be read into this Agreement or otherwise exist against the Agent. The provisions of this Section 9 are solely for the benefit of the Agent and the Lenders and no Loan Party shall have any rights as a third party beneficiary or otherwise under any of the provisions hereof. In performing its functions and duties hereunder and under the other Loan Documents, the Agent shall act solely as the agent of the Lenders and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for any Loan Party or any of their respective successors and assigns. Section 9.2 Delegation of Duties. The Agent may execute any of its duties under this Agreement or the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care. Section 9.3 Exculpatory Provisions. The Agent shall not be (i) liable for any action lawfully taken or omitted to be taken by it or any Person described in Section 9.2 under or in connection with this Agreement or any other Loan Document (except for its or such Person's own gross negligence or willful misconduct), or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Loan Party contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, or any other Loan Document or for any failure of any Loan Party to perform their obligations hereunder or thereunder. The Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party. This Section is intended solely to govern the relationship between the Agent, on the one hand, and the Lenders, on the other. Section 9.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any Note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document 83 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to any Loan Party), independent accountants and other experts selected by the Agent. The Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless the Agent shall have received an executed Assignment Agreement in respect thereof. The Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Notes. Section 9.5 Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default unless the Agent has received notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Agent receives such a notice, the Agent shall promptly give notice thereof to the Lenders. Subject to the provisions of Section 10.5, the Agent shall take such action with respect to such Default or Event of Default as shall be directed by the Required Lenders; PROVIDED that unless and until the Agent shall have received such directions, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as the Agent shall deem advisable and in the best interests of the Lenders. Section 9.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly acknowledges that neither the Agent, nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by the Agent hereafter taken, including, without limitation, any review of the affairs of any Loan Party, shall be deemed to constitute any representation or warranty by the Agent. Each Lender represents and warrants to the Agent that it has, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, prospects, financial and other conditions and creditworthiness of the Loan Parties and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, prospects, financial and other condition and creditworthiness of the Loan Parties. Except for notices, reports and other documents expressly required under the Loan Documents to be furnished to the Lenders by the Agent, the Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, prospects, financial and other condition or creditworthiness of the Loan Parties which may come into the possession of the Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates. Section 9.7 Indemnification. The Lenders agree to indemnify the Agent and its officers, directors, employees, representatives and agents (to the extent not reimbursed by the Loan Parties and without limiting the obligation of the Loan Parties to do so), ratably according to their 84 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT Pro Rata Shares, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including, without limitation, the fees and disbursements of counsel for the Agent or such Person in connection with any investigative, administrative or judicial proceeding commenced or threatened, whether or not the Agent or such Person shall be designated a party thereto) that may at any time (including, without limitation, at any time following the payment of the Obligations) be imposed on, incurred by or asserted against the Agent or such Person as a result of, or arising out of, or in any way related to or by reason of, any of the Transactions or the execution, delivery or performance of any Loan Document or any other Transaction Document (but excluding any such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the gross negligence or willful misconduct of the Agent or such Person as finally determined by a court of competent jurisdiction); PROVIDED that to the extent indemnification payments made by the Lenders pursuant to this Section 9.7 are subsequently recovered from or for the account of the Borrower, the Agent shall promptly refund such previously paid indemnification payments to the Lenders. Section 9.8 Agent in its Individual Capacity. The Agent and its affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Loan Parties as though the Agent were not the Agent hereunder. With respect to Loans made or renewed by it and any Note issued to it, the Agent shall have the same rights and powers under this Agreement as any Lender and may exercise the same as though it were not the Agent, and the terms "Lender" and "Lenders" shall include the Agent in its individual capacity. Section 9.9 Successor Agent. The Agent may resign as Agent upon 30 days' notice to the Borrower and the Lenders. If the Agent shall resign as Agent under this Agreement, then the Required Lenders during such 30-day period shall appoint from among the Lenders a successor agent, whereupon such successor agent shall succeed to the rights, powers and duties of the Agent and the term "Agent" shall mean such successor agent, effective upon its appointment, and the former Agent's rights, powers and duties as Agent shall be terminated, without any other or further act or deed on the part of such former Agent or any of the parties to this Agreement or any holders of the Notes. Notwithstanding anything herein to the contrary, so long as no Event of Default has occurred and is continuing, each such successor agent shall be subject to approval by the Borrower, which approval shall not be unreasonably withheld or delayed. After any retiring Agent's resignation hereunder as Agent, the provisions of this Section 9 and Section 10.1 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. SECTION 10. MISCELLANEOUS Section 10.1 Payment of Expenses, Indemnity, etc. The Borrower shall: (a) whether or not the transactions hereby contemplated are consummated, pay all reasonable out-of-pocket costs and expenses of the Agent in connection with the negotiation, preparation, execution and delivery of the Loan Documents, the commitment letter related thereto and the Fee Letter, the syndication of the Loans and the closing of the Transactions and the documents and instruments referred to therein, in connection therewith, the creation, perfection or protection of the Agent's Liens in the Collateral (including, without limitation, fees and expenses for lien searches and filing and recording fees and, including, without limitation, fees and expenses incurred in connection with the transactions contemplated by Section 2.21), and any amendment, waiver or consent relating to any of the Loan Documents (including, without limitation, 85 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT as to each of the foregoing, the reasonable fees and disbursements of Skadden, Arps, Slate, Meagher & Flom (Illinois), special counsel to the Agent and any other attorneys and legal assistants retained by the Agent and allocated costs of internal counsel and legal assistants) and of the Agent and each Lender in connection with the preservation of rights under, and enforcement of, the Loan Documents and the documents and instruments referred to therein or in connection with any restructuring or rescheduling of the Obligations (including, without limitation, the reasonable fees and disbursements of counsel for the Agent and for each of the Lenders); (b) pay, and hold the Agent and each of the Lenders harmless from and against, any and all present and future stamp, excise and other similar taxes with respect to the foregoing matters and hold the Agent and each Lender harmless from and against any and all liabilities with respect to or resulting from any delay or omission (other than to the extent attributable to such Lender) to pay such taxes; and (c) indemnify the Agent, the Financial Advisor and each Lender, and each of their Affiliates and their officers, directors, employees, representatives, trustees, attorneys and agents (each an "INDEMNITEE") from, and hold each of them harmless against, any and all losses, liabilities, claims, damages, expenses, obligations, penalties, actions, judgments, suits, costs or disbursements of any kind or nature whatsoever (including, without limitation, the reasonable fees and disbursements of counsel for such Indemnitee) that may at any time (including, without limitation, at any time following the payment of the Obligations) be imposed on, asserted against or incurred by any Indemnitee as a result of, or arising out of, or in any way related to or by reason of, or in connection with the preparation for a defense of, any investigation, litigation or proceeding arising out of, related to or in connection with (i) any of the Transactions or the execution, delivery or performance of any Loan Document or any other Transaction Document (including, without limitation, any actual or proposed use by the Borrower or any Subsidiary of the Borrower of the proceeds of any Loan or Letter of Credit), (ii) any violation by any Loan Party or its Environmental Affiliate of any applicable Environmental Law, (iii) any Environmental Claim arising out of the management, use, control, ownership or operation of property or assets by any of the Loan Parties or any of their Environmental Affiliates, including, without limitation, all on-site and off-site activities involving Materials of Environmental Concern, (iv) the breach of any environmental representation or warranty set forth in Section 5.19, (v) the grant to the Agent and the Lenders of any Lien in any property or assets of any of the Loan Parties or any stock or other equity interest in any of the Loan Parties, and (vi) the exercise by the Agent and the Lenders of their rights and remedies (including, without limitation, foreclosure) under any agreements creating any such Lien (but excluding, as to any Indemnitee, any such losses, liabilities, claims, damages, expenses, obligations, penalties, actions, judgments, suits, costs or disbursements incurred solely by reason of the gross negligence or willful misconduct of such Indemnitee as finally determined by a court of competent jurisdiction). The Borrower's obligations under this Section shall survive the termination of this Agreement and the payment of the Obligations. Section 10.2 Right of Setoff. In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, upon the occurrence and during the continuance of any Event of Default, each Lender and each of such Lender's Affiliates is hereby authorized at any time or from time to time, without presentment, demand, protest or other notice of any kind to any Loan Party or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and apply any and all deposits (general or special, time or demand, provisional or final) and any other indebtedness at any time held or owing by such Lender or such Affiliate (including, without limitation, by branches and agencies of 86 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT such Lender or such Affiliate wherever located) to or for the credit or the account of any Loan Party against and on account of the Obligations of the Loan Parties to such Lender or such Affiliate under this Agreement or under any of the other Loan Documents, including, without limitation, all interests in Obligations purchased by such Lender pursuant to Section 10.7, and all other claims of any nature or description arising out of or connected with this Agreement or any other Loan Document, irrespective of whether or not such Lender or such Affiliate shall have made any demand hereunder and although said Obligations, liabilities or claims, or any of them, shall be contingent or unmatured. Section 10.3 Notices. Except as otherwise expressly provided herein, all notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy, telex, or cable communication), and shall be deemed to have been duly given or made when delivered by hand, or five days after being deposited in the United States mail, postage prepaid, or, in the case of telex notice, when sent, answerback received, or, in the case of telecopy notice, when sent, or, in the case of a nationally recognized overnight courier service, one Business Day after delivery to such courier service, addressed, in the case of each party hereto, at its address specified opposite its signature below or on the appropriate Assignment Agreement, or to such other address as may be designated by any party in a written notice to the other parties hereto, PROVIDED that notices and communications to the Agent shall not be effective until received by the Agent. Section 10.4 Successors and Assigns; Participation; Assignments. (a) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Borrower, the Lenders, the Agent, all future holders of the Notes and their respective successors and assigns, except that the Borrower may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of each Lender. No Lender may participate, assign or sell any of its Credit Exposure (as defined in clause (b) below) except as required by operation of law, in connection with the merger, consolidation or dissolution of any Lender or as provided in this Section 10.4. (b) Participation. Any Lender may at any time sell to one or more Persons (each a "PARTICIPANT") participating interests in any Loan owing to such Lender, any Note held by such Lender, any Commitment of such Lender and or any other interest of such Lender hereunder (in respect of any such Lender, its "CREDIT EXPOSURE"). Notwithstanding any such sale by a Lender of participating interests to a Participant, such Lender's rights and obligations under this Agreement shall remain unchanged, such Lender shall remain solely responsible for the performance thereof, such Lender shall remain the holder of any such Note for all purposes under this Agreement (except as expressly provided below), and the Borrower and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. The Borrower agrees that if any Obligations are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence and during the continuance of an Event of Default, each Participant shall be deemed to have the right of setoff in respect of its participating interest in amounts owing under this Agreement and any Note to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement or any Note PROVIDED, that such right of setoff shall be subject to the obligations of such Participant to share with the Lenders, and the Lenders agree to share with such Participant, as provided in Section 10.7. The Borrower also agrees that each Participant shall be entitled to the benefits of Sections 2.16, 2.17, 2.18 and 2.19, PROVIDED, that no Participant shall be entitled to receive any greater amount pursuant to such sections than the transferor Lender would have been entitled to receive in respect of the amount of the participating interest transferred by such transferor Lender to 87 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT such Participant had no such transfer occurred. Each Lender agrees that any agreement between such Lender and any such Participant in respect of such participating interest shall not restrict such Lender's right to agree to any amendment, supplement, waiver or modification to this Agreement or any other Loan Document, except where the result of any of the foregoing would be to extend the final maturity of any Obligation or any regularly scheduled installment thereof or reduce the rate or extend the time of payment of interest thereon or reduce the principal amount thereof or release all or substantially all of the Collateral (except as expressly provided in the Loan Documents). (c) Assignments. Any Lender may, in accordance with applicable law, at any time assign to any Lender or any affiliate thereof, including, without limitation, a Lender Affiliate or, with the consent of the Agent, which consent shall not be unreasonably withheld, to any other Person (each an "ASSIGNEE") all or any part of its Credit Exposure; PROVIDED, that in the case of any such assignment to a Person that is not another Lender or an affiliate of the assigning Lender, each such assignment shall be (i) except in the case of an assignment of the entire remaining amount of the Lender's Credit Exposure, (A) for a Credit Exposure not less than $5,000,000 in the case of Revolving Loans and (B) for Credit Exposure not less than $1,000,000 in the case of Term Loans, PROVIDED, that concurrent assignments of such Lender's Term Loan Credit Exposure to such Person and the affiliates of such Person, including, without limitation, Lender Affiliates of such Person, may be for lesser amounts so long as the aggregate amount of such assignments are not less than $1,000,000, (ii) to an Assignee approved in writing by the Agent, which approval shall not be unreasonably withheld and (iii) so long as no Default or Event of Default shall have occurred and be continuing, to an Assignee approved by the Borrower, which approval shall not be unreasonably withheld. Such consent of the Agent shall be substantially in the form attached as Schedule II to Exhibit I hereto. The Borrower, the Agent and the Lenders agree that to the extent of any assignment the Assignee shall be deemed to have the same rights and benefits under the Loan Documents and the same rights of setoff and obligation to share pursuant to Section 10.7 as it would have had if it were a Lender hereunder; PROVIDED that the Borrower and the Agent shall be entitled to continue to deal solely and directly with the assignor Lender in connection with the interests so assigned to the Assignee unless and until such Assignee becomes a Purchasing Lender pursuant to clause (d) below. (d) Assignments to Purchasing Lenders. Any Lender may at any time and from time to time assign to one or more Persons ("PURCHASING LENDERS") all or any part of its Credit Exposure pursuant to a supplement to this Agreement, substantially in the form of Exhibit I hereto (an "ASSIGNMENT AGREEMENT"), executed by such Purchasing Lender, such transferor Lender and the Agent. Upon (i) such execution of such Assignment Agreement, (ii) delivery to the Agent of a notice of assignment substantially in the form of Schedule I to Exhibit I hereto (a "NOTICE OF ASSIGNMENT") with a copy to the Borrower, together with any consent required pursuant to Section 10.4(c) above and a copy of the Assignment Agreement, (iii) payment by such Purchasing Lender to such transferor Lender of an amount equal to the purchase price agreed between such transferor Lender and such Purchasing Lender and (iv) payment of a $3,500 fee to the Agent for processing of such assignment, and subject to acceptance and recording of such Assignment Agreement pursuant to subsection (h) below, such assignment shall become effective on the effective date specified in such Assignment Agreement, which effective date shall be at least five (5) Business Days after delivery of such Notice of Assignment to the Agent (or such shorter period agreed to by the Agent), such transferor Lender shall be released from its obligations hereunder to the extent of such assignment and such Purchasing Lender shall for all purposes be a Lender party to this Agreement and shall have all the rights and obligations of a Lender under this Agreement to the same extent as if it were an original party hereto, and no further consent or action by the Borrower, the Lenders or the Agent shall be required. Such Assignment Agreement shall be deemed to amend this 88 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing Lender as a Lender and the resulting adjustment of the Commitments, if any, arising from the purchase by such Purchasing Lender of all or a portion of the Credit Exposure of such transferor Lender. (e) Disclosure of Information. The Borrower authorizes each Lender to disclose to any Participant, Assignee or Purchasing Lender (each, a "TRANSFEREE") and any prospective Transferee any and all financial and other information in such Lender's possession concerning the Borrower which has been delivered to such Lender by the Borrower pursuant to this Agreement or which has been delivered to such Lender by the Borrower in connection with such Lender's credit evaluation of the Borrower prior to entering into this Agreement. (f) Pledges by Lenders. Notwithstanding any other provision set forth in this Agreement, any Lender may at any time assign and pledge a security interest in all or any portion of its rights under this Agreement to secure the obligations of such Lender, including, without limitation, any assignment or pledge to secure obligations to any Federal Reserve Bank as collateral security pursuant to Regulation A and any Operating Circular issued by such Federal Reserve Bank; PROVIDED, that no such assignment or pledge shall release the assigning Lender from its obligations hereunder or substitute any such assignee or pledgee for such Lender as a party hereto. (g) Transfer and Exchange of Notes. Promptly after the consummation of any transfer to a Purchasing Lender pursuant hereto, the transferor Lender, the Agent and the Borrower shall make appropriate arrangements so that any Notes held by such transferor Lender shall be surrendered to the Borrower for cancellation, one or more replacement Notes in exchange therefor shall be issued to such transferor Lender, and one or more new Notes shall be issued to such Purchasing Lender, in each case in notional amounts reflecting such transfer. Each such new Revolving Note and new Term Note shall be payable to the Purchasing Lender and shall be substantially in the form of Exhibits A and B, respectively. (h) Register. The Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at its address referred to on its signature page hereto a copy of each Assignment Agreement delivered to it and a register (the "REGISTER") for the recordation of the names and addresses of the Lenders and the Commitments of, and the principal amount of the Loans and the making of payments with respect to any Letter of Credit owing to, each Lender pursuant to the terms hereof from time to time. The entries in the Register shall be, to the extent permitted by law, prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded, and the Borrower, the Agent, the Issuing Bank and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as the owner of the Loans recorded therein for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender at any reasonable time and from time to time upon reasonable prior notice. Section 10.5 Amendments and Waivers. (a) Neither this Agreement, any Note, any other Loan Document to which the Borrower or any other Loan Party is a party nor any terms hereof or thereof may be amended, supplemented, modified or waived except in accordance with the provisions of this Section. The Required Lenders and the Borrower (or such other Loan Party, as the case may be) may, from time to time, enter into written amendments, supplements, modifications or waivers for 89 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT the purpose of adding, deleting, changing or waiving any provisions to this Agreement, the Notes, or the other Loan Documents to which the Borrower or such other Loan Party is a party, PROVIDED, that no such amendment, supplement, modification or waiver shall (i) extend the Revolving Loan Maturity Date or the Term Loan Maturity Date or extend the time for payment of any installment, fee or required prepayment of any Obligations or reduce the rate or extend the time of payment of interest on any Obligations, or reduce the principal amount of any Obligations or reduce any fee payable to the Lenders hereunder, or release or subordinate all or substantially all of the Collateral (except as expressly contemplated by the Loan Documents) or change the amount of any Commitment of any Lender, or amend, modify or waive any provision of this Section 10.5, or the definition of Required Lenders, or consent to or permit the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement or any other Loan Document, or modify any provision hereof providing for the pro rata sharing of payments, in each case without the written consent of all the Lenders; (ii) release Carl Karcher Enterprises, Inc., Hardee's or any Subsidiary of Hardee's (other than any such Subsidiary which is an Immaterial Subsidiary), from the Guaranty and the other applicable Security Documents (including the release of such Loan Party's stock certificates from the Borrower Pledge Agreement or the Subsidiary Pledge Agreement, as applicable), in each case without the written consent of all of the Lenders; or (iii) amend, modify or waive any provision of Section 9 or any other provision of any Loan Document if the effect thereof is to affect the rights or duties of the Agent, without the written consent of the then Agent; PROVIDED, FURTHER, that the release from the Guaranty and the other applicable Security Documents (including the release of such Loan Party's stock certificates from the Borrower Pledge Agreement or the Subsidiary Pledge Agreement, as applicable) of any Subsidiary of the Borrower (other than a Subsidiary of Hardee's) with assets of less than $10,000,000 (as determined in accordance with GAAP) shall not require the consent of any of the Lenders in any of the foregoing circumstances if (x) such Subsidiary (a "SOLD GUARANTOR") is being released from the Guaranty because all or a portion of the assets of such Sold Guarantor are being sold or otherwise disposed of in an Asset Disposition or the Equity Interests of such Sold Guarantor are being sold or otherwise disposed of or an issuance of Equity Interests of such Sold Guarantor is commenced, and immediately after giving effect to such sale, other disposition or issuance of Equity Interests and as a result of such sale, other disposition or issuance of Equity Interests, such Sold Guarantor is no longer a Subsidiary of the Borrower and (y) any such Asset Disposition or sale, other disposition or issuance of Equity Interests is otherwise permitted and commenced in accordance with the terms of this Agreement (and the Agent is hereby authorized by the Lenders to execute and deliver to the Borrower all such documents evidencing any such release). (iv) amend, modify or waive Section 2.12 or 2.13 hereof in a manner that would alter the application of any prepayment of the Obligations without the consent of each Lender adversely affected thereby. Any such amendment, supplement, modification or waiver shall apply to each of the Lenders equally and shall be binding upon the Borrower, the Lenders, the Agent and all future holders of the Notes. 90 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT In the case of any waiver, the Borrower, the Lenders and the Agent shall be restored to their former position and rights hereunder and under the outstanding Notes, and any Default or Event of Default waived shall be deemed to be cured and not continuing, but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. Notwithstanding the foregoing, (i) the Fee Letter may be amended or otherwise modified in a writing executed by only the parties thereto and (ii) a Letter of Credit may be amended in accordance with Section 3.1(f). (b) Each of the Lenders agrees that in the event that such Lender is requested to consent to any amendment, supplement, modification or waiver of any term or condition of or with respect to this Agreement or any other Loan Document, the effectiveness of which requires the consent of all of the Lenders pursuant to the first proviso of Section 10.5(a) hereof, and such Lender shall fail or refuse to give such consent, such Lender (the "AFFECTED LENDER") shall be obliged, at the request of the Borrower and with the consent of the Agent, to assign all of its rights and obligations hereunder to (i) another Lender or (ii) another qualified financial institution nominated by the Agent and reasonably acceptable to the Borrower (the "REPLACEMENT LENDER"), and willing to participate in this Agreement through the Final Maturity Date in the place of such Affected Lender; PROVIDED that the Affected Lender receives payment in full, pursuant to an Assignment Agreement, of an amount equal to such Lender's Pro Rata Share of all unpaid principal and interest owing to the Lenders and all accrued but unpaid fees and other costs and expenses payable with respect to its Pro Rata Share. The Agent shall give written notice to the Borrower of any such assignment. Section 10.6 No Waiver; Remedies Cumulative. No failure or delay on the part of the Agent or any Lender or any holder of a Note in exercising any right, power or privilege hereunder or under any other Loan Document and no course of dealing between any Loan Party and the Agent or any Lender or the holder of any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Loan Document preclude any other or further exercise thereof of the exercise of any other right, power or privilege hereunder or thereunder. The rights and remedies herein expressly provided are cumulative and not exclusive of any rights or remedies which the Agent or any Lender or the holder of any Note would otherwise have. No notice to or demand on any Loan Party in any case shall entitle any Loan Party to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Agent, the Lenders or the holder of any Note to any other or further action in any circumstances without notice or demand. Section 10.7 Sharing of Payments. Each of the Lenders agrees that if it should receive any amount hereunder (whether by voluntary payment, by realization upon security, by the exercise of the right of setoff or banker's lien, by counterclaim or cross action, by the enforcement of any right under the Loan Documents, or otherwise) which is applicable to the payment of any Obligations, of a sum which with respect to the related sum or sums received by other Lenders is in a greater proportion than the total of such Obligation then owed and due to such Lender bears to the total of such Obligation then owed and due to all of the Lenders immediately prior to such receipt, then such Lender receiving such excess payment shall purchase for cash without recourse or warranty from the other Lenders an interest in such Obligations owing to such Lenders in such amount as shall result in a proportional participation by all of the Lenders in such amount; PROVIDED that if all or any portion of such excess amount is thereafter recovered from such Lender, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest. 91 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT Section 10.8 Application of Collateral Proceeds. The Agent shall, unless otherwise specified at the direction of the Required Lenders which direction shall be consistent with the last sentence of this Section 10.8, apply all proceeds of Collateral in the following order: (A) first, to pay Obligations in respect of any fees, expense reimbursements or indemnities then due to the Agent; (B) second, to pay Obligations in respect of any fees, expenses, reimbursements or indemnities then due to the Lenders and the Issuer; (C) third, to pay interest due in respect of the Loans and L/C Obligations; (D) fourth, to the ratable payment of principal outstanding on the Loans, Obligations for unreimbursed drawings under all Letters of Credit and net termination amounts payable in respect of Rate Hedging Obligations (with the order of application to the installments of any particular Loan, Obligation for any unreimbursed drawing under any Letter of Credit or net termination amount payable in respect of Rate Hedging Obligation to be determined by the Agent in its sole discretion); (E) fifth, to provide required cash collateral if any pursuant to Section 8.2; and (F) sixth, to the ratable payment of all other Obligations. The order of priority set forth in this Section 10.8 and the related provisions of this Agreement are set forth solely to determine the rights and priorities of the Agent and the Lenders as among themselves. The order of priority set forth in clauses (B) through (F) of this Section 10.8 may at any time and from time to time be changed with the consent of 100% of the Lenders without necessity of notice to or consent of or approval by the Borrower, or any other Person. The order of priority set forth in clause (A) of this Section 10.8 may be changed only with the prior written consent of the Agent. Section 10.9 Governing Law; Submission to Jurisdiction. (a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW TO THE EXTENT SUCH PRINCIPLES WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF ILLINOIS). (b) Any legal action or proceeding with respect to this Agreement or any other Loan Document and any action for enforcement of any judgment in respect thereof may be brought in the courts of the State of Illinois or of the United States of America for the Northern District of Illinois, and, by execution and delivery of this Agreement, the Borrower hereby accepts for itself and in respect of its property, generally and unconditionally, the non-exclusive jurisdiction 92 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT of the aforesaid courts and appellate courts. The Borrower irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, the Borrower at its address set forth opposite its signature below. The Borrower hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement or any other Loan Document brought in the courts referred to above and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. Nothing herein shall affect the right of the Agent, any Lender or any holder of a Note to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Borrower in any other jurisdiction. Section 10.10 Counterparts. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. Section 10.11 Financial Advisor. The Borrower and each Lender agrees and acknowledges that the Agent may, in its sole discretion, from time to time retain a financial advisor (the "FINANCIAL ADVISOR") for the purpose of advising the Agent and the Lenders as to the financial condition of the Borrower and its Subsidiaries and such other matters related to the facility provided and contemplated hereunder as the Agent and the Lenders may desire. The Borrower agrees to pay all reasonable fees, costs and out-of-pocket expenses of the Financial Advisor in connection with the performance of its duties under this Section 10.11 and to indemnify the Financial Advisor in accordance with Section 10.1(c) hereof. Section 10.12 Amendment and Restatement. This Agreement amends and restates in its entirety the Original Credit Agreement. Upon the effectiveness of this Agreement, the terms and provisions of the Original Credit Agreement shall, subject to this Section 10.12, be superseded hereby. Notwithstanding the amendment and restatement of the Original Credit Agreement by this Agreement, the Borrower shall continue to be liable to the Lenders party to the Original Credit Agreement and the Agent with respect to agreements on the part of the Borrower under the Original Credit Agreement to indemnify any of such Lenders or the Agent in connection with events or conditions arising or existing prior to the date hereof, including, but not limited to, those events and conditions set forth in Section 10 thereof. This Agreement is given in substitution for the Original Credit Agreement. Upon the effectiveness of this Agreement, each reference to the Original Credit Agreement in any other document, instrument or agreement executed and/or delivered in connection therewith shall mean and be a reference to this Agreement. This Agreement amends, restates and supersedes only the Original Credit Agreement. This Agreement is not a novation. Nothing contained herein or in any of the other Loan Documents, unless expressly herein or therein stated to the contrary, is intended to amend, modify or otherwise affect any other instrument, document or agreement executed and/or delivered in connection with the Original Credit Agreement. The principal amounts of Loans outstanding under the Original Credit Agreement immediately prior to giving effect to this Agreement to each Lender that is a party thereto shall be deemed to be Loans made by that Lender hereunder. Each Letter of Credit issued under the Original Credit Agreement and outstanding immediately prior to giving effect to this Agreement shall be deemed to be a Letter of Credit hereunder. To the extent necessary, the Agent shall reallocate such outstanding Revolving Loans and the participation interests in such outstanding Letters of Credit ratably among the 93 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT Revolving Lenders after giving effect to this Agreement so that each Revolving Lender's Pro Rata Share of such Letters of Credit is based on the Total Revolving Loan Commitment hereunder. Section 10.13 Headings Descriptive. The headings of the several Sections and subsections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement. Section 10.14 Marshalling; Recapture. Neither the Agent nor any Lender shall be under any obligation to marshall any assets in favor of any Loan Party or any other party or against or in payment of any or all of the Obligations. To the extent any Lender receives any payment by or on behalf of any Loan Party, which payment or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to such Loan Party or its estate, trustee, receiver, custodian or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then to the extent of such payment or repayment, the obligation or part thereof which has been paid, reduced or satisfied by the amount so repaid shall be reinstated by the amount so repaid and shall be included within the liabilities of such Loan Party to such Lender as of the date such initial payment, reduction or satisfaction occurred. Section 10.15 Severability. In case any provision in or obligation under this Agreement or the Notes or the other Loan Documents shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. Section 10.16 Independence of Covenants. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or be otherwise within the limitations of, another covenant shall not avoid the occurrence of a Default or Event of Default if such action is taken or condition exists. Section 10.17 Survival. All indemnities set forth herein including, without limitation, in Sections 2.16, 2.17, 2.18, 2.19, 9.7 and 10.1 shall survive the execution and delivery of this Agreement and the Notes and the making and repayment of the Loans hereunder. Section 10.18 Domicile of Loans. Each Lender may transfer and carry its Loans at, to or for the account of any branch office, subsidiary or affiliate of such Lender. Section 10.19 Limitation of Liability. No claim may be made by any Loan Party or any other Person against the Agent or any Lender or the Affiliates, directors, officers, employees, attorneys or agent of any of them for any special, indirect, consequential or punitive damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement or any other Transactions, or any act, omission or event occurring in connection therewith; and each Loan Party hereby waives, releases and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor. Section 10.20 Calculations; Computations. The financial statements to be furnished to the Agent and the Lenders pursuant hereto shall be made and prepared in accordance with GAAP consistently applied throughout the periods involved and consistent with GAAP as used in the 94 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT preparation of the financial statements referred to in Section 5.5, and, except as otherwise specifically provided herein, all computations determining compliance with Section 7.1 hereof shall utilize GAAP. Section 10.21 WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE BORROWER, THE AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY MATTER ARISING HEREUNDER OR THEREUNDER. Section 10.22 References. Unless otherwise expressly specified herein, all references to "Article," "Section,""Schedule," or "Exhibit" shall mean articles and sections of, and schedules and exhibits to, this Agreement. (Signature Pages Follow) 95 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this Agreement as of the date first above written. CKE RESTAURANTS, INC. By: _______________________________ Print Name: Title: Address: 6307 Carpinteria Avenue Suite A Carpinteria, CA 93013 Attn: General Counsel Telephone: (714) 774-5796 Telecopy: (714) 520-4485 S-1 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT BNP PARIBAS, as Agent and as a Lender By: _______________________________ Print Name: Clark C. King III Title: Managing Director By: _______________________________ Print Name: Title: Address: 209 S. LaSalle Street Suite 500 Chicago, IL 60604 Attn: Clark C. King III Telephone: (312) 977-2254 Telecopy: (312) 977-1380 with a copy to: Maureen B. Keating BNP Paribas 787 Seventh Avenue New York, NY 10019-6016 Telephone: (212) 841-2286 Telecopy: (212) 841-2275 S-2 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT FIRST BANK & TRUST By: _______________________________ Print Name: Nic Goeres Title: Vice President Address: 4301 MacArthur Blvd. Newport Beach, CA 92660 Attn: Nic Goeres Telephone: (949) 475-6320 Telecopy: (949) 851-8747 S-3 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT WELLS FARGO BANK, N.A. By: _______________________________ Print Name: Stephen Amendt Title: Vice President Address: 2030 Main Street Suite 900 Irvine, CA 92614 Attn: Stephen Amendt Telephone: (949) 251-4195 Telecopy: (949) 261-1830 S-4 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT FLEET NATIONAL BANK By: _______________________________ Print Name: Title: Address: Attn: Heidi Tyng Telephone: (617) 434-1087 Telecopy: (617) 434-0637 S-5 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT U.S. BANK NATIONAL ASSOCIATION By: _______________________________ Print Name: Janet E. Jordan Title: Vice President Address: 555 S. W. Oak Street, PL-4 Portland, OR 97204 Attn: Janet Jordan Telephone: (503) 275-5871 Telecopy: (503) 275-5428 S-6 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT UNION BANK OF CALIFORNIA, N.A. By: _______________________________ Print Name: Stephen W. Dunne Title: Vice President Address: 18300 Von Karman Ave. Suite 310 Irvine, CA 92612 Attn: Stephen W. Dunne Telephone: (949) 553-6846 Telecopy: (949) 553-7122 S-7 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT ALLIED IRISH BANKS, P.L.C. By: _______________________________ Print Name: Title: Address: Bankcentre, Ballsbridge Dublin 4, Ireland Attn: John Timoney Telephone: (212) 515-6762 Telecopy: (212) 339-8325 S-8 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT CITICORP NORTH AMERICA, INC. By: _______________________________ Print Name: Title: Address: 390 Greenwich Street 1st Floor New York, NY 10013 Attn: Dan Brill Telephone: (212) 723-6614 Telecopy: (212) 723-8547 S-9 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT EAST WEST BANK By: _______________________________ Print Name: Title: Address: 415 Huntington Drive San Marino, CA 91108 Attn: Nancy A. Moore Telephone: (626) 685-3636 Telecopy: (626) 799-3167 S-10 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT TORONTO DOMINION (NEW YORK) INC. By: _______________________________ Print Name: Title: Address: 909 Fannin Suite 1700 Houston, TX 77010 Attn: Stacey, L. Malek Telephone: (713) 653-8215 Telecopy: (713) 652-0914 S-11 Schedule 1.1 to Credit Agreement Lenders and Commitments

Name of Lender Revolving Loan Commitment --------------- ------------------------- First Bank and Trust $20,000,000.00 Fleet National Bank $30,000,000.00 BNP Paribas $25,000,000.00 U.S. Bank National Association $15,000,000.00 Wells Fargo Bank, N.A. $25,000,000.00 Union Bank of California $15,000,000.00 Allied Irish Bank $10,000,000.00 Citicorp North America, Inc. $ 5,000,000.00 East West Bank $ 5,000,000.00

Name of Lender Term Loan Commitment -------------- -------------------- BNP Paribas $23,000,000.00 Toronto Dominion (New York) Inc. $ 2,000,000.00

SCHEDULE 4.1(b) Local Counsel

State Counsel - ----------------------------------------------------------------- Delaware & California Stradling Yocca Carlson & Rauth - ----------------------------------------------------------------- North Carolina Kilpatrick Stockton - ----------------------------------------------------------------- Alabama Johnston Barton Proctor & Powell LLP - ----------------------------------------------------------------- Minnesota Larkin, Hoffman, Daly & Lindgren, Ltd. - ----------------------------------------------------------------- Nevada Schreck Brignone Godfrey - -----------------------------------------------------------------

Sch 4.2(b)-1 ANNEX I

DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE - --------------------------------------------------------------------------- BNP Paribas BNP Paribas 209 S. LaSalle Street 209 S. LaSalle Street Suite 500 Suite 500 Chicago, IL 60604 Chicago, IL 60604 Telephone: (312) 977-2200 Telephone: (312) 977-2200 Telecopy: (312) 977-1380 Telecopy: (312) 977-1380 - --------------------------------------------------------------------------- First Bank & Trust First Bank & Trust 4301 MacArthur Blvd. 4301 MacArthur Blvd. Newport Beach, CA 92660 Newport Beach, CA 92660 Telephone: (949) 475-6320 Telephone: (949) 475-6320 Telecopy: (949) 851-8747 Telecopy: (949) 851-8747 - --------------------------------------------------------------------------- Fleet National Bank Fleet National Bank Mail Code: MA DE 10008H Mail Code: MA DE 10008H 100 Federal Street 100 Federal Street Boston, MA 02110 Boston, MA 02110 Telephone: (617) 434-5777 Telephone: (617) 434-5777 Telecopy: (617) 434-9933 Telecopy: (617) 434-9933 - --------------------------------------------------------------------------- U.S. Bank National Association U.S. Bank National Association 555 S. W. Oak Street, PL-4 555 S. W. Oak Street, PL-4 Portland, OR 97204 Portland, OR 97204 Telephone: (503) 275-5871 Telephone: (503) 275-5871 Telecopy: (503) 275-5428 Telecopy: (503) 275-5428 - --------------------------------------------------------------------------- Wells Fargo Bank, N.A. Wells Fargo Bank, N.A. 2030 Main Street 2030 Main Street Suite 900 Suite 900 Irvine, CA 92614 Irvine, CA 92614 Telephone: (949) 251-4156 Telephone: (949) 251-4156 Telecopy: (949) 261-1830 Telecopy: (949) 261-1830 - --------------------------------------------------------------------------- Union Bank of California, N.A. Union Bank of California, N.A. 1980 Saturn Street 1980 Saturn Street Monterey Park, CA Monterey Park, CA Telephone: (323) 720 2870 Telephone: (323) 720 2870 Telecopy: (323) 720-6198 Telecopy: (323) 720-6198 - ---------------------------------------------------------------------------

Annex I-2 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE - ------------------------------------------------------------------------------ Citicorp North America, Inc. Citicorp North America, Inc. 2 Penns Way 2 Penns Way Suite 110 Suite 110 New Castle, DE 19720 New Castle, DE 19720 Telephone: (213) 816-7077 Telephone: (213) 816-7077 Telecopy: (213) 816-2021 Telecopy: (213) 816-2021 - ------------------------------------------------------------------------------ East West Bank East West Bank 407 West Valley Blvd. 407 West Valley Blvd. Alhambra, CA 91803 Alhambra, CA 91803 Telephone: (626) 300-2982 Telephone: (626) 300-2982 Telecopy: (626) 282-6497 Telecopy: (626) 282-6497 - ------------------------------------------------------------------------------ Toronto Dominion (New York), Inc. Toronto Dominion (New York), Inc. 909 Fannin 909 Fannin Suite 1700 Suite 1700 Houston, TX 77010 Houston, TX 77010 Telephone: (713) 653-8200 Telephone: (713) 653-8200 Telecopy: (713) 951-9921 Telecopy: (713) 951-9921 - ------------------------------------------------------------------------------ Allied Irish Banks, p.l.c. Allied Irish Banks, p.l.c. Business Support Unit Business Support Unit AIB Bankcentre AIB Bankcentre Ballsbridge Ballsbridge Dublin 4, Ireland Dublin 4, Ireland Telephone: +353 1 641 6632 Telephone: +353 1 641 6632 Telecopier: +353 1 608 9795 Telecopier: +353 1 608 9795 - ------------------------------------------------------------------------------

Annex I-3 EX-31.1 8 a94967exv31w1.htm EXHIBIT 31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Andrew F. Puzder, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ended November 3, 2003, of CKE Restaurants, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) [Paragraph omitted pursuant to SEC Release Nos. 33-82538 and 34-47986];

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financing reporting.

Date: December 10, 2003

/s/ Andrew F. Puzder

Andrew F. Puzder
Chief Executive Officer

EX-31.2 9 a94967exv31w2.htm EXHIBIT 31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Theodore Abajian, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ended November 3, 2003, of CKE Restaurants, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) [Paragraph omitted pursuant to SEC Release Nos. 33-82538 and 34-47986];

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financing reporting.

Date: December 10, 2003

/s/ Theodore Abajian

Theodore Abajian
Chief Financial Officer

EX-32.1 10 a94967exv32w1.htm EXHIBIT 32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the period ended November 3, 2003, of CKE Restaurants, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Andrew F. Puzder, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78m(a) or Section 78o(d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

December 10, 2003

/s/ Andrew F. Puzder

Andrew F. Puzder
Chief Executive Officer

EX-32.2 11 a94967exv32w2.htm EXHIBIT 32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the period ended November 3, 2003, of CKE Restaurants, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Theodore Abajian, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78m(a) or Section 78o(d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

December 10, 2003

/s/ Theodore Abajian

Theodore Abajian
Chief Financial Officer

-----END PRIVACY-ENHANCED MESSAGE-----

EX-4.6

                                                                     EXHIBIT 4.6

                                                                  EXECUTION COPY

                              CKE RESTAURANTS, INC.

                                       AND

                                ----------------

                 J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION

                                   AS TRUSTEE

                                ----------------

                                   $90,000,000

                   4% Convertible Subordinated Notes due 2023*

                                ----------------

                                    INDENTURE

                         Dated as of September 29, 2003

- -------------------
*  Plus an option to purchase up to $15,000,000 aggregate principal amount of 4%
   Convertible Subordinated Notes due 2023.



                         TABLE OF CONTENTS



                                                                            PAGE
                                                                            ----
                                                                         
                                    ARTICLE 1
                                   DEFINITIONS
                                        1

Section 1.01   Definitions................................................    1
Section 1.02   Other Definitions..........................................    8
Section 1.03   Incorporation by Reference of Trust Indenture Act..........    9
Section 1.04   Rules of Construction......................................    9

                                    ARTICLE 2
                       THE CONVERTIBLE SUBORDINATED NOTES
                                       10

Section 2.01   Form and Dating............................................   10
Section 2.02   Execution and Authentication...............................   11
Section 2.03   Registrar, Paying Agent and Conversion Agent...............   12
Section 2.04   Paying Agent to Hold Money in Trust........................   12
Section 2.05   Holder Lists...............................................   12
Section 2.06   Transfer and Exchange......................................   13
Section 2.07   Replacement Convertible Subordinated Notes.................   15
Section 2.08   Outstanding Convertible Subordinated Notes.................   15
Section 2.09   When Treasury Convertible Subordinated Notes Disregarded...   16
Section 2.10   Temporary Convertible Subordinated Notes; Transfers of
               Global Security to Beneficial Owners.......................   16
Section 2.11   Cancellation...............................................   18
Section 2.12   Defaulted Interest.........................................   18
Section 2.13   CUSIP Number...............................................   18
Section 2.14   Regulation S...............................................   19

                                    ARTICLE 3
                            REDEMPTION AND PURCHASES
                                       19

Section 3.01   Optional Redemption........................................   19
Section 3.02   Notices to Trustee.........................................   19
Section 3.03   Selection of Convertible Subordinated Notes to Be Redeemed.   19
Section 3.04   Notice of Redemption.......................................   20
Section 3.05   Effect of Notice of Redemption.............................   21
Section 3.06   Deposit of Redemption Price................................   21
Section 3.07   Convertible Subordinated Notes Redeemed in Part............   22
Section 3.08   Conversion Arrangement on Call for Redemption..............   22
Section 3.09   Repurchase of Convertible Subordinated Notes at Option of
               the Holder.................................................   23


                                       i



                                TABLE OF CONTENTS
                                   (CONTINUED)



                                                                            PAGE
                                                                            ----
                                                                         
Section 3.10   Repurchase Upon Fundamental Change.........................   26

                                    ARTICLE 4
                                    COVENANTS
                                       28

Section 4.01   Payment of Convertible Subordinated Notes..................   28
Section 4.02   Commission Reports.........................................   29
Section 4.03   Compliance Certificate.....................................   29
Section 4.04   Maintenance of Office or Agency............................   29
Section 4.05   Continued Existence........................................   29
Section 4.06   Appointments to Fill Vacancies in Trustee's Office.........   30
Section 4.07   Stay, Extension and Usury Laws.............................   30
Section 4.08   Taxes......................................................   30
Section 4.09   Investment Company Act.....................................   30

                                    ARTICLE 5
                                   SUCCESSORS
                                       30

Section 5.01   When the Company May Merge, Etc............................   30
Section 5.02   Successor Corporation Substituted..........................   31
Section 5.03   Purchase Option on Change of Control.......................   32

                                    ARTICLE 6
                              DEFAULTS AND REMEDIES
                                       32

Section 6.01   Events of Default..........................................   32
Section 6.02   Acceleration...............................................   34
Section 6.03   Other Remedies.............................................   34
Section 6.04   Waiver of Past Defaults....................................   35
Section 6.05   Control by Majority........................................   35
Section 6.06   Limitation on Suits........................................   35
Section 6.07   Rights of Holders to Receive Payment.......................   36
Section 6.08   Collection Suit by Trustee.................................   36
Section 6.09   Trustee May File Proofs of Claim...........................   36
Section 6.10   Priorities.................................................   36
Section 6.11   Undertaking for Costs......................................   37


                                       ii



                                TABLE OF CONTENTS
                                   (CONTINUED)



                                                                            PAGE
                                                                            ----
                                                                         
                                    ARTICLE 7
                                   THE TRUSTEE
                                       37

Section 7.01   Duties of the Trustee......................................   37
Section 7.02   Rights of the Trustee......................................   38
Section 7.03   Individual Rights of the Trustee...........................   40
Section 7.04   Trustee's Disclaimer.......................................   40
Section 7.05   Notice of Defaults.........................................   40
Section 7.06   Reports by the Trustee to Holders..........................   40
Section 7.07   Compensation and Indemnity.................................   41
Section 7.08   Replacement of the Trustee.................................   42
Section 7.09   Successor Trustee by Merger, etc...........................   43
Section 7.10   Eligibility, Disqualification..............................   43
Section 7.11   Preferential Collection of Claims Against Company..........   43

                                    ARTICLE 8
                     SATISFACTION AND DISCHARGE OF INDENTURE
                                       43

Section 8.01   Discharge of Indenture.....................................   43
Section 8.02   Deposited Monies to Be Held in Trust by Trustee............   44
Section 8.03   Paying Agent to Repay Monies Held..........................   44
Section 8.04   Return of Unclaimed Monies.................................   44
Section 8.05   Reinstatement..............................................   45

                                    ARTICLE 9
                                   AMENDMENTS
                                       45

Section 9.01   Without the Consent of Holders.............................   45
Section 9.02   With the Consent of Holders................................   46
Section 9.03   Compliance With the Trust Indenture Act....................   47
Section 9.04   Revocation and Effect of Consents..........................   47
Section 9.05   Notation on or Exchange of Convertible Subordinated Notes..   48
Section 9.06   Trustee Protected..........................................   48

                                   ARTICLE 10
                               GENERAL PROVISIONS
                                       48

Section 10.01  Trust Indenture Act Controls...............................   48
Section 10.02  Notices....................................................   49
Section 10.03  Communication by Holders With Other Holders................   49


                                      iii



                                TABLE OF CONTENTS
                                   (CONTINUED)



                                                                            PAGE
                                                                            ----
                                                                         
Section 10.04  Certificate and Opinion as to Conditions Precedent.........   49
Section 10.05  Statements Required in Certificate or Opinion..............   50
Section 10.06  Rules by Trustee and Agents................................   50
Section 10.07  Legal Holidays.............................................   51
Section 10.08  No Recourse Against Others.................................   51
Section 10.09  Counterparts...............................................   51
Section 10.10  Other Provisions...........................................   51
Section 10.11  Governing Law..............................................   52
Section 10.12  No Adverse Interpretation of Other Agreements..............   52
Section 10.13  Successors.................................................   52
Section 10.14  Severability...............................................   52
Section 10.15  Table of Contents, Headings, etc...........................   52

                                   ARTICLE 11
                                  SUBORDINATION
                                       52

Section 11.01  Agreement to Subordinate...................................   52
Section 11.02  Liquidation; Dissolution; Bankruptcy.......................   53
Section 11.03  Default on Senior Debt and/or Designated Senior
               Indebtedness...............................................   53
Section 11.04  Acceleration of Convertible Subordinated Notes.............   54
Section 11.05  When Distribution Must Be Paid Over........................   54
Section 11.06  Notice by Company..........................................   55
Section 11.07  Subrogation................................................   55
Section 11.08  Relative Rights............................................   55
Section 11.09  Subordination May Not Be Impaired by Company...............   56
Section 11.10  Distribution or Notice to Representative...................   56
Section 11.11  Rights of Trustee and Paying Agent.........................   56
Section 11.12  Authorization to Effect Subordination......................   56
Section 11.13  Article Applicable to Paying Agents........................   57
Section 11.14  Senior Debt Entitled to Rely...............................   57
Section 11.15  Permitted Payments.........................................   57

                                   ARTICLE 12
                  CONVERSION OF CONVERTIBLE SUBORDINATED NOTES
                                       57

Section 12.01  Right to Convert...........................................   57
Section 12.02  Exercise of Conversion Privilege; Issuance of Common Stock
               on Conversion; No Adjustment for Interest or Dividends.....   58
Section 12.03  Cash Payments in Lieu of Fractional Shares.................   60
Section 12.04  Taxes on Shares Issued.....................................   60
Section 12.05  Reservation of Shares; Shares to Be Fully Paid; Listing of
               Common Stock...............................................   60


                                       iv



                                TABLE OF CONTENTS
                                   (CONTINUED)



                                                                            PAGE
                                                                            ----
                                                                         
Section 12.06  Adjustment for Change in Capital Stock.....................   61
Section 12.07  [Reserved].................................................   66
Section 12.08  [Reserved].................................................   66
Section 12.09  When Adjustment May Be Deferred............................   66
Section 12.10  When No Adjustment is Required.............................   67
Section 12.11  Notice of Adjustment.......................................   67
Section 12.12  Voluntary Increase.........................................   67
Section 12.13  Notice of Certain Transactions.............................   67
Section 12.14  Reorganization of Company; Special Distributions...........   68
Section 12.15  Company Determination Final................................   69
Section 12.16  Trustee's Adjustment Disclaimer............................   69
Section 12.17  Simultaneous Adjustments...................................   69
Section 12.18  Successive Adjustments.....................................   69
Section 12.19  Restriction on Common Stock Issuable Upon Conversion.......   69

                                    EXHIBITS

Exhibit A      Form of Convertible Subordinated Note......................  A-1
Exhibit B      Form of Transfer Certificate for Transfer of Restricted
               Common Stock...............................................  B-1


                                       v



                             CROSS-REFERENCE TABLE*



Trust Indenture                                                               Indenture
  Act Section                                                                  Section
  -----------                                                                  -------
                                                                       
310(a)(1)............................................................                   7.10
     (a)(2)..........................................................                   7.10
     (a)(3)..........................................................                    n/a
     (a)(4)..........................................................                    n/a
     (b).............................................................      7.08, 7.10, 10.02
     (c).............................................................                    n/a

311(a)...............................................................                   7.11
     (b).............................................................                   7.11
     (c).............................................................                    n/a

312(a)...............................................................                   2.05
     (b).............................................................                  10.03
     (c).............................................................                  10.03

313(a)...............................................................                   7.06
     (b)(1)..........................................................                    n/a
     (b)(2)..........................................................              5.7, 7.06
     (c).............................................................            7.06, 10.02
     (d).............................................................                   7.06

314(a)...............................................................     4.02, 10.02, 10.05
     (b).............................................................                    n/a
     (c)(1)..........................................................                  10.04
     (c)(2)..........................................................                  10.04
     (c)(3)..........................................................                    n/a
     (d).............................................................                    n/a
     (e).............................................................                  10.05
     (f).............................................................                    n/a

315(a)...............................................................                7.01(b)
     (b).............................................................            7.05, 10.02
     (c).............................................................                7.01(a)
     (d).............................................................                7.01(c)
     (e).............................................................                   6.11

316(a)(last sentence)................................................                   2.09
     (a)(1)(A).......................................................                   6.05
     (a)(1)(B).......................................................                   6.04
     (a)(2)..........................................................                    n/a
     (b).............................................................                  11.08
     (c).............................................................                   9.04

317(a)(1)............................................................                   6.08
     (a)(2)..........................................................                   6.09
     (b).............................................................                   2.04

318(a)...............................................................                  10.01
     (b).............................................................                    n/a
     (c).............................................................                  10.01


- ------------------
"n/a" means not applicable.

*This Cross-Reference Table shall not, for any purpose, be deemed to be a part
of the Indenture.

                                       vi



         THIS INDENTURE, dated as of September 29, 2003, is between CKE
Restaurants, Inc., a Delaware corporation (the "Company"), and J.P. Morgan Trust
Company, National Association (the "Trustee"). The Company has duly authorized
the creation of its 4% Convertible Subordinated Notes due 2023 (the "Convertible
Subordinated Notes"), and to provide therefor the Company and the Trustee have
duly authorized the execution and delivery of this Indenture. Each party agrees
as follows for the benefit of the other party and for the equal and ratable
benefit of the holders from time to time of the Convertible Subordinated Notes:

                                    ARTICLE 1

                                   DEFINITIONS

SECTION 1.01 Definitions.

         "Affiliate" means, when used with reference to any person, any other
person directly or indirectly controlling, controlled by, or under direct or
indirect common control of, the referent person. For the purposes of this
definition, "control" when used with respect to any specified person means the
power to direct or cause the direction of management or policies of the referent
person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise. The terms "controlling" and "controlled"
have meanings correlative of the foregoing.

         "Agent" means any Registrar, Paying Agent, Conversion Agent or
co-registrar.

         "Agent Member" means any member of, or participant in, the Depositary.

         "Business Day" means any day on which banking institutions in the State
of New York or the State of California are open for business.

         "Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board of Directors.

         "Capital Stock" of any person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such person, but excluding any debt
securities convertible into such equity.

         "Change of Control" means the occurrence of one or more of the
following events: (a) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of shares
representing more than 50% of the combined voting power of the then outstanding
Voting Stock of the Company, (b) the Company consolidates with or merges into
any other corporation, any other corporation merges into the Company, or the
Company effects a share exchange, and, in the case of any such transaction, the
outstanding Common Stock of the Company is reclassified into or exchanged for
any other property or securities, unless the shareholders of the Company
immediately before such transaction own, directly or indirectly immediately
following such transaction, at least a majority of the combined voting power of
the then outstanding Voting Stock of the corporation resulting from such
transaction in substantially the same respective proportions as their ownership
of the Voting Stock of the Company immediately before such transaction, (c) the
Company or the Company and its subsidiaries, taken

                                       1



as a whole, sells, assigns, conveys, transfers or leases all or substantially
all assets of the Company or of the Company and its subsidiaries, taken as a
whole, as applicable (other than to one or more wholly-owned subsidiaries of the
Company), or (d) any time the Continuing Directors do not constitute a majority
of the full Board of Directors of the Company (or, if applicable, a successor
corporation to the Company); provided, that a Change of Control under (a), (b)
and (c) above shall not be deemed to have occurred if either (y) the Closing
Sale Price per share of Common Stock for any five trading days within the period
of ten consecutive trading days ending immediately after the later of the Change
of Control or the public announcement of the Change of Control (in the case of a
Change of Control under clause (a) above) or the period of ten consecutive
trading days ending immediately before the Change of Control (in the case of a
Change of Control under clause (b) or (c) above) shall equal or exceed 110% of
the conversion price in effect on the date of such Change of Control or the
public announcement of such Change of Control, as applicable or (z) at least 90%
of the consideration (excluding cash payments for fractional shares) in the
transaction or transactions constituting the Change of Control consists of
shares of common stock that are, or upon issuance will be, traded on the New
York Stock Exchange or quoted on The Nasdaq National Market and, as a result of
the transaction, the Convertible Subordinated Notes become convertible solely
into such common stock.

         "Closing Sale Price" of a security on any trading day means (a) the
last reported per share sale price (or, if the last sale price is not reported,
the average bid and ask prices or, if more than one in either case, the average
of the bid and the average ask prices) on such date as reported on The New York
Stock Exchange or if such security is not then listed on The New York Stock
Exchange, then as reported by the principal U.S. exchange or quotation system on
which such security is then listed or quoted or (b) in the absence of such
quotation, such price as the Company shall determine on the basis of such
quotations as the Company considers appropriate.

         "Commission" means the Securities and Exchange Commission.

         "Common Stock" means any stock of any class of the Company which has no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which is not subject to redemption by the Company. Subject to the provisions
of Section 12.14, however, shares issuable on conversion of Convertible
Subordinated Notes shall include only shares of the class designated as Common
Stock of the Company at the date of this Indenture or shares of any class or
classes resulting from any reclassification or reclassifications thereof and
which have no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Company and which are not subject to redemption by the Company; provided
that if at any time there shall be more than one such resulting class, the
shares of each such class then so issuable shall be substantially in the
proportion which the total number of shares of such class resulting from all
such reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.

         "Company" means the party named as such above until a successor
replaces it in accordance with Article 5 and thereafter means the successor.
References to the Company shall not include any subsidiary.

                                       2



         "Continuing Directors" means, as of any date of determination, any
member of the Board of Directors who (i) was a member of such Board of Directors
on the date of this Indenture or (ii) was nominated for election or elected to
such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board of Directors at the time of such
nomination or election.

         "conversion price" has the meaning specified in paragraph 9 of the
Convertible Subordinated Notes.

         "Convertible Subordinated Notes" means the 4% Convertible Subordinated
Notes due 2023 issued, authenticated and delivered under this Indenture.

         "Corporate Trust Office" means the corporate trust office of the
Trustee at which at any particular time the trust created by this Indenture
shall principally be administered; as of the date hereof, the Corporate Trust
Office is located at 560 Mission St., Floor 13, San Francisco, CA 94105.

         "Default" means any event that is, or after notice or passage of time,
or both, would be, an Event of Default.

         "Depositary" means, with respect to any Global Securities, a clearing
agency that is registered as such under the Exchange Act and is designated by
the Company to act as Depositary for such Global Securities (or any successor
securities clearing agency so registered), which shall initially be DTC.

         "Designated Senior Indebtedness" means (a) the Senior Credit Facility
and (ii) any particular Senior Debt which has at the time of the giving of the
Payment Blockage Notice an aggregate outstanding principal amount in excess of
$25 million, if the instrument creating or evidencing the same or the assumption
or guarantee thereof (or related agreements or documents to which the Company is
a party) expressly provides that such Indebtedness shall be "Designated Senior
Indebtedness" for purposes of the Indenture (provided that such instrument,
agreement or other document may place limitations and conditions on the right of
such Senior Debt to exercise the rights of Designated Senior Indebtedness.)

         "DTC" means The Depository Trust Company, a New York corporation.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.

         "Ex-Dividend Date" for any issuance or distribution means the date
immediately prior to the commencement of "ex-dividend" trading for such issuance
or distribution on The New York Stock Exchange or the principal U.S. exchange or
quotation system on which the Common Stock is then listed or quoted.

         "fair market value" means the amount which a willing buyer would pay an
unaffiliated willing seller in an arm's length transaction.

                                       3



         "Fundamental Change" means the occurrence of a Change of Control or a
Termination of Trading.

         "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect from time to time.

         "Global Securities Legend" means the legend labeled as such and that is
set forth in Exhibit A hereto.

         "Indebtedness" means, with respect to any person, all obligations,
whether or not contingent, of such person (i) (a) for borrowed money (including,
but not limited to, any indebtedness secured by a security interest, mortgage or
other lien on the assets of the Company that is (1) given to secure all or part
of the purchase price of property subject thereto, whether given to the vendor
of such property or to another, or (2) existing on property at the time of
acquisition thereof), (b) evidenced by a note, debenture, bond or other written
instrument, (c) under a lease required to be capitalized on the balance sheet of
the lessee under GAAP or under any lease or related document (including a
purchase agreement) that provides that the Company is contractually obligated to
purchase or cause a third party to purchase and thereby guarantee a minimum
residual value of the lease property to the lessor and the obligations of the
Company under such lease or related document to purchase or to cause a third
party to purchase such leased property, (d) in respect of letters of credit,
bank guarantees or bankers' acceptances (including reimbursement obligations
with respect to any of the foregoing), (e) with respect to indebtedness secured
by a mortgage, pledge, lien, encumbrance, charge or adverse claim affecting
title or resulting in an encumbrance to which the property or assets of such
person are subject, whether or not the obligation secured thereby shall have
been assumed by or shall otherwise be such person's legal liability, (f) in
respect of the balance of deferred and unpaid purchase price of any property or
assets, (g) under interest rate or currency swap agreements, cap, floor and
collar agreements, spot and forward contracts and similar agreements and
arrangements; (ii) with respect to any obligation of others of the type
described in the preceding clause (i) or under clause (iii) below assumed by or
guaranteed in any manner by such person through an agreement to purchase
(including, without limitation, "take or pay" and similar arrangements),
contingent or otherwise (and the obligations of such person under any such
assumptions, guarantees or other such arrangements); and (iii) any and all
deferrals, renewals, extensions, refinancings and refundings of, or amendments,
modifications or supplements to, any of the foregoing.

         "Indenture" means this Indenture as amended or supplemented from time
to time.

         "Initial Purchasers" means Citigroup Global Markets Inc. and BNP
Paribas Securities Corp.

         "Interest Payment Date" means April 1 and October 1 of each year,
beginning April 1, 2004.

                                       4



         "Issue Date" means the date on which Convertible Subordinated Notes are
first issued and authenticated under this Indenture.

         "Maturity Date" means October 1, 2023, unless earlier redeemed,
repurchased or converted.

         "Note Custodian" means J.P. Morgan Trust Company, National Association,
as custodian for the Depositary with respect to any Global Security, or any
successor entity thereto.

         "Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

         "Offering Memorandum" means the offering memorandum dated September 23,
2003, relating to the Convertible Subordinated Notes, including all amendments
thereto.

         "Officer" means the Chairman of the Board, the Chief Executive Officer,
the President, the Chief Financial Officer, the Chief Accounting Officer, any
Executive Vice President, Senior Vice President or Vice President (whether or
not designated by a number or numbers or word or words before or after the title
"Vice President"), the Treasurer and the Secretary of the Company.

         "Officers' Certificate" means a certificate signed by two Officers, one
of whom is the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Financial Officer or the Treasurer of the Company.

         "Opinion of Counsel" means a written opinion from legal counsel who may
be an employee of or counsel to the Company or the Trustee except to the extent
otherwise indicated in this Indenture.

         A "person" means any individual, corporation, partnership, joint
venture, trust, estate, unincorporated organization, limited liability company
or government or any agency or political subdivision thereof.

         "Principal Amount" of each Convertible Subordinated Note means the
principal amount as set forth on the face of the Convertible Subordinated Note.

         "Redemption Date" when used with respect to any of the Convertible
Subordinated Notes to be redeemed, means the date fixed by the Company for such
redemption pursuant to Article 3 of this Indenture and the Convertible
Subordinated Notes.

         "Redemption Price" when used with respect to any of the Convertible
Subordinated Notes to be redeemed, means the price fixed for such redemption
pursuant to Article 3 of this Indenture and the Convertible Subordinated Notes.

         "Registrable Securities" has the meaning specified in paragraph 18 of
the Convertible Subordinated Note.

                                       5



         "Registration Default Damages" has the meaning specified in paragraph
18 of the form of Convertible Subordinated Note, which is attached as Exhibit A
hereto.

         "Registration Rights Agreement" means the Registration Rights Agreement
relating to the Convertible Subordinated Notes and Common Stock issuable upon
conversion of such Convertible Subordinated Notes dated September 29, 2003,
between the Company and the Initial Purchasers, as such agreement may be
amended, modified or supplemented from time to time.

         "Regular Record Date" means the March 15 or September 15 immediately
preceding each Interest Payment Date.

         "Representative" means (a) the indenture trustee or other trustee,
agent or representative for any Senior Debt or (b) with respect to any Senior
Debt that does not have any such trustee, agent or other representative, (i) in
the case of such Senior Debt issued pursuant to an agreement providing for
voting arrangements as among the holders or owners of such Senior Debt, any
holder or owner of such Senior Debt acting with the consent of the required
persons necessary to bind such holders or owners of such Senior Debt and (ii) in
the case of all other such Senior Debt, the holder or owner of such Senior Debt.

         "Restricted Securities Legend" means the legend labeled as such and
that is set forth in Exhibit A hereto.

         "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

         "Senior Credit Facility" means the Fourth Amended and Restated Credit
Agreement dated as of January 31, 2002 among the Company, as borrower, the
lenders identified therein, and BNP Paribas, as administrative agent and
including any related notes, guarantee agreements and other instruments and
agreements executed in connection therewith, in each case including any
deferrals, renewals, extensions, replacements, refinancings or refundings
thereof, or amendments, modifications or supplements thereto and any agreement
providing therefor whether by or with the same or any other lender, creditor,
group of lenders or group of creditors.

         "Senior Debt" means the principal of, premium, if any, and interest on,
rent under, fees, costs, expenses and any other amounts payable on or in respect
of any Indebtedness of the Company (including, without limitation, any
Obligations in respect of such Indebtedness and any interest accruing after the
filing of a petition by or against the Company under any bankruptcy law, whether
or not allowed as a claim after such filing in any proceeding under such
bankruptcy law), whether outstanding on the date of this Indenture or thereafter
created, incurred, assumed, guaranteed or in effect guaranteed by the Company
(including all deferrals, renewals, extensions, refinancings or refundings of,
or amendments, modifications or supplements to the foregoing); provided,
however, that Senior Debt does not include (u) Indebtedness evidenced by the
Convertible Subordinated Notes, (v) the Company's 4 1/4% Convertible
Subordinated Notes Due 2004, (w) any liability for federal, state, local or
other taxes owed or owing by the Company, (x) Indebtedness of the Company to any
subsidiary of the Company except to the extent such Indebtedness is of a type
described in clause (ii) of the definition of Indebtedness, (y) trade payables
of the Company for goods, services or materials purchased in the ordinary course
of

                                       6



business (other than, to the extent they may otherwise constitute trade
payables, any obligations of the type described in clause (ii) of the definition
of Indebtedness), and (z) any particular Indebtedness in which the instrument
creating or evidencing the same expressly provides that such Indebtedness shall
not be senior in right of payment to, or is pari passu with, or is subordinated
or junior to, the Convertible Subordinated Notes.

         "Shelf Registration Statement" shall have the meaning set forth in the
Registration Rights Agreement.

         A "subsidiary" means, with respect to any person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of capital stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
person or one or more of the other subsidiaries of that person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or managing
general partner of which is such person or a subsidiary of such person or (b)
the only general partners of which are such person or of one or more
subsidiaries of such person (or any combination thereof).

         "Termination of Trading" will be deemed to have occurred if the Common
Stock (or other common stock into which the Convertible Subordinated Notes are
then convertible) is neither listed for trading on the New York Stock Exchange
nor approved for trading on The Nasdaq National Market.

         "TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb) as in effect on the date of execution of this Indenture, except as
provided in Sections 9.03 and 12.06.

         "trading day" means any day on which The New York Stock Exchange is
open for trading or, if the applicable security is then quoted on the Nasdaq
National Market, any day on which trades may be made on the Nasdaq National
Market or, if the applicable security is not so listed, admitted for trading or
quoted, any Business Day.

         "Trading Price" has the meaning specified in paragraph 9 of the
Convertible Subordinated Notes.

         "Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor.

         "Trust Officer" means an officer in the Corporate Trust Office of the
Trustee and having direct responsibility for the administration of this
Indenture or, with respect to a particular trust matter, any other officer to
whom such matter is referred because of such officer's knowledge and familiarity
with the particular subject.

         "U.S. Government Obligations" means direct obligations of the United
States of America for the payment of which the full faith and credit of the
United States of America is pledged. In order to have money available on a
payment date to pay principal or interest on the Convertible Subordinated Notes,
the U.S. Government Obligations shall be payable as to principal or interest on
or before such payment date in such amounts as will provide the necessary money.
U.S. Government Obligations shall not be callable at the issuer's option.

                                       7



         "Voting Stock" of a corporation means all classes of Capital Stock of
such corporation then outstanding and normally entitled to vote in the election
of directors.

SECTION 1.02 Other Definitions.



                                                                                                    Defined in
                                                                                                      Section
                                                                                                 
"Accepted Purchase Shares"...............................................................              12.06
"Agent Members"..........................................................................               2.01
"Bankruptcy Law".........................................................................               6.01
"Business Day"...........................................................................              10.07
"Clearstream"............................................................................               2.01
"Commencement Date"......................................................................              12.06
"Conversion Agent".......................................................................               2.03
"Conversion Date"........................................................................              12.02
"Conversion Rate"........................................................................              12.01
"Conversion Shares"......................................................................              12.02
"Current market price"...................................................................              12.06
"Custodian"..............................................................................               6.01
"Determination Date".....................................................................              12.06
"Distribution Date"......................................................................              12.06
"Euroclear"..............................................................................               2.01
"Event of Default".......................................................................               6.01
"Expiration Time"........................................................................              12.06
"Fundamental Change Date"................................................................               3.10
"Fundamental Change Offer"...............................................................               3.10
"Fundamental Change Offer Termination Date"..............................................               3.10
"Fundamental Change Payment".............................................................               3.10
"Fundamental Change Payment Date"........................................................               3.10
"Global Security"........................................................................               2.01
"Investment Company Act".................................................................               4.09
"Legal Holiday"..........................................................................              10.07
"Measurement Date".......................................................................              12.06
"Non-Payment Default"....................................................................              11.03
"Offer Expiration Time"..................................................................              12.06
"Paying Agent"...........................................................................               2.03
"Payment Blockage Notice"................................................................              11.03
"Payment Default"........................................................................               6.01
"Purchase Agreement".....................................................................               2.01
"Purchased Shares".......................................................................              12.06
"Registrar"..............................................................................               2.03
"Register"...............................................................................               2.03
"Regulation S"...........................................................................               2.01
"Repurchase Date"........................................................................               3.09
"Repurchase Notice"......................................................................               3.09
"Repurchase Price".......................................................................               3.09


                                       8



                                                                                                    
"Restricted Common Stock Legend".........................................................              12.19
"Rights".................................................................................              12.06
"Rule 144A"..............................................................................               2.01



SECTION 1.03 Incorporation by Reference of Trust Indenture Act.

         Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.

         The following TIA terms used in this Indenture have the following
meanings:

                  "Commission" means the Commission;

                  "indenture securities" means the Convertible Subordinated
                  Notes;

                  "indenture security holder" means a holder of a Convertible
                  Subordinated Note;

                  "indenture to be qualified" means this Indenture;

                  "indenture trustee" or "institutional trustee" means the
                  Trustee; and

                  "obligor" on the Convertible Subordinated Notes means the
                  Company or any other obligor on the Convertible Subordinated
                  Notes.

         All other terms in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by Commission rule under the TIA
have the meanings so assigned to them.

SECTION 1.04 Rules of Construction.

         Unless the context otherwise requires:

                  (1)      a term has the meaning assigned to it;

                  (2)      an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;

                  (3)      "or" is not exclusive;

                  (4)      words in the singular include the plural, and in the
plural include the singular; and

                  (5)      the male, female and neuter genders include one
another.

                                       9



                                    ARTICLE 2

                       THE CONVERTIBLE SUBORDINATED NOTES

SECTION 2.01 Form and Dating.

         (a)      GLOBAL SECURITIES. The Convertible Subordinated Notes are
being offered and sold by the Company pursuant to a Purchase Agreement relating
to the Convertible Subordinated Notes, dated September 23, 2003, among the
Company and the Initial Purchasers (the "Purchase Agreement").

         The Convertible Subordinated Notes are being offered and sold (i) in
reliance on Regulation S under the Securities Act ("Regulation S") or (ii) to
"qualified institutional buyers" as defined in Rule 144A in reliance on Rule
144A under the Securities Act ("Rule 144A"), each as provided in the Purchase
Agreement, and shall be issued in the form of one or more permanent global
securities in definitive, fully registered form without interest coupons with
the Global Securities Legend and Restricted Securities Legend set forth in
Exhibit A hereto (each, a "Global Security"). Any Global Security shall be
deposited on behalf of the purchasers of the Convertible Subordinated Notes
represented thereby with the Trustee, as Note Custodian, and registered in the
name of the Depositary or a nominee of the Depositary for the accounts of
participants in the Depositary (and, in the case of Convertible Subordinated
Notes held in accordance with Regulation S, registered with the Depositary for
the accounts of designated agents holding on behalf of the Euroclear System
("Euroclear") or Clearstream Banking, societe anonyme ("Clearstream")), duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of a Global Security may from time to
time be increased or decreased by adjustments made on the records of the Trustee
and the Depositary or its nominee as hereinafter provided.

         (b)      BOOK-ENTRY PROVISIONS. This Section 2.01(b) shall apply only
to a Global Security deposited with or on behalf of the Depositary.

         The Company shall execute and the Trustee shall, in accordance with
this Section 2.01(b) and the written order of the Company, authenticate and
deliver initially one or more Global Securities that (i) shall be registered in
the name of Cede & Co. or other nominee of such Depositary and (ii) shall be
delivered by the Trustee to such Depositary or pursuant to such Depositary's
instructions or held by the Trustee as Note Custodian pursuant to a FAST Balance
Certificate Agreement between the Depositary and the Trustee.

         Except as provided in Section 2.10, members of, or participants in, the
Depositary ("Agent Members") shall have no rights under this Indenture with
respect to any Global Security held on their behalf by the Depositary or by the
Trustee as the Note Custodian of the Depositary or under such Global Security,
and the Depositary may be treated by the Company, the Trustee and any agent of
the Company or the Trustee as the absolute owner of such Global Security for all
purposes whatsoever. Notwithstanding the foregoing, the registered holder of a
Global Security may grant proxies and otherwise authorize any person, including
Agent Members and persons that may hold interests through Agent Members, to take
any action that a Holder is entitled to take under this Indenture or the
Convertible Subordinated Notes, and nothing herein

                                       10



shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and its Agent Members, the operation of customary practices of such Depositary
governing the exercise of the rights of a holder of a beneficial interest in any
Global Security.

         The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "Management
Regulations and Instructions to Participants" of Clearstream shall be applicable
to interests in any Global Securities that are held by participants through
Euroclear or Clearstream. The Trustee shall have no obligation to notify holders
of any such procedures or to monitor or enforce compliance with the same.

         (c)      DEFINITIVE SECURITIES. Except as provided in Section 2.10,
owners of beneficial interests in Global Securities will not be entitled to
receive physical delivery of certificated Convertible Subordinated Notes in
definitive form. If applicable, certificated Convertible Subordinated Notes in
definitive form will bear the Restricted Securities Legend set forth on Exhibit
A unless removed in accordance with Section 2.06(c).

SECTION 2.02 Execution and Authentication.

         One Officer shall sign the Convertible Subordinated Notes for the
Company by manual or facsimile signature.

         If an Officer whose signature is on a Convertible Subordinated Note no
longer holds that office at the time the Convertible Subordinated Note is
authenticated, the Convertible Subordinated Note shall nevertheless be valid.

         A Convertible Subordinated Note shall not be valid until authenticated
by the manual signature of the Trustee. The signature shall be conclusive
evidence that the Convertible Subordinated Note has been authenticated under
this Indenture.

         Upon a written order of the Company signed by an Officer of the
Company, the Trustee shall authenticate Convertible Subordinated Notes for
original issue up to an aggregate Principal Amount of $90,000,000 (plus up to
$15,000,000 aggregate Principal Amount of Convertible Subordinated Notes that
may be sold by the Company pursuant to the option to purchase additional
Convertible Subordinated Notes granted to the Initial Purchasers pursuant to the
Purchase Agreement) to the Initial Purchasers. The aggregate Principal Amount of
Convertible Subordinated Notes outstanding at any time may not exceed that
amount except as provided in Section 2.07.

         The Convertible Subordinated Notes shall be issuable only in registered
form without coupons and only in denominations of $1,000 or any integral
multiple thereof.

         The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Convertible Subordinated Notes. An authenticating agent
may authenticate Convertible Subordinated Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An

                                       11



authenticating agent has the same right as an Agent to deal with the Company or
an Affiliate of the Company.

SECTION 2.03 Registrar, Paying Agent and Conversion Agent.

         The Company shall maintain or cause to be maintained in such locations
as it shall determine, which may be the Corporate Trust Office, an office or
agency: (i) where securities may be presented for registration of transfer or
for exchange ("Registrar"); (ii) where Convertible Subordinated Notes may be
presented for payment ("Paying Agent"); (iii) an office or agency where
Convertible Subordinated Notes may be presented for conversion (the "Conversion
Agent"); and (iv) where notices and demands to or upon the Company in respect of
Convertible Subordinated Notes and this Indenture may be served by the holders
of the Convertible Subordinated Notes. The Registrar shall keep a Register
("Register") of the Convertible Subordinated Notes and of their transfer and
exchange. The Company may appoint one or more co-registrars, one or more
additional paying agents and one or more additional conversion agents. The term
"Paying Agent" includes any additional paying agent, and the term "Conversion
Agent" includes any additional Conversion Agent. The Company may change any
Paying Agent, Registrar, Conversion Agent or co-registrar without prior notice.
The Company shall notify the Trustee of the name and address of any Agent not a
party to this Indenture and shall enter into an appropriate agency agreement
with any Registrar, Paying Agent, Conversion Agent or co-registrar not a party
to this Indenture. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Company or any of its subsidiaries may
act as Paying Agent, Registrar, Conversion Agent or co-registrar, except that
for purposes of Articles 3 and 8, neither the Company nor any of its
subsidiaries shall act as Paying Agent. If the Company fails to appoint or
maintain another entity as Registrar, or Paying Agent or Conversion Agent, the
Trustee shall act as such, and the Trustee shall initially act as such.

SECTION 2.04 Paying Agent to Hold Money in Trust.

         The Company shall require each Paying Agent (other than the Trustee,
who hereby so agrees), to agree in writing that the Paying Agent will hold in
trust for the benefit of holders of the Convertible Subordinated Notes or the
Trustee all money held by the Paying Agent for the payment of principal or
interest and Registration Default Damages, if any, on the Convertible
Subordinated Notes, and will notify the Trustee of any default by the Company in
respect of making any such payment. While any such default continues, the
Trustee may require a Paying Agent to pay all money held by it to the Trustee.
The Company at any time may require a Paying Agent to pay all money held by it
to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other
than the Company or a subsidiary of the Company) shall have no further liability
for the money. If the Company or a subsidiary of the Company acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the holders of the Convertible Subordinated Notes all money held by it as Paying
Agent.

SECTION 2.05 Holder Lists.

         The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
holders of Convertible Subordinated Notes and shall otherwise comply with TIA
Section 312(a). If the Trustee is not the Registrar, the

                                       12



Company shall furnish to the Trustee at least seven Business Days before each
Interest Payment Date, and as the Trustee may request in writing within fifteen
(15) days after receipt by the Company of any such request (or such lesser time
as the Trustee may reasonably request in order to enable it to timely provide
any notice to be provided by it hereunder), a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of holders
of Convertible Subordinated Notes.

SECTION 2.06 Transfer and Exchange.

         (a)      When Convertible Subordinated Notes are presented to the
Registrar or a co-registrar with a request to register a transfer or to exchange
them for an equal Principal Amount of Convertible Subordinated Notes for other
denominations, the Registrar shall register the transfer or make the exchange if
its requirements for such transactions are met. To permit registrations of
transfers and exchanges, the Company shall issue and the Trustee shall
authenticate Convertible Subordinated Notes at the Registrar's request, bearing
registration numbers not contemporaneously outstanding. No service charge shall
be made to a holder for any registration of transfer or exchange (except as
otherwise expressly permitted herein), but the Company and the Registrar may
require payment of a sum sufficient to cover any transfer tax or other
governmental charge payable upon exchanges pursuant to Sections 2.10, 3.07, 9.05
or 12.02.

         The Company or the Registrar shall not be required (i) to issue,
register the transfer of or exchange Convertible Subordinated Notes during a
period beginning at the opening of business fifteen (15) days before the day of
any selection of Convertible Subordinated Notes for redemption under Section
3.03 and ending at the close of business on the day of selection, (ii) to
register the transfer or exchange of any Convertible Subordinated Note so
selected for redemption in whole or in part, except the unredeemed portion of
any Convertible Subordinated Note being redeemed in part or (iii) to register
the transfer of any Convertible Subordinated Notes surrendered for repurchase
pursuant to Section 3.09 or Section 3.10.

         All Convertible Subordinated Notes issued upon any transfer or exchange
of Convertible Subordinated Notes in accordance with this Indenture shall be the
valid obligations of the Company, evidencing the same debt, and entitled to the
same benefits under this Indenture as the Convertible Subordinated Notes
surrendered upon such registration of transfer or exchange.

         (b)      Notwithstanding any provision to the contrary herein, so long
as a Global Security remains outstanding and is held by or on behalf of the
Depositary, transfers of a Global Security, in whole or in part, or of any
beneficial interest therein, shall only be made in accordance with Sections
2.01(b) and 2.10; provided, however, that beneficial interests in a Global
Security may be transferred to persons who take delivery thereof in the form of
a beneficial interest in the Global Security in accordance with the transfer
restrictions set forth under the heading "Notice to Investors" in the Offering
Memorandum and, if applicable, in the Restricted Securities Legend.

         Except for transfers or exchanges made in accordance with Section 2.10,
transfers of a Global Security shall be limited to transfers of such Global
Security in whole, but not in part, to nominees of the Depositary or to a
successor of the Depositary or such successor's nominee.

                                       13



         In the event that a Global Security is exchanged for Convertible
Subordinated Notes in definitive form pursuant to Section 2.10 prior to the
effectiveness of a Shelf Registration Statement with respect to such Convertible
Subordinated Notes, such exchange may occur, and such Convertible Subordinated
Notes may be further exchanged or transferred, only upon receipt by the
Registrar and the Trustee of (1) such Global Security or such Convertible
Subordinated Notes in definitive form, duly endorsed as provided herein, as
applicable, (2) instructions from the holder directing the Trustee to
authenticate and deliver one or more Convertible Subordinated Notes in
definitive form of the same aggregate Principal Amount as the Global Security or
the Convertible Subordinated Notes in definitive form (or portion thereof), as
applicable, to be transferred, such instructions to contain the name or names of
the designated transferee or transferees, the authorized denomination or
denominations of the Convertible Subordinated Notes in definitive form to be so
issued and appropriate delivery instructions, and (3) such certifications or
other information and, in the case of transfers pursuant to Rule 144 under the
Securities Act, legal opinions as the Company, the Registrar and the Trustee may
reasonably require to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act (including the certification requirements
intended to ensure that such transfers comply with Rule 144A or Regulation S
under the Securities Act, as the case may be), and upon compliance with such
other procedures as may from time to time be adopted by the Company and the
Registrar.

         (c)      Except in connection with a Shelf Registration Statement
contemplated by and in accordance with the terms of the Registration Rights
Agreement, if Convertible Subordinated Notes are issued upon the registration of
transfer, exchange or replacement of Convertible Subordinated Notes bearing a
Restricted Securities Legend, or if a request is made to remove such a
Restrictive Securities Legend on Convertible Subordinated Notes, the Convertible
Subordinated Notes so issued shall bear the Restricted Securities Legend, or a
Restricted Securities Legend shall not be removed, as the case may be, unless
there is delivered to the Company such satisfactory evidence, which, in the case
of a transfer made pursuant to Rule 144 under the Securities Act, may include an
opinion of counsel given in accordance with the laws in the State of New York,
as may be reasonably required by the Company, that neither the legend nor the
restrictions on transfer set forth therein are required to ensure that transfers
thereof comply with the provisions of Rule 144A, Rule 144 or Regulation S under
the Securities Act or that such Convertible Subordinated Notes are not
"restricted" within the meaning of Rule 144 under the Securities Act. Upon
provision to the Company of such satisfactory evidence, the Trustee, at the
written direction of the Company, shall authenticate and deliver Convertible
Subordinated Notes that do not bear the legend. The Company shall not otherwise
be entitled to require the delivery of a legal opinion in connection with any
transfer or exchange of Securities.

         (d)      Neither the Trustee nor any Agent shall have any
responsibility for any actions taken or not taken by the Depositary.

         (e)      The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Convertible Subordinated Notes (including any transfers between
or among the Depositary's participants or beneficial owners of interests in any
Global Security) other than to require delivery of such certificates and other
documentation as is expressly required by, and to do so if and when expressly
required by, the terms of this

                                       14



Indenture and to examine the same to determine substantial compliance as to form
with the express requirements hereof.

SECTION 2.07 Replacement Convertible Subordinated Notes.

         If the holder of a Convertible Subordinated Note claims that its
Convertible Subordinated Note has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Convertible
Subordinated Note if the Trustee's and the Company's requirements are met. If
required by the Trustee or the Company as a condition of receiving a replacement
Convertible Subordinated Note, the holder of a Convertible Subordinated Note
must provide a certificate of loss and an indemnity and/or an indemnity bond
sufficient, in the judgment of both the Company and the Trustee, to fully
protect the Company, the Trustee, any Agent and any authenticating agent from
any loss, liability, cost or expense which any of them may suffer or incur if
the Convertible Subordinated Note is replaced. The Company and the Trustee may
charge the relevant holder for their expenses in replacing any Convertible
Subordinated Note.

         The Trustee or any authenticating agent may authenticate any such
substituted Convertible Subordinated Note, and deliver the same upon the receipt
of such security or indemnity as the Trustee, the Company and, if applicable,
such authenticating agent may require. Upon the issuance of any substituted
Convertible Subordinated Note, the Company and the Trustee may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses connected therewith.
In case any Convertible Subordinated Note which has matured or is about to
mature, or has been called for redemption pursuant to Article 3, submitted for
repurchase pursuant to Section 3.09 or Section 3.10 or is about to be converted
into Common Stock pursuant to Article 12, shall become mutilated or be
destroyed, lost or stolen, the Company may, instead of issuing a substitute
Convertible Subordinated Note, pay or authorize the payment of or convert or
authorize the conversion of the same (without surrender thereof except in the
case of a mutilated Convertible Subordinated Note), as the case may be, if the
applicant for such payment or conversion shall furnish to the Company, to the
Trustee and, if applicable, to the authenticating agent such security or
indemnity as may be required by them to save each of them harmless for any loss,
liability, cost or expense caused by or connected with such substitution, and,
in case of destruction, loss or theft, evidence satisfactory to the Company, the
Trustee and, if applicable, any paying agent or conversion agent of the
destruction, loss or theft of such Convertible Subordinated Note and of the
ownership thereof.

         Every replacement Convertible Subordinated Note is an additional
obligation of the Company and shall be entitled to all the benefits provided
under this Indenture equally and proportionately with all other Convertible
Subordinated Notes duly issued, authenticated and delivered hereunder.

SECTION 2.08 Outstanding Convertible Subordinated Notes.

         The Convertible Subordinated Notes outstanding at any time are all the
Convertible Subordinated Notes properly authenticated by the Trustee except for
those canceled by the

                                       15



Trustee, those delivered to it for cancellation, and those described in this
Section as not outstanding.

         If a Convertible Subordinated Note is replaced pursuant to Section
2.07, it ceases to be outstanding unless the Trustee receives proof satisfactory
to it that the replaced Convertible Subordinated Note is held by a bona fide
purchaser.

         If Convertible Subordinated Notes are considered paid under Section
4.01 or converted under Article 12, they cease to be outstanding, and interest
on them ceases to accrue.

         Subject to Section 2.09 hereof, a Convertible Subordinated Note does
not cease to be outstanding because the Company or an Affiliate of the Company
holds the Convertible Subordinated Note.

SECTION 2.09 When Treasury Convertible Subordinated Notes Disregarded.

         In determining whether the holders of the required principal amount of
Convertible Subordinated Notes have concurred in any direction, waiver or
consent, Convertible Subordinated Notes owned by the Company or an Affiliate of
the Company shall be considered as though they are not outstanding except that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Convertible Subordinated
Notes which a Trust Officer of the Trustee actually knows are so owned shall be
so disregarded.

SECTION 2.10 Temporary Convertible Subordinated Notes; Transfers of Global
             Security to Beneficial Owners.

         (a)      Until definitive Convertible Subordinated Notes are ready for
delivery, the Company may prepare and the Trustee shall authenticate temporary
Convertible Subordinated Notes. Temporary Convertible Subordinated Notes shall
be substantially in the form of definitive Convertible Subordinated Notes but
may have variations that the Company considers appropriate for temporary
Convertible Subordinated Notes and shall be reasonably acceptable to the
Trustee. Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate definitive Convertible Subordinated Notes in exchange for
temporary Convertible Subordinated Notes.

         (b)      A Global Security deposited with the Depositary or with the
Trustee as Note Custodian for the Depositary pursuant to Section 2.01 shall be
transferred to the beneficial owners thereof in the form of certificated
Convertible Subordinated Notes in definitive form only if such transfer complies
with Section 2.06 and (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for such Global Security or if at
any time such Depositary ceases to be a "clearing agency" registered under the
Exchange Act at a time when the Depositary is required to be so registered in
order to act as depositary and in each case a successor Depositary is not
appointed by the Company within 90 days of such notice, or (ii) the Company
executed and delivers to the Trustee and Registrar an Officer's Certificate
stating that such Global Security shall be so exchangeable.

                                       16



         In connection with the exchange of an entire Global Security for
certificated Convertible Subordinated Notes pursuant to this subsection (b),
such Global Security shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and upon Company order the Trustee
shall authenticate and deliver, to each beneficial owner identified by the
Depositary in exchange for its beneficial interest in such Global Security, an
equal aggregate Principal Amount of certificated Convertible Subordinated Notes
of authorized denominations.

         In addition, the owner of a beneficial interest in a Global Security
will be entitled to receive a certificated Convertible Subordinated Note in
exchange for such interest if an Event of Default has occurred and is
continuing. Upon receipt by the Note Custodian and Registrar of instructions
from the Holder of a Global Security directly the Note Custodian and Registrar
to (x) issue one or more certificate Convertible Subordinated Notes in the
amounts specified to the owner of a beneficial interest in such Global Security
and (y) debit or cause to be debited an equivalent amount of beneficial interest
in such Global Security, subject to the rules and procedures of the Depositary:

         (i)      the Note Custodian and Registrar shall notify the Company and
the Trustee of such instructions, identifying the owner and amount of such
beneficial interest in such Global Security;

         (ii)     the Company shall promptly execute, and upon Company order the
Trustee shall authenticate and deliver, to such beneficial owner certificated
Convertible Subordinated Notes in an equivalent amount to such beneficial
interest in such Global Security; and

         (iii)    the Registrar shall decrease such Global Security by such
amount in accordance with the foregoing.

         In the event that the certificated Convertible Subordinated Notes are
not issued to each such beneficial owner promptly after the Registrar has
received a request from the Holder of a Global Security to issue such
certificated Convertible Subordinated Notes, the Company expressly acknowledges,
with respect to the right of any holder to pursue a remedy pursuant to Sections
6.06 or 6.07 hereof, the right of any beneficial owner of the Convertible
Subordinated Notes to pursue such remedy with respect to the portion of the
Convertible Subordinated Notes that represents such beneficial owner's
Convertible Subordinated Notes as if such certificated Convertible Subordinated
Notes had been issued.

         (c)      Any Global Security or interest thereon that is transferable
to the beneficial owners thereof in the form of certificated Convertible
Subordinated Notes in definitive form shall, if held by the Depository, be
surrendered by the Depositary to the Trustee, without charge, and the Trustee
shall authenticate and deliver, upon such transfer of each portion of such
Global Security, an equal aggregate Principal Amount of Convertible Subordinated
Notes of authorized denominations in the form of certificated Convertible
Subordinated Notes in definitive form. Any portion of a Global Security
transferred pursuant to this Section shall be executed, authenticated and
delivered only in denominations of $1,000 of Principal Amount and any integral
multiple thereof and registered in such names as the Depositary shall direct.
Any Convertible Subordinated Notes in the form of certificated Convertible
Subordinated Notes in

                                       17



definitive form delivered in exchange for an interest in the Global Security
shall, except as otherwise provided by Section 2.06(c), bear the Restricted
Securities Legend.

         (d)      Prior to any transfer pursuant to Section 2.10(b), the
registered holder of a Global Security may grant proxies and otherwise authorize
any person, including Agent Members and persons that may hold interests through
Agent Members, to take any action that a holder is entitled to take under this
Indenture or the Convertible Subordinated Notes.

SECTION 2.11 Cancellation.

         The Company at any time may deliver Convertible Subordinated Notes to
the Trustee for cancellation. The Registrar and Paying Agent shall forward to
the Trustee any Convertible Subordinated Notes surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else may
cancel Convertible Subordinated Notes surrendered for registration of transfer,
exchange, payment, replacement, conversion, redemption, repurchase or
cancellation. Upon written instructions of the Company, the Trustee shall
destroy and dispose of canceled Convertible Subordinated Notes as the Company
directs and, after such destruction, shall deliver a certificate of destruction
to the Company. The Company may not issue new Convertible Subordinated Notes to
replace Convertible Subordinated Notes that it has paid, redeemed or repurchased
or that have been delivered to the Trustee for cancellation or that any holder
has (i) converted pursuant to Article 12 hereof, (ii) submitted for redemption
pursuant to Article 3 hereof or (iii) submitted for repurchase pursuant to
Section 3.09 or Section 3.10 hereof (unless revoked).

SECTION 2.12 Defaulted Interest.

         If the Company fails to make a payment of interest on the Convertible
Subordinated Notes, it shall pay such defaulted interest plus, to the extent
lawful, any interest payable on the defaulted interest. It may pay such
defaulted interest, plus any such interest payable on it, to the persons who are
holders of Convertible Subordinated Notes on a subsequent special record date.
The Company shall fix any such record date and payment date. At least 15 days
before any such record date, the Company shall mail to holders of the
Convertible Subordinated Notes a notice that states the record date, payment
date and amount of such interest to be paid.

SECTION 2.13 CUSIP Number.

         The Company in issuing the Convertible Subordinated Notes may use a
"CUSIP" number, and if so, such CUSIP number shall be included in notices of
redemption, repurchase or exchange as a convenience to holders of Convertible
Subordinated Notes; provided, however, that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Convertible Subordinated Notes and that reliance
may be placed only on the other identification numbers printed on the
Convertible Subordinated Notes. The Company will promptly notify the Trustee of
any change in the CUSIP number.

                                       18



SECTION 2.14 Regulation S.

         The Company agrees that it will refuse to register any transfer of
Convertible Subordinated Notes or any shares of Common Stock issued upon
conversion of Convertible Subordinated Notes that is not made in accordance with
the provisions of Regulation S under the Securities Act, pursuant to a
registration statement which has been declared effective under the Securities
Act or pursuant to an available exemption from the registration requirements of
the Securities Act; provided that the provisions of this paragraph shall not be
applicable to any Convertible Subordinated Notes which do not bear a Restricted
Securities Legend or to any shares of Common Stock evidenced by certificates
which do not bear a Restricted Common Stock Legend.

                                    ARTICLE 3

                            REDEMPTION AND PURCHASES

SECTION 3.01 Optional Redemption.

         The Company, at its option, may redeem all or any portion of the
Convertible Subordinated Notes upon the terms and at the Redemption Prices set
forth in each of the Convertible Subordinated Notes. Any redemption shall be
made in accordance with the provisions of Paragraph 6 the Convertible
Subordinated Notes and this Article 3.

SECTION 3.02 Notices to Trustee.

         If the Company elects to redeem Convertible Subordinated Notes pursuant
to the optional redemption provisions of paragraph 6 of the Convertible
Subordinated Notes, it shall furnish to the Trustee, at least 30 (45 if less
than all of the then outstanding Convertible Subordinated Notes are to be
redeemed) days but not more than 60 days before a Redemption Date (unless a
shorter period shall be satisfactory to the Trustee), an Officers' Certificate
setting forth (i) the Section of this Indenture pursuant to which the redemption
shall occur, (ii) the Redemption Date, (iii) the principal amount of Convertible
Subordinated Notes (if less than all) to be redeemed, (iv) the Redemption Price
and (v) the CUSIP number of the Convertible Subordinated Notes being redeemed.

SECTION 3.03 Selection of Convertible Subordinated Notes to Be Redeemed.

         If less than all the Convertible Subordinated Notes are to be redeemed,
the Trustee shall select the Convertible Subordinated Notes to be redeemed pro
rata or by lot or by any other method the Trustee considers fair and appropriate
(so long as such method is not prohibited by the rules of any stock exchange on
which the Securities are then listed). The Trustee shall make the selection at
least 30 days but not more than 60 days before a Redemption Date from
outstanding Convertible Subordinated Notes not previously called for redemption.

         Convertible Subordinated Notes and any portions thereof that the
Trustee selects shall be in Principal Amounts of $1,000 or an integral multiple
of $1,000. Provisions of this Indenture that apply to Convertible Subordinated
Notes called for redemption also apply to portions of Convertible Subordinated
Notes called for redemption. The Trustee shall notify the Company

                                       19



promptly of the Convertible Subordinated Notes or portions of Convertible
Subordinated Notes to be redeemed.

         If any Convertible Subordinated Note selected for partial redemption is
converted in part before termination of the conversion right with respect to the
portion of the Convertible Subordinated Note so selected, the converted portion
of such Convertible Subordinated Note shall be deemed (so far as may be) to be
the portion selected for redemption. The Convertible Subordinated Notes (or
portion thereof) so selected shall be deemed duly selected for redemption for
all purposes hereof, notwithstanding that any such Convertible Subordinated Note
is converted in whole or in part before the mailing of the notice of redemption.

SECTION 3.04 Notice of Redemption.

         The Company shall mail by first-class mail a notice of redemption to
each holder whose Convertible Subordinated Notes are to be redeemed, at such
holder's registered address. The Company will not give fewer than 30 days'
notice of redemption by first class mail to holders of notes.

         The notice shall identify the Convertible Subordinated Notes to be
redeemed and shall state:

                  (1)      the Redemption Date;

                  (2)      the Redemption Price and accrued and unpaid interest,
if any, payable on the Redemption Date;

                  (3)      the Conversion Rate;

                  (4)      the name and address of the Paying Agent and
Conversion Agent;

                  (5)      that Convertible Subordinated Notes called for
redemption may be converted at any time prior to the close of business on the
last trading day immediately preceding the Redemption Date and if not converted
prior to the close of business on such date, the right of conversion will be
lost;

                  (6)      that holders who want to convert Convertible
Subordinated Notes must satisfy the requirements set forth in Paragraph 9 of the
Convertible Subordinated Notes;

                  (7)      that Convertible Subordinated Notes called for
redemption must be surrendered to the Paying Agent to collect the Redemption
Price and accrued and unpaid interest and Registration Default Damages, if any;

                  (8)      if fewer than all the outstanding Convertible
Subordinated Notes are to be redeemed, the certificate number and Principal
Amounts of the particular Convertible Subordinated Notes to be redeemed;

                                       20



                  (9)      that, unless the Company defaults in making payment
of such Redemption Price and any interest or Registration Default Damages which
are due and payable, interest and Registration Default Damages, if any, will
cease to accrue on and after the Redemption Date;

                  (10)     the CUSIP number of the Convertible Subordinated
Notes;

                  (11)     that in the case of Convertible Subordinated Notes or
portions thereof called for redemption on a date that is also an Interest
Payment Date, the interest payment and Registration Default Damages, if any, due
on such date shall be paid to the person in whose name the Convertible
Subordinated Notes are registered at the close of business on the relevant
Regular Record Date; and

                  (12)     any other information that the Company wants to
present.

         The notice if mailed in the manner herein provided shall be
conclusively presumed to have been given, whether or not the holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice to the holder of any Convertible Subordinated Note designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any Convertible Subordinated Note.

         At the Company's request, the Trustee shall give the notice of
redemption to holders in the Company's name and at the Company's expense,
provided that the Company makes such request at least three Business Days
(unless a shorter period shall be satisfactory to the Trustee) prior to the date
such notice of redemption must be mailed.

SECTION 3.05 Effect of Notice of Redemption.

         Once notice of redemption is given, Convertible Subordinated Notes
called for redemption become due and payable on the Redemption Date and at the
Redemption Price (together with accrued and unpaid interest and Registration
Default Damages, if any) stated in the notice except for Convertible
Subordinated Notes which are converted in accordance with the terms of this
Indenture. Upon surrender to the Paying Agent, such Convertible Subordinated
Notes shall be paid at the Redemption Price, together with accrued and unpaid
interest and Registration Default Damages, if any, as stated in the notice.

SECTION 3.06 Deposit of Redemption Price.

         On or before the Redemption Date, the Company shall deposit with the
Paying Agent (or if the Company or a subsidiary or an Affiliate of either of
them is the Paying Agent, shall segregate and hold in trust) in immediately
available funds sufficient to pay the Redemption Price of, and any accrued and
unpaid interest and any Registration Default Damages on, all Convertible
Subordinated Notes to be redeemed on that date other than Convertible
Subordinated Notes or portions of Convertible Subordinated Notes called for
redemption which on or prior thereto have been delivered by the Company to the
Trustee for cancellation or have been converted. The Paying Agent shall as
promptly as practicable return to the Company any money not required for that
purpose.

                                       21



         On and after the Redemption Date, unless the Company shall default in
the payment of the Redemption Price, interest and Registration Default Damages,
if applicable, will cease to accrue on the Principal Amount of the Convertible
Subordinated Notes or portions thereof called for redemption and for which funds
have been set apart for payment, and such Convertible Subordinated Notes, or
portions thereof, shall cease after the close of business on the trading day
immediately preceding the Redemption Date to be convertible into Common Stock
and, except as provided in this Section 3.06 and Section 8.04, to be entitled to
any benefit or security under this Indenture, and the holders thereof shall have
no right in respect of such Convertible Subordinated Notes, or portions thereof,
except the right to receive the Redemption Price thereof and unpaid interest and
Registration Default Damages, if any, to (but excluding) the Redemption Date. In
the case of Convertible Subordinated Notes or portions thereof redeemed on a
Redemption Date which is also an Interest Payment Date, the interest payment and
Registration Default Damages, if any, due on such date shall be paid to the
person in whose name the Convertible Subordinated Note is registered at the
close of business on the relevant Regular Record Date.

SECTION 3.07 Convertible Subordinated Notes Redeemed in Part.

         Upon surrender of a Convertible Subordinated Note that is redeemed in
part only, the Company shall issue and the Trustee shall authenticate and
deliver to the holder of a Convertible Subordinated Note a new Convertible
Subordinated Note equal in Principal Amount to the unredeemed portion of the
Convertible Subordinated Note surrendered, at the expense of the Company, except
as specified in Section 2.06 or 2.07.

SECTION 3.08 Conversion Arrangement on Call for Redemption.

         In connection with any redemption of Convertible Subordinated Notes,
the Company may arrange for the purchase and conversion of any Convertible
Subordinated Notes by an arrangement with one or more investment banks or other
purchasers to purchase such Convertible Subordinated Notes by paying to the
Trustee in trust for the holders, on or before 10:00 a.m. New York City time on
the Redemption Date, an amount not less than the applicable Redemption Price,
together with interest and Registration Default Damages, if any, accrued to the
Redemption Date, of such Convertible Subordinated Notes. Notwithstanding
anything to the contrary contained in this Article 3, the obligation of the
Company to pay the Redemption Price of such Convertible Subordinated Notes,
together with interest and Registration Default Damages, if any, accrued to the
Redemption Date, shall be deemed to be satisfied and discharged to the extent
such amount is so paid by such purchasers. If such an agreement is entered into,
a copy of which will be filed with the Trustee prior to the Redemption Date, and
any Convertible Subordinated Notes not duly surrendered for conversion by the
holders thereof may, at the option of the Company, be deemed, to the fullest
extent permitted by law, acquired by such purchasers from such holders and
(notwithstanding anything to the contrary contained in Article 12) surrendered
by such purchasers for conversion, all as of immediately prior to the close of
business on the Redemption Date (and the right to convert any such Convertible
Subordinated Notes shall be deemed to have been extended through such time),
subject to payment of the above amount as aforesaid. At the direction of the
Company, the Trustee shall hold and dispose of any such amount paid to it in the
same manner as it would monies deposited with it by the Company for the
redemption of Convertible Subordinated Notes. Without the Trustee's prior

                                       22



written consent, no arrangement between the Company and such purchasers for the
purchase and conversion of any Convertible Subordinated Notes shall increase or
otherwise affect any of the powers, duties, responsibilities or obligations of
the Trustee as set forth in this Indenture, and the Company agrees to indemnify
the Trustee from, and defend and hold it harmless against, any loss, liability
or expense arising out of or in connection with any such arrangement for the
purchase and conversion of any Convertible Subordinated Notes between the
Company and such purchasers to which the Trustee has not consented in writing,
including the reasonable costs and expenses incurred by the Trustee in the
defense of any claim or liability arising out of or in connection with the
exercise or performance of any of its powers, duties, responsibilities or
obligations under this Indenture.

SECTION 3.09 Repurchase of Convertible Subordinated Notes at Option of the
             Holder.

         (a)      Convertible Subordinated Notes shall be purchased by the
Company pursuant to the terms of the Convertible Subordinated Notes at the
option of the holder on October 1 of 2008, 2013 and 2018 (each, a "Repurchase
Date"), at a purchase price of 100% of the Principal Amount plus any accrued and
unpaid interest and any Registration Default Damages (the "Repurchase Price"),
in each case, to, but excluding, such Repurchase Date, subject to the provisions
of this Section 3.09(a).

         Notice of an upcoming Repurchase Date shall be mailed by or at the
direction of the Company to the holders of Convertible Subordinated Notes as
shown on the Register of such holders maintained by the Registrar not less than
20 Business Days prior to the Repurchase Date at the addresses as shown on the
Register of holders maintained by the Registrar. The Company will also give
notice to beneficial owners as required by applicable law. Such notice will
describe, among other things, the repurchase right at the option of the holder,
the Repurchase Date, the Repurchase Price, that the holder must exercise the
repurchase right at any time from the opening of business on the date that is 20
Business Days prior to the Repurchase Date until the close of business on the
Business Day prior to the Repurchase Date, that the holder shall have the right
to withdraw any Convertible Subordinated Notes surrendered prior to the close of
business on the Repurchase Date, the procedures that a holder of Convertible
Subordinated Notes must follow in order to require the Company to repurchase
such holder's Convertible Subordinated Notes and to withdraw any surrendered
Convertible Subordinated Notes, the place or places where the holder is to
surrender such holder's Convertible Subordinated Notes, the amount of interest
and Registration Default Damages, if any, accrued on each Convertible
Subordinated Note to (but excluding) the Repurchase Date, and the CUSIP number
or numbers of the Convertible Subordinated Notes (if then generally in use).

         No failure of the Company to give the foregoing notices and no defect
therein shall limit the Convertible Subordinated Note holders' repurchase rights
or affect the validity of the proceedings for the repurchase of the Convertible
Subordinated Notes pursuant to this Section 3.09.

         Repurchases of Convertible Subordinated Notes under this Section 3.09
shall be made, at the option of the holder thereof, upon:

                                       23



                  (1)      delivery to the Paying Agent by a holder of a written
         notice (a "Repurchase Notice") during the period beginning at any time
         from the opening of business on the date that is 20 Business Days prior
         to the applicable relevant Repurchase Date until the close of business
         on the Business Day prior to such Repurchase Date stating:

                           (A) if certificated Convertible Subordinated Notes
                           have been issued, the certificate numbers of the
                           Convertible Subordinated Notes which the holder will
                           deliver to be purchased (or if a holder's Convertible
                           Subordinated Notes are not certificated, such
                           holder's Repurchase Notice must comply with
                           appropriate Depositary procedures),

                           (B) the portion of the Principal Amount of the
                           Convertible Subordinated Notes which the holder will
                           deliver to be purchased, which portion must be a
                           Principal Amount of $1,000 or an integral multiple
                           thereof,

                           (C) that such Convertible Subordinated Note shall be
                           purchased as of the Repurchase Date pursuant to the
                           terms and conditions specified in paragraph 7 of the
                           Convertible Subordinated Notes and in this Indenture,
                           and

                  (2)      delivery or book-entry transfer of the Convertible
         Subordinated Notes to Paying Agent at any time after delivery of the
         applicable Repurchase Notice (together with all necessary endorsements)
         at the office of the Paying Agent, such delivery being a condition to
         receipt by the holder of the Repurchase Price therefor; provided that
         such Repurchase Price shall be so paid pursuant to this Section 3.09
         only if the Convertible Subordinated Note so delivered to Paying Agent
         shall conform in all respects to the description thereof in the related
         Repurchase Notice.

         The Company shall purchase from the holder thereof, pursuant to this
Section 3.09, a portion of a Convertible Subordinated Note if the Principal
Amount of such portion is $1,000 or an integral multiple of $1,000. Provisions
of this Indenture that apply to the purchase of all of a Convertible
Subordinated Note also apply to the purchase of such portion of such Convertible
Subordinated Note.

         The Paying Agent shall promptly notify the Company of the receipt by it
of any Repurchase Notice or written notice of withdrawal thereof.

         (b)      Upon receipt by the Paying Agent of the Repurchase Notice
specified in Section 3.09(a), the holder of the Convertible Subordinated Note in
respect of which such Repurchase Notice was given shall (unless such Repurchase
Notice is validly withdrawn) thereafter be entitled to receive solely the
Repurchase Price with respect to such Convertible Subordinated Note. Such
Repurchase Price shall be paid to such holder, subject to receipt of funds
and/or Convertible Subordinated Notes by the Paying Agent, promptly following
the later of (x) the Repurchase Date with respect to such Convertible
Subordinated Note (provided the holder has satisfied the conditions in Section
3.09(a)) and (y) the time of delivery of such Convertible

                                       24



Subordinated Note to the Paying Agent by the holder thereof in the manner
required by Section 3.09(a). Notwithstanding anything herein to the contrary,
Convertible Subordinated Notes in respect of which a Repurchase Notice has been
given by the holder thereof may not be converted pursuant to Article 12 hereof
on or after the date of the delivery of such Repurchase Notice unless such
Repurchase Notice has first been validly withdrawn.

         A Repurchase Notice may be withdrawn by means of a written notice of
withdrawal delivered to the office of the Paying Agent in accordance with the
Repurchase Notice at any time prior to the close of business on the Repurchase
Date so long as delivery or book-entry transfer of the Convertible Subordinated
Notes in exchange for the Repurchase Price has not occurred, specifying:

                  (1) the certificate number, if any, of the Convertible
                  Subordinated Note in respect of which such notice of
                  withdrawal is being submitted, or the appropriate Depositary
                  information if the Convertible Subordinated Note in respect of
                  which such notice of withdrawal is being submitted is
                  represented by a Global Security,

                  (2) the Principal Amount of the Convertible Subordinated Note
                  with respect to which such notice of withdrawal is being
                  submitted, and

                  (3) the Principal Amount, if any, of such Convertible
                  Subordinated Note which remains subject to the original
                  Repurchase Notice and which has been or will be delivered for
                  purchase by the Company.

         (a)      On or prior to the Repurchase Date, the Company shall deposit
with the Paying Agent (or, if the Company or a subsidiary or an Affiliate of
either of them is acting as the Paying Agent, shall segregate and hold in trust
as provided in Section 2.04) an amount of cash (in immediately available funds
if deposited on such Business Day) sufficient to pay the aggregate Repurchase
Price of all the Convertible Subordinated Notes or portions thereof that are to
be purchased as of the Repurchase Date.

         (b)      Upon presentation of any Convertible Subordinated Note
repurchased only in part, the Company shall execute and the Trustee shall
authenticate and make available for delivery to the holder thereof, at the
expense of the Company, a new Convertible Subordinated Note or Convertible
Subordinated Notes, of any authorized denomination, in aggregate Principal
Amount equal to the unrepurchased portion of the Convertible Subordinated Notes
presented.

         (c)      The Paying Agent shall return to the Company any cash that
remains unclaimed, together with interest, if any, thereon, held by them for the
payment of the Repurchase Price; provided that to the extent that the aggregate
amount of cash deposited by the Company pursuant to Section 3.09 exceeds the
aggregate Repurchase Price of the Convertible Subordinated Notes or portions
thereof which the Company is obligated to purchase as of the Repurchase Date
then, unless otherwise agreed in writing with the Company, promptly after the
Business Day following the Repurchase Date, the Paying Agent shall return any
such excess to the Company together with interest, if any, thereon. If the
Paying Agent holds money sufficient to pay the Repurchase Price of a Convertible
Subordinated Note on the Business Day following the Repurchase Date, then on or
after that date, such Convertible Subordinated Note shall cease to be
outstanding, and

                                       25



interest and Registration Default Damages, if applicable, will cease to accrue
on the Principal Amount of the Convertible Subordinated Note and the holders
thereof shall have no right in respect of such Convertible Subordinated Note
except the right to receive the Repurchase Price thereof and unpaid interest and
Registration Default Damages, if any, to (but excluding) the Repurchase Date.

SECTION 3.10 Repurchase Upon Fundamental Change.

         Following a Fundamental Change (the date of each such occurrence being
the "Fundamental Change Date"), the Company shall notify the holders of
Convertible Subordinated Notes in writing of such occurrence and shall make an
offer (the "Fundamental Change Offer") to repurchase all Convertible
Subordinated Notes then outstanding at a repurchase price in cash equal to 100%
of the Principal Amount thereof, plus accrued and unpaid interest and
Registration Default Damages, if any (the "Fundamental Change Payment"), to, but
excluding, the Fundamental Change Payment Date (as defined below).

         Notice of a Fundamental Change shall be mailed by or at the direction
of the Company to the holders of Convertible Subordinated Notes as shown on the
Register of such holders maintained by the Registrar not more than 20 days after
the applicable Fundamental Change Date at the addresses as shown on the Register
of holders maintained by the Registrar, with a copy to the Trustee and the
Paying Agent. The Fundamental Change Offer shall remain open until a specified
date (the "Fundamental Change Offer Termination Date") which is at least 20
Business Days from the date such notice is mailed. During the period specified
in such notice, holders of Convertible Subordinated Notes may elect to tender
their Convertible Subordinated Notes in whole or in part in integral multiples
of $1,000 of Principal Amount in exchange for cash. Payment shall be made by the
Company in respect of Convertible Subordinated Notes properly tendered pursuant
to this Section on a specified Business Day (the "Fundamental Change Payment
Date") which shall be no later than 60 days after the applicable Fundamental
Change.

         The notice, which shall govern the terms of the Fundamental Change
Offer, shall include such disclosures as are required by law and shall state:

         (a)      that a Fundamental Change Offer is being made pursuant to this
Section 3.10 and that all Convertible Subordinated Notes will be accepted for
payment;

         (b)      the event, transaction or transactions that constitute the
Fundamental Change;

         (c)      the Fundamental Change Payment for each Convertible
Subordinated Note, the Fundamental Change Offer Termination Date and the
Fundamental Change Payment Date;

         (d)      that any Convertible Subordinated Note not properly tendered
will continue to accrue interest (including Contingent Interest, if any) and
Registration Default Damages, if applicable, in accordance with the terms
thereof;

         (e)      that, unless the Company defaults on making the Fundamental
Change Payment, any Convertible Subordinated Note properly tendered pursuant to
the Fundamental Change Offer shall cease to accrue interest and Registration
Default Damages, if applicable, on the

                                       26



Fundamental Change Payment Date and no further interest (including Contingent
Interest, if any) or Registration Default Damages shall accrue on or after such
date;

         (f)      that holders electing to have Convertible Subordinated Notes
repurchased pursuant to a Fundamental Change Offer will be required to surrender
their Convertible Subordinated Notes to the Paying Agent at the address
specified in the notice prior to 5:00 p.m., New York City time, on the
Fundamental Change Offer Termination Date and must complete any form letter of
transmittal proposed by the Company and acceptable to the Trustee and the Paying
Agent;

         (g)      that holders of Convertible Subordinated Notes will be
entitled to withdraw their election if the Paying Agent receives, not later than
5:00 p.m., New York City time, on the Fundamental Change Offer Termination Date,
a facsimile transmission or letter setting forth the name of the holder, the
principal amount of Convertible Subordinated Notes the holder delivered for
purchase, the Convertible Subordinated Note certificate number (if any) and a
statement that such holder is withdrawing his election to have such Convertible
Subordinated Notes purchased;

         (h)      that holders whose Convertible Subordinated Notes are tendered
for repurchase in part will be issued Convertible Subordinated Notes equal in
Principal Amount to the unpurchased portion of the Convertible Subordinated
Notes surrendered;

         (i)      the instructions that holders must follow in order to tender
their Convertible Subordinated Notes; and

         (j)      that in the case of a Fundamental Change Offer Termination
Date that is also an Interest Payment Date, the interest payment (including
Contingent Interest, if any) and Registration Default Damages, if any, due on
such date shall be paid to the person in whose name the Convertible Subordinated
Note is registered at the close of business on the relevant Fundamental Change
Offer Termination Date.

         On the Fundamental Change Offer Termination Date, the Company shall (i)
accept for payment all Convertible Subordinated Notes or portions thereof
properly tendered pursuant to the Fundamental Change Offer, (ii) deposit with
the Paying Agent money sufficient to pay the Fundamental Change Payment with
respect to all Convertible Subordinated Notes or portions thereof so tendered
and (iii) deliver or cause to be delivered to the Trustee the Convertible
Subordinated Notes so tendered together with an Officers' Certificate setting
forth the aggregate principal amount of Convertible Subordinated Notes or
portions thereof tendered to the Company. On the Fundamental Change Payment
Date, the Paying Agent shall send or deliver the Fundamental Change Payment to
the holders of Convertible Subordinated Notes so tendered and the Trustee shall
promptly authenticate and send or cause to be transferred by book entry to such
holders a new Convertible Subordinated Note equal in principal amount to any
unpurchased portion of the Convertible Subordinated Note surrendered, if any;
provided that such new Convertible Subordinate Notes will be in a Principal
Amount of $1,000 or an integral multiple thereof. Any Convertible Subordinated
Notes not properly tendered shall be promptly mailed or delivered by the Company
to the holder thereof.

                                       27



         In the case of any reclassification, change, consolidation, merger,
share exchange, combination or sale or conveyance to which Section 12.14 applies
in which the Common Stock of the Company is changed or exchanged as a result
into the right to receive stock, securities or other property or assets
(including cash) which includes shares of common stock of the Company or another
person that are, or upon issuance will be, traded on a United States national
securities exchange or approved for trading on an established automated
over-the-counter trading market in the United States and such shares constitute
at the time such change or exchange becomes effective in excess of 50% of the
aggregate fair market value of such stock, securities other property and assets
(including cash) (as determined by the Company, which determination shall be
conclusive and binding), then the person formed by such consolidation or
resulting from such merger or share exchange or which acquires such assets, as
the case may be, shall execute and deliver to the Trustee a supplemental
indenture (which shall comply with the TIA as in force at the date of execution
of such supplemental indenture) modifying the provisions of this Indenture
relating to the right of holders of Convertible Subordinated Notes to cause the
Company to repurchase Convertible Subordinated Notes following a Fundamental
Change, including the applicable provisions of this Section 3.10 and the
definitions of Fundamental Change, Change of Control and Termination of Trading,
as appropriate, as determined in good faith by the Company (which determination
shall be conclusive and binding), to make such provision apply to such common
stock and the issuer thereof if different from the Company and Common Stock of
the Company (in lieu of the Company and the Common Stock of the Company).

         The Fundamental Change Offer shall be made by the Company in compliance
with all applicable provisions of the Exchange Act, and all applicable tender
offer rules promulgated thereunder, to the extent such laws and regulations are
then applicable and shall include all instructions and materials that the
Company shall reasonably deem necessary to enable such holders of Convertible
Subordinated Notes to tender their Convertible Subordinated Notes.

                                    ARTICLE 4

                                    COVENANTS

SECTION 4.01 Payment of Convertible Subordinated Notes.

         The Company shall pay the principal of and interest and Registration
Default Damages, if any, on the Convertible Subordinated Notes on the dates and
in the manner provided in the Convertible Subordinated Notes. Principal,
interest and Registration Default Damages, if any, the Redemption Price,
Repurchase Price and the Fundamental Change Payment shall be considered paid on
the date due if the Trustee or Paying Agent (other than the Company or a
subsidiary of the Company) holds as of 10:00 a.m., New York City time, on that
date immediately available funds designated for and sufficient to pay all
principal, interest, Registration Default Damages, if any, the Redemption Price,
Repurchase Price or the Fundamental Change Payment then due, provided, however,
that money held by the Agent for the benefit of holders of Senior Debt pursuant
to the provisions of Article 11 hereof or the payment of which to the holders of
the Convertible Subordinated Notes is prohibited by Article 11 shall not be
considered to be designated for the payment of any principal of or interest or
any Registration Default Damages on the Convertible Subordinated Notes within
the meaning of this Section 4.01.

                                       28



         To the extent lawful, the Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on (i)
overdue principal, at the rate borne by Convertible Subordinated Notes,
compounded semiannually; and (ii) overdue installments of interest (without
regard to any applicable grace period) at the same rate, compounded
semiannually.

SECTION 4.02 Commission Reports.

         The Company shall comply with Section 314(a) of the TIA.

SECTION 4.03 Compliance Certificate.

         The Company shall deliver to the Trustee within 120 days after the end
of each fiscal year of the Company, an Officers' Certificate stating that a
review of the activities of the Company and its subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has fully performed its
obligations under this Indenture and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge, the Company
is not in default in the performance or observance of any of the terms and
conditions hereof (or, if any Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he or she may have
knowledge) and, that to the best of his or her knowledge, no event has occurred
and remains in existence by reason of which payments on account of the principal
of or interest or Registration Default Damages, if any, on the Convertible
Subordinated Notes are prohibited.

         The Company shall, so long as any of the Convertible Subordinated Notes
are outstanding, deliver to the Trustee, forthwith upon becoming aware of any
Default or Event of Default, an Officers' Certificate specifying such Default or
Event of Default and what action the Company is taking or proposes to take with
respect thereto.

SECTION 4.04 Maintenance of Office or Agency.

         The Company shall maintain or cause to be maintained the office or
agency required under Section 2.03. The Company shall give prompt written notice
to the Trustee of the location, and any change in the location, of such office
or agency not maintained by the Trustee. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, presentations, surrenders, notices and demands
with respect to the Convertible Subordinated Notes may be made or served at the
Corporate Trust Office of the Trustee.

         The Company may also from time to time designate one or more other
offices or agencies where the Convertible Subordinated Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designation.

SECTION 4.05 Continued Existence.

         Subject to Article 5, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence.

                                       29


SECTION 4.06 Appointments to Fill Vacancies in Trustee's Office.

         The Company, whenever necessary to avoid or fill a vacancy in the
office of Trustee, will appoint, in the manner provided in Section 7.08, a
Trustee, so that there shall at all times be a Trustee hereunder.

SECTION 4.07 Stay, Extension and Usury Laws.

         The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter enforced, that may affect the Company's
obligation to pay the Convertible Subordinated Notes; and the Company (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law insofar as such law applies to the Convertible
Subordinated Notes, and covenants that it shall not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law has been enacted.

SECTION 4.08 Taxes.

         The Company shall, and shall cause each of its subsidiaries to, pay
prior to delinquency all taxes, assessments and government levies; provided,
however, that the Company shall not be required to pay or cause to be paid any
such tax, assessment or levy (A) if the failure to do so will not, in the
aggregate, have a material adverse impact on the Company and its subsidiaries
taken as a whole, or (B) if the amount, applicability or validity is being
contested in good faith by appropriate proceedings.

SECTION 4.09 Investment Company Act.

         As long as any Convertible Subordinated Notes are outstanding, the
Company will conduct its business and operations so as not to become an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended (the "Investment Company Act"), and will take all steps required in
order for it to continue not to be an "investment company" and not to be
required to be registered under the Investment Company Act, including, if
necessary, redeployment of the assets of the Company.

                                    ARTICLE 5

                                   SUCCESSORS

SECTION 5.01 When the Company May Merge, Etc.

         The Company may not, in a single transaction or series of related
transactions, consolidate or merge with or into or effect a share exchange with
(whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets to, any person as an entirety or substantially as an
entirety unless:

                                       30


         (a)      either

                  (i)      the Company shall be the surviving or continuing
corporation or

                  (ii)     the person formed by or surviving any such
consolidation or share exchange or into which the Company is merged (if other
than the Company) or the person which acquires by sale, assignment, transfer,
lease, conveyance or other disposition the properties and assets of the Company
substantially as an entirety

                           (1)      shall be a corporation organized and validly
existing under the laws of the United States or any State thereof and

                           (2)      shall expressly assume, by supplemental
indenture the due and punctual payment of the principal of, any premium on, and
any interest on, all of the Company's outstanding debt securities and the
performance of every covenant in this Indenture and the Registration Rights
Agreement and any other agreement related to the Company's outstanding debt
securities on the part of the Company to be performed or observed, including,
without limitation, with respect to this Indenture, modifications to rights of
holders to cause the repurchase of Convertible Subordinated Notes upon a
Fundamental Change in accordance with the penultimate paragraph of Section 3.10
and conversion rights in accordance with Section 12.14 to the extent required by
such Sections;

         (b)      immediately after giving effect to such transaction no Default
and no Event of Default, after notice or lapse of time or both, shall have
occurred and be continuing;

         (c)      in case of any such consolidation, merger, conveyance or
transfer, such successor corporation will succeed to and be substituted for the
Company as obligor on the Convertible Subordinated Notes, with the same effect
as if it had been named in the Indenture as the obligor and

         (d)      the Company or such person shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel each stating that such
consolidation, merger, share exchange, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture, comply with this provision of this Indenture and that
all conditions precedent in this Indenture relating to such transaction have
been satisfied.

         For purposes of this Section 5.01, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more subsidiaries of the
Company, the capital stock of which constitutes all or substantially all of the
properties and assets of the Company, shall be deemed to be the transfer of all
or substantially all of the properties and assets of the Company.

SECTION 5.02 Successor Corporation Substituted.

         Upon any such consolidation, merger, share exchange, sale, assignment,
conveyance, lease, transfer or other disposition in accordance with Section
5.01, the successor person formed by such consolidation, or share exchange or
into which the Company is merged or to which such

                                       31


assignment, conveyance, lease, transfer or other disposition is made will
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor had
been named as the Company therein, and thereafter (except in the case of a sale,
assignment, transfer, lease, conveyance or other disposition) the predecessor
corporation will be relieved of all further obligations and covenants under this
Indenture and the Convertible Subordinated Notes.

SECTION 5.03 Purchase Option on Change of Control.

         This Article 5 does not affect the obligations of the Company
(including without limitation any successor to the Company) under Section 3.10.

                                   ARTICLE 6

                              DEFAULTS AND REMEDIES

SECTION 6.01 Events of Default.

         An "Event of Default" with respect to any Convertible Subordinated
Notes occurs if:

         (a)      the Company defaults in the payment (whether or not such
payment is prohibited by the subordination provisions set forth in Article 11 of
this Indenture) of any interest on or Registration Default Damages on the
Convertible Subordinated Notes when due (including any interest or Registration
Default Damages, if any, payable in connection with a repurchase pursuant to
Section 3.09 or Section 3.10 or in connection with any optional redemption
payment pursuant to Article 3) and continuance of such default for 30 days or
more;

         (b)      the Company defaults in the payment (whether or not such
payment is prohibited by the subordination provisions set forth in Article 11 of
this Indenture) of principal of or premium, if any, on the Convertible
Subordinated Notes when due and payable, including, without limitation, failure
of the Company to make any optional redemption payment when required pursuant to
Article 3;

         (c)      the Company defaults in the payment of the Fundamental Change
Payment or the Repurchase Price in respect of the Convertible Subordinated Notes
on the date therefor, whether or not such payment is prohibited by the
subordination provisions set forth in Article 11 of this Indenture;

         (d)      the Company fails to provide timely notice of any Fundamental
Change in accordance with Section 3.10;

         (e)      a default in the Company's obligation to redeem the
Convertible Subordinated Notes after it has exercised its redemption option,
whether or not such payment is prohibited by the subordination provisions set
forth in Article 11 of this Indenture;

         (f)      a default in the Company's obligation to satisfy its
conversion obligation pursuant to Article 12 of this Indenture upon exercise of
a holder's conversion right;

                                       32


         (g)      the Company defaults (other than a default set forth in
clauses (a), (b), (c) and (d) above) in the performance of, or breaches, any
other covenant or warranty of the Company set forth in this Indenture or the
Convertible Subordinated Notes and fails to remedy such default or breach within
a period of 30 days after the receipt of written notice to the Company from the
Trustee or to the Company and the Trustee from the holders of at least 25% in
aggregate Principal Amount of the then outstanding Convertible Subordinated
Notes;

         (h)      a default under any credit agreement, mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any subsidiary
of the Company (or the payment of which is guaranteed by the Company or any of
its subsidiaries), whether such Indebtedness or guarantee exists on the date of
this Indenture or is created thereafter, which default (i) is caused by a
failure to pay when due any principal of or interest on such Indebtedness within
the grace period provided for in such Indebtedness (which failure continues
beyond any applicable grace period) (a "Payment Default") or (ii) results in the
acceleration of such Indebtedness prior to its express maturity (without such
acceleration being rescinded or annulled) and, in each case, the principal
amount of such Indebtedness, together with the principal amount of any other
such Indebtedness under which there is a Payment Default or the maturity of
which has been so accelerated, aggregates $5,000,000 or more;

         (i)      a final, non-appealable judgment or final, non-appealable
judgments (other than any judgment as to which a reputable insurance company has
accepted full liability) for the payment of money are entered by a court or
courts of competent jurisdiction against the Company or any subsidiaries of the
Company and remain unstayed, unbonded or undischarged for a period (during which
execution shall not be effectively stayed) of 60 days, provided that the
aggregate amount of all such judgments exceeds $5,000,000;

         (j)      the Company or any subsidiary, pursuant to or within the
meaning of any Bankruptcy Law:

                  (i)      commences a voluntary case,

                  (ii)     consents to the entry of an order for relief against
it in an involuntary case,

                  (iii)    consents to the appointment of a Custodian of it or
for all or substantially all of its property,

                  (iv)     makes a general assignment for the benefit of its
creditors,

                  (v)      makes the admission in writing that it generally is
unable to pay its debts as the same become due; or

         (k)      a court of competent jurisdiction enters a judgment, order or
decree under any Bankruptcy Law that:

                  (i)      is for relief against the Company or any subsidiary
in an involuntary case,

                                       33


                  (ii)     appoints a Custodian of the Company or any
subsidiary, and the order or decree remains unstayed and in effect for 90 days
or

                  (iii)    orders the liquidation of the Company or any
subsidiary, and the order or decree remains unstayed and in effect for 90 days.

         The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.

SECTION 6.02 Acceleration.

         If an Event of Default (other than an Event of Default with respect to
the Company specified in clauses (j) and (k) of Section 6.01) occurs and is
continuing, then and in every such case the Trustee, by written notice to the
Company, or the holders of at least 25% in aggregate Principal Amount of the
then outstanding Convertible Subordinated Notes, by written notice to the
Company and the Trustee, may declare the unpaid Principal Amount of, premium, if
any, and accrued and unpaid interest and Registration Default Damages, if any,
on all the Convertible Subordinated Notes to be due and payable. Upon such
declaration such Principal Amount, premium, if any, and accrued and unpaid
interest and Registration Default Damages, if any, shall become immediately due
and payable, notwithstanding anything contained in this Indenture or the
Convertible Subordinated Notes to the contrary, but subject to the provisions of
Article 11 hereof. If any Event of Default with respect to the Company specified
in clauses (j) or (k) of Section 6.01 occurs, all unpaid Principal Amount of and
premium, if any, and accrued and unpaid interest and Registration Default
Damages, if any, on the Convertible Subordinated Notes then outstanding shall
become automatically due and payable subject to the provisions of Article 11
hereof, without any declaration or other act on the part of the Trustee or any
holder of Convertible Subordinated Notes.

         The holders of a majority in aggregate Principal Amount of the then
outstanding Convertible Subordinated Notes by notice to the Trustee may rescind
an acceleration of the Convertible Subordinated Notes and its consequences if
all existing Events of Default including payment of the Trustee's fees and
expenses (other than nonpayment of principal of or premium, if any, and interest
and Registration Default Damages, if any, on the Convertible Subordinated Notes
which has become due solely by virtue of such acceleration) have been cured or
waived and if the rescission would not conflict with any judgment or decree of
any court of competent jurisdiction. No such rescission shall affect any
subsequent Default or Event of Default or impair any right consequent thereto.

SECTION 6.03 Other Remedies.

         If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy by proceeding at law or in equity to collect the payment of
Principal Amount of or interest or Registration Default Damages, if applicable,
on the Convertible Subordinated Notes or to enforce the performance of any
provision of the Convertible Subordinated Notes or this Indenture, subject to
the provisions of Article 11 hereof. The Trustee may maintain a proceeding even
if it does not possess any of the Convertible Subordinated Notes or does not
produce any of

                                       34

them in the proceeding. A delay or omission by the Trustee or any holder of a
Convertible Subordinated Note in exercising any right or remedy occurring upon
an Event of Default shall not impair the right or remedy or constitute a waiver
of or acquiescence in the Event of Default. All remedies are cumulative to the
extent permitted by law.

SECTION 6.04 Waiver of Past Defaults.

         The holders of a majority in aggregate Principal Amount of the
Convertible Subordinated Notes then outstanding may, on behalf of the holders of
all the Convertible Subordinated Notes, waive an existing Default or Event of
Default and its consequences, except a Default or Event of Default in the
payment of the principal of, premium, if any, or interest or Registration
Default Damages, if applicable, on the Convertible Subordinated Notes (other
than the non-payment of principal of and premium, if any, and interest and
Registration Default Damages, if any, on the Convertible Subordinated Notes
which has become due solely by virtue of an acceleration which has been duly
rescinded as provided above), or in respect of a covenant or provision of this
Indenture which cannot be modified or amended without the consent of all holders
of Convertible Subordinated Notes. When a Default or Event of Default is waived,
it is cured and stops continuing. No waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon.

SECTION 6.05 Control by Majority.

         The holders of a majority in aggregate Principal Amount of the then
outstanding Convertible Subordinated Notes may direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it. However, the Trustee may refuse
to follow any direction that conflicts with law or this Indenture that the
Trustee determines may be unduly prejudicial to the rights of other holders of
Convertible Subordinated Notes or that may involve the Trustee in personal
liability; provided that the Trustee shall have no duty or obligation (subject
to Section 7.01) to ascertain whether or not such actions of forebearances are
unduly prejudicial to such holders; provided, further, that the Trustee may take
any other action the Trustee deems proper that is not inconsistent with such
directions.

SECTION 6.06 Limitation on Suits.

         A holder of a Convertible Subordinated Note may not pursue any remedy
with respect to this Indenture or the Convertible Subordinated Notes unless:

                  (1)      the holder gives to the Trustee notice of a
continuing Event of Default;

                  (2)      the holders of at least 25% in Principal Amount of
the then outstanding Convertible Subordinated Notes make a request to the
Trustee to pursue the remedy;

                  (3)      the Trustee does not comply with the request within
60 days after receipt of the request and the offer and, if requested, the
provision of indemnity; and

                                       35


                  (4)      during such 60-day period the holders of a majority
in Principal Amount of the then outstanding Convertible Subordinated Notes do
not give the Trustee a direction inconsistent with the request.

         A holder of a Convertible Subordinated Note may not use this Indenture
to prejudice the rights of another holder or to obtain a preference or priority
over another holder.

SECTION 6.07 Rights of Holders to Receive Payment.

         Subject to the provisions of Article 11 hereof, notwithstanding any
other provision of this Indenture, the right of any holder of a Convertible
Subordinated Note to receive payment of principal, premium, if any, and interest
and Registration Default Damages, if any, on the Convertible Subordinated Note,
on or after the respective due dates expressed in the Convertible Subordinated
Note, or to bring suit for the enforcement of any such payment on or after such
respective dates, or to bring suit for the enforcement of the right to convert
the Convertible Subordinated Note shall not be impaired or affected without the
consent of the holder of a Convertible Subordinated Note.

SECTION 6.08 Collection Suit by Trustee.

         Subject to the provisions of Article 11 hereof, if an Event of Default
specified in Section 6.01(a), (b), or (e) occurs and is continuing, the Trustee
may recover judgment in its own name and as trustee of an express trust against
the Company for the whole amount of principal and interest and Registration
Default Damages, if any, remaining unpaid on the Convertible Subordinated Notes
and interest on overdue principal and interest and Registration Default Damages,
if any, and such further amount as shall be sufficient to cover the costs and,
to the extent lawful, expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.

SECTION 6.09 Trustee May File Proofs of Claim.

         The Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee and
the holders of Convertible Subordinated Notes allowed in any judicial
proceedings relative to the Company, its creditors or its property. Nothing
contained herein shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any holder of a Convertible
Subordinated Note any plan of reorganization, arrangement, adjustment or
composition affecting the Convertible Subordinated Notes or the rights of any
holder thereof, or to authorize the Trustee to vote in respect of the claim of
any holder in any such proceeding. The Trustee may participate as a member of
any official committee of creditors appointed in matters as it deems necessary
or advisable.

SECTION 6.10 Priorities.

         If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:

                                       36


                  First: to the Trustee for amounts due under Section 7.07,
         including payment of all compensation, expenses and liabilities
         incurred, and all advances made, by the Trustee, and the costs and
         expenses of collection;

                  Second: to holders of Senior Debt to the extent required by
         Article 11;

                  Third: to holders of Convertible Subordinated Notes for
         amounts due and unpaid on the Convertible Subordinated Notes for
         principal, premium, if any, and interest and Registration Default
         Damages, if any, ratably, without preference or priority of any kind,
         according to the amounts due and payable on the Convertible
         Subordinated Notes for principal, premium, if any, and interest and
         Registration Default Damages, if any, respectively; and

                  Fourth: to the Company.

         Except as otherwise provided in Section 2.12, the Trustee may fix a
record date and payment date for any payment to holders of Convertible
Subordinated Notes.

SECTION 6.11 Undertaking for Costs.

         In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit, other than the Trustee, of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys fees, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section does not apply to a suit by the Trustee, a suit
by a holder pursuant to Section 6.07 or a suit by holders of more than 10% in
aggregate Principal Amount of the then outstanding Convertible Subordinated
Notes.

                                    ARTICLE 7

                                   THE TRUSTEE

         The Trustee hereby accepts the trust imposed upon it by this Indenture
and covenants and agrees to perform the same, as herein expressed. Whether or
not herein expressly so provided, every provision of this Indenture relating to
the conduct or affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Article 7.

SECTION 7.01 Duties of the Trustee.

         (a)      If an Event of Default known to a Trust Officer of the Trustee
has occurred and is continuing, the Trustee shall exercise such of the rights
and powers vested in it by this Indenture and use the same degree of care and
skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.

         (b)      Except during the continuance of an Event of Default actually
known to the Trustee:

                                       37


                           (1)      The duties of the Trustee shall be
determined solely by the express provisions of this Indenture, and the Trustee
need perform only those duties that are specifically set forth in this Indenture
and no others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and

                           (2)      In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any statements, certificates
or opinions furnished to the Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the form required by this Indenture.

         (c)      The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:

                           (1)      This paragraph does not limit the effect of
paragraph (b) of this Section;

                           (2)      The Trustee shall not be liable for any
error of judgment made in good faith by a Trust Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts; and

                           (3)      The Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05.

         (d)      Whether or not therein expressly so provided, every provision
of this Indenture that is in any way related to the Trustee is subject to
paragraphs (a), (b) and (c) of this Section 7.01.

         (e)      No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any financial liability in the performance
of any of its duties or the exercise of any of its rights and powers hereunder,
if it shall have reasonable grounds for believing that repayment of such funds
or adequate indemnity against such risk of liability is not reasonably assured
to it.

         (f)      The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.

SECTION 7.02 Rights of the Trustee.

         (a)      The Trustee may rely on and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate, or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, security or other document believed by it to be genuine and to have been
signed or presented by the proper person. The Trustee need not investigate any
fact or matter contained therein.

         (b)      Any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by an Officers' Certificate
(unless other evidence in respect thereof is

                                       38


herein specifically prescribed). In addition, before the Trustee acts or
refrains from acting, it may require an Officers' Certificate, an Opinion of
Counsel or both. The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such Officers' Certificate or Opinion
of Counsel. The Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection from liability in respect of any action taken, suffered or omitted by
it hereunder in good faith and in reliance thereon.

         (c)      The Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through its attorneys
and agents and other persons not regularly in its employ and shall not be
responsible for the misconduct or negligence of any attorney or agent appointed
with due care.

         (d)      The Trustee shall not be liable for any action it takes or
omits to take in good faith without negligence or willful misconduct which it
believes to be authorized or within its discretion, rights or powers.

         (e)      Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by Officers of the Company.

         (f)      The Trustee shall not be required to give any bond or surety
in respect of the performance of its powers and duties hereunder.

         (g)      The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request, order or
discretion of any of the holders of Convertible Subordinated Notes pursuant to
the provisions of this Indenture, unless such holders have offered to the
Trustee security or indemnity satisfactory to it against the costs, expenses and
liabilities which might be incurred therein or thereby.

         (h)      The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, security or other
document unless requested in writing to do so by the holders of not less than a
majority in aggregate Principal Amount of the Convertible Subordinated Notes
then outstanding, provided that if the Trustee determines in its discretion to
make any such investigation, then it shall be entitled, upon reasonable prior
notice and during normal business hours, to examine the books and records and
the premises of the Company, personally or by agent or attorney, and the
reasonable expenses of every such examination shall be paid by the Company or,
if paid by the Trustee or any predecessor Trustee, shall be reimbursed by the
Company upon demand.

         (i)      The permissive rights of the Trustee to do things enumerated
in this Indenture shall not be construed as a duty, and the Trustee shall not be
answerable for other than its negligence or willful misconduct.

         (j)      The Trustee shall not be responsible for the computation of
any adjustment to the Conversion Rate or for any determination as to whether an
adjustment is required and shall not be deemed to have knowledge of any
adjustment unless and until it shall have received the notice from the Company
contemplated by Section 12.11.

                                       39


SECTION 7.03 Individual Rights of the Trustee.

         Subject to Sections 7.10 and 7.11, the Trustee in its individual or any
other capacity may become the owner or pledgee of Convertible Subordinated Notes
with the same rights it would have if it were not the Trustee and may otherwise
deal with the Company or an Affiliate of the Company and receive, collect, hold
and retain collections from the Company with the same rights it would have if it
were not Trustee. Any Agent may do the same with like rights.

SECTION 7.04 Trustee's Disclaimer.

         The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Convertible Subordinated
Notes. It shall not be accountable for the Company's use of the proceeds from
the Convertible Subordinated Notes or any money paid to the Company or upon the
Company's direction under any provision of this Indenture. It shall not be
responsible for the use or application of any money received by any Paying Agent
other than the Trustee, and it shall not be responsible for any statement or
recital herein or any statement in the Convertible Subordinated Notes or any
other document in connection with the sale of the Convertible Subordinated Notes
or pursuant to this Indenture other than its certificate of authentication.

SECTION 7.05 Notice of Defaults.

         If a Default or Event of Default occurs and is continuing and if it is
known to a Trust Officer of the Trustee, the Trustee shall mail to each holder
of a Convertible Subordinated Note a notice of the Default or Event of Default
within 60 days after it occurs. A Default or an Event of Default shall not be
considered known to a Trust Officer of the Trustee unless it is a Default or
Event of Default in the payment of principal, interest or Registration Default
Damages, if any, when due under Section 6.01(a), (b), (c) or (e), as applicable,
or a Trust Officer of the Trustee shall have received notice thereof, in
accordance with this Indenture, from the Company or from the holders of a
majority in aggregate Principal Amount of the outstanding Convertible
Subordinated Notes. Except in the case of a Default or Event of Default in
payment of principal of, premium, if any, or interest or Registration Default
Damages, if any, on any Convertible Subordinated Note, the Trustee may withhold
the notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interest of the holders of the
Convertible Subordinated Notes.

SECTION 7.06 Reports by the Trustee to Holders.

         Within 60 days after the reporting date stated in Section 10.10, the
Trustee shall mail to holders of Convertible Subordinated Notes a brief report
dated as of such reporting date that complies with TIA Section 313(a) (but if
no event described in TIA Section 313(a) has occurred within twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA Section 313(b)(2). The Trustee shall also transmit by
mail all reports as required by TIA Section 313(c) and TIA Section 313(d).

         A copy of each report at the time of its mailing to holders of
Convertible Subordinated Notes shall be filed, at the expense of the Company, by
the Trustee with the Commission and each stock exchange or securities market, if
any, on which the Convertible Subordinated Notes

                                       40


are listed. The Company shall timely notify the Trustee when the Convertible
Subordinated Notes are listed or quoted on any stock exchange or securities
market.

SECTION 7.07 Compensation and Indemnity.

         The Company shall pay to the Trustee from time to time, and the Trustee
shall be entitled to, reasonable compensation for its acceptance of this
Indenture and its services hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by or on behalf of it in
addition to the compensation for its services. Such expenses may include the
reasonable compensation, disbursements and expenses of the Trustee's agents,
counsel and other persons not regularly in its employ.

         The Company shall indemnify the Trustee (including in each of its
capacities hereunder) against, and defend and hold the Trustee harmless from,
any loss, liability or expense incurred by it arising out of or in connection
with the acceptance or administration of its duties under this Indenture and the
trusts hereunder, including the costs and expenses of defending itself against
or investigating any claim of liability in the premises, except as set forth in
the next paragraph. The Trustee shall notify the Company promptly of any claim
for which it may seek indemnity. Failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder, except to the extent
such failure of notice materially adversely affects the Company. The Company
shall defend the claim with counsel designated by the Company, who may be
outside counsel to the Company but shall in all events be reasonably
satisfactory to the Trustee, and the Trustee shall cooperate in the defense. The
indemnification herein extends to any settlement, provided that the Company will
not be liable for any settlement made without its consent, provided, further,
that such consent will not be unreasonably withheld.

         The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through its own negligence or willful
misconduct.

         The Trustee shall have a lien prior to the Convertible Subordinated
Notes on all money or property held or collected by the Trustee to secure the
Company's payment obligations in this Section 7.07, except that held in trust to
pay principal, interest and Registration Default Damages, if any, on Convertible
Subordinated Notes. Such liens and the Company's obligations under this Section
7.07 shall survive the satisfaction and discharge of this Indenture.

         When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(h) or (i) occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.

         The provisions of this Section 7.07 shall survive the termination of
this Indenture, and shall extend to each agent, Custodian and other person
employed by the Trustee consistent with the terms of this Indenture.

                                       41


SECTION 7.08 Replacement of the Trustee.

         A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.

         The Trustee may resign at any time and be discharged from the trust
hereby created by so notifying the Company. The holders of a majority in
aggregate Principal Amount of the then outstanding Convertible Subordinated
Notes may remove the Trustee by so notifying the Trustee and the Company in
writing. The Company may remove the Trustee if:

                           (1)      the Trustee fails to comply with Section
7.10;

                           (2)      the Trustee is adjudged a bankrupt or an
insolvent or an order for relief is entered with respect to the Trustee under
any Bankruptcy Law;

                           (3)      a Custodian or public officer takes charge
of the Trustee or its property; or

                           (4)      the Trustee becomes incapable of acting.

         If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the holders
of a majority in aggregate Principal Amount of the then outstanding Convertible
Subordinated Notes may appoint a successor Trustee to replace the successor
Trustee appointed by the Company.

         If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
holders of at least 10% in aggregate Principal Amount of the then outstanding
Convertible Subordinated Notes may petition any court of competent jurisdiction
for the appointment of a successor Trustee.

         If the Trustee after written request by any holder of a Convertible
Subordinated Note who has been a holder for at least six months fails to comply
with Section 7.10, such holder may petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee.

         A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to holders of Convertible Subordinated Notes. The retiring Trustee
shall promptly transfer all property held by it as Trustee to the successor
Trustee, provided that all sums owing to the retiring Trustee hereunder have
been paid and subject to the lien provided for in Section 7.07. Notwithstanding
the replacement of the Trustee pursuant to this Section 7.08, the Company's
obligations under Section 7.07 shall continue for the benefit of the retiring
Trustee with respect to expenses and liabilities incurred by it prior to such
replacement.

                                       42


         Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to in the
preceding paragraph.

SECTION 7.09 Successor Trustee by Merger, etc.

         If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust business (including the trust
created by this Indenture) to, another corporation or national banking
association, the resulting, surviving or transferee corporation or national
banking association without any further act shall be the successor Trustee with
the same effect as if the successor Trustee had been named as the Trustee
herein.

SECTION 7.10 Eligibility, Disqualification.

         This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1). The Trustee shall always have a combined
capital and surplus as stated in Section 10.10. The Trustee is subject to TIA
Section 310(b) regarding the disqualification of a trustee upon acquiring a
conflicting interest.

SECTION 7.11 Preferential Collection of Claims Against Company.

         The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship set forth in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.

                                   ARTICLE 8

                    SATISFACTION AND DISCHARGE OF INDENTURE

SECTION 8.01 Discharge of Indenture.

         When (a) the Company delivers to the Trustee for cancellation all
Convertible Subordinated Notes theretofore authenticated (other than any other
Convertible Subordinated Notes which have been destroyed, lost or stolen and in
lieu of or in substitution for which other Convertible Subordinated Notes have
been authenticated and delivered) and not theretofore canceled, or (b) all the
Convertible Subordinated Notes not theretofore canceled or delivered to the
Trustee for cancellation have become due and payable, or are by their terms will
become due and payable within one year or are to be called for redemption within
one year under arrangements satisfactory to the Trustee for the giving of notice
of redemption, and the Company deposits with the Trustee (after the Company
obtains the necessary consents under the Senior Credit Facility to make such
deposit if the Senior Credit Facility is then in effect and such deposit is then
prohibited by the Senior Credit Facility), in trust, amounts sufficient to pay
at maturity or upon redemption of all of the Convertible Subordinated Notes
(other than any Convertible Subordinated Notes which have been mutilated,
destroyed, lost or stolen and in lieu of or in substitution for which other
Convertible Subordinated Notes have been authenticated and delivered) not
theretofore canceled or delivered to the Trustee for cancellation, including
principal and premium, if any, interest and Registration Default Damages, if
any, due or to become due to such Maturity Date or Redemption Date, as the case
may be, and if in either case

                                       43


the Company also pays, or causes to be paid, all other sums payable hereunder by
the Company, then this Indenture shall cease to be of further effect (except as
to (i) rights of registration of transfer, substitution, replacement and
exchange and conversion of Convertible Subordinated Notes, (ii) rights hereunder
of holders of Convertible Subordinated Notes to receive payments of principal of
and premium, if any, interest and Registration Default Damages, if any, on, the
Convertible Subordinated Notes, (iii) the obligations under Sections 2.03 and
8.05 hereof and (iv) the rights, obligations and immunities of the Trustee
hereunder), and the Trustee, on demand of the Company accompanied by an
Officers' Certificate and an Opinion of Counsel as required by Section 10.04 and
at the Company's cost and expense, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture; the Company,
however, hereby agrees to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred by the Trustee and to compensate the
Trustee for any services thereafter reasonably and properly rendered by the
Trustee in connection with this Indenture or the Convertible Subordinated Notes.

SECTION 8.02 Deposited Monies to Be Held in Trust by Trustee.

         Subject to Section 8.04, all monies deposited with the Trustee pursuant
to Section 8.01 shall be held in trust and applied by it to the payment,
notwithstanding the provisions of Article 11, either directly or through the
Paying Agent, to the holders of the particular Convertible Subordinated Notes
for the payment or redemption of which such monies have been deposited with the
Trustee, of all sums due and to become due thereon for principal, interest and
Registration Default Damages, if any, and premium, if any.

SECTION 8.03 Paying Agent to Repay Monies Held.

         Upon the satisfaction and discharge of this Indenture, all monies then
held by any Paying Agent (other than the Trustee) shall, upon the Company's
demand, be repaid to it or paid to the Trustee, and thereupon such Paying Agent
shall be released from all further liability with respect to such monies.

SECTION 8.04 Return of Unclaimed Monies.

         Subject to the requirements of applicable law, any monies deposited
with or paid to the Trustee for payment of the principal of, premium, if any,
interest or Registration Default Damages, if any, on Convertible Subordinated
Notes and not applied but remaining unclaimed by the holders thereof for two
years after the date upon which the principal of, premium, if any, interest or
Registration Default Damages, if any, on such Convertible Subordinated Notes, as
the case may be, have become due and payable, shall be repaid to the Company by
the Trustee on demand; provided, however, that the Company, or the Trustee at
the request of the Company, shall have first caused notice of such payment to
the Company to be mailed to each holder of a Convertible Subordinated Note
entitled thereto no less than 30 days prior to such payment and all liability of
the Trustee shall thereupon cease with respect to such monies; and the holder of
any of the Convertible Subordinated Notes shall thereafter look only to the
Company for any payment which such holder may be entitled to collect unless an
applicable abandoned property law designates another person.

                                       44


SECTION 8.05 Reinstatement.

         If the Trustee or the Paying Agent is unable to apply any money in
accordance with Section 8.02 by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Convertible
Subordinated Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.01 until such time as the Trustee or the Paying
Agent is permitted to apply all such money in accordance with Section 8.02;
provided, however, that if the Company makes any payment of interest or
Registration Default Damages, if any, on or principal of any Convertible
Subordinated Note following the reinstatement of its obligations, the Company
shall be subrogated to the rights of the holders thereof to receive such payment
from the money held by the Trustee or Paying Agent.

                                    ARTICLE 9

                                   AMENDMENTS

SECTION 9.01 Without the Consent of Holders.

         The Company and the Trustee may amend this Indenture or the Convertible
Subordinated Notes without notice to or the consent of any holder of a
Convertible Subordinated Note for the purposes of:

         (a)      curing any ambiguity or correcting or supplementing any
defective or inconsistent provision contained in this Indenture or making any
other changes in the provisions of this Indenture which the Company and the
Trustee may deem necessary or desirable provided such amendment does not
materially and adversely affect the legal rights under the Indenture of the
holders of Convertible Subordinated Notes.

         (b)      providing for uncertificated Convertible Subordinated Notes in
addition to or in place of certificated Convertible Subordinated Notes;

         (c)      evidencing the succession of another person to the Company and
providing for the assumption by such successor of the covenants and obligations
of the Company thereunder and in the Convertible Subordinated Notes as permitted
by Section 5.01;

         (d)      providing for conversion rights and/or repurchase rights of
holders of Convertible Subordinated Notes in the event of consolidation, merger,
share exchange or sale of all or substantially all of the assets of the Company
as required to comply with Sections 5.01 and/or 12.14;

         (e)      increasing the Conversion Rate;

         (f)      evidence and provide for the acceptance of appointment under
this Indenture of a successor Trustee;

                                       45


         (g)      making any changes that would provide the holders of the
Convertible Subordinated Notes with any additional rights or benefits or that
does not adversely affect the legal rights under this Indenture of any such
holder;

         (h)      modifying the subordination provisions of the Indenture in a
manner adverse to the holders of the Convertible Subordinated Notes; or

         (i)      complying with the requirements of the Commission in order to
effect or maintain the qualification of the Indenture under the TIA.

SECTION 9.02 With the Consent of Holders.

         Subject to Section 6.07, the Company and the Trustee may amend this
Indenture or the Convertible Subordinated Notes with the written consent of the
holders of at least a majority in aggregate Principal Amount of the then
outstanding Convertible Subordinated Notes (including consents obtained in
connection with a tender offer or exchange offer for Convertible Subordinated
Notes).

         Subject to Sections 6.04 and 6.07, the holders of a majority in
aggregate Principal Amount of the Convertible Subordinated Notes then
outstanding may also waive compliance in a particular instance by the Company
with any provision of this Indenture or the Convertible Subordinated Notes.

         However, without the consent of each holder of a Convertible
Subordinated Note affected, an amendment or waiver under this Section may not
(with respect to any Convertible Subordinated Notes held by a non-consenting
holder):

         (a)      reduce the principal amount of Convertible Subordinated Notes
whose holders must consent to an amendment, supplement or waiver;

         (b)      reduce the principal of or premium on or change the fixed
maturity of any Convertible Subordinated Note or, except as permitted pursuant
to Section 9.01(a), (d), (g) or (h), alter the redemption or repurchase
provisions with respect thereto;

         (c)      reduce the rate of, or change the time for payment of,
interest, including defaulted interest or Registration Default Damages on any
Convertible Subordinated Note;

         (d)      waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest or Registration Default Damages, if
any, on the Convertible Subordinated Notes (except a rescission of acceleration
of the Convertible Subordinated Notes by the holders of at least a majority in
aggregate Principal Amount of the Convertible Subordinated Notes then
outstanding and a waiver of the payment default that resulted from such
acceleration);

         (e)      make any Convertible Subordinated Note payable in money other
than as provided for herein and in the Convertible Subordinated Notes;

         (f)      make any change in the provisions of this Indenture relating
to waivers of past Defaults or Events of Default or the rights of holders of
Convertible Subordinated Notes to

                                       46


receive payments of principal of, or interest or Registration Default Damages,
if any, on the Convertible Subordinated Notes;

         (g)      except as permitted herein (including Section 9.01(a)),
decrease the Conversion Rate or modify the provisions contained herein relating
to conversion of the Convertible Subordinated Notes in a manner adverse to the
holders thereof;

         (h)      make any change to the ability of holder of Convertible
Subordinated Notes to enforce their rights under the Indenture or the provisions
of clauses (a) through (i) of Section 9.02 of the Indenture;

         (i)      reduce the Redemption Price, Repurchase Price or Fundamental
Change Purchase Price of the Convertible Subordinated Notes;

         (j)      modify the subordination provisions of this Indenture as set
forth in Article 11 a manner adverse to the holders of the Convertible
Subordinated Notes; or

         (k)      make any change that adversely affects the right to convert
the Convertible Subordinated Notes.

         To secure a consent of the holders of Convertible Subordinated Notes
under this Section, it shall not be necessary for such holders to approve the
particular form of any proposed amendment or waiver, but it shall be sufficient
if such consent approves the substance thereof.

         After an amendment or waiver under this Section becomes effective, the
Company shall mail to holders of Convertible Subordinated Notes a notice briefly
describing the amendment or waiver.

SECTION 9.03 Compliance With the Trust Indenture Act.

         Every amendment to this Indenture or the Convertible Subordinated Notes
shall be set forth in a supplemental indenture that complies with the TIA as
then in effect.

SECTION 9.04 Revocation and Effect of Consents.

         Until an amendment or waiver becomes effective, a consent to it by a
holder of a Convertible Subordinated Note is a continuing consent by the holder
and every subsequent holder of a Convertible Subordinated Note or portion of a
Convertible Subordinated Note that evidences the same debt as the consenting
holder's Convertible Subordinated Note, even if notation of the consent is not
made on any Convertible Subordinated Note. However, any such holder or
subsequent holder may revoke the consent as to his or her Convertible
Subordinated Note or portion of a Convertible Subordinated Note if the Trustee
receives the notice of revocation before the date on which the Trustee receives
an Officers' Certificate certifying that the holders of the requisite principal
amount of Convertible Subordinated Notes have consented to the amendment or
waiver.

         The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the holders of Convertible Subordinated Notes
entitled to consent to any amendment

                                       47


or waiver. If a record date is fixed, then notwithstanding the provisions of the
immediately preceding paragraph, those persons who were holders of Convertible
Subordinated Notes at such record date (or their duly designated proxies), and
only those persons, shall be entitled to consent to such amendment or waiver or
to revoke any consent previously given, whether or not such persons continue to
be holders after such record date. No consent shall be valid or effective for
more than 90 days after such record date unless consents from holders of the
principal amount of Convertible Subordinated Notes required hereunder for such
amendment or waiver to be effective shall have also been given and not revoked
within such 90-day period.

         After an amendment or waiver becomes effective it shall bind every
holder of a Convertible Subordinated Note, unless it is of the type described in
clauses (a) - (j) of Section 9.02. In such case, the amendment or waiver shall
bind each holder of a Convertible Subordinated Note who has consented to it and
every subsequent holder of a Convertible Subordinated Note or portion of a
Convertible Subordinated Note that evidences the same debt as the consenting
holder's Convertible Subordinated Note.

SECTION 9.05 Notation on or Exchange of Convertible Subordinated Notes.

         Convertible Subordinated Notes authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article 9 may, and
shall if required by the Trustee, bear a notation in the form approved by the
Trustee as to any matter provided for in such supplemental indenture. If the
Company shall so determine, new Convertible Subordinated Notes so modified as to
conform, in the opinion of the Company and the Trustee, to any such supplemental
indenture may be prepared and executed by the Company and authenticated and
delivered by the Trustee in exchange for outstanding Convertible Subordinated
Notes without charge to the holders of the Convertible Subordinated Notes,
except as specified in Section 2.06.

SECTION 9.06 Trustee Protected.

         The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article 9 if such amendment or supplemental
indenture does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. If such amendment or supplemental indenture does
adversely affect the rights, duties, liabilities or immunities of the Trustee,
the Trustee may, but need not, sign it. In signing such amendment or
supplemental indenture, the Trustee shall be entitled to receive, and shall be
fully protected in relying upon, an Officers' Certificate and an Opinion of
Counsel as conclusive evidence that such amendment or supplemental indenture is
authorized or permitted by this Indenture, that it is not inconsistent herewith,
and that it will be valid and binding upon the Company in accordance with its
terms.

                                   ARTICLE 10

                               GENERAL PROVISIONS

SECTION 10.01 Trust Indenture Act Controls.

         If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), such duties imposed by such section
of the TIA shall control. If any provision of this Indenture expressly modifies
or excludes any provision of the TIA that may be so modified

                                       48


or excluded, the Indenture provision so modifying or excluding such provision of
the TIA shall be deemed to apply.

SECTION 10.02 Notices.

         Any notice or communication by the Company or the Trustee to the other
is duly given if in writing and delivered in person or mailed by first-class
mail, with postage prepaid (registered or certified, return receipt requested),
or sent by facsimile or overnight air couriers guaranteeing next day delivery,
to the other's address as stated in Section 10.10. The Company or the Trustee by
notice to the other may designate additional or different addresses for
subsequent notices or communications.

         All notices and communications (other than those sent to holders of
Convertible Subordinated Notes) shall be deemed to have been duly given at the
time delivered by hand, if personally delivered; five Business Days after being
deposited in the mail, postage prepaid, if mailed; when transmission is
confirmed, if transmitted by facsimile; and the next Business Day after timely
delivery to the courier, if sent by overnight air courier guaranteeing next day
delivery.

         Any notice or communication to a holder of a Convertible Subordinated
Note shall be mailed by first-class mail, with postage prepaid, to his or her
address shown on the Register kept by the Registrar. Failure to mail a notice or
communication to a holder or any defect in it shall not affect its sufficiency
with respect to other holders.

         If a notice or communication to a holder of a Convertible Subordinated
Note is sent in the manner provided above within the time prescribed, it is duly
given, whether or not the addressee receives it.

         If the Company sends a notice or communication to holders of
Convertible Subordinated Notes, it shall send a copy to the Trustee and each
Agent at the same time.

         All notices or communications shall be in writing.

SECTION 10.03 Communication by Holders With Other Holders.

         Holders may communicate pursuant to TIA Section 312(b) with other
holders with respect to their rights under this Indenture or the Convertible
Subordinated Notes. The Company, the Trustee, the Registrar and the paying agent
shall have the protection of TIA Section 312(c).

SECTION 10.04 Certificate and Opinion as to Conditions Precedent.

         Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:

                           (1)      an Officers' Certificate in form and
substance reasonably satisfactory to the Trustee (which shall include the
statements set forth in Section 10.05) stating that, in the opinion of such
person, all conditions precedent and covenants, if any, provided for in this
Indenture relating to the proposed action have been complied with; and

                                       49


                           (2)      an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee (which shall include the statements set
forth in Section 10.05) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been complied with.

SECTION 10.05 Statements Required in Certificate or Opinion.

         Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) shall include:

                           (1)      a statement that the person making such
certificate or opinion has read such covenant or condition;

                           (2)      a brief statement as to the nature and scope
of the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;

                           (3)      a statement that, in the opinion of such
person, he or she has made such examination or investigation as is necessary to
enable him or her to express an informed opinion as to whether or not such
covenant or condition has been complied with; and

                           (4)      a statement as to whether or not, in the
opinion of such person, such condition or covenant has been complied with.

         Any Officers' Certificate may be based, insofar as it relates to legal
matters, upon an Opinion of Counsel, unless such Officer knows that the opinion
with respect to the matters upon which his or her certificate may be based as
aforesaid is erroneous. Any Opinion of Counsel may be based, insofar as it
relates to factual matters, upon certificates, statements or opinions of, or
representations by an officer or officers of the Company, or other persons or
firms deemed appropriate by such counsel, unless such counsel knows that the
certificates, statements or opinions or representations with respect to the
matters upon which his or her opinion may be based as aforesaid are erroneous.

         Any Officers' Certificate, statement or Opinion of Counsel may be
based, insofar as it relates to accounting matters, upon a certificate or
opinion of or representation by an accountant (who may be an employee of the
Company), or firm of accountants, unless such Officer or counsel, as the case
may be, knows that the certificate or opinion or representation with respect to
the accounting matters upon which his or her certificate, statement or opinion
may be based as aforesaid is erroneous.

SECTION 10.06 Rules by Trustee and Agents.

         The Trustee may make reasonable rules for action by, or a meeting of,
holders of Convertible Subordinated Notes. The Registrar or Paying Agent may
make reasonable rules and set reasonable requirements for its functions.

                                       50


SECTION 10.07 Legal Holidays.

         A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in the City of New York or the city in which the Corporate Trust
Office of the Trustee is located are not required to be open, and a "Business
Day" is any day that is not a Legal Holiday. If a payment date is a Legal
Holiday at a place of payment, payment may be made at that place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period. If any date specified in this Indenture, including, without
limitation, a Redemption Date under Paragraph 6 of the Convertible Subordinated
Notes or a purchase by the Company under paragraph 7 of the Convertible
Subordinated Notes, is a Legal Holiday, then such date shall be the next
succeeding Business Day.

SECTION 10.08 No Recourse Against Others.

         No director, officer, employee, shareholder or Affiliate, as such, of
the Company from time to time shall have any liability for any obligations of
the Company under the Convertible Subordinated Notes or this Indenture or for
any claim based on, in respect of, or by reason of such obligations or their
creation. Each holder by accepting a Convertible Subordinated Note waives and
releases all such liability. This waiver and release are part of the
consideration for the Convertible Subordinated Notes. Each of such directors,
officers, employees, shareholders and Affiliates is a third party beneficiary of
this Section 10.08.

SECTION 10.09 Counterparts.

         This Indenture may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.

SECTION 10.10 Other Provisions.

         The Company initially appoints the Trustee as Paying Agent, Registrar
and authenticating agent.

         The reporting date for Section 7.06 is April 30 of each year. The first
reporting date is the April 30 following the issuance of Convertible
Subordinated Notes hereunder.

         The Trustee shall always have, or shall be a subsidiary of a bank or
bank holding company which has, a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition.

         The Company's address is:

                  CKE Restaurants, Inc.
                  6307 Carpinteria Avenue, Suite A,
                  Carpinteria, CA 93013
                  Attention: Chief Financial Officer
                  Facsimile: (714) 780-6311
                  Telephone: (805) 745-7725

                                       51


         The Trustee's address is:

                  J.P. Morgan Trust Company, National Association
                  560 Mission St., Floor 13
                  San Francisco, CA 94105
                  Attention: Mitch Gardner
                  Facsimile: (415) 315-7745
                  Telephone: (415) 315-7585

SECTION 10.11 Governing Law.

         The internal laws of the State of New York shall govern this Indenture
and the Convertible Subordinated Notes, without regard to the conflict of laws
provisions thereof.

SECTION 10.12 No Adverse Interpretation of Other Agreements.

         This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a subsidiary. Any such other indenture, loan or
debt agreement may not be used to interpret this Indenture.

SECTION 10.13 Successors.

         All agreements of the Company in this Indenture and the Convertible
Subordinated Notes shall bind its successor. All agreements of the Trustee in
this Indenture shall bind its successor.

SECTION 10.14 Severability.

         In case any provision in this Indenture or in the Convertible
Subordinated Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

SECTION 10.15 Table of Contents, Headings, etc.

         The Table of Contents, Cross-Reference Table and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.

                                   ARTICLE 11

                                  SUBORDINATION

SECTION 11.01 Agreement to Subordinate.

         The Company agrees, and each holder of Convertible Subordinated Notes
by accepting a Convertible Subordinated Note agrees, that the Obligations
evidenced by the Convertible Subordinated Note are subordinated in right of
payment, to the extent and in the manner provided in this Article 11, to the
prior payment in full when due, in cash or other payment satisfactory to holders
of Senior Debt of all Senior Debt (whether outstanding on the date hereof

                                       52

or hereafter created, incurred, assumed or guaranteed), and that the
subordination is for the benefit of the holders of Senior Debt.

SECTION 11.02 Liquidation; Dissolution; Bankruptcy.

         Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshaling of the Company's
assets and liabilities:

                           (1)      holders of Senior Debt shall be entitled to
receive payment in full of all Obligations due or to become due in respect of
such Senior Debt (including interest after the commencement of any such
proceeding at the rate specified in the applicable Senior Debt) in cash or other
payment satisfactory to the holders of the Senior Debt before holders of
Convertible Subordinated Notes shall be entitled to receive any payment with
respect to the Convertible Subordinated Notes; and

                           (2)      until all Obligations due in respect of
Senior Debt is paid in full in cash or other payment satisfactory to the holders
of the Senior Debt, any distribution to which holders of Convertible
Subordinated Notes would be entitled but for this Article 11 shall be made to
holders of Senior Debt, as their interests may appear.

SECTION 11.03 Default on Senior Debt and/or Designated Senior Indebtedness.

         Anything in this Indenture to the contrary notwithstanding, no payment
on account of principal of or premium, if any, interest or Registration Default
Damages, if any, on or other amounts due on the Convertible Subordinated Notes
(including without limitation the making of a deposit pursuant to Section 3.06,
3.09 or 3.10), and no redemption, repurchase, or other acquisition of the
Convertible Subordinated Notes, shall be made by or on behalf of the Company if:

         (1)      a default in the payment of any Senior Debt Obligations
occurs, whether at maturity, a date is fixed for prepayment or by declaration of
acceleration or otherwise, and is continuing beyond any applicable period of
grace, unless and until such payment default shall have been cured or waived or
shall have ceased to exist; or

         (2)      a default, other than a payment default described in clause
(1) above, on any Designated Senior Indebtedness occurs and is continuing that
then permits holders of such Designated Senior Indebtedness to accelerate its
maturity and the Trustee receives a written notice of the default (a "Payment
Blockage Notice") from the holders of Designated Senior Indebtedness or their
representative (a "Non-Payment Default").

         If the Trustee receives a Payment Blockage Notice that there has
occurred and is continuing a Non-Payment Default under a Designated Senior
Indebtedness, or any agreement under which such Designated Senior Indebtedness
is issued, no subsequent Payment Blockage Notice shall be effective for purposes
of this Section 11.03 unless and until at least 365 days shall have elapsed
since the initial effectiveness of the immediately prior Payment Blockage Notice
and all scheduled payment on the Convertible Subordinated Notes that have come
due

                                       53


have been paid in full in cash. No Non-Payment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the Trustee
shall be, or be made, the basis for a subsequent Payment Blockage Notice.

         The Company may and shall resume payments on and distributions in
respect of the Notes upon the earlier of:

         (1)      in the case of a payment default under clause (1) above, the
date upon which any such payment default is cured or waived or ceases to exist,
or

         (2)      in the case of a Non-Payment Default, the earlier of (x) the
date upon which such default is cured or waived or ceases to exist or (y) 179
days after the date on which the applicable Payment Blockage Notice is received
if the maturity of such Designated Senior Indebtedness has not been accelerated.

SECTION 11.04 Acceleration of Convertible Subordinated Notes.

         In the event of the acceleration of the Convertible Subordinated Notes
because of an Event of Default, the Company may not make any payment or
distribution to the Trustee or any holder of Convertible Subordinated Notes in
respect of Obligations with respect to Convertible Subordinated Notes and may
not acquire or purchase from the Trustee or any holder of Convertible
Subordinated Notes any Convertible Subordinated Notes until all of the
Obligations due in respect of Senior Debt have been paid in full in cash or
other payment satisfactory to the holders of Senior Debt or such acceleration is
rescinded in accordance with the terms of this Indenture.

         If payment of the Convertible Subordinated Notes is accelerated because
of an Event of Default, the Company or the Trustee shall promptly notify holders
of Senior Debt or trustee(s) of such Senior Debt of the acceleration.

SECTION 11.05 When Distribution Must Be Paid Over.

         In the event that the Trustee, any holder of Convertible Subordinated
Notes or any other person receives any payment or distributions of assets of the
Company of any kind with respect to the Convertible Subordinated Notes in
contravention of any terms contained in this Indenture, whether in cash,
property or securities, including, without limitation by way of set-off or
otherwise, then such payment shall be held by the recipient in trust for the
benefit of holders of Senior Debt, and shall be immediately paid over and
delivered to the holders of Senior Debt or their representative(s), to the
extent necessary to make payment in full of all Obligations due in respect of
Senior Debt remaining unpaid, after giving effect to any concurrent payment or
distribution or provision therefor, to or for the holders of Senior Debt;
provided that the foregoing shall apply to the Trustee only if a Trust Officer
of the Trustee has knowledge (as determined in accordance with Section 11.11)
that such payment or distribution is prohibited by this Indenture.

         With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 11, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this

                                       54


Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt, and shall not be liable to any
such holders if the Trustee shall pay over or distribute to or on behalf of
holders of Convertible Subordinated Notes or the Company or any other person
money or assets to which any holders of Senior Debt shall be entitled by virtue
of this Article 11, except if such payment is made as a result of the willful
misconduct or gross negligence of the Trustee.

SECTION 11.06 Notice by Company.

         The Company shall promptly notify the Trustee of any facts known to the
Company that would cause a payment of any Obligations with respect to the
Convertible Subordinated Notes or the purchase of any Convertible Subordinated
Notes by the Company to violate this Article, but failure to give such notice
shall not affect the subordination of the Convertible Subordinated Notes to the
Senior Debt as provided in this Article.

SECTION 11.07 Subrogation.

         After all Obligations due in respect of Senior Debt are paid in full
and until the Convertible Subordinated Notes are paid in full, holders of
Convertible Subordinated Notes shall be subrogated (equally and ratably with all
other indebtedness pari passu with the Convertible Subordinated Notes) to the
rights of holders of Senior Debt to receive distributions applicable to Senior
Debt to the extent that distributions otherwise payable to the holders of
Convertible Subordinated Notes have been applied to the payment of Senior Debt.
A distribution made under this Article to holders of Senior Debt that otherwise
would have been made to holders of Convertible Subordinated Notes is not, as
between the Company and holders of Convertible Subordinated Notes, a payment by
the Company on the Convertible Subordinated Notes.

SECTION 11.08 Relative Rights.

         This Article 11 defines the relative rights of holders of Convertible
Subordinated Notes and holders of Senior Debt. Nothing in this Indenture shall:

                           (1)      impair, as between the Company and holders
of Convertible Subordinated Notes, the obligation of the Company, which is
absolute and unconditional, to pay principal of, premium, if any, interest and
Registration Default Damages, if any, on the Convertible Subordinated Notes in
accordance with their terms;

                           (2)      affect the relative rights of holders of
Convertible Subordinated Notes and creditors (other than with respect to Senior
Debt) of the Company, other than their rights in relation to holders of Senior
Debt; or

                           (3)      prevent the Trustee or any holder of
Convertible Subordinated Notes from exercising its available remedies upon a
Default or Event of Default, subject to the rights of holders and owners of
Senior Debt to receive distributions and payments otherwise payable to holders
of Convertible Subordinated Notes.

                                       55


         If the Company fails because of this Article 11 to pay principal of or
interest and Registration Default Damages, if any, on a Convertible Subordinated
Note on the due date, the failure is still a Default or Event of Default.

SECTION 11.09 Subordination May Not Be Impaired by Company.

         No right of any holder of Senior Debt to enforce the subordination of
the indebtedness evidenced by the Convertible Subordinated Notes as herein
provided shall be prejudiced or impaired by any act or failure to act by the
Company or any holder of Convertible Subordinated Notes or by the failure of the
Company or any such holder to comply with this Indenture, regardless of any
knowledge thereof any such holder may have or otherwise be charged with.

SECTION 11.10 Distribution or Notice to Representative.

         Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative(s).

         Upon any payment or distribution of assets of the Company referred to
in this Article 11, the Trustee and the holders of Convertible Subordinated
Notes shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other person making any distribution to the
Trustee or to the holders of Convertible Subordinated Notes for the purpose of
ascertaining the persons entitled to participate in such distribution, the
holders of the Senior Debt and other indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article 11.

SECTION 11.11 Rights of Trustee and Paying Agent.

         Notwithstanding the provisions of this Article 11 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee (other than pursuant to Section 11.04), and the
Trustee may continue to make payments on the Convertible Subordinated Notes,
unless a Trust Officer shall have received at least two Business Days prior to
the date of such payment or distribution written notice of facts that would
cause such payment or distribution with respect to the Convertible Subordinated
Notes to violate this Article. Only the Company or a Representative may give the
notice.

         Nothing in this Article 11 shall impair the claims of, or payments to,
the Trustee under or pursuant to Section 7.07 hereof.

         The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.

SECTION 11.12 Authorization to Effect Subordination.

         Each holder of a Convertible Subordinated Note by the holder's
acceptance thereof authorizes and directs the Trustee on the holder's behalf to
take such action as may be necessary or appropriate to effectuate the
subordination as provided in this Article 11, and appoints the

                                       56


Trustee to act as the holder's attorney-in-fact for any and all such purposes.
If the Trustee does not file a proper proof of claim or proof of debt in the
form required in any proceeding referred to in Section 6.09 hereof at least 30
days before the expiration of the time to file such claim, the holders of any
Senior Debt or their Representatives are hereby authorized to file an
appropriate claim for and on behalf of the holders of the Convertible
Subordinated Notes.

SECTION 11.13 Article Applicable to Paying Agents.

         In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee; provided,
however, that the second and third paragraphs of Section 11.11 shall not apply
to the Company or any subsidiary of the Company if it or such subsidiary acts as
Paying Agent.

SECTION 11.14 Senior Debt Entitled to Rely.

         The holders of Senior Debt shall have the right to rely upon this
Article 11, and no amendment or modification of the provisions contained herein
shall diminish the rights of such holders unless such holders shall have agreed
in writing thereto.

SECTION 11.15 Permitted Payments.

         Notwithstanding anything to the contrary in this Article 11, the
holders of Convertible Subordinated Notes may receive and retain at any time on
or prior to the Maturity Date (i) securities that are subordinated to at least
the same extent as the Convertible Subordinated Notes to (a) Senior Debt and (b)
any securities issued in exchange for Senior Debt, (ii) payments and other
distributions made from any trust created pursuant to Section 8.01 hereof and
(iii) cash payments in lieu of fractional shares pursuant to Section 12.03.

                                   ARTICLE 12

                  CONVERSION OF CONVERTIBLE SUBORDINATED NOTES

SECTION 12.01 Right to Convert.

                  A holder of a Convertible Subordinated Note may convert such
Convertible Subordinated Note into shares of Common Stock at any time during the
periods and subject to the conditions stated in paragraph 9 of the Convertible
Subordinated Notes, subject to the provisions of this Article 12. The number of
shares of Common Stock issuable upon conversion of a Convertible Subordinated
Note per $1,000 of Principal Amount thereof (the "Conversion Rate") shall be
determined in accordance with the provisions of paragraph 9 of the Convertible
Subordinated Notes. The initial Conversion Rate shall equal 112.4859 shares of
Common Stock per $1,000 of Principal Amount of Convertible Subordinated Notes,
subject to adjustment as described in this Article 12.

                                       57


                  A holder may convert a portion of the Principal Amount of a
Convertible Subordinated Note if the portion is $1,000 or an integral multiple
of $1,000. Provisions of this Indenture that apply to conversion of all of a
Convertible Subordinated Note also apply to conversion of a portion of a
Convertible Subordinated Note.

         The Trustee (or other conversion agent appointed by the Company) shall,
on behalf of the Company, determine whether the Convertible Subordinated Notes
shall be convertible as a result of the occurrence of an event specified above
and, if the Convertible Subordinated Notes shall be convertible, the Trustee (or
other conversion agent appointed by the Company) shall promptly deliver to the
Company and the Trustee (if the Trustee is not the conversion agent) written
notice thereof. Whenever the Convertible Subordinated Notes shall become
convertible pursuant to the foregoing condition, the Company or, at the
Company's request, the Trustee in the name and at the expense of the Company,
shall notify the holders of the event triggering such convertibility in the
manner provided herein, and, in connection with providing such notice, the
Company will issue a press release containing information regarding the event
triggering such convertibility or publish such information on the Company's then
existing website or through such other public medium as the Company shall
determine. Any notice so given shall be conclusively presumed to have been duly
given, whether or not the holder receives such notice. In determining whether
the Convertible Subordinated Notes shall be convertible, the Trustee shall only
be deemed to have knowledge of any credit rating event or the occurrence of any
corporate transaction which would cause the Convertible Subordinated Notes to
become convertible pursuant to paragraph 9 of the Convertible Subordinated Notes
if it receives written notice thereof. The Company shall promptly notify the
Trustee upon the occurrence of any event described in the third and fifth
paragraph of paragraph 9 of the Convertible Subordinated Notes.

SECTION 12.02 Exercise of Conversion Privilege; Issuance of Common Stock on
              Conversion; No Adjustment for Interest or Dividends.

                  To convert a Convertible Subordinated Note into Common Stock
(the shares of Common Stock issuable upon such conversion, the "Conversion
Shares"), a holder must satisfy the requirements in paragraph 9 of the
Convertible Subordinated Notes. The date on which the holder satisfies all those
requirements is the conversion date (the "Conversion Date"). Following the
Conversion Date, the Company shall deliver to the holder through the Conversion
Agent, a certificate for the number of full shares of Common Stock issuable upon
the conversion and cash in lieu of any fractional share determined pursuant to
Section 12.03. The Company shall determine such full number of shares and the
amounts of the required cash with respect to any fractional share, and shall set
forth such information in an Officers' Certificate delivered to the Conversion
Agent. The Conversion Agent shall have no duties under this paragraph unless and
until it has received such certificate.

                  The Person in whose name the certificate is registered shall
be treated as a stockholder of record on and after the Conversion Date;
provided, however, that no surrender of a Convertible Subordinated Note on any
date when the stock transfer books of the Company shall be closed shall be
effective to constitute the Person or Persons entitled to receive the shares of
Common Stock upon such conversion as the record holder or holders of such shares
of Common Stock on such date, but such surrender shall be effective to
constitute the Person or Persons entitled to receive such shares of Common Stock
as the record holder or holders thereof

                                       58


for all purposes at the close of business on the next succeeding day on which
such stock transfer books are open; such conversion shall be at the Conversion
Rate in effect on the date that such Security shall have been surrendered for
conversion, as if the stock transfer books of the Company had not been closed.
Upon conversion of a Convertible Subordinated Note, such Person shall no longer
be a holder of such Convertible Subordinated Note.

                  Holders may surrender a Convertible Subordinated Note for
conversion by means of book-entry delivery in accordance with paragraph 9 of the
Convertible Subordinated Notes and the regulations of the applicable book-entry
facility.

                  No payment or adjustment will be made for dividends on, or
other distributions with respect to, any Common Stock except as provided in this
Article 12. On conversion of a Convertible Subordinated Note, the increases in
Principal Amount and accrued interest attributable to the period from the Issue
Date of the Convertible Subordinated Note through the Conversion Date, with
respect to the converted Convertible Subordinated Note shall not be cancelled,
extinguished or forfeited, but rather shall be deemed to be paid in full to the
holder thereof through delivery of the Common Stock (together with the cash
payment, if any, in lieu of fractional shares) in exchange for the Convertible
Subordinated Note being converted pursuant to the provisions hereof; and the
fair market value of such shares of Common Stock (together with any such cash
payment in lieu of fractional shares) shall be treated as issued, to the extent
thereof, first in exchange for the increases in Principal Amount and accrued
interest through the Conversion Date, and the balance, if any, of such fair
market value of such Common Stock (and any such cash payment) shall be treated
as issued in exchange for the Issue Price of the Convertible Subordinated Note
being converted pursuant to the provisions hereof. Notwithstanding the
foregoing, accrued interest will be payable upon conversion of Convertible
Subordinated Notes made concurrently with or after acceleration of Convertible
Subordinated Notes following an Event of Default.

                  If the holder converts more than one Convertible Subordinated
Note at the same time, the number of shares of Common Stock issuable upon
conversion shall be based on the aggregate Principal Amount of the Convertible
Subordinated Notes converted.

                  A Convertible Subordinated Note surrendered for conversion
based on (a) the Common Stock price may be surrendered for conversion until the
close of business on September 30, 2023, (b) the Convertible Subordinated Note
being called for redemption may be surrendered for conversion at any time prior
to the close of business on the Business Day immediately preceding the
Redemption Date, even if it is not otherwise convertible at such time, and (c)
the occurrence of certain corporate transactions more fully described in
paragraph 9 of the Convertible Subordinated Notes under clause (a) of
"Conversion Upon Occurrence of Certain Corporate Transactions" may be
surrendered for conversion at any time from and after the date which is 15 days
prior to the anticipated effective date of such transaction until 15 days after
the actual date of such transaction, and if such day is not a Business Day, the
next occurring Business Day following such day.

                  Upon surrender of a Convertible Subordinated Note that is
converted in part, the Company shall execute, and the Trustee shall authenticate
and deliver to the holder, a new

                                       59


Convertible Subordinated Note in an authorized denomination equal in Principal
Amount to the unconverted portion of the Convertible Subordinated Note
surrendered.

                  Convertible Subordinated Note or portion thereof surrendered
for conversion during the period from the close of business on the Regular
Record Date next preceding any Interest Payment Date to the opening of business
on such Interest Payment Date (except for Convertible Subordinated Notes to be
redeemed within the period) shall be accompanied by payment, in funds acceptable
to the Company, of an amount equal to the interest otherwise payable on such
Interest Payment Date on the Principal Amount being converted; provided however,
that no such payment need be made if (1) the Company has specified a Redemption
Date that is after a record date and on or prior to the corresponding Interest
Payment Date, (2) the Company has specified a Repurchase Date following a
Fundamental Change that is during such period, or (3) any overdue interest
exists at the time of conversion with respect to such Convertible Subordinated
Notes, to the extent of such overdue interest. The holders of the Convertible
Subordinated Notes will continue to be entitled to receive Registration Default
Damages in accordance with the Registration Rights Agreement.

SECTION 12.03 Cash Payments in Lieu of Fractional Shares.

         The Company will not issue a fractional share of Common Stock upon
conversion of a Convertible Subordinated Note. Instead, the Company will deliver
cash for the current market value of the fractional share. The current market
value of a fractional share shall be determined, to the nearest 1/1,000th of a
share, by multiplying the per share Closing Sale Price of the Common Stock, on
the last trading day prior to the Conversion Date, by the fractional amount and
rounding the product to the nearest whole cent.

SECTION 12.04 Taxes on Shares Issued.

         If a holder converts a Convertible Subordinated Note, the Company shall
pay any documentary, stamp or similar issue or transfer tax due on the issue of
shares of Common Stock upon the conversion. However, the holder shall pay any
such tax which is due because the holder requests the shares to be issued in a
name other than the holder's name and any income tax which is imposed on the
holder as a result of the conversion. The Conversion Agent may refuse to deliver
the certificates representing the Common Stock being issued in a name other than
the holder's name until the Conversion Agent receives a sum sufficient to pay
any tax which will be due because the shares are to be issued in a name other
than the holder's name. Nothing herein shall preclude the Company from any tax
withholding or directing the withholding of any tax required by law or
regulations.

SECTION 12.05 Reservation of Shares; Shares to Be Fully Paid; Listing of Common
              Stock.

         The Company shall provide, free from preemptive rights, out of its
authorized but unissued shares or shares held in treasury, sufficient shares to
provide for the conversion of the Convertible Subordinated Notes from time to
time as such Convertible Subordinated Notes are presented for conversion.

         Before taking any action which would cause an adjustment reducing the
Conversion Rate below the then par value, if any, of the shares of Common Stock
issuable upon conversion of the

                                       60


Convertible Subordinated Notes, the Company shall take all corporate action
which may, in the opinion of its counsel, be necessary in order that the Company
may validly and legally issue shares of such Common Stock at such adjusted
Conversion Rate.

         The Company covenants that all shares of Common Stock issued upon
conversion of Convertible Subordinated Notes shall be newly issued shares or
treasury shares, shall be duly and validly issued and fully paid and
nonassessable and shall be free from preemptive rights and free of any tax, lien
or adverse claim created by the Company.

         The Company further covenants that as long as the Common Stock is
listed on the New York Stock Exchange, or its successor, the Company shall cause
all Common Stock issuable upon conversion of the Convertible Subordinated Notes
to be eligible for such quotation in accordance with, and at the times required
under, the requirements of such market, and if at any time the Common Stock
becomes listed any other national securities exchange, the Company shall cause
all Common Stock issuable upon conversion of the Convertible Subordinated Notes
to be so listed and kept listed.

SECTION 12.06 Adjustment for Change in Capital Stock.

         The Conversion Rate shall be subject to adjustment from time to time as
follows:

         (a)      In case the Company shall (1) pay a dividend in shares of
Common Stock to all holders of Common Stock, (2) make a distribution in shares
of Common Stock to all or substantially all holders of Common Stock, (3)
subdivide the outstanding shares of Common Stock into a greater number of shares
of Common Stock or (4) combine the outstanding shares of Common Stock into a
smaller number of shares of Common Stock or (5) reclassify its outstanding
Common Stock, the Conversion Rate in effect immediately prior to such action
shall be adjusted so that the holder of any Convertible Subordinated Note
thereafter surrendered for conversion shall be entitled to receive the number of
shares of Common Stock which he would have owned immediately following such
action had such Convertible Subordinated Notes been converted immediately prior
thereto. Any adjustment made pursuant to this Section 12.06(a) shall become
effective immediately after the record date in the case of a dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision, combination, or reclassification.

         (b)      In case the Company shall issue rights, options or warrants to
all or substantially all holders of Common Stock, as the case may be, entitling
them (for a period commencing no earlier than the record date for the
determination of holders of Common Stock entitled to receive such rights,
options or warrants and expiring not more than 60 days after such record date)
to subscribe for or purchase shares of Common Stock (or securities convertible
into Common Stock), at a price per share less than the then current market price
(as determined pursuant to Section 12.06(h) below) of Common Stock at the time
of the announcement of the distribution, the Conversion Rate shall be increased
by multiplying the Conversion Rate in effect immediately prior to such record
date by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding on such record date, plus the number of shares of
Common Stock so offered for subscription or purchase, and the denominator of
which shall be the number of shares of Common Stock outstanding at the close of
business on such record date plus the number of shares

                                       61

of Common Stock which the aggregate of the offering price of the total number
of shares of Common Stock so offered for subscription or purchase would purchase
at such current market price. Such adjustments shall become effective
immediately after such record date. To the extent that shares of Common Stock
are not delivered pursuant to such rights, options or warrants, upon the
expiration or termination of such rights, options or warrants the Conversion
Rate shall be readjusted to be the Conversion Rate which would then be in effect
had the adjustments made upon the issuance of such rights, options or warrants
been made on the basis of delivery of only the number of shares of Common Stock
actually delivered. If such rights, options or warrants are not so issued, the
Conversion Rate shall again be adjusted to be the Conversion Rate which would
then be in effect if such date fixed for the determination of shareholders
entitled to receive such rights, options or warrants had not been fixed. In
determining whether any rights, options or warrants entitle the holders to
subscribe for or purchase shares of Common Stock at less than such current
market price, and in determining the aggregate offering price of such shares of
Common Stock, there shall be taken into account any consideration received for
such rights, options or warrants, with the value of such consideration, if other
than cash, to be determined by the Board of Directors.

         (c)      In case the Company shall distribute to all holders of Common
Stock shares of capital stock of the Company, evidences of indebtedness or other
assets (including cash and securities), or shall distribute to all holders of
Common Stock rights, options or warrants to subscribe for securities (in each
case other than those referred to in Section 12.06(a) and (b) above and Section
12.06(d) and Section 12.14 below), then in each such case the Conversion Rate
shall be increased by multiplying the Conversion Rate in effect immediately
prior to the close of business on the record date for the determination of
shareholders entitled to such distribution by a fraction of which the numerator
shall be the current market price of Common Stock (determined as provided in
Section 12.06(h) below) on such date and the denominator shall be such current
market price less the fair market value (as determined by the Board of Directors
whose determination shall be conclusive and described in a Board Resolution) on
such date of the portion of the evidences of indebtedness, shares of capital
stock, cash and other assets to be distributed or of such subscription rights,
options or warrants applicable to one share of Common Stock, such increase to
become effective immediately prior to the opening of business on the day
following such record date. Notwithstanding the foregoing, in the event that the
Company shall distribute rights, options or warrants (other than those referred
to in Section 12.06(b) above) ("Rights") pro rata to holders of Common Stock,
the Company may, in lieu of making any adjustment pursuant to this Section
12.06(c), make proper provision so that each holder of a Convertible
Subordinated Note who converts such Convertible Subordinated Note (or any
portion thereof) after the record date for such distribution and prior to the
expiration or redemption of the Rights shall be entitled to receive upon such
conversion, in addition to the Conversion Shares, a number of Rights to be
determined as follows: (i) if such conversion occurs on or prior to the date for
the distribution to the holders of Rights of separate certificates evidencing
such Rights (the "Distribution Date"), the same number of Rights to which a
holder of a number of shares of Common Stock equal to the number of shares of
Conversion Shares is entitled at the time of such conversion in accordance with
the terms and provisions of and applicable to the Rights; and (ii) if such
conversion occurs after the Distribution Date, the same number of Rights to
which a holder of the number of shares of Common Stock into which the principal
amount of the Convertible Subordinated Note so converted was convertible
immediately prior to the Distribution Date

                                       62


would have been entitled on the Distribution Date in accordance with the terms
and provisions of and applicable to the Rights.

         (d)      In case the Company shall make a distribution consisting
exclusively of cash to all or substantially all holders of Common Stock, then
the Conversion Rate shall be increased by multiplying the Conversion Rate in
effect immediately prior to the close of business on the record date for the
determination of shareholders entitled to such distribution by a fraction of
which the numerator shall be the current market price of Common Stock
(determined as provided in Section 12.06(h) below) on such date and the
denominator shall be such current market price less the amount of cash to be
distributed per share of Common Stock, such increase to become effective
immediately prior to the opening of business on the day following such record
date.

         (e)      If, after the Issue Date of the Convertible Subordinated
Notes, the Company or any subsidiary of the Company pays holders of the
Company's Common Stock in respect of a repurchase of (including a tender or
exchange offer for) the Company's Common Stock consideration per share of Common
Stock having a fair market value, as determined in good faith by the Board of
Directors of the Company, whose determination shall be conclusive, in excess of
the current market price of the Common Stock as of the first Business Day (the
"Measurement Date") next succeeding the last Business Day tenders or exchanges
may be made pursuant to the offer (the "Expiration Time"), the Conversion Rate
shall be increased so that the same shall equal the rate determined by
multiplying the Conversion Rate in effect immediately prior to the effectiveness
of the Conversion Rate adjustment contemplated by this Section 12.06(e) by a
fraction, the numerator of which shall be the sum of (x) the fair market value
of the aggregate consideration payable to stockholders based on the acceptance
of all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time up to the maximum specified in the tender or exchange offer (the
"Purchased Shares") and (y) the product of the number of shares of Common Stock
outstanding (less any Purchased Shares) at the Expiration Time and the Closing
Sale Price of a share of Common Stock on the Measurement Date, and the
denominator of which shall be the number of shares of Common Stock outstanding
(including any tendered or exchanged shares) at the Expiration Time (including
the Purchased Shares) multiplied by the Closing Sale Price of one share of
Common Stock on the Measurement Date. Such reduction shall become effective
immediately prior to the opening of business on the day following the
Measurement Date.

         To the extent such repurchase or such tender or exchange offer
described in Section 12.06(e) does not occur, the Conversion Rate shall be
readjusted to eliminate any adjustment made to the Conversion Rate on account of
such purchase pursuant to such tender or exchange offer. If the application of
this Section 12.06(e) to any repurchase (including by way of tender offer or
exchange offer) would result in a decrease in the Conversion Rate, no adjustment
shall be made for such repurchase under this Section 12.06(e).

         (f)      In case of a tender or exchange offer made by a Person other
than the Company or any of its subsidiaries for an amount which increases the
offeror's ownership of Common Stock to more than 35% of the Common Stock
outstanding and shall involve the payment by such Person of consideration per
share of Common Stock having a fair market value (as determined by the Board of
Directors, or to the extent permitted by applicable law, a duly authorized
committee thereof, whose determination shall be conclusive, and described in a
resolution of the

                                       63


Board of Directors) at the last time (the "Offer Expiration Time") tenders or
exchanges may be made pursuant to such tender or exchange offer (as it shall
have been amended) that exceeds the current market price of the Common Stock on
the Trading Day next succeeding the Offer Expiration Time, and in which, as of
the Offer Expiration Time the Board of Directors is not recommending rejection
of the offer, the Conversion Rate shall be increased so that the same shall
equal the rate determined by multiplying the Conversion Rate in effect
immediately prior to the Offer Expiration Time by a fraction of which the
numerator shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to stockholders based on the
acceptance (up to any maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered or exchanged and not withdrawn as of the
Offer Expiration Time (the shares deemed so accepted, up to any such maximum
being referred to as the "Accepted Purchased Shares") and (y) the product of the
number of shares of Common Stock outstanding (less any Accepted Purchased
Shares) on the Offer Expiration Time and the current market price of the Common
Stock on the Trading Day next succeeding the Offer Expiration Time, and the
denominator shall be the number of shares of Common Stock outstanding (including
any tendered or exchanged shares) on the Offer Expiration Time multiplied by the
current market price of the Common Stock on the Trading Day next succeeding the
Offer Expiration Time, such increase to become effective immediately prior to
the opening of business on the day following the Offer Expiration Time. In the
event that such Person is obligated to purchase shares pursuant to any such
tender or exchange offer, but such Person is permanently prevented by applicable
law from effecting any such purchases or all such purchases are rescinded, the
Conversion Rate shall again be adjusted to be the Conversion Rate which would
then be in effect if such tender or exchange offer had not been made.
Notwithstanding the foregoing, the adjustment described in this subsection (f)
shall not be made if, as of the Offer Expiration Time, the offering documents
with respect to such offer disclose a plan or intention to cause the Company to
engage in a consolidation or merger involving the Company or a sale of all or
substantially all of its assets.

         (g)      In case the Company shall issue Common Stock or securities
convertible into, or exchangeable for, Common Stock at a price per share (or
having a conversion or exchange price per share) that is less than the then
current market price of the Common Stock (but excluding, among other things,
issuances: (i) pursuant to any bona fide plan for the benefit of employees,
directors, consultants or other individuals in connection with employee
incentive plans of the Company now or hereafter in effect; (ii) to acquire all
or any portion of a business in an arm's-length transaction between the Company
and an unaffiliated third party including, if applicable, issuances upon
exercise of options or warrants assumed in connection with such an acquisition;
(iii) in a bona fide public offering pursuant to a firm commitment underwriting
(or a similar type of offering made pursuant to Rule 144A and/or Regulation S
under the Securities Act) or sales at the market pursuant to a continuous
offering stock program; (iv) pursuant to the exercise of warrants, rights
(including, without limitation, earnout rights) or options, or upon the
conversion of convertible securities, which are issued and outstanding on the
date hereof, or which may be issued in the future at fair value and with an
exercise price or conversion price at least equal to the current market price of
the Common Stock at the time of issuance of such warrant, right, option or
convertible security; and (v) pursuant to a dividend reinvestment plan or other
plan hereafter adopted for the reinvestment of dividends or interest provided
that such Common Stock is issued at a price at least equal to current market
price of the Common Stock at the time of such issuance.) The Conversion Rate
shall be increased so that the holder of each Convertible

                                       64


Subordinated Note shall be entitled to receive, upon the conversion thereof, the
number of shares of Common Stock determined by multiplying (i) the Conversion
Rate on the day immediately prior to such date of issuance by (ii) a fraction,
the numerator of which shall be the sum of (A) the number of shares of Common
Stock outstanding on such date and (B) the number of additional shares of Common
Stock issued (or into which the convertible securities may convert) and the
denominator of which shall be the sum of (x) the number of shares of Common
Stock outstanding on such date and (y) the number of shares of Common Stock
which the aggregate consideration receivable by the Company for the total number
of shares of Common Stock so issued (or into which the convertible securities
may convert) would purchase at the current market price on such date. An
adjustment made pursuant to this subsection (g) shall be made on the next
Business Day following the date on which any such issuance is made and shall be
effective retroactively immediately after the close of business on such date.
For purposes of this subsection (g), the aggregate consideration receivable by
the Company in connection with the issuance of shares of Common Stock or of
securities convertible into shares of Common Stock shall be deemed to be equal
to the sum of the aggregate offering price (before deduction of underwriting
discounts or commissions and expenses payable to third parties) of all such
securities plus the minimum aggregate amount, if any, payable upon conversion of
any such convertible securities into shares of Common Stock.

         (h)      For the purpose of any computation under subsections (a), (b),
(c), (d) and (g) above of this Section 12.06, the "current market price" per
share of Common Stock on the date fixed for determination of the stockholders
entitled to receive the issuance or distribution requiring such computation (the
"Determination Date") shall be deemed to be the average of the Closing Sale
Price for the ten consecutive trading days immediately preceding the
Determination Date; provided, however, that (i) if the "ex" date for any event
(other than the issuance or distribution requiring such computation) that
requires an adjustment to the Conversion Rate pursuant to subsection (a), (b),
(c), (d), (e), (f) or (g) above occurs on or after the tenth trading day prior
to the Determination Date and prior to the "ex" date for the issuance or
distribution requiring such computation, the Closing Sale Price for each trading
day prior to the "ex" date for such other event shall be adjusted by multiplying
such Closing Sale Price by the reciprocal of the fraction by which the
Conversion Rate is so required to be adjusted as a result of such other event,
(ii) if the "ex" date for any event (other than the issuance or distribution
requiring such computation) that requires an adjustment to the Conversion Rate
pursuant to subsection (a), (b), (c), (d), (e), (f) or (g) above occurs on or
after the "ex" date for the issuance or distribution requiring such computation
and on or prior to the Determination Date, the Closing Sale Price for each
Business Day on and after the "ex" date for such other event shall be adjusted
by multiplying such Closing Sale Price by the same fraction by which the
Conversion Rate is so required to be adjusted as a result of such other event,
and (iii) if the "ex" date for the issuance or distribution requiring such
computation is on or prior to the Determination Date, after taking into account
any adjustment required pursuant to clause (i) or (ii) of this proviso, the
Closing Sale Price for each trading day on and after the "ex" date shall be
adjusted by adding thereto the amount of any cash and the fair market value (as
determined by the Board of Directors in a manner consistent with any
determination of such value for the purposes of this Section 12.06, whose
determination shall be conclusive and described in a Resolution of the Board of
Directors) of the evidences of indebtedness, shares of capital stock or other
securities or assets being distributed (in the distribution requiring such
computation) applicable to one share of Common Stock as of the close of business
on the day before such "ex" date. For the purpose of any

                                       65


computation under subsection (e) and (f) of this Section 12.06, the current
market price per share of Common Stock at the expiration time for the repurchase
or tender or exchange offer, as the case may be, requiring such computation
shall be deemed to be the average of the Closing Sale Price for the ten
consecutive trading days commencing on the Business Day immediately following
the expiration time of such repurchase or exchange or tender offer, as the case
may be (the "Commencement Date"); provided, however, that if the "ex" date for
any event (other than the repurchase requiring such computation) that requires
an adjustment to the Conversion Rate pursuant to subsection (a), (b), (c), (d),
(e), (f) or (g) above occurs on or after the expiration time for the repurchase
requiring such computation and prior to the day in question, the Closing Sale
Price for each trading day on or after the "ex" date for such other event shall
be adjusted by multiplying such Closing Sale Price by the same fraction by which
the Conversion Rate is so required to be adjusted as a result of such other
event. For purposes of this subsection, the term "ex" date, (i) when used with
respect to any issuance or distribution, means the first date on which the
Common Stock trades regular way on the relevant exchange or in the relevant
market from which the Closing Sale Price was obtained without the right to
receive such issuance or distribution, (ii) when used with respect to any
subdivision or combination of shares of Common Stock, means the first date on
which the Common Stock trades regular way on such exchange or in such market
after the time at which such subdivision or combination becomes effective, and
(iii) when used with respect to any repurchase means the first date on which the
Common Stock trades regular way on such exchange or in such market after the
expiration time of such repurchase (as it may be amended or extended).

         (i)      In case the Company shall have a rights plan in effect, upon
conversion of the Convertible Subordinated Notes into Common Stock, holders will
receive, in addition to the Common Stock, the rights under the rights plan,
unless the rights have separated from the Common Stock at the time of
conversion, in which case the Conversion Rate will be adjusted as if the Company
distributed to all holders of Common Stock shares of the Company's Capital
Stock, evidence of the Company's indebtedness or other assets, subject to
readjustment in the event of the expiration, termination or redemption of such
rights.

SECTION 12.07 [Reserved].

SECTION 12.08 [Reserved].

SECTION 12.09 When Adjustment May Be Deferred.

         No adjustment in the Conversion Rate need be made unless the adjustment
would require an increase or decrease of at least 1% in the Conversion Rate. Any
adjustments that are not made shall be carried forward and taken into account in
any subsequent adjustment and all adjustments that are made and carried forward
shall be taken in the aggregate in order to determine if the 1% threshold is
met.

         All calculations under this Article 12 shall be made to the nearest
cent or to the nearest 1/1,000th of a share, as the case may be.

                                       66


SECTION 12.10 When No Adjustment is Required.

         No adjustment need be made for a transaction referred to in Section
12.06 or 12.14 if Convertible Subordinated Note holders are to participate in
the transaction on a basis and with notice that the Board of Directors
determines to be fair and appropriate in light of the basis and notice on which
holders of Common Stock participate in the transaction. Such participation by
holders may include participation upon conversion provided that an adjustment
shall be made at such time as the holders are no longer entitled to participate.

         No adjustment need be made for rights to purchase Common Stock pursuant
to a Company plan for reinvestment of dividends or interest.

         No adjustment need be made for a change in the par value of the Common
Stock.

         No adjustment will be made pursuant to this Article 12 that would
result, through the application of two or more provisions hereof, in the
duplication of any adjustment.

SECTION 12.11 Notice of Adjustment.

         Whenever the Conversion Rate is adjusted, the Company shall promptly
mail to Convertible Subordinated Note holders and the Trustee a notice of the
adjustment. The Company shall file with the Trustee and the Conversion Agent
such notice and a certificate from the Company's independent public accountants
briefly stating the facts requiring the adjustment and the manner of computing
it. Upon receipt by it of such notice, and at the written request of the
Company, the Conversion Agent will promptly mail such notice to Convertible
Subordinated Note holders at the Company's expense. The certificate shall be
conclusive evidence that the adjustment is correct. Neither the Trustee nor any
Conversion Agent shall be under any duty or responsibility with respect to any
such certificate except to exhibit the same to any holder desiring inspection
thereof.

SECTION 12.12 Voluntary Increase.

         The Company from time to time may increase the Conversion Rate by any
amount for any period of time. Whenever the Conversion Rate is increased, the
Company shall mail to Convertible Subordinated Note holders and deliver to the
Trustee and the Conversion Agent a notice of the increase. The Company shall
mail the notice at least 20 days before the date the increased Conversion Rate
takes effect. The notice shall state the increased Conversion Rate and the
period it will be in effect.

         A voluntary increase of the Conversion Rate does not change or adjust
the Conversion Rate otherwise in effect for purposes of Section 12.06 or 12.14.

SECTION 12.13 Notice of Certain Transactions.

         If:

         (a)      the Company takes any action that would require an adjustment
in the Conversion Rate pursuant to Section 12.06 (unless no adjustment is to
occur pursuant to Section 12.10); or

                                       67


         (b)      the Company takes any action that would require a supplemental
indenture pursuant to Section 12.14; or

         (c)      there is a liquidation or dissolution of the Company;

then the Company shall mail to Convertible Subordinated Note holders and deliver
to the Trustee and the Conversion Agent a notice stating the proposed record
date for a dividend or distribution or the proposed effective date of a
subdivision, combination, reclassification, consolidation, merger, binding share
exchange, transfer, liquidation or dissolution. The Company shall so deliver and
mail the notice at least 20 days before such date. Failure to deliver or mail
the notice or any defect in it shall not affect the validity of the transaction,
but the Trustee and the Conversion Agent shall not be deemed to have notice of
the above transaction until they receive such notice.

SECTION 12.14 Reorganization of Company; Special Distributions.

         If the Company is a party to a transaction subject to Article 5 (other
than a sale of all or substantially all of the assets of the Company in a
transaction in which the holders of Common Stock immediately prior to such
transaction do not receive securities, cash, property or other assets of the
Company or any other Person) or a merger or binding share exchange which
reclassifies or changes its outstanding Common Stock, the Person obligated to
deliver securities, cash or other assets upon conversion of Securities shall
enter into a supplemental indenture. If the issuer of securities deliverable
upon conversion of Convertible Subordinated Notes is an Affiliate of the
successor Company, that issuer shall join in the supplemental indenture.

         The supplemental indenture shall provide that the holder of a
Convertible Subordinated Note may convert it into the kind and amount of
securities, cash or other assets which such holder would have received
immediately after the consolidation, merger, binding share exchange or transfer
if such holder had converted the Convertible Subordinated Note immediately
before the effective date of the transaction, assuming (to the extent
applicable) that such holder (i) was not a constituent Person or an Affiliate of
a constituent Person to such transaction; (ii) made no election with respect
thereto; and (iii) was treated alike with the plurality of non-electing holders.
The supplemental indenture shall provide for adjustments which shall be as
nearly equivalent as may be practical to the adjustments provided for in this
Article 12. The successor Company shall mail to Convertible Subordinated Note
holders a notice briefly describing the supplemental indenture.

         If this Section applies, Section 12.06 does not apply. If the Company
makes a distribution to all holders of its Common Stock of any of its assets, or
debt securities or any rights, warrants or options to purchase securities of the
Company that would otherwise result in an adjustment in the Conversion Rate
pursuant to the provisions of Section 12.06, then, from and after the record
date for determining the holders of Common Stock entitled to receive the
distribution, a holder of a Convertible Subordinated Note that converts such
Convertible Subordinated Note in accordance with the provisions of this
Indenture shall upon such conversion be entitled to receive, in addition to the
shares of Common Stock into which the Convertible Subordinated Note is
convertible, the kind and amount of securities, cash or other assets comprising
the distribution that such holder would have received if such holder had

                                       68


converted the Convertible Subordinated Note immediately prior to the record date
for determining the holders of Common Stock entitled to receive the
distribution.

SECTION 12.15 Company Determination Final.

         Any determination that the Company or the Board of Directors must make
pursuant to Section 12.03, 12.06, 12.09, 12.10, 12.14 or 12.17 is conclusive.

SECTION 12.16 Trustee's Adjustment Disclaimer.

         The Trustee has no duty to determine when an adjustment under this
Article 12 should be made, how it should be made or what it should be. The
Trustee has no duty to determine whether a supplemental indenture under Section
12.14 need be entered into or whether any provisions of any supplemental
indenture are correct. The Trustee shall not be accountable for and makes no
representation as to the validity or value of any securities or assets issued
upon conversion of Convertible Subordinated Notes. The Trustee shall not be
responsible for the Company's failure to comply with this Article 12. Each
Conversion Agent (other than the Company or an Affiliate of the Company) shall
have the same protection under this Section 12.16 as the Trustee.

SECTION 12.17 Simultaneous Adjustments.

         In the event that this Article 12 requires adjustments to the
Conversion Rate under more than one clause of Section 12.06, and the record
dates for the distributions giving rise to such adjustments shall occur on the
same date, then such adjustments shall be made by applying, first, the
provisions of clause (a), second, the provisions of clause (c) and, third, the
provisions of Section clause (b).

SECTION 12.18 Successive Adjustments.

         After an adjustment to the Conversion Rate under this Article 12, any
subsequent event requiring an adjustment under this Article 12 shall cause an
adjustment to the Conversion Rate as so adjusted.

SECTION 12.19 Restriction on Common Stock Issuable Upon Conversion.

         (a)      Shares of Common Stock to be issued upon conversion of the
Convertible Subordinated Notes prior to the effectiveness of a Shelf
Registration Statement shall be physically delivered in certificated form to the
holders converting such Convertible Subordinated Notes, and the certificate
representing such shares of Common Stock shall bear the following legend (the
"Restricted Common Stock Legend") unless removed in accordance with Section
12.19(c):

         THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
         AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING
         THIS SECURITY, AGREES FOR THE BENEFIT OF THE ISSUER THAT THIS SECURITY
         MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE
         SECOND ANNIVERSARY OF THE

                                       69


         ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY
         HOLDER THAT WAS AN "AFFILIATE" (WITHIN THE MEANING OF RULE 144 UNDER
         THE SECURITIES ACT) OF THE ISSUER AT ANY TIME DURING THE THREE MONTHS
         PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO
         THE ISSUER, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE
         PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A
         PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
         BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT
         OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
         GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN
         RELIANCE ON RULE 144A, (3) IN AN OFFSHORE TRANSACTION (AS DEFINED IN
         REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE WITH REGULATION S
         UNDER THE SECURITIES ACT, (4) PURSUANT TO AN EXEMPTION FROM
         REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF
         APPLICABLE) UNDER THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE
         REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
         ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
         UNITED STATES. PRIOR TO A TRANSFER OF THIS SECURITY (OTHER THAN A
         TRANSFER PURSUANT TO CLAUSE (5) ABOVE), THE HOLDER OF THIS SECURITY
         MUST FURNISH TO THE ISSUER AND THE TRANSFER AGENT SUCH CERTIFICATES AND
         OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY
         TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING
         RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
         REPRESENTS AND AGREES FOR THE BENEFIT OF THE ISSUER THAT IT IS (1) A
         QUALIFIED INSTITUTIONAL BUYER OR (2) NOT A U.S. PERSON AND IS OUTSIDE
         THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE
         REQUIREMENTS OF PARAGRAPH (k)(2) OF RULE 902 UNDER) REGULATION S UNDER
         THE SECURITIES ACT. IN ANY CASE THE HOLDER HEREOF WILL NOT, DIRECTLY OR
         INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS
         SECURITY EXCEPT AS PERMITTED BY THE SECURITIES ACT.

         (b)      If (i) shares of Common Stock to be issued upon conversion of
a Convertible Subordinated Note prior to the effectiveness of a Shelf
Registration Statement are to be registered in a name other than that of the
holder of such Convertible Subordinated Note or (ii) shares of Common Stock
represented by a certificate bearing the Restricted Common Stock Legend are
transferred subsequently by such holder, then, unless the Shelf Registration
Statement has become effective and such shares are being transferred pursuant to
the Shelf Registration Statement, the holder must deliver to the transfer agent
for the Common Stock a certificate in substantially the form of Exhibit B as to
compliance with the restrictions on transfer applicable to such shares of Common
Stock, and neither the transfer agent nor the registrar for the Common Stock
shall be required to register any transfer of such Common Stock not so
accompanied by a properly completed certificate.

                                       70


         (c)      Except for transfers in connection with a Shelf Registration
Statement, if certificates representing shares of Common Stock are issued upon
the registration of transfer, exchange or replacement of any other certificate
representing shares of Common Stock bearing the Restricted Common Stock Legend,
or if a request is made to remove such Restricted Common Stock Legend from
certificates representing shares of Common Stock, the certificates so issued
shall bear the Restricted Common Stock Legend, or the Restricted Common Stock
Legend shall not be removed, as the case may be, unless there is delivered to
the Company, the Conversion Agent and the Transfer Agent such satisfactory
evidence, which, in the case of a transfer made pursuant to Rule 144 under the
Securities Act, may include an opinion of counsel as may be reasonably required
by the Company, that neither the legend nor the restrictions on transfer set
forth therein are required to ensure that transfers thereof comply with the
provisions of Rule 144A, Rule 144 or Regulation S under the Securities Act or
that such shares of Common Stock are securities that are not "restricted" within
the meaning of Rule 144 under the Securities Act. Upon provision to the Company
of such reasonably satisfactory evidence, the Company shall cause the transfer
agent for the Common Stock to countersign and deliver certificates representing
shares of Common Stock that do not bear the legend.

                                       71


         IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed and attested, all as of the date first above written, signifying their
agreements contained in this Indenture.

                                                 CKE RESTAURANTS, INC.

                                                 By ___________________________
                                                    Name: _____________________
                                                    Title: ____________________

                                                 J.P. MORGAN TRUST COMPANY,
                                                    NATIONAL ASSOCIATION

                                                 By ___________________________
                                                    Name: _____________________
                                                    Title: ____________________

                                       72


                                    EXHIBIT A

                               (Face of Security)

         The following legend shall appear on the face of each Global Security:

         UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL
NOTES REPRESENTED HEREBY, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.

         The following legend shall appear on the face of each Global Security
for which The Depository Trust Company is to be the Depositary:

         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

                         [Restricted Securities Legend]

         THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE ISSUER THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF
THE ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER
THAT WAS AN "AFFILIATE" (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES
ACT) OF THE ISSUER AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF
SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE ISSUER, (2) SO LONG AS THIS
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (3) IN AN OFFSHORE TRANSACTION (AS DEFINED IN REGULATIONS

                                      A-1


UNDER THE SECURITIES ACT) IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES
ACT, (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT OR (5) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. PRIOR TO A TRANSFER OF THIS SECURITY, (OTHER THAN A TRANSFER PURSUANT TO
CLAUSE (5) ABOVE) THE HOLDER OF THIS SECURITY MUST FURNISH TO THE ISSUER AND THE
TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE
TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING
RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND
AGREES FOR THE BENEFIT OF THE ISSUER THAT IT IS (1) A QUALIFIED INSTITUTIONAL
BUYER OR (2) NOT A U.S. PERSON AND IS OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2) OF
RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE THE HOLDER
HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH
REGARD TO THIS SECURITY OR ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
SECURITY EXCEPT AS PERMITTED BY THE SECURITIES ACT.

                                      A-2


                              CKE RESTAURANTS, INC.
                    4% Convertible Subordinated Note due 2023

No. ___                                                       CUSIP: 12561E AF 2
Issue Date: September 29, 2003                     Principal Amount: $__________
Issue Price: $1,000.00
(for each $1,000
Principal Amount)

         CKE Restaurants, Inc., a Delaware corporation, promises to pay to
______________ or registered assigns, on October 1, 2023, the Principal Amount
of this Convertible Subordinated Note on such date. This Convertible
Subordinated Note is issued with a Principal Amount of ________________________
DOLLARS ($____________).

         This Convertible Subordinated Note shall not bear interest except as
specified on the other side of this Convertible Subordinated Note. The Principal
Amount of this Convertible Subordinated Note will accrue as specified on the
other side of this Convertible Subordinated Note. This Convertible Subordinated
Note is convertible as specified on the other side of this Convertible
Subordinated Note.

         Additional provisions of this Convertible Subordinated Note are set
forth on the other side of this Convertible Subordinated Note.

                                      A-3


                  IN WITNESS WHEREOF, the Company has caused this Note to be
duly executed.

Dated:

                                                CKE Restaurants, Inc.

                                                     By: _______________________
                                                     Name:
                                                     Title:

TRUSTEE'S CERTIFICATE OF
AUTHENTICATION

J.P. Morgan Trust Company, National Association as Trustee, certifies that this
is one of the Convertible Subordinated Notes referred to in the within-mentioned
Indenture.

By:________________________
      Authorized Officer

Dated:

                                      A-4


                               (Back of Security)

                    4% CONVERTIBLE SUBORDINATED NOTE DUE 2023

1.       Interest.

         (a)      The Convertible Subordinated Notes will bear interest on the
Principal Amount at the rate of 4% per year from the Issue Date, or from the
most recent date to which interest has been paid or provided for, until October
1, 2023. During such period, the Company will pay interest semiannually in
arrears on each Interest Payment Date to holders of record at the close of
business on each Regular Record Date immediately preceding such Interest Payment
Date. Each payment of interest on the Convertible Subordinated Notes will
include interest and Registration Default Damages, if any, accrued through the
day immediately preceding the most recent Interest Payment Date (or the
Repurchase Date, Redemption Date, the Fundamental Change Payment Date or, in
certain circumstances, the Conversion Date, as the case may be). Any payment
required to be made on any day that is not a Business Day will be made on the
next succeeding Business Day.

         (b)      Interest on any Convertible Subordinated Note that is payable,
and is punctually paid or duly provided for, on any Interest Payment Date shall
be paid to the person in whose name that Convertible Subordinated Note is
registered at the close of business on the Regular Record Date for such
interest, at the office or agency of the Company maintained for such purpose.

         (c)      The amount of interest payable for any period shall be
computed on the basis of a 360-day year of twelve 30-day months. The amount of
interest payable for any partial period shall be computed on the basis of a
360-day year of twelve 30-day months and the days elapsed in any partial month.
In the event that any date on which interest is payable on a Convertible
Subordinated Note is not a Business Day, then a payment of the interest payable
on such date will be made on the next succeeding day which is a Business Day
(and without any interest or other payment in respect of any such delay) with
the same force and effect as if made on the date the payment was originally
payable.

2.       Method of Payment.

         Subject to the terms and conditions of the Indenture, the Company will
make payments in respect of Principal Amount, Redemption Prices, Repurchase
Prices, Fundamental Change Payment and on the Maturity Date to holders who
surrender Convertible Subordinated Notes to a Paying Agent to collect such
payments in respect of the Convertible Subordinated Notes. In addition, the
Company will pay interest beginning September 29, 2003 until October 1, 2023, as
more fully described in paragraph 1 hereof. The Company will pay any cash
amounts in money of the United States that at the time of payment is legal
tender for payment of public and private debts. However, the Company may make
such cash payments by check payable in such money.

3.       Paying Agent, Conversion Agent and Registrar.

         Initially, J.P. Morgan Trust Company, National Association (the
"Trustee") will act as Paying Agent, Conversion Agent and Registrar. The Company
may appoint and change any

                                      A-5


Paying Agent, Conversion Agent and Registrar or co-registrar without notice,
other than notice to the Trustee except that the Company will maintain at least
one Paying Agent in the State of New York, City of New York, Borough of
Manhattan, which shall initially be an office or agency of the Trustee located
at 4 New York Plaza, 15th Floor, New York, New York 10004. The Company or any of
its subsidiaries or any of their Affiliates may act as Paying Agent, Conversion
Agent, Registrar or co-registrar.

4.       Indenture.

         The Company issued the Convertible Subordinated Notes pursuant to an
Indenture dated as of September 29, 2003 (the "Indenture"), between the Company
and the Trustee. The terms of the Convertible Subordinated Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Convertible Subordinated Notes themselves and the Trust Indenture Act of 1939,
as in effect from time to time (the "TIA"). Capitalized terms used herein and
not defined herein have the meanings ascribed thereto in the Indenture. The
Convertible Subordinated Notes are subject to all such terms, and Convertible
Subordinated Note holders are referred to the Indenture and the TIA for a
statement of those terms. In the event of any inconsistency between the terms
hereof and the terms of the Indenture, the terms of the Indenture shall prevail.

         The Convertible Subordinated Notes are unsecured and subordinated
obligations of the Company limited to $90,000,000 aggregate Principal Amount
(plus up to $15,000,000 aggregate Principal Amount that may be sold by the
Company to the Initial Purchasers pursuant to the option to purchase additional
Convertible Subordinated Notes granted to the Initial Purchasers pursuant to the
Purchase Agreement). The Indenture does not limit other indebtedness of the
Company, secured or unsecured.

5.       [Reserved].

6.       Redemption at the Option of the Company.

         No sinking fund is provided for the Convertible Subordinated Notes. The
Convertible Subordinated Notes are redeemable as a whole, or from time to time
in part, at any time at the option of the Company in accordance with the
Indenture at 100% of the Principal Amount of such Convertible Subordinated
Notes, plus accrued and unpaid interest and Registration Default Damages, if
any, to but not including the Redemption Dates, provided that the Convertible
Subordinated Notes are not redeemable prior to October 1, 2008.

7.       Purchase by the Company at the Option of the Holder.

         Subject to the terms and conditions of the Indenture, the Company shall
become obligated to purchase, at the option of the holder, the Convertible
Subordinated Notes held by such holder on October 1 of 2008, 2013 and 2018 at a
Repurchase Price equal to 100% of the Principal Amount of such Convertible
Subordinated Notes on the applicable Repurchase Date plus accrued and unpaid
interest and Registration Default Damages, if any, to but not including the
Repurchase Date, upon delivery of a Repurchase Notice containing the information
set forth in the Indenture at any time from the opening of business on the date
that is 20 Business Days prior to such Repurchase Date until the close of
business on the Business Day prior to such

                                      A-6


Repurchase Date and upon delivery of the Convertible Subordinated Notes to the
Paying Agent by the holder as set forth in the Indenture.

         At the option of the holder and subject to the terms and conditions of
the Indenture, the Company shall become obligated to purchase in cash all or a
portion of the Convertible Subordinated Notes in integral multiples of $1,000
Principal Amount held by such holder no later than 60 Business Days after the
occurrence of a Fundamental Change of the Company for a Fundamental Change
Payment equal to 100% of the Principal Amount of such Convertible Subordinated
Notes plus accrued and unpaid interest and Registration Default Damages, if any,
to but not including the Fundamental Change Payment Date, which Fundamental
Change Payment shall be paid in cash.

         Holders have the right to withdraw any Repurchase Notice or Fundamental
Change notice, as the case may be, by delivering to the Paying Agent a written
notice of withdrawal in accordance with the provisions of the Indenture.

         Payment of the Repurchase Price for a Convertible Subordinated Note for
which a Repurchase Notice has been delivered and not withdrawn is conditioned
upon book-entry transfer or delivery of such Convertible Subordinated Note,
together with any necessary endorsements, to the Paying Agent at its office in
the Borough of Manhattan, The City of New York, or any other office or the
Paying Agent, at any time after delivery of the Repurchase Notice.

         If cash sufficient to pay the Repurchase Price or Fundamental Change
Payment, as the case may be, of all Convertible Subordinated Notes or portions
thereof to be purchased as of the Repurchase Date or the Fundamental Change
Payment Date, as the case may be, is deposited with the Paying Agent on the
Business Day immediately following the Repurchase Date or on the Fundamental
Change Payment Date, as the case may be, such Convertible Subordinated Notes (or
portions thereof) will cease to be outstanding, the Principal Amount shall cease
to increase, and interest and Registration Default Damages, if any, shall cease
to accrue on such Convertible Subordinated Notes (or portions thereof) on such
Repurchase Date or Fundamental Change Payment Date, as the case may be, and the
holder thereof shall have no other rights as such (other than the right to
receive the Repurchase Price or Fundamental Change Payment, as the case may be,
if any, upon surrender of such Convertible Subordinated Notes). This will be the
case whether or not book-entry transfer of the Convertible Subordinated Note has
been made or the Convertible Subordinated Note has been delivered to the Paying
Agent.

8.       [Reserved].

9.       Conversion.

         Conversion Based on Common Stock Price. Subject to the provisions of
this paragraph 9 and notwithstanding the fact that any other condition to
conversion described below has not been satisfied, holders may convert the
Convertible Subordinated Notes into Common Stock on a Conversion Date at any
time starting with the first day of any calendar quarter commencing after
December 31, 2003 if the Closing Sale Price of the Common Stock for at least 20
trading days in a period of 30 consecutive trading days ending on the last
trading day of the calendar quarter

                                      A-7


prior to such calendar quarter is greater than 110% of the conversion price per
share of Common Stock on the last trading day of the prior calendar quarter. If
the foregoing condition is satisfied, then the Convertible Subordinated Notes
will be convertible at any time at the option of the holder, through their
maturity.

         The "conversion price" per share of Common Stock as of any day equals
the quotient of $1,000 divided by the Conversion Rate in effect at that time.

         Conversion Based on Trading Price of Convertible Subordinated Notes.
Subject to the provisions of this paragraph 9 and notwithstanding the fact that
any other condition to conversion described below has not been satisfied,
Holders may convert the Convertible Subordinated Notes into Common Stock during
each of the five Business Day periods after any ten consecutive trading day
period in which the Trading Price per $1,000 Principal Amount of the Convertible
Subordinated Notes for each day of such ten day period was less than 98% of the
product of (i) the average of the Closing Sale Price of the Common Stock over
the same ten trading day period and (ii) the number of shares of Common Stock
issuable upon conversion of $1,000 Principal Amount of the Convertible
Subordinated Notes.

         The "Trading Price" means, on any date of determination, the average of
the secondary market bid quotations for the Convertible Subordinated Notes
obtained by the Trustee per $1,000 Principal Amount of the Convertible
Subordinated Notes for $5,000,000 Principal Amount of Convertible Subordinated
Notes at approximately 3:30 p.m., New York City time, on such determination date
from three independent nationally recognized securities dealers selected by the
Company; provided that if at least three such bids cannot reasonably be obtained
by the Trustee, but two such bids are obtained, then the average of the two bids
shall be used, and if only one such bid can reasonably be obtained by the
Trustee, one bid shall be used; and provided further that if the Trustee cannot
reasonably obtain at least one bid for $5,000,000 Principal Amount of
Convertible Subordinated Notes from a nationally recognized securities dealer or
in the Company's reasonable judgment, the bid quotations are not indicative of
the secondary market value of the Convertible Subordinated Notes, then the
Trading Price per $1,000 Principal Amount of Convertible Subordinated Notes
shall be deemed to be less than 98% of the product of (a) the number of shares
of Common Stock issuable upon conversion of $1,000 Principal Amount of
Convertible Subordinated Notes and (b) the Closing Sale Price on such date.

         The Trustee (or other conversion agent appointed by the Company) shall
have no obligation to determine the Trading Price unless the Company has
requested such a determination; and the Company shall have no obligation to make
such request unless a holder provides it with reasonable evidence that the
Trading Price per $1,000 Principal Amount of Convertible Subordinated Notes
would be less than 98% of the product of the Closing Sale Price of Common Stock
and the number of shares of Common Stock issuable upon conversion of $1,000
Principal Amount of Convertible Subordinated Notes. If such evidence is
provided, the Company shall instruct the Trustee (or other conversion agent) to
determine the Trading Price of the Convertible Subordinated Notes beginning on
the next trading day and on each successive trading day until the Trading Price
per $1,000 Principal Amount of Convertible Subordinated Notes is greater than
98% of the product of the average of the Closing Sale Price of the Common Stock
over a ten trading day period and the number of shares issuable upon conversion
of $1,000 Principal Amount of the Convertible Subordinated Notes.

                                      A-8


         Conversion upon Credit Rating Event. Subject to the provisions of this
paragraph 9 and notwithstanding the fact that any other condition described
herein to conversion has not been satisfied, a holder may convert the
Convertible Subordinated Notes into Common Stock during any period in which the
Convertible Subordinated Notes are rated below CCC by Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc., and its successors, or
below Caa1 by Moody's Investors Services and its successors, or the notes are no
longer rated by either one of these ratings services, or if the ratings for the
notes have been withdrawn or been suspended by either one of these ratings
services.

         Conversion upon Redemption. Subject to the provisions of this paragraph
9 and notwithstanding the fact that any other condition described herein to
conversion has not been satisfied, a holder may convert into Common Stock a
Convertible Subordinated Note or portion of a Convertible Subordinated Note
which has been called for redemption pursuant to paragraph 6 hereof, provided
such Convertible Subordinated Notes are surrendered for conversion prior to the
close of business on the Business Day immediately preceding the Redemption Date.

         Conversion Upon Occurrence of Certain Corporate Transactions. (a)
Subject to the provisions of this paragraph 9 and notwithstanding the fact that
any other condition described herein to conversion has not been satisfied, in
the event the Company is a party to a consolidation, merger or binding share
exchange or a transfer of all or substantially all of the Company's assets
pursuant to which the Common Stock would be converted into cash, securities or
other property as set forth in Section 12.14 of the Indenture, the Convertible
Subordinated Notes may be surrendered for conversion at any time from and after
the date which is 15 days prior to the date announced by the Company as the
anticipated effective time until 15 days after the actual effective date of such
transaction, and at the effective time of such transaction the right to convert
a Convertible Subordinated Note into Common Stock will be deemed to have changed
into a right to convert it into the kind and amount of cash, securities or other
assets of the Company or another person which the holder would have received if
the holder had converted its Convertible Subordinated Note into Common Stock
immediately prior to the transaction. If such transaction also constitutes a
Fundamental Change, a holder will be able to require the Company to purchase all
or a portion of such holder's Convertible Subordinated Notes pursuant to
Paragraph 7 and Section 3.10 of the Indenture.

         (a)      Subject to the provisions of this paragraph 9 and
notwithstanding the fact that any other condition to conversion has not been
satisfied, in the event that the Company declares a dividend or distribution
described in Section 12.06(b) of the Indenture, or a dividend or a distribution
described in Section 12.06(c) of the Indenture where, the fair market value, per
share, of such dividend or distribution per share of Common Stock, as determined
in the Indenture, exceeds 10% of the Closing Sale Price of the Common Stock on
the Business Day immediately preceding the date of declaration for such dividend
or distribution or a Fundamental Change occurs other than pursuant to a
transaction described in clause (a) hereof, the Convertible Subordinated Notes
may be surrendered for conversion beginning on the date the Company gives notice
to the holders of such right, which shall not be less than 20 days prior to the
Ex-Dividend Date for such dividend or distribution or which shall be within 20
days of the occurrence of such Fundamental Change, as the case may be, and
Convertible Subordinated Notes may be surrendered for conversion at any time
thereafter until the earlier of the close of business on the Business Day prior
to the Ex-Dividend Date or until the Company announces that such dividend

                                      A-9


or distribution will not take place, with respect to a dividend or distribution,
or within 30 days of such Fundamental Change notice, in the case of such a
Fundamental Change. No adjustment to the Conversion Rate or the ability of the
holders to convert this Convertible Subordinated Note will be made if the
Company provides, as permitted in the Indenture, for holders to participate in
the transaction without conversion or in other cases specified in the Indenture.

         A Convertible Subordinated Note in respect of which a holder has
delivered a Repurchase Notice or notice of a Fundamental Change exercising the
option of such holder to require the Company to purchase such Convertible
Subordinated Note may be converted only if such notice of exercise is withdrawn
in accordance with the terms of the Indenture.

         The initial Conversion Rate is 112.4859 shares of Common Stock per
$1,000 Principal Amount of each Convertible Subordinated Note, subject to
adjustment for certain events described in the Indenture. The Company will
deliver cash or a check in lieu of any fractional share of Common Stock. The
ability to surrender Convertible Subordinated Notes for conversion will expire
at the close of business on September 30, 2023.

         Increases in the Principal Amount and interest will not be paid on
Convertible Subordinated Notes that are converted, except accrued interest will
be payable upon conversion of Convertible Subordinated Notes made concurrently
with or after acceleration of Convertible Subordinated Notes following an Event
of Default. Holders of Convertible Subordinated Notes at the close of business
on a Regular Record Date will receive payments of interest payable on the
corresponding Interest Payment Date notwithstanding the conversion of such notes
at any time after the close of business on such Regular Record Date. Notes
surrendered for conversion by a holder during the period from the close of
business on any Regular Record Date to the opening of business on the
corresponding Interest Payment Date must be accompanied by payment of an amount
equal to the interest that the holder is to receive on the Convertible
Subordinated Notes; provided, however, that no such payment need be made if (1)
the Company has specified a Redemption Date that is after a Regular Record Date
and on or prior to the corresponding Interest Payment Date, (2) the Company has
specified a Repurchase Date following a Fundamental Change that is during such
period, or (3) any overdue interest exists at the time of conversion with
respect to such Convertible Subordinated Notes, to the extent of such overdue
interest. The holders of the Convertible Subordinated Notes will continue to be
entitled to receive Registration Default Damages in accordance with the
Registration Rights Agreement.

         To exercise its conversion right, a holder must (1) complete and
manually sign the conversion notice (or complete and manually sign a facsimile
of such notice) and deliver such notice to the Conversion Agent, (2) surrender
the Convertible Subordinated Note to the Conversion Agent, (3) furnish
appropriate endorsements and transfer documents if required by the Conversion
Agent, the Company or the Trustee and (4) pay any transfer or similar taxes, if
required.

         A holder may convert a portion of a Convertible Subordinated Note if
the Principal Amount of such portion is $1,000 or an integral multiple of
$1,000. No payment or adjustment will be made for dividends on the Common Stock
except as provided in the Indenture. On conversion of a Convertible Subordinated
Note, increases in the Principal Amount or interest attributable to the period
from the Issue Date through the Conversion Date shall not be cancelled,

                                      A-10


extinguished or forfeited, but rather shall be deemed to be paid in full to the
holder thereof through the delivery of the Common Stock (together with the cash
payment, if any, in lieu of fractional shares) in exchange for the Convertible
Subordinated Note being converted pursuant to the terms hereof; and the fair
market value of such shares of Common Stock (together with any such cash payment
in lieu of fractional shares) shall be treated as issued, to the extent thereof,
first in exchange for increases in the Principal Amount or interest accrued
through the Conversion Date, and the balance, if any, of such fair market value
of such Common Stock (and any such cash payment) shall be treated as issued in
exchange for the Issue Price of the Convertible Subordinated Note being
converted pursuant to the provisions hereof.

         The Conversion Rate will be adjusted for dividends or distributions on
Common Stock payable in Common Stock or other Capital Stock of the Company;
subdivisions, combinations or certain reclassifications of Common Stock;
distributions to all holders of Common Stock of certain rights to purchase
Common Stock for a period expiring within 60 days of the record date for such
distribution at less than the current market price of the Common Stock at the
time of the announcement of the distribution; distributions to such holders of
assets or debt securities of the Company or certain rights to purchase
securities of the Company (including cash dividends or distributions); payments
in respect of a repurchase of (including a tender offer or exchange offer for)
the Company's Common Stock; payments in respect of a tender offer or exchange
offer made by a Person other than the Company or any of its subsidiaries which
increases the offeror's ownership of Common Stock to more than 35% of the Common
Stock outstanding; and any issuance by the Company of Common Stock or securities
convertible into, or exchangeable for, Common Stock at a price per share (or
having a conversion or exchange price per share) that is less than the then
current market price of the Common Stock (but excluding without limitation those
exceptions listed in Section 12.06(g). However, no adjustment need be made if
Convertible Subordinated Note holders may participate in the transaction or in
certain other cases. The Company from time to time may voluntarily increase the
Conversion Rate.

         If the Company is a party to a consolidation, merger or binding share
exchange or a transfer of all or substantially all of its assets, or upon
certain distributions described in the Indenture, the right to convert a
Convertible Subordinated Note into Common Stock may be changed into a right to
convert it into securities, cash or other assets of the Company or another
person.

         The Conversion Rate will not be adjusted for increases in the Principal
Amount or accrued interest or Registration Default Damages, if any.

10.      Conversion Arrangement on Call for Redemption.

         Any Convertible Subordinated Notes called for redemption, unless
surrendered for conversion before the close of business on the Redemption Date,
may be deemed to be purchased from the holders of such Convertible Subordinated
Notes at an amount not less than the Redemption Price, by one or more investment
bankers or other purchasers who may agree with the Company to purchase such
Convertible Subordinated Notes from the holders, to convert them into Common
Stock of the Company and to make payment for such Convertible Subordinated Notes
to the Trustee in trust for such holders.

                                      A-11


11.      [Reserved]

12.      Defaulted Interest.

         Except as otherwise specified with respect to the Convertible
Subordinated Notes, any defaulted interest on any Convertible Subordinated Note
shall forthwith cease to be payable to the registered holder thereof on the
relevant Regular Record Date or accrual date, as the case may be, by virtue of
having been such holder, and such defaulted interest may be paid by the Company
as provided for in Section 2.12 of the Indenture.

13.      Denominations; Transfer; Exchange.

         The Convertible Subordinated Notes are in fully registered form,
without coupons, in denominations of $1,000 of Principal Amount and integral
multiples of $1,000. A holder may transfer or exchange Convertible Subordinated
Notes in accordance with the Indenture. The Registrar may require a holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not transfer or exchange any Convertible Subordinated Notes
selected for redemption (except, in the case of a Convertible Subordinated Note
to be redeemed in part, the portion of the Convertible Subordinated Note not to
be redeemed) or any Convertible Subordinated Notes in respect of which a
Repurchase Notice or Fundamental Change notice has been given and not withdrawn
(except, in the case of a Convertible Subordinated Note to be purchased in part,
the portion of the Convertible Subordinated Note not to be purchased) or any
Convertible Subordinated Notes for a period of 15 days before the mailing of a
notice of redemption of Convertible Subordinated Notes to be redeemed.

14.      Persons Deemed Owners.

         The registered holder of this Convertible Subordinated Note may be
treated as the owner of this Convertible Subordinated Note for all purposes.

15.      Unclaimed Money or Securities.

         The Trustee and the Paying Agent shall return to the Company, upon
written request any money or securities held by them for the payment of any
amount with respect to the Convertible Subordinated Notes that remains unclaimed
for two years, subject to applicable unclaimed property laws. After return to
the Company holders entitled to the money or securities must look to the Company
for payment as general creditors unless an applicable abandoned property law
designates another person.

16.      Amendment; Waiver.

         Subject to certain exceptions, the Indenture or the Convertible
Subordinated Notes may be amended or supplemented with the consent of the
holders of at least a majority in principal amount of the then outstanding
Convertible Subordinated Notes, and any existing default may be waived with the
consent of the holders of a majority in aggregate Principal Amount of the then
outstanding Convertible Subordinated Notes.

                                      A-12


         Without the consent of any holder, the Indenture or the Convertible
Subordinated Notes may be amended to: (a) cure any ambiguity or correct or
supplement any defective or inconsistent provision contained in the Indenture,
or make any other changes in the provisions of the Indenture which the Company
and the Trustee may deem necessary or desirable provided such amendment does not
materially and adversely affect the legal rights under the Indenture of the
holders of Convertible Subordinated Notes; (b) provide for uncertificated
Convertible Subordinated Notes in addition to or in place of certificated
Convertible Subordinated Notes; (c) evidence the succession of another person to
the Company and providing for the assumption by such successor of the covenants
and obligations of the Company thereunder and in the Convertible Subordinated
Notes as permitted by Section 5.01 of the Indenture; (d) provide for exchange
rights of holders of Convertible Subordinated Notes in the event of
consolidation, merger, share exchange or sale of all or substantially all of the
assets of the Company as required to comply with Sections 5.01 and/or 12.14 of
the Indenture; (e) increase the Conversion Rate; (f) evidence and provide for
the acceptance of the appointment under the Indenture of a successor Trustee;
(g) make any change that would provide any additional rights or benefits to the
holders of Convertible Subordinated Notes or that does not adversely affect the
legal rights under the Indenture of any such holder; or (h) comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the TIA.

         Without the consent of each holder affected, an amendment or waiver may
not (with respect to any Convertible Subordinated Notes held by a non-consenting
holder): (a) reduce the principal amount of Convertible Subordinated Notes whose
holders must consent to an amendment, supplement or waiver; (b) reduce the
principal of or change the fixed maturity of any Convertible Subordinated Note;
(c) reduce the rate of or change the time for payment of interest on any
Convertible Subordinated Notes; (d) waive a Default or Event of Default in the
payment of principal of or premium, if any, or interest or Registration Default
Damages, if any, on the Convertible Subordinated Notes (except a rescission of
acceleration of the Convertible Subordinated Notes by the holders of at least a
majority in aggregate Principal Amount of the Convertible Subordinated Notes and
a waiver of the payment default that resulted from such acceleration); (e) make
any Convertible Subordinated Note payable in money other than as provided for in
the Indenture and in the Convertible Subordinated Notes; (f) make any change in
the provisions of the Indenture relating to waivers of past Defaults or the
rights of holders of Convertible Subordinated Notes to receive payments of
principal of or interest or Registration Default Damages, if any, on the
Convertible Subordinated Notes; (g) except as permitted by the Indenture
(including Section 9.01(a)), decrease the Conversion Rate or modify the
provisions of the Indenture relating to conversion of the Convertible
Subordinated Notes in a manner adverse to the holders thereof; (h) make any
change to the ability of holder of Convertible Subordinated Notes to enforce
their rights under the Indenture or the provisions of clauses (a) through (i) of
Section 9.02 of the Indenture; (i) reduce the Redemption Price, purchase price
or Fundamental Change purchase price of the Convertible Subordinated Notes; (j)
modify the subordination provisions of the Indenture in a manner adverse to the
holders of the Convertible Subordinated Notes; or (k) make any change that
adversely affects the right to convert the Convertible Subordinated Notes.

                                      A-13


17.      Defaults and Remedies.

         An Event of Default is: (a) default for 30 days or more in payment of
any installment of interest or Registration Default Damages, if any, on the
Convertible Subordinated Notes, whether or not such payment is prohibited by the
subordination provisions of the Indenture; (b) default in payment of the
principal of or premium, if any, on the Convertible Subordinated Notes, when due
and payable, whether or not such payment is prohibited by the subordination
provisions of the Indenture; (c) default in the payment of the Fundamental
Change Payment in respect of the Convertible Subordinated Notes on the date
therefor, whether or not such payment is prohibited by the subordination
provisions of the Indenture; (d) failure to provide timely notice of a
Fundamental Change; a default in the Company's obligation to redeem the
Convertible Subordinated Notes after it has exercised its redemption option,
whether or not such payment is prohibited by the subordination provisions of the
indenture; (e) a default in its obligation to satisfy its conversion obligation
upon exercise of a holder's conversion right; (f) the Company defaults (other
than a default set forth in clauses (a), (b), (c) and (d) above) in the
performance of, or breaches, any other covenant or warranty of the Company set
forth in this Indenture or the Convertible Subordinated Notes and fails to
remedy such default or breach within a period of 30 days after the receipt of
written notice from the Trustee or the holders of at least 25% in aggregate
Principal Amount of the then outstanding Convertible Subordinated Notes; (g) a
default under any credit agreement, mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any subsidiary of the Company
(or the payment of which is guaranteed by the Company or any of its
subsidiaries), whether such Indebtedness or guarantee exists on the date of this
Indenture or is created thereafter, which default (i) is caused by a Payment
Default or (ii) results in the acceleration of such Indebtedness prior to its
express maturity (without such acceleration being rescinded or annulled) and, in
each case, the principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness under which there is a Payment
Default or the maturity of which has been so accelerated, aggregates $5,000,000
or more; (h) a final, non-appealable judgment or final, non-appealable judgments
(other than any judgment as to which a reputable insurance company has accepted
full liability) for the payment of money are entered by a court or courts of
competent jurisdiction against the Company or any subsidiaries of the Company
and remain unstayed, unbonded or undischarged for a period (during which
execution shall not be effectively stayed) of 60 days, provided that the
aggregate amount of all such judgments exceeds $5,000,000; (i) the Company or
any subsidiary, pursuant to or within the meaning of any Bankruptcy Law
commences a voluntary case, consents to the entry of an order for relief against
it in an involuntary case, consents to the appointment of a Custodian of it or
for all or substantially all of its property, makes a general assignment for the
benefit of its creditors, makes the admission in writing that it generally is
unable to pay its debts as the same become due; (j) a court of competent
jurisdiction enters a judgment, order or decree under any Bankruptcy Law that is
for relief against the Company or any subsidiary in an involuntary case,
appoints a Custodian of the Company or any subsidiary, and the order or decree
remains unstayed and in effect for 90 days or orders the liquidation of the
Company or any subsidiary, and the order or decree remains unstayed and in
effect for 90 days. If an Event of Default occurs and is continuing, the Trustee
or the holders of at least 25% in aggregate Principal Amount of the then
outstanding Convertible Subordinated Notes may declare the unpaid principal of,
premium, if any, and accrued and unpaid interest and Registration Default
Damages, if any, on all Convertible Subordinated Notes then outstanding to be
due and payable

                                      A-14


immediately, except that in the case of an Event of Default
arising from certain events of bankruptcy, insolvency, or reorganization with
respect to the Company or any of its subsidiaries, all outstanding Convertible
Subordinated Notes become due and payable without further action or notice.
Holders of Convertible Subordinated Notes may not enforce the Indenture or the
Convertible Subordinated Notes except as provided in the Indenture. The Trustee
may require an indemnity satisfactory to it before it enforces the Indenture or
the Convertible Subordinated Notes. Subject to certain limitations, holders of a
majority in principal amount of the then outstanding Convertible Subordinated
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from holders notice of any continuing default (except a default in
payment of principal, premium, if any, or interest or Registration Default
Damages, if applicable) if it determines that withholding notice is in their
interests. The Company must furnish annual compliance certificates to the
Trustee.

18.      Registration Rights Agreement.

         The holder of this Convertible Subordinated Note is entitled to the
benefits of a Registration Rights Agreement, dated September 29, 2003, between
the Company and the Initial Purchasers (the "Registration Rights Agreement").
Pursuant to the Registration Rights Agreement the Company has agreed for the
benefit of the holders of the Convertible Subordinated Notes and the Common
Stock issued and issuable upon conversion of the Convertible Subordinated Notes,
that (i) it will, at its cost, within 90 days after the Issue Date, file a shelf
registration statement (the "Shelf Registration Statement") with the Securities
and Exchange Commission (the "Commission") with respect to resales of the
Convertible Subordinated Notes and the Common Stock issuable upon conversion
thereof, (ii) the Company will use its reasonable best efforts to cause such
Shelf Registration Statement to be declared effective by the Commission under
the Securities Act within 180 days after the Issue Date and (iii) subject to its
rights to suspend use of the shelf registration statement and prospectus under
certain circumstances described below, the Company will use its reasonable best
efforts to keep such Shelf Registration Statement continuously effective under
the Securities Act until the earliest of (a) the second anniversary of the Issue
Date or, if later, the second anniversary of the last date on which any
Convertible Subordinated Notes are issued upon exercise of the Initial
Purchasers' option to purchase additional Convertible Subordinated Notes, (b)
the date on which the Convertible Subordinated Notes or the Common Stock
issuable upon conversion thereof may be sold to persons who are not "affiliates"
(as defined in Rule 144) of the Company pursuant to paragraph (k) of Rule 144
(or any successor provision) promulgated by the Commission under the Securities
Act and (c) the date as of which all the Convertible Subordinated Notes or the
Common Stock issuable upon conversion thereof have been sold pursuant to such
Shelf Registration Statement.

         If the Shelf Registration Statement (i) is not filed with the
Commission on or prior to 90 days, or has not been declared effective by the
Commission within 180 days, after the Issue Date or (ii) is filed and declared
effective but shall thereafter cease to be effective (without being succeeded
immediately by a replacement shelf registration statement filed and declared
effective) or cease to be usable (including, without limitation, as a result of
a Suspension Period as defined below) for the offer and sale of Registrable
Securities (as defined below) for a period of time (including any Suspension
Period) which shall exceed 30 days within any three-month period or 60 days in
the aggregate in any 12-month period (each such event referred to in clauses

                                      A-15


(i) and (ii) being referred to herein as a "Registration Default"), the Company
will pay liquidated damages ("Registration Default Damages") to each holder of
Registrable Securities which has complied with its obligations under the
Registration Rights Agreement. The amount of Registration Default Damages
payable during any period in which a Registration Default shall have occurred
and be continuing is that amount which is equal to one-quarter of one percent
(25 basis points) per annum per $1,000 principal amount of Securities or $2.50
per annum per 112.4859 shares of Common Stock (subject to adjustment from time
to time in the event of a stock split, stock recombination, stock dividend and
the like) constituting Registrable Securities for the first 90 days during which
a Registration Default has occurred and is continuing and one-half of one
percent (50 basis points) per annum per $1,000 principal amount of Securities
and $5.00 per annum per 112.4859 shares of Common Stock (subject to adjustment
as set forth above) constituting Registrable Securities for any additional days
during which such Registration Default has occurred and is continuing. The
Company will pay all accrued Registration Default Damages by wire transfer of
immediately available funds or by federal funds check on each Damages Payment
Date (as defined in the Registration Rights Agreement), and Registration Default
Damages will be calculated on the basis of a 360-day year consisting of twelve
30-day months. Following the cure of a Registration Default, Registration
Default Damages will cease to accrue with respect to such Registration Default.

"Registrable Securities" means each Convertible Subordinated Note and the Common
Stock issuable or issued upon conversion thereof until the date on which such
Convertible Subordinated Note or Common Stock (i) has been transferred pursuant
to the shelf registration statement or another registration statement covering
such note or share of common stock which has been filed with the SEC pursuant to
the Securities Act, in either case after such registration statement has become,
and while such registration statement is, effective under the Securities Act,
(ii) has been transferred pursuant to Rule 144 under the Securities Act (or any
similar provision then in force), or (iii) may be sold or transferred by
non-affiliates of the Company's pursuant to paragraph (k) of Rule 144 under the
Securities Act (or any successor provision promulgated by the SEC)).

         Pursuant to the Registration Rights Agreement, the Company may suspend
the use of the prospectus which is a part of the Shelf Registration Statement
for a period not to exceed 30 days in any three-month period or an aggregate of
60 days in any twelve-month period under certain circumstances (each, a
"Suspension Period"); provided that the existence of a Suspension Period will
not prevent the occurrence of a Registration Default or otherwise limit the
obligation of the Company to pay Registration Default Damages.

         The above description of certain provisions of the Registration Rights
Agreement is qualified by reference to, and is subject in its entirety to, the
more complete description thereof contained in the Registration Rights
Agreement.

19.      Trustee Dealings with the Company.

         Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Convertible Subordinated Notes and may otherwise deal with and
collect obligations owed to it by the Company or its Affiliates and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee.

                                      A-16


20.      No Recourse Against Others.

         A director, officer, employee, agent, representative, stockholder or
equity holder, as such, of the Company shall not have any liability for any
obligations of the Company under the Convertible Subordinated Notes or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Convertible Subordinated Note,
each Convertible Subordinated Note holder shall waive and release all such
liability. The waiver and release shall be part of the consideration for the
issue of the Convertible Subordinated Notes.

21.      Authentication.

         This Convertible Subordinated Note shall not be valid until an
authorized signatory of the Trustee manually signs the Trustee's Certificate of
Authentication on the other side of this Convertible Subordinated Note.

22.      Abbreviations.

         Customary abbreviations may be used in the name of a Convertible
Subordinated Note holder or an assignee, such as TEN COM (=tenants in common),
TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with right of
survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A
(=Uniform Gift to Minors Act).

23.      GOVERNING LAW.

         THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THIS
CONVERTIBLE SUBORDINATED NOTE.

                                      A-17


         The Company will furnish to any Convertible Subordinated Note holder
upon written request and without charge a copy of the Indenture that has in it
the text of this Convertible Subordinated Note in larger type. Requests may be
made to:

                  CKE Restaurants, Inc.
                  6307 Carpinteria Avenue, Suite A,
                  Carpinteria, CA 93013
                  Attention: Chief Financial Officer

                                      A-18




                ASSIGNMENT FORM                                  CONVERSION NOTICE
                                                 
To assign this Convertible Subordinated Note,       To convert this Convertible Subordinated
fill in the form below:                             Note into Common Stock of the Company,
                                                    check the box: [ ]

I or we assign and transfer this Convertible
Subordinated Note to:

____________________________________________        To convert only part of this Convertible
                                                    Subordinated Note, state the Original
____________________________________________        Principal Amount to be converted (which
                                                    must be $1,000 or an integral multiple of
(Insert assignee's soc. sec. or tax ID no.)         $1,000):

____________________________________________        $ _________________________________________

____________________________________________        If you want the stock certificate made out
                                                    in another person's name, fill in the form
____________________________________________        below:
(Print or type assignee's name, address and         ___________________________________________
zip code)                                           ___________________________________________
                                                    (Insert other person's soc. sec. or tax ID
                                                    no.)
and irrevocably appoint

__________________________ agent to transfer        ___________________________________________
this Convertible Subordinated Note on the
books of the Company. The agent may                 ___________________________________________
substitute another to act for him.
                                                    ___________________________________________

                                                    ___________________________________________
                                                    (Print or type other person's name, address
                                                    and zip code)
                                                    ___________________________________________


___________________________________________

Date: ____________________________ Your Signature: _____________________________

________________________________________________________________________________
    (Sign exactly as your name appears on the other side of this Convertible
                               Subordinated Note)

                                      A-19


                      OPTION OF HOLDER TO ELECT REPURCHASE

         If you wish to have this Convertible Subordinated Note repurchased by
the Company pursuant to Section 3.09 of the Indenture, check the Box: [ ]

         If you wish to have a portion of this Convertible Subordinated Note
purchased by the Company pursuant to Section 3.09 of the Indenture, state the
amount (in multiples of $1,000): $_____.

Date: ___________   Your Signature: ____________________________________________
                         (Sign exactly as your name appears on the other side of
                                   this Convertible Subordinated Note)

Medallion Signature Guarantee: _________________________________________________

                                      A-20


                                    EXHIBIT B

                    FORM OF TRANSFER CERTIFICATE FOR TRANSFER
                           OF RESTRICTED COMMON STOCK

            (Transfers pursuant to Section 12.19(c) of the Indenture)

[NAME AND ADDRESS OF COMMON STOCK TRANSFER AGENT]

         Re:      CKE Restaurants, Inc. 4% Convertible Subordinated Notes due
                  2023 (the "Convertible Subordinated Notes")

         Reference is hereby made to the Indenture dated as of September 29,
2003 (the "Indenture") between CKE Restaurants, Inc. and J.P. Morgan Trust
Company, National Association, as Trustee. Capitalized terms used but not
defined herein shall have the meanings given them in the Indenture.

         This letter relates to _________ shares of Common Stock represented by
the accompanying certificate(s) that were issued upon conversion of Convertible
Subordinated Notes and which are held in the name of [name of transferor] (the
"Transferor") to effect the transfer of such Common Stock.

         In connection with the transfer of such shares of Common Stock, the
undersigned confirms that such shares of Common Stock are being transferred:

CHECK ONE BOX BELOW

         (1)      [ ]      to the Company; or

         (2)      [ ]      pursuant to and in compliance with Rule 144A under
                           the Securities Act of 1933; or

         (3)      [ ]      pursuant to and in compliance with Regulation S under
                           the Securities Act of 1933; or

         (4)      [ ]      pursuant to an exemption from registration under the
                           Securities Act of 1933 provided by Rule 144
                           thereunder.

                                       B-1


         Unless one of the boxes is checked, the transfer agent will refuse to
register any of the Common Stock evidenced by this certificate in the name of
any person other than the registered holder thereof; provided, however, that if
box (3) or (4) is checked, the transfer agent may require, prior to registering
any such transfer of the Common Stock such certifications and other information,
and if box (4) is checked such legal opinions, as the Company has reasonably
requested in writing, by delivery to the transfer agent of a standing letter of
instruction, to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933.

                                          [Name of Transferor],

                                          By ___________________________________
                                          Name: ________________________________
                                          Title: _______________________________

Dated:

                                       B-2


         UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL
NOTES REPRESENTED HEREBY, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR AN NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.

         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

         THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE ISSUER THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF
THE ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER
THAT WAS AN "AFFILIATE" (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES
ACT) OF THE ISSUER AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF
SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE ISSUER, (2) SO LONG AS THIS
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (3) IN AN OFFSHORE TRANSACTION (AS DEFINED IN REGULATION S UNDER THE
SECURITIES ACT) IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (4)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT OR (5) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. PRIOR TO A TRANSFER OF THIS SECURITY, (OTHER THAN A TRANSFER PURSUANT TO
CLAUSE (5) ABOVE) THE HOLDER OF THIS SECURITY MUST FURNISH TO THE ISSUER AND THE
TRUSTEE SUCH CERTIFICATES AND OTHER



INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF
THIS SECURITY  COMPLIES WITH THE FOREGOING  RESTRICTIONS.  THE HOLDER HEREOF, BY
PURCHASING  THIS  SECURITY,  REPRESENTS AND AGREES FOR THE BENEFIT OF THE ISSUER
THAT IT IS (1) A QUALIFIED  INSTITUTIONAL  BUYER OR (2) NOT A U.S. PERSON AND IS
OUTSIDE THE UNITED  STATES WITHIN THE MEANING OF (OR AN ACCOUNT  SATISFYING  THE
REQUIREMENTS  OF  PARAGRAPH  (k)(2) OF RULE 902  UNDER)  REGULATION  S UNDER THE
SECURITIES ACT. IN ANY CASE THE HOLDER HEREOF WILL NOT,  DIRECTLY OR INDIRECTLY,
ENGAGE IN ANY HEDGING  TRANSACTION  WITH  REGARD TO THIS  SECURITY OR ANY COMMON
STOCK  ISSUABLE  UPON  CONVERSION  OF THIS  SECURITY  EXCEPT AS PERMITTED BY THE
SECURITIES ACT.



                              CKE RESTAURANTS, INC.
                    4% Convertible Subordinated Note due 2023

No. 1                                                        CUSIP:  12561E AF 2
Issue Date: September 29, 2003                   Principal Amount:  $105,000,000
Issue Price: $1,000.00
(for each $1,000 Principal Amount)

         CKE Restaurants, Inc., a Delaware corporation, promises to pay to CEDE
& CO. or registered assigns, on October 1, 2023, the Principal Amount of this
Convertible Subordinated Note on such date. This Convertible Subordinated Note
is issued with a Principal Amount of ONE HUNDRED AND FIVE MILLION DOLLARS
($105,000,000).

         This Convertible Subordinated Note shall not bear interest except as
specified on the other side of this Convertible Subordinated Note. The Principal
Amount of this Convertible Subordinated Note will accrue as specified on the
other side of this Convertible Subordinated Note. This Convertible Subordinated
Note is convertible as specified on the other side of this Convertible
Subordinated Note.

         Additional provisions of this Convertible Subordinated Note are set
forth on the other side of this Convertible Subordinated Note.



                  IN WITNESS WHEREOF, the Company has caused this Note to be
duly executed.

Dated:

                                               CKE Restaurants, Inc.

                                               By:______________________________
                                               Name:
                                               Title:

TRUSTEE'S CERTIFICATE OF
AUTHENTICATION

J.P. Morgan Trust Company, National Association
as Trustee, certifies that this
is one of the Convertible Subordinated Notes referred
to in the within-mentioned Indenture.

By:_____________________________
         Authorized Officer

Dated:



                               (Back of Security)

                    4% CONVERTIBLE SUBORDINATED NOTE DUE 2023

1.       Interest.

         (a)      The Convertible Subordinated Notes will bear interest on the
Principal Amount at the rate of 4% per year from the Issue Date, or from the
most recent date to which interest has been paid or provided for, until October
1, 2023. During such period, the Company will pay interest semiannually in
arrears on each Interest Payment Date to holders of record at the close of
business on each Regular Record Date immediately preceding such Interest Payment
Date. Each payment of interest on the Convertible Subordinated Notes will
include interest and Registration Default Damages, if any, accrued through the
day immediately preceding the most recent Interest Payment Date (or the
Repurchase Date, Redemption Date, the Fundamental Change Payment Date or, in
certain circumstances, the Conversion Date, as the case may be). Any payment
required to be made on any day that is not a Business Day will be made on the
next succeeding Business Day.

         (b)      Interest on any Convertible Subordinated Note that is payable,
and is punctually paid or duly provided for, on any Interest Payment Date shall
be paid to the person in whose name that Convertible Subordinated Note is
registered at the close of business on the Regular Record Date for such
interest, at the office or agency of the Company maintained for such purpose.

         (c)      The amount of interest payable for any period shall be
computed on the basis of a 360-day year of twelve 30-day months. The amount of
interest payable for any partial period shall be computed on the basis of a
360-day year of twelve 30-day months and the days elapsed in any partial month.
In the event that any date on which interest is payable on a Convertible
Subordinated Note is not a Business Day, then a payment of the interest payable
on such date will be made on the next succeeding day which is a Business Day
(and without any interest or other payment in respect of any such delay) with
the same force and effect as if made on the date the payment was originally
payable.

2.       Method of Payment.

         Subject to the terms and conditions of the Indenture, the Company will
make payments in respect of Principal Amount, Redemption Prices, Repurchase
Prices, Fundamental Change Payment and on the Maturity Date to holders who
surrender Convertible Subordinated Notes to a Paying Agent to collect such
payments in respect of the Convertible Subordinated Notes. In addition, the
Company will pay interest beginning September 29, 2003 until October 1, 2023, as
more fully described in paragraph 1 hereof. The Company will pay any cash
amounts in money of the United States that at the time of payment is legal
tender for payment of public and private debts. However, the Company may make
such cash payments by check payable in such money.

3.       Paying Agent, Conversion Agent and Registrar.

         Initially, J.P. Morgan Trust Company, National Association (the
"Trustee") will act as Paying Agent, Conversion Agent and Registrar. The Company
may appoint and change any

                                       1



Paying Agent, Conversion Agent and Registrar or co-registrar without notice,
other than notice to the Trustee except that the Company will maintain at least
one Paying Agent in the State of New York, City of New York, Borough of
Manhattan, which shall initially be an office or agency of the Trustee located
at 4 New York Plaza, 15th Floor, New York, New York 10004. The Company or any of
its subsidiaries or any of their Affiliates may act as Paying Agent, Conversion
Agent, Registrar or co-registrar.

4.       Indenture.

         The Company issued the Convertible Subordinated Notes pursuant to an
Indenture dated as of September 29, 2003 (the "Indenture"), between the Company
and the Trustee. The terms of the Convertible Subordinated Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Convertible Subordinated Notes themselves and the Trust Indenture Act of 1939,
as in effect from time to time (the "TIA"). Capitalized terms used herein and
not defined herein have the meanings ascribed thereto in the Indenture. The
Convertible Subordinated Notes are subject to all such terms, and Convertible
Subordinated Note holders are referred to the Indenture and the TIA for a
statement of those terms. In the event of any inconsistency between the terms
hereof and the terms of the Indenture, the terms of the Indenture shall prevail.

         The Convertible Subordinated Notes are unsecured and subordinated
obligations of the Company limited to $90,000,000 aggregate Principal Amount
(plus up to $15,000,000 aggregate Principal Amount that may be sold by the
Company to the Initial Purchasers pursuant to the option to purchase additional
Convertible Subordinated Notes granted to the Initial Purchasers pursuant to the
Purchase Agreement). The Indenture does not limit other indebtedness of the
Company, secured or unsecured.

5.       [Reserved].

6.       Redemption at the Option of the Company.

         No sinking fund is provided for the Convertible Subordinated Notes. The
Convertible Subordinated Notes are redeemable as a whole, or from time to time
in part, at any time at the option of the Company in accordance with the
Indenture at 100% of the Principal Amount of such Convertible Subordinated
Notes, plus accrued and unpaid interest and Registration Default Damages, if
any, to but not including the Redemption Dates, provided that the Convertible
Subordinated Notes are not redeemable prior to October 1, 2008.

7.       Purchase by the Company at the Option of the Holder.

         Subject to the terms and conditions of the Indenture, the Company shall
become obligated to purchase, at the option of the holder, the Convertible
Subordinated Notes held by such holder on October 1 of 2008, 2013 and 2018 at a
Repurchase Price equal to 100% of the Principal Amount of such Convertible
Subordinated Notes on the applicable Repurchase Date plus accrued and unpaid
interest and Registration Default Damages, if any, to but not including the
Repurchase Date, upon delivery of a Repurchase Notice containing the information
set forth in the Indenture at any time from the opening of business on the date
that is 20 Business Days prior to such Repurchase Date until the close of
business on the Business Day prior to such

                                       2



Repurchase Date and upon delivery of the Convertible Subordinated Notes to the
Paying Agent by the holder as set forth in the Indenture.

         At the option of the holder and subject to the terms and conditions of
the Indenture, the Company shall become obligated to purchase in cash all or a
portion of the Convertible Subordinated Notes in integral multiples of $1,000
Principal Amount held by such holder no later than 60 Business Days after the
occurrence of a Fundamental Change of the Company for a Fundamental Change
Payment equal to 100% of the Principal Amount of such Convertible Subordinated
Notes plus accrued and unpaid interest and Registration Default Damages, if any,
to but not including the Fundamental Change Payment Date, which Fundamental
Change Payment shall be paid in cash.

         Holders have the right to withdraw any Repurchase Notice or Fundamental
Change notice, as the case may be, by delivering to the Paying Agent a written
notice of withdrawal in accordance with the provisions of the Indenture.

         Payment of the Repurchase Price for a Convertible Subordinated Note for
which a Repurchase Notice has been delivered and not withdrawn is conditioned
upon book-entry transfer or delivery of such Convertible Subordinated Note,
together with any necessary endorsements, to the Paying Agent at its office in
the Borough of Manhattan, The City of New York, or any other office or the
Paying Agent, at any time after delivery of the Repurchase Notice.

         If cash sufficient to pay the Repurchase Price or Fundamental Change
Payment, as the case may be, of all Convertible Subordinated Notes or portions
thereof to be purchased as of the Repurchase Date or the Fundamental Change
Payment Date, as the case may be, is deposited with the Paying Agent on the
Business Day immediately following the Repurchase Date or on the Fundamental
Change Payment Date, as the case may be, such Convertible Subordinated Notes (or
portions thereof) will cease to be outstanding, the Principal Amount shall cease
to increase, and interest and Registration Default Damages, if any, shall cease
to accrue on such Convertible Subordinated Notes (or portions thereof) on such
Repurchase Date or Fundamental Change Payment Date, as the case may be, and the
holder thereof shall have no other rights as such (other than the right to
receive the Repurchase Price or Fundamental Change Payment, as the case may be,
if any, upon surrender of such Convertible Subordinated Notes). This will be the
case whether or not book-entry transfer of the Convertible Subordinated Note has
been made or the Convertible Subordinated Note has been delivered to the Paying
Agent.

8.       [Reserved].

9.       Conversion.

         Conversion Based on Common Stock Price. Subject to the provisions of
this paragraph 9 and notwithstanding the fact that any other condition to
conversion described below has not been satisfied, holders may convert the
Convertible Subordinated Notes into Common Stock on a Conversion Date at any
time starting with the first day of any calendar quarter commencing after
December 31, 2003 if the Closing Sale Price of the Common Stock for at least 20
trading days in a period of 30 consecutive trading days ending on the last
trading day of the calendar quarter

                                       3



prior to such calendar quarter is greater than 110% of the conversion price per
share of Common Stock on the last trading day of the prior calendar quarter. If
the foregoing condition is satisfied, then the Convertible Subordinated Notes
will be convertible at any time at the option of the holder, through their
maturity.

         The "conversion price" per share of Common Stock as of any day equals
the quotient of $1,000 divided by the Conversion Rate in effect at that time.

         Conversion Based on Trading Price of Convertible Subordinated Notes.
Subject to the provisions of this paragraph 9 and notwithstanding the fact that
any other condition to conversion described below has not been satisfied,
Holders may convert the Convertible Subordinated Notes into Common Stock during
each of the five Business Day periods after any ten consecutive trading day
period in which the Trading Price per $1,000 Principal Amount of the Convertible
Subordinated Notes for each day of such ten day period was less than 98% of the
product of (i) the average of the Closing Sale Price of the Common Stock over
the same ten trading day period and (ii) the number of shares of Common Stock
issuable upon conversion of $1,000 Principal Amount of the Convertible
Subordinated Notes.

         The "Trading Price" means, on any date of determination, the average of
the secondary market bid quotations for the Convertible Subordinated Notes
obtained by the Trustee per $1,000 Principal Amount of the Convertible
Subordinated Notes for $5,000,000 Principal Amount of Convertible Subordinated
Notes at approximately 3:30 p.m., New York City time, on such determination date
from three independent nationally recognized securities dealers selected by the
Company; provided that if at least three such bids cannot reasonably be obtained
by the Trustee, but two such bids are obtained, then the average of the two bids
shall be used, and if only one such bid can reasonably be obtained by the
Trustee, one bid shall be used; and provided further that if the Trustee cannot
reasonably obtain at least one bid for $5,000,000 Principal Amount of
Convertible Subordinated Notes from a nationally recognized securities dealer or
in the Company's reasonable judgment, the bid quotations are not indicative of
the secondary market value of the Convertible Subordinated Notes, then the
Trading Price per $1,000 Principal Amount of Convertible Subordinated Notes
shall be deemed to be less than 98% of the product of (a) the number of shares
of Common Stock issuable upon conversion of $1,000 Principal Amount of
Convertible Subordinated Notes and (b) the Closing Sale Price on such date.

         The Trustee (or other conversion agent appointed by the Company) shall
have no obligation to determine the Trading Price unless the Company has
requested such a determination; and the Company shall have no obligation to make
such request unless a holder provides it with reasonable evidence that the
Trading Price per $1,000 Principal Amount of Convertible Subordinated Notes
would be less than 98% of the product of the Closing Sale Price of Common Stock
and the number of shares of Common Stock issuable upon conversion of $1,000
Principal Amount of Convertible Subordinated Notes. If such evidence is
provided, the Company shall instruct the Trustee (or other conversion agent) to
determine the Trading Price of the Convertible Subordinated Notes beginning on
the next trading day and on each successive trading day until the Trading Price
per $1,000 Principal Amount of Convertible Subordinated Notes is greater than
98% of the product of the average of the Closing Sale Price of the Common Stock
over a ten trading day period and the number of shares issuable upon conversion
of $1,000 Principal Amount of the Convertible Subordinated Notes.

                                       4



         Conversion upon Credit Rating Event. Subject to the provisions of this
paragraph 9 and notwithstanding the fact that any other condition described
herein to conversion has not been satisfied, a holder may convert the
Convertible Subordinated Notes into Common Stock during any period in which the
Convertible Subordinated Notes are rated below CCC by Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc., and its successors, or
below Caa1 by Moody's Investors Services and its successors, or the notes are no
longer rated by either one of these ratings services, or if the ratings for the
notes have been withdrawn or been suspended by either one of these ratings
services.

         Conversion upon Redemption. Subject to the provisions of this paragraph
9 and notwithstanding the fact that any other condition described herein to
conversion has not been satisfied, a holder may convert into Common Stock a
Convertible Subordinated Note or portion of a Convertible Subordinated Note
which has been called for redemption pursuant to paragraph 6 hereof, provided
such Convertible Subordinated Notes are surrendered for conversion prior to the
close of business on the Business Day immediately preceding the Redemption Date.

         Conversion Upon Occurrence of Certain Corporate Transactions. (a)
Subject to the provisions of this paragraph 9 and notwithstanding the fact that
any other condition described herein to conversion has not been satisfied, in
the event the Company is a party to a consolidation, merger or binding share
exchange or a transfer of all or substantially all of the Company's assets
pursuant to which the Common Stock would be converted into cash, securities or
other property as set forth in Section 12.14 of the Indenture, the Convertible
Subordinated Notes may be surrendered for conversion at any time from and after
the date which is 15 days prior to the date announced by the Company as the
anticipated effective time until 15 days after the actual effective date of such
transaction, and at the effective time of such transaction the right to convert
a Convertible Subordinated Note into Common Stock will be deemed to have changed
into a right to convert it into the kind and amount of cash, securities or other
assets of the Company or another person which the holder would have received if
the holder had converted its Convertible Subordinated Note into Common Stock
immediately prior to the transaction. If such transaction also constitutes a
Fundamental Change, a holder will be able to require the Company to purchase all
or a portion of such holder's Convertible Subordinated Notes pursuant to
Paragraph 7 and Section 3.10 of the Indenture.

         (a)      Subject to the provisions of this paragraph 9 and
notwithstanding the fact that any other condition to conversion has not been
satisfied, in the event that the Company declares a dividend or distribution
described in Section 12.06(b) of the Indenture, or a dividend or a distribution
described in Section 12.06(c) of the Indenture where, the fair market value, per
share, of such dividend or distribution per share of Common Stock, as determined
in the Indenture, exceeds 10% of the Closing Sale Price of the Common Stock on
the Business Day immediately preceding the date of declaration for such dividend
or distribution or a Fundamental Change occurs other than pursuant to a
transaction described in clause (a) hereof, the Convertible Subordinated Notes
may be surrendered for conversion beginning on the date the Company gives notice
to the holders of such right, which shall not be less than 20 days prior to the
Ex-Dividend Date for such dividend or distribution or which shall be within 20
days of the occurrence of such Fundamental Change, as the case may be, and
Convertible Subordinated Notes may be surrendered for conversion at any time
thereafter until the earlier of the close of business on the Business Day prior
to the Ex-Dividend Date or until the Company announces that such dividend

                                       5



or distribution will not take place, with respect to a dividend or distribution,
or within 30 days of such Fundamental Change notice, in the case of such a
Fundamental Change. No adjustment to the Conversion Rate or the ability of the
holders to convert this Convertible Subordinated Note will be made if the
Company provides, as permitted in the Indenture, for holders to participate in
the transaction without conversion or in other cases specified in the Indenture.

         A Convertible Subordinated Note in respect of which a holder has
delivered a Repurchase Notice or notice of a Fundamental Change exercising the
option of such holder to require the Company to purchase such Convertible
Subordinated Note may be converted only if such notice of exercise is withdrawn
in accordance with the terms of the Indenture.

         The initial Conversion Rate is 112.4859 shares of Common Stock per
$1,000 Principal Amount of each Convertible Subordinated Note, subject to
adjustment for certain events described in the Indenture. The Company will
deliver cash or a check in lieu of any fractional share of Common Stock. The
ability to surrender Convertible Subordinated Notes for conversion will expire
at the close of business on September 30, 2023.

         Increases in the Principal Amount and interest will not be paid on
Convertible Subordinated Notes that are converted, except accrued interest will
be payable upon conversion of Convertible Subordinated Notes made concurrently
with or after acceleration of Convertible Subordinated Notes following an Event
of Default. Holders of Convertible Subordinated Notes at the close of business
on a Regular Record Date will receive payments of interest payable on the
corresponding Interest Payment Date notwithstanding the conversion of such notes
at any time after the close of business on such Regular Record Date. Notes
surrendered for conversion by a holder during the period from the close of
business on any Regular Record Date to the opening of business on the
corresponding Interest Payment Date must be accompanied by payment of an amount
equal to the interest that the holder is to receive on the Convertible
Subordinated Notes; provided, however, that no such payment need be made if (1)
the Company has specified a Redemption Date that is after a Regular Record Date
and on or prior to the corresponding Interest Payment Date, (2) the Company has
specified a Repurchase Date following a Fundamental Change that is during such
period, or (3) any overdue interest exists at the time of conversion with
respect to such Convertible Subordinated Notes, to the extent of such overdue
interest. The holders of the Convertible Subordinated Notes will continue to be
entitled to receive Registration Default Damages in accordance with the
Registration Rights Agreement.

         To exercise its conversion right, a holder must (1) complete and
manually sign the conversion notice (or complete and manually sign a facsimile
of such notice) and deliver such notice to the Conversion Agent, (2) surrender
the Convertible Subordinated Note to the Conversion Agent, (3) furnish
appropriate endorsements and transfer documents if required by the Conversion
Agent, the Company or the Trustee and (4) pay any transfer or similar taxes, if
required.

         A holder may convert a portion of a Convertible Subordinated Note if
the Principal Amount of such portion is $1,000 or an integral multiple of
$1,000. No payment or adjustment will be made for dividends on the Common Stock
except as provided in the Indenture. On conversion of a Convertible Subordinated
Note, increases in the Principal Amount or interest attributable to the period
from the Issue Date through the Conversion Date shall not be cancelled,

                                       6



extinguished or forfeited, but rather shall be deemed to be paid in full to the
holder thereof through the delivery of the Common Stock (together with the cash
payment, if any, in lieu of fractional shares) in exchange for the Convertible
Subordinated Note being converted pursuant to the terms hereof; and the fair
market value of such shares of Common Stock (together with any such cash payment
in lieu of fractional shares) shall be treated as issued, to the extent thereof,
first in exchange for increases in the Principal Amount or interest accrued
through the Conversion Date, and the balance, if any, of such fair market value
of such Common Stock (and any such cash payment) shall be treated as issued in
exchange for the Issue Price of the Convertible Subordinated Note being
converted pursuant to the provisions hereof.

         The Conversion Rate will be adjusted for dividends or distributions on
Common Stock payable in Common Stock or other Capital Stock of the Company;
subdivisions, combinations or certain reclassifications of Common Stock;
distributions to all holders of Common Stock of certain rights to purchase
Common Stock for a period expiring within 60 days of the record date for such
distribution at less than the current market price of the Common Stock at the
time of the announcement of the distribution; distributions to such holders of
assets or debt securities of the Company or certain rights to purchase
securities of the Company (including cash dividends or distributions); payments
in respect of a repurchase of (including a tender offer or exchange offer for)
the Company's Common Stock; payments in respect of a tender offer or exchange
offer made by a Person other than the Company or any of its subsidiaries which
increases the offeror's ownership of Common Stock to more than 35% of the Common
Stock outstanding; and any issuance by the Company of Common Stock or securities
convertible into, or exchangeable for, Common Stock at a price per share (or
having a conversion or exchange price per share) that is less than the then
current market price of the Common Stock (but excluding without limitation those
exceptions listed in Section 12.06(g). However, no adjustment need be made if
Convertible Subordinated Note holders may participate in the transaction or in
certain other cases. The Company from time to time may voluntarily increase the
Conversion Rate.

         If the Company is a party to a consolidation, merger or binding share
exchange or a transfer of all or substantially all of its assets, or upon
certain distributions described in the Indenture, the right to convert a
Convertible Subordinated Note into Common Stock may be changed into a right to
convert it into securities, cash or other assets of the Company or another
person.

         The Conversion Rate will not be adjusted for increases in the Principal
Amount or accrued interest or Registration Default Damages, if any.

10.      Conversion Arrangement on Call for Redemption.

         Any Convertible Subordinated Notes called for redemption, unless
surrendered for conversion before the close of business on the Redemption Date,
may be deemed to be purchased from the holders of such Convertible Subordinated
Notes at an amount not less than the Redemption Price, by one or more investment
bankers or other purchasers who may agree with the Company to purchase such
Convertible Subordinated Notes from the holders, to convert them into Common
Stock of the Company and to make payment for such Convertible Subordinated Notes
to the Trustee in trust for such holders.

                                       7



11.      [Reserved]

12.      Defaulted Interest.

         Except as otherwise specified with respect to the Convertible
Subordinated Notes, any defaulted interest on any Convertible Subordinated Note
shall forthwith cease to be payable to the registered holder thereof on the
relevant Regular Record Date or accrual date, as the case may be, by virtue of
having been such holder, and such defaulted interest may be paid by the Company
as provided for in Section 2.12 of the Indenture.

13.      Denominations; Transfer; Exchange.

         The Convertible Subordinated Notes are in fully registered form,
without coupons, in denominations of $1,000 of Principal Amount and integral
multiples of $1,000. A holder may transfer or exchange Convertible Subordinated
Notes in accordance with the Indenture. The Registrar may require a holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not transfer or exchange any Convertible Subordinated Notes
selected for redemption (except, in the case of a Convertible Subordinated Note
to be redeemed in part, the portion of the Convertible Subordinated Note not to
be redeemed) or any Convertible Subordinated Notes in respect of which a
Repurchase Notice or Fundamental Change notice has been given and not withdrawn
(except, in the case of a Convertible Subordinated Note to be purchased in part,
the portion of the Convertible Subordinated Note not to be purchased) or any
Convertible Subordinated Notes for a period of 15 days before the mailing of a
notice of redemption of Convertible Subordinated Notes to be redeemed.

14.      Persons Deemed Owners.

         The registered holder of this Convertible Subordinated Note may be
treated as the owner of this Convertible Subordinated Note for all purposes.

15.      Unclaimed Money or Securities.

         The Trustee and the Paying Agent shall return to the Company, upon
written request any money or securities held by them for the payment of any
amount with respect to the Convertible Subordinated Notes that remains unclaimed
for two years, subject to applicable unclaimed property laws. After return to
the Company holders entitled to the money or securities must look to the Company
for payment as general creditors unless an applicable abandoned property law
designates another person.

16.      Amendment; Waiver.

         Subject to certain exceptions, the Indenture or the Convertible
Subordinated Notes may be amended or supplemented with the consent of the
holders of at least a majority in principal amount of the then outstanding
Convertible Subordinated Notes, and any existing default may be waived with the
consent of the holders of a majority in aggregate Principal Amount of the then
outstanding Convertible Subordinated Notes.

                                       8



         Without the consent of any holder, the Indenture or the Convertible
Subordinated Notes may be amended to: (a) cure any ambiguity or correct or
supplement any defective or inconsistent provision contained in the Indenture,
or make any other changes in the provisions of the Indenture which the Company
and the Trustee may deem necessary or desirable provided such amendment does not
materially and adversely affect the legal rights under the Indenture of the
holders of Convertible Subordinated Notes; (b) provide for uncertificated
Convertible Subordinated Notes in addition to or in place of certificated
Convertible Subordinated Notes; (c) evidence the succession of another person to
the Company and providing for the assumption by such successor of the covenants
and obligations of the Company thereunder and in the Convertible Subordinated
Notes as permitted by Section 5.01 of the Indenture; (d) provide for exchange
rights of holders of Convertible Subordinated Notes in the event of
consolidation, merger, share exchange or sale of all or substantially all of the
assets of the Company as required to comply with Sections 5.01 and/or 12.14 of
the Indenture; (e) increase the Conversion Rate; (f) evidence and provide for
the acceptance of the appointment under the Indenture of a successor Trustee;
(g) make any change that would provide any additional rights or benefits to the
holders of Convertible Subordinated Notes or that does not adversely affect the
legal rights under the Indenture of any such holder; or (h) comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the TIA.

         Without the consent of each holder affected, an amendment or waiver may
not (with respect to any Convertible Subordinated Notes held by a non-consenting
holder): (a) reduce the principal amount of Convertible Subordinated Notes whose
holders must consent to an amendment, supplement or waiver; (b) reduce the
principal of or change the fixed maturity of any Convertible Subordinated Note;
(c) reduce the rate of or change the time for payment of interest on any
Convertible Subordinated Notes; (d) waive a Default or Event of Default in the
payment of principal of or premium, if any, or interest or Registration Default
Damages, if any, on the Convertible Subordinated Notes (except a rescission of
acceleration of the Convertible Subordinated Notes by the holders of at least a
majority in aggregate Principal Amount of the Convertible Subordinated Notes and
a waiver of the payment default that resulted from such acceleration); (e) make
any Convertible Subordinated Note payable in money other than as provided for in
the Indenture and in the Convertible Subordinated Notes; (f) make any change in
the provisions of the Indenture relating to waivers of past Defaults or the
rights of holders of Convertible Subordinated Notes to receive payments of
principal of or interest or Registration Default Damages, if any, on the
Convertible Subordinated Notes; (g) except as permitted by the Indenture
(including Section 9.01(a)), decrease the Conversion Rate or modify the
provisions of the Indenture relating to conversion of the Convertible
Subordinated Notes in a manner adverse to the holders thereof; (h) make any
change to the ability of holder of Convertible Subordinated Notes to enforce
their rights under the Indenture or the provisions of clauses (a) through (i) of
Section 9.02 of the Indenture; (i) reduce the Redemption Price, purchase price
or Fundamental Change purchase price of the Convertible Subordinated Notes; (j)
modify the subordination provisions of the Indenture in a manner adverse to the
holders of the Convertible Subordinated Notes; or (k) make any change that
adversely affects the right to convert the Convertible Subordinated Notes.

                                       9



17.      Defaults and Remedies.

         An Event of Default is: (a) default for 30 days or more in payment of
any installment of interest or Registration Default Damages, if any, on the
Convertible Subordinated Notes, whether or not such payment is prohibited by the
subordination provisions of the Indenture; (b) default in payment of the
principal of or premium, if any, on the Convertible Subordinated Notes, when due
and payable, whether or not such payment is prohibited by the subordination
provisions of the Indenture; (c) default in the payment of the Fundamental
Change Payment in respect of the Convertible Subordinated Notes on the date
therefor, whether or not such payment is prohibited by the subordination
provisions of the Indenture; (d) failure to provide timely notice of a
Fundamental Change; a default in the Company's obligation to redeem the
Convertible Subordinated Notes after it has exercised its redemption option,
whether or not such payment is prohibited by the subordination provisions of the
indenture; (e) a default in its obligation to satisfy its conversion obligation
upon exercise of a holder's conversion right; (f) the Company defaults (other
than a default set forth in clauses (a), (b), (c) and (d) above) in the
performance of, or breaches, any other covenant or warranty of the Company set
forth in this Indenture or the Convertible Subordinated Notes and fails to
remedy such default or breach within a period of 30 days after the receipt of
written notice from the Trustee or the holders of at least 25% in aggregate
Principal Amount of the then outstanding Convertible Subordinated Notes; (g) a
default under any credit agreement, mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any subsidiary of the Company
(or the payment of which is guaranteed by the Company or any of its
subsidiaries), whether such Indebtedness or guarantee exists on the date of this
Indenture or is created thereafter, which default (i) is caused by a Payment
Default or (ii) results in the acceleration of such Indebtedness prior to its
express maturity (without such acceleration being rescinded or annulled) and, in
each case, the principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness under which there is a Payment
Default or the maturity of which has been so accelerated, aggregates $5,000,000
or more; (h) a final, non-appealable judgment or final, non-appealable judgments
(other than any judgment as to which a reputable insurance company has accepted
full liability) for the payment of money are entered by a court or courts of
competent jurisdiction against the Company or any subsidiaries of the Company
and remain unstayed, unbonded or undischarged for a period (during which
execution shall not be effectively stayed) of 60 days, provided that the
aggregate amount of all such judgments exceeds $5,000,000; (i) the Company or
any subsidiary, pursuant to or within the meaning of any Bankruptcy Law
commences a voluntary case, consents to the entry of an order for relief against
it in an involuntary case, consents to the appointment of a Custodian of it or
for all or substantially all of its property, makes a general assignment for the
benefit of its creditors, makes the admission in writing that it generally is
unable to pay its debts as the same become due; (j) a court of competent
jurisdiction enters a judgment, order or decree under any Bankruptcy Law that is
for relief against the Company or any subsidiary in an involuntary case,
appoints a Custodian of the Company or any subsidiary, and the order or decree
remains unstayed and in effect for 90 days or orders the liquidation of the
Company or any subsidiary, and the order or decree remains unstayed and in
effect for 90 days. If an Event of Default occurs and is continuing, the Trustee
or the holders of at least 25% in aggregate Principal Amount of the then
outstanding Convertible Subordinated Notes may declare the unpaid principal of,
premium, if any, and accrued and unpaid interest and Registration Default
Damages, if any, on all Convertible Subordinated Notes then outstanding to be
due and payable

                                       10



immediately, except that in the case of an Event of Default arising from certain
events of bankruptcy, insolvency, or reorganization with respect to the Company
or any of its subsidiaries, all outstanding Convertible Subordinated Notes
become due and payable without further action or notice. Holders of Convertible
Subordinated Notes may not enforce the Indenture or the Convertible Subordinated
Notes except as provided in the Indenture. The Trustee may require an indemnity
satisfactory to it before it enforces the Indenture or the Convertible
Subordinated Notes. Subject to certain limitations, holders of a majority in
principal amount of the then outstanding Convertible Subordinated Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from holders notice of any continuing default (except a default in
payment of principal, premium, if any, or interest or Registration Default
Damages, if applicable) if it determines that withholding notice is in their
interests. The Company must furnish annual compliance certificates to the
Trustee.

18.      Registration Rights Agreement.

         The holder of this Convertible Subordinated Note is entitled to the
benefits of a Registration Rights Agreement, dated September 29, 2003, between
the Company and the Initial Purchasers (the "Registration Rights Agreement").
Pursuant to the Registration Rights Agreement the Company has agreed for the
benefit of the holders of the Convertible Subordinated Notes and the Common
Stock issued and issuable upon conversion of the Convertible Subordinated Notes,
that (i) it will, at its cost, within 90 days after the Issue Date, file a shelf
registration statement (the "Shelf Registration Statement") with the Securities
and Exchange Commission (the "Commission") with respect to resales of the
Convertible Subordinated Notes and the Common Stock issuable upon conversion
thereof, (ii) the Company will use its reasonable best efforts to cause such
Shelf Registration Statement to be declared effective by the Commission under
the Securities Act within 180 days after the Issue Date and (iii) subject to its
rights to suspend use of the shelf registration statement and prospectus under
certain circumstances described below, the Company will use its reasonable best
efforts to keep such Shelf Registration Statement continuously effective under
the Securities Act until the earliest of (a) the second anniversary of the Issue
Date or, if later, the second anniversary of the last date on which any
Convertible Subordinated Notes are issued upon exercise of the Initial
Purchasers' option to purchase additional Convertible Subordinated Notes, (b)
the date on which the Convertible Subordinated Notes or the Common Stock
issuable upon conversion thereof may be sold to persons who are not "affiliates"
(as defined in Rule 144) of the Company pursuant to paragraph (k) of Rule 144
(or any successor provision) promulgated by the Commission under the Securities
Act and (c) the date as of which all the Convertible Subordinated Notes or the
Common Stock issuable upon conversion thereof have been sold pursuant to such
Shelf Registration Statement.

         If the Shelf Registration Statement (i) is not filed with the
Commission on or prior to 90 days, or has not been declared effective by the
Commission within 180 days, after the Issue Date or (ii) is filed and declared
effective but shall thereafter cease to be effective (without being succeeded
immediately by a replacement shelf registration statement filed and declared
effective) or cease to be usable (including, without limitation, as a result of
a Suspension Period as defined below) for the offer and sale of Registrable
Securities (as defined below) for a period of time (including any Suspension
Period) which shall exceed 30 days within any three-month period or 60 days in
the aggregate in any 12-month period (each such event referred to in clauses

                                       11



(i) and (ii) being referred to herein as a "Registration Default"), the Company
will pay liquidated damages ("Registration Default Damages") to each holder of
Registrable Securities which has complied with its obligations under the
Registration Rights Agreement. The amount of Registration Default Damages
payable during any period in which a Registration Default shall have occurred
and be continuing is that amount which is equal to one-quarter of one percent
(25 basis points) per annum per $1,000 principal amount of Securities or $2.50
per annum per 112.4859 shares of Common Stock (subject to adjustment from time
to time in the event of a stock split, stock recombination, stock dividend and
the like) constituting Registrable Securities for the first 90 days during which
a Registration Default has occurred and is continuing and one-half of one
percent (50 basis points) per annum per $1,000 principal amount of Securities
and $5.00 per annum per 112.4859 shares of Common Stock (subject to adjustment
as set forth above) constituting Registrable Securities for any additional days
during which such Registration Default has occurred and is continuing. The
Company will pay all accrued Registration Default Damages by wire transfer of
immediately available funds or by federal funds check on each Damages Payment
Date (as defined in the Registration Rights Agreement), and Registration Default
Damages will be calculated on the basis of a 360-day year consisting of twelve
30-day months. Following the cure of a Registration Default, Registration
Default Damages will cease to accrue with respect to such Registration Default.

"Registrable Securities" means each Convertible Subordinated Note and the Common
Stock issuable or issued upon conversion thereof until the date on which such
Convertible Subordinated Note or Common Stock (i) has been transferred pursuant
to the shelf registration statement or another registration statement covering
such note or share of common stock which has been filed with the SEC pursuant to
the Securities Act, in either case after such registration statement has become,
and while such registration statement is, effective under the Securities Act,
(ii) has been transferred pursuant to Rule 144 under the Securities Act (or any
similar provision then in force), or (iii) may be sold or transferred by
non-affiliates of the Company's pursuant to paragraph (k) of Rule 144 under the
Securities Act (or any successor provision promulgated by the SEC)).

         Pursuant to the Registration Rights Agreement, the Company may suspend
the use of the prospectus which is a part of the Shelf Registration Statement
for a period not to exceed 30 days in any three-month period or an aggregate of
60 days in any twelve-month period under certain circumstances (each, a
"Suspension Period"); provided that the existence of a Suspension Period will
not prevent the occurrence of a Registration Default or otherwise limit the
obligation of the Company to pay Registration Default Damages.

         The above description of certain provisions of the Registration Rights
Agreement is qualified by reference to, and is subject in its entirety to, the
more complete description thereof contained in the Registration Rights
Agreement.

19.      Trustee Dealings with the Company.

         Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Convertible Subordinated Notes and may otherwise deal with and
collect obligations owed to it by the Company or its Affiliates and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee.

                                       12



20.      No Recourse Against Others.

         A director, officer, employee, agent, representative, stockholder or
equity holder, as such, of the Company shall not have any liability for any
obligations of the Company under the Convertible Subordinated Notes or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Convertible Subordinated Note,
each Convertible Subordinated Note holder shall waive and release all such
liability. The waiver and release shall be part of the consideration for the
issue of the Convertible Subordinated Notes.

21.      Authentication.

         This Convertible Subordinated Note shall not be valid until an
authorized signatory of the Trustee manually signs the Trustee's Certificate of
Authentication on the other side of this Convertible Subordinated Note.

22.      Abbreviations.

         Customary abbreviations may be used in the name of a Convertible
Subordinated Note holder or an assignee, such as TEN COM (=tenants in common),
TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with right of
survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A
(=Uniform Gift to Minors Act).

23.      GOVERNING LAW.

         THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THIS
CONVERTIBLE SUBORDINATED NOTE.

                                       13



         The Company will furnish to any Convertible Subordinated Note holder
upon written request and without charge a copy of the Indenture that has in it
the text of this Convertible Subordinated Note in larger type. Requests may be
made to:

                  CKE Restaurants, Inc.
                  6307 Carpinteria Avenue, Suite A,
                  Carpinteria, CA 93013
                  Attention: Chief Financial Officer

                                       14





            ASSIGNMENT FORM                         CONVERSION NOTICE
                                      
To assign this Convertible Subordinated  To convert this Convertible
Note, fill in the form below:            Subordinated Note into Common Stock of
                                         the Company, check the box: [ ]

I or we assign and transfer this
Convertible Subordinated Note to:

_______________________________________  To convert only part of this
                                         Convertible Subordinated Note, state
_______________________________________  the Original Principal Amount to be
                                         converted (which must be $1,000 or an
(Insert assignee's soc. sec. or tax ID   integral multiple of $1,000):
 no.)

_______________________________________  $______________________________________

_______________________________________  If you want the stock certificate made
                                         out in another person's name, fill in
_______________________________________  the form below:
(Print or type assignee's name, address  _______________________________________
and zip code)                            _______________________________________
                                         (Insert other person's soc. sec. or tax
                                         ID no.)
and irrevocably appoint

                                         _______________________________________
_____________________ agent to transfer
this Convertible Subordinated Note on    _______________________________________
the books of the Company. The agent may
substitute another to act for him.

                                         _______________________________________

                                         _______________________________________
                                         (Print or type other person's name,
                                         address and zip code)
                                         _______________________________________


_______________________________________

Date:______________________________ Your Signature: ____________________________

________________________________________________________________________________
    (Sign exactly as your name appears on the other side of this Convertible
                               Subordinated Note)

                                       15



                      OPTION OF HOLDER TO ELECT REPURCHASE

         If you wish to have this Convertible Subordinated Note repurchased by
the Company pursuant to Section 3.09 of the Indenture, check the Box: [ ]

         If you wish to have a portion of this Convertible Subordinated Note
purchased by the Company pursuant to Section 3.09 of the Indenture, state the
amount (in multiples of $1,000): $_____.

Date: _____________ Your Signature:_____________________________________________
                         (Sign exactly as your name appears on the other side of
                                   this Convertible Subordinated Note)
Medallion Signature Guarantee:__________________________________________________

                                       16

EX-4.8

                                                                     EXHIBIT 4.8

                              CKE RESTAURANTS, INC.

                   4% Convertible Subordinated Notes due 2023

                          REGISTRATION RIGHTS AGREEMENT

                                                              September 29, 2003

Citigroup Global Markets Inc.
As Representatives of the Initial Purchasers
c/o Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013

Ladies and Gentlemen:

                  CKE Restaurants, Inc., a corporation organized under the laws
of Delaware (the "Company"), proposes to issue and sell to certain purchasers
(the "Initial Purchasers"), for whom you (the "Representatives") are acting as
representatives, its 4% Convertible Subordinated Notes due 2023 (the
"Securities"), upon the terms set forth in the Purchase Agreement between the
Company and the Initial Purchasers dated September 23, 2003 (the "Purchase
Agreement") relating to the initial placement (the "Initial Placement") of the
Securities. To induce the Initial Purchasers to enter into the Purchase
Agreement and to satisfy a condition to your obligations thereunder, the Company
agrees with you for your benefit and the benefit of the holders from time to
time of the Securities and the Common Stock (as defined herein) issuable upon
conversion of the Securities (including the Initial Purchasers) (each a "Holder"
and, collectively, the "Holders"), as follows:

                  1.       Definitions. Capitalized terms used herein without
definition shall have their respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following capitalized defined terms
shall have the following meanings:

                  "Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.

                  "Affiliate" shall have the meaning specified in Rule 405 under
the Act and the terms "controlling" and "controlled" shall have meanings
correlative thereto.

                  "Broker-Dealer" shall mean any broker or dealer registered as
such under the Exchange Act.



                  "Business Day" shall mean any day other than a Saturday, a
Sunday or a legal holiday or a day on which banking institutions or trust
companies are authorized or obligated by law to close in New York City.

                  "Closing Date" shall mean the date of the first issuance of
the Securities.

                  "Commission" shall mean the Securities and Exchange
Commission.

                  "Common Stock" means the Common Stock, par value $.01 per
share, of the Company, as it exists on the date of this Agreement and any other
shares of capital stock or other securities of the Company into which such
Common Stock may be reclassified or changed, together with any and all other
securities which may from time to time be issuable upon conversion of the
Securities.

                  "Damages Payment Date" means, with respect to the Securities
or the Common Stock issuable upon conversion thereof, as applicable, each
Interest Payment Date; and in the event that any Security, or portion thereof,
is called for redemption or surrendered for purchase by the Company and not
withdrawn pursuant to a Fundamental Change Offer (as defined in the Indenture),
the relevant redemption date or Fundamental Change Payment Date (as defined in
the Indenture), as the case may be, shall also be a Damages Payment Date with
respect to such Security, or portion thereof, unless the Indenture provides that
accrued and unpaid interest on the Security (or portion thereof) to be redeemed
or repurchased, as the case may be, is to be paid to the person who was the
Record Holder thereof on a record date prior to such redemption date or
Fundamental Change Payment Date, as the case may be, in which case the relevant
Damages Payment Date shall be the date on which interest is payable to such
Record Holder.

                  "Default Rate" means the rate of interest payable with respect
to overdue amounts on the Securities pursuant to Section 4.01 of the Indenture.

                  "Deferral Period" shall have the meaning indicated in Section
3(i) hereof.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder.

                  "Final Memorandum" shall mean the offering memorandum, dated
September 29, 2003 relating to the Securities, including any and all exhibits
thereto and any information incorporated by reference therein as of such date.

                  "Holder" shall have the meaning set forth in the preamble
hereto.

                  "Indenture" shall mean the Indenture relating to the
Securities, dated as of September 29, 2003, between the Company and J.P. Morgan
Trust Company, National Association, as trustee, as the same may be amended from
time to time in accordance with the terms thereof.

                  "Initial Placement" shall have the meaning set forth in the
preamble hereto.

                  "Initial Purchasers" shall have the meaning set forth in the
preamble hereto.

                                        2


                  "Interest Payment Date" shall mean April 1 and October 1.

                  "Losses" shall have the meaning set forth in Section 5(d)
hereof.

                  "Majority Holders" shall mean, on any date, Holders of a
majority of the aggregate principal amount of Securities registered under a
Registration Statement provided that Holders of Common Stock issued upon
conversion of Securities shall be deemed to be Holders of the aggregate
principal amount of Securities from which such Common Stock was converted; and
provided, further, that Securities or Common Stock which have been sold or
otherwise transferred pursuant to the Shelf Registration Statement shall not be
included in the calculation of Majority Holders.

                  "Managing Underwriters" shall mean the investment banker or
investment bankers and manager or managers that administer an underwritten
offering, if any, conducted pursuant to Section 6 hereof.

                  "NASD Rules" shall mean the Conduct Rules and the By-Laws of
the NASD, Inc.

                  "Notice and Questionnaire" shall mean a written notice
delivered to the Company substantially in the form attached as Annex A to the
Final Memorandum.

                  "Notice Holder" shall mean, on any date, any Holder of
Registrable Securities that has delivered a Notice and Questionnaire to the
Company on or prior to such date.

                  "Prospectus" shall mean a prospectus included in the Shelf
Registration Statement (including, without limitation, a prospectus that
discloses information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A under the Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Securities or Common Stock issuable upon
conversion thereof covered by the Shelf Registration Statement, and all
amendments and supplements thereto, including any and all exhibits thereto and
any information incorporated by reference therein.

                  "Purchase Agreement" shall have the meaning set forth in the
preamble hereto.

                  "Record Holder" means (i) with respect to any Damages Payment
Date which occurs on an Interest Payment Date, each person who is registered on
the books of the registrar as the holder of Securities at the close of business
on the record date with respect to such Interest Payment Date and (ii) with
respect to any Damages Payment Date relating to the Common Stock issued upon
conversion thereof, each person who is a holder of record of such Common Stock
fifteen days prior to the Damages Payment Date.

                  "Registrable Securities" shall mean Securities and the Common
Stock issuable or issued upon conversion thereof other than those that (i) have
been transferred pursuant to the Shelf Registration Statement or another
registration statement covering such Securities or shares of Common Stock, which
has been filed with the Commission pursuant to the Act, in either case after
such Shelf Registration Statement has become, and while such Shelf Registration
Statement is, effective under the Act or (ii) have been distributed to the
public pursuant to Rule 144 under

                                        3


the Act (or any similar provision then in force) or (iii) may be sold or
transferred by non-Affiliates of the Company pursuant to paragraph (k) of Rule
144 under the Act (or any similar provision then in force).

                  "Registration Default Damages" shall have the meaning set
forth in Section 7 hereof.

                  "Securities" shall have the meaning set forth in the preamble
hereto.

                  "Shelf Registration Period" shall have the meaning set forth
in Section 2(c) hereof.

                  "Shelf Registration Statement" shall mean a "shelf"
registration statement of the Company pursuant to the provisions of Section 2
hereof which covers some or all of the Securities and the Common Stock issuable
upon conversion thereof, as applicable, on an appropriate form under Rule 415
under the Act, or any similar rule that may be adopted by the Commission,
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.

                  "Trustee" shall mean the trustee with respect to the
Securities under the Indenture.

                  "Trust Indenture Act" shall mean the Trust Indenture Act of
1939, as amended, and the rules and regulations of the Commission promulgated
thereunder.

                  "underwriter" shall mean any underwriter of Securities or
Common Stock issuable or issued upon conversion thereof in connection with an
offering thereof under the Shelf Registration Statement.

                  2.       Shelf Registration. (a) The Company shall as promptly
as practicable (but in no event more than 90 days after the Closing Date) file
with the Commission a Shelf Registration Statement providing for the
registration of, and the sale on a continuous or delayed basis by the Holders
of, all of the Registrable Securities, from time to time in accordance with the
methods of distribution elected by such Holders, pursuant to Rule 415 under the
Act or any similar rule that may be adopted by the Commission.

                  (b) The Company shall use its reasonable best efforts to cause
the Shelf Registration Statement to become or be declared effective under the
Act no later than 180 days after the Closing Date.

                  (c) The Company shall use its reasonable best efforts to keep
the Shelf Registration Statement continuously effective, supplemented and
amended as required by the Act, in order to permit the Prospectus forming part
thereof to be usable by Holders for a period (the "Shelf Registration Period")
from the date the Shelf Registration Statement is declared effective by the
Commission until the earlier of (i) the second anniversary of the Closing Date
or if later, the second anniversary of the last date on which any Securities are
issued upon exercise of the Initial Purchasers' option to purchase additional
Securities; (ii) the date on which Registrable Securities may be sold by
non-Affiliates of the Company pursuant to paragraph (k)

                                        4


of Rule 144 (or any successor provision) promulgated by the Commission under the
Act; or (iii) the date as of which all of the Registrable Securities have been
sold pursuant to the Shelf Registration Statement. The Company shall be deemed
not to have used its reasonable best efforts to keep the Shelf Registration
Statement effective during the Shelf Registration Period if it voluntarily takes
any action that would result in Holders of Registrable Securities not being able
to offer and sell such Registrable Securities at any time during the Shelf
Registration Period, unless such action is (x) required by applicable law or
otherwise undertaken by the Company in good faith and for valid business reasons
(not including avoidance of the Company's obligations hereunder), including the
acquisition or divestiture of assets, and (y) permitted by Section 3(i) hereof.

                  (d) The Company shall cause the Shelf Registration Statement
and the related Prospectus and any amendment or supplement thereto, as of the
effective date of the Shelf Registration Statement or such amendment or
supplement, (i) to comply in all material respects with the applicable
requirements of the Act; and (ii) not to contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein (in the case of the
Prospectus, in the light of the circumstances under which they were made) not
misleading.

                  (e) (i) Not less than 30 calendar days prior to the
                  effectiveness of the Shelf Registration Statement, the Company
                  shall mail the Notice and Questionnaire to the Holders of
                  Registrable Securities. The Company shall take action to name
                  each Holder that is a Notice Holder as of the date that is
                  five Business Days prior to the effectiveness of the Shelf
                  Registration Statement as a selling securityholder in the
                  Shelf Registration Statement at the time of its effectiveness
                  so that such Holder is permitted to deliver the Prospectus
                  forming a part thereof as of such time to purchasers of such
                  Holder's Registrable Securities in accordance with applicable
                  law.

                           (i)      After the Shelf Registration Statement has
                  become effective, the Company shall, upon the request of any
                  Holder of Registrable Securities, promptly send a Notice and
                  Questionnaire to such Holder. Each Holder of Registrable
                  Securities agrees to deliver a Notice and Questionnaire to the
                  Company at least five Business Days prior to any distribution
                  by it of Registrable Securities under the Shelf Registration
                  Statement. From and after the date the Shelf Registration
                  Statement is declared effective, the Company shall, as
                  promptly as is practicable after the date a Notice and
                  Questionnaire is delivered, and in any event within five
                  Business Days after such date, (i) if required by applicable
                  law, file with the Commission a post-effective amendment to
                  the Shelf Registration Statement or prepare and, if required
                  by applicable law, file a supplement to the related Prospectus
                  or an amendment or supplement to any document incorporated
                  therein by reference or file any other required document so
                  that the Holder delivering such Notice and Questionnaire is
                  named as a selling holder in the Shelf Registration Statement
                  and the related Prospectus and so that such Holder is
                  permitted to deliver such Prospectus to purchasers of the
                  Registrable Securities in accordance with applicable law and,
                  if the Company shall file a post-effective amendment to the
                  Shelf Registration Statement, use

                                        5


                  reasonable best efforts to cause such post-effective amendment
                  to be declared effective under the Act as promptly as is
                  practicable; (ii) provide such Holder copies of any documents
                  filed pursuant to clause (i) above; and (iii) notify such
                  Holder as promptly as practicable after the effectiveness
                  under the Act of any post-effective amendment filed pursuant
                  to clause (i) above; provided, that if such Notice and
                  Questionnaire is delivered during a Deferral Period, the
                  Company shall so inform the Holder delivering such Notice and
                  Questionnaire and shall take the actions set forth in clauses
                  (i), (ii) and (iii) above upon expiration of the Deferral
                  Period in accordance with Section 3(i) hereof. Notwithstanding
                  anything contained herein to the contrary, the Company shall
                  be under no obligation to name any Holder that is not a Notice
                  Holder as a selling holder in the Shelf Registration Statement
                  or related Prospectus; provided, however, that any Holder that
                  becomes a Notice Holder pursuant to the provisions of this
                  Section 2(e) (whether or not such Holder was a Notice Holder
                  at the time the Shelf Registration Statement was declared
                  effective) shall be named as a selling holder in the Shelf
                  Registration Statement or related Prospectus in accordance
                  with the requirements of this Section 2(e).

                  3.       Registration Procedures. The following provisions
shall apply in connection with the Shelf Registration Statement.

                  (a) The Company shall:

                           (i)      furnish to each of the Representatives and
                  to counsel for the Notice Holders, not less than five Business
                  Days prior to the filing thereof with the Commission, a copy
                  of the Shelf Registration Statement and each amendment thereof
                  and each amendment or supplement, if any, to the Prospectus
                  included therein (including all documents incorporated by
                  reference therein after the initial filing) and shall use its
                  best efforts to reflect in each such document, when so filed
                  with the Commission, such comments as the Representatives
                  reasonably propose; and

                           (ii)     include information regarding the Notice
                  Holders and the methods of distribution they have elected for
                  their Registrable Securities provided to the Company in
                  Notices and Questionnaires as necessary to permit such
                  distribution by the methods specified therein.

                  (b) The Company shall ensure that:

                           (i)      the Shelf Registration Statement and any
                  amendment thereto and any Prospectus forming part thereof and
                  any amendment or supplement thereto comply in all material
                  respects with the Act; and

                           (ii)     the Shelf Registration Statement and any
                  amendment thereto does not, when it becomes effective, contain
                  an untrue statement of a material fact or omit to state a
                  material fact required to be stated therein or necessary to
                  make the statements therein not misleading.

                                       6


                  (c) The Company shall advise the Representatives, the Notice
Holders and any underwriter that has provided in writing to the Company a
telephone or facsimile number and address for notices, and confirm such advice
by notice in writing (which notice pursuant to clauses (ii)-(v) hereof shall be
accompanied by an instruction to suspend the use of the Prospectus until the
Company shall have remedied the basis for such suspension):

                           (i)      when the Shelf Registration Statement and
                  any amendment thereto has been filed with the Commission and
                  when the Shelf Registration Statement or any post-effective
                  amendment thereto has become effective;

                           (ii)     of any request by the Commission for any
                  amendment or supplement to the Shelf Registration Statement or
                  the Prospectus or for additional information;

                           (iii)    of the issuance by the Commission of any
                  stop order suspending the effectiveness of the Shelf
                  Registration Statement or the institution or threatening of
                  any proceeding for that purpose;

                           (iv)     of the receipt by the Company of any
                  notification with respect to the suspension of the
                  qualification of the Registrable Securities included therein
                  for sale in any jurisdiction or the institution or threatening
                  of any proceeding for such purpose; and

                           (v)      of the determination by the Company that a
                  post-effective amendment to the Shelf Registration Statement
                  would be appropriate or of the happening of any event that
                  requires any change in the Shelf Registration Statement or the
                  Prospectus, in each case so that, as of such date, they (A) do
                  not contain any untrue statement of a material fact and (B) do
                  not omit to state a material fact required to be stated
                  therein or necessary to make the statements therein (in the
                  case of the Prospectus, in the light of the circumstances
                  under which they were made) not misleading.

                  (d) The Company shall use its best efforts to prevent the
issuance of any order suspending the effectiveness of the Shelf Registration
Statement or the qualification of the securities therein for sale in any
jurisdiction and, if issued, to obtain as soon as possible the withdrawal
thereof.

                  (e) Upon written request by a Notice Holder, the Company shall
furnish to each Notice Holder, without charge, at least one copy of the Shelf
Registration Statement and any post-effective amendment thereto, including all
material incorporated therein by reference, and, if a Notice Holder so requests
in writing, all exhibits thereto (including exhibits incorporated by reference
therein).

                  (f) During the Shelf Registration Period, the Company shall
promptly deliver to each Initial Purchaser, each Notice Holder, and any sales or
placement agents or underwriters acting on their behalf, without charge, as many
copies of the Prospectus (including the preliminary Prospectus) included in the
Shelf Registration Statement and any amendment or supplement thereto as any such
person may reasonably request. The Company consents to the

                                       7


use of the Prospectus or any amendment or supplement thereto by each of the
foregoing in connection with the offering and sale of Registrable Securities.

                  (g) Prior to any offering of Registrable Securities pursuant
to the Shelf Registration Statement, the Company shall arrange for the
qualification of such Registrable Securities for sale under the laws of such
jurisdictions as any Notice Holder shall reasonably request and shall maintain
such qualification in effect so long as required; provided that in no event
shall the Company be obligated to qualify to do business in any jurisdiction
where it is not then so qualified or to take any action that would subject it to
service of process in suits, other than those arising out of the Initial
Placement or any offering pursuant to the Shelf Registration Statement, in any
jurisdiction where it is not then so subject.

                  (h) Upon the occurrence of any event contemplated by
subsections (c)(ii) through (v) above, the Company shall promptly (or within the
time period provided for by Section 3(i) hereof, if applicable) prepare a
post-effective amendment to the Shelf Registration Statement or an amendment or
supplement to the related Prospectus or file any other required document so
that, as thereafter delivered to Initial Purchasers of the securities included
therein, the Prospectus will not include an untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.

                  (i) Upon the occurrence or existence of any pending corporate
development or any other material event that, in the reasonable judgment of the
Company, makes it appropriate to suspend the availability of the Shelf
Registration Statement and the related Prospectus, the Company shall give notice
(without notice of the nature or details of such events) to the Notice Holders
that the availability of the Shelf Registration is suspended and, upon actual
receipt of any such notice, each Notice Holder agrees not to sell any
Registrable Securities pursuant to the Shelf Registration until such Notice
Holder's receipt of copies of the supplemented or amended Prospectus provided
for in Section 3(i) hereof, or until it is advised in writing by the Company
that the Prospectus may be used, and has received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference
in such Prospectus. The period during which the availability of the Shelf
Registration and any Prospectus is suspended (the "Deferral Period") shall not
exceed 30 days in any three-month period or 60 days in any twelve-month period.

                  (j) Not later than the effective date of the Shelf
Registration Statement, the Company shall provide CUSIP numbers for the
Registrable Securities registered under the Shelf Registration Statement and
provide the Trustee with printed certificates for the Securities, free of any
restrictive legends, in a form eligible for deposit with The Depository Trust
Company.

                  (k) The Company shall comply with all applicable rules and
regulations of the Commission and shall make generally available to its security
holders an earnings statement satisfying the provisions of Section 11(a) of the
Act as soon as practicable after the effective date of the Shelf Registration
Statement and in any event no later than 45 days after the end of a 12-month
period (or 90 days, if such period is a fiscal year) beginning with the first
month of the Company's first fiscal quarter commencing after the effective date
of the Shelf Registration Statement.

                                       8


                  (l) The Company shall cause the Indenture to be qualified
under the Trust Indenture Act in a timely manner and cause all Common Stock
issued or issuable upon conversion of the Securities to be listed on each
securities exchange or quotation system on which the Common Stock is then listed
no later than the date the applicable Shelf Registration Statement is declared
effective and, in connection therewith, to make such filings as may be required
under the Exchange Act and to have such filings declared effective as and when
required thereunder.

                  (m) The Company may require each Holder of Registrable
Securities to furnish to the Company such information regarding the Holder and
the distribution of such Registrable Securities as the Company may from time to
time reasonably require for inclusion in the Shelf Registration Statement. The
Company may exclude from the Shelf Registration Statement the Registrable
Securities of any Holder that fails to furnish such information within a
reasonable time after receiving such request.

                  (n) The Company shall enter into customary agreements
(including, if requested, an underwriting agreement in customary form) and take
all other appropriate actions in order to expedite or facilitate the
registration or the disposition of the Registrable Securities, and in connection
therewith, if an underwriting agreement is entered into, cause the same to
contain indemnification provisions and procedures no less favorable than those
set forth in Section 5 hereof. The plan of distribution in the Shelf
Registration Statement and the Prospectus included therein shall permit resales
of Registrable Securities to be made by selling securityholders through
underwriters, brokers and dealers, and shall also include such other information
as the Representative may reasonably request.

                  (o) The Company shall:

                           (i)      make reasonably available for inspection by
                  a representative of Holders of Registrable Securities, any
                  underwriter participating in any disposition pursuant to the
                  Shelf Registration Statement, and any attorney, accountant or
                  other agent retained by such representatives of Holders or any
                  such underwriter all relevant financial and other records and
                  pertinent corporate documents of the Company and its
                  subsidiaries;

                           (ii)     cause the Company's officers, directors,
                  employees, accountants and auditors to supply all relevant
                  information reasonably requested by the representative of the
                  Holders or any such underwriter, attorney, accountant or agent
                  in connection with any the Shelf Registration Statement as is
                  customary for similar due diligence examinations;

                           (iii)    make such representations and warranties to
                  the Holders of Registrable Securities and the underwriters, if
                  any, in form, substance and scope as are customarily made by
                  issuers to underwriters in primary underwritten offerings and
                  covering matters including, but not limited to, those set
                  forth in the Purchase Agreement;

                                       9


                           (iv)     obtain opinions of counsel to the Company
                  and updates thereof (which counsel and opinions (in form,
                  scope and substance) shall be reasonably satisfactory to the
                  Managing Underwriters, if any) addressed to each selling
                  Holder and the underwriters, if any, covering such matters as
                  are customarily covered in opinions requested in underwritten
                  offerings and such other matters as may be reasonably
                  requested by such Holders and underwriters;

                           (v)      obtain "comfort" letters and updates thereof
                  from the independent certified public accountants of the
                  Company (and, if necessary, any other independent certified
                  public accountants of any subsidiary of the Company or of any
                  business acquired by the Company for which financial
                  statements and financial data are, or are required to be,
                  included in the Shelf Registration Statement), addressed to
                  each selling Holder and the underwriters, if any, in customary
                  form and covering matters of the type customarily covered in
                  "comfort" letters in connection with primary underwritten
                  offerings; and

                           (vi)     deliver such documents and certificates as
                  may be reasonably requested by the Majority Holders or the
                  Managing Underwriters, if any, including those to evidence
                  compliance with Section 3(i) hereof and with any customary
                  conditions contained in the underwriting agreement or other
                  agreement entered into by the Company.

The actions set forth in clauses (iii), (iv), (v) and (vi) of this paragraph (o)
shall be performed at (A) the effectiveness of the Shelf Registration Statement
and each post-effective amendment thereto; and (B) each closing under any
underwriting or similar agreement as and to the extent required thereunder.

                  (p) The Company shall use its best efforts, if the Securities
have been rated prior to the initial sale of such Securities, to confirm such
ratings will apply to the Securities covered by the Shelf Registration
Statement.

                  (q) In the event that any Broker-Dealer shall underwrite any
Registrable Securities or participate as a member of an underwriting syndicate
or selling group or "assist in the distribution" (within the meaning of the NASD
Rules) thereof, whether as a Holder of such Registrable Securities or as an
underwriter, a placement or sales agent or a broker or dealer in respect
thereof, or otherwise, the Company shall assist such Broker-Dealer in complying
with the NASD Rules.

                  (r) The Company shall use its reasonable best efforts to take
all other steps necessary to effect the registration of the Registrable
Securities.

                  4.       Registration Expenses. The Company shall bear all
expenses incurred in connection with the performance of its obligations under
Sections 2 and 3 hereof and shall reimburse the Holders for the reasonable fees
and disbursements of one firm or counsel (which shall initially be Cleary,
Gottlieb, Steen & Hamilton but which may be another nationally recognized law
firm experienced in securities matters designated by the Majority Holders to act
as counsel for the Holders in connection therewith).

                                       10


                  5.       Indemnification and Contribution. (a) The Company
agrees to indemnify and hold harmless each Holder of Registrable Securities
covered by the Shelf Registration Statement, each Initial Purchaser, the
directors, officers, employees, Affiliates and agents of each such Holder or
Initial Purchaser and each person who controls any such Holder or Initial
Purchaser within the meaning of either the Act or the Exchange Act against any
and all losses, claims, damages or liabilities, joint or several, to which they
or any of them may become subject under the Act, the Exchange Act or other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Shelf Registration Statement as
originally filed or in any amendment thereof, or in any preliminary Prospectus
or the Prospectus, or in any amendment thereof or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein (in the case of any preliminary Prospectus or the Prospectus, in the
light of the circumstances under which they were made) not misleading, and
agrees to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of the party claiming indemnification specifically
for inclusion therein. This indemnity agreement shall be in addition to any
liability that the Company may otherwise have.

                  The Company also agrees to indemnify as provided in this
Section 5(a) or contribute as provided in Section 5(d) hereof to Losses of each
underwriter, if any, of Registrable Securities registered under the Shelf
Registration Statement, its directors, officers, employees, Affiliates or agents
and each person who controls such underwriter on substantially the same basis as
that of the indemnification of the Initial Purchasers and the selling Holders
provided in this paragraph (a) and shall, if requested by any Holder, enter into
an underwriting agreement reflecting such agreement, as provided in Section 3(n)
hereof.

                  (b) Each Holder of Registrable Securities covered by the Shelf
Registration Statement (including each Initial Purchaser that is a Holder, in
such capacity) severally and not jointly agrees to indemnify and hold harmless
the Company, each of its directors, each of its officers who signs the Shelf
Registration Statement and each person who controls the Company within the
meaning of either the Act or the Exchange Act, to the same extent as the
foregoing indemnity from the Company to each such Holder, but only with
reference to written information relating to such Holder furnished to the
Company by or on behalf of such Holder specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement shall
be acknowledged by each Notice Holder that is not an Initial Purchaser in such
Notice Holder's Notice and Questionnaire and shall be in addition to any
liability that any such Notice Holder may otherwise have.

                  (c) Promptly after receipt by an indemnified party under this
Section 5 or notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 5, notify the indemnifying party in

                                       11


writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under paragraph (a) or
(b) above unless and to the extent it did not otherwise learn of such action and
such failure results in the forfeiture by the indemnifying party of substantial
rights and defenses; and (ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel (including local
counsel) of the indemnifying party's choice at the indemnifying party's expense
to represent the indemnified party in any action for which indemnification is
sought (in which case the indemnifying party shall not thereafter be responsible
for the fees and expenses of any separate counsel, other than local counsel if
not appointed by the indemnifying party, retained by the indemnified party or
parties except as set forth below); provided, however, that such counsel shall
be satisfactory to the indemnified party. Notwithstanding the indemnifying
party's election to appoint counsel (including local counsel) to represent the
indemnified party in an action, the indemnified party shall have the right to
employ separate counsel (including local counsel), and the indemnifying party
shall bear the reasonable fees, costs and expenses of such separate counsel if
(i) the use of counsel chosen by the indemnifying party to represent the
indemnified party would present such counsel with a conflict of interest; (ii)
the actual or potential defendants in, or targets of, any such action include
both the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties that are different from or additional to those
available to the indemnifying party; (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action; or (iv) the indemnifying party shall authorize the indemnified
party to employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.

                  (d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 5 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, then each applicable indemnifying party shall
have a joint and several obligation to contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending loss, claim, liability,
damage or action) (collectively "Losses") to which such indemnified party may be
subject in such proportion as is appropriate to reflect the relative benefits
received by such indemnifying party, on the one hand, and such indemnified
party, on the other hand, from the Initial Placement and the Shelf Registration
Statement which resulted in such Losses; provided, however, that in no case
shall any Initial Purchaser be responsible, in the aggregate, for any amount in
excess of the purchase discount or commission applicable to such Security, as
set forth in the Final Memorandum, nor shall any underwriter be responsible for
any amount in excess of the underwriting discount or commission applicable to
the securities purchased by such underwriter under the Shelf Registration
Statement which resulted in such Losses. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the indemnifying
party and the indemnified party shall contribute in such proportion as is
appropriate to reflect not only such

                                       12


relative benefits but also the relative fault of such indemnifying party, on the
one hand, and such indemnified party, on the other hand, in connection with the
statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Company shall be
deemed to be equal to the total net proceeds from the Initial Placement (before
deducting expenses) as set forth in the Final Memorandum. Benefits received by
the Initial Purchasers shall be deemed to be equal to the total purchase
discounts and commissions as set forth on the cover page of the Final
Memorandum, and benefits received by any other Holders shall be deemed to be
equal to the value of receiving Registrable Securities registered under the Act.
Benefits received by any underwriter shall be deemed to be equal to the total
underwriting discounts and commissions, as set forth on the cover page of the
Prospectus forming a part of the Shelf Registration Statement which resulted in
such Losses. Relative fault shall be determined by reference to, among other
things, whether any untrue or any alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
provided by the indemnifying party, on the one hand, or by the indemnified
party, on the other hand, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The parties agree that it would not be just and
equitable if contribution were determined by pro rata allocation (even if the
Holders were treated as one entity for such purpose) or any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph (d), no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 5, each person who
controls a Holder or underwriter within the meaning of either the Act or the
Exchange Act and each director, officer, employee and agent of such Holder or
underwriter shall have the same rights to contribution as such Holder, and each
person who controls the Company within the meaning of either the Act or the
Exchange Act, each officer of the Company who shall have signed the Shelf
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to the applicable
terms and conditions of this paragraph (d).

                  (e) The provisions of this Section 5 shall remain in full
force and effect, regardless of any investigation made by or on behalf of any
Holder or the Company or any of the indemnified persons referred to in this
Section 5, and shall survive the sale by a Holder of Registrable Securities
covered by the Shelf Registration Statement.

                  6.       Underwritten Registrations. (a) If any of the
Registrable Securities are to be sold in an underwritten offering, the Managing
Underwriters shall be selected by the Majority Holders participating in such
underwritten offering.

                  (b) No person may participate in any underwritten offering
pursuant to the Shelf Registration Statement unless such person (i) agrees to
sell such person's Registrable Securities on the basis reasonably provided in
any underwriting arrangements approved by the persons entitled hereunder to
approve such arrangements; and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements.

                                       13


                  7.       Registration Defaults. If any of the following events
shall occur, then the Company shall pay liquidated damages (the "Registration
Default Damages") to the Holders of Registrable Securities in respect of the
Registrable Securities as follows (it being understood that Registration Default
Damages may not accrue under more than one of the following clauses (a), (b),
(c), or (d) at any one time:

                  (a) if the Shelf Registration Statement is not filed with the
Commission on or prior to the 90th day following the Closing Date, then
commencing on the 91st day after the Closing Date, Registration Default Damages
shall accrue on the Registrable Securities at a rate of .25% per annum per
$1,000 principal amount of Securities and $2.50 per annum per 112.4859 shares of
Common Stock (subject to adjustments to the conversation rate as described in
the Final Memorandum) constituting Registrable Securities for the first 90 days
from and including such 91st day and .50% per annum thereafter; or

                  (b) if the Shelf Registration Statement is not declared
effective by the Commission on or prior to the 180th day following the Closing
Date, then commencing on the 181st day after the Closing Date, Registration
Default Damages shall accrue on the Registrable Securities at a rate of .25% per
annum per $1,000 principal amount of Securities and $2.50 per annum per 112.4859
shares of Common Stock (subject to adjustments to the conversation rate as
described in the Final Memorandum) constituting Registrable Securities for the
first 90 days from and including such 181st day and .50% per annum thereafter;
or

                  (c) if the Shelf Registration Statement has been declared
effective but ceases to be effective (other than pursuant to Section 3(i)
hereof) at any time during the Shelf Registration Period, then commencing on the
day the Shelf Registration Statement ceases to be effective, Registration
Default Damages shall accrue on the Registrable Securities at a rate of .25% per
annum per $1,000 principal amount of Securities and $2.50 per annum per 112.4859
shares of Common Stock (subject to adjustments to the conversation rate as
described in the Final Memorandum) constituting Registrable Securities for the
first 90 days from and including such date on which the Shelf Registration
Statement ceases to be effective and .50% per annum thereafter; or

                  (d) if the aggregate duration of Deferral Periods in any
period exceeds the number of days permitted in respect of such period pursuant
to Section 3(i) hereof, then commencing on the day the aggregate duration of
Deferral Periods in any period exceeds the number of days permitted in respect
of such period, Registration Default Damages shall accrue on the Registrable
Securities at a rate of .25% per annum per $1,000 principal amount of Securities
and $2.50 per annum per 112.4859 shares of Common Stock (subject to adjustments
to the conversation rate as described in the Final Memorandum) constituting
Registrable Securities for the first 90 days from and including such date and
..50% per annum thereafter;

provided, however, that (1) upon the filing of the Shelf Registration Statement
(in the case of paragraph (a) above), (2) upon the effectiveness of the Shelf
Registration Statement (in the case of paragraph (b) above), (3) upon the
effectiveness of the Shelf Registration Statement which had ceased to remain
effective (in the case of paragraph (c) above), or (4) upon the termination of
the Deferral Period that caused the limit on the aggregate duration of Deferral
Periods in a period set forth in Section 3(i) to be exceeded (in the case of
paragraph (d) above), Registration

                                       14


Default Damages shall cease to accrue. All Registration Default Damages shall be
paid by wire transfer of immediately available funds or by federal funds check
by the Company on each Damage Payment Date and Registration Default Damages will
be calculated on the basis of a 360-day year consisting of twelve 30-day months.
In the event that any Registration Default Damages are not paid when due, then
to the extent permitted by law, such overdue Registration Default Damages, if
any, shall bear interest until paid at the Default Rate, compounded
semi-annually. The parties hereto agree that the Registration Default Damages
provided for in this Section 7(d) constitute a reasonable estimate of the
damages that may be incurred by Holders by reason of a Registration Default.

                  (e) All of the Company's obligations (including, without
limitation, the obligation to pay Registration Default Damages) set forth in the
preceding paragraphs which are outstanding or exist with respect to any
Registrable Security at the time such security ceases to be a Registrable
Security shall survive until such time as all such obligations with respect to
such security shall have been satisfied in full.

                  (f) Within two business days following the occurrence or the
termination of a Registration Default, the Company shall give the Trustee, in
the case of notice with respect to the Securities, and the transfer and paying
agent for the Common Stock, in the case of notice with respect to Common Stock
issued or issuable upon conversion thereof, notice of such commencement or
termination, of the obligation to pay Registration Default Damages with regard
to the Securities and Common Stock and the amount thereof and of the event
giving rise to such commencement or termination (such notice to be contained in
an Officers' Certificate (as such term is defined in the Indenture)), and prior
to receipt of such Officers' Certificate the Trustee and such transfer and
paying agent shall be entitled to assume that no such commencement or
termination has occurred, as the case may be.

                  8.       No Inconsistent Agreements. The Company has not
entered into, and agrees not to enter into, any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders herein or
that otherwise conflicts with the provisions hereof.

                  9.       Amendments and Waivers. The provisions of this
Agreement may not be amended, qualified, modified or supplemented, and waivers
or consents to departures from the provisions hereof may not be given, unless
the Company has obtained the written consent of the Majority Holders; provided
that, with respect to any matter that directly or indirectly affects the rights
of any Initial Purchaser hereunder, the Company shall obtain the written consent
of each such Initial Purchaser against which such amendment, qualification,
supplement, waiver or consent is to be effective; provided, further, that no
amendment, qualification, supplement, waiver or consent with respect to Section
7 hereof shall be effective as against any Holder of Registrable Securities
unless consented to in writing by such Holder; and provided, further, that the
provisions of this Article 9 may not be amended, qualified, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
Initial Purchasers and each Holder.

                  10.      Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
first-class mail, telex, telecopier or air courier guaranteeing overnight
delivery:

                                       15


                  (a) if to a Holder, at the most current address given by such
holder to the Company in accordance with the provisions of the Notice and
Questionnaire, which address initially is, with respect to each Holder, the
address of such Holder maintained by the Registrar under the Indenture;

                  (b) if to the Initial Purchasers or the Representatives,
initially at the address or addresses set forth in the Purchase Agreement; and

                  (c) if to the Company, initially at its address set forth in
the Purchase Agreement.

                  All such notices and communications shall be deemed to have
been duly given when received.

                  The Initial Purchasers or the Company by notice to the other
parties may designate additional or different addresses for subsequent notices
or communications.

                  11.      Remedies. Each Holder, in addition to being entitled
to exercise all rights provided to it herein, in the Indenture or in the
Purchase Agreement or granted by law, including recovery of liquidated or other
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive in any action for specific
performance the defense that a remedy at law would be adequate.

                  12.      Successors. This Agreement shall inure to the benefit
of and be binding upon the parties hereto, their respective successors and
assigns, including, without the need for an express assignment or any consent by
the Company thereto, subsequent Holders, and the indemnified persons referred to
in Section 5 hereof. The Company hereby agrees to extend the benefits of this
Agreement to any Holder and underwriters, and any such Holder or underwriter may
specifically enforce the provisions of this Agreement as if an original party
hereto.

                  13.      Counterparts. This Agreement may be signed in one or
more counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.

                  14.      Headings. The section headings used herein are for
convenience only and shall not affect the construction hereof.

                  15.      Applicable Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed in the State of New York. The parties hereto
each hereby waive any right to trial by jury in any action, proceeding or
counterclaim arising out of or relating to this Agreement.

                  16.      Severability. In the event that any one of more of
the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for any
reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions hereof shall not be in any way
impaired or affected

                                       16


thereby, it being intended that all of the rights and privileges of the parties
shall be enforceable to the fullest extent permitted by law.

                  17.      Securities Held by the Company, etc. Whenever the
consent or approval of Holders of a specified percentage of principal amount of
Securities or the Common Stock issuable upon conversion thereof is required
hereunder, Securities or the Common Stock issued upon conversion thereof held by
the Company or its Affiliates (other than subsequent Holders of Securities or
the Common Stock issued upon conversion thereof if such subsequent Holders are
deemed to be Affiliates solely by reason of their holdings of such Securities or
Common Stock) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.

                                       17

                  If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
between the Company and the several Initial Purchasers.

                                                      Very truly yours,

                                                      CKE RESTAURANTS, INC.

                                                      By: ______________________
                                                      Name:
                                                      Title:

The foregoing Agreement is hereby confirmed and
accepted as of the date first above written.

Citigroup Global Markets Inc.

By ____________________
   Name:
   Title:

For itself and the other several Initial
Purchasers named in Schedule I to the
Purchase Agreement.

EX-10.50

                                                                   EXHIBIT 10.50

                             DIRECTOR FEE AGREEMENT

         THIS DIRECTOR FEE AGREEMENT (the "Agreement") is effective as of April
1, 2003 (the "Effective Date"), by and between CKE RESTAURANTS, INC., a Delaware
corporation (the "Company"), and WILLIAM P. FOLEY, II (the "Director"). In
consideration of the mutual covenants and agreements set forth herein, the
parties agree as follows.

                                    Recitals

         WHEREAS, the Director is the Chairman of the Board of Directors of the
Company;

         WHEREAS, the Company and the Director are parties to that certain
Employment Agreement, dated as of April 9, 1999;

         WHEREAS, during the tenure of the Employment Agreement, the Director
has devoted a significant amount of his time to the strategic, financial and
operational affairs of the Company;

         WHEREAS, the Director now desires to devote more of his attention to
other business ventures, and correspondingly less of his time to the strategic,
financial and operational affairs of the Company; and

         WHEREAS, in recognition of the change in the relationship of the
Company and the Director, the Company and the Director desire to terminate the
Employment Agreement and enter into this Agreement;

         NOW, THEREFORE, the Company and the Director hereby agree as follows.

                                    Agreement

         1.       Termination of Employment Agreement. As of the Effective Date,
the Employment Agreement is hereby terminated and of no further force and
effect; provided, however, that the Company and the Director shall each continue
to be bound by the terms of the Employment Agreement with respect to any
obligations incurred by either of them prior to the Effective Date, and Director
shall continue to be bound by Section 10 regarding "Confidential Information"..

         2.       Duties of the Director. The Company agrees to continue to
retain the Director as its Chairman of the Board, and the Director accepts such
service. As Chairman of the Board, Director shall perform such reasonable
responsibilities and duties, commensurate with such position, as directed by the
Company's Board of Directors or as set forth in the Articles of Incorporation
and the Bylaws of the Company.

         3.       Term. The term of this Agreement shall commence on the
Effective Date and shall continue until terminated by the Director, on the one
hand, or the Board of Directors of the Company, on the other hand (the "Term").

         4.       Director Fees. During the Term, the Company shall pay the
Director an amount, before deducting all applicable withholdings, of $150,000
per year, payable quarterly. The amount of such compensation may be periodically
reviewed and increased at the discretion of the Compensation Committee of the
Board of Directors.



         5.       Other Compensation and Fringe Benefits. In addition to any
pension, deferred compensation and stock option plans which the Company may from
time to time make available to the Director upon mutual agreement, the Director
shall be entitled to the following:

                  (a)      the standard Company benefits enjoyed by the
Company's top executives;

                  (b)      payment by the Company of the Director's initiation
and membership dues in a social and/or recreational club as deemed necessary and
appropriate by the Director (and pre-approved by the Company at the Company's
discretion) to maintain various business relationships on behalf of the Company;
provided, however, that the Company shall not be obligated to pay for any of the
Director's personal purchases and expenses at such club;

                  (c)      provision by the Company during the Term and any
extensions thereof to the Director and his dependents of the medical and other
insurance coverage provided by the Company to its top executives; and

                  (d)      provision by the Company of supplemental disability
insurance sufficient to provide two-thirds of the Director's pre-disability
annual compensation for a two year period.

The Company shall deduct from all compensation payable under this Agreement to
the Director any taxes or withholdings the Company is required to deduct
pursuant to state and federal laws or by mutual agreement between the parties.

         6.       Expense Reimbursement. In addition to the compensation and
benefits provided herein, the Company shall, upon receipt of appropriate
documentation, reimburse the Director each month for his reasonable travel,
lodging, entertainment, promotion and other ordinary and necessary business
expenses in accordance with the Company's policies then in effect, all such
expense reimbursements to be approved in writing by the Company's President.

         7.       Non-Delegation of Director's Rights. The obligations, rights
and benefits of the Director hereunder are personal and may not be delegated,
assigned or transferred in any manner whatsoever, nor are such obligations,
rights or benefits subject to involuntary alienation, assignment or transfer.

         8.       Amendment. This Agreement contains, and its terms constitute,
the entire agreement of the parties, and it may be amended only by a written
document signed by both parties to this Agreement.

         9.       Governing Law. California law shall govern the construction
and enforcement of this Agreement and the parties agree that any litigation
pertaining to this Agreement shall be adjudicated in courts located in
California.

         10.      Attorneys' Fees. If any party finds it necessary to employ
legal counsel or to bring an action at law or other proceedings against the
other party to enforce any of the terms hereof, the party prevailing in any such
action or other proceeding shall be paid by the other party its reasonable
attorneys' fees as well as court costs, all as determined by the court and not a
jury.

         11.      Severability. If any section, subsection or provision hereof
is found for any reason whatsoever, to be invalid or inoperative, that section,
subsection or provision shall be deemed severable and shall not affect the force
and validity of any other provision of this Agreement. If any

                                       2


covenant herein is determined by a court to be overly broad thereby making the
covenant unenforceable, the parties agree and it is their desire that such court
shall substitute a reasonable judicially enforceable limitation in place of the
offensive part of the covenant and that as so modified the covenant shall be as
fully enforceable as if set forth herein by the parties themselves in the
modified form. The covenants of the Director in this Agreement shall each be
construed as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of the Director against the
Company, whether predicated on this Agreement or otherwise, shall not constitute
a defense to the enforcement by the Company of the covenants in this Agreement.

         12.      Notices. Any notice, request, or instruction to be given
hereunder shall be in writing and shall be deemed given when personally
delivered or three (3) days after being sent by United States certified mail,
postage prepaid, with return receipt requested, to the parties at their
respective addresses set for the below:

                  To the Company:

                           CKE Restaurants, Inc.
                           3916 State Street, Suite 300
                           Santa Barbara, CA 93105
                           Attention: Andrew F. Puzder, Chief Executive Officer

                  To the Director:

                           William P. Foley, II
                           4181 Creciente Drive
                           Santa Barbara, California 93110

         13.      Waiver of Breach. The waiver by any party of any provisions of
this Agreement shall not operate or be construed as a waiver of any prior or
subsequent breach by the other party.

         14.      Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.

                           [signature page to follow]

                                       3


         IN WITNESS WHEREOF the parties have executed this Agreement to be
effective as of the date first set forth above.

                                                     CKE RESTAURANTS, INC.

                                                     By:  /s/ Andrew F. Puzder
                                                          ----------------------

                                                     Its: President and Chief

                                                     DIRECTOR

                                                     /s/ William P. Foley, II
                                                     ---------------------------
                                                     William P. Foley, II

                                       4

EX-10.51

                                                                   EXHIBIT 10.51

                         DISTRIBUTION SERVICE AGREEMENT

THIS DISTRIBUTION SERVICE AGREEMENT ("Agreement") is entered into and made
effective as of the 7th day of November 2003, between McCabe's QUALITY FOODS
("McCabe's") and LA SALSA, INC. ("Buyer").

                                    RECITALS

WHEREAS, McCabe's operates certain distribution centers in California and Oregon
from which it distributes food, packaging, and related supplies to food service
operations which are located within the service area of such distribution
centers (the "Service Area"): and

WHEREAS, Buyer presently operates certain restaurants listed on Exhibit A in
which it or an affiliate owns a controlling interest (hereinafter the "Company
Units") and licenses others to operate certain restaurants listed on Exhibit A-I
(hereinafter the "Franchised Units") under the service marks "La Salsa Fresh
Mexican Grill", "La Salsa", and "La Salsa Cantina", The Company Units and the
Franchised Units shall include additional locations opened during the term of
this Agreement within the Service Area. The Company Units and the Franchised
Units, including any such additional locations, are sometimes hereinafter
collectively referred to as the "Restaurants".

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the value and sufficiency of which are hereby acknowledged, the
parties agree as follows:

I BASIC AGREEMENT

McCabe's will purchase, warehouse, and distribute for sale to Restaurants, and
Restaurants will purchase from McCabe's all Buyer approved products including,
but not limited to, the following categories: dairy, frozen and refrigerated
items, poultry, beef, pork, seafood, canned and dry goods, beverages, soft drink
syrup products, paper and disposables, janitorial supplies including cleaning
chemicals and other non-food products requiring frequent replacement
(collectively the "Products"),

II PRODUCT DESIGNATION

Buyer shall designate the brands and/or suppliers of Products it requires and
may negotiate with designated suppliers the price and terms at which McCabe's
shall procure Products from such suppliers for resale to the Restaurants, which
shall be based upon volume requirements that are supported by the historical
usage over the previous twelve (12) month period.

III INVENTORY MANAGEMENT

      A.    Inventory Management -- During the term of this Agreement, McCabe's
            shall maintain an inventory of the Products in quantities necessary
            to provide the Restaurants with an adequate supply of such Products.
            McCabe's shall use reasonable, good faith efforts to minimize the
            risk of inventory obsolescence. McCabe's shall not buy or stock more
            than four weeks supply unless authorized by Buyer. McCabe's will
            provide Buyer with monthly status reports of slow moving items.
            Buyer will communicate with McCabe's regarding menu changes and
            Product mix changes.

IV SERVICES

      A. Delivery Frequency - McCabe's will determine Order and delivery
      schedules. McCabe's will make two deliveries per week to each Restaurant
      unless otherwise mutually agreed in writing between Buyer and McCabe's.
      Under certain circumstances, individual Restaurants may only require one
      weekly delivery due to less than average volume. Delivery schedule and
      route changes shall have Buyer's approval four weeks before
      implementation. Major route changes shall be limited to three times a
      year.

      B. Service Area - Subject to and in accordance with the terms of this
      Agreement, McCabe's shall deliver Products to all current and future
      Restaurants located in the Service Area, defined as "within a 350 mile
      radius of the Distribution Center".

      C. Scheduling Access - McCabe's may make such deliveries on any day of the
      week, at any time of day, except between 11:00 a.m. -- 1:30 p.m. Buyer
      agrees to provide keys and security codes for its Restaurants to
      facilitate night deliveries where necessary. It is understood that either
      Buyer or McCabe's may have particular scheduling needs for specific
      Restaurants where unusual circumstances may exist, and each party agree to
      address such needs in good faith.


                                       1

      D. Order Balancing - It is understood that Restaurants receiving two
      deliveries per week will use reasonable, good faith efforts to balance the
      orders such that each delivery consists of approximately the same number
      of cases.

      E. In-store Delivers at Restaurants - McCabe's delivery drivers will
      bring all Products into those Restaurants where it is possible to safely
      roll a two-wheel cart. McCabe's delivery drivers will separate and deliver
      the order to the Restaurants freezer, cooler and dry storeroom. McCabe's
      delivery driver will not put Products on the shelves. McCabe's delivery
      drivers shall use caution and care in using access driveways, hallways,
      and pathways. McCabe's shall repair damages (other than reasonable wear
      and tear) caused by McCabe's delivery drivers within a reasonable time.

      F.    On-time Delivery - Deliveries within sixty (60) minutes of a.
            scheduled delivery are considered to be "on time," McCabe's will
            maintain a monthly average of no less than eighty-percent (85%")
            on-time delivery.

      G.    Service Level - Service level is defined as the calculation of the
            total number of items actually received at the time of delivery
            divided by the total number of cases ordered. McCabe's will maintain
            a Service level of no less than ninety-nine and one-half percent
            (99.5%).

      H.    Order Entry - Restaurant shall fax order to McCabe's by 4:00 PM two
            days prior to scheduled delivery. Restaurant may place orders
            electronically to McCabe's when available systems are in place at
            both Restaurant and McCabe's.

      I.    Shortages - McCabe's shall promptly notify Restaurants of shorted
            items prior to delivery. McCabe's shall arrange delivery of shorted
            items within twenty-four (24) hours from the time of delivery.
            McCabe's shall reimburse the Restaurants for related expenses
            incurred for retail purchases to cover shorted items.

V TERM OF AGREEMENT AND IMPLEMENTATION

The term of this Agreement will be three (3) years and shall commence as of
October 1,2003 and terminate on September 31, 2006 unless sooner terminated as
hereinafter provided. Such term shall be extended for consecutive periods of one
(1) year from the expiration thereof and from the expiration of each subsequent
extension period, as the case may be, unless McCabe's or Buyer shall have given,
either to the other, not less than one hundred twenty (120) days prior written
notice of its desire to terminate this Agreement as of such expiration.

VI PRICING

      A. Sell Price - The Sell Price to Restaurant for all Products sold under
      this Agreement will be the manufacturer FOB cost (excluding any "prompt
      payment" discount), less any promotional allowances reflected or, invoices
      to the distribution centers, plus applicable Freight Charges (collectively
      referred to hereafter as "Cost"), plus a distribution fee. Freight rates
      shall not exceed those negotiated and guaranteed by the Product supplier.

      B. McCabe's Fee Per Case - The Sell Price of each Product sold under this
      Agreement will equal the cost ("Cost") of each Product delivered to all
      McCabe's distribution centers on a period basis, or a weekly basis for
      commodity items, plus a distribution fee that will equal a prescribed
      dollar amount per case of Product. (the "Fee Per Case") as stated in the
      following table.



Payment Terms Days               Agreed Fee Per Case
- ------------------               -------------------
                              
         0                              $1.90
         7                              $1.95
        14                              $2.00
        21                              $2.05
        28                              $2.10


            1.    For example, a Product with a Cost of $20.00 and a Fee Per
                  Case of $1.90 will have a sell price calculated as follows:

                  $20.00+$1.90=$21.90

            2.    Fee Per Case shall be adjusted after the end of the second
                  (2nd) year of the term (September 31, 2005) of this Agreement
                  by multiplying the most recent Fee Per Case by the "Percentage
                  Change" (hereinafter defined) in the "Price Index"
                  (hereinafter defined).


                                       2

            a)    "Price Index" as used herein shall mean the Consumer Price
                  Index for All Urban Consumers (CR1-U), West Coast City
                  Average, All Items (Base Year 1982-84=100) ("CPI").

            b)    "Percentage Change" as used herein shall mean the percentage
                  increase in the Price Index represented by a fraction, the
                  numerator of which shall be the latest Price Index available
                  and the denominator of which shall he the Price Index reported
                  for the month which was twenty-four (24) months before the
                  month used in the numerator.

            c)    There shall he no Fee Per Case increase until the CPI
                  Percentage Change has increased by 3.5%. Furthermore, the CPI
                  mark-up increase shall be capped at 3.5% per year.

      C. Cola Supplier Products. Soft drink syrup products and bottled water
      products will be priced according to the national account-pricing program
      provided to McCabe's by cola supplier less applicable discounts. There
      will be a 1% discount, less national pricing (i.e., sell price $40.99 per
      case for 2003).

      D. Minimum Drop Size -- In the event the combined average shipment of
      Product (cases per delivery), measured annually, falls below 75 cases of
      Product per shipment, McCabe's is entitled to a $0.10 per case increase.
      Buyer shall have the option to go with once a week delivery for low volume
      units in order to maintain the existing markup structure.

      E. Fuel Price Adjustment -- The Fee Per Case shall be adjusted every six
      months (6) to reflect the increases or decreases in fuel costs per gallon,
      on a one month lagged basis, in the following fashion: The October 1,2003
      West Coast fuel price published on the 1st day of October or first date of
      publication following the 1st day of October (which is compiled by Energy
      Information Administration, Retail On-Highway Diesel Prices, National
      Average as shown on their Website:http:www.cia.doe.gov/pub/oil_gas/
      petroleum/data_publications/weekly_on_highway_diesel_prices/current/html/
      html/diesel.html) will be subtracted From the West Coast fuel price for
      subsequent bi-annual adjustment. For every $0.10 per gallon increase or
      decrease in fuel prices the markup per case will increase or decrease by
      $0.01. Fuel cost adjustments shall be added to or subtracted from the Fee
      Per Case at the beginning of the accounting period following the first of
      the month fuel cost posting.

      F.    Cost Verification -- Within thirty (30) days of the first, second,
            and third anniversaries of the agreement and upon written notice, a
            representative of the Buyer has the right to verify the Cost of
            Products sold under this Agreement. McCabe's will furnish
            documentation verifying Costs, subject to the following limitations:

            1.    Date and time of verification must be mutually agreed.

            2.    All verifications must be done at McCabe's premises.

            3.    The period for which pricing is verified shall be the twelve
                  (12) months prior to the date of Cost Verification.

VII PROMPT PAYMENT

      A.    McCabe's shall periodically invoice the Company (which may be
            affected by electronic transmission of the invoice to the Company)
            at the address of its corporate headquarters, Attention: Director of
            Cash Management following delivery to the Company Restaurants for
            all Products supplied by McCabe's and accepted by the Company
            Restaurants hereunder. The prices on invoices for all Products
            supplied by McCabe's and accepted by the Company Restaurants shall
            be in accordance with Section X hereof. The terms of payment of each
            invoice shall be zero days as outlined in Section VI.B. (the
            "Payment Terms"). All payments made by the Company to McCabe's
            pursuant to that Agreement shall be made by wire transfer of
            immediately available funds to a bank account designated by McCabe's
            not fewer than two days prior to such payment, or the last bank
            account used for any such transfer, as the case may be,

      B.    McCabe's shall periodically invoice the operator of each Franchised
            Restaurant it accordance with its usual practices, provided,
            however, that each Franchised Restaurant shall be offered the
            Payment Terms if such Franchised Restaurants meets McCabe's credit
            standards as they may from time to time be amended in good faith.

VIII TERMINATION

      A.    Notwithstanding Section V of this Agreement, if any party fails or
            refuses to comply with one or more of its material obligations
            hereunder resulting in a material default which is incapable of
            being cured or which is capable of being cured and is not cured
            within a reasonable period of time following its receipt of oral or
            written notice of such default (a "Breach"), the nonbreaching party
            shall provide the breaching party written notice thereof describing
            the Breach


                                       3


            and specifying a date, not less than sixty (60) days following the
            breaching party's receipt of such notice, on which this Agreement
            shall be terminable at the option of the nonbreaching party unless
            the Breach has by that date been substantially cured. This procedure
            and remedy of termination is in addition to any and all other
            remedies available to a party by contract, law or otherwise,
            including without limitation McCabe's right to immediately modify
            payment terms or stop shipment under Section VTI of this Agreement
            for non-payment.

      B.    Any party's failure to terminate this Agreement, or to take any
            other action, upon the occurrence of one or more breaches shall not
            constitute a waiver or otherwise affect the right of such party to
            terminate the Agreement for any subsequent Breach.

      C.    The obligations of McCabe's pursuant to this Agreement shall be
            terminable, at McCabe's option, if any of the following events shall
            occur and be continuing: (i) if a proceeding is instituted (and not
            dismissed within sixty (60) days) by or against Buyer under any
            applicable federal or state bankruptcy, insolvency, reorganization
            or other similar law to he adjudicated as bankrupt or insolvent:
            (ii) the appointment of or taking possession by a custodian,
            receiver, liquidator, assignee, trustee or similar official of all
            or a substantial part of the assets of buyer; (iii) any assignment
            for the benefit of creditors of Buyer; or (iv) if Buyer shall admit
            in writing its inability to pay its debts as they became due.

      D     Upon termination of this Agreement by the Buyer, Buyer shall he
            responsible for purchasing all Products approved by and purchased by
            McCabe's solely for Buyer within sixty (60) days.

IX ASSIGNMENT

      A.    McCabe's may not assign this Agreement without the prior written
            consent of Buyer, which consent shall not be unreasonably withheld
            or delayed; provided, however, that nothing in this Section shall
            preclude McCabe's from employing common carriers, contract carriers,
            public warehousemen or other similar parties to temporarily perform
            its services hereunder.

      B.    Notwithstanding subsection VIII A above, McCabe's may not assign its
            rights and obligations under this Agreement without Buyer's consent
            to any subsidiary or affiliate of McCabe's or to any purchaser of
            all or substantially all of its distribution business or assets. For
            purposes of this Section, a change of control or majority ownership
            of McCabe's shall not be deemed to be an assignment of rights under
            this Agreement for which Buyer's consent is required.

      C.    McCabe's may assign accounts receivable payable by Buyer.

      D.    Any permitted assignment of this Agreement by either party shall,
            except as otherwise agreed, be deemed an assignment of all of the
            assignor's rights and liabilities under this Agreement accruing,
            arising or relating to any period on or after the date of such
            assignment

      E.    Any assignment made in violation of this Section shall be null and
            void.

X TITLE AND RISK OF LOSS

Except in the case of night deliveries or so-called "key drop" deliveries, title
to all Products shall pass upon a Restaurant's acceptance, subject to the
rejection of certain items by notation on the delivery ticket, of such Products
for delivery.

With respect to "key drop" deliveries, title to all goods shall pass at the
close of business on the immediately succeeding business day, unless rejected by
the Restaurant prior thereto. In the event the product is picked-up by McCabe's
in original condition and a credit is due the Restaurant, McCabe's shall provide
credits for Product(s) within seven (7) days of pickup. Restaurant shall make
arrangements through McCabe's order department before close of business the next
day for the pickup of any goods not accepted by Restaurant. Pickups are
typically made on the next scheduled delivery day. Credits for highly perishable
items can be issued without waiting for the next delivery, providing that the
Restaurant has the advance agreement of McCabe's. McCabe's shall promptly issue
a receipt to Restaurant for any Products determined acceptable by McCabe's for
return and ensure that, Buyer receives a proper credit therefor within seven (7)
days of pickup. McCabe's shall bear all risk of loss, damage, or destruction
until title passes to Buyer. Credits will be automatically processed after ten
(10) days if McCabe s fails to make the customer pickup as agreed with the
Restaurant.

XI REPORT REQUIREMENTS

Within five (5) days of the commencement of a McCabe's Accounting Period,
McCabe's will provide Buyer with an Accounting Period Order Guide and Price
List. For purposes of determining commodity Sell Prices, McCabe's will provide a
Weekly Price Change Notice. McCabe's agrees to provide rolling twelve (12) month
usage reports, monthly gross margin report, fill rate report by unit and roll
up, on-time delivery report by unit and rollup to Buyer. Buyer may reasonably
request additional reports that may be useful as a management tool.


                                       4

XII INSURANCE

McCabe's agrees to maintain, during the entire term of the Agreement, insurance
coverage against such risks as may he reasonably specified by Buyer, in such
minimum amounts as may be reasonably satisfactory to Buyer.

XIII FORCE MAJEURE

Either party is excused from performance hereunder (other than payment
obligations, which shall not be excused under this Section XIII) if such
non-performance results from any acts of God, war, riots, terrorism, sabotage,
subversion, acts of governmental authorities (interruption in supply, strike
lockout, labor dispute), or any other cause outside the reasonable control of
the non-performing party. Both parties shall use their best efforts to terminate
or cause the expiration of any Force Majeure as soon as practical following its
occurrence.

XIV CONFIDENTIALITY

Buyer and McCabe's each agree that they will keep all terms of this Agreement
completely confidential, and that neither party will disclose any information
concerning this Agreement to any person or entity without the prior express
written consent of the other party; provided, however, that neither party will
be in breach of this requirement if such party reasonably believes such
disclosure is required based on the advise of counsel under applicable law,
regulation or court order. In the event that such disclosure is required by
applicable law, regulation or court order, however, Buyer and McCabe's each
agree that, if reasonably practicable, such disclosure will not be made to, any
person or entity until after such time as the other party has received written
notice with regard to any required disclosure, and tile other party has had a
reasonable opportunity to contest the basis for disclosure and review the
content of any disclosure proposed to he made to any person or entity. Buyer and
McCabe's further agree that disclosure of the terms and conditions of this
Agreement in violation of this Section constitutes a material breach of the
Agreement.

XV NOTICES

All notices required or permitted to be given hereunder shall be in writing and
delivered personally or sent by United States registered or certified mail,
postage prepaid, return receipt requested, or by express delivery service which
provides for return receipts, addressed to the parties as follows:

            (A) If to McCabe's:

                McCabe's Quality Foods.
                17600 E, San Rafael
                Portland, OR 91230
                Attention: Joe Kemetz - President/CEO

                With Copy to:

                Services Group of America, Inc
                4025 Delridge Way SW, Suite 500
                Seattle WA 98106
                Attention: Peter K. Smith. CFO
                           Jeffrey R. Masi, General Counsel


                                       5

            (B) If to Buyer:

                La Salsa. Inc.

                3916 State Street
                Santa Barbara, CA 93105
                Attn: Michele Rushing Vice- President Purchasing

                With Copy to:

                La Salsa. Inc.
                6307 Carpinteria Avenue
                Carpinteria, CA 93013-2901
                Attn: General Counsel

XVI GOVERNING LAW AND VENUE

This agreement shall be governed by, and construed in accordance with, the laws
of the state of California without reference to the choice of law principles
thereof. Each party hereto agrees that it shall bring any action or proceeding
in respect of any claim arising out of or related to this agreement or the
transactions contained or contemplated by this agreement, whether in tort or
contract or at law or in equity, exclusively in the Superior Court of Orange
County, California (the "chosen court") and (i) irrevocably submits to the
exclusive jurisdiction of the chosen court, (ii) waives any objection to laying
venue in any such action or proceeding in the chosen court. (iii) waives any
objection that the chosen court is an inconvenient forum or does not have
jurisdiction over any party hereto and (iv) agrees that service of process upon
such party in any such action or proceeding shall be effective if notice is
given in accordance with section xv of this agreement.

XVII CAPTIONED HEADINGS

The section headings contained in this Agreement are for reference purposes only
and shall not in any way affect the meaning or interpretation of this Agreement.

XVIII COMPLIANCE WITH LA\VS

McCabe's warrants that all Products distributed by it to the Restaurants shall
be received, handled, stored, shipped, delivered and sold by McCabe's in
compliance with all applicable federal, state and local laws, ordinances, rules
and regulations.

XIX NO PARTNERSHIP

McCabe's acknowledges that it is an independent contractor and no party is or
shall be construed as an agent, partner, joint venturer or employee of another.
No party shall have the authority to bind or otherwise obligate any other palm
in any manner and no party shall represent to anyone that it has a right to do
so,

XX WAIVERS

No waiver or waivers by any party of any provision of this Agreement, whether by
conduct or otherwise, shall be deemed to be a further or continuing waiver of
the provision or any other provision of this Agreement.

XXI ATTORNEYS' FEES

If it is necessary for either party to institute stilt to enforce any of be
provisions of this Agreement, then the prevailing party in such suit shall be
entitled to collect and receive reasonable outside attorneys' fees and court
costs,

XXII SEVERABILITY

The provisions of this agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.

XXIII THIRD-PARTY RIGHTS

Notwithstanding any other provision of this Agreement, this Agreement shall not
create benefits on behalf of any third party or person other than the parties
hereto or their permitted assignees (including without limitation any broker,
finder, supplier or customer), and this Agreement shall be effective only as
between the parties hereto, their successors and permitted assigns.


                                       6

XXIV ENTIRE. AGREEMENT/AMENDMENT'S

The parties expressly acknowledge that this Agreement contains the entire
agreement of the parties with respect to the relationship specified in this
Agreement and supersedes any prior arrangements or understandings, verbal or
written, between the parties with respect to such relationship. This Agreement
may only be amended by a written document signed by each of the parties hereto.

XXV COUNTERPARTS

This Agreement and any amendments hereto may be executed in one or more
counterparts, each of which shall be deemed to be an original by the parties
executing such counterpart, but all of which shall be considered one and the
same instrument.

IN WITNESS WHEREOF, this Agreement has been signed on behalf of each of the
parties hereto as of the date first written above.



           McCabe's                BUYER                BUYER
                                               
BY         McCabe's Quality Foods  La Salsa, Inc.       La Salsa Inc.

Signature  /s/ Joe Kemetz          /s/ Michele Rushing  /s/ Michael W. Liby
           --------------          -------------------  -------------------

It's:      President/CEO           VP Purchasing        Executive Vice President Chief Operating Officer

Date:      11/7/03                 11/10/03             11/10/03



                                       7

Exhibit A                        La Salsa, Inc.
                           Company Restaurant Listing



PS#      Old   Phone         Fax           Unit Name            Address 1                   City               St   Zip
         Unit
         #
- -------  ----  ------------  ------------  -------------------  --------------------------  -----------------  ---  ----------
                                                                                            
1610001  1     310-479-0919  310-477-2388  PICO                 11077 W. Pico Blvd.         Los Angeles        CA   90064
1610005  5     310-276-2373  310-273-2375  BEVERLY HILLS        9631 Santa Monica Blvd.     Beverly Hills      CA   90210
1610006  6     949-640-4289  640-640-2761  NEWPORT BEACH        401 Newport Center Dr.      Newport Beach      CA   92660
                                                                A-107
1610008  8     619-234-6906  619-234-6214  NORTON PLAZA         415 Horton Plaza            San Diego          CA   92101
1610009  9     760-747-6605  760-747-8051  NO. COUNTY FAIR      200 E. Via Rancho Pkwy      Escondido          CA   92025
1610016  16    310-826-7337  310-826-7704  BRENTWOOD            11740 San Vicente Blvd.     Brentwood          CA   90049
                                                                #102
1610019  19    619-435-7778  619-435-3664  CORONADO             1360 Orange Avenue          Coronado Island    CA   92118
1610027  27    310-473-7880  310-312-0638  VINCI PLAZA          11901 Santa Monica Blvd.    Los Angeles        CA   90025
                                                                Ste 111
1610035  35    805-963-1001  805-963-1660  STATE ST             1131 State Street           Santa Barbara      CA   93101
1610037  37    818-760-7797  818-760-1970  STUDIO CITY          12048 Ventura Blvd.         Studio City        CA   91604
1610039  39    805-964-1146  805-964-5766  FIVE POINTS          3987 State St.  Suite D     Santa Barbara      CA   93104
1610040  40    310-208-7083  310-208-3176  WESTWOOD             1154 Westwood Blvd.         Los Angeles        CA   90024
1610041  41    213-892-8227  213-892-8415  ROOSEVELT            727 W. 7th Street           Los Angeles        CA   90017
1610044  44    310-587-0755  310-587-3515  PROMENADE            1401 3rd Street Promenade   Santa Monica       CA   90401
1610064  64    916-446-7133  916-446-1316  SACRAMENTO           545 Downtown Plaza Ste.     Sacramento         CA   95814
                                                                2095
1610067  67    818-789-8587  818-789-8589  SHERMAN OAKS         14006 Riverside Dr. Space   Sherman Oaks       CA   91423
                                                                #256
1610068  68    949-786-7692  949-786-7694  IRVINE               3850 Barranca Pkwy. Ste D   Irvine             CA   92606
1610069  69    408-946-6696  408-946-6586  MILPITAS             602 Great Mall Drive #447   Milpitas           CA   95035
1610070  70    510-352-9095  510-352-9098  SAN LEANDRO          1207 Marina Blvd.           San Leandro        CA   94577
1610071  71    650-917-8290  650-917-9293  MOUNTAIN VIEW        660 San Antonio Road Ste A  Mountain View      CA   94040
1610072  72    916-565-0144  916-565-1006  ARDEN FAIR           1689 Arden Way #2012        Sacramento         CA   95815
1610073  73    650-588-9722  650-588-9725  SAN BRUNO            1230 El Camino Real Ste. Q  San Bruno          CA   94066
1610074  74    650-579-3684  650-579-4754  BURLINGAME           1125 Burlingame Avenue      Burlingame         CA   94010
1610075  75    510-834-3422  510-834-3420  OAKLAND              501 14th Street Ste 24      Oakland            CA   94612
1610076  76    702-735-8228  702-735-1145  CAESARS              3500 S. Las Vegas Blvd.     Las Vegas          NV   89109
                                                                SPE7
1610077  77    702-369-1234  702-369-8632  BOULEVARD MALL       3840 S. Maryland Parkway    Las Vegas          NV   89109
                                                                FC#108
1610078  78    805-777-0090  805-777-0190  WESTLAKE             180 Promenade Way Ste E     Westlake Village   CA   91362
1610079  79    310-318-5904  310-318-2634  REDONDO SHORES       409 N. Pacific Coast Hwy    Redondo Beach      CA   90277
                                                                E#110
1610080  80    213-683-8815  213-683-8817  UNION BANK           445 S. Figueroa St Space    Los Angeles        CA   90071
                                                                #104
1610082  82    213-623-6390  213-623-4161  BUNKER HILL          601 W. 5th Street           Los Angeles        CA   90071
                                                                Ste.#R-201
1610084  84    818-343-6744  818-343-6867  TARZANA              18660 Ventura Blvd          Los Angeles        CA   91356
1610085  85    415-771-7848  415-771-7835  FILLMORE             2401 California Street      San Francisco      CA   94115
1610090  90    510-339-9311  510-339-9235  MOTCLAIR             2064 Antioch Street         Oakland            CA   94611
1610091  91    818-591-7787  818-591-1785  CALABASAS            4799 Commons Way Ste. G     Calabasas          CA   91302
1610093  93    760-735-8253  760-735-8645  AUTO PARKWAY         1290 Auto Parkway           Escondido          CA   92029
1610094  94    760-436-9266  760-436-4580  ENCINITAS            219 N. El Camino Real       Encinitas          CA   92024
1610095  95    619-589-6696  619-589-2547  LA MESA              4990 Baltimore Drive        La Mesa            CA   91941
1610096  96    310-317-9466  310-317-9416  MALIBU               22800 Pacific Coast Hwy     Malibu             CA   90265
1610097  97    858-483-1007  858-483-1080  PACIFIC BEACH        980 Grand Avenue            Pacific Beach      CA   92109
1610098  98    818-888-2246  818-888-8097  TOPANGA              6600 Topanga Canyon Blvd.   Canoga Park        CA   91303-2678
                                                                Ste. 1-E
1610099  99    702-739-1776  702-739-1796  LUXOR                3900 Las Vegas Blvd South   Las Vegas          NV   89119
1610100  100   510-477-0141  510-477-0128  UNION LANDING        32248 Dyer Street           Union City         CA   94587
1610101  101   925-803-9200  925-803-9201  DUBLIN               4930 Dublin Blvd.           Dublin             CA   94568
1610102  102   949-475-2506  949-475-2508  MAC ARTHUR           4341 Mac Arthur Blvd. Ste   Newport Beach      CA   92660
                                                                F
610104   104   310-453-7551  310-828-3171  ARBORETUM            2200 Colorado Avenue        Santa Monica       CA   90404
610105   105   310-234-8338  310-234-8320  W. SIDE PLAZA        10800 W. Pico Blvd.         Los Angeles        CA   90064
610106   106   949-574-1315  949-5741-1318 COSTA MESA           279 E  17th Street          Costa Mesa         CA   92627
610107   107   714-685-1840  714-685-1468  ORANGE VILLA         2094 N. Tustin Avenue A-2   Orange             CA   92865-3928
610108   108   858-350-8307  858-350-6579  CARMEL COUNTRY ROAD  12880 Carmel Country Rd     San Diego          CA   92130
                                                                Ste D-100
610109   109   310-265-5570  310-265-5560  ROLLING HILLS        55-A Peninsula Center       Rolling Hills      CA   90274
                                                                                            Estate
610110   110   949-888-8530  949-888-8641  SANTA MARGARITA      30642 Santa Margarita Pkwy  Rancho Santa       CA   92688
                                                                                            Margarita
610111   111   949-450-8511  949-450-8510  IRVINE CENTER        8673 Irvine Center Drive    Irvine             CA   92618
610112   112   909-517-3560  909-517-2171  CHINO HILLS          13089 Peyton Dr. Bldg. 3A   Chino              CA   91709
                                                                Ste. J
610117   117   858-974-1305  858-974-1487  CLAIREMONT           9211 Clairemont Mesa        San Diego          CA   92123-1211
                                                                Blvd. #106
610118   118   760-724-8170  760-724-8170  OCEANSIDE            4111 Oceanside Blvd. Ste    Oceanside          CA   92056-6004
                                                                102
610119   119   415-291-0717  415-291-0817  PIER 39              Pier 39 Bldg. P             San Francisco      CA   94133
610120   120   805-981-2276  805-981-4867  ESPLANADE            641 W. Esplanade Drive      Oxnard             CA   93030
610121   121   562-529-3570  562-529-3764  LAKEWOOD             500 Lakewood Center Mall    Lakewood           CA   90712
                                                                FC-10
610122   122   714-838-8253  714-838-8235  TUSTIN               535 E. Main Street          Tustin             CA   92780
610123   123   949-551-6680  949-551-6685  TRABUCO GROVE        14171 Jeffrey Road          Irvine             CA   92620



                                       8



Name      Unit#  Owner/Operator         Name           Street Address                  St   Zip         Phone         Fax
- --------  -----  ---------------------  -------------  ------------------------------  ---  ----------  ------------  ------------
                                                                                              
La Salsa  24     Anthony Luis, Inc.     San Diego      1010 University Ave. #101       CA   92103       619-543-0777  619-297-2127
La Salsa  501    Bing & Connie Magpayo  Hayward        792 B St.                       CA   94541-5008  510-940-3737  510-940-3663
La Salsa  405    Bravo Group, LLC       Tucson         4881 E. Grant Road #101         AZ   85712       520-325-2200  520-325-2200
La Salsa  421    Bravo Group, LLC       Tucson         7090 N. Oracle Road #128        AZ   85704       520-531-1211  520-531-8188
La Salsa  422    Bravo Group, LLC       Tucson         1800 E. Fort Lowell Road #156   AZ   85719       520-325-0082  520-325-0089
La Salsa  492    Bravo Group, LLC       Tucson         1021 N. Wilmot Road             AZ   85711       520-747-0066  520-747-3855
La Salsa  431    Campico, Inc.          Primm          129 Stateline Road              NV   89102       702-874-2340  702-874-2340
La Salsa  485    Campico, Inc.          Las Vegas      2901 S. Las Vegas Blvd.         NV   89109       702-697-4401  000-000-0000
La Salsa  20     Goldmex                Glendale       1144 Glendale Galleria          CA   91210       818-548-5341  818-548-5341
La Salsa  401    Goldmex                Northridge     9301 Tampa Avenue Space FC5     CA   91324       818-700-1501  818-700-1501
La Salsa  415    Host Marriott #2       Ontario        1 Mills Circle #F11             CA   91764       909-476-1313  909-476-1316
La Salsa  416    Host Marriott #4       Los Angeles
                                        Airport        201 World Way                   CA   90045       310-646-6470  310-646-8058
La Salsa  428    Host Marriott #5       Sacramento     6850 Airport Blvd. Ste 28       CA   95837       916-929-9596  918-929-3543
La Salsa  427    John Ricci             Thousand Oaks  488 W. Hillcrest Drive          CA   91360       805-496-1327  805-496-7760
La Salsa  488    LTS Enterprises, Inc.  Las Vegas -
                                        Alladin        3863 S. Las Vegas Blvd. #380    NV   89109       702-892-0645  702-892-9741
La Salsa  489    LTS Enterprises, Inc.  Las Vegas -    450 Freemont Street Ste. 195    NV   89101       702-384-1720  702-384-1734
                                        Neonopolis

La Salsa  420    Marco Garcia           San Diego      3707 N. Harbor Drive            CA   92101       619-296-3789  619-296-4187
La Salsa  497    Nevada Franchise,
                 LLC/DBA Bola VI, LLC   Las Vegas      3785 S. Las Vegas Blvd. Ste     NV   89109       702-240-6944  702-644-6946
                                                       1500
La Salsa  32     Northern Restaurants   Scottsdale     7014 E. Camelback Road          AZ   85258       480-994-4112  000-000-0000
La Salsa  408    Northern Restaurants   Phoenix        10855 N. Tatum Blvd.            AZ   85028       480-948-2600  480-948-8282
La Salsa  484    Northern Restaurants   Glendale       7700 W. Arrowhead Town Center   AZ   85308       623-412-8803  623-412-8810
                                                       #2073

La Salsa  487    QSR Enterprises, Inc.  Upland         960-A  Mountain Avenue          CA   91786-3657  909-946-6949  909-946-6948
La Salsa  21     R&R Enterprises        San Diego      8750 Genesee Avenue #240        CA   92122       858-455-7229  858-455-5305
La Salsa  435    Sodexho-Marriott       Burbank        Riverside Commissary Mail Code  CA   91521       818-460-5777  818-460-5266
                 Services                              5019

La Salsa  502    Sodexho-Marriott       San Diego      Main Exchange Foodcourt MCAS    CA   92101       858-695-7303  858-689-9615
                 Services                              Miramar
La Salsa  414    USC Hospitality        Los Angeles    830 W. 36th Place               CA   90089       213-740-5544  213-740-8831
La Salsa  38     YSJA America, Inc.     Redondo Beach  2790 Manhattan Beach Blvd.      CA   90278       310-793-9444  310-793-1472
La Salsa  46     YSJA America, Inc.     Torrance       24223 Crenshaw Blvd             CA   90505       310-326-1444  310-326-2529
La Salsa  403    YSJA America, Inc.     Cerritos       137 Los Cerritos Center         CA   90703       562-809-4034  562-809-0583
La Salsa  406    YSJA America, Inc.     Redondo Beach  1759 South Elena Avenue         CA   90277       310-543-2448  310-5433144



                                       9

                                    EXHIBIT B

                              ACCEPTANCE AGREEMENT

This Acceptance Agreement is entered into as of the ____ day of
______________________________________,, by and between the undersigned owner
(the "Owner") of the establishments described on the attached Exhibit A (the
`Subject Locations") and McCabe's on behalf of itself and certain of its
operating companies (collectively, "McCabe's") that are approved to provide
distribution services to the Owner, as a franchisee of La Salsa, Inc. (the
"Master Organization").

                                    RECITALS

      A. The Owner and the Master Organization dense that McCabe's provide
distribution services to the Subject Locations under substantially similar terms
and conditions (the "Standard Tents") as set forth in the distribution agreement
entered into by and between McCabe's and the Master Organization dated as of
_______________________ [date of Master Distribution Services Agreement] (the
"Distribution Agreement"). In certain cases, the Distribution Agreement permits
variances in the Standard Terms to address the specific delivery requirements,
credit terms, and/or other unique circumstances relating to or requirements of
the Owner or the Subject Locations.

      B. McCabe's, as a condition to providing distribution services to the
Subject Locations, requires that the Owner execute this Agreement, evidencing
the Owner's agreement to the terms and conditions of the Distribution Agreement,
as modified and/or supplemented by the Location Specific Terms, as set forth in
Exhibit B attached to and hereby incorporated by reference within this
Agreement. All capitalized terms not otherwise defined in this Agreement shall
have the meanings ascribed to them under the Distribution Agreement.

      Therefore, in consideration of the premises and the mutual covenants, the
sufficiency of which is acknowledged by than, the Owner and McCabe's agree as
follows:

      1. Binding Nature of Distribution Agreement By his/her/its signature
below, the Owner specifically acknowledges and agrees: (A) that the distribution
services that McCabe's provides to the Subject Locations shall to subject to the
terms and conditions of the Distribution Agreement, as the same may be modified
upon. Agreement by and between McCabe's and the Master Organization, from time
to time, pursuant to its terms, and further subject to the Location Specific
Tents: (B) to be bound by any adjustments in the pricing terms permitted under
the Distribution Agreement and/or negotiated and agreed to by the Master
Organization. The Owner specifically acknowledges and agrees that the "Cost" or
`Contracted Cost' that shall be utilized in determining the sell price of
Products distributed to the Subject Locations shall be determined in the manner
provided in the Distribution Agreement The Owner specifically recognizes and
agrees that McCabe's shall be entitled to compensation for its performance of
merchandising and other value-added services to or for the benefit of suppliers,
as provided in the Distribution Agreement, and that such compensation shall not
be deducted from or otherwise offset against the "Cost or Contracted Cost'
utilized in determining the sell price of Products.

      Provided that McCabe's has indicated its acceptance hereof through the
signature of its authorized representative below, McCabe's shall provide
distribution services to the Subject Locations in accordance with the terms and
conditions of the Distribution Agreement, as amended and/or supplemented by the
Location Specific Terms.

      2. Pricing Delivery and Credit Terms. Delivery frequencies and credit
terms and other supplemental and/or modified terms applicable to the Subject
Locations are set forth in Exhibit "B" attached to this Agreement, and
incorporated herein by reference or if not addressed therein, shall he the same
as set forth in the Distribution Agreement.


                                       10

      3. Confidentiality. Owner agrees that it will keep all terms of this
Agreement and Financial information completely confidential, and that it will
not disclose any information concerning this Agreement to any person or entity
without the prior express written consent of McCabe's; provided, however, that
such information may be provided by Owner to .its auditors, consultants, and
advisors who agree to maintain such confidentiality or are otherwise bound to
restrictions or disclosures and to any prospective purchasers of all or part of
their respective businesses, provided that such prospective purchasers shall
have executed and delivered a confidentiality agreement in form and substance
approved by McCabe's, which approval shall not unreasonably be withheld or
delayed. Owner will not be in breach of this requirement if Owner reasonably
believes such disclosure is required based on the advice of counsel under
applicable law, regulation, or court order. In. the event that such disclosure
is required by applicable law. regulation, or court order, however, Owner agrees
that, if reasonably practicable, such disclosure will not be made to any person
or entity until after such time as McCabe's has received written notice with
regard to any required disclosure (provided that notice of the requited
disclosure is not prohibited by lax;'), and McCabe's has had a reasonable
opportunity to contest the basis for disclosure and review the content of any
disclosure proposed to be made to any person or entity. Owner further agrees
that disclosure of the terms and conditions of this Agreement in violation of
this Section constitutes a material breach of the Agreement.

      4. Financial Reports. The continuing credit worthiness of Owner is of
central importance to McCabe's. If the Owner's accounts payable balance due
McCabe's exceeds $12,000 at anytime, the Owner will provide quarterly and annual
financial statements consisting of a balance sheet, income statement and cash
flow statement and the financial condition of the Owner must continually support
the extension of credit granted in this Agreement. Alternatively, if the Owner
is not a natural person, the Owner [may, in lieu of quarterly financial
statements, provide personal guaranties of the payment of Owner's obligations
under the Agreement from the owners of legal or beneficial interests in the
Owner and annual personal financial statements of such guarantors, provided that
the financial condition of such guarantors continues to support the credit
extended to the Owner. In such event, the Owner shall continue to provide annual
financial statements relating tote Owner.

      5. Termination/Delivery Stoppage.

      (a)   This Agreement and McCabe's obligation to provide distribution
            services to the Subject Locations may be terminated:

            (i) By McCabe's upon site termination of the Distribution Agreement,
            or by reason of the circumstances permitting termination of the
            Distribution Agreement, even if not exercised, by McCabe's;

            (ii) By Owner upon the termination of Owner's franchise agreement
            with the Master Organization;

            (iii) By either Party, upon thirty (30) days prior written notice to
            the other Party, if the other Party breaches the terms and
            conditions of this Agreement and fails to cure such breach within
            such thirty (30) day cure period;

            (iv) By McCabe's open written notice to Owner In the event that
            McCabe's reasonably determines that Owner has suffered a material
            adverse change it his/her/or its financial condition;

            (v) By either Party, if the other Party is adjudicated insolvent by
            any court or tribunal, or files a voluntary petition in bankruptcy,
            or enters into an arrangement with its creditors or applies for or
            consents to the appointment of a receiver or trustee of itself or
            its property, or makes an assignment for the benefit of creditors or
            suffers or permits the entry of an order adjudicating it to be
            bankrupt or insolvent or appointing a receiver or trustee of itself
            or its property, in which event no notice to the defaulting Party
            shall he required and this Agreement shall immediately terminate; or


                                       11

            (vi) By either Party, if the oilier Party permits or suffers on
            involuntary petition in bankruptcy filed against it to remain
            undischarged or stayed for a period of sixty (60) days in which
            event no notice TO the other Party shall be required and this
            Agreement shall immediately terminate.

                  Absent such earlier termination, this Agreement shall remain,
            in full force and effect until the expiration 0f the Distribution
            Agreement.

      (b) In the event Owner fails to pay for any Products delivered to any
Subject Locations within the approved payment terms established pursuant to this
Agreement, McCabe's shall be entitled to, forthwith upon notice to Owner,
withhold any future deliveries of Products to the Subject Locations until
McCabe's receives payment in full of the Sell Price with respect to such
Products and any finance or law charges permitted under the Distribution
Agreement. In addition, in the event that Owner fails to timely pay for Products
delivered to any 0f the Subject Locations or upon the occurrence of any of the
events described in clauses (iii), (iv), and (s') above with respect to Owner,
McCabe's shall be entitled to condition future deliveries of Products to the
Subject Locations upon more stringent credit and/or payment terms, such as,
without limitation, shortened payment periods, cash on delivery, cash in
advance, the receipt of satisfactory guaranties that guaranty payment to
McCabe's for such Products, and/or the pledging of collateral to secure such
payments.

      6. Release. Owner agrees that McCabe's ability to perform distribution
services for Owner under the terms of the Distribution Agreement as modified
herein, is expressly contingent upon the Master Organization's approval for
McCabe's to do so. Accordingly, Owner hereby releases McCabe's it's affiliates,
and each of their respective officers, employees, and directors from any and all
losses, damages, or claims that Owner may have or suffer as a result of McCabe's
discontinuance of services to Owner as a result of express instructions from the
Master Organization to cease such services.

Effective as of the date first above written.

OWNER

By:
    --------------------
Name:
      ------------------
Title:
       -----------------


                                       12

EX-10.52

                                                                   EXHIBIT 10.52

                           FIFTH AMENDED AND RESTATED
                                CREDIT AGREEMENT

                                      among

                             CKE RESTAURANTS, INC.,

                            THE LENDERS NAMED HEREIN

                                       and

                                  BNP PARIBAS,

                                    As Agent

                          DATED AS OF NOVEMBER 12, 2003



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                                TABLE OF CONTENTS



                                                                                                   Page
                                                                                                   ----
                                                                                                
SECTION 1.        DEFINITIONS.................................................................       1
     Section 1.1           Definitions........................................................       1

SECTION 2.        AMOUNT AND TERMS OF CREDIT FACILITIES.......................................      23
     Section 2.1           Term Loans.........................................................      23
     Section 2.2           Revolving Loans....................................................      24
     Section 2.3           Notice of Borrowing................................................      25
     Section 2.4           Disbursement of Funds..............................................      25
     Section 2.5           Notes..............................................................      26
     Section 2.6           Interest...........................................................      26
     Section 2.7           Interest Periods...................................................      28
     Section 2.8           Minimum Amount of Eurodollar Loans.................................      28
     Section 2.9           Conversion or Continuation.........................................      28
     Section 2.10          Voluntary Reduction of Commitments.................................      29
     Section 2.11          Voluntary Prepayments..............................................      29
     Section 2.12          Mandatory Prepayments..............................................      29
     Section 2.13          Application of Prepayments.........................................      31
     Section 2.14          Method and Place of Payment........................................      31
     Section 2.15          Fees...............................................................      32
     Section 2.16          Interest Rate Unascertainable, Increased Costs, Illegality.........      32
     Section 2.17          Funding Losses.....................................................      34
     Section 2.18          Increased Capital..................................................      34
     Section 2.19          Taxes..............................................................      35
     Section 2.20          Use of Proceeds....................................................      36
     Section 2.21          Collateral Security................................................      36
     Section 2.22          Replacement of Certain Lenders.....................................      38

SECTION 3.        LETTERS OF CREDIT...........................................................      39
     Section 3.1           Issuance of Letters of Credit, etc.................................      39
     Section 3.2           Letter of Credit Fees..............................................      40
     Section 3.3           Obligation of Borrower Absolute, etc...............................      41

SECTION 4.        CONDITIONS PRECEDENT........................................................      43
     Section 4.1           Conditions Precedent to the Effectiveness of this Agreement........      43
     Section 4.2           Conditions Precedent to All Loans..................................      48

SECTION 5.        REPRESENTATIONS AND WARRANTIES..............................................      49
     Section 5.1           Corporate Status...................................................      49
     Section 5.2           Corporate Power and Authority......................................      50
     Section 5.3           No Violation.......................................................      50
     Section 5.4           Litigation.........................................................      50
     Section 5.5           Financial Statements; Financial Condition; etc.....................      50
     Section 5.6           Solvency...........................................................      50
     Section 5.7           Projections........................................................      50
     Section 5.8           Material Adverse Change............................................      51
     Section 5.9           Use of Proceeds; Margin Regulations................................      51


                                       i



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                                                                                                 
     Section 5.10          Governmental and Other Approvals...................................      51
     Section 5.11          Security Interests and Liens.......................................      51
     Section 5.12          Tax Returns and Payments...........................................      51
     Section 5.13          ERISA..............................................................      51
     Section 5.14          Investment Company Act; Public Utility Holding Company Act.........      52
     Section 5.15          Dissolved Subsidiaries; Previously Material Subsidiaries, etc......      52
     Section 5.16          Representations and Warranties in Subordinated Debt Documents......      52
     Section 5.17          True and Complete Disclosure.......................................      53
     Section 5.18          Corporate Structure; Capitalization................................      53
     Section 5.19          Environmental Matters..............................................      53
     Section 5.20          Intellectual Property..............................................      54
     Section 5.21          Ownership of Property; Restaurants.................................      54
     Section 5.22          No Default.........................................................      55
     Section 5.23          Licenses, etc......................................................      55
     Section 5.24          Compliance with Law................................................      55
     Section 5.25          No Burdensome Restrictions.........................................      55
     Section 5.26          Brokers' Fees......................................................      55
     Section 5.27          Labor Matters......................................................      55
     Section 5.28          Indebtedness of the Borrower and Its Subsidiaries..................      55
     Section 5.29          Other Agreements...................................................      55
     Section 5.30          Immaterial Subsidiaries............................................      56
     Section 5.31          Franchise Agreements and Franchisees...............................      56

SECTION 6.        AFFIRMATIVE COVENANTS.......................................................      56
     Section 6.1           Information Covenants..............................................      56
     Section 6.2           Books, Records and Inspections.....................................      60
     Section 6.3           Maintenance of Insurance...........................................      60
     Section 6.4           Taxes..............................................................      60
     Section 6.5           Corporate Franchises...............................................      61
     Section 6.6           Compliance with Law................................................      61
     Section 6.7           Performance of Obligations.........................................      61
     Section 6.8           Maintenance of Properties..........................................      61
     Section 6.9           Compliance with Terms of Leaseholds................................      61
     Section 6.10          Compliance with Environmental Laws.................................      61
     Section 6.11          Subsidiary Guarantors..............................................      62
     Section 6.12          Immaterial Subsidiaries............................................      62
     Section 6.13          Additional Mortgages...............................................      62
     Section 6.14          Collateral Account.................................................      62

SECTION 7.        NEGATIVE COVENANTS..........................................................      63
     Section 7.1           Financial Covenants................................................      63
     Section 7.2           Indebtedness.......................................................      66
     Section 7.3           Liens..............................................................      68
     Section 7.4           Restriction on Fundamental Changes.................................      70
     Section 7.5           Sale of Assets.....................................................      70
     Section 7.6           Contingent Obligations.............................................      72
     Section 7.7           Dividends..........................................................      72
     Section 7.8           Advances, Investments and Loans....................................      72
     Section 7.9           Transactions with Affiliates.......................................      75



                                       ii



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                                                                                                 
     Section 7.10          Limitation on Voluntary Payments and Modifications of
                           Certain Documents..................................................      75
     Section 7.11          Changes in Business................................................      77
     Section 7.12          Certain Restrictions...............................................      77
     Section 7.13          Lease Obligations..................................................      77
     Section 7.14          Hedging Agreements.................................................      78
     Section 7.15          Plans..............................................................      78
     Section 7.16          Fiscal Year; Fiscal Quarter........................................      79
     Section 7.17          Partnerships.......................................................      79
     Section 7.18          Excluded Resales...................................................      79
     Section 7.19          Designated Senior Indebtedness.....................................      79
     Section 7.20          Instruments........................................................      79
     Section 7.21          Real Estate Collateral Value.......................................      79

SECTION 8.        EVENTS OF DEFAULT...........................................................      79
     Section 8.1           Events of Default..................................................      79
     Section 8.2           Rights and Remedies................................................      82

SECTION 9.        THE AGENT...................................................................      83
     Section 9.1           Appointment........................................................      83
     Section 9.2           Delegation of Duties...............................................      83
     Section 9.3           Exculpatory Provisions.............................................      83
     Section 9.4           Reliance by Agent..................................................      83
     Section 9.5           Notice of Default..................................................      84
     Section 9.6           Non-Reliance on Agent and Other Lenders............................      84
     Section 9.7           Indemnification....................................................      84
     Section 9.8           Agent in its Individual Capacity...................................      85
     Section 9.9           Successor Agent....................................................      85

SECTION 10.       MISCELLANEOUS...............................................................      85
     Section 10.1          Payment of Expenses, Indemnity, etc................................      85
     Section 10.2          Right of Setoff....................................................      86
     Section 10.3          Notices............................................................      87
     Section 10.4          Successors and Assigns; Participation; Assignments.................      87
     Section 10.5          Amendments and Waivers.............................................      89
     Section 10.6          No Waiver; Remedies Cumulative.....................................      91
     Section 10.7          Sharing of Payments................................................      91
     Section 10.8          Application of Collateral Proceeds.................................      92
     Section 10.9          Governing Law; Submission to Jurisdiction..........................      92
     Section 10.10         Counterparts.......................................................      93
     Section 10.11         Financial Advisor..................................................      93
     Section 10.12         Amendment and Restatement..........................................      93
     Section 10.13         Headings Descriptive...............................................      94
     Section 10.14         Marshalling; Recapture.............................................      94
     Section 10.15         Severability.......................................................      94
     Section 10.16         Independence of Covenants..........................................      94
     Section 10.17         Survival...........................................................      94
     Section 10.18         Domicile of Loans..................................................      94
     Section 10.19         Limitation of Liability............................................      94



                                       iii



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                                                                                                 
     Section 10.20         Calculations; Computations.........................................      94
     Section 10.21         Waiver Of Trial By Jury............................................      95
     Section 10.22         References.........................................................      95



                                       iv



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                         Exhibits, Schedules and Annexes

Exhibit A          -     Form of Term Note
Exhibit B          -     Form of Revolving Note
Exhibit C          -     Form of Borrower Pledge Agreement
Exhibit D          -     Form of Borrower Security Agreement
Exhibit E          -     Form of Guaranty
Exhibit F          -     Form of Subsidiary Pledge Agreement
Exhibit G          -     Form of Subsidiary Security Agreement
Exhibit H          -     Form of Opinion of Stradling, Yocca, Carlson and Rauth
Exhibit I          -     Form of Assignment Agreement
Exhibit J          -     Form of Notice of Borrowing

Schedule 1.1       -     Commitments
Schedule 4.1(b)    -     Local Counsel
Schedule 5.10      -     Governmental Approvals
Schedule 5.11      -     Prior Liens
Schedule 5.13      -     ERISA
Schedule 5.15      -     Dissolved Entities
Schedule 5.18      -     Capital Structure
Schedule 5.19      -     Phase I Environmental Reports
Schedule 5.21      -     Real Property
Schedule 5.27      -     Labor Matters
Schedule 5.29      -     Joint Ventures; Non-Competition Agreements
Schedule 5.30      -     Immaterial Subsidiaries
Schedule 5.31      -     Franchisees/Licensees
Schedule 7.2       -     Existing Indebtedness
Schedule 7.3       -     Existing Liens
Schedule 7.6       -     Existing Contingent Obligations
Schedule 7.8       -     Existing Investments
Schedule 7.17      -     Existing Partnerships

Annex I            -     Lending Offices

                                       v



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                   FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

         FIFTH AMENDED AND RESTATED CREDIT AGREEMENT, dated as of November 12,
2003, among CKE Restaurants, Inc., a Delaware corporation (the "BORROWER"), the
Lenders (as hereinafter defined) and BNP Paribas, a bank organized under the
laws of France acting through its Chicago branch (as successor in interest to
Paribas) ("BNP PARIBAS"), as acting in its capacity as agent for the Lenders.

SECTION 1. DEFINITIONS.

                  Section 1.1 Definitions. As used herein, the following terms
shall have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural number the singular.

         "ACQUIRING SUBSIDIARY" shall have the meaning provided in Section
2.21(b).

         "ACQUISITION" shall mean any transaction, or any series of related
transactions, consummated after the Closing Date, by which the Borrower or any
of its Subsidiaries (i) acquires any going business or assets of any Person or
division thereof (other than assets acquired by the Borrower or any of its
Subsidiaries in the ordinary course of its business), whether through purchase
of assets, merger or otherwise or (ii) directly or indirectly acquires (in one
transaction or as the most recent transaction in a series of related
transactions) at least a majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election of directors or a
majority (by percentage or voting power) of the outstanding partnership
interests of a partnership or of the outstanding equity interests of a limited
liability company or other corporate entity.

         "ADJUSTED LEVERAGE RATIO" shall mean with respect to the Borrower on a
consolidated basis with its Subsidiaries, at any date, the ratio of (a)(i)
Consolidated Total Debt plus (ii) the product of (A) eight multiplied by (B) an
amount equal to Consolidated Rentals for the period of four (4) consecutive
fiscal quarters of the Borrower (taken as one accounting period) most recently
ended on or prior to such date to (b) Consolidated EBITDAR for the period of
four (4) consecutive fiscal quarters most recently ended on or prior to such
date.

         "AFFECTED LENDER" shall have the meaning provided in Section 2.22.

         "AFFILIATE" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control another Person if
such Person possesses, directly or indirectly, the power to (i) vote 10% or more
of the Voting Stock of such other Person or (ii) direct or cause the direction
of the management and policies of such other Person, whether through the
ownership of voting securities, by contract or otherwise. No Lender shall be
deemed to be an Affiliate of the Borrower as a result of its being a party to
this Agreement.

         "AGENT" shall mean BNP Paribas (and its successors) acting in its
capacity as agent for the Lenders and any successor agent appointed in
accordance with Section 9.9.

         "AGENT'S OFFICE" shall mean the office of the Agent located at Chicago,
Illinois, or such other office as the Agent may hereafter designate in writing
as such to the other parties hereto.



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

         "AGREEMENT" shall mean this Fifth Amended and Restated Credit
Agreement, as the same may from time to time hereafter be modified, restated,
supplemented or amended.

         "APPLICABLE MARGIN" shall mean, with respect to the Commitment Fee and
each Eurodollar Loan or Base Rate Loan that is a Revolving Loan, the rate of
interest per annum shown below for the range of Leverage Ratio specified below:



Leverage Ratio                           Eurodollar Loans      Base Rate Loans    Commitment Fee
- ------------------------------------------------------------------------------------------------
                                                                         
less than or equal to 3.5 to 1.0              3.50%                 2.25%             0.50%
greater than 3.5                              3.75%                 2.50%             0.50%


The Leverage Ratio shall be calculated as of the end of each fiscal quarter of
the Borrower, commencing with the fiscal quarter ending November 3, 2003 and
shall be reported to the Agent pursuant to a Compliance Certificate delivered by
the Borrower in accordance with Section 6.1(e). Not later than two (2) Business
Days after receipt by the Agent of each Compliance Certificate delivered by the
Borrower in accordance with Section 6.1(e) for each fiscal quarter or fiscal
year of the Borrower, as applicable, the Agent shall determine the Leverage
Ratio for the applicable period and shall promptly notify the Borrower and the
Lenders of such determination and of any change in each Applicable Margin
resulting therefrom. Each Applicable Margin shall be adjusted (upwards or
downwards, as appropriate), if necessary, based on the Leverage Ratio as of the
end of the fiscal quarter immediately preceding the date of determination;
PROVIDED, HOWEVER, that for the period commencing on the Closing Date and ending
on the date of the delivery of a Compliance Certificate in accordance with
Section 6.1(e) for the second fiscal quarter of the Borrower ending after the
Closing Date, the Leverage Ratio shall be deemed to be greater than 3.5 to 1.
The adjustment, if any, to the Applicable Margin shall be effective commencing
on the third (3rd) Business Day after the receipt by the Agent of such quarterly
or annual financial statements delivered in accordance with Sections 6.1(a) and
6.1(b) and such related Compliance Certificate of the Borrower delivered in
accordance with Section 6.1(e) and shall be effective from and including the
third (3rd) Business Day after the date the Agent receives such Compliance
Certificate to but excluding the third (3rd) Business Day after the date on
which the next Compliance Certificate is required to be delivered pursuant to
Section 6.1(e); provided, however, that, in the event that the Borrower shall
fail at any time to furnish to the Lenders such financial statements and any
such Compliance Certificate required to be delivered pursuant to Sections
6.1(a), 6.1(b) and 6.1(e), for purposes of determining the Applicable Margin,
the Leverage Ratio shall be deemed to be greater than 3.5 to 1 at all times
until the third (3rd) Business Day after such time as all such financial
statements and each such Compliance Certificate are so received by the Agent and
the Lenders. Each determination of the Leverage Ratio and each Applicable Margin
by the Agent in accordance with this definition shall be conclusive and binding
on the Borrower and the Lenders absent manifest error.

         "ASSET DISPOSITION" shall mean any conveyance, sale, lease, license,
transfer or other disposition by the Borrower or any of its Subsidiaries
subsequent to the Closing Date of any asset (including by way of (i) a sale and
leaseback transaction, (ii) the sale or other transfer of any of the capital
stock or other equity interest of any Subsidiary of the Borrower and (iii) any
total or partial loss, destruction or condemnation of any asset), but excluding
(A) sales of inventory in the ordinary

                                       2


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

course of business, (B) licenses of intellectual property to franchisees in the
ordinary course of business, (C) leases and subleases of real and personal
property of the Borrower or any of its Subsidiaries to any of their respective
franchisees in the ordinary course of business and consistent with past
practices, and (D) sales, transfers or other dispositions of any property or
assets by the Borrower or any of its wholly-owned Subsidiaries to the Borrower
or any of its wholly-owned Domestic Subsidiaries, PROVIDED, that (i) all
documents or opinions required to be delivered to the Agent pursuant to Section
2.21 have been delivered to the Agent and the Borrower has provided the Agent
with written notice of such sale, transfer or other disposition at least ten
(10) days prior to the date of any such sale, transfer or other disposition and
(ii) the Agent and Lenders shall not be deemed to have released their security
interest in any such property or assets.

         "ASSIGNEE" shall have the meaning provided in Section 10.4(c).

         "ASSIGNMENT AGREEMENT" shall have the meaning provided in Section
10.4(d).

         "AUTHORIZED OFFICER" of any Person shall mean any of the President, the
Chief Executive Officer, the Chief Operating Officer, the Chief Financial
Officer, any Senior Vice President, any Executive Vice President, any Vice
President, the Controller, the Treasurer or Assistant Treasurer of such Person,
acting singly.

         "BANKRUPTCY CODE" shall mean Title 11 of the United States Code
entitled "Bankruptcy", as amended from time to time, and any successor statute
or statutes.

         "BASE RATE" shall mean, at any particular date, the higher of (i) the
rate of interest publicly announced by BNP Paribas in its office in New York,
New York from time to time as its "base rate" changing as and when such base
rate changes and (ii) the Federal Funds Rate plus 0.50%. The base rate is not
intended to be the lowest rate of interest charged by BNP Paribas in connection
with extensions of credit to debtors.

         "BASE RATE LOANS" shall mean Loans made and/or being maintained at a
rate of interest based upon the Base Rate.

         "BLOCKED ACCOUNT AGREEMENT" shall mean an agreement that grants the
Agent "control" within the meaning of the UCC of the Collateral Account,
provides that the Agent may make withdrawals from, and otherwise direct the
disposition of the funds deposited or credited to, the Collateral Account and is
otherwise satisfactory in form and substance to the Agent.

         "BORROWER" shall have the meaning provided in the first paragraph of
this Agreement.

         "BORROWER PLEDGE AGREEMENT" shall mean a pledge agreement substantially
in the form of the Third Amended and Restated Borrower Pledge Agreement set
forth as Exhibit C hereto, as the same may be amended, restated, modified or
supplemented from time to time.

         "BORROWER SECURITY AGREEMENT" shall mean a security agreement
substantially in the form of the Third Amended and Restated Borrower Security
Agreement set forth as Exhibit D hereto duly executed and delivered to the Agent
by the Borrower, as the same may be amended, restated, modified or supplemented
from time to time.

                                       3


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

         "BORROWING" shall mean the incurrence of one Type of Loan of one
Facility from all the Lenders on a given date (or resulting from conversions or
continuations on a given date) having, in the case of Eurodollar Loans, the same
Interest Period.

         "BUSINESS DAY" shall mean (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which shall be
in Chicago, Los Angeles or New York City a legal holiday or a day on which
banking institutions are authorized or required by law or other government
actions to close and (ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on, Eurodollar Loans,
any day which is a Business Day described in clause (i) and which is also a day
for trading by and between banks for U.S. dollar deposits in the relevant London
interbank Eurodollar market.

         "CAPITAL EXPENDITURES" shall mean, for any period, all expenditures
(whether paid in cash or accrued as a liability, including the portion of
Capitalized Leases of the Borrower and its Subsidiaries originally incurred
during such period that is capitalized on the consolidated balance sheet of the
Borrower and its Subsidiaries) by the Borrower and its Subsidiaries during such
period that, in conformity with GAAP, are included in "capital expenditures",
"additions to property, plant or equipment" or comparable items in the
consolidated financial statements of the Borrower and its Subsidiaries
(excluding any expenditures for assets that would be included in "capital
expenditures," "additions to property, plant or equipment" or in comparable
items in the consolidated financial statements of the Borrower and its
Subsidiaries in conformity with GAAP which assets are acquired in a Permitted
Acquisition).

         "CAPITAL STOCK" shall mean any and all shares of, or interests or
participations in, corporate stock (or other instruments or securities
evidencing ownership).

         "CAPITALIZED LEASE" shall mean with respect to any Person, (i) any
lease of property, real or personal, the obligations under which are capitalized
on the consolidated balance sheet of such Person, and (ii) any other such lease
of such Person to the extent that the then present value of the minimum rental
commitment thereunder should, in accordance with GAAP, be capitalized on a
balance sheet of the lessee.

         "CAPITALIZED LEASE OBLIGATIONS" with respect to any Person, shall mean
at any time of determination all obligations of such Person under or in respect
of Capitalized Leases of such Person.

         "CASH COLLATERALIZE" shall mean the pledge and deposit with or delivery
to the Agent, for the benefit of the Agent, the Issuing Bank and the Lenders,
cash or deposit account balances pursuant to documentation in form and substance
reasonably satisfactory to the Agent and the Issuing Bank; such documentation
shall irrevocably authorize the Agent to apply such cash collateral to
reimbursement of the Issuing Bank for draws under Letters of Credit as and when
occurring, and in all cases to payment of other Obligations as and when due.
Cash collateral shall be maintained in blocked deposit accounts at the Agent or
a Lender.

         "CASH EQUIVALENTS" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (PROVIDED that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than 360 days from the date of acquisition, (ii) time deposits and certificates
of deposit of any Lender or any domestic commercial bank of recognized standing
having capital and surplus in excess of $200,000,000 with maturities of not more
than 180 days from the date of acquisition,

                                       4


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

(iii) fully secured repurchase obligations with a term of not more than 7 days
for underlying securities of the types described in clause (i) entered into with
any bank meeting the qualifications specified in clause (ii) above, and (iv)
commercial paper issued by the parent corporation of any Lender or any domestic
commercial bank of recognized standing having capital and surplus in excess of
$500,000,000 and commercial paper rated at least A-1 or the equivalent thereof
by Standard & Poor's Ratings Group or at least P-1 or the equivalent thereof by
Moody's Investor Services, Inc. and in each case maturing within 180 days after
the date of acquisition.

         "CLOSING DATE" shall mean November 12, 2003.

         "CLOSING EBITDA" shall mean, with respect to the Borrower and its
Subsidiaries for the 13 Retail Periods ended immediately prior to the Closing
Date and all determined on a consolidated basis and in accordance with GAAP, the
sum of (i) Consolidated Net Income for such period, plus (ii) to the extent
deducted in the calculation of Consolidated Net Income for such period,
Consolidated Interest Expense for such period, plus (iii) to the extent deducted
in the calculation of Consolidated Net Income for such period, federal and state
income taxes for such period, plus (iv) to the extent deducted in the
calculation of Consolidated Net Income for such period, depreciation and
amortization expense for such period, plus (v) to the extent deducted in the
calculation of Consolidated Net Income for such period, all extraordinary losses
for such period, minus (vi) to the extent included in the calculation of
Consolidated Net Income for such period, all extraordinary gains for such
period.

         "CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute.

         "COLLATERAL" shall mean all property and interests in property now
owned or hereafter acquired in or upon which a Lien has been or is purported or
intended to have been granted to the Agent or any Lender or any Interest Rate
Hedge Provider under any of the Security Documents.

         "COLLATERAL ACCOUNT" shall have the meaning set forth in the Borrower
Security Agreement."

         "COMMITMENT FEE" shall have the meaning provided in Section 2.15(b).

         "COMMITMENTS" shall mean, collectively, the Term Loan Commitments and
the Revolving Loan Commitments and "COMMITMENT" shall mean either of such
Commitments.

         "COMPLIANCE CERTIFICATE" shall have the meaning provided in Section
6.1(e).

         "CONSENTS" shall have the meaning provided in Section 4.1(r).

         "CONSOLIDATED CASH INTEREST EXPENSE" shall mean, for any period,
Consolidated Interest Expense for such period minus the amount of such
Consolidated Interest Expense for such period not paid or payable in cash.

         "CONSOLIDATED EBITDA" shall mean, for any Person during any period, the
sum of (i) Consolidated Net Income for such period, plus (ii) to the extent
deducted in the calculation of Consolidated Net Income for such period,
Consolidated Interest Expense for such period, plus (iii) to the extent deducted
in the calculation of Consolidated Net Income for such period, federal and state
income taxes for such period, plus (iv) to the extent deducted in the
calculation of Consolidated Net Income for such period, depreciation and
amortization expense for such period, plus (v) to the extent

                                       5


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

deducted in the calculation of Consolidated Net Income for such period, all
extraordinary losses for such period, PROVIDED, HOWEVER, that up to $3,000,000
of any extraordinary loss incurred in connection with the disposition of Timber
Lodge shall be excluded from the calculation of Consolidated EBDITA, minus (vi)
to the extent included in the calculation of Consolidated Net Income for such
period, all extraordinary gains for such period, all determined on a
consolidated basis for such Person and its Subsidiaries in accordance with GAAP.

         "CONSOLIDATED EBITDAR" shall mean, during any period (i) Consolidated
EBITDA for the Borrower and its Subsidiaries for such period plus (ii) to the
extent deducted in the calculation of Consolidated Net Income of the Borrower
and its Subsidiaries for such period, Consolidated Rentals for such period.

         "CONSOLIDATED INTEREST EXPENSE" shall mean, for any Person and for any
period, the total interest expense (including, without limitation, interest
expense attributable to Capitalized Leases in accordance with GAAP, but
excluding any non-cash interest expense attributable to the amortization or
write-off of deferred financing costs) of such Person and its Subsidiaries for
such period determined on a consolidated basis in accordance with GAAP.

         "CONSOLIDATED NET INCOME" shall mean for any Person and for any period
the net income (or loss) of such Person and its Subsidiaries on a consolidated
basis for such period (taken as a single accounting period) as determined in
accordance with GAAP minus to the extent included in the calculation of
Consolidated Net Income for such period, gains for such period (net of any
applicable state or federal expense) resulting from any sale by the Borrower or
any of its Subsidiaries of a Restaurant of the Borrower or such Subsidiary plus
to the extent included in the calculation of Consolidated Net Income for such
period, losses for such period (net of any applicable state or federal tax
benefit) resulting from any sale by the Borrower or any of its Subsidiaries of a
Restaurant of the Borrower or such Subsidiary, plus any reserves (net of any
applicable state or federal tax benefit) established in accordance with GAAP for
closures of Restaurants or non-cash reductions in the carrying value of
Restaurant-related assets (including goodwill and other intangible assets).

         "CONSOLIDATED RENTALS" shall mean, for the Borrower and its
Subsidiaries for any period, the aggregate rent expense for the Borrower and its
Subsidiaries for such period, minus rental income received from franchisees and
third parties pursuant to (i) subleases to such franchisees or third parties, as
the case may be, and (ii) leases that have been assigned to such franchisees or
third parties, as the case may be, in which the Borrower or its Subsidiary, as
applicable, remains liable for the payment of rent under such lease to the
extent that rent payments are actually made, all as determined on a consolidated
basis in accordance with GAAP.

         "CONSOLIDATED TANGIBLE NET WORTH" shall mean, at any time, the excess
of (i) the total assets of the Borrower and its Subsidiaries determined on a
consolidated basis in accordance with GAAP, minus goodwill and any other items
that are classified as intangibles in accordance with GAAP, minus (ii) all
liabilities of the Borrower and its Subsidiaries determined on a consolidated
basis in accordance with GAAP; PROVIDED, HOWEVER, that solely for the purpose of
determining Consolidated Tangible Net Worth hereunder, any loans and advances to
directors and officers of the Borrower and its Subsidiaries permitted by this
Agreement shall be accounted for as assets and included in the calculation of
total assets in clause (i) hereof.

                                       6


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

         "CONSOLIDATED TOTAL DEBT" shall mean, at any time, all Indebtedness of
the Borrower and its Subsidiaries (other than undrawn amounts under letters of
credit issued for the account of the Borrower or any of its Subsidiaries) as
determined on a consolidated basis.

         "CONTINGENT OBLIGATION" as to any Person shall mean any obligation of
such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("PRIMARY OBLIGATIONS") of any other Person (the
"PRIMARY OBLIGOR") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(i) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (x) for the
purchase or payment of any such primary obligation or (y) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (iv) otherwise to assure or hold harmless the owner
of such primary obligation against loss in respect thereof; PROVIDED, HOWEVER,
that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.

         "CONTROLLING STOCKHOLDERS" shall mean (i) William P. Foley II, (ii)
Fidelity National Financial, Inc., a Delaware corporation and (iii) any other
Person that, directly or indirectly, controls, is controlled by or is under
common control with any of the foregoing. For purposes of this definition, the
term "control" (including the terms "controlled by" and "under common control
with") of a Person means the possession, directly or indirect, of (A) the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of Voting Stock, by contract or otherwise or (B)
the power to vote 51% or more of the Voting Stock of such Person. No Lender
shall be deemed to be a Controlling Stockholder as a result of its being a party
to this Agreement.

         "CONVERSION" shall have the meaning provided in Section 2.21(b).

         "CONVERTIBLE SUBORDINATED NOTE INDENTURE" shall mean that certain
Indenture between the Borrower and Chase Manhattan Bank and Trust Company, N.A.,
as trustee, dated as of March 13, 1998, as the same may be amended, restated,
supplemented or otherwise modified in accordance with the terms of this
Agreement.

         "CONVERTIBLE SUBORDINATED NOTES" shall mean the Convertible
Subordinated Notes issued by the Borrower pursuant to the Convertible
Subordinated Note Indenture, in the original aggregate principal amount of
$197,225,000, as the same may be amended, restated, supplemented or otherwise
modified in accordance with the terms of this Agreement; PROVIDED that such
Convertible Subordinated Notes shall at all times be subordinated in respect of
the Obligations on subordination terms contained in the Convertible Subordinated
Note Indenture.

         "CREDIT EXPOSURE" shall have the meaning provided in Section 10.4(b).

                                       7


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

         "DEFAULT" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.

         "DEFAULT RATE" shall have the meaning provided in Section 2.6(c).

         "DIVIDENDS" shall have the meaning provided in Section 7.7.

         "DOMESTIC LENDING OFFICE" shall mean, as to any Lender, the office of
such Lender designated as such on Annex I, or such other office designated by
such Lender from time to time by written notice to the Agent and the Borrower.

         "DOMESTIC SUBSIDIARY" shall mean any wholly-owned Subsidiary of the
Borrower that is organized under the laws of a state of the United States of
America, and which is a party to the Subsidiary Security Agreement, the Guaranty
and, if required pursuant to Section 2.21, a Subsidiary Pledge Agreement.

         "EBITDA CAPEX AMOUNT" shall mean, for any fiscal year of the Borrower,
an amount, if positive, equal to (i) .80 multiplied by (ii) the difference, if
any, between Consolidated EBITDA for such fiscal year and $110,000,000.

         "EMPLOYEE STOCK LOAN" shall mean a loan made by the Borrower or any of
its Subsidiaries to an employee or director of the Borrower or any of its
Subsidiaries, the purpose of which is to finance the acquisition by such
employee or director of the capital stock of the Borrower.

         "ENVIRONMENTAL AFFILIATE" shall mean, with respect to any Person, any
other Person whose liability for any Environmental Claim such Person has or may
have retained, assumed or otherwise become liable for (contingently or
otherwise), either contractually or by operation of law.

         "ENVIRONMENTAL APPROVALS" shall mean any permit, license, approval,
ruling, variance, exemption or other authorization required under applicable
Environmental Laws.

         "ENVIRONMENTAL CLAIM" shall mean, with respect to any Person, any
notice, claim, demand or similar communication (written or oral) by any other
Person alleging potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, fines or penalties arising out of, based on or resulting from
(i) the presence, or release into the environment, of any Material of
Environmental Concern at any location, whether or not owned by such Person or
(ii) circumstances forming the basis of any violation, or alleged violation, of
any Environmental Law.

         "ENVIRONMENTAL LAWS" shall mean all federal, state, local and foreign
laws and regulations relating to pollution or protection of human health, safety
or the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), including without limitation,
laws and regulations relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern.

         "EQUITY INTERESTS" shall mean Capital Stock and warrants, options or
other rights to acquire Capital Stock.

                                       8


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time. Section references to ERISA are to ERISA, as in
effect at the Closing Date and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.

         "ERISA CONTROLLED GROUP" means a group consisting of any ERISA Person
and all members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common control with such Person
that, together with such Person, are treated as a single employer under
regulations of the PBGC.

         "ERISA PERSON" shall have the meaning set forth in Section 3(9) of
ERISA for the term "person."

         "ERISA PLAN" means (i) any Plan that (x) is not a Multiemployer Plan
and (y) has Unfunded Benefit Liabilities in excess of $2,000,000 and (ii) any
Plan that is a Multiemployer Plan.

         "EUROCURRENCY RESERVE REQUIREMENTS" shall mean, with respect to each
day during an Interest Period for Eurodollar Loans, that percentage (expressed
as a decimal) which is in effect on such day, as prescribed by the Federal
Reserve Board or other governmental authority or agency having jurisdiction with
respect thereto for determining the maximum reserves (including, without
limitation, basic, supplemental, marginal and emergency reserves) for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D) maintained by a member bank of the Federal Reserve System.

         "EURODOLLAR BASE RATE" shall mean, with respect to each day during an
Interest Period for Eurodollar Loans, the rate per annum (rounded upwards, if
necessary, to the nearest whole multiple of one-sixteenth of one percent)
appearing on Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in United States Dollars at approximately 11:00 A.M.
(London time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period. If for any reason such rate is
not available, the term "Eurodollar Base Rate" shall mean, for any Eurodollar
Loan for any Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest whole multiple of one-sixteenth of one percent)
appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in United States Dollars at approximately 11:00 A.M. (London time) two
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; PROVIDED, HOWEVER, if more than one rate is
specified on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates (rounded upwards, if necessary, to the nearest
whole multiple of one-sixteenth of one percent). If, for any reason, neither of
such rates is available, then "Eurodollar Base Rate" shall mean the rate per
annum at which deposits in United States Dollars, as determined by the Agent,
are being offered by the principal office of each of the Reference Banks in
London, England to prime banks in the London interbank market at 11:00 A.M.
(London time) two Business Days before the first day of such Interest Period in
an amount substantially equal to such Reference Bank's Eurodollar Loan
comprising part of such Borrowing to be outstanding during such Interest Period
and for a period equal to such Interest Period and the Eurodollar Base Rate for
any Interest Period for each Eurodollar Loan comprising part of the same
Borrowing shall be determined by the Agent on the basis of applicable rates
furnished to and received by the Agent from the Reference Banks two Business
Days before the first day of such Interest Period, subject, however, to the
provisions of Section 2.7.

                                       9


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

         "EURODOLLAR LENDING OFFICE" shall mean, as to any Lender, the office of
such Lender designated as such on Annex I, or such other office designated by
such Lender from time to time by written notice to the Agent and the Borrower.

         "EURODOLLAR LOANS" shall mean Loans made and/or being maintained at a
rate of interest based upon the Eurodollar Rate.

         "EURODOLLAR RATE" shall mean with respect to each day during an
Interest Period for Eurodollar Loans, a rate per annum determined for such day
in accordance with the following formula (rounded upwards to the nearest whole
multiple of 1/100th of one percent):

                  Eurodollar Base Rate
         ----------------------------------------
         1.00 - Eurocurrency Reserve Requirements

         "EVENT OF DEFAULT" shall have the meaning provided in Section 8.1.

         "EXCESS AVAILABILITY" shall mean, as of any time the same is to be
determined, the amount (if any) by which (a) the Total Revolving Loan Commitment
as then determined exceeds (b) the aggregate principal amount of the Revolving
Loans and L/C Obligations then outstanding.

         "EXCLUDED RESALES" shall mean any sale by the Borrower or any of its
Subsidiaries of a Restaurant of the Borrower or such Subsidiary so long as (i)
such Restaurant was acquired by the Borrower or such Subsidiary from a
franchisee with the intent of reselling such Restaurant and (ii) such sale
occurs within twelve (12) months of the acquisition of such Restaurant by the
Borrower or such Subsidiary.

         "EXISTING DEBT" shall have the meaning provided in Section 4.1(o).

         "EXISTING PROPERTY SALE AND LEASEBACK TRANSACTION" shall have the
meaning provided in Section 7.13(a)(i).

         "FACILITY" shall mean either or both of the Term Loans and the
Revolving Loans.

         "FEDERAL FUNDS RATE" shall mean, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago
time) on such day on such transactions received by the Agent from three (3)
Federal funds brokers of recognized standing selected by the Agent in its sole
discretion.

         "FEDERAL RESERVE BOARD" shall mean the Board of Governors of the
Federal Reserve System as constituted from time to time.

         "FEE LETTER" shall mean that certain fee letter entered into between
the Borrower and the Agent dated September 12, 2003, as amended, restated or
otherwise modified from time to time.

         "FEES" shall have the meaning set forth in Section 2.15(c).

                                       10


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

         "FINAL MATURITY DATE" shall mean the later of the Revolving Loan
Maturity Date and the Term Loan Maturity Date.

         "FINANCIAL ADVISOR" has the meaning set forth in Section 10.11.

         "FIXED CHARGES" shall mean, without duplication, with respect to the
Borrower and its Subsidiaries for any period, (i) all Consolidated Cash Interest
Expense (excluding in respect of Capitalized Leases of the Borrower and its
Subsidiaries) for such period, plus (ii) scheduled payments due in such period
for principal of the Term Loans (including only such payments made due to
scheduled reductions in the Commitments during such period), plus (iii) all
scheduled amortization during such period (including principal and interest) of
Capitalized Leases under which the Borrower or any of its Subsidiaries is the
lessee, all determined on a consolidated basis for the Borrower and its
Subsidiaries for such period, plus (iv) the net usage of the Borrower's store
closure reserve for such period, determined in accordance with GAAP.

         "FRANCHISE AGREEMENTS" shall mean any and all agreements that create a
franchise or license to which the Borrower or any of its Subsidiaries is a party
(as franchisee, licensee, franchisor or licensor) relating to the operation or
development of any Restaurant or Restaurants, including such franchise and/or
license agreements to which any of Borrower or any of its Subsidiaries is a
party as of the Closing Date and such franchise and/or license agreements
entered into from time to time after the Closing Date by the Borrower or any of
its Subsidiaries and shall include all other rights under such agreements
regardless of their nature.

         "FRANCHISEE CONSTRUCTION DEBT" shall have the meaning provided in
Section 7.2(j).

         "GAAP" shall mean (i) for purposes of determining compliance with the
covenants set forth in Section 7 hereof, United States generally accepted
accounting principles as in effect on the Closing Date and consistent with those
utilized in the preparation of the financial statements referred to in Section
5.5 and (ii) for all other purposes, United States generally accepted accounting
principles as in effect as of the date of determination.

         "GREEN BURRITO" shall mean GB Franchise Corporation, a California
corporation.

         "GUARANTOR" shall mean each Subsidiary of the Borrower that shall be
required by the terms of this Agreement to enter into a Guaranty from time to
time.

         "GUARANTY" shall mean a guaranty substantially in the form of the Third
Amended and Restated Guaranty set forth as Exhibit E hereto duly executed and
delivered to the Agent for itself, the Lenders and any Interest Rate Hedge
Providers by each Subsidiary of the Borrower (other than Immaterial Subsidiaries
which are not Subordinated Guarantors), as the same may be amended, restated,
modified or supplemented from time to time.

         "HARDEE'S" shall mean Hardee's Food Systems, Inc., a North Carolina
corporation or any successor entity permitted pursuant to the terms of this
Agreement.

         "HART-SCOTT-RODINO ACT" shall mean the Hart-Scott-Rodino Antitrust
Improvement Act of 1976, as amended.

         "HEDGING AGREEMENTS" shall mean any interest rate protection agreements
(including, without limitation, any interest rate swaps, caps, floors, collars,
options, futures and similar

                                       11


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

agreements) and swaps (including, without limitation, any caps, floors, collars,
options, futures and similar agreements) relating to currencies, commodities or
securities, and similar agreements.

         "IMMATERIAL INVESTMENTS" shall mean, at any time, (a) any Investment
owned by the Borrower or any Subsidiary consisting of Capital Stock of any
Person that is not a Subsidiary of the Borrower and which, when added to all
other Investments held by the Borrower and/or its Subsidiaries consisting of
Capital Stock of such Person does not exceed $1,000,000 at any one time
outstanding and (b) any Investment owned by the Borrower or any Subsidiary
consisting of an Instrument payable by any Person that is not a Subsidiary of
the Borrower and which, when added to all other Investments held by the Borrower
and/or its Subsidiaries consisting of Instruments payable by such Person does
not exceed $2,000,000 at any one time outstanding.

         "IMMATERIAL SUBSIDIARIES" shall mean any Subsidiary of the Borrower
with assets of less than $1,500,000 (as determined in accordance with GAAP),
which is designated by the Borrower as an Immaterial Subsidiary on Schedule 5.30
or pursuant to Section 6.12; provided that the aggregate amount of assets of all
Subsidiaries designated as Immaterial Subsidiaries shall not at any time exceed
$10,000,000 (as determined in accordance with GAAP).

         "INDEBTEDNESS" of any Person shall mean, without duplication, (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than trade payables on terms of 90 days or
less incurred in the ordinary course of business of such Person), (ii) all
indebtedness of such Person evidenced by a note, bond, debenture, acceptance or
similar instrument, (iii) the principal component of all Capitalized Lease
Obligations of such Person, (iv) the face amount of all letters of credit issued
for the account of such Person and, without duplication, all unreimbursed
amounts drawn thereunder, and all obligations of such Person, contingent or
otherwise, under acceptances or similar facilities, (v) all indebtedness of any
other Person secured by any Lien on any property owned by such Person, whether
or not such indebtedness has been assumed in an amount equal to the lesser of
the fair market value at such date of such property subject to such Lien
securing such Indebtedness and the amount of the Indebtedness secured by such
Lien, (vi) all indebtedness of such Person created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even if the rights and remedies of the seller or lender
under such agreement in the event of default are limited to repossession or sale
of such property), (vii) all Contingent Obligations of such Person, (viii) all
payment obligations, whether absolute or contingent, matured or unmatured,
present or future, due or to become due, now existing or hereafter arising, of
such Person under any Hedging Agreements, (ix) all Redeemable Stock and (x) all
indebtedness and other obligations of the types specified in clauses (i) through
(ix) above of any joint venture or partnership for which such Person is liable.

         "INDEMNITEE" shall have the meaning provided in Section 10.1(c).

         "INS" shall mean the United States Immigration and Naturalization
Service or any governmental body succeeding to its functions.

         "INSTRUMENT" shall have the meaning ascribed thereto in the UCC.

         "INTELLECTUAL PROPERTY" has the meaning set forth in Section 5.20.

         "INTEREST PERIOD" shall have the meaning provided in Section 2.7.

                                       12


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

         "INTEREST RATE AGREEMENTS" shall mean any and all interest rate
protection agreements, including, without limitation, any interest rate swaps,
caps, collars, floors and similar agreements.

         "INTEREST RATE HEDGE PROVIDERS" shall mean any Lender or Affiliate of
any Lender that provides an Interest Rate Agreement to the Borrower as permitted
pursuant to Section 7.14(a) and that executes and delivers an agency agreement,
in form and substance satisfactory to the Agent.

         "INVESTMENT" of a Person shall mean any loan, advance, extension of
credit or commitment to make any such loan, advance or extension of credit
(other than accounts receivable arising in the ordinary course of business),
deposit account or contribution of capital by such Person to any other Person or
any investment in, or purchase or other acquisition (whether by purchase,
merger, consolidation or otherwise) of, the stock, partnership interests, notes,
bonds, debentures or other securities, including options and warrants, of, or
other ownership interests in, any other Person made by such Person (whether for
cash, property, services, securities or otherwise).

         "ISSUE" shall mean, with respect to any Letter of Credit, to issue or
to extend the expiry of, or to renew or increase the amount of, such Letter of
Credit; and the terms "Issued," "Issuing" and "Issuance" have corresponding
meanings.

         "ISSUING BANK" shall mean BNP Paribas or, with the consent of BNP
Paribas, any other Revolving Lender (and their respective successors) that
agrees to be an Issuing Bank hereunder, in its capacity as issuer of one or more
Letters of Credit hereunder.

         "LA SALSA" shall mean, collectively, La Salsa, Inc., a California
corporation, La Salsa Franchise, Inc., a California corporation, and La Salsa of
Nevada, Inc., a Nevada corporation.

         "L/C AMENDMENT APPLICATION" shall mean an application form for
amendment of outstanding Letters of Credit as shall at any time be in use at the
Issuing Bank, as the Issuing Bank shall request.

         "L/C APPLICATION" shall mean an application form for issuance of
Standby Letters of Credit or Trade Letters of Credit, as appropriate, as shall
at any time be in use at the Issuing Bank, as the Issuing Bank shall request.

         "L/C COMMITMENT" shall mean the commitment of the Issuing Bank to
Issue, and the commitment of the Revolving Lenders severally to participate in,
Letters of Credit from time to time Issued or outstanding under Section 3, in an
aggregate amount not to exceed on any date the amount of $80,000,000, PROVIDED,
that the L/C Commitment is part of the Total Revolving Loan Commitment, rather
than a separate, independent commitment.

         "L/C OBLIGATIONS" shall mean at any time the sum of (a) the aggregate
undrawn amount of all Letters of Credit then outstanding, plus (b) the amount of
all unreimbursed drawings under all Letters of Credit.

         "L/C RELATED DOCUMENTS" shall mean the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document relating to
any Letter of Credit, including any of the Issuing Bank's standard form
documents for standby or commercial letter of credit issuances, as appropriate.

                                       13


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

         "LENDER AFFILIATE" shall mean, with respect to any Lender that is a
fund that invests in bank loans, any other fund that invests in bank loans and
similar extensions of credit in the ordinary course of its business and is
managed or advised by the same investment advisor as such Lender or by an
Affiliate of such Lender or advisor.

         "LENDERS" shall mean the persons listed on Schedule 1.1 hereto and the
persons which from time to time become a party hereto in accordance with Section
10.4(d).

         "LETTERS OF CREDIT" shall mean any letters of credit Issued by the
Issuing Bank pursuant to Section 3.

         "LEVERAGE RATIO" shall mean, with respect to the Borrower on a
consolidated basis with its Subsidiaries, at any date, the ratio of (a)
Consolidated Total Debt of the Borrower and its Subsidiaries to (b) Consolidated
EBITDA of the Borrower and its Subsidiaries for the period of four (4)
consecutive fiscal quarters most recently ended on or prior to such date, all
determined on a consolidated basis for the Borrower and its Subsidiaries for
such period.

         "LIEN" shall mean any mortgage, deed of trust, pledge, charge, security
interest, hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or other), or preference, priority or other security agreement of any
kind or nature whatsoever, whether or not filed, recorded or otherwise perfected
under applicable law, including, without limitation, any conditional sale or
other title retention agreement, any financing lease having substantially the
same effect as any of the foregoing and the filing of any financing statement or
similar instrument under the Uniform Commercial Code or comparable law of any
jurisdiction, domestic or foreign.

         "LIQUIDATING DISTRIBUTION" shall mean any extraordinary, liquidating or
other distribution in return of capital with respect to any Equity Interest of
any Person (other than a Subsidiary of any Domestic Subsidiary) owned by a Loan
Party which Equity Interest is pledged pursuant to any of the Security
Documents.

         "LOAN DOCUMENTS" shall mean this Agreement, the Notes, the Guaranty,
each Letter of Credit, each L/C Related Document, the Fee Letter, the Security
Documents, each Interest Rate Agreement permitted to be entered into pursuant to
Section 7.14(a) and all other documents, instruments and agreements executed
and/or delivered in connection herewith or therewith or required or contemplated
hereunder or thereunder, as the same may be amended, restated, modified or
supplemented and in effect from time to time.

         "LOAN PARTY" shall mean and include the Borrower and each Guarantor.

         "LOANS" shall mean and include the Term Loans and the Revolving Loans.

         "MARGIN STOCK" shall have the meaning provided such term in Regulation
U of the Federal Reserve Board.

         "MATERIAL ADVERSE EFFECT" shall mean a material adverse effect upon (i)
the business, operations, properties, assets, performance, prospects or
condition (financial or otherwise) of the Borrower and its Subsidiaries, taken
as a whole, or (ii) the ability of any Loan Party to perform, or of the Agent or
any of the Lenders to enforce, any of such Loan Party's material Obligations
under any

                                       14


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

Loan Document to which it is or is to be a party, or (iii) the validity,
perfection or priority of any Lien in favor of the Agent for the benefit of the
Lenders on any material portion of the Collateral.

         "MATERIAL LEASES" shall have the meaning provided in Section 6.9.

         "MATERIALS OF ENVIRONMENTAL CONCERN" shall mean and include chemicals,
pollutants, contaminants, wastes, toxic substances, petroleum and petroleum
products, asbestos and radioactive materials.

         "MORTGAGES" shall mean collectively, each mortgage, deed of trust,
leasehold mortgage, leasehold deed of trust or other similar instrument executed
and delivered by the Borrower or any of its Subsidiaries to the Agent for the
benefit of the Lenders from time to time (including, without limitation, all
Mortgages delivered prior to the Closing Date) and granting or purporting to
grant a Lien on the real property of the Borrower or such Subsidiary identified
therein, as the same may be amended, restated, supplemented or otherwise
modified.

         "MULTIEMPLOYER PLAN" shall mean a Plan which is a "multiemployer plan"
as defined in Section 4001(a)(3) of ERISA.

         "NET DEBT PROCEEDS" means all cash proceeds received by the Borrower or
any of its Subsidiaries from the incurrence of, or the issuance of any
instruments relating to, any Indebtedness (other than (i) Indebtedness borrowed
by the Borrower under this Agreement, (ii) Indebtedness permitted to be incurred
pursuant to Section 7.2(g), (iii) Indebtedness permitted to be incurred pursuant
to Section 7.2(i) (including the New Convertible Subordinated Notes) and (iv)
Indebtedness permitted to be incurred pursuant to Section 7.2(m) with respect to
Sale and Leaseback Transactions) net of reasonable and customary underwriting
fees and discounts, brokerage commissions and other similar reasonable and
customary costs and expenses directly attributable to such issuance or
incurrence.

         "NET EQUITY PROCEEDS" shall mean all cash proceeds received by the
Borrower or any of its Subsidiaries from any capital contribution or the
issuance of any Equity Interests or other equity securities of the Borrower or
any of its Subsidiaries (other than the issuance of common stock (A) of the
Borrower issued to employees, consultants or directors of the Borrower or any of
its Subsidiaries pursuant to an employee stock option or purchase plan approved
by the Board of Directors of the Borrower or (B) of any Subsidiary of the
Borrower to the Borrower or any wholly-owned Subsidiary of the Borrower), net of
any reasonable and customary brokerage commissions, underwriting fees and
discounts and any other similar reasonable and customary costs or expenses
directly attributable to such issuance.

         "NET SALE PROCEEDS" shall mean, with respect to (a) any Asset
Disposition, all proceeds in the form of cash or cash equivalents received by
the Borrower or any of its Subsidiaries from or in respect of such Asset
Disposition (including any cash proceeds received as income or other proceeds of
any noncash proceeds of such Asset Disposition and including any insurance
payment or condemnation award in respect of any assets of the Borrower or any of
its Subsidiaries) and (b) any Liquidating Distribution, all proceeds in the form
of cash or cash equivalents received by the Borrower or any of its Subsidiaries
from or in respect of any Liquidating Distribution, in the case of the foregoing
clauses (a) and (b), net of (i) reasonable and customary expenses incurred or
reasonably expected to be incurred in connection with such Asset Disposition or
Liquidating Distribution, (ii) any income, franchise, transfer or other tax
payable by the Borrower or such

                                       15


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

Subsidiary in connection with such Asset Disposition or Liquidating Distribution
and (iii) any Indebtedness secured by a Lien on such property or assets and
required to be repaid as a result of such Asset Disposition, in each case with
respect to the foregoing clause (i) to the extent, but only to the extent, that
the amounts so deducted are, at the time of receipt of such cash or cash
equivalents, actually paid to a Person that is not an Affiliate and are properly
attributable to such transaction or to the asset that is the subject thereof;
PROVIDED, HOWEVER, that Net Sale Proceeds shall not include any such proceeds
from Excluded Resales.

         "NEW CONVERTIBLE SUBORDINATED NOTE INDENTURE" shall mean that certain
Indenture between the Borrower and J.P. Morgan Trust Company, National
Association, as Trustee, dated as of September 29, 2003, as the same may be
amended, restated, supplemented or otherwise modified in accordance with the
terms of this Agreement.

         "NEW CONVERTIBLE SUBORDINATED NOTES" shall mean the convertible
subordinated notes issued by the Borrower pursuant to the New Convertible
Subordinated Note Indenture, in the maximum aggregate principal amount not to
exceed $105,000,000, as the same may be amended, restated, supplemented or
otherwise modified in accordance with the terms of this Agreement; PROVIDED that
such New Convertible Subordinated Notes shall at all times be subordinated in
respect of the Obligations on subordination terms contained in the New
Convertible Subordinated Note Indenture.

         "NEW PROPERTY SALE AND LEASEBACK TRANSACTION" shall have the meaning
provided in Section 7.13(a)(i).

         "NEW RETAIL UNIT" shall mean a retail unit of the Borrower or any of
its Subsidiaries purchased from a franchisee or constructed by the Borrower or
such Subsidiary after the Closing Date.

         "NEW SUBORDINATED NOTE INDENTURE" shall mean that certain Indenture
among the Borrower, certain Subsidiaries of the Borrower, and Chase Manhattan
Bank and Trust Company, National Association, as trustee, dated as of March 4,
1999, as the same may be amended, restated, supplemented or otherwise modified
in accordance with the terms of this Agreement.

         "NEW SUBORDINATED NOTES" shall mean the Senior Subordinated Notes
issued by the Borrower pursuant to the New Subordinated Note Indenture, in a
maximum principal amount not to exceed $200,000,000 in the aggregate at the rate
of 9-1/8% and due 2009 (the "ORIGINAL NOTES"), as the same may be amended,
restated, supplemented or otherwise modified in accordance with the terms of
this Agreement; PROVIDED, that such New Subordinated Notes shall at all times be
subordinated in respect of the Obligations on subordination terms contained in
the New Subordinated Note Indenture; PROVIDED, FURTHER, that the term "New
Subordinated Notes" shall include any notes or instruments exchanged for then
outstanding New Subordinated Notes pursuant to the New Subordinated Note
Indenture.

         "NEW UNIT CAPITAL EXPENDITURES" shall mean Capital Expenditures
incurred in any period of four consecutive fiscal quarters for the construction
or purchase of a New Retail Unit constructed or purchased during such period or
the remodeling of a New Retail Unit constructed or purchased during such period.

         "NOTE" shall mean a Revolving Note or a Term Note.

                                       16


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

         "NOTES" shall mean and include each Revolving Note and each Term Note.

         "NOTICE OF BORROWING" shall have the meaning provided in Section
2.3(a).

         "NOTICE OF CONVERSION OR CONTINUATION" shall have the meaning provided
in Section 2.9(b).

         "OBLIGATIONS" shall mean all obligations, liabilities and indebtedness
of every kind, nature and description of the Borrower and the other Loan Parties
from time to time owing to the Agent or any Lender or any Indemnitee under or in
connection with this Agreement or any other Loan Document, whether direct or
indirect, primary or secondary, joint or several, absolute or contingent, due or
to become due, now existing or hereafter arising and however acquired and shall
include, without limitation, all principal and interest on the Loans and, to the
extent chargeable under any Loan Document, all charges, expenses, fees and
attorney's fees.

         "ORIGINAL CREDIT AGREEMENT" shall mean that certain Fourth Amended and
Restated Credit Agreement dated as of January 31, 2002, among the Borrower, the
lenders party thereto and BNP Paribas, as Agent, as amended prior to the date
hereof.

         "OTHER TAXES" shall have the meaning provided in Section 2.19(c).

         "PARTICIPANT" shall have the meaning provided in Section 10.4(b).

         "PAYMENT DATE" shall mean the fifteenth day of each March, June,
September and December of each year.

         "PBGC" shall mean the Pension Benefit Guaranty Corporation established
under ERISA, or any successor thereto.

         "PERMITTED ACQUISITION" shall mean any Acquisition by the Borrower or
any of its Subsidiaries of a Carl's Jr., a Hardee's, a Green Burrito or a La
Salsa Restaurant from a franchisee that has been approved by the board of
directors (or other governing body, if applicable) of the Person which is the
subject of such Acquisition.

         "PERMITTED SUBORDINATED DEBT" shall mean Indebtedness of the Borrower
or any Subsidiary of the Borrower incurred after the Closing Date, (A) with
respect to which no principal payments are due prior to the date which is one
year and one day after the Final Maturity Date and (B) which is subordinated as
to exercise of remedies and in right of payment to the Borrower's Obligations
and such Subsidiary's Obligations, respectively, under the Loan Documents on,
and is otherwise subject to, terms and conditions (including, without
limitation, terms in respect of maturities, covenants, defaults and remedies and
interest rates) approved in writing by the Agent and in any event shall not
include Indebtedness issued pursuant to the Subordinated Notes.

         "PERSON" shall mean and include any individual, partnership, joint
venture, firm, corporation, limited liability company, association, trust or
other enterprise or any government or political subdivision or agency,
department or instrumentality thereof.

         "PLAN" means any employee benefit plan covered by Title IV of ERISA,
the funding requirements of which:

                                       17


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                           (i)      were the responsibility of the Borrower or a
         member of its ERISA Controlled Group at any time within the six years
         immediately preceding the Closing Date,

                           (ii)     are currently the responsibility of the
         Borrower or a member of its ERISA Controlled Group, or

                           (iii)    hereafter become the responsibility of the
         Borrower or a member of its ERISA Controlled Group,

including any such plans as may have been, or may hereafter be, terminated for
whatever reason.

         "PREPAYMENT" shall have the meaning provided in Section 7.10(a)(i).

         "PRO RATA SHARE" as to any Lender shall mean:

                  (a)      with respect to all payments, computations and
determinations relating to the Term Loan Commitment or the Term Loan of any
Lender, the percentage obtained by dividing (i) the outstanding principal
balance of such Lender's Term Loan by (ii) the aggregate outstanding principal
balance of the Term Loans;

                  (b)      with respect to all payments, computations and
determinations relating to the Revolving Loan Commitment or the Revolving Loans
of any Lender, or such Lender's interest in Letters of Credit (including,
without limitation, determinations of the Commitment Fee under Section 2.15(b)
and letter of credit fees under Section 3.2), the percentage obtained by
dividing (i) such Lender's Revolving Loan Commitment (or the aggregate
outstanding principal balance of such Lender's Revolving Loans and all L/C
Obligations in which such Lender has an interest, if the Revolving Loan
Commitments have been terminated pursuant to the terms of this Agreement) by
(ii) the Total Revolving Loan Commitment (or the aggregate outstanding principal
balance of the Revolving Loans and all L/C Obligations, if the Revolving Loan
Commitments have been terminated pursuant to the terms of this Agreement); and

                  (c)      for all other purposes with respect to each Lender,
the percentage obtained by dividing (i) the sum of (A) the outstanding principal
balance of such Lender's Term Loan and (B) such Lender's Revolving Loan
Commitment (or the aggregate outstanding principal balance of such Lender's
Revolving Loans and all L/C Obligations in which such Lender has an interest, if
the Revolving Loan Commitments have been terminated pursuant to the terms of
this Agreement) by (ii) the sum of (A) the aggregate outstanding principal
balance of the Term Loans and (B) the Total Revolving Loan Commitment (or the
aggregate outstanding principal balance of the Revolving Loans and all L/C
Obligations, if the Revolving Loan Commitments have been terminated pursuant to
the terms of this Agreement).

         "PURCHASING LENDERS" shall have the meaning provided in Section
10.4(d).

         "RATE HEDGING OBLIGATIONS" shall mean any and all obligations of any
Loan Party to any Interest Rate Hedge Provider under Interest Rate Agreements
permitted pursuant to Section 7.14(a).

         "REAL ESTATE COLLATERAL" shall mean Collateral subject to or purported
to be subject to the Lien of the Mortgages.

                                       18


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

         "REAL ESTATE COLLATERAL VALUE" shall mean, at any time, the sum of (i)
the fair market values of all Real Estate Collateral then subject to the Lien of
the Mortgages, plus (ii) all amounts then on deposit or credited to the
Collateral Account, PROVIDED, that the Collateral Account is subject to a
Blocked Account Agreement. The fair market values of the Real Estate Collateral
for the purpose of calculating Real Estate Collateral Value shall be (i) for
Real Estate Collateral subject to the Lien of the Mortgages on or prior to July
8, 2002, as determined by appraisals delivered to the Agent on or prior to July
8, 2002 and (ii) for Real Estate Collateral that becomes subject to the Lien of
the Mortgages after July 8, 2002, as determined by appraisals delivered to the
Agent on or prior to July 8, 2002 or, if no such appraisals have been delivered
to the Agent on or prior to such date, then by an appraisal or appraisals
satisfactory to the Agent, prepared by a firm satisfactory to the Agent and
delivered to the Agent prior to such Real Estate Collateral being included in
the calculation of Real Estate Collateral Value.

         "REDEEMABLE STOCK" shall mean any Equity Interest which, by its terms,
or upon the happening of any event matures, is mandatorily redeemable or
repurchaseable (other than for Capital Stock not constituting Redeemable Stock),
in whole or in part, prior to one year and one day after the Final Maturity
Date, or is, by its terms or upon the happening of any event, required to be
redeemed or repurchased, redeemable or repurchaseable at the option of the
holder thereof, in whole or in part, at any time prior to one year and one day
after the Final Maturity Date.

         "REDEMPTION TRANSACTIONS" shall mean, collectively, the issuance of the
New Convertible Subordinated Notes, the redemption of the Convertible
Subordinated Notes with the proceeds from the issuance of the New Convertible
Subordinated Notes, net of customary underwriting fees and discounts, brokerage
commissions and other similar reasonable and customary costs and expenses
directly attributable to the issuance of the New Convertible Subordinated Notes
and to the extent such proceeds are insufficient to redeem all of the
Convertible Subordinated Notes outstanding on the date of the issuance of the
New Convertible Subordinated Notes, the redemption of the balance of the
Convertible Subordinated Notes with the proceeds of the Loans as soon as
practicable, but in no event later than March 15, 2004.

         "REFERENCE BANKS" shall mean BNP Paribas, First Bank and Trust, Fleet
National Bank, U.S. Bank National Association, Wells Fargo Bank, National
Association and Union Bank of California, N.A. and their respective successors.

         "REGISTER" shall have the meaning provided in Section 10.4(h).

         "REGULATION D" shall mean Regulation D of the Federal Reserve Board as
from time to time in effect and any successor to all or any portion thereof.

         "REPLACEMENT LENDER" shall have the meaning provided in Section 2.22.

         "REPORTABLE EVENT" has the meaning set forth in Section 4043(b) of
ERISA (other than a Reportable Event as to which the provision of 30 days notice
to the PBGC is waived under applicable regulations), or is the occurrence of any
of the events described in Section 4068(f) or 4063(a) of ERISA.

         "REQUIRED LENDERS" shall mean all Lenders whose Pro Rata Shares, in the
aggregate, are greater than 50%.

                                       19


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

         "RESTAURANT" shall mean a Timber Lodge restaurant or any quick service
restaurant.

         "RETAIL PERIOD" shall mean any of the thirteen consecutive four week or
five week periods used by the Borrower for accounting purposes which begin on or
about the Tuesday after the last Monday in January of each year and ending on
the last Monday in January of the next year.

         "REVOLVING LENDERS" shall mean, collectively, the Lenders holding the
Revolving Commitments or any outstanding Revolving Loan, L/C Obligation or
participation therein and "REVOLVING LENDER" means any one of them.

         "REVOLVING LOAN COMMITMENT" shall mean at any time, for any Lender, the
amount set forth opposite such Lender's name on Schedule 1.1 hereto under the
heading "Revolving Loan Commitment," as such amount may be reduced from time to
time pursuant to the terms of this Agreement.

         "REVOLVING LOAN MATURITY DATE" shall mean November 15, 2006.

         "REVOLVING LOANS" shall have the meaning provided in Section 2.2(a).

         "REVOLVING NOTE" shall have the meaning provided in Section 2.5(a).

         "SALE AND LEASEBACK TRANSACTIONS" shall mean Existing Property Sale and
Leaseback Transactions and New Property Sale and Leaseback Transactions, in each
case, permitted to be entered into by the Borrower or any of its Subsidiaries
pursuant to Section 7.13(a).

         "SECURED PARTIES" shall have the meaning provided in the Borrower
Security Agreement and the Subsidiary Security Agreement.

         "SECURITY DOCUMENTS" shall mean and include the Borrower Security
Agreement, the Subsidiary Security Agreement, the Guaranty, the Borrower Pledge
Agreement, the Subsidiary Pledge Agreements, the Mortgages and all other
security agreements, pledge agreements, mortgages, leasehold mortgages,
assignments and similar agreements executed in connection with the Loan
Documents.

         "SOLVENT" as to any Person shall mean that (i) the sum of the assets of
such Person, both at a fair valuation and at present fair salable value, will
exceed its liabilities, including contingent liabilities, (ii) such Person will
have sufficient capital with which to conduct its business as presently
conducted and as proposed to be conducted and (iii) such Person has not incurred
debts, and does not intend to incur debts, beyond its ability to pay such debts
as they mature. For purposes of this definition, "debt" means any liability on a
claim, and "claim" means (x) a right to payment, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured, or (y)
a right to an equitable remedy for breach of performance if such breach gives
rise to a payment, whether or not such right to an equitable remedy is reduced
to judgment, fixed, contingent, matured, unmatured, disputed, undisputed,
secured, or unsecured. With respect to any such contingent liabilities, such
liabilities shall be computed at the amount which, in light of all the facts and
circumstances existing at the time, represents the amount which can reasonably
be expected to become an actual or matured liability.

                                       20


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

         "STANDBY LETTER OF CREDIT" shall mean any standby letter of credit
issued by the Issuing Bank pursuant to Section 3 and which is not a Trade Letter
of Credit.

         "SUBORDINATED DEBT DOCUMENTS" shall mean the Subordinated Notes and the
Subordinated Note Indentures.

         "SUBORDINATED GUARANTOR" shall mean each Subsidiary of the Borrower
that guarantees any Indebtedness or other obligations of the Borrower or any
Subsidiary of the Borrower under or with respect to any of the New Subordinated
Notes.

         "SUBORDINATED NOTE INDENTURES" shall mean the Convertible Subordinated
Note Indenture, the New Subordinated Note Indenture and the New Convertible
Subordinated Note Indenture.

         "SUBORDINATED NOTES" shall mean the Convertible Subordinated Notes, the
New Subordinated Notes and the New Convertible Subordinated Notes.

         "SUBSIDIARY" of any Person shall mean and include (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned or controlled by such Person
directly or indirectly through one or more Subsidiaries and (ii) any
partnership, limited liability company, association, joint venture or other
entity in which such Person, directly or indirectly through one or more
Subsidiaries, is either a general partner or has a more than 50% equity interest
at the time. Unless otherwise expressly provided, all references to a
"Subsidiary" shall mean a Subsidiary of the Borrower.

         "SUBSIDIARY PLEDGE AGREEMENT" shall mean each pledge agreement
substantially in the form of the Third Amended and Restated Subsidiary Pledge
Agreement set forth as Exhibit F hereto duly executed and delivered to the Agent
by each Subsidiary of the Borrower which owns any equity interest of any Person,
as the same may be amended, restated, modified or supplemented from time to
time.

         "SUBSIDIARY SECURITY AGREEMENT" shall mean a security agreement
substantially in the form of the Third Amended and Restated Subsidiary Security
Agreement set forth as Exhibit G hereto duly executed and delivered to the Agent
by each Subsidiary of the Borrower (other than Immaterial Subsidiaries), as the
same may be amended, restated, modified or supplemented from time to time.

         "SURVIVING DEBT" shall have the meaning provided in Section 4.1(o).

         "TAXES" has the meaning set forth in Section 2.19(a).

         "TERM LOAN" shall have the meaning provided in Section 2.1.

         "TERM LOAN COMMITMENT" shall mean at any time, for any Lender, the
amount set forth opposite such Lender's name on Schedule 1.1 hereto under the
heading "Term Loan Commitment," as such amount may be reduced from time to time
pursuant to the terms of this Agreement.

         "TERM LOAN LENDERS" means, collectively, the Lenders holding the Term
Loan Commitments or any outstanding Term Loans and "TERM LOAN LENDER" means any
one of them.

                                       21


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

         "TERM LOAN MATURITY DATE" shall mean April 1, 2008.

         "TERM LOAN PAYDOWN" shall have the meaning set forth in Section 2.1.

         "TERM NOTE" shall have the meaning provided in Section 2.5(a).

         "TERMINATION EVENT" shall mean (i) a Reportable Event, or (ii) the
initiation of any action by the Borrower, any member of the Borrower's ERISA
Controlled Group or any ERISA Plan fiduciary to terminate an ERISA Plan or the
treatment of an amendment to an ERISA Plan as a termination under ERISA, or
(iii) the institution of proceedings by the PBGC under Section 4042 of ERISA to
terminate an ERISA Plan or to appoint a trustee to administer any ERISA Plan.

         "TIMBER LODGE" shall mean Timber Lodge Steakhouse, Inc., a Minnesota
corporation.

         "TOTAL COMMITMENT" shall mean, at any time, the sum of the Commitments
of all of the Lenders at such time.

         "TOTAL REVOLVING LOAN COMMITMENT" shall have the meaning set forth in
Section 2.2(a).

         "TOTAL TERM LOAN COMMITMENT" shall have the meaning set forth in
Section 2.1(a).

         "TRADE LETTER OF CREDIT" shall mean any Letter of Credit that is issued
pursuant to Section 3 for the benefit of a supplier of inventory to the Borrower
or any of its Subsidiaries to effect payment for such inventory.

         "TRANSACTION DOCUMENTS" shall mean the Loan Documents.

         "TRANSACTIONS" shall mean each of the transactions contemplated by the
Transaction Documents.

         "TRANSFEREE" shall have the meaning provided in Section 10.4(e).

         "TYPE" shall mean any type of Loan determined with respect to the
interest option applicable thereto, i.e., a Base Rate Loan or a Eurodollar Loan.

         "UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the applicable jurisdiction.

         "UNFUNDED BENEFIT LIABILITIES" shall mean with respect to any Plan at
any time, the amount (if any) by which (i) the present value of all benefit
liabilities under such Plan as defined in Section 4001(a)(16) of ERISA, exceeds
(ii) the fair market value of all Plan assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plan (on the basis
of assumptions prescribed by the PBGC for the purpose of Section 4044 of ERISA).

         "UNUSED PORTION" shall mean at any time with respect to the Revolving
Loans, the amount by which the Total Revolving Loan Commitment in effect at such
time exceeds the sum of (i) the aggregate principal amount of the Revolving
Loans outstanding at such time and (ii) the aggregate amount of L/C Obligations
outstanding at such time.

                                       22


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

         "VOTING STOCK" shall mean capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors
(or persons performing similar functions) of such Person, even though the right
so to vote has been suspended by the happening of such a contingency.

SECTION 2. AMOUNT AND TERMS OF CREDIT FACILITIES.

                  Section 2.1 Term Loans. Subject to and upon the terms and
conditions herein set forth, each Term Loan Lender severally and not jointly
agrees to make a single loan to the Borrower on the Closing Date of a sum not
exceeding the Term Loan Commitment of such Term Loan Lender (each such loan, a
"TERM LOAN"). The aggregate principal amount of the Term Loan Commitments (the
"TOTAL TERM LOAN COMMITMENT") shall not exceed $25,000,000. All unutilized Term
Loan Commitments shall expire simultaneously with the making of the Term Loans
on the Closing Date. The Term Loan of each Term Loan Lender made on the Closing
Date shall be initially made as a Base Rate Loan or a Eurodollar Loan (subject
to the other terms of this Agreement, including without limitation, Section 2.3
and Section 2.17) and may thereafter be maintained at the option of the Borrower
as a Base Rate Loan or a Eurodollar Loan, in accordance with the provisions
hereof. Once repaid, Term Loans may not be reborrowed. The Borrower shall repay
the principal amounts with respect to the Term Loans on the dates and in the
amounts set forth below (each, a "TERM LOAN PAYDOWN"):

                                       23


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT



     DATE           PAYDOWN AMOUNT
     ----           --------------
                 
January 1, 2004     $      937,500
April 1, 2004       $      937,500
July 1, 2004        $      937,500
October 1, 2004     $      937,500
January 1, 2005     $    1,250,000
April 1, 2005       $    1,250,000
July 1, 2005        $    1,250,000
October 1, 2005     $    1,250,000
January 1, 2006     $    1,250,000
April 1, 2006       $    1,250,000
July 1, 2006        $    1,250,000
October 1, 2006     $    1,250,000
January 1, 2007     $    1,250,000
April 1, 2007       $    1,250,000
July 1, 2007        $    1,250,000
October 1, 2007     $    1,250,000
January 1, 2008     $    3,125,000
April 1, 2008       $    3,125,000


The Term Loans shall mature on the Term Loan Maturity Date and shall be repaid
in full, without premium or penalty, by the Borrower, on the Term Loan Maturity
Date; PROVIDED HOWEVER, that the last such installment due on the Term Loan
Maturity Date shall be in the amount necessary to repay in full the aggregate
unpaid principal balance of the Term Loans.

                  Section 2.2 Revolving Loans.

                           (a)      Subject to and upon the terms and conditions
herein set forth, each Lender severally and not jointly agrees, at any time and
from time to time on and after the Closing Date and prior to the Revolving Loan
Maturity Date, to make revolving loans (collectively, "REVOLVING LOANS") to the
Borrower, which Revolving Loans shall not exceed in aggregate principal amount
at any time outstanding (i) the Revolving Loan Commitment of such Lender at such
time minus (ii) such Lender's Pro Rata Share of the L/C Obligations at such
time; PROVIDED that at no time shall the aggregate outstanding principal amount
of the Revolving Loans of all of the Lenders plus the L/C Obligations of all of
the Lenders exceed the Total Revolving Loan Commitment. The sum of the Revolving
Loan Commitments of all of the Lenders (the "TOTAL REVOLVING LOAN COMMITMENT")
as of the date hereof is $150,000,000. The Revolving Loans of each Lender made
on the Closing Date shall be initially made as a Base Rate Loan or a Eurodollar
Loan (subject to the

                                       24


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

other terms of this Agreement, including without limitation, Section 2.3 and
Section 2.17) and may thereafter be maintained at the option of the Borrower as
a Base Rate Loan or a Eurodollar Loan, in accordance with the provisions hereof.

                           (b)      Revolving Loans may be voluntarily prepaid
pursuant to Section 2.11, and, subject to the other provisions of this
Agreement, any amounts so prepaid may be reborrowed. Each Lender's Revolving
Loan Commitment shall expire, and each Revolving Loan shall mature on, the
Revolving Loan Maturity Date, without further action on the part of the Lenders
or the Agent.

                           (c)      Each Borrowing of Revolving Loans shall be
in the aggregate minimum amount of $500,000 or any integral multiple of $500,000
in excess thereof.

                  Section 2.3 Notice of Borrowing.

                           (a)      Whenever the Borrower desires to borrow
Revolving Loans hereunder, it shall give the Agent at the Agent's Office prior
to 12:00 Noon, Chicago time, on the Business Day of such borrowing by telex,
facsimile or telephonic notice (promptly confirmed in writing) of each Base Rate
Loan, and at least three Business Days' prior telex, facsimile or telephonic
notice (promptly confirmed in writing) of each Eurodollar Loan to be made
hereunder. Each such notice shall be in the form of Exhibit J hereto (a "NOTICE
OF BORROWING") shall be irrevocable and shall specify (i) the aggregate
principal amount of the requested Revolving Loans, (ii) the date of Borrowing
(which shall be a Business Day), and (iii) whether such Revolving Loans shall
consist of Base Rate Loans or Eurodollar Loans and, if Eurodollar Loans, the
initial Interest Period to be applicable thereto (PROVIDED, that no Eurodollar
Loan may be requested or made when any Default or Event of Default has occurred
and is continuing).

                           (b)      Promptly after receipt of a Notice of
Borrowing, the Agent shall provide each Lender with a copy thereof and inform
each Lender as to its Pro Rata Share of the Revolving Loans requested
thereunder.

                  Section 2.4 Disbursement of Funds.

                           (a)      No later than 2:00 P.M., Chicago time, on
the date specified in each Notice of Borrowing, each Lender will make available
its Pro Rata Share of the Revolving Loans requested to be made on such date, in
U.S. dollars and immediately available funds, at the Agent's Office. After the
Agent's receipt of the proceeds of such Revolving Loans, the Agent will make
available to the Borrower by depositing in the Borrower's account at the Agent's
Office the aggregate of the amounts so made available in the type of funds
actually received.

                           (b)      Unless the Agent shall have been notified by
any Lender prior to the date of a Borrowing that such Lender does not intend to
make available to the Agent its portion of the Revolving Loans to be made on
such date, the Agent may assume that such Lender has made such amount available
to the Agent on such date and the Agent in its sole discretion may, in reliance
upon such assumption, make available to the Borrower a corresponding amount. If
such corresponding amount is not in fact made available to the Agent by such
Lender and the Agent has made such amount available to the Borrower, the Agent
shall be entitled to recover such corresponding amount on demand from such
Lender. If such Lender does not pay such corresponding amount forthwith upon the
Agent's demand therefor, the Agent shall promptly notify the Borrower and the
Borrower shall immediately repay such corresponding amount to the Agent. The
Agent shall also be entitled to

                                       25


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

recover from such Lender or the Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Agent to the Borrower to the date such
corresponding amount is recovered by the Agent, at a rate per annum equal to the
then applicable rate of interest, calculated in accordance with Section 2.6, for
the respective Revolving Loans. Nothing herein shall be deemed to relieve any
Lender from its obligation to fulfill its commitments hereunder or to prejudice
any rights which the Borrower may have against any Lender as a result of any
default by such Lender hereunder. Notwithstanding anything contained herein or
in any other Loan Document to the contrary, the Agent may apply all funds and
proceeds of Collateral available for the payment of any Obligations first to
repay any amount owing by any Lender to the Agent as a result of such Lender's
failure to fund its Revolving Loans hereunder.

                  Section 2.5 Notes.

                           (a)      The Borrower's obligation to pay the
principal of, and interest on, each Lender's Loans shall be evidenced by (i) in
the case of such Lender's Term Loans, a promissory note (as the same may be
amended, restated, supplemented or otherwise modified from time to time, a "TERM
NOTE") duly executed and delivered by the Borrower substantially in the form of
Exhibit A hereto in a principal amount equal to such Lender's Term Loan with
blanks appropriately completed in conformity herewith and (ii) in the case of
such Lender's Revolving Loans, a promissory note (as the same may be amended,
restated, supplemented or otherwise modified from time to time, a "REVOLVING
NOTE") duly executed and delivered by the Borrower substantially in the form of
Exhibit B hereto in a principal amount equal to such Lender's Revolving Loan
Commitment, with blanks appropriately completed in conformity herewith. Each
Note issued to a Lender shall (x) be payable to the order of such Lender, (y) be
dated the date such Note was issued, and (z) mature on the Term Loan Maturity
Date or the Revolving Loan Maturity Date, as the case may be.

                           (b)      Each Lender is hereby authorized, at its
option, either (i) to endorse on the schedule attached to its Revolving Note (or
on a continuation of such schedule attached to such Revolving Note and made a
part thereof) an appropriate notation evidencing the date and amount of each
Revolving Loan evidenced thereby and the date and amount of each principal and
interest payment in respect thereof, or (ii) to record such Revolving Loans and
such payments in its books and records. Such schedule or such books and records,
as the case may be, shall constitute prima facie evidence of the accuracy of the
information contained therein.

                  Section 2.6 Interest.

                           (a)      (i)      The Borrower agrees to pay interest
in respect of the unpaid principal amount of each Revolving Loan that is a Base
Rate Loan from the date of the making of such Revolving Loan until such
Revolving Loan shall be paid in full at a rate per annum which shall be equal to
the sum of (x) the Applicable Margin plus (y) the Base Rate in effect from time
to time, such rate to change as and when the Base Rate changes, such interest to
be computed on the basis of a 365 or 366 day year, as the case may be, and paid
for the actual number of days elapsed, subject to the provisions of clause (c)
of this Section 2.6.

                           (ii)     The Borrower agrees to pay interest in
respect of the unpaid principal amount of each Term Loan that is a Base Rate
Loan from the date of the making of such Loan until such Loan shall be paid in
full at a rate per annum which shall be equal to the sum of (x) 2.5% plus (y)
the Base Rate in effect from time to time, such rate to change as and when the
Base Rate changes,

                                       26


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

such interest to be computed on the basis of a 365 or 366-day year, as the case
may be, and paid for the actual number of days elapsed, subject to the
provisions of clause (c) of this Section 2.6.

                           (b)      (i)      The Borrower agrees to pay interest
in respect of the unpaid principal amount of each Revolving Loan that is a
Eurodollar Loan from the date of the making of such Revolving Loan until such
Revolving Loan shall be paid in full at a rate per annum which shall be equal to
the sum of (x) the Applicable Margin plus (y) the relevant Eurodollar Rate, such
interest to be computed on the basis of a 360-day year and paid for the actual
number of days elapsed, subject to the provisions of clause (c) of this Section
2.6.

                           (ii)     The Borrower agrees to pay interest in
respect of the unpaid principal amount of each Term Loan that is a Eurodollar
Loan from the date of the making of such Term Loan until such Term Loan shall be
paid in full at a rate per annum which shall be equal to the sum of (x) 3.75%
plus (y) the relevant Eurodollar Rate, such interest to be computed on the basis
of a 360-day year and paid for the actual number of days elapsed, subject to the
provisions of clause (c) of this Section 2.6.

                           (c)      In the event that, and for so long as, any
Event of Default shall have occurred and be continuing, the outstanding
principal amount of all Loans and, to the extent permitted by law, overdue
interest in respect of all Loans, shall bear interest at a rate per annum (the
"DEFAULT RATE") equal to (i) for Revolving Loans, the sum of (x) two percent
(2%) plus (y) the Applicable Margin applicable to Revolving Loans that are Base
Rate Loans plus (z) the Base Rate in effect from time to time, and shall be
payable on demand, and (ii) for Term Loans, the sum of (x) two percent (2%) plus
(y) 2.5% plus (z) the Base Rate in effect from time to time, and shall be
payable on demand.

                           (d)      Interest on each Loan shall accrue from and
including the date of the Borrowing thereof to but excluding the date of any
repayment thereof (PROVIDED that any Loan borrowed and repaid on the same day
shall accrue one day's interest) and shall be payable (i) in respect of each
Base Rate Loan, quarterly in arrears on each Payment Date, (ii) in respect of
each Eurodollar Loan, on the last day of each Interest Period applicable to such
Loan and, in the case of an Interest Period of six months, on the date occurring
three months from the first day of such Interest Period and on the last day of
such Interest Period, and (iii) in the case of all Loans, on any prepayment or
conversion (on the amount prepaid or converted), at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand. Each
determination by the Agent of an interest rate hereunder shall, except for
manifest error, be final, conclusive and binding for all purposes.

                           (e)      In the event that the Eurodollar Base Rate
is to be determined by reference to the Reference Banks, each Reference Bank
agrees to furnish to the Agent timely information for the purpose of determining
each Eurodollar Base Rate. If any one or more of the Reference Banks shall not
furnish such timely information to the Agent for the purpose of determining any
such interest rate, the Agent shall determine such interest rate on the basis of
timely information furnished by the remaining Reference Banks. The Agent shall
give prompt notice to the Borrower and the Lenders of the applicable interest
rate determined by the Agent for purposes of Section 2.6(b), and the rate, if
any, furnished by each Reference Bank for the purpose of determining the
interest rate under Section 2.6(b).

                                       27


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                  Section 2.7 Interest Periods.

                           (a)      The Borrower shall, in each Notice of
Borrowing or Notice of Conversion or Continuation in respect of the making of,
conversion into or continuation of a Eurodollar Loan, select the interest period
(each an "INTEREST PERIOD") applicable to such Eurodollar Loan, which Interest
Period shall, at the option of the Borrower, be either a one-month, two-month,
three-month or six-month period, PROVIDED that:

                                    (i)      the initial Interest Period for any
         Eurodollar Loan shall commence on the date of the making of such Loan
         (including the date of any conversion from a Base Rate Loan) and each
         Interest Period occurring thereafter in respect of such Loan shall
         commence on the date on which the next preceding Interest Period
         expires;

                                    (ii)     if any Interest Period would
         otherwise expire on a day which is not a Business Day, such Interest
         Period shall expire on the next succeeding Business Day, PROVIDED,
         HOWEVER, that if any Interest Period would otherwise expire on a day
         which is not a Business Day but is a day of the month after which no
         further Business Day occurs in such month, such Interest Period shall
         expire on the next preceding Business Day;

                                    (iii)    if any Interest Period begins on a
         day for which there is no numerically corresponding day in the calendar
         month at the end of such Interest Period, such Interest Period shall
         end on the last Business Day of such calendar month;

                                    (iv)     no Interest Period in respect of
         any Revolving Loan or any Term Loan shall extend beyond the Revolving
         Loan Maturity Date or the Term Loan Maturity Date, as the case may be;
         and

                                    (v)      no Interest Period in respect of a
         Term Loan shall extend beyond any date upon which a repayment of the
         Term Loans is required to be made pursuant to Section 2.1 unless the
         aggregate principal amount of Term Loans which are Base Rate Loans or
         which have Interest Periods which will expire on or before such date is
         equal to or in excess of the amount of the Term Loan repayment required
         to be made on such date.

                           (b)      If upon the expiration of any Interest
Period, the Borrower has failed to elect a new Interest Period to be applicable
to the respective Eurodollar Loan as provided above, the Borrower shall be
deemed to have elected to convert such Eurodollar Loans into Base Rate Loans
effective as of the expiration date of such current Interest Period.

                  Section 2.8 Minimum Amount of Eurodollar Loans. All
borrowings, conversions, continuations, payments, prepayments and selection of
Interest Periods hereunder shall be made or selected so that, after giving
effect thereto, (i) the aggregate principal amount of any Borrowing comprised of
Eurodollar Loans shall not be less than $3,000,000 or an integral multiple of
$500,000 in excess thereof, and (ii) there shall be no more than twelve (12)
Borrowings comprised of Eurodollar Loans outstanding at any time.

                  Section 2.9 Conversion or Continuation.

                           (a)      Subject to the other provisions hereof, the
Borrower shall have the option (i) to convert at any time all or any part of
outstanding Base Rate Loans which comprise part

                                       28


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

of the same Borrowing to Eurodollar Loans, (ii) to convert all or any part of
outstanding Eurodollar Loans which comprise part of the same Borrowing to Base
Rate Loans, on the expiration date of the Interest Period applicable thereto, or
(iii) to continue all or any part of outstanding Eurodollar Loans which comprise
part of the same Borrowing as Eurodollar Loans for an additional Interest
Period, on the expiration of the Interest Period applicable thereto; PROVIDED,
that no Loan may be continued as, or converted into, a Eurodollar Loan when any
Default or Event of Default has occurred and is continuing.

                           (b)      In order to elect to convert or continue a
Loan under this Section 2.9, the Borrower shall deliver an irrevocable notice
thereof (a "NOTICE OF CONVERSION OR CONTINUATION") to the Agent no later than
12:00 Noon, Chicago time, (i) on the Business Day of the proposed conversion
date in the case of a conversion to a Base Rate Loan and (ii) at least three
Business Days in advance of the proposed conversion or continuation date in the
case of a conversion to, or a continuation of, a Eurodollar Loan. A Notice of
Conversion or Continuation shall specify (w) the requested conversion or
continuation date (which shall be a Business Day), (x) the amount, Facility and
Type of the Loan to be converted or continued, (y) whether a conversion or
continuation is requested, and (z) in the case of a conversion to, or a
continuation of, a Eurodollar Loan, the requested Interest Period. Promptly
after receipt of a Notice of Conversion or Continuation under this Section
2.9(b), the Agent shall provide each Lender with a copy thereof.

                  Section 2.10 Voluntary Reduction of Commitments. Upon at least
three Business Day's prior irrevocable written notice (or telephonic notice
promptly confirmed in writing) to the Agent (which notice the Agent shall
promptly transmit to each of the Lenders), the Borrower shall have the right,
without premium or penalty, to permanently reduce each Lender's Pro Rata Share
of all or part of the Total Revolving Loan Commitment, PROVIDED that any such
partial reduction shall be in the minimum aggregate amount of $1,000,000 or any
integral multiple of $500,000 in excess thereof.

                  Section 2.11 Voluntary Prepayments. The Borrower shall have
the right to prepay the Loans in whole or in part from time to time on the
following terms and conditions: (i) the Borrower shall give the Agent written
notice (or telephonic notice promptly confirmed in writing), which notice shall
be irrevocable, of its intent to prepay the Loans, at least three Business Days
prior to a prepayment of Eurodollar Loans and on the Business Day of a
prepayment of Base Rate Loans, which notice shall specify the amount of such
prepayment and what Types of Loans and which Facilities are to be prepaid and,
in the case of Eurodollar Loans, the specific Borrowing(s) pursuant to which
made, and which notice the Agent shall promptly transmit to each of the Lenders,
(ii) each prepayment shall be in an aggregate principal amount of $1,000,000 or
any integral multiple of $500,000 in excess thereof and (iii) partial
prepayments of the Term Loans shall be applied to the remaining scheduled
installments of principal thereof on a pro rata basis; PROVIDED that if any
prepayment of Eurodollar Loans is made pursuant to this Section 2.11 on a day
which is not the last day of the Interest Period applicable thereto, the
Borrower shall pay to each Lender all amounts due in connection with such
prepayment pursuant to Section 2.17.

                  Section 2.12 Mandatory Prepayments.

                           (a)      Upon the consummation of any Asset
Disposition or upon the receipt by any Loan Party of any Liquidating
Distribution after the Closing Date, in each case within 270 days after the
Borrower or any of its Subsidiaries receives any Net Sale Proceeds, the Borrower
shall prepay the outstanding Loans in an amount equal to 100% of the amount of
such Net Sale Proceeds,

                                       29


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

in accordance with the provisions of Section 2.13; PROVIDED, HOWEVER, that such
Net Sale Proceeds which the Borrower or such Subsidiary shall, within 270 days
after receipt thereof, use to reinvest in the business of the Borrower of its
Subsidiaries, shall not be included in determining the aggregate Net Sale
Proceeds for such period; PROVIDED, FURTHER that, if an Event of Default shall
have occurred and be continuing on the date such Net Sale Proceeds are received
by the Borrower or any of its Subsidiaries or at any time during such 270 day
period, then the Borrower shall prepay the outstanding Loans in an amount equal
to 100% of such Net Sale Proceeds (or, if any portion of such proceeds shall
have been reinvested prior to the occurrence of such Event of Default, 100% of
such remaining amount of Net Sale Proceeds not so reinvested), in accordance
with the provisions of Section 2.13, on the later of the date such Net Sale
Proceeds are received by the Borrower or any of its Subsidiaries or the date of
the occurrence of such Event of Default.

                           (b)      On each date on which the Borrower or any of
its Subsidiaries receives any Net Equity Proceeds, the Borrower shall prepay the
outstanding Loans in an amount equal to (i) 50% of such Net Equity Proceeds if
both (A) the Leverage Ratio as of the end of the fiscal quarter immediately
preceding such date as to which financial statements are required to have been
delivered pursuant to Sections 6.1(a) and 6.1(b), as applicable, on a pro forma
basis after giving effect to any prepayment made by the Borrower pursuant to
clause (ii)(A) of this Section 2.12(b), is less than 2.0 to 1.0 and (B) no
Default or Event of Default has occurred or is continuing as a result of the
Borrower's failure to deliver any financial statement or Compliance Certificate
as and when required pursuant to Section 6.1(a), 6.1(b) or 6.1(e), as applicable
and (ii) 75% of such Net Equity Proceeds if either (A) the Leverage Ratio as of
the end of the fiscal quarter immediately preceding such date as to which
financial statements are required to have been delivered pursuant to Section
6.1(a) or 6.1(b), as applicable, is greater than or equal to 2.0 to 1.0 (but
only until the Leverage Ratio is less than 2.0 to 1.0, at which time clause (i)
of this Section 2.12(b) shall apply (unless clause (ii)(B) of this Section
2.12(b) shall then be applicable)) or (B) any Default or Event of Default has
occurred and is continuing as a result of the Borrower's failure to deliver any
financial statement or Compliance Certificate as and when required pursuant to
Sections 6.1(a), 6.1(b) or 6.1(e), as applicable, in each case in accordance
with the provisions of Section 2.13.

                           (c)      On each date on which the Borrower or any of
its Subsidiaries receives any Net Debt Proceeds or becomes or remains liable
with respect to Indebtedness with respect to Capitalized Leases in excess of
$100,000,000 in the aggregate at any one time outstanding for the Borrower and
its Subsidiaries, the Borrower shall prepay the outstanding Loans in an amount
equal to 100% of such Net Debt Proceeds or 100% of the amount by which the
aggregate amount of Indebtedness of the Borrower and its Subsidiaries with
respect to Capitalized Leases exceeds $100,000,000 on such date, respectively,
in accordance with the provisions of Section 2.13.

                           (d)      On each day on which the Total Revolving
Loan Commitment is reduced pursuant to Section 2.10 the Borrower shall prepay
the Revolving Loans to the extent, if any, that the outstanding principal amount
of the Revolving Loans exceeds such reduced Total Revolving Loan Commitment.

                           (e)      If at any time and for any reason the
aggregate principal amount of Revolving Loans plus the L/C Obligations then
outstanding are greater than the Total Revolving Loan Commitment, the Borrower
shall immediately prepay the Revolving Loans in an amount equal to such excess.
In addition, to the extent at any time and for any reason, the Total Revolving
Loan Commitment minus the aggregate principal amount of Revolving Loans then
outstanding, is less than the amount of L/C Obligations outstanding at such
time, the Borrower shall Cash Collateralize the

                                       30


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

L/C Obligations in an amount equal to the amount by which such L/C Obligations
exceed the amount equal to the difference between the Total Revolving Loan
Commitment and such aggregate principal amount of Revolving Loans.

                           (f)      The Borrower shall make each Term Loan
Paydown in accordance with Section 2.1.

                           (g)      Nothing in this Section 2.12 shall be
construed to constitute the Lenders' consent to any transactions referred to in
Sections 2.12(a), 2.12(b) or 2.12(c) above which transaction is not expressly
permitted by the terms of this Agreement.

                  Section 2.13 Application of Prepayments.

                           (a)      All prepayments of the Loans required by
clauses (a) through (c) of Section 2.12 shall be applied first, to prepay the
Term Loans until such Term Loans shall have been repaid in full, together with
accrued and unpaid interest thereon, second, to prepay the Revolving Loans until
such Revolving Loans shall have been repaid in full, together with accrued and
unpaid interest thereon, third, to Cash Collateralize the then outstanding
Letters of Credit and, fourth, to all other outstanding Obligations. If (i) at
the time of any prepayment of the principal amount of the Revolving Loans
pursuant to the preceding sentence (other than any prepayment required by
Section 2.12(a)) either (A) the Leverage Ratio as of the end of the fiscal
quarter immediately preceding such date as to which financial statements are
required to have been delivered pursuant to Section 6.1(a) or 6.1(b), as
applicable, is greater than or equal to 2.0 or (B) any Default has occurred and
is continuing as a result of the Borrower's failure to deliver any financial
statement or Compliance Certificate as and when required pursuant to Section
6.1(a), 6.1(b) or 6.1(e), as applicable, then simultaneously with any prepayment
of the principal amount of the Revolving Loans pursuant to the preceding
sentence, each Lender's Revolving Loan Commitment shall be permanently reduced
by such Lender's Pro Rata Share of such prepayment and, (ii) at the time of any
prepayment of the principal amount of the Revolving Loans pursuant to the
preceding sentence (other than any prepayment required by Section 2.12(a)), both
(A) the Leverage Ratio as of the end of the fiscal quarter immediately preceding
such date as to which financial statements are required to have been delivered
pursuant to Sections 6.1(a) and 6.1(b), as applicable, is less than 2.0 and (B)
no Default has occurred or is continuing as a result of the Borrower's failure
to deliver any financial statement or Compliance Certificate as and when
required pursuant to Section 6.1(a), 6.1(b) or 6.1(e), as applicable, then, any
Revolving Loans repaid pursuant to the preceding sentence may be reborrowed,
subject to the other terms of this Agreement.

                           (b)      Simultaneously with any prepayment of the
principal amount of Revolving Loans pursuant to Section 2.12(a), each Lender's
Revolving Loan Commitment shall be permanently reduced by such Lender's Pro Rata
Share of such prepayment.

                           (c)      All prepayments of the then remaining Term
Loans required by clauses (a) through (c) of Section 2.12 shall be applied on a
pro rata basis to the scheduled installments of principal thereof.

                  Section 2.14 Method and Place of Payment.

                           (a)      Except as otherwise specifically provided
herein, all payments and prepayments under this Agreement and the Notes shall be
made to the Agent for the account of the

                                       31


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

Lenders entitled thereto not later than 2:00 P.M., Chicago time, on the date
when due and shall be made in lawful money of the United States of America in
immediately available funds at the Agent's Office, and any funds received by the
Agent after such time shall, for all purposes hereof (including the following
sentence), be deemed to have been paid on the next succeeding Business Day.
Except as otherwise specifically provided herein, the Agent shall thereafter
cause to be distributed on the date of receipt thereof to each Lender in like
funds its Pro Rata Share of payments so received.

                           (b)      Whenever any payment to be made hereunder or
under any Note shall be stated to be due on a day which is not a Business Day,
the due date thereof shall be extended to the next succeeding Business Day and,
with respect to payments of principal, interest shall be payable at the
applicable rate during such extension.

                           (c)      All payments made by the Borrower hereunder
and under the other Loan Documents shall be made irrespective of, and without
any reduction for, any setoff or counterclaims.

                  Section 2.15 Fees.

                           (a)      The Borrower agrees to pay the fees in the
amounts and on the dates specified in the Fee Letter.

                           (b)      The Borrower agrees to pay to the Agent for
the account of each Lender a commitment fee (the "COMMITMENT FEE") for each day
computed at the per annum rate equal to the Applicable Margin (determined for
the Commitment Fee in accordance with the definition of Applicable Margin)
multiplied by each such Lender's Pro Rata Share of the average daily Unused
Portion, from and including the Closing Date to the Revolving Loan Maturity
Date.

                           (c)      The Commitment Fee shall accrue from and
including the Closing Date to but excluding the Revolving Loan Maturity Date.
Accrued fees under this Section 2.15 shall be payable on the Closing Date and
payable quarterly in arrears on each Payment Date, commencing December 15, 2003,
and on the Revolving Loan Maturity Date or such earlier date, if any, on which
the Revolving Loan Commitments shall terminate in accordance with the terms
hereof. The Commitment Fee and all other fees due under the Loan Documents
(collectively the "FEES") shall be calculated on the basis of a 360-day year for
the actual number of days elapsed.

                  Section 2.16 Interest Rate Unascertainable, Increased Costs,
                               Illegality.

                           (a)      In the event that the Agent, in the case of
clause (i) below, or any Lender, in the case of clauses (ii) and (iii) below,
shall have determined (which determination shall, absent manifest error, be
final and conclusive and binding upon all parties hereto):

                                    (i)      on any date for determining the
         Eurodollar Rate for any Interest Period, that by reason of any changes
         arising after the Closing Date affecting the interbank Eurodollar
         market, adequate and fair means do not exist for ascertaining the
         applicable interest rate on the basis provided for in the definition of
         the Eurodollar Rate; or

                                    (ii)     at any time, that the relevant
         Eurodollar Rate applicable to any of its Loans shall not represent the
         effective pricing to such Lender for funding or maintaining a
         Eurodollar Loan, or such Lender shall incur increased costs or
         reductions in the

                                       32


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

         amounts received or receivable hereunder in respect of any Eurodollar
         Loan, in any such case because of (x) any change since the Closing Date
         in any applicable law or governmental rule, regulation, guideline or
         order or any interpretation thereof and including the introduction of
         any new law or governmental rule, regulation, guideline or order (such
         as for example but not limited to a change in official reserve
         requirements, but, in all events, excluding reserves required under
         Regulation D of the Federal Reserve Board to the extent included in the
         computation of the Eurodollar Rate), whether or not having the force of
         law and whether or not failure to comply therewith would be unlawful,
         and/or (y) other circumstances affecting such Lender or the interbank
         Eurodollar market or the position of such Lender in such market; or

                                    (iii)    at any time, that the making or
         continuance by it of any Eurodollar Loan has become unlawful by
         compliance by such Lender in good faith with any law or governmental
         rule, regulation, guideline or order (whether or not having the force
         of law and whether or not failure to comply therewith would be
         unlawful) or has become impracticable as a result of a contingency
         occurring after the Closing Date which materially and adversely affects
         the interbank Eurodollar market;

then, and in any such event, the Agent or such Lender shall, promptly after
making such determination, give notice (by telephone promptly confirmed in
writing) to the Borrower and (if applicable) the Agent of such determination
(which notice the Agent shall promptly transmit to each of the other Lenders).
Thereafter (x) in the case of clause (i) above, the Borrower's right to request
Eurodollar Loans shall be suspended, and any Notice of Borrowing or Notice of
Conversion or Continuation given by the Borrower with respect to any Borrowing
of Eurodollar Loans which has not yet been made shall be deemed cancelled and
rescinded by the Borrower, (y) in the case of clause (ii) above, the Borrower
shall pay to such Lender, upon such Lender's delivery of a written demand
therefor to the Borrower with a copy to the Agent, such additional amounts (in
the form of an increased rate of interest, or a different method of calculating
interest, or otherwise, as such Lender in its sole discretion shall determine)
as shall be required to compensate such Lender for such increased costs or
reduction in amounts received or receivable hereunder and (z) in the case of
clause (iii) above, the Borrower shall take one of the actions specified in
clause (b) below as promptly as possible and, in any event, within the time
period required by law. The written demand provided for in clause (y) shall
demonstrate in reasonable detail the calculation of the amounts demanded and
shall, absent manifest error, be final and conclusive and binding upon all of
the parties hereto.

                           (b)      In the case of any Eurodollar Loan or
requested Eurodollar Loan affected by the circumstances described in clause
(a)(ii) above, the Borrower may, and in the case of any Eurodollar Loan affected
by the circumstances described in clause (a)(iii) above the Borrower shall,
either (i) if any such Eurodollar Loan has not yet been made but is then the
subject of a Notice of Borrowing or a Notice of Conversion or Continuation, be
deemed to have cancelled and rescinded such notice, or (ii) if any such
Eurodollar Loan is then outstanding, require the affected Lender to convert each
such Eurodollar Loan into a Base Rate Loan at the end of the applicable Interest
Period or such earlier time as may be required by law, in each case by giving
the Agent notice (by telephone promptly confirmed in writing) thereof on the
Business Day that the Borrower was notified by the Lender pursuant to clause (a)
above; PROVIDED, HOWEVER, that all Lenders whose Eurodollar Loans are affected
by the circumstances described in clause (a) above shall be treated in the same
manner under this clause (b).

                                       33


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                           (c)      In the event that the Agent determines at
any time following its giving of notice based on the conditions described in
clause (a)(i) above that none of such conditions exist, the Agent shall promptly
give notice thereof to the Borrower and the Lenders, whereupon the Borrower's
right to request Eurodollar Loans from the Lenders and the Lenders' obligation
to make Eurodollar Loans shall be restored.

                           (d)      In the event that a Lender determines at any
time following its giving of a notice based on the conditions described in
clause (a)(iii) above that none of such conditions exist, such Lender shall
promptly give notice thereof to the Borrower and the Agent, whereupon the
Borrower's right to request Eurodollar Loans from such Lender and such Lender's
obligation to make Eurodollar Loans shall be restored.

                  Section 2.17 Funding Losses. The Borrower shall compensate
each Lender, upon such Lender's delivery of a written demand therefor to the
Borrower, with a copy to the Agent (which demand shall set forth the basis for
requesting such amounts and shall, absent manifest error, be final and
conclusive and binding upon all of the parties hereto), for all reasonable
losses, expenses and liabilities (including, without limitation, any loss,
expense or liability incurred by such Lender in connection with the liquidation
or reemployment of deposits or funds required by it to make or carry its
Eurodollar Loans), that such Lender sustains: (i) if for any reason (other than
a default by such Lender) a Borrowing of, or conversion from or into, or a
continuation of, Eurodollar Loans does not occur on a date specified therefor in
a Notice of Borrowing or Notice of Conversion or Continuation (whether or not
rescinded, cancelled or withdrawn or deemed rescinded, cancelled or withdrawn,
pursuant to Section 2.16(a) or 2.16(b) or otherwise), (ii) if any prepayment or
repayment (including, without limitation, payment after acceleration) or
conversion of any of its Eurodollar Loans occurs on a date which is not the last
day of the Interest Period applicable thereto, (iii) if any prepayment of any of
its Eurodollar Loans is not made on any date specified in a notice of prepayment
given by the Borrower, or (iv) as a consequence of any default by the Borrower
in repaying its Eurodollar Loans or any other amounts owing hereunder in respect
of its Eurodollar Loans when required by the terms of this Agreement.
Calculation of all amounts payable to a Lender under this Section 2.17 shall be
made on the assumption that such Lender has funded its relevant Eurodollar Loan
through the purchase of a Eurodollar deposit bearing interest at the Eurodollar
Rate in an amount equal to the amount of such Eurodollar Loan with a maturity
equivalent to the Interest Period applicable to such Eurodollar Loan, and
through the transfer of such Eurodollar deposit from an offshore office of such
Lender to a domestic office of such Lender in the United States of America,
PROVIDED that each Lender may fund its Eurodollar Loans in any manner that it in
its sole discretion chooses and the foregoing assumption shall only be made in
order to calculate amounts payable under this Section 2.17.

                  Section 2.18 Increased Capital. If any Lender shall have
determined that compliance with any applicable law, rule, regulation, guideline,
request or directive (whether or not having the force of law) of any
governmental authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the capital or assets of such Lender or
any Person controlling such Lender as a consequence of its commitments or
obligations hereunder, then from time to time, upon such Lender's delivering a
written demand therefor to the Agent and the Borrower (with a copy to the
Agent), the Borrower shall pay to such Lender such additional amount or amounts
as will compensate such Lender or Person for such reduction.

                                       34

                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                  Section 2.19 Taxes.

                           (a)      All payments made by the Borrower under this
Agreement shall be made free and clear of, and without reduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any governmental
authority excluding, in the case of the Agent and each Lender, net income and
franchise taxes imposed on the Agent or such Lender by the jurisdiction under
the laws of which the Agent or such Lender is organized or any political
subdivision or taxing authority thereof or therein, or by any jurisdiction in
which such Lender's Domestic Lending Office or Eurodollar Lending Office, as the
case may be, is located or any political subdivision or taxing authority thereof
or therein (all such non-excluded taxes, levies, imposts, deductions, charges or
withholdings being hereinafter called "TAXES"). If any Taxes are required to be
withheld from any amounts payable to the Agent or any Lender hereunder or under
the Notes, the amounts so payable to the Agent or such Lender shall be increased
to the extent necessary to yield to the Agent or such Lender (after payment of
all Taxes) interest or any such other amounts payable hereunder at the rates or
in the amounts specified in this Agreement and the Notes. Whenever any Taxes are
payable by the Borrower, as promptly as possible thereafter, the Borrower shall
send to the Agent for its own account or for the account of such Lender, as the
case may be, a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower fails to pay any Taxes when
due to the appropriate taxing authority or fails to remit to the Agent the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Agent or any Lender as a result of any
such failure. The agreements in this Section 2.19 shall survive the termination
of this Agreement and the payment of the Notes and all other Obligations.

                           (b)      Each Lender that is not incorporated under
the laws of the United States of America or a state thereof (including each
Purchasing Lender that becomes a party to this Agreement pursuant to Section
10.4) agrees that, prior to the first date on which any payment is due to it
hereunder, it will deliver to the Borrower and the Agent (i) two duly completed
copies of United States Internal Revenue Service Form W-8BEN or W-8ECI or
successor applicable form, as the case may be, certifying in each case that such
Lender is entitled to receive payments under this Agreement and the Notes
payable to it, without deduction or withholding of any United States federal
income taxes, and (ii) an Internal Revenue Service Form W-8 (or W-8BEN) or W-9
or successor applicable form, as the case may be, to establish an exemption from
United States backup withholding tax. Each Lender which delivers to the Borrower
and the Agent a Form W-8BEN or W-8ECI and Form W-8 (or W-8BEN) or W-9 pursuant
to the preceding sentence further undertakes to deliver to the Borrower and the
Agent two further copies of the said letter and Form W-8BEN or W-8ECI and Form
W-8 (or W-8BEN) or W-9, or successor applicable forms, or other manner of
certification, as the case may be, on or before the date that any such letter or
form expires or becomes obsolete or after the occurrence of any event requiring
a change in the most recent letter and form previously delivered by it to the
Borrower, and such extensions or renewals thereof as may reasonably be requested
by the Borrower, certifying in the case of a Form W-8BEN or W-8ECI that such
Lender is entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes, unless in any such case
an event (including, without limitation, any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Lender from duly completing and delivering any such letter or form
with respect to it and such Lender advises the Borrower that it is not capable
of receiving payments without any deduction or

                                       35


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

withholding of United States federal income tax, and in the case of a Form W-8
(or W-8BEN) or W-9, establishing an exemption from United States backup
withholding tax.

                           (c)      In addition, the Borrower agrees to pay any
and all present or future stamp, court or documentary taxes and any other excise
or property taxes or charges or similar levies which arise from any payment made
under any Loan Document or from the execution, delivery, performance,
enforcement or registration of, or otherwise with respect to, any Loan Document
(hereinafter referred to as "Other Taxes").

                           (d)      The Borrower agrees to indemnify the Agent
and each Lender for (i) the full amount of Taxes and Other Taxes (including any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable
under this Section) paid by the Agent and such Lender, (ii) amounts payable
under Section 2.19 (c) and (iii) any liability (including additions to tax,
penalties, interest and expenses) arising therefrom or with respect thereto, in
each case whether or not such Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant governmental authority. Payment under this
subsection (d) shall be made within 30 days after the date the Lender or the
Agent makes a demand therefor.

                  Section 2.20 Use of Proceeds. The proceeds of the Loans shall
be used (i) to the extent the proceeds from the issuance of the New Convertible
Subordinated Notes on or prior to the Closing Date, net of customary
underwriting fees and discounts, brokerage commissions and other similar
reasonable and customary costs and expenses directly attributable to the
issuance of the New Convertible Subordinated Notes are insufficient to redeem
all of the Convertible Subordinated Notes outstanding on the date of the
issuance of the New Convertible Subordinated Notes, to redeem the balance of
such Convertible Subordinated Notes as soon as practicable, but in no event
later than March 15, 2004 and (ii) for the Borrower's working capital and
general corporate purposes which shall include, but not be limited to,
Restaurant renovations and Permitted Acquisitions.

                  Section 2.21 Collateral Security.

                           (a)      As security for the payment of the
Obligations, the Borrower shall cause to be granted to the Agent, for the
ratable benefit of the Lenders, a first priority perfected Lien on and security
interest in all of the following, whether now or hereafter existing or acquired
subject only to the Liens permitted to be incurred pursuant to Section 7.3
hereof: (i) all of the shares of capital stock (or other equity interests of
each Subsidiary if such Subsidiary is not a corporation) of each Subsidiary of
the Borrower now or hereafter directly or indirectly owned by the Borrower and
all proceeds thereof, all as more specifically described in the Borrower Pledge
Agreement and the Subsidiary Pledge Agreements; (ii) certain of the assets of
the Borrower and all proceeds thereof, all as more specifically described in the
Borrower Security Agreement and the Mortgages; and (iii) certain of the assets
of each Subsidiary now or hereafter directly or indirectly owned by the Borrower
and all proceeds thereof, all as more specifically described in the Subsidiary
Security Agreement and the Mortgages. To the extent the Agent for the benefit of
the Lenders does not have a first priority perfected security interest in any
assets of the Borrower or any other Loan Party required to be pledged as
described above which is of the type described in the Borrower Security
Agreement, the Borrower Pledge Agreement, the Subsidiary Pledge Agreement or the
Subsidiary Security Agreement or which consists of real property of the type
described in subsection (c) below, the Borrower will grant, and cause each other
Loan Party to grant, to the Agent for itself and the benefit of the Lenders a
first priority perfected security interest in such assets subject only to the
Liens permitted pursuant to Section 7.3 hereof. In connection with any sales of
assets permitted

                                       36


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

hereunder, the Agent will release and terminate the liens and security interests
granted under the Security Documents with respect to such assets and no further
consent of the Lenders will be required with respect to any such release.

                           (b)      Concurrently with the consummation of any
Permitted Acquisition or any other acquisition of any asset (whether by
purchase, merger, contribution, license or otherwise) which is of the type
described in the Borrower Security Agreement, the Subsidiary Security Agreement,
the Borrower Pledge Agreement or the Subsidiary Pledge Agreement by the Borrower
or any Subsidiary of the Borrower (other than a Subsidiary which, after giving
effect to any such acquisition, is an Immaterial Subsidiary, except as otherwise
provided in Section 6.11 or any Security Document) (an "ACQUIRING SUBSIDIARY")
or the formation of any new Subsidiary (other than a Subsidiary which, after
giving effect to any such acquisition, is an Immaterial Subsidiary, except as
otherwise provided in Section 6.11 or any Security Document) of the Borrower or
upon an Immaterial Subsidiary ceasing to qualify or be designated as an
Immaterial Subsidiary (conversion from the status of an Immaterial Subsidiary to
a Subsidiary which is not an Immaterial Subsidiary is hereinafter referred to as
a "CONVERSION"), the Borrower shall:

                                    (i)      in the case of a Permitted
         Acquisition of stock or other equity interest or any other acquisition
         of stock or other equity interest (whether by purchase, merger,
         contribution, license or otherwise) by the Borrower or any such
         Acquiring Subsidiary of the Borrower or the formation of such a new
         Subsidiary or a Conversion: (A) deliver or cause to be delivered to the
         Agent all of the certificates representing the capital stock (or other
         equity interest if such equity interests are represented by a
         certificate or certificates) of such new Subsidiary which is being
         acquired or formed or converted (or Investment if such Investment is
         not an Immaterial Investment), beneficially owned by the Borrower or
         such Acquiring Subsidiary, as additional collateral for the
         Obligations, to be held by the Agent in accordance with the terms of
         the Borrower Pledge Agreement or a Subsidiary Pledge Agreement, as the
         case may be; and (B) cause such Acquiring Subsidiary (which is not
         already a party thereto) or new Subsidiary which is being acquired or
         formed or converted to deliver to the Agent (1) duly executed
         counterpart signature pages to each of the Guaranty, and the Subsidiary
         Security Agreement, in the forms attached respectively thereto as Annex
         I, together with the authorization to the Agent and the Lenders to
         attach such signature pages to the Guaranty and the Subsidiary Security
         Agreement, respectively, the effect of which shall be that as of the
         date set forth on such signature pages such Acquiring Subsidiary or
         such new or converted Subsidiary, as the case may be, shall become a
         party to each such agreement and be bound by the terms thereof and any
         revisions to the schedules to the Subsidiary Security Agreement
         necessary in connection therewith, (2) if such new or converted
         Subsidiary owns any capital stock or other equity interest or if such
         Acquiring Subsidiary is not already a party to a Subsidiary Pledge
         Agreement, a Subsidiary Pledge Agreement duly executed by such new or
         converted Subsidiary or such Acquiring Subsidiary, as the case may be,
         or if such new or converted Subsidiary owns any copyrights, trademarks,
         patents or other intellectual property, such additional Security
         Documents as requested by the Agent, (3) such Uniform Commercial Code
         financing statements as shall be required to perfect the security
         interest of the Agent and the Lenders in the Collateral being pledged
         by such new Subsidiary pursuant to the Subsidiary Security Agreement,
         and (4) ten (10) days prior written notice of any such Permitted
         Acquisition, other acquisition, formation or Conversion.

                                       37


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                                    (ii)     in the case of a Permitted
         Acquisition of assets or any other acquisition of assets (including
         equity interests of a Person other than a corporation) (whether by
         purchase, merger, contribution, license or otherwise) by the Borrower
         or any such Acquiring Subsidiary which is of the type described in the
         Borrower Security Agreement or the Subsidiary Security Agreement or the
         formation of such a new Subsidiary or a Conversion into a Person which
         in either case is not a corporation, deliver or cause to be delivered
         by the Borrower or such Acquiring Subsidiary acquiring such assets or
         forming such new Subsidiary, (A) such Uniform Commercial Code financing
         statements as shall be required to perfect the security interest of the
         Agent and the Lenders in the assets being so acquired, (B) if such
         assets include copyrights, trademarks, patents or other intellectual
         property, such additional Security Documents as requested by the Agent,
         (C) any additional instruments or documents evidencing the security
         interest of the Agent reasonably required by the Agent and (D) ten (10)
         days prior written notice of any such Permitted Acquisition, other
         acquisition, formation or Conversion; and

                                    (iii)    in any case (A) provide such other
         documentation, including, without limitation, one or more opinions of
         counsel reasonably satisfactory to the Agent, articles of
         incorporation, by-laws and resolutions (or equivalent organizational
         and authorization documents), which in the reasonable opinion of the
         Agent is necessary or advisable in connection with such Permitted
         Acquisition or formation of such new Subsidiary or other acquisition
         (whether by purchase, merger, contribution or otherwise) or Conversion,
         (B) cause any newly formed or acquired Immaterial Subsidiary which is
         or is to become a Subordinated Guarantor, to execute and deliver a
         counterpart to the Guaranty, and (C) if, as a result of the
         consummation of any transaction or transactions, there is a significant
         change in the information provided by the Borrower on Schedule 5.18,
         promptly provide the Agent with a new schedule which reflects the then
         current corporate structure of the Borrower and its Subsidiaries
         certified by an Authorized Officer of the Borrower.

                           (c)      Concurrently with the acquisition of any
interest (including a leasehold interest) in any real property by the Borrower
or any Subsidiary of the Borrower in any state that does not at the time of
acquisition assess a mortgage recording tax, the Borrower shall deliver or cause
to be delivered to the Agent, Mortgages with respect to such real property
interest, together with title insurance policies, surveys, appraisals, opinions
of counsels and such other documentation as the Agent may reasonably request.

                  Section 2.22 Replacement of Certain Lenders. If a Lender
("AFFECTED LENDER") shall have requested compensation from the Borrower under
Sections 2.16, 2.18 or 2.19 to recover Taxes or other additional costs incurred
by such Lender which are not being incurred generally by the other Lenders, or
delivered a notice pursuant to Section 2.16(a)(iii) claiming that such Lender is
unable to extend Eurodollar Loans to the Borrower for reasons not generally
applicable to the other Lenders, then, in any such case, so long as no Default
or Event of Default exists, the Borrower may make written demand on such
Affected Lender (with a copy to the Agent) for the Affected Lender to assign,
and such Affected Lender shall assign pursuant to one or more duly executed
assignment and acceptance agreements in substantially the form of Exhibit I
thirty (30) Business Days after the date of such demand, to one or more
financial institutions that comply with the provisions of Sections 10.4(c) and
10.4(d) (and that are reasonably acceptable to the Agent) which the Borrower
shall have engaged for such purpose ("REPLACEMENT LENDER"), all of such Affected
Lender's rights and obligations under this Agreement and the other Loan
Documents (including its Revolving Loan Commitment, all Loans owing to it, all
of its participation interests in outstanding Letters of Credit,

                                       38


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

and its obligation to participate in additional Letters of Credit hereunder) in
accordance with Sections 10.4(c) and 10.4(d). Further, with respect to any such
assignment, the Affected Lender shall have concurrently received, in cash, all
amounts due and owing to such Affected Lender hereunder or under any other Loan
Document, including the aggregate outstanding principal amount of the Loans owed
to such Lender, together with accrued interest thereon through the date of such
assignment from the Replacement Lender, amounts payable under Sections 2.16,
2.18 and 2.19 with respect to such Affected Lender and compensation payable
under Section 2.15; PROVIDED, that upon such Affected Lender's replacement, such
Affected Lender shall cease to be a party hereto but shall continue to be
entitled to the benefits of Sections 2.16, 2.17, 2.18, 2.19 and 10.1 accruing
with respect to such Affected Lender prior to the date such Affected Lender is
replaced, as well as to any fees accrued for its account hereunder prior to
being replaced and not yet paid, and shall continue to be obligated under
Section 9.7.

SECTION 3. LETTERS OF CREDIT.

                  Section 3.1 Issuance of Letters of Credit, etc.

                           (a)      Subject to the terms and conditions hereof,
at any time and from time to time from the Closing Date through the day prior to
the Revolving Loan Maturity Date, the Issuing Bank shall issue such Letters of
Credit for the account of the Borrower or any Subsidiary of the Borrower which
is a party to the Guaranty as Borrower may request by an L/C Application;
PROVIDED that, giving effect to such Letter of Credit, (x) the sum of the L/C
Obligations then outstanding plus the then outstanding aggregate principal
amount of the Revolving Loans shall not exceed the Total Revolving Loan
Commitment and (y) the aggregate L/C Obligations then outstanding shall not
exceed the L/C Commitment. Unless all the Revolving Lenders and the Issuing Bank
otherwise consent in writing, the Borrower and its Subsidiaries shall not
request any Letter of Credit (i) whose term exceeds 12 months or (ii) which
expires after the Revolving Loan Maturity Date unless such Letter of Credit is
Cash Collateralized at least two (2) Business Days prior to the Revolving Loan
Maturity Date. No Letter of Credit shall be issued except in the ordinary course
of business of the Borrower or any of its Subsidiaries or in connection with
Permitted Acquisitions with respect to which the conditions set forth in Section
7.8(f) have been satisfied, each Letter of Credit shall be used solely (a) to
support obligations of the Borrower and its Subsidiaries not prohibited
hereunder, other than Indebtedness for borrowed money, and (b) for the purposes
described in the definition of "Trade Letter of Credit".

                           (b)      The Borrower shall submit the L/C
Application for the Issuance of any Letter of Credit to the Issuing Bank at
least five Business Days prior to the date when required. Upon Issuance of a
Letter of Credit, the Issuing Bank shall promptly notify the Revolving Lenders
of the amount and terms thereof.

                           (c)      Upon the Issuance of a Letter of Credit,
each Revolving Lender that has made a Revolving Loan Commitment shall be deemed
to have purchased a pro rata participation, from the Issuing Bank in an amount
equal to that Lender's Pro Rata Share, in the Letter of Credit. Without limiting
the scope and nature of each Revolving Lender's participation in any Letter of
Credit, to the extent that the Issuing Bank has not been reimbursed by the
Borrower for any payment to a beneficiary of a Letter of Credit in respect of a
drawing under such Letter of Credit made by the Issuing Bank under any Letter of
Credit, each Revolving Lender shall, pro rata according to its Pro Rata Share,
reimburse the Issuing Bank promptly upon demand for the amount of such payment.
The obligation of each Revolving Lender to so reimburse the Issuing Bank shall
be absolute and

                                       39


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

unconditional and shall not be affected by the occurrence of a Default, Event of
Default or any other occurrence or event. Any such reimbursement shall not
relieve or otherwise impair the obligation of the Borrower to reimburse the
Issuing Bank for the amount of any payment made by the Issuing Bank under any
Letter of Credit together with interest as hereinafter provided.

                           (d)      Upon the making of any payment with respect
to any Letter of Credit by the Issuing Bank, the Borrower shall be deemed to
have submitted a Notice of Borrowing for a Revolving Loan consisting of a Base
Rate Loan in the amount of such payment, and the Agent shall without notice to
or the consent of Borrower cause Revolving Loans to be made by the Revolving
Lenders in an aggregate amount equal to the amount paid by the Issuing Bank on
that Letter of Credit, but not exceeding the Total Revolving Loan Commitment
minus the then outstanding principal amount of Revolving Loans and minus all
other then outstanding L/C Obligations, and for this purpose, the conditions
precedent set forth in Section 4 hereof shall not apply. The proceeds of such
Revolving Loans shall be paid to the Issuing Bank to reimburse it for the
payment made by it under the Letter of Credit. Promptly following any Revolving
Loans made under this Section 3.1(d), the Agent shall notify the Borrower
thereof.

                           (e)      To the extent that any Revolving Loans made
pursuant to Section 3.1(d) are insufficient to reimburse the Issuing Bank in
full, the Borrower agrees to pay to the Issuing Bank with respect to each Letter
of Credit, within one Business Day after demand therefor, a principal amount
equal to any payment made by the Issuing Bank under that Letter of Credit,
together with interest on such amount from the date of any payment made by the
Issuing Bank through the date of payment by the Borrower at the Default Rate for
Revolving Loans. The principal amount of any such payment made by the Borrower
to the Issuing Bank shall be used to reimburse the Issuing Bank for the payment
made by it under the Letter of Credit. Each Revolving Lender that has reimbursed
the Issuing Bank pursuant to Section 3.1(d) for its Pro Rata Share of any
payment made by the Issuing Bank under a Letter of Credit shall thereupon
acquire a pro rata participation, to the extent of such reimbursement, in the
claim of the Issuing Bank against the Borrower under this Section 3.1(e).

                           (f)      The Issuance of any supplement,
modification, amendment, renewal or extension to or of any Letter of Credit
shall be treated in all respects the same as the Issuance of a new Letter of
Credit.

                  Section 3.2 Letter of Credit Fees. The Borrower shall pay (i)
a letter of credit fee to the Agent equal to (x) a per annum rate equal to the
then effective Applicable Margin for Eurodollar Loans minus 0.50% times (y) the
stated amount of each Standby Letter of Credit for the term of each such Letter
of Credit for the account of the Lenders who have made Revolving Loan
Commitments, according to their respective Pro Rata Shares, in each case payable
quarterly in arrears on each Payment Date, commencing on December 15, 2003, and
(ii) a letter of credit fee to the Agent equal to (x) a per annum rate equal to
the then effective Applicable Margin for Eurodollar Loans minus 0.50% times (y)
the stated amount of each Trade Letter of Credit as of the date of Issuance
thereof, payable for the account of the Lenders who have made Revolving Loan
Commitments, according to their respective Pro Rata Shares, in each case payable
quarterly in arrears on each Payment Date, commencing on December 15, 2003. Upon
(A) the issuance of each Letter of Credit, the Borrower shall also pay to the
Agent for the account of the Issuing Bank an amount equal to the greater of (i)
$500 or (ii) 0.125% of the stated amount of such Letter of Credit as an issuance
fee; (B) the amendment of each Letter of Credit, the Borrower shall pay to the
Agent for the account of the Issuing Bank the amendment fees, in each case, as
the Issuing Bank normally

                                       40


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

charges in connection with a Letter of Credit and activity pursuant thereto, in
either case which fees shall be solely for the account of the Issuing Bank; and
(C) the incurrence of any reasonable out-of-pocket costs and expenses in
connection with the maintenance of any Letter of Credit, the Borrower shall pay
to the Agent for the account of the Issuing Bank the amount of such
out-of-pocket costs and expenses so incurred.

                  Section 3.3 Obligation of Borrower Absolute, etc.

                           (a)      The obligation of the Borrower to pay to the
Issuing Bank the amount of any payment made by the Issuing Bank under any Letter
of Credit shall be absolute, unconditional and irrevocable. Without limiting the
foregoing, such obligation of the Borrower shall not be affected by any of the
following circumstances:

                                    (1)      any lack of validity or
         enforceability of the Letter of Credit, this Agreement or any other
         agreement or instrument relating thereto;

                                    (2)      any amendment or waiver of or any
         consent to departure from the Letter of Credit, this Agreement or any
         other agreement or instrument relating thereto;

                                    (3)      the existence of any claim, setoff,
         defense or other rights which the Borrower or any Subsidiary of the
         Borrower may have at any time against the Issuing Bank, any Lender, the
         Agent, any beneficiary of the Letter of Credit (or any Persons for whom
         any such beneficiary may be acting) or any other Person, whether in
         connection with the Letter of Credit, this Agreement or any other
         agreement or instrument relating thereto, or any unrelated
         transactions;

                                    (4)      any demand, statement or any other
         document presented under the Letter of Credit proving to be forged,
         fraudulent, invalid or insufficient in any respect or any statement
         therein being untrue or inaccurate in any respect whatsoever so long as
         any such document appeared to comply with the terms of the Letter of
         Credit;

                                    (5)      payment by the Issuing Bank in good
         faith under the Letter of Credit against presentation of a draft or any
         accompanying document which does not strictly comply with the terms of
         the Letter of Credit;

                                    (6)      the existence, character, quality,
         quantity, condition, packing, value or delivery of any property
         purported to be represented by documents presented in connection with
         any Letter of Credit or for any difference between any such property
         and the character, quality, quantity, condition or value of such
         property as described in such documents;

                                    (7)      the time, place, manner, order or
         contents of shipments or deliveries of property as described in
         documents presented in connection with any Letter of Credit or the
         existence, nature and extent of any insurance relative thereto;

                                    (8)      the solvency or financial
         responsibility of any party issuing any documents in connection with a
         Letter of Credit;

                                       41


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                                    (9)      any failure or delay in notice of
         shipments or arrival of any property; and

                                    (10)     any other circumstances whatsoever.

                           (b)      As among the Borrower, the Lenders, the
Issuing Bank and the Agent, the Borrower assumes all risks of the acts and
omissions of, or misuse of such Letter of Credit by, the beneficiary of any
Letter of Credit. In furtherance and not in limitation of the foregoing, subject
to the provisions of the Letter of Credit applications and Letter of Credit
reimbursement agreements executed by the Borrower at the time it requests any
Letter of Credit, the Agent, the Issuing Bank and the Lenders shall not be
responsible:

                                    (i)      for the form, validity,
         sufficiency, accuracy, genuineness or legal effect of any document
         submitted by any party in connection with the application for and
         issuance of the Letters of Credit, even if it should in fact prove to
         be in any or all respects invalid, insufficient, inaccurate, fraudulent
         or forged;

                                    (ii)     for the validity or sufficiency of
         any instrument transferring or assigning or purporting to transfer or
         assign a Letter of Credit or the rights or benefits thereunder or
         proceeds thereof, in whole or in part, which may prove to be invalid or
         ineffective for any reason;

                                    (iii)    for the failure of the beneficiary
         of a Letter of Credit to comply duly with conditions required in order
         to draw upon such Letter of Credit;

                                    (iv)     for errors, omissions,
         interruptions or delays in transmission or delivery of any messages, by
         mail, cable, telegraph, telex, or other similar form of
         teletransmission or otherwise;

                                    (v)      for errors in interpretation of
         technical trade terms;

                                    (vi)     for any loss or delay in the
         transmission or otherwise of any document required in order to make a
         drawing under any Letter of Credit or of the proceeds thereof;

                                    (vii)    for the misapplication by the
         beneficiary of a Letter of Credit of the proceeds of any drawing under
         such Letter of Credit; and

                                    (viii)   for any consequences arising from
         causes beyond the control of the Agent, the Issuing Bank and the
         Lenders including, without limitation, any act or omission, whether
         rightful or wrongful, of any present or future de jure or de facto
         government or governmental authority.

None of the above shall affect, impair, or prevent the vesting of any of the
Issuing Bank's rights or powers hereunder.

                           (c)      In furtherance and extension and not in
limitation of the specific provisions hereinabove set forth, any action taken or
omitted by the Issuing Bank under or in connection with Letters of Credit issued
by it or any related certificates shall not, in the absence of

                                       42


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

gross negligence or willful misconduct, put the Issuing Bank under any resulting
liability to the Borrower or relieve the Borrower of any of its obligations
hereunder to any such Person.

                           (d)      The Issuing Bank shall be entitled to the
protection accorded to the Agent pursuant to Section 9, mutatis mutandis.

SECTION 4. CONDITIONS PRECEDENT.

                  Section 4.1 Conditions Precedent to the Effectiveness of this
Agreement. This Agreement shall become effective as of the Closing Date upon the
satisfaction on or before the Closing Date of the following conditions
precedent:

                           (a)      Loan Documents.

                                    (i)      Credit Agreement. The Borrower and
         the Lenders shall have executed and delivered this Agreement to the
         Agent.

                                    (ii)     Notes. The Borrower shall have
         executed and delivered to each of the Lenders the appropriate Notes in
         the amount, maturity and as otherwise provided herein.

                                    (iii)    Borrower Security Agreement. The
         Borrower shall have executed and delivered to the Agent the Borrower
         Security Agreement.

                                    (iv)     Subsidiary Security Agreement. Each
         Subsidiary of the Borrower (other than any such Subsidiary which is an
         Immaterial Subsidiary) shall have duly executed and delivered to the
         Agent the Subsidiary Security Agreement.

                                    (v)      Borrower Pledge Agreement. The
         Borrower shall have executed and delivered to the Agent the Borrower
         Pledge Agreement.

                                    (vi)     Subsidiary Pledge Agreements. Each
         Subsidiary of the Borrower that owns any Equity Interest in any Person
         as of the Closing Date (other than in an Immaterial Subsidiary) shall
         have duly executed and delivered to the Agent a Subsidiary Pledge
         Agreement.

                                    (vii)    Guaranty. Each Subsidiary of the
         Borrower (other than any Immaterial Subsidiary that is not a
         Subordinated Guarantor) shall have executed and delivered to the Agent
         the Guaranty.

                                    (viii)   [Intentionally Omitted.].

                                    (ix)     Borrower Trademark Security
         Agreement. The Borrower shall have executed and delivered to the Agent
         an amended and restated Borrower Trademark Security Agreement, amending
         and restating that certain Borrower Trademark Security Agreement, dated
         as of July 15, 1997, by the Borrower in favor of the Agent.

                                    (x)      Subsidiary Trademark, Patent and
         Copyright Security Agreements. Each Subsidiary of the Borrower party to
         the Amended and Restated Subsidiary Trademark Security Agreement,
         Amended and Restated Subsidiary Patent

                                       43


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

         Security Agreement or Amended and Restated Subsidiary Copyright
         Security Agreement (as applicable), each dated as of January 31, 2002
         in favor of the Agent, shall have executed and delivered to the Agent a
         second amended and restated version of each such agreement, and each
         Subsidiary of the Borrower not party to any of such agreements that
         owns any Intellectual Property shall have executed and delivered to the
         Agent a security agreement substantially in the form of each such
         previously delivered agreement (as applicable).

                           (b)      Opinions of Counsel. The Agent shall have
received (A) a legal opinion, dated the Closing Date, from Stradling Yocca
Carlson & Rauth, counsel to the Loan Parties, substantially in the form set
forth as Exhibit H hereto, (B) legal opinions, dated the Closing Date, from each
of the local counsel to the Loan Parties identified on Schedule 4.1(b), in form
and substance satisfactory to the Agent and (C) such other legal opinions, each
dated the Closing Date, from local counsel to the Loan Parties as requested by
the Agent with respect to such matters as requested by the Agent and in form and
substance satisfactory to the Agent.

                           (c)      Corporate Documents. The Agent shall have
received the certificate of incorporation, certificate of limited partnership,
certificate of formation or other similar organizational document of each of the
Loan Parties as amended, modified or supplemented to the Closing Date, (other
than in the case of a general partnership) certified to be true, correct and
complete by the appropriate Secretary of State as of a date not more than ten
Business Days prior to the Closing Date, together with a good standing
certificate from such Secretary of State and a good standing certificate from
the Secretaries of State (or the equivalent thereof) of each other State in
which each of them is required to be qualified to transact business, each to be
dated a date not more than ten Business Days prior to the Closing Date and a
bring-down good standing certificate or telephonic confirmation from the
appropriate Secretary of State in each jurisdiction of organization of each Loan
Party dated the Closing Date.

                           (d)      Certified Resolutions, etc. The Agent shall
have received a certificate of the Secretary or Assistant Secretary of each of
the Loan Parties or of a general partner in the case of each Loan Party which is
a general partnership and dated the Closing Date certifying (i) the names and
true signatures of the incumbent officers of such Person authorized to sign the
applicable Loan Documents, (ii) the By-Laws, partnership agreement, limited
liability company agreement or other similar organizational document of such
Person as in effect on the Closing Date, (iii) the resolutions of such Person's
Board of Directors (or other governing body, as applicable) approving and
authorizing the execution, delivery and performance of all Transaction Documents
executed by such Person, and (iv) that there have been no changes in the
certificate of incorporation, certificate of limited partnership, certificate of
formation or other similar organizational document of such Person since the date
of the most recent certification thereof by the appropriate Secretary of State
or, in the case of a partnership or other similar entity, the partnership
agreement or other similar organizational document.

                           (e)      Existing Indebtedness. The Agent shall have
received copies of all documents relating to existing Indebtedness for borrowed
money or evidenced by a note, bond, debenture, acceptance or similar instrument
of the Borrower and its Subsidiaries that shall be outstanding in each case in a
principal amount in excess of $2,000,000 on and after the Closing Date,
including, without limitation, terms of amortization, interest, premiums, fees,
expenses, maturity, amendments, covenants, events of default and remedies,
certified as of the Closing Date as such by the President or Vice President of
the Borrower.

                                       44


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                           (f)      Process Agent. Each Loan Party shall have
appointed an agent satisfactory to the Agent for service of process in
connection with any action or proceeding arising under or relating to the Loan
Documents, and such agent shall have accepted such appointment in writing.

                           (g)      Officer's Certificate. The Agent and the
Lenders shall have received a certificate of the President or Vice President of
the Borrower, dated the Closing Date, certifying that (i) the Subordinated Debt
Documents are in full force and effect and no material term or condition thereof
has been amended from the form thereof delivered to the Agent, or waived, except
as disclosed to the Agent or its counsel prior to the execution of this
Agreement, (ii) each of the Loan Parties and, to the best of his or her
knowledge, the other parties to the Subordinated Debt Documents, have performed
or complied in all material respects with all agreements and conditions
contained in such Subordinated Debt Documents, (iii) subject to the foregoing,
neither any Loan Party nor, to the best of his or her knowledge, any such other
party is in default in the performance or compliance with any of the material
terms or provisions thereof, except to the extent that performance thereof or
compliance therewith or default has been waived with the prior written consent
of the Lenders, (iv) all of the representations and warranties of the Borrower
and each other Loan Party contained in the Subordinated Debt Documents and the
Loan Documents are true and correct, (v) no Default or Event of Default has
occurred and is continuing and no default or event of default has occurred and
is continuing under the Subordinated Debt Documents and (vi) since January 31,
2002, no event or change has occurred that has caused or evidences a Material
Adverse Effect.

                           (h)      Closing Compliance Certificate. The Agent
shall have received a certificate signed by the chief financial officer of the
Borrower (i) containing conclusions that the Borrower and its Subsidiaries are
Solvent before and after giving effect to the Transactions and the Redemption
Transactions and that Closing EBITDA equals at least $100,000,000 and (ii)
setting forth the calculations required to establish the Leverage Ratio
calculated as of the end of the Retail Period of the Borrower ending October 6,
2003.

                           (i)      Insurance. The Agent shall have received a
certificate of insurance demonstrating insurance coverage in respect of each of
the Loan Parties of types, in amounts, with insurers and with other terms
reasonably satisfactory to the Agent and which name the Agent as an additional
insured or loss payee, as applicable.

                           (j)      Lien Search Reports. The Agent shall have
received satisfactory reports of UCC, tax lien, judgment and litigation searches
with respect to the Borrower and each of the other Loan Parties in each of the
locations requested by the Agent.

                           (k)      UCC-1 Financing Statements. The Agent shall
have received originals of each UCC-1 financing statement (i) duly authorized by
the Borrower naming the Borrower as debtor and the Agent as secured party and
filed in the jurisdictions set forth in Schedule I to the Borrower Security
Agreement and (ii) duly authorized by each other Loan Party naming such Loan
Party as debtor and the Agent as secured party and filed in the appropriate
jurisdictions set forth in Schedule I to the Subsidiary Security Agreement.

                           (l)      Pledged Collateral. The Agent shall have
received (i) the original stock, membership interest or partnership interest
certificates evidencing the Pledged Stock (as defined in the Borrower Pledge
Agreement and each Subsidiary Pledge Agreement) pursuant to the

                                       45


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

Borrower Pledge Agreement and each Subsidiary Pledge Agreement (other than
certificates representing any shares of Pledged Stock of any Immaterial
Subsidiary and any shares of Pledged Stock which evidence an Immaterial
Investment), together with undated stock powers or similar instruments of
assignment duly executed in blank in connection therewith and (ii) each original
Instrument pursuant to the Borrower Pledge Agreement and each Subsidiary Pledge
Agreement (other than any Instrument evidencing an Immaterial Investment).

                           (m)      Corporate and Capital Structure. The
corporate and capital structure of the Loan Parties shall be satisfactory to the
Lenders, and the Agent shall have received a corporate structure chart with
respect to the Borrower and all of its Subsidiaries (certified by an Authorized
Officer of the Borrower).

                           (n)      Funded Debt and Capitalization. The Total
Revolving Loan Commitment minus the aggregate principal amount of the Revolving
Loans outstanding on the Closing Date minus the amount of any L/C Obligations
then outstanding including any Letters of Credit to be issued on the Closing
Date shall equal at least $25,000,000. The Leverage Ratio for the four fiscal
quarters ended immediately prior to the Closing Date shall not exceed 4.1 to 1.
The assets and liabilities of the Borrower and its consolidated Subsidiaries
shall be materially consistent with the projections dated September 26, 2003 and
previously delivered by the Borrower to the Agent.

                           (o)      Existing Indebtedness. The Agent shall have
received evidence satisfactory to the Agent and the Lenders that, after giving
effect to the consummation of the Transactions, (i) the Borrower and its
Subsidiaries shall not be liable for or have outstanding any Indebtedness which
is of the type of Indebtedness which would appear as a liability on (or would be
required to appear as a liability on) the consolidated balance sheet of the
Borrower (and not of the type required solely to be included in the footnotes
thereto) and which Indebtedness shall include, without limitation, Indebtedness
for borrowed money and Capitalized Lease Obligations, other than (A) the Loans
outstanding hereunder as contemplated by Section 4.1(n) and (B) Indebtedness
permitted under Section 7.2 (but excluding Indebtedness described in Section
7.2(a)) (collectively, the "SURVIVING DEBT"), and (ii) the Borrower and each of
its Subsidiaries shall have paid in full all other Indebtedness of the Borrower
and each of its Subsidiaries existing prior to the making of the initial Loans
hereunder (all of the foregoing Indebtedness described in the foregoing clause
(i) and (ii) referred to collectively as "EXISTING DEBT"). The Agent shall be
satisfied that the execution and delivery of, and the performance by each of the
Borrower and its Subsidiaries of its respective obligations under, each
Transaction Document to which it is a party and consummation of the Transactions
does not violate, conflict with or cause a default under any document or
instrument evidencing Existing Debt. The Agent shall have received (i) payoff
and lien termination and release agreements, in form and substance satisfactory
to the Agent, from each creditor of the Borrower and its Subsidiaries with
respect to Existing Debt other than Surviving Debt, and (ii) such UCC Amendments
(or its equivalent), intellectual property lien releases in recordable form in
all applicable jurisdictions, and other lien and mortgage release and
termination agreements, evidence of release of federal and state tax liens, all
in form and substance satisfactory to the Agent, as the Agent shall request,
duly executed by the appropriate Person in favor of which such Liens were
granted.

                           (p)      Environmental Matters. The Agent shall have
received, if the Agent deems it necessary, a written report of an investigation,
conducted to the Agent's satisfaction, from an environmental consultant
acceptable to the Agent, as to any environmental, health or safety violations,
hazards or liabilities which it deems material. The Agent shall (i) be satisfied
that neither the Borrower nor any of its Subsidiaries nor any other Loan Party
is subject to any present or

                                       46


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

contingent liability deemed material by the Agent in its reasonable judgment in
connection with any past or present treatment, storage, recycling, disposal or
release or threatened release, at any property location regardless of whether
owned or operated by the Borrower or any of its Subsidiaries or any other Loan
Party, of any Materials of Environmental Concern or in connection with any
Environmental Law or other health or safety laws or regulations, and that their
operations taken as a whole comply in all material respects (in the Agent's
reasonable judgment) with all Environmental Laws or other health or safety laws
or regulations, (ii) be satisfied that neither the Borrower nor any of its
Subsidiaries, nor any other Loan Party nor any property owned or operated by any
such Person is the subject of any federal or state investigation evaluating
whether any remedial action, involving a material expenditure (in the opinion of
the Agent) is needed to respond to any release or other presence of Materials of
Environmental Concern and (iii) have received a list of all of the properties
operated, owned or leased by the Borrower and each of its Subsidiaries as to
which Phase I environmental audit reports have been completed within ten (10)
years prior to the Closing Date and have received copies of those Phase I audit
reports which identify, or which recommend a subsequent Phase II investigation
as to, any material environmental health or safety violations, hazards or
potential liabilities relating to the properties and business of the Borrower
and each of its Subsidiaries, the other Loan Parties (if applicable) and each of
their Environmental Affiliates of which the Borrower or any of its Subsidiaries
have knowledge.

                           (q)      Fees and Expenses. The Agent shall have
received, for its account and for the account of each Lender, as applicable, all
Fees and other fees and expenses due and payable hereunder and under the other
Loan Documents on or before the date hereof, including, without limitation, the
reasonable fees and expenses accrued through the date hereof, of Skadden, Arps,
Slate, Meagher & Flom (Illinois) and any other counsel retained by the Agent.

                           (r)      Consents, Licenses, Approvals; Compliance
with Laws. All consents, licenses, orders, permits, authorizations, validations,
certificates, filings and approvals (collectively, "CONSENTS"), if any, required
in connection with the execution, delivery and performance by the Borrower or
any of its Subsidiaries, and the validity and enforceability of the Transaction
Documents, or in connection with any of the Transactions, including, without
limitation, all shareholder Consents and all Consents required by any federal,
state, local regulatory or governmental authority including, without limitation,
all Consents required pursuant to the Hart-Scott-Rodino Act, shall have been
obtained or made and shall be in full force and effect and copies thereof shall
in each case have been delivered to the Agent. No law or Regulation shall be
applicable that could reasonably be expected to restrain, prevent or otherwise
impose adverse conditions on the validity and enforceability of the Transaction
Documents, or the Transactions. The Borrower shall have delivered to the Agent
such evidence as the Agent shall have requested, evidencing compliance by the
Borrower, its Subsidiaries and the other Loan Parties with all applicable laws,
rules and regulations before and after giving effect to the Transactions
(including, without limitation, all applicable corporate and securities laws and
all ERISA, environmental and health and safety laws, rules and regulations).

                           (s)      Management Contracts. The Borrower shall
have delivered to the Agent and each Lender copies of each written agreement
that it or any of its Subsidiaries has with its officers or other members of
management as requested by the Agent certified by an officer of the Borrower,
and each such contract shall be satisfactory in form and substance to the Agent.

                           (t)      Franchise Agreements. The Borrower shall
deliver to the Agent copies of representative forms of Franchise Agreements,
which represent the various forms of all

                                       47


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

Franchise Agreements to which the Borrower or any of its Subsidiaries as of the
Closing Date is the franchisor or licensor in each case certified by the general
counsel of the Borrower.

                           (u)      No Material Adverse Change; No Default. No
event, act or condition shall have occurred after January 31, 2003, that has had
a Material Adverse Effect, or that would make the facts and other information
represented by the Borrower or the other Loan Parties to the Agent prior to the
Closing Date materially misleading. No Default or Event of Default shall have
occurred and be continuing or shall result from the consummation of the
Transactions on the Closing Date.

                           (v)      Management/Ownership. The composition of the
management of the Borrower and its strategic plans shall be satisfactory to the
Agent.

                           (w)      No Litigation. There shall not be any
action, suit, investigation, arbitration, litigation or proceeding pending or
threatened against the Borrower or any of its Subsidiaries, before any court,
arbitrator or governmental or administrative body, agency or official that could
reasonably be expected to have a material adverse effect on the Transactions and
the Redemption Transactions, the Borrower or the other Loan Parties.

                           (x)      [Intentionally Omitted].

                           (y)      Mortgage Amendments. The Borrower shall have
executed and delivered to the Agent, and cause its Subsidiaries to execute and
deliver to the Agent, such amendments to the Mortgages as the Agent shall
reasonably request.

                           (z)      Financial Statements. The Agent shall have
received and be satisfied with (i) audited financial statements of the Borrower
and its Subsidiaries for each of the last three fiscal years, including balance
sheets, income and cash flow statements, audited by independent public
accountants of recognized national standing and prepared in conformity with
GAAP, together with such accountants' report thereon, (ii) unaudited interim
financial statements of the Borrower and its subsidiaries for the fiscal periods
most recently ended prior to the Closing Date (including without limitation
Retail Period financial statements for any such period), (iii) a pro forma
balance sheet of the Borrower and the other Loan Parties as of the Closing Date
after giving effect to the Transactions and the Redemption Transactions, and
(iv) projected financial statements (including balance sheets, income and cash
flow statements) of the Borrower and the other Loan Parties for the seven-year
period after the Closing Date, all of the foregoing to be substantially
consistent with any financial statements for the same periods delivered to the
Agent prior to September 26, 2003 and, in the case of any such financial
statements for subsequent periods, substantially consistent with any projected
financial statements for such periods delivered to the Agent prior to September
26, 2003.

                           (aa)     Additional Matters. The Agent shall have
received such other certificates, opinions, documents and instruments relating
to the Transactions as may have been reasonably requested by the Agent or any
Lender, and all corporate and other proceedings and all other documents
(including, without limitation, all documents referred to herein and not
appearing as exhibits hereto) and all legal matters in connection with the
Transactions shall be satisfactory in form and substance to the Lenders.

                  Section 4.2 Conditions Precedent to All Loans. The obligation
of each Lender to make any Loan at any time on or after the date hereof and of
the Issuing Bank to issue any Letter of

                                       48


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

Credit is subject to the satisfaction on the date such Loan is made or such
Letter of Credit is Issued of the following conditions precedent:

                           (a)      Representations and Warranties. The
representations and warranties contained herein and in the other Loan Documents
(other than representations and warranties which expressly speak only as of a
different date) shall be true and correct in all material respects on such date
both before and after giving effect to the making of such Loans or the Issuance
of such Letter of Credit.

                           (b)      No Default or Event of Default. No Default
or Event of Default shall have occurred and be continuing on such date either
before or after giving effect to the making of such Loans or the Issuance of
such Letter of Credit.

                           (c)      No Injunction. No law or regulation shall
have been adopted, no order, judgment or decree of any governmental authority
shall have been issued, and no litigation shall be pending or threatened, which
in the reasonable judgment of the Lenders would enjoin, prohibit or restrain, or
impose or result in the imposition of any material adverse condition upon, the
making or repayment of the Loans, the Issuance of such Letter of Credit or the
reimbursement of any amounts with respect thereto or the consummation of the
Transactions.

                           (d)      No Material Adverse Change. No event, act or
condition shall have occurred after January 31, 2003 which, in the judgment of
the Required Lenders, has had or could have a Material Adverse Effect.

                           (e)      Notice of Borrowing or Issuance. The Agent
or the Issuing Bank shall have received a fully executed Notice of Borrowing or
L/C Application, as appropriate, in respect of the Loans to be made or Letters
of Credit to be Issued, respectively, on such date.

         The acceptance of the proceeds of each Loan and of the Issuance of each
Letter of Credit shall constitute a representation and warranty by the Borrower
to the Agent and each of the Lenders that all of the conditions required to be
satisfied under this Section 4 in connection with the making of such Loan or the
Issuance of such Letter of Credit have been satisfied.

         All of the Notes, certificates, agreements, legal opinions and other
documents and papers referred to in this Section 4, unless otherwise specified,
shall be delivered to the Agent for the account of each of the Lenders and,
except for the Notes, in sufficient counterparts for each of the Lenders, and
shall be satisfactory in form and substance to the Agent and each Lender in its
sole discretion.

SECTION 5. REPRESENTATIONS AND WARRANTIES.

         In order to induce the Lenders to enter into this Agreement and to make
the Loans and to induce the Issuing Bank to issue Letters of Credit, the
Borrower makes the following representations and warranties, which shall survive
the execution and delivery of this Agreement and the Notes and the making of the
Loans and the Issuance of the Letters of Credit:

                  Section 5.1 Corporate Status. Each Loan Party (i) is duly
organized and validly existing and in good standing under the laws of the
jurisdiction of its organization, (ii) has the corporate or other requisite
power and authority to own its property and assets and to transact the

                                       49


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

business in which it is engaged or presently proposes to engage and (iii) has
duly qualified and is authorized to do business and is in good standing as a
foreign entity in every jurisdiction in which it owns or leases real property or
in which the nature of its business requires it to be so qualified, except in
the case of clause (iii), where the failure to so qualify, individually or in
the aggregate, could not have a Material Adverse Effect.

                  Section 5.2 Corporate Power and Authority. Each Loan Party has
the corporate or other requisite power and authority to execute, deliver and
carry out the terms and provisions of each of the Transaction Documents to which
it is a party and has taken all necessary corporate or other requisite action to
authorize the execution, delivery and performance by it of such Transaction
Documents. Each Loan Party has duly executed and delivered each such Transaction
Document, and each such Transaction Document constitutes its legal, valid and
binding obligation, enforceable in accordance with its terms.

                  Section 5.3 No Violation. Neither the execution, delivery or
performance by any Loan Party of the Transaction Documents to which it is a
party, nor compliance by it with the terms and provisions thereof nor the
consummation of the Transactions, (i) will contravene any applicable provision
of any law, statute, rule, regulation, order, writ, injunction or decree of any
court or governmental instrumentality or (ii) will conflict or be inconsistent
with or result in any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien (except pursuant
to the Security Documents) upon any of the property or assets of any Loan Party
pursuant to the terms of, any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which such Loan Party is a party or by which it
or any of its property or assets is bound or to which it may be subject, or
(iii) will violate any provision of its certificate of incorporation, by-laws,
partnership agreement or limited liability company agreement (or other relevant
organizational documents) of any Loan Party.

                  Section 5.4 Litigation. There are no actions, suits,
governmental investigations, arbitrations or proceedings pending or threatened
(i) with respect to any of the Transactions or the Transaction Documents or (ii)
that could, individually or in the aggregate, result in a Material Adverse
Effect.

                  Section 5.5 Financial Statements; Financial Condition; etc.
Each of the financial statements and financial certificates delivered pursuant
to Section 4.1(z) were prepared in accordance with GAAP consistently applied and
fairly present the financial condition and the results of operations of the
entities covered thereby on the dates and for the periods covered thereby,
except as disclosed in the notes thereto and, with respect to interim financial
statements, subject to normally recurring year-end adjustments. No Loan Party
has any material liability (contingent or otherwise) not reflected in such
financial statements or in the notes thereto.

                  Section 5.6 Solvency. On the Closing Date and at all times
after the Closing Date, after giving effect to the Transactions, each Loan Party
is and will be Solvent.

                  Section 5.7 Projections. The projections delivered to the
Lenders dated September 26, 2003, were prepared on the basis of the assumptions
accompanying them, and such projections and assumptions, as of the date of
preparation thereof and as of the Closing Date, are reasonable and represent the
Borrower's good faith estimate of its future financial performance, it being
understood that nothing contained in this Section 5.7 shall constitute a
representation or warranty that such future financial performance or results of
operations will in fact be achieved.

                                       50


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                  Section 5.8 Material Adverse Change. Since January 31, 2003,
there has occurred no event, act, condition or liability which has had, or could
have, a Material Adverse Effect.

                  Section 5.9 Use of Proceeds; Margin Regulations. All proceeds
of each Loan, and each Letter of Credit, will be used by the Borrower only in
accordance with the provisions of Section 2.20. No part of the proceeds of any
Loan, or any Letter of Credit, will be used by the Borrower to purchase or carry
any Margin Stock or to extend credit to others for the purpose of purchasing or
carrying any Margin Stock. Neither the making of any Loan, nor the Issuance of
any Letter of Credit, nor the use of the proceeds thereof will violate or be
inconsistent with the provisions of Regulations T, U or X of the Federal Reserve
Board. Following the application of the proceeds of each Loan, less than 25% of
the value (as determined by any reasonable method) of the assets of the Borrower
and its Subsidiaries (on a consolidated and an unconsolidated basis) have been
and will continue to be, represented by Margin Stock.

                  Section 5.10 Governmental and Other Approvals. No order,
consent, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, any governmental or public body
or authority, or any subdivision thereof, or any other Person, is required to
authorize, or is required in connection with (i) the execution, delivery and
performance of any Transaction Document or the consummation of any of the
Transactions or (ii) the legality, validity, binding effect or enforceability of
any Transaction Document or the exercise by the Agent or any Lender of any of
its rights under any Loan Document, except those listed on Schedule 5.10 that
have already been duly made or obtained and remain in full force and effect and
except for the filing of financing statements pursuant to the Security
Documents. All applicable waiting periods including, without limitation, those
under the Hart-Scott-Rodino Act in connection with each Permitted Acquisition
and the other transactions contemplated thereby have expired without any action
having been taken by any competent authority restraining, preventing or imposing
materially adverse conditions upon the rights of the Loan Parties or their
Subsidiaries freely to transfer or otherwise dispose of, or to create any Lien
on, any properties now owned or hereafter acquired by any of them.

                  Section 5.11 Security Interests and Liens. The Security
Documents create, as security for the Obligations, valid and enforceable
security interests in and Liens on all of the Collateral, in favor of the Agent
for the ratable benefit of the Lenders, and subject to no other Liens (other
than Liens expressly permitted by Section 7.3 hereof). Upon the satisfaction of
the conditions precedent described in Sections 4.1(k) and 4.1(l), such security
interests in and Liens on the Collateral shall be superior to and prior to the
rights of all third parties (except as disclosed on Schedule 5.11), and no
further recordings or filings are or will be required in connection with the
creation, perfection or enforcement of such security interests and Liens, other
than the filing of continuation statements in accordance with applicable law.

                  Section 5.12 Tax Returns and Payments. Each Loan Party has
filed all tax returns required to be filed by it and has paid all taxes and
assessments payable by it which have become due, other than (i) those not yet
delinquent or those that are reserved against in accordance with GAAP which are
being diligently contested in good faith by appropriate proceedings or (ii)
where the failure to so pay has not resulted and could not reasonably be
expected to result in liability in excess of $1,000,000 in the aggregate for all
of the Loan Parties.

                  Section 5.13 ERISA. Neither the Borrower nor any of its
Subsidiaries have any Plans other than those listed on Schedule 5.13. No
accumulated funding deficiency (as defined in Section 412 of the Code or Section
302 of ERISA) or Reportable Event has occurred with respect to

                                       51


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

any Plan. There are no Unfunded Benefit Liabilities under any Plan except as
notified to the Agent pursuant to Section 6.1(h)(i)(E). The Borrower and each
member of its ERISA Controlled Group have complied with the requirements of
Section 515 of ERISA with respect to each Multiemployer Plan and is not in
"default" (as defined in Section 4219(c)(5) of ERISA) with respect to payments
to a Multiemployer Plan. The aggregate potential total withdrawal liability, and
the aggregate potential annual withdrawal liability payments of the Borrower and
the members of its ERISA Controlled Group as determined in accordance with Title
IV of ERISA as if the Borrower and the members of its ERISA Controlled Group had
completely withdrawn from all Multiemployer Plans is not greater than
$2,000,000. To the best knowledge of the Borrower and each member of its ERISA
Controlled Group, no Multiemployer Plan is or is likely to be in reorganization
(as defined in Section 4241 of ERISA or Section 418 of the Code) or is insolvent
(as defined in Section 4245 of ERISA). No material liability to the PBGC (other
than required premium payments), the Internal Revenue Service, any Plan or any
trust established under Title IV of ERISA has been, or is expected by the
Borrower or any member of its ERISA Controlled Group to be, incurred by the
Borrower or any member of its ERISA Controlled Group. Neither the Borrower nor
any member of its ERISA Controlled Group has any contingent liability with
respect to any post-retirement benefit under any "welfare plan" (as defined in
Section 3(1) of ERISA), other than liability for continuation coverage under
Part 6 of Title I of ERISA and other than contingent liabilities under Hardee's
Retiree Medical Insurance Plan, and the aggregate present value of all
post-retirement benefit liabilities of the Borrower and its Subsidiaries under
Hardee's Retiree Medical Insurance Plan as of the Closing Date does not exceed
$4,800,000. No lien under Section 412(n) of the Code or 302(f) of ERISA or
requirement to provide security under Section 401(a)(29) of the Code or Section
307 of ERISA has been or is reasonably expected by the Borrower or any member of
its ERISA Controlled Group to be imposed on the assets of the Borrower or any
member of its ERISA Controlled Group.

                  Section 5.14 Investment Company Act; Public Utility Holding
Company Act. No Loan Party is (x) an "investment company" or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended, (y) a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of either a "holding company"
or a "subsidiary company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended, or (z) subject to any other federal or state
law or regulation which purports to restrict or regulate its ability to borrow
money.

                  Section 5.15 Dissolved Subsidiaries; Previously Material
Subsidiaries, etc. Schedule 5.15 sets forth a list of previous Subsidiaries that
have been dissolved since January 31, 2002 (the "DISSOLVED ENTITIES"). All of
the assets and property (including, without limitation, all real property for
which title was previously vested in Leased Restaurant Partners) of each
Dissolved Entity have been transferred to the Borrower or a Subsidiary of the
Borrower party to the Subsidiary Security Agreement and Guaranty. In addition,
substantially all of the assets and property of each of Carl's Jr. Media Fund,
Inc., a California corporation, Carl's Jr. National Production Fund, Inc., a
California corporation, and Hardee's Employees Hurricane Fund, Inc., a
California corporation has been transferred to the Borrower or a Subsidiary of
the Borrower party to the Subsidiary Security Agreement and Guaranty. None of
Carl's Jr. Media Fund, Inc., a California corporation, Carl's Jr. National
Production Fund, Inc., a California corporation, and Hardee's Employees
Hurricane Fund, Inc., a California corporation has any obligation as a
"Subsidiary Guarantor" under and as defined in the New Subordinated Note
Indenture.

                  Section 5.16 Representations and Warranties in Subordinated
Debt Documents. All representations and warranties made by any Loan Party in the
Subordinated Debt Documents,

                                       52


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

and, to the best of the Borrower's knowledge, all representations made by each
other Person in such Subordinated Debt Documents, are true and correct in all
material respects. None of such representations and warranties is inconsistent
in any material respect with the representations and warranties of any Loan
Party made herein or in any other Loan Document.

                  Section 5.17 True and Complete Disclosure. All factual
information (taken as a whole) furnished by or on behalf of any Loan Party in
writing to the Agent or any Lender on or prior to the Closing Date, for purposes
of or in connection with this Agreement or any of the Transactions is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of any Loan Party in writing to the Agent or any Lender will be, true and
accurate in all material respects on the date as of which such information is
dated or furnished and not incomplete by omitting to state any material fact
necessary to make such information (taken as a whole) not misleading at such
time. As of the Closing Date, there are no facts, events or conditions known to
any Loan Party which, individually or in the aggregate, have or could be
expected to have a Material Adverse Effect.

                  Section 5.18 Corporate Structure; Capitalization. Schedule
5.18 hereto sets forth as of the Closing Date, the jurisdiction of incorporation
or organization of the Borrower, each of its Subsidiaries, each other Loan Party
and each Subsidiary of such Loan Party, the number of authorized and issued
shares of capital stock or other outstanding equity interests of the Borrower
and each of its Subsidiaries and of each other Loan Party and each Subsidiary of
such Loan Party, the par value thereof and (other than with respect to the
Borrower) the registered owner(s) thereof. All of such stock has been duly and
validly issued and is fully paid and non-assessable and (except for the stock of
the Borrower) is, together with all such other equity interests, owned by such
Loan Party free and clear of all Liens. Except for the Convertible Subordinated
Notes or as disclosed in Schedule 5.18, neither any Loan Party nor any such
Subsidiary has outstanding any securities convertible into or exchangeable for
its capital stock or other outstanding equity interest nor does any Loan Party
or any such Subsidiary have outstanding any rights to subscribe for or to
purchase, or any options for the purchase of, warrants or any agreements
providing for the issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to, its capital stock or other
outstanding equity interest.

                  Section 5.19 Environmental Matters.

                           (a)      (i) Each of the Loan Parties and their
Environmental Affiliates are in compliance with all applicable Environmental
Laws except where noncompliance, individually or in the aggregate, could not
have a Material Adverse Effect, (ii) each of the Loan Parties and their
Environmental Affiliates have all Environmental Approvals required to operate
their businesses as presently conducted or as reasonably anticipated to be
conducted except where the failure to obtain any such Environmental Approval,
individually or in the aggregate, could not have a Material Adverse Effect,
(iii) none of the Loan Parties nor any of their Environmental Affiliates has
received any communication (written or oral), whether from a governmental
authority, citizens group, employee or otherwise, that alleges that such Loan
Party or Environmental Affiliate is not in full compliance with all
Environmental Laws and where such noncompliance, individually or in the
aggregate, could have a Material Adverse Effect, and (iv) to the Borrower's best
knowledge after due inquiry, there are no circumstances that may prevent or
interfere with such full compliance in the future except where such
noncompliance, individually or in the aggregate, could not have a Material
Adverse Effect.

                                       53


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                           (b)      There is no Environmental Claim pending or
threatened against any Loan Party or its Environmental Affiliate, which,
individually or in the aggregate, could have a Material Adverse Effect.

                           (c)      There are no past or present actions,
activities, circumstances, conditions, events or incidents, including, without
limitation, the release, emission, discharge or disposal of any Material of
Environmental Concern, that could form the basis of any Environmental Claims
against any of the Loan Parties or any of their Environmental Affiliates, which
Environmental Claims, individually or in the aggregate, could have a Material
Adverse Effect.

                           (d)      Schedule 5.19 sets forth a list of all of
the properties operated, owned or leased by the Borrower and each of its
Subsidiaries as to which Phase I environmental audit reports have been completed
as of the Closing Date and the Borrower has delivered copies of those Phase I
audit reports which identify, or which recommend a subsequent Phase II
investigation as to, any material environmental, health or safety violations,
hazards or potential liabilities relating to the properties and business of the
Borrower, each of its Subsidiaries, the other Loan Parties (if applicable) and
each of their Environmental Affiliates of which the Borrower or any of its
Subsidiaries have knowledge.

                           (e)      The Borrower has caused to be completed
Phase I audit reports with respect to each property owned, operated or leased by
the Borrower or any of its Subsidiaries, upon which a business or operation
other than a Restaurant has been conducted at any time during the six (6) years
immediately preceding the Closing Date and with respect to which a Phase I audit
report had not been completed in the eleven (11) year period immediately
preceding the Closing Date. The Borrower has delivered all such Phase I audit
reports to the Agent which were obtained pursuant to the preceding sentence
which identified, or which recommended a subsequent Phase II investigation as
to, any material environmental, health or safety violations, hazards or
potential liabilities relating to the properties and business of any Loan Party
or any of their Environmental Affiliates.

                  Section 5.20 Intellectual Property. Each of the Loan Parties
owns or has the valid right to use all patents, trademarks, service marks,
domain names, trade names, copyrights, trade secrets and other intangible rights
(the "INTELLECTUAL PROPERTY"), which are used in or necessary for the operation
of its business, free and clear of all Liens. Schedule V to the Borrower
Security Agreement and Schedule V to the Subsidiary Security Agreement together
set forth a complete and accurate list thereof with respect to each Loan Party
as of the Closing Date, of all applications and registrations for Intellectual
Property owned by such Loan Party and all license agreements to or from third
parties to which such Loan Party is a party or is otherwise bound. Each Loan
Party is the record owner of all registrations and applications which it owns
and all such registrations for Intellectual Property are valid and enforceable.
To the best of each Loan Party's knowledge, no service, product, process,
component or other material presently offered, sold or employed by any Loan
Party infringes upon or dilutes any Intellectual Property of any other Person,
and no such claims have been made by any other Person against any Loan Party.
There is no pending or, to the best of each Loan Party's knowledge, threatened
claim or litigation against or affecting any Loan Party contesting its rights to
own or use any Intellectual Property or the validity or enforceability thereof.

                  Section 5.21 Ownership of Property; Restaurants. Schedule 5.21
sets forth all the real property owned or leased by the Loan Parties as of the
Closing Date and identifies the street address, the current owner (and current
record owner, if different) and whether such property is

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                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

leased or owned. The Loan Parties have good and marketable fee simple title to
or valid leasehold interests in all of such real property and good title to all
of their personal property subject to no Lien of any kind except Liens permitted
hereby. Schedule 5.21 also sets forth a list of each Restaurant and the street
address thereof which is owned or operated as of the Closing Date by any Loan
Party or any of its Subsidiaries. The Loan Parties enjoy peaceful and
undisturbed possession under all of their respective leases.

                  Section 5.22 No Default. No Loan Party is in default under or
with respect to any Transaction Document or any other agreement, instrument or
undertaking to which it is a party or by which it or any of its property is
bound in any respect which could result in a Material Adverse Effect. No Default
or Event of Default exists.

                  Section 5.23 Licenses, etc. The Loan Parties have obtained and
hold in full force and effect, all franchises, licenses, permits, certificates,
authorizations, qualifications, accreditations, easements, rights of way and
other rights, consents and approvals which are necessary for the operation of
their respective businesses as presently conducted.

                  Section 5.24 Compliance with Law. Each Loan Party is in
compliance with all applicable laws, rules, regulations, orders, judgments,
writs and decrees except where such non-compliance, individually or in the
aggregate, could not have a Material Adverse Effect.

                  Section 5.25 No Burdensome Restrictions. No Loan Party is a
party to any agreement or instrument or subject to any other obligation or any
charter or corporate restriction or any provision of any applicable law, rule or
regulation which, individually or in the aggregate, could have a Material
Adverse Effect.

                  Section 5.26 Brokers' Fees. None of the Loan Parties has any
obligation to any Person in respect of any finder's, brokers, investment banking
or other similar fee in connection with any of the Transactions.

                  Section 5.27 Labor Matters. Except as set forth on Schedule
5.27, there are no collective bargaining agreements or Multiemployer Plans
covering the employees of the Borrower, any of its Subsidiaries or any of the
other Loan Parties, and none of such Persons has suffered any strikes, walkouts,
work stoppages or other material labor difficulty within the last five years. No
proceedings are pending against the Borrower or any of its Subsidiaries before
the INS which could reasonably be expected to have a Material Adverse Effect.

                  Section 5.28 Indebtedness of the Borrower and Its
Subsidiaries. Set forth on Schedule 7.2 hereto is a complete and accurate list
of all Indebtedness of the Borrower and each of its Subsidiaries existing as of
the Closing Date, showing the principal amount outstanding thereunder as of the
Closing Date. As of the Closing Date, the Borrower has redeemed or repurchased
Convertible Subordinated Notes for an aggregate purchase price of
$101,274,666.67 with the proceeds from the issuance of the New Convertible
Subordinated Notes, and the par value of all Convertible Subordinated Notes so
redeemed or repurchased is $100,000,000 as of the Closing Date.

                  Section 5.29 Other Agreements. Schedule 5.29 sets forth a
complete and accurate list as of the Closing Date of (i) all joint venture and
partnership agreements to which the Borrower or any of its Subsidiaries is a
party, and (ii) all covenants not to compete restricting the Borrower or

                                       55


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

any of its Subsidiaries to which the Borrower or any of its Subsidiaries is a
party or by which the Borrower or any of its Subsidiaries is bound.

                  Section 5.30 Immaterial Subsidiaries. The Subsidiaries of the
Borrower designated as Immaterial Subsidiaries on the Closing Date are set forth
on Schedule 5.30. The assets of each Subsidiary of the Borrower designated as an
Immaterial Subsidiary by the Borrower do not exceed $1,500,000 and the assets of
all of the Subsidiaries of the Borrower designated as Immaterial Subsidiaries by
the Borrower do not in the aggregate exceed $10,000,000, in each case as
determined in accordance with GAAP.

                  Section 5.31 Franchise Agreements and Franchisees. None of the
Franchise Agreements to which the Borrower or any of its Subsidiaries is a party
as a franchisor or a licensor prohibit or restrict in any manner the assignment
of such Franchise Agreement to the Agent for the benefit of the Secured Parties
or require any consent of any Person in connection with any such assignment.
Schedule 5.31 sets forth a complete and accurate list of each Person who is a
franchisee or licensee of the Borrower or any of its Subsidiaries as of the
Closing Date.

SECTION 6. AFFIRMATIVE COVENANTS.

         The Borrower covenants and agrees that until all of the Commitments of
each of the Lenders have terminated, each of the Letters of Credit has expired
or been terminated, and the Obligations are paid in full:

                  Section 6.1 Information Covenants. The Borrower will furnish
to the Agent, with sufficient copies for each Lender:

                           (a)      Quarterly Financial Statements. Within 45
days after the close of each of the first three (3) quarterly accounting periods
in each fiscal year of the Borrower, the consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such quarterly period and the
related consolidated statements of income and cash flow for such quarterly
period and for the elapsed portion of the fiscal year ended with the last day of
such quarterly period, and in each case setting forth comparative figures for
the related periods in the prior fiscal year.

                           (b)      Annual Financial Statements. Within 90 days
after the close of each fiscal year of the Borrower, the consolidated balance
sheet of the Borrower and its Subsidiaries as at the end of such fiscal year and
the related consolidated statements of income and cash flow for such fiscal
year, setting forth comparative figures for the preceding fiscal year and, with
respect to such consolidated financial statements, certified without
qualification by KPMG LLP or other independent certified public accountants of
recognized national standing reasonably acceptable to the Agent and the Required
Lenders and indicating that its audit of the consolidated financial statements
of the Borrower was conducted in accordance with generally accepted auditing
standards.

                           (c)      Management Letters. Promptly after the
Borrower's receipt thereof, a copy of any "management letter" or other material
report received by the Borrower from its certified public accountants.

                           (d)      Budgets. Within 60 days after the first day
of each fiscal year of the Borrower (including the fiscal year 2005 commencing
on January 27, 2004), a budget and financial forecast of results of operations
and sources and uses of cash (in form reasonably satisfactory to the

                                       56


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

Agent) prepared by the Borrower for such fiscal year, accompanied by a written
statement of the assumptions used in connection therewith, together with a
certificate of the chief financial officer of the Borrower to the effect that
such budget and financial forecast and, to the best of such officer's knowledge,
assumptions, are reasonable and were prepared in good faith. The financial
statements required to be delivered pursuant to clauses (a) and (b) above shall
be accompanied by a comparison of the actual financial results set forth in such
financial statements to those contained in the forecasts delivered pursuant to
this clause (d) together with an explanation of any material variations from the
results anticipated in such forecasts.

                           (e)      Officer's Certificates. At the time of the
delivery of the financial statements under clauses (a) and (b) above, a
certificate of the chief financial officer of the Borrower which certifies (x)
that such financial statements fairly present the financial condition and the
results of operations of the Borrower and its Subsidiaries on the dates and for
the periods indicated, subject, in the case of interim financial statements, to
normally recurring year-end adjustments, and that such financial statements were
prepared in accordance with GAAP and (y) that such officer has reviewed the
terms of the Loan Documents and has made, or caused to be made under his or her
supervision, a review in reasonable detail of the business and condition of the
Borrower and its Subsidiaries during the accounting period covered by such
financial statements, and that as a result of such review such officer has
concluded that no Default or Event of Default has occurred during the period
commencing at the beginning of the accounting period covered by the financial
statements accompanied by such certificate and ending on the date of such
certificate or, if any Default or Event of Default has occurred, specifying the
nature and extent thereof and, if continuing, the action the Borrower proposes
to take in respect thereof (the "COMPLIANCE CERTIFICATE"). Such certificate
shall set forth the calculations required to establish whether the Borrower was
in compliance with the provisions of Sections 6.11, 6.12, 7.1, 7.2, 7.3, 7.7,
7.8 and 7.18 during and as at the end of the accounting period covered by the
financial statements accompanied by such certificate.

                           (f)      Notice of Default. Promptly and in any event
within one Business Day after any Loan Party obtains knowledge thereof, notice
(i) of the occurrence of any Default or Event of Default together with a
certificate of an Authorized Officer of the Borrower specifying the nature and
period of existence thereof and the Borrower's proposed response thereto, (ii)
that any holder of Indebtedness of the Borrower or any Subsidiary of the
Borrower having an outstanding principal balance exceeding $5,000,000 has given
any written notice to the Borrower or any Subsidiary of the Borrower or taken
any other action with respect to a claimed default or event or condition of the
type referred to in Section 8.1(d) specifying (A) the nature and period of
existence of any such claimed default, condition or event, (B) the notice given
or action taken by such Person in connection therewith, and (C) the Borrower's
proposed response thereto and (iii) of the occurrence of any default or event of
default under any Subordinated Debt Document specifying (A) the nature and
period of existence of any such default, condition or event, (B) any notice
given or action taken by any holder or trustee thereunder in connection
therewith, and (C) the Borrower's proposed response thereto.

                           (g)      Notice of Litigation. Promptly after (i) the
occurrence thereof, notice of the institution of, or any material development
in, any action, suit, litigation, proceeding, investigation or arbitration,
before any court or arbitrator or any governmental or administrative body,
agency or official, against the Borrower, any of its Subsidiaries or any
material property of any thereof which, individually or in the aggregate, could
have a Material Adverse Effect, or (ii) actual knowledge thereof, notice of the
threat of any such action, suit, proceeding, investigation or arbitration.

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                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                           (h)      ERISA.

                                (i) As soon as possible and in any event within
10 days after the Borrower or any member of its ERISA Controlled Group knows,
or has reason to know, that:

                                    (A)      any Termination Event with respect
         to a Plan has occurred or will occur, or

                                    (B)      any condition exists with respect
         to a Plan which presents a material risk of termination of the Plan or
         imposition of an excise tax or other liability on the Borrower or any
         member of its ERISA Controlled Group, or

                                    (C)      the Borrower or any member of its
         ERISA Controlled Group has applied for a waiver of the minimum funding
         standard under Section 412 of the Code or Section 302 of ERISA, or

                                    (D)      the Borrower or any member of its
         ERISA Controlled Group has engaged in a "prohibited transaction," as
         defined in Section 4975 of the Code or as described in Section 406 of
         ERISA, that is not exempt under Section 4975 of the Code and Section
         408 of ERISA, or

                                    (E)      the aggregate present value of the
         Unfunded Benefit Liabilities under all Plans has in any year increased
         by $500,000 or to an amount in excess of $2,000,000, or

                                    (F)      any condition exists with respect
         to a Multiemployer Plan which presents a material risk of a partial or
         complete withdrawal (as described in Section 4203 or 4205 of ERISA) by
         the Borrower or any member of its ERISA Controlled Group from a
         Multiemployer Plan, or

                                    (G)      the Borrower or any member of its
         ERISA Controlled Group is in "default" (as defined in Section
         4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan,
         or

                                    (H)      a Multiemployer Plan is in
         "reorganization" (as defined in Section 418 of the Code or Section 4241
         of ERISA) or is "insolvent" (as defined in Section 4245 of ERISA), or

                                    (I)      the potential withdrawal liability
         (as determined in accordance with Title IV of ERISA) of the Borrower
         and the members of its ERISA Controlled Group with respect to all
         Multiemployer Plans has in any year increased by $500,000 or to an
         amount in excess of $2,000,000, or

                                    (J)      there is an action brought against
         the Borrower or any member of its ERISA Controlled Group under Section
         502 of ERISA with respect to its failure to comply with Section 515 of
         ERISA,

a certificate of the president or chief financial officer of the Borrower
setting forth the details of each of the events described in clauses (A) through
(J) above as applicable and the action which the

                                       58


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

Borrower or the applicable member of its ERISA Controlled Group proposes to take
with respect thereto, together with a copy of any notice or filing from the PBGC
or which may be required by the PBGC or other agency of the United States
government with respect to each of the events described in clauses (A) through
(J) above, as applicable.

                               (ii) As soon as possible and in any event within
         two Business Days after the receipt by the Borrower or any member of
         its ERISA Controlled Group of a demand letter from the PBGC notifying
         the Borrower or such member of its ERISA Controlled Group of its final
         decision finding liability and the date by which such liability must be
         paid, a copy of such letter, together with a certificate of the
         president or chief financial officer of the Borrower setting forth the
         action which the Borrower or such member of its ERISA Controlled Group
         proposes to take with respect thereto.

                           (i)      SEC Filings. Promptly upon transmission
thereof, copies of all regular and periodic financial information, proxy
materials and other information, regular, periodic and special reports and
registration statements, if any, which any Loan Party shall file with the
Securities and Exchange Commission or any governmental agencies substituted
therefore or which any Loan Party shall send to its stockholders.

                           (j)      Environmental. Promptly and in any event
within two Business Days after the existence of any of the following conditions,
a certificate of an Authorized Officer of the Borrower specifying in detail the
nature of such condition and the applicable Loan Party's or Environmental
Affiliate's proposed response thereto: (i) the receipt by any Loan Party or any
of its Environmental Affiliates of any communication (written or oral), whether
from a governmental authority, citizens group, employee or otherwise, that
alleges that such Loan Party or Environmental Affiliate is not in compliance
with applicable Environmental Laws where such noncompliance, individually or in
the aggregate, could have a Material Adverse Effect, (ii) any Loan Party or any
of its Environmental Affiliates shall obtain actual knowledge that there exists
any Environmental Claim pending or threatened against such Loan Party or such
Environmental Affiliate, which, individually or in the aggregate, could have a
Material Adverse Effect, or (iii) any release, emission, discharge or disposal
of any Material of Environmental Concern that could form the basis of any
Environmental Claim against any Loan Party or any of their Environmental
Affiliates, which Environmental Claim, individually or in the aggregate could
have a Material Adverse Effect.

                           (k)      Creditor Reports. Promptly after the
furnishing thereof, copies of any statement or report furnished to any other
holder of the securities of any Loan Party or of any of its Subsidiaries
pursuant to the terms of any indenture, loan or credit or similar agreement and
not otherwise required to be furnished to the Lenders pursuant to any other
clause of this Section 6.1.

                           (l)      Officer's Certificates and Financial
Statements relating to Retail Periods. Within 45 days after the close of each
Retail Period of the Borrower, a certificate of the chief financial officer of
the Borrower setting forth the calculations required to establish whether the
Borrower was in compliance with the provisions of Section 7.1(c) during and as
at the end of such Retail Period (including, without limitation, calculations of
Consolidated EBITDA, consolidated depreciation and consolidated amortization of
the Borrower and its Subsidiaries for such Retail Period), which certificate
shall be accompanied by (i) consolidated and consolidating (by business units)
statements of income for the Borrower and its Subsidiaries for such Retail
Period and for the elapsed portion of the fiscal year ended with the last day of
such Retail Period, (ii) consolidated balance sheets of the Borrower and its
Subsidiaries as at the end of such Retail Period and the related

                                       59


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

consolidated statements of cash flow for such Retail Period and for the elapsed
portion of the fiscal year ended with the last day of such Retail Period, (iii)
comparative figures for the related periods in the prior fiscal year for the
statement of income required to be delivered pursuant to this subsection (l) for
such Retail Period and (iv) comparative figures for the corresponding financial
results contained in the budget required to be delivered pursuant to Section
6.1(d) and prior year for the statement of income. In addition, the Borrower
agrees to furnish the foregoing information within the time period specified
above with respect to its Retail Periods ended September 8, 2003, October 6,
2003 and November 3, 2003.

                           (m)      Other Information. From time to time, such
other information or documents (financial or otherwise) as any Lender may
reasonably request.

                  Section 6.2 Books, Records and Inspections. The Borrower
shall, and shall cause each of its Subsidiaries to, keep proper books of record
and account in which full, true and correct entries in conformity with GAAP and
all requirements of law shall be made of all dealings and transactions in
relation to its business and activities. The Borrower shall, and shall cause
each of its Subsidiaries to, permit the officers and designated representatives
of any Lender or the Financial Advisor to visit and inspect any of the
properties of the Borrower or any of its Subsidiaries, and to examine the books
of record and account of the Borrower or any of its Subsidiaries and discuss the
affairs, finances and accounts of the Borrower or any of its Subsidiaries, with,
and be advised as to the same by, its and their officers and independent
accountants, all upon reasonable notice and at such reasonable times as such
Lender or, in the case of the Financial Advisor, the Agent may desire; PROVIDED
that no such prior notice shall be required if an Event of Default has occurred
and is continuing.

                  Section 6.3 Maintenance of Insurance. The Borrower shall, and
shall cause each of its Subsidiaries to, (a) maintain with financially sound and
reputable insurance companies insurance on itself and its properties (including
all real properties leased or owned by them)in at least such amounts and against
at least such risks as are customarily insured against in the same general area
by companies engaged in the same or a similar business similarly situated, which
insurance shall in any event not provide for materially less coverage than the
insurance in effect on the Closing Date and shall name the Agent for the benefit
of the Lenders as an additional insured or loss payee, as applicable, and (b)
furnish to each Lender from time to time, upon written request, the policies
under which such insurance is issued, certificates of insurance and such other
information relating to such insurance as such Lender may request.

                  Section 6.4 Taxes.

                           (a)      The Borrower, and shall cause each of its
Subsidiaries to, timely file with the appropriate governmental authorities all
required tax returns, tax reports, and information statements relating to Taxes,
and all such tax returns, tax reports and information statements shall be true,
correct and complete in all material respects when filed. The Borrower shall pay
or cause to be paid, and shall cause each of its Subsidiaries to pay or cause to
be paid, when due, all taxes, charges and assessments and all other lawful
claims required to be paid by the Borrower or such Subsidiaries, except as
contested in good faith and by appropriate proceedings diligently conducted, if
adequate reserves have been established with respect thereto in accordance with
GAAP.

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                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                           (b)      The Borrower shall not, and shall not permit
any of its Subsidiaries to, file or consent to the filing of any consolidated
tax return with any Person (other than the Borrower and its Subsidiaries).

                  Section 6.5 Corporate Franchises. Except as permitted by
Section 7.4 below, the Borrower shall, and shall cause each of its Subsidiaries
to, do or cause to be done, all things necessary to preserve and keep in full
force and effect its existence and its patents, trademarks, servicemarks,
tradenames, copyrights, franchises, licenses, permits, certificates,
authorizations, qualifications, accreditations, easements, rights of way and
other rights, consents and approvals except where the failure to so preserve any
of the foregoing (other than existence) could not, individually or in the
aggregate, result in a Material Adverse Effect.

                  Section 6.6 Compliance with Law. The Borrower shall, and shall
cause each of its Subsidiaries to, comply in all material respects with all
applicable laws, rules, statutes, regulations, decrees and orders of, and all
applicable restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of their business and the ownership of their
property, including, without limitation, ERISA and all Environmental Laws.

                  Section 6.7 Performance of Obligations. The Borrower shall,
and shall cause each of its Subsidiaries to, perform all of its obligations
under the terms of each mortgage, indenture, security agreement, debt
instrument, lease, undertaking and contract by which it or any of its properties
is bound or to which it is a party, except where the failure to perform such
obligations individually or in the aggregate could not reasonably be expected to
have a Material Adverse Effect.

                  Section 6.8 Maintenance of Properties. The Borrower shall, and
shall cause each of its Subsidiaries to, ensure that its respective properties
useful in its respective business are kept in good repair, working order and
condition, normal wear and tear excepted.

                  Section 6.9 Compliance with Terms of Leaseholds. The Borrower
shall and shall cause each of its Subsidiaries to (a) make all payments and
otherwise perform all obligations in respect of all leases of the Borrower and
each of its Subsidiaries of real property, (b) keep all such leases that are
useful or material in the conduct of the business of the Borrower and its
Subsidiaries (such useful or material leases are hereinafter referred to as the
"MATERIAL LEASES") in full force and effect, (c) not allow such Material Leases
to lapse or be terminated or any rights to renew such leases to be forfeited or
cancelled, and (d) notify the Agent of any default by any party with respect to
such Material Leases and cooperate with the Agent in all respects to cure any
such default.

                  Section 6.10 Compliance with Environmental Laws. The Borrower
shall, and shall cause each of its Subsidiaries and all lessees and other
Persons occupying its properties to (a) comply in all material respects, with
all Environmental Laws and Environmental Approvals applicable to its respective
operations and properties; (b) obtain and renew all Environmental Approvals
necessary for its respective operations and properties; and (c) conduct any
investigation, study, sampling and testing, and undertake any cleanup, removal,
remedial or other action necessary to remove and clean up all Materials of
Environmental Concern from any of its respective properties, in accordance with
the requirements of all Environmental Laws; PROVIDED, HOWEVER, that neither the
Borrower nor any of its Subsidiaries shall be required to undertake any such
cleanup, removal, remedial or other action to the extent that its obligation to
do so is being contested in good faith and by proper proceedings and appropriate
reserves are being maintained with respect to such circumstances, unless the
Borrower or any of its Subsidiaries is subject to an order issued by any
governmental authority requiring the

                                       61


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

Borrower or such Subsidiary to undertake any such cleanup, removal, remedial or
other action, in which case this proviso shall not apply.

                  Section 6.11 Subsidiary Guarantors. The Borrower shall cause
each of its Subsidiaries now or hereafter existing, formed or acquired (other
than any Immaterial Subsidiaries) to at all times be and remain a party to the
Guaranty, the Subsidiary Security Agreement and, if any such Subsidiary owns any
Equity Interests in any Person (other than in Boston West, L.L.C. and other than
in an Immaterial Subsidiary), a Subsidiary Pledge Agreement. The Borrower shall
cause each of its Immaterial Subsidiaries which is a Subordinated Guarantor to
at all times be and remain a party to the Guaranty so long as each such
Immaterial Subsidiary is a Subordinated Guarantor. The Borrower shall cause to
be delivered to the Agent a legal opinion in form and substance reasonably
satisfactory to the Agent with respect to any Subsidiary entering into the
Guaranty after the Closing Date.

                  Section 6.12 Immaterial Subsidiaries. If (i) the assets of any
Subsidiary of the Borrower then designated as an Immaterial Subsidiary shall at
any time exceed $1,500,000, then the Borrower shall immediately provide notice
to the Agent thereof, and such Subsidiary shall immediately be deemed
automatically to no longer be an Immaterial Subsidiary or (ii) the aggregate
amount of assets of all Subsidiaries of the Borrower so designated as Immaterial
Subsidiaries shall at any time exceed $10,000,000, then the Borrower shall
immediately provide notice to the Agent thereof and notice of which of such
previously designated Immaterial Subsidiaries shall no longer be deemed to be
Immaterial Subsidiaries so that the aggregate amount of assets of all such
Subsidiaries so designated as Immaterial Subsidiaries does not exceed
$10,000,000; PROVIDED that the Borrower may from time to time designate
additional Subsidiaries of the Borrower as Immaterial Subsidiaries so long as
the assets of any such Subsidiary do not exceed $1,500,000 and so long as the
aggregate amount of assets of all such Subsidiaries so designated as Immaterial
Subsidiaries does not exceed $10,000,000 (in each case as determined in
accordance with GAAP). At such time as any Subsidiary that was an Immaterial
Subsidiary is no longer an Immaterial Subsidiary, the Borrower shall thereafter
comply with the terms of this Agreement with respect to such Subsidiary relating
to or affecting Subsidiaries that are not Immaterial Subsidiaries (in addition
to those terms relating to or affecting the Borrower's Subsidiaries generally),
including, without limitation, the requirements of Section 6.11 and Section
2.21.

                  Section 6.13 Additional Mortgages. As security for the payment
of the Obligations, the Borrower shall and shall cause each of its Subsidiaries
to, concurrently with the acquisition thereof, grant to the Agent a first
priority Lien (free and clear of all Liens other than Liens permitted to be
incurred pursuant to Section 7.3) on and security interest in, all real property
(including any leasehold interest) acquired by the Borrower or any such
Subsidiary after the Closing Date in any jurisdiction that does not as of the
date of acquisition assess a mortgage recording tax, together with title
insurance policies, surveys, appraisals, opinions of counsels and such other
documentation as the Agent may reasonably request.

                  Section 6.14 Collateral Account. The Collateral Account shall,
at all times during which any funds are deposited therein or credited thereto,
be subject to a Blocked Account Agreement.

                                       62


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

SECTION 7. NEGATIVE COVENANTS.

         The Borrower covenants and agrees that until all of the Commitments of
each Lender have terminated, each of the Letters of Credit has expired or been
terminated, and the Obligations are paid in full:

                  Section 7.1 Financial Covenants.

                           (a)      Leverage Ratio. The Borrower shall not
permit the Leverage Ratio at any time during each of the fiscal quarters of the
Borrower ending on the date set forth below to exceed the ratio set forth
opposite such date:



Quarter Ending                                        Ratio
- --------------                                        -----
                                                   
 November 3, 2003                                      4.10

 January 26, 2004                                      4.00

 May 17, 2004                                          3.90

 August 9, 2004                                        3.90

 November 1, 2004                                      3.80

 January 31, 2005                                      3.60

 May 23, 2005                                          3.40

 August 15, 2005                                       3.30

 November 7, 2005                                      3.20

 January 30, 2006                                      3.10

 May 22, 2006                                          3.00

 August 14, 2006                                       2.90

 November 6, 2006                                      2.80

 January 29, 2007 and thereafter                       2.75


                           (b)      Fixed Charge Coverage Ratio. The Borrower
shall not permit the ratio of (i) (A) Consolidated EBITDA of the Borrower, minus
(B) Capital Expenditures, minus (C) all federal and state income taxes paid in
cash by the Borrower or any of its Subsidiaries, plus (D) New Unit Capital
Expenditures, to (ii) Fixed Charges of the Borrower for the period of four
consecutive fiscal quarters of the Borrower (taken as one accounting period) as
determined on the last day of each of the fiscal quarters of the Borrower ending
on the dates set forth below to be less than the ratio set forth opposite such
dates:

                                       63


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT



Quarter Ending                           Ratio
- --------------                           -----
                                      
January 26, 2004                          1.10

May 17, 2004 and each fiscal quarter      1.25
thereafter


                           (c)      Minimum Consolidated EBITDA. The Borrower
shall not permit Consolidated EBITDA of the Borrower for the period of thirteen
consecutive Retail Periods of the Borrower (taken as one accounting period) as
determined on the last day of each Retail Period of the Borrower ending during
each period set forth below, to be less than the amount set forth opposite such
period:



    Retail Periods Ending                            Amount
    ---------------------                            ------
                                            
November 3, 2003 through                        $  100,000,000
December 29, 2003

January 26, 2004 through                        $  102,500,000
April 19, 2004

May 17, 2004 through July 12,                   $  105,000,000
2004

August 9, 2004 through                          $  108,000,000
October 4, 2004

November 1, 2004 through                        $  110,000,000
December 27, 2004

January 31, 2005 through                        $  115,000,000
April 25, 2005

May 23, 2005 through July 18,                   $  120,000,000
2005

August 15, 2005 through                         $  122,000,000
October 10, 2005

November 7, 2005 and thereafter                 $  125,000,000


                           (d)      Adjusted Leverage Ratio. The Borrower shall
not permit the Adjusted Leverage Ratio to exceed at any time during each fiscal
quarter of the Borrower ending on the date set forth below, the ratio set forth
opposite such date:

                                       64


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT



    Quarter Ending                                 Ratio
    --------------                                 -----
                                                
November 3, 2003                                    5.75

January 26, 2004                                    5.75

May 17, 2004                                        5.60

August 9, 2004                                      5.50

November 1, 2004                                    5.45

January 31, 2005                                    5.35

May 23, 2005                                        5.30

August 15, 2005                                     5.25

November 7, 2005                                    5.20

January 30, 2006                                    5.15

May 22, 2006                                        5.10

August 14, 2006                                     5.00

November 6, 2006                                    4.95

January 29, 2007 and thereafter                     4.75


                           (e)      Capital Expenditures.

                                    (i)      The Borrower shall not make or
incur, and shall not permit any of its Subsidiaries to make or incur, any
Capital Expenditures, except, subject to subsections (ii) and (iii) below,
Capital Expenditures of the Borrower and its Subsidiaries in an aggregate
amount, (A) for fiscal year 2004 of the Borrower not in excess of $55,000,000
and (B) for each fiscal year of the Borrower thereafter, not in excess of the
sum of (I) $45,000,000, plus (II) the EBITDA CapEx Amount for such fiscal year,
plus (III) the amount of Net Sale Proceeds for Asset Dispositions occurring
during such fiscal year not required to be applied to reduce the Loans pursuant
to Section 2.12. If the aggregate amount of Capital Expenditures made or
incurred during any fiscal year of the Borrower is less than the amount (as
reduced, if applicable) permitted to be made or incurred pursuant to the
immediately preceding sentence, then the maximum amount for the following fiscal
year of the Borrower and its Subsidiaries (but not any subsequent fiscal year of
the Borrower) shall be increased by the amount of such difference.

                                    (ii)     Notwithstanding any other provision
of this Section 7.1(e), for fiscal year 2005 of the Borrower and each fiscal
year of the Borrower thereafter, the ability of

                                       65


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

the Borrower and its Subsidiaries to make or incur Capital Expenditures as
otherwise permitted by this Section 7.1(e) shall be subject to quarterly
sublimits as follows: the Borrower shall not make or incur, and shall not permit
any of its Subsidiaries to make or incur, any Capital Expenditures (A) for the
first fiscal quarter of such fiscal year, in an amount that exceeds one-third
(1/3) of the maximum amount of Capital Expenditures permitted for the
immediately preceding fiscal year (including any increases pursuant to the last
sentence of subsection (i) above), (B) for the first two fiscal quarters of such
fiscal year, in an amount that exceeds two-thirds (2/3) of the maximum amount of
Capital Expenditures permitted for the immediately preceding fiscal year
(including any increases pursuant to the last sentence of subsection (i) above)
and (C) for the first three fiscal quarters of such fiscal year, in an amount
that exceeds the maximum amount of all Capital Expenditures permitted for the
immediately preceding fiscal year (including any increases pursuant to the last
sentence of subsection (i) above).

                                    (iii)    Notwithstanding any other provision
of this Section 7.1(e), if at any time the Unused Portion of the Revolving Loans
shall be less than $15,000,000, and until such time as such Unused Portion has
been restored to at least $15,000,000, the Borrower shall not make or incur and
shall not permit any of its Subsidiaries to make or incur any Capital
Expenditures (other than Capital Expenditures otherwise permitted by this
Section 7.1(e) and made or incurred pursuant to contractual commitments to make
or incur such Capital Expenditures entered into by the Borrower or any of its
Subsidiaries at a time when such Unused Portion was at least $15,000,000).

                           (f)      Consolidated Tangible Net Worth. The
Borrower shall not permit its Consolidated Tangible Net Worth at any time to be
less than the sum of (i) $70,000,000; (ii) 50% of cumulative Consolidated Net
Income of the Borrower and its Subsidiaries for all fiscal quarters of the
Borrower ended on or after November 3, 2003 in which Consolidated Net Income is
positive (and without any deduction for any fiscal quarter in which Consolidated
Net Income is negative), plus (iii) 100% of the Net Equity Proceeds of any
equity offering by the Borrower.

                           (g)      Excess Availability. The Borrower shall at
all times prior to the redemption in full of all of the Convertible Subordinated
Notes maintain Excess Availability of $15,000,000.

                  Section 7.2 Indebtedness. The Borrower shall not, and shall
not permit any of its Subsidiaries to, create, incur, assume, suffer to exist or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness other than the following PROVIDED that none of the creation,
incurrence, assumption or existence of any of the following result in or cause a
violation or breach of, or default under, any Subordinated Debt Document:

                           (a)      Indebtedness hereunder and under the other
Loan Documents;

                           (b)      Indebtedness outstanding on the Closing Date
and set forth on Schedule 7.2 hereto (without duplication of any other
Indebtedness permitted by the other provisions of this Section 7.2);

                           (c)      Indebtedness permitted under Sections
7.6(a), 7.6(b) and 7.6(d);

                                       66


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                           (d)      Indebtedness of the Borrower of the type
described in clause (viii) of the definition of Indebtedness to the extent
permitted under Section 7.14;

                           (e)      Indebtedness with respect to (i) purchase
money Indebtedness incurred solely to finance Capital Expenditures permitted
under Section 7.1(e) and any extensions, renewals, refundings or refinancings
thereof, not in excess of $5,000,000 in the aggregate at any one time
outstanding for all such purchase money Indebtedness and all extensions,
renewals, refundings and refinancings thereof and (ii) Capitalized Leases
permitted under Section 7.13 and any extensions, renewals, refundings or
refinancings thereof so long as the terms of any such Indebtedness with respect
to Capitalized Leases is permitted under Section 7.13; PROVIDED, that (A) any
such Indebtedness incurred pursuant to this clause (e) and any such extensions,
renewals, refundings or refinancings thereof shall not exceed 85% of the lesser
of the purchase price or the fair market value of the asset so financed, (B) at
the time of such incurrence, no Default or Event of Default has occurred and is
continuing or would result from such incurrence, and (C) such Indebtedness has a
scheduled maturity and is not due on demand;

                           (f)      any extensions, renewals, refundings and
refinancings of the Indebtedness described in clause (b) above, so long as the
terms of any such extension, renewal, refunding or refinancing Indebtedness, and
of any agreement entered into and of any instrument issued in connection
therewith, are otherwise permitted by the Loan Documents; PROVIDED, FURTHER,
that the principal amount of such Indebtedness shall not be increased above the
principal amount thereof outstanding immediately prior to such extension,
renewal, refunding or refinancing, and the direct and contingent obligors
therefor shall not be changed, as a result of or in connection with such
extension, renewal, refunding or refinancing;

                           (g)      Indebtedness of any Domestic Subsidiary of
the Borrower owed to the Borrower or to any Domestic Subsidiary of the Borrower;

                           (h)      Permitted Subordinated Debt in an aggregate
principal amount not to exceed $5,000,000 at any one time outstanding incurred
in connection with a Permitted Acquisition with respect to which all of the
conditions set forth in Section 7.8(f) have been satisfied and incurred to pay
all or part of the purchase price thereof which Permitted Subordinated Debt, if
secured, is secured only by Liens permitted pursuant to Section 7.3(i);

                           (i)      Indebtedness of the Borrower incurred
pursuant to (i) the Convertible Subordinated Notes in an aggregate original
principal amount not to exceed $22,319,000, (ii) the New Subordinated Notes in
an aggregate original principal amount not to exceed $200,000,000 and (iii) the
New Convertible Subordinated Notes in an aggregate principal amount not to
exceed $105,000,000; in each case less all repayments, redemptions, prepayments,
purchases, defeasances or acquisitions for value with respect thereto after the
Closing Date, PROVIDED, HOWEVER, that the New Convertible Subordinated Notes
shall be permitted only to the extent all of the proceeds, net of customary
underwriting fees and discounts, brokerage commissions and other similar
reasonable and customary costs and expenses directly attributable to the
issuance of the New Convertible Subordinated Notes, are applied to redeem
Convertible Subordinated Notes as permitted to be redeemed pursuant to Section
7.10(d)(vi) within 90 days of the receipt of such proceeds and pending such
redemptions the Borrower shall maintain such proceeds in a segregated account
restricted for such purpose;

                                       67


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                           (j)      unsecured Indebtedness of the Borrower or
any of its Subsidiaries consisting of guarantees of Indebtedness of a franchisee
incurred to finance a remodeling, construction or purchase of a retail unit of
such franchisee or capital expenditures of such franchisee ("FRANCHISEE
CONSTRUCTION DEBT"); PROVIDED, that (i) the amount of the obligations of the
Borrower and its Subsidiaries under or with respect to such guarantees shall not
exceed $40,000,000 in the aggregate outstanding at any time; (ii) the amount of
the obligations of the Borrower and its Subsidiaries under or with respect to
guarantees of more than 20% of the principal amount of the Franchisee
Construction Debt of a franchisee shall not exceed $5,000,000 in the aggregate
outstanding at any time; and (iii) except for the guarantees described in the
foregoing clause (ii), the amount of the obligations of the Borrower and its
Subsidiaries under or with respect to guarantees of Franchisee Construction Debt
of any franchisee shall not exceed 20% of the Franchisee Construction Debt of
such franchisee;

                           (k)      unsecured Indebtedness of the Borrower or
any of its Subsidiaries owing to former franchisees and representing the
deferred purchase price (or a deferred portion of such purchase price) payable
by the Borrower or such Subsidiary to such former franchisee in connection with
the purchase by the Borrower or such Subsidiary of one or more retail outlets
from such former franchisee in an aggregate principal amount for all such
Indebtedness not to exceed $5,000,000 at any one time outstanding;

                           (l)      Indebtedness of any entity acquired pursuant
to a Permitted Acquisition with respect to which all of the conditions set forth
in Section 7.8(f) have been satisfied, which Indebtedness (i) is existing prior
to such Permitted Acquisition, (ii) is assumed by the Borrower or any Subsidiary
of the Borrower in connection with any such Permitted Acquisition and (iii) is
not incurred in contemplation of such Permitted Acquisition; PROVIDED, that the
aggregate principal amount of all such Indebtedness shall not exceed $5,000,000
at any time outstanding; and

                           (m)      Indebtedness with respect to Sale and
Leaseback Transactions permitted under Section 7.13(a).

                  Section 7.3 Liens. The Borrower shall not, and shall not
permit any of its Subsidiaries to, create, incur, assume or suffer to exist,
directly or indirectly, any Lien on any of its property now owned or hereafter
acquired, other than the following PROVIDED, that none of the creation,
incurrence, assumption or existence of any of the following result in the
creation or imposition of a Lien under any Subordinated Debt Document:

                           (a)      Liens existing on the Closing Date and set
forth on Schedule 7.3 hereto;

                           (b)      Liens for taxes not yet due or which are
being contested in good faith by appropriate proceedings diligently conducted
and with respect to which adequate reserves are being maintained in accordance
with GAAP;

                           (c)      Statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and other Liens imposed by Law
(other than any Lien imposed by ERISA or pursuant to any Environmental Law)
created in the ordinary course of business for amounts not yet due or which are
being contested in good faith by appropriate proceedings diligently conducted
and with respect to which adequate bonds have been posted;

                                       68


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                           (d)      Liens (other than any Lien imposed by ERISA
or pursuant to any Environmental Law) incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);

                           (e)      Easements, licenses, rights-of-way,
covenants, conditions and restrictions, zoning and similar restrictions and
other similar charges or encumbrances not interfering with the ordinary conduct
of the business of the Borrower or any of its Subsidiaries and which do not
detract materially from the value of the property to which they attach or impair
materially the use thereof by the Borrower or any of its Subsidiaries or
materially adversely affect the security interests of the Agent or the Lenders
therein;

                           (f)      Liens granted to the Agent for the benefit
of the Lenders pursuant to the Security Documents securing the Obligations;

                           (g)      Liens created pursuant to Capitalized Leases
and to secure other purchase-money Indebtedness permitted pursuant to Section
7.2(e), PROVIDED, that such Liens are only in respect of the property or assets
subject to, and secure only, the respective Capitalized Lease or other
purchase-money Indebtedness;

                           (h)      Liens arising out of the replacement,
extension or renewal of any Lien permitted by clause (a) above upon or in the
same property theretofore subject thereto in connection with the refunding,
refinancing, extension or renewal (without increase in the amount or change in
any direct or contingent obligor) of the Indebtedness secured thereby permitted
pursuant to Section 7.2(f);

                           (i)      Liens securing Permitted Subordinated Debt
permitted pursuant to Section 7.2(h) PROVIDED, that (i) such Liens are only in
respect of the assets acquired in the applicable Permitted Acquisition, (ii) the
Obligations are secured by valid first priority perfected Liens on such assets
and the Liens permitted pursuant to this Section 7.3(i) are second in priority
to the Liens on such assets securing the Obligations and (iii) the rights and
remedies of any holder of such Liens are subordinated to the rights and remedies
of the Agent and the Lenders on terms approved in writing by the Agent;

                           (j)      Liens securing Indebtedness (other than
Permitted Subordinated Debt) of the Borrower and its Subsidiaries in an
aggregate principal amount not to exceed $25,000,000;

                           (k)      Liens of a lessor covering only specific
 property leased by the Borrower or any of its Subsidiaries subject to operating
leases entered into by the Borrower or any of its Subsidiaries as a lessee in
the ordinary course of business;

                           (l)      Liens of a lessor covering only specific
property leased by the Borrower or any of its Subsidiaries subject to a Sale and
Leaseback Transaction permitted by Section 7.13(a) entered into by the Borrower
or any of its Subsidiaries as a lessee; and

                                       69


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                           (m)      Liens set forth as exceptions to the title
policies accepted by the Agent in connection with the Real Estate Collateral.

                  Section 7.4 Restriction on Fundamental Changes.

                           (a)      The Borrower shall not, and shall not permit
any of its Subsidiaries to, enter into any merger or consolidation, or
liquidate, wind-up or dissolve (or suffer any liquidation or dissolution),
discontinue its business or convey, lease, sell, transfer or otherwise dispose
of, in one transaction or series of transactions, all or any substantial part of
its business or property, whether now or hereafter acquired, except (i) as
otherwise permitted under Section 7.5, (ii) any wholly-owned Subsidiary of the
Borrower may merge into or convey, sell, lease or transfer all or substantially
all of its assets to, the Borrower or any other Domestic Subsidiary of the
Borrower, PROVIDED, that in any such merger involving the Borrower, the Borrower
shall be the surviving corporation and any such Subsidiary merging into the
Borrower or any such Domestic Subsidiary shall be Solvent, (iii) any Solvent
Person acquired by the Borrower or a Subsidiary of the Borrower in a Permitted
Acquisition permitted hereunder may merge with the Borrower or any wholly-owned
Subsidiary of the Borrower, PROVIDED, that in any such merger, the Borrower or
such wholly-owned Subsidiary shall be the surviving corporation, PROVIDED,
FURTHER, that in each case, (A) any such wholly-owned Subsidiary of the Borrower
which is the surviving corporation of any such merger or to which any business
or property is so transferred shall be a party to the Guaranty and the
Subsidiary Security Agreement and if required by Section 2.21, a Subsidiary
Pledge Agreement, (B) the Borrower shall give the Agent at least ten (10) days
prior written notice of any such sale, merger or other transfer, (C) the Agent
and Lenders shall not be deemed to have released their security interest in any
assets so transferred or in any Subsidiary or the assets of any Subsidiary so
merged and (D) no Default or Event of Default shall have occurred or be
continuing or would occur after giving effect thereto or as a result thereof.

                           (b)      Borrower shall not and shall not permit any
of its Subsidiaries to, amend its certificate of incorporation or by-laws (or
other relevant organizational and governing documents) in any manner adverse to
the interests of the Agent or the Lenders.

                  Section 7.5 Sale of Assets. The Borrower shall not, and shall
not permit any of its Subsidiaries to, make, consummate or effect any Asset
Disposition (or agree to do so at any future time) with respect to all or any
part of its property or assets, except:

                           (a)      the sale of any asset by the Borrower or any
of its Subsidiaries (excluding (i) a bulk sale of inventory and a sale of
receivables (other than delinquent accounts for collection purposes only) and
(ii) a sale of any capital stock of Carl Karcher Enterprises, Inc. or Hardee's)
so long as:

                           (I)      the purchase price paid to the Borrower or
         such Subsidiary for such asset shall be no less than the fair market
         value of such asset at the time of such sale,

                           (II)     the purchase price for such asset shall be
         paid to the Borrower or such Subsidiary solely in cash, Cash
         Equivalents or non-cash consideration in the form of promissory notes,
         PROVIDED, that in the case of non-cash consideration received in the
         form of promissory notes, (A) such consideration shall not exceed 25%
         of the aggregate purchase price for such asset, (B) such promissory
         notes shall mature no later than 3 years after the date of issuance,
         (C) such promissory notes shall be pledged to the Agent, for the
         benefit of the Lenders, pursuant to a pledge agreement in form and
         substance satisfactory to the Agent,

                                       70


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

         (D) all payments of principal, interest and other amounts payable under
         such promissory notes and that are received by the Borrower or such
         Subsidiary shall be applied to prepay the outstanding Loans in
         accordance with Section 2.12(a) hereof and (E) the aggregate principal
         amount of all promissory notes received as consideration for all asset
         sales permitted under this Section 7.5(a) shall not exceed $50,000,000
         at any one time outstanding,

                           (III)    the aggregate fair market value of such
         asset and all other assets sold by the Borrower and its Subsidiaries
         during the same fiscal year of the Borrower pursuant to this clause (a)
         shall not exceed 10% of the total assets of the Borrower and its
         Subsidiaries determined on a consolidated basis in accordance with GAAP
         (PROVIDED, that Excluded Resales shall not be included in the
         calculation of such percentage),

                           (IV)     the Borrower shall prepay the outstanding
         Loans pursuant to, and in accordance with, Section 2.12 in an aggregate
         principal amount equal to the Net Sale Proceeds received by the
         Borrower or such Subsidiary from the sale, transfer or other
         disposition of such asset,

                           (V)      no Default or Event of Default has occurred
         and is continuing or would result from such asset sale, and

                           (VI)     with respect to any Asset Disposition
         involving Real Estate Collateral, if, after giving effect to such sale,
         the minimum Real Estate Collateral Value required under Section 7.21
         would not be satisfied, the Borrower or such Subsidiary shall,
         concurrently with such sale, in substitution for the Real Estate
         Collateral sold, either:

                                    (i)      pledge to the Agent for the benefit
         of the Lenders and the Interest Rate Hedge Providers additional real
         property of the Borrower or such Subsidiary with a fair market value,
         as determined by appraisals delivered to the Agent on or prior to July
         8, 2002 or, if no such appraisals have been delivered to the Agent on
         or prior to such date, then by an appraisal satisfactory to the Agent
         and prepared by a firm satisfactory to the Agent, at least equal to the
         amount necessary to satisfy the minimum Real Estate Collateral Value
         required by Section 7.21 after giving effect to such sale, and deliver
         to the Agent such agreements, documents and instruments as the Agent
         shall request to create, perfect, establish the first priority nature
         of or otherwise protect any Lien purported to be created in favor of
         the Agent in the real property so substituted; or

                                    (ii)     deposit cash into the Collateral
         Account, which shall be subject to a Blocked Account Agreement, in an
         amount at least equal to the amount necessary to satisfy the minimum
         Real Estate Collateral Value required by Section 7.21 after giving
         effect to such sale, deliver to the Agent such other agreements,
         documents and instruments as the Agent shall request to create,
         perfect, establish the first priority nature of or otherwise protect
         any Lien purported to be created in favor of the Agent in the money
         deposited in the Collateral Account and in the Collateral Account.

                  At any time when funds are on deposit in the Collateral
Account, so long as no Default or Event of Default has occurred and is
continuing, the Agent shall, at the Borrower's request, release to the Borrower
from the Collateral Account an amount equal to the lesser of (I) all amounts on
deposit in the Collateral Account and (II) the amount by which the Real Estate
Collateral Value exceeds $218,000,000; and

                                       71


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                           (b)      so long as no Default or Event of Default
shall occur and be continuing, the grant of any option or other right to
purchase any asset in a transaction which would be permitted under the
provisions of the preceding clause (a).

                  Section 7.6 Contingent Obligations. The Borrower shall not,
and shall not permit any of its Subsidiaries to, create or become or be liable
with respect to any Contingent Obligation, except:

                           (a)      pursuant to the Guaranty or the Security
Documents;

                           (b)      Contingent Obligations which are in
existence on the Closing Date and which are set forth on Schedule 7.6;

                           (c)      Contingent Obligations permitted pursuant to
Section 7.2(j); and

                           (d)      guarantees by Subsidiaries of the Borrower
pursuant to the New Subordinated Note Indenture of obligations of the Borrower
under the New Subordinated Notes, PROVIDED, that such guarantees shall at all
times be subordinated in respect of the Obligations on subordination terms
contained in the New Subordinated Note Indenture.

                  Section 7.7 Dividends. The Borrower shall not, and shall not
permit any of its Subsidiaries to, declare or pay any dividends, or return any
capital to, its stockholders or authorize or make any other distribution,
payment or delivery of property or cash to its stockholders as such, or redeem,
retire, purchase, defease or otherwise acquire, directly or indirectly, any
shares of any class of its Capital Stock now or hereafter outstanding (or any
options, rights or warrants issued with respect to its Capital Stock), or set
aside any funds for any of the foregoing purposes (all the foregoing
"DIVIDENDS"), except that:

                           (a)      Dividends may be made to the Borrower or any
of its wholly-owned Subsidiaries by any of its wholly-owned Subsidiaries; and

                           (b)      So long as no Default or Event of Default
shall have occurred and be continuing or would result therefrom, the Borrower
may declare and deliver dividends and distributions payable only in common stock
of the Borrower; and

                           (c)      So long as no Default or Event of Default
shall have occurred and be continuing, any Subsidiary of the Borrower that is
not a wholly-owned Subsidiary of the Borrower may declare and pay cash dividends
to the extent, and only to the extent, of any cumulative positive net income
(after deducting any negative net income) of such Subsidiary arising after the
date such Subsidiary became a Subsidiary of the Borrower so long as such
dividends are payable to all of its equity holders on a ratable basis.

                  Section 7.8 Advances, Investments and Loans. The Borrower
shall not, and shall not permit any of its Subsidiaries to, make or suffer to
exist, directly or indirectly any Investments (including, without limitation,
loans and advances to the Borrower or any of its Subsidiaries, and other
Investments in Subsidiaries of the Borrower), or commitments therefor, or to
create any Subsidiary or to become or remain a partner in any partnership or
joint venture, or make any Acquisition of any interest in any Person, except
that the following shall be permitted PROVIDED, that none of the making,
existence or creation of or becoming or remaining a partner in, any of the

                                       72


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

following will not result in or cause a violation or breach of, or default
under, any Subordinated Debt Document:

                           (a)      Investments set forth on Schedule 7.8;

                           (b)      Investments by the Borrower and its
Subsidiaries in Subsidiaries of the Borrower outstanding on the Closing Date,
additional Investments (other than loans and advances) by the Borrower or any
Subsidiary of the Borrower in any Domestic Subsidiary of the Borrower which
Subsidiary is Solvent and is a party to the Guaranty, and additional Investments
by the Borrower or any wholly-owned Subsidiary of the Borrower consisting of
loans and advances to wholly-owned Domestic Subsidiaries of the Borrower to the
extent permitted by Section 7.2(g).

                           (c)      loans and advances by the Borrower and its
Subsidiaries to their employees in the ordinary course of its business (other
than Employee Stock Loans) not exceeding $2,000,000 in the aggregate at any one
time outstanding;

                           (d)      the Borrower and its Subsidiaries may
acquire and hold Cash Equivalents;

                           (e)      Investments consisting of promissory notes
permitted to be received as consideration in connection with Asset Dispositions
permitted under Section 7.5(a);

                           (f)      Permitted Acquisitions, PROVIDED, that, in
the case of each Permitted Acquisition, the conditions referred to in clauses
(i) through (viii) below are satisfied on or prior to the date of such Permitted
Acquisition (it being understood that, for purposes of clause (ii) below, the
phrase "the Borrower and its Subsidiaries" and the phrase "Consolidated" shall
be deemed to include the Person (and its Subsidiaries, if any, to be acquired)
or assets to be acquired as though such Person (and its Subsidiaries, if any, to
be acquired) or assets were a Subsidiary of the Borrower):

                                    (i)      the Person or assets to be acquired
         satisfy the criteria set forth in either the definition of "Permitted
         Acquisition" contained in Section 1;

                                    (ii)     the Borrower shall have delivered
         to the Agent a certificate of the chief financial officer of the
         Borrower, in form and substance satisfactory to the Agent,
         demonstrating:

                                          (1)  compliance by the Borrower and
         its Subsidiaries with the covenants set forth in Section 7.1, on a pro
         forma basis after giving effect to such Acquisition, for a period of
         four consecutive fiscal quarters after the date of such Acquisition,
         and

                                          (2)  the Consolidated EBITDA of the
         Person and any of its Subsidiaries, if any, to be acquired, for the
         twelve-month period most recently ended shall be a positive number;

                                    (iii)    the representations and warranties
         contained in each Loan Document are correct in all material respects on
         and as of the date of such Acquisition, after giving effect to such
         Acquisition, as though made on and as of such date, other than any such
         representations and warranties that by their terms are specifically
         made as of a date other than such date;

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                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                                    (iv)     no event has occurred and is
         continuing on the date of such Acquisition, or would result from such
         Acquisition, that constitutes a Default or an Event of Default;

                                    (v)      the Total Revolving Loan Commitment
         minus the aggregate principal amount of the Revolving Loans outstanding
         on the date of such Permitted Acquisition, minus the amount of any L/C
         Obligations outstanding on the date of such Permitted Acquisition shall
         equal at least $25,000,000;

                                    (vi)     all Consents and waiting periods
         described in clause (vii)(3)(D) below shall have been obtained or
         expired; and

                                    (vii)    the Borrower or such Subsidiary of
         the Borrower making such Acquisition shall furnish or cause to be
         furnished to the Agent and the Lenders the following:

                                           (1)  Certified copies of the
         resolutions of the Board of Directors (or other governing body) of the
         Borrower and, if any Subsidiary of the Borrower will participate in the
         applicable Acquisition, of such Subsidiary (in each case, to the extent
         resolutions of the Board of Directors of the Borrower or such
         Subsidiary are required or advisable pursuant to applicable law or the
         Borrower's or such Subsidiary's charter documents) and of all documents
         evidencing other necessary corporate action or other Consents, if any,
         with respect to such Acquisition;

                                           (2)  Such other financial, business
         and other information regarding the Person or assets to be acquired, as
         the case may be, as the Agent or the Required Lenders through the Agent
         shall have reasonably requested, including, without limitation, actual
         and pro forma financial statements and projections relating to such
         Person or assets;

                                           (3)  In the case of each Permitted
         Acquisition, to the extent that such Acquisition consists of the
         acquisition by the Borrower or any of its Subsidiaries of stock,
         partnership or other Equity Interests of any Person (or assets in the
         case of clause (A) below):

                                                (A) All documents required to be
delivered pursuant to Section 2.21 and Section 6.11;

                                                (B) A copy of the charter or
other organizational document of such Person and each amendment thereto, if any,
certified by the Secretary of State of its jurisdiction of organization, as of a
date reasonably near the date of such Borrowing, as being a true and correct
copy thereof;

                                                (C) An officer's certificate
signed on behalf of such Person by an appropriate officer of such Person,
certifying as to (i) the absence of any amendment to the charter or other
organizational document of such Person since the date of the Secretary of
State's certificate referred to in clause (B) above, (ii) a true and correct
copy of the by-laws or similar organizational document of such Person, (iii) a
true and correct copy of the resolutions adopted by the Board of Directors or
equivalent governing body of such Person approving the documents or instruments
to be delivered under this Section 7.8(f) to which such

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                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

Person is a party and the matters contemplated thereby, (iv) the incumbency and
specimen signatures of the officers of such Person executing the documents and
instruments to be delivered under this Section 7.8(f) to which such Person is a
party, and (v) the due organization and good standing of such Person as a Person
organized under the laws of its jurisdiction of organization;

                                               (D) Evidence satisfactory to the
Agent and the Lenders that the Borrower, its Subsidiaries and the Person being
acquired has made and obtained all necessary governmental and other Consents
required in order to consummate such Acquisition and that all applicable waiting
periods with respect to such Acquisition including, without limitation, those
under the Hart-Scott-Rodino Act have expired without any action having been
taken by any competent authority restraining, preventing or imposing materially
adverse conditions upon the rights of the Loan Parties or their Subsidiaries
freely to transfer or otherwise dispose of, or to create any Lien on, any
properties now owned or hereafter acquired by any of them; and

                                    (viii)   the total consideration, contingent
         or other-wise, for the Acquisition of the Person being acquired,
         together with the consideration paid for each other Acquisition
         consummated pursuant to this Section 7.8(f) during the same fiscal year
         does not exceed, in the aggregate, $10,000,000 (including, without
         limitation, securities, instruments, or promissory notes tendered or
         executed in connection with such acquisition), PROVIDED, that the
         consideration paid under this clause (viii) shall be included for
         purposes of calculating compliance with Section 7.1(e) and all such
         Acquisitions shall be permitted only to the extent they are permitted
         under Section 7.1(e);

                           (g)      Investments received as consideration in
connection with Asset Dispositions permitted under paragraph (a) of Section 7.5;

                           (h)      Investments consisting of promissory notes
evidencing past due receivables owed to the Borrower or any Subsidiary of the
Borrower by an account debtor and not involving any monetary advance;

                           (i)      Employee Stock Loans not exceeding
$10,000,000 in the aggregate at any one time outstanding; and

                           (j)      loans to franchisees of Green Burrito in an
aggregate amount not to exceed $900,000 for all such loans made after the
Closing Date.

                  Section 7.9 Transactions with Affiliates. The Borrower shall
not, and shall not permit any of its Subsidiaries to, enter into any transaction
or series of related transactions, whether or not in the ordinary course of
business, with any Affiliate, other than on terms and conditions substantially
as favorable to the Borrower or such Subsidiary as would be obtainable at the
time in a comparable arm's-length transaction with a Person other than an
Affiliate; PROVIDED, HOWEVER, that Employee Stock Loans otherwise permitted by
the terms hereof shall not be considered to be transactions with Affiliates for
purposes of this Section 7.9.

                  Section 7.10 Limitation on Voluntary Payments and
Modifications of Certain Documents. The Borrower shall not, and shall not permit
any of its Subsidiaries to:

                           (a)      make any sinking fund payment or voluntary
or optional payment or prepayment on or redemption, defeasance, purchase or
acquisition for value of (including, without

                                       75


                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

limitation, by way of depositing with the trustee with respect thereto money or
securities before due for the purpose of paying when due) or exchange of any
Indebtedness (excluding the Indebtedness hereunder and under the other Loan
Documents and Indebtedness permitted to be incurred pursuant to Section 7.2(i)),
PROVIDED that the Borrower may, and may permit any of its Subsidiaries to,

                                    (i)      prepay, redeem, defease, purchase
         or acquire or exchange any (collectively, a "PREPAYMENT") Surviving
         Debt (other than Indebtedness permitted to be incurred pursuant to
         Section 7.2(i)) only if on the date of such Prepayment (x) no event or
         condition has occurred and is continuing, or would result from such
         Prepayment, that constitutes a Default or an Event of Default, and (y)
         after giving effect to such Prepayment, the Total Revolving Loan
         Commitment minus the aggregate principal amount of the Revolving Loans
         outstanding on the date of such Prepayment minus the amount of any L/C
         Obligations outstanding on the date of such Prepayment shall equal at
         least $20,000,000; PROVIDED, HOWEVER, that notwithstanding the
         foregoing, the Borrower shall not, and shall not permit any of its
         Subsidiaries to, make any Prepayment of any Indebtedness referred to in
         Section 7.2(h); and

                                    (ii)     make regularly scheduled or
         required repayments of Indebtedness permitted pursuant to Section 7.2.

                           (b)      amend, modify or waive, or permit the
amendment, modification or waiver of (i) the Surviving Debt (other than
Indebtedness permitted to be incurred pursuant to Section 7.2(h) or Section
7.2(i)) in any way that would be materially adverse to the Lenders or (ii) the
Permitted Subordinated Debt or the Subordinated Debt Documents; or

                           (c)      make any payment in violation of any
subordination terms of any Indebtedness of the Borrower or any of its
Subsidiaries; or

                           (d)      make or offer to make any sinking fund
payment, payment, prepayment, redemption, defeasance, purchase or acquisition
for value (including, without limitation, by way of depositing with the trustee
with respect thereto money or securities before due for the purpose of paying
when due) or otherwise segregate funds with respect to the Subordinated Notes
other than (i) regularly scheduled semi-annual interest payments required to be
made in cash, (ii) conversions of the Convertible Subordinated Notes or the New
Convertible Subordinated Notes into common stock of the Borrower, (iii)
redemptions of the Convertible Subordinated Notes with the proceeds of the
Loans, as soon as practicable and in any event no later than March 15, 2004,
PROVIDED, that any such Convertible Subordinated Notes that are redeemed by the
Borrower shall then be cancelled in accordance with the terms of the Convertible
Subordinated Note Indenture, and shall not be reissued and (iv) the redemption
or repurchase of Subordinated Notes, PROVIDED, that (A) the purchase price paid
by the Borrower for such Subordinated Notes shall not exceed in the aggregate,
for the period commencing November 3, 2003, and ending the last day of the last
fiscal quarter ending prior to such redemption or repurchase the sum of (1) the
aggregate Net Equity Proceeds of the Borrower for such period, plus (2) 50% of
Consolidated Net Income for such period (or if Consolidated Net Income for such
period is a deficit, less 100% of such deficit (which deficit for purposes of
subtracting such amount shall be deemed to be a positive number)), (B) the
Borrower shall have delivered to the Agent a certificate of the chief financial
officer of the Borrower, in form and substance satisfactory to the Agent,
demonstrating that, both before and after giving effect to such repurchase and
redemption, for a period of four consecutive fiscal quarters then ended, the
Leverage Ratio shall be less than 3.75 and Consolidated EBITDA of the Borrower
and its

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                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

Subsidiaries for the 13 Retail Period most recently ended shall at least equal
$115,000,000, (C) both before and after giving effect to such redemption or
repurchase, no Default or Event of Default shall have occurred and be continuing
and (D) after giving effect to such redemption or repurchase, no Revolving Loans
shall be outstanding.

                  Section 7.11 Changes in Business. The Borrower shall not, and
shall not permit any of its Subsidiaries to, enter into any business which is
substantially different from that conducted by the Borrower or such Loan Party,
as the case may be, on the Closing Date after giving effect to the Transactions.

                  Section 7.12 Certain Restrictions. The Borrower shall not, and
shall not permit any of its Subsidiaries to, enter into or permit to exist any
agreement, instrument or other document which directly or indirectly restricts
the ability of the Borrower or any of its Subsidiaries to (a) enter into
amendments, modifications or waivers of the Loan Documents, (b) sell, transfer
or otherwise dispose of its assets, (c) create, incur, assume or suffer to exist
any Lien upon any of its property, (d) create, incur, assume, suffer to exist or
otherwise become liable with respect to any Indebtedness, (e) make loans or
advances to the Borrower, or (f) pay any Dividend or repay any Indebtedness owed
to the Borrower or any of its Subsidiaries; PROVIDED, that Capitalized Leases or
agreements governing purchase money Indebtedness which contain restrictions of
the types referred to in clauses (b) or (c) with respect to the property covered
thereby shall be permitted; PROVIDED, FURTHER, that the foregoing shall not
apply to restrictions in effect on the Closing Date contained in agreements
governing Surviving Debt (other than Indebtedness arising under the Subordinated
Notes) and, if such Indebtedness is renewed, extended or refinanced,
restrictions in the agreements governing the renewed, extended or refinanced
Indebtedness (as successive renewals, extensions and refinancings thereof) if
such restrictions are no more restrictive in any material respect than those
contained in the agreements governing the Indebtedness being renewed, extended
or refinanced and if such renewals, extensions and refinancings are permitted
pursuant to Section 7.2(f).

                  Section 7.13 Lease Obligations. The Borrower shall not, and
shall not permit any of its Subsidiaries to, create, incur, assume or suffer to
exist any obligations as lessee:

                           (a)      for the rental or hire of real or personal
property in connection with any sale and leaseback transaction, except:

                                    (i)      the Borrower and its Subsidiaries
         may sell real property or equipment owned by the Borrower or any of its
         Subsidiaries on the Closing Date and simultaneously with such sale
         become liable with respect to any operating lease involving such
         property (each, an "EXISTING PROPERTY SALE AND LEASEBACK TRANSACTION"),
         and (ii) the Borrower and its Subsidiaries may sell real property which
         the Borrower or any of its Subsidiaries acquires after the Closing Date
         for the purpose of building a Restaurant which the Borrower or such
         Subsidiary intends to own and operate, and simultaneously with such
         sale become liable with respect to any operating lease involving such
         property if such sale and leaseback occurs on or before the date which
         is twelve (12) months after the date of acquisition by the Borrower or
         one of its Subsidiaries of such real property (each, a "NEW PROPERTY
         SALE AND LEASEBACK TRANSACTION") PROVIDED, that:

                                             (1)      an Affiliate of the
         Borrower or any of its Subsidiaries is not a party to any such Sale and
         Leaseback Transaction (except to the extent that the Borrower or any of
         its Subsidiaries is the lessee);

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                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                                             (2)      the Agent is provided with
         fully executed documentation of each Sale and Leaseback Transaction on
         or prior to the closing date of such transaction;

                                             (3)      no Default or Event of
         Default exists on the closing date of any Sale and Leaseback
         Transaction or would result therefrom and the Borrower shall deliver to
         the Agent prior to the closing date of such transaction an officer's
         certificate of the chief financial officer of the Borrower certifying
         thereto;

                                             (4)      the term of each such
         operating lease shall not be less than fifteen (15) years, PROVIDED,
         that the Borrower and its Subsidiaries may enter into Sale and
         Leaseback Transactions involving equipment in an amount not exceeding
         $5,000,000 in the aggregate where the term of the operating lease is
         less than fifteen (15) but greater than three (3) years;

                                             (5)      the aggregate amount of
         all property sold after the Closing Date pursuant to a Sale and
         Leaseback Transaction shall not exceed $25,000,000 in the aggregate;
         and

                                             (6)      concurrently with any Sale
         and Leaseback Transaction involving Real Estate Collateral, the
         Borrower or such Subsidiary shall, (i) in substitution for the real
         property sold, pledge additional fee owned real property of the
         Borrower or such Subsidiary to the Agent for the benefit of the Lenders
         with a fair market value at least equal to the then fair market value
         of the real property sold, as determined by an appraisal performed at
         the time of such sale which is satisfactory to the Agent and prepared
         by a firm satisfactory to the Agent and (ii) deliver to the Agent
         Mortgages and such title insurance policies, surveys and appraisals
         with respect to such substitution property and the leasehold interest
         created as the Agent may reasonably request, together such agreements,
         documents and instruments as the Agent shall request to create,
         perfect, establish the first priority nature of or otherwise protect
         any Lien purported to be created in favor of the Agent in the
         substitution property and the leasehold interest;

                                    (b)      for the rental or hire of other
real or personal property of any kind under leases or agreements to lease
including Capitalized Leases except for leases (including Capitalized Leases)
entered into for fair market value in the ordinary course of business of the
Borrower and its Subsidiaries.

                  Section 7.14 Hedging Agreements. The Borrower shall not, and
shall not permit any of its Subsidiaries to, enter into or remain liable under
any Hedging Agreement, except (a) Interest Rate Agreements with one or more of
the Lenders or their respective Affiliates pursuant to which the Borrower and
its Subsidiaries have hedged their reasonably estimated interest rate exposure
and (b) Hedging Agreements relating to commodities pursuant to which the
Borrower and its Subsidiaries have hedged their reasonably estimated commodity
price exposure.

                  Section 7.15 Plans. The Borrower shall not, nor shall it
permit any member of its ERISA Controlled Group to, take any action which would
increase the aggregate present value of the Unfunded Benefit Liabilities under
all Plans to an amount in excess of $2,000,000.

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                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                  Section 7.16 Fiscal Year; Fiscal Quarter. The Borrower shall
not, and shall not permit any of its Subsidiaries to, change its fiscal year or
any of its fiscal quarters.

                  Section 7.17 Partnerships. The Borrower shall not, and shall
not permit any of its Subsidiaries to, become or remain a general partner in any
general or limited partnership, or permit any of its Subsidiaries to do so,
except for any Subsidiary which is a corporation and the sole assets of which
consist of its interest in such partnership and except with respect to the
partnerships described on Schedule 7.17.

                  Section 7.18 Excluded Resales. The Borrower shall not, and
shall not permit any of its Subsidiaries to, acquire, purchase, hold or own any
Restaurants which the Borrower or any such Subsidiaries acquire from a
franchisee with the intent of reselling to the extent the aggregate amount of
Restaurants owned or held by the Borrower and its Subsidiaries would exceed
$20,000,000 at any one time outstanding, such amount to be measured by the
purchase price paid by the Borrower or any such Subsidiaries for such
Restaurants.

                  Section 7.19 Designated Senior Indebtedness. The Borrower
shall not designate, create or permit to exist any (a) Designated Senior
Indebtedness (as defined in the Convertible Subordinated Note Indenture), (b)
Designated Senior Indebtedness (as defined in the New Subordinated Note
Indenture) or (c) Designated Senior Indebtedness (as defined in the New
Convertible Subordinated Note Indenture), in each case other than obligations
arising under the Loan Documents.

                  Section 7.20 Instruments. The Borrower shall not permit any of
its Subsidiaries to own or hold, directly or beneficially, any Instrument if
such Subsidiary is not a party to a legal, valid and binding Subsidiary Pledge
Agreement.

                  Section 7.21 Real Estate Collateral Value. The Borrower shall
not permit the Real Estate Collateral Value to be less than $218,000,000 at any
time.

SECTION 8. EVENTS OF DEFAULT

                  Section 8.1 Events of Default. Each of the following events,
acts, occurrences or conditions shall constitute an Event of Default (each an
"EVENT OF DEFAULT") under this Agreement, regardless of whether such event, act,
occurrence or condition is voluntary or involuntary or results from the
operation of law or pursuant to or as a result of compliance by any Person with
any judgment, decree, order, rule or regulation of any court or administrative
or governmental body:

                           (a)      Failure to Make Payments. The Borrower shall
(i) default in the payment when due of any principal of the Loans or (ii)
default, and such default shall continue unremedied for two (2) or more Business
Days, in the payment when due of any interest on the Loans or in the payment
when due of any Fees or any other amounts owing hereunder.

                           (b)      Breach of Representation or Warranty. Any
representation or warranty made by any Loan Party herein or in any other Loan
Document or in any certificate or statement delivered pursuant hereto or thereto
shall prove to be false or misleading in any material respect on the date as of
which made or deemed made.

                                       79



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                           (c)      Breach of Covenants.

                                    (i)      The Borrower shall fail to perform
         or observe any agreement, covenant or obligation arising under Section
         6.1(f) or Section 7.

                                    (ii)     The Borrower shall fail to perform
         or observe any agreement, covenant or obligation arising under this
         Agreement (except those described in subsections (a), (b) and (c)(i)
         above), and such failure shall continue for thirty (30) days.

                                    (iii)    Any Loan Party shall fail to
         perform or observe any agreement, covenant or obligation arising under
         any provision of the Loan Documents other than this Agreement, which
         failure shall continue after the end of the applicable grace period, if
         any, provided therein.

                           (d)      Default Under Other Agreements. Any Loan
Party or any of its Subsidiaries shall default in the payment when due (whether
by scheduled maturity, required prepayment, acceleration, demand or otherwise)
of any amount owing in respect of any Indebtedness of such Loan Party or any of
its Subsidiaries (other than the Obligations) in the aggregate principal amount
of $5,000,000 or more; or any Loan Party or any of its Subsidiaries shall
default in the performance or observance of any obligation or condition with
respect to any such Indebtedness or any other event shall occur or condition
shall exist, if the effect of such default, event or condition is to accelerate
the maturity or cause a mandatory redemption of any such Indebtedness or to
permit the holder or holders thereof, or any trustee or agent for such holders,
to accelerate the maturity or require a redemption or other repurchase thereof
of any such Indebtedness, or any such Indebtedness shall become or be declared
to be due and payable prior to its stated maturity other than as a result of a
regularly scheduled payment; or any such Indebtedness shall be declared to be
due and payable, or shall be required to be prepaid, redeemed, purchased or
defeased, or an offer to prepay, redeem, purchase or defease such Indebtedness
shall be required to be made, in each case prior to its stated maturity other
than as a result of a regularly scheduled payment.

                           (e)      Bankruptcy, etc. (i) Any Loan Party or any
of its Subsidiaries shall commence a voluntary case concerning itself under the
Bankruptcy Code; or (ii) an involuntary case is commenced against any Loan Party
or any of its Subsidiaries and the petition is not controverted within 10 days,
or is not dismissed within 60 days, after commencement of the case; or (iii) a
custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge
of, all or substantially all of the property of any Loan Party or any of its
Subsidiaries or any Loan Party or any of its Subsidiaries commences any other
proceedings under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to any Loan Party or
any of its Subsidiaries or there is commenced against any Loan Party or any of
its Subsidiaries any such proceeding which remains undismissed for a period of
60 days; or (iv) any order of relief or other order approving any such case or
proceeding is entered; or (v) any Loan Party or any of its Subsidiaries is
adjudicated insolvent or bankrupt; or (vi) any Loan Party or any of its
Subsidiaries suffers any appointment of any custodian or the like for it or any
substantial part of its property to continue undischarged or unstayed for a
period of 60 days; or (vii) any Loan Party or any of its Subsidiaries makes a
general assignment for the benefit of creditors; or (viii) any Loan Party or any
of its Subsidiaries shall fail to pay, or shall state that it is unable to pay,
or shall be unable to pay, its debts generally as they become due; or (ix) any
Loan Party or any of its Subsidiaries shall call a meeting of its creditors with
a view to arranging a composition or adjustment of its debts; or (x) any Loan
Party or any of its Subsidiaries

                                       80



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

shall by any act or failure to act consent to, approve of or acquiesce in any of
the foregoing; or (xi) any corporate action is taken by any Loan Party or any of
its Subsidiaries for the purpose of effecting any of the foregoing.

                           (f)      ERISA. (i) Any Termination Event shall
occur, or (ii) any Plan shall incur an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived, or (iii) the Borrower or a member of its ERISA Controlled Group shall
have engaged in a transaction which is prohibited under Section 4975 of the Code
or Section 406 of ERISA which could result in the imposition of liability in
excess of $2,000,000 on the Borrower or any member of its ERISA Controlled
Group, or (iv) the Borrower or any member of its ERISA Controlled Group shall
fail to pay when due an amount which it shall have become liable to pay to the
PBGC, any Plan or a trust established under Title IV of ERISA, or (v) a
condition shall exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that an ERISA Plan must be terminated or have a trustee
appointed to administer any ERISA Plan, or (vi) the Borrower or a member of its
ERISA Controlled Group suffers a partial or complete withdrawal from a
Multiemployer Plan or is in "default" (as defined in Section 4219(c)(5) of
ERISA) with respect to payments to a Multiemployer Plan, or (vii) a proceeding
shall be instituted against the Borrower or any member of its ERISA Controlled
Group to enforce Section 515 of ERISA and such proceeding shall remain
undismissed for 180 days, or (viii) any other event or condition shall occur or
exist with respect to any Plan which could subject the Borrower or any member of
its ERISA Controlled Group to any tax, penalty or other liability in excess of
$2,000,000 or (ix) the aggregate present value of all post-retirement benefit
liabilities of the Borrower and its Subsidiaries under any "welfare plan" (as
defined in Section 3(1) of ERISA), including, without limitation, Hardee's
Retiree Medical Insurance Plan, exceeds $20,000,000.

                           (g)      Security Documents. Any of the Security
Documents shall for any reason cease to be in full force and effect, or shall
cease to give the Agent for the benefit of the Lenders the Liens, rights, powers
and privileges purported to be created thereby including, without limitation, a
perfected first priority security interest in, and Lien on, any material part of
the Collateral in accordance with the terms thereof or the Borrower or any of
the Borrower's Subsidiaries party to any Security Document seeks to repudiate
its respective obligations thereunder and the Liens created thereby are
rendered, or the Borrower or any such Subsidiary of the Borrower seeks to render
such Liens, invalid and unperfected.

                           (h)      Guaranty. The Guaranty or any provision
thereof shall cease to be in full force and effect, or any Guarantor or any
Person acting by or on behalf of a Guarantor shall deny or disaffirm all or any
portion of such Guarantor's obligations under such Guaranty.

                           (i)      Change of Control. (i) Any Person or two or
more Persons acting in concert other than the Controlling Stockholders shall
have acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934),
directly or indirectly, of Voting Stock of the Borrower (or other securities
convertible into such Voting Stock) representing 20% or more of the combined
voting power of all Voting Stock of the Borrower; or (ii) during any period of
up to 24 consecutive months, commencing after the Closing Date, individuals who
at the beginning of such 24-month period were directors of the Borrower shall
cease for any reason to constitute a majority of the board of directors of the
Borrower; or (iii) any Person or two or more Persons acting in concert other
than the Controlling Stockholders shall have acquired by contract or otherwise,
or shall have entered into a contract or arrangement that, upon consummation,
will result in its or their acquisition of, the power to exercise control over

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                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

Voting Stock of the Borrower (or other securities convertible into such
securities representing 20% or more of the combined voting power of all Voting
Stock of the Borrower); (iv) a Change in Control as defined in the New
Subordinated Note Indenture shall have occurred; (v) a Change of Control as
defined in the Convertible Subordinated Note Indenture shall have occurred or
(vi) a Change of Control as defined in the New Convertible Subordinated Note
Indenture shall have occurred.

                           (j)      Judgments. One or more judgments or decrees
or awards in an aggregate amount of $5,000,000 or more shall be entered by a
court or courts of competent jurisdiction or in any arbitration proceeding
against any Loan Party or any of its Subsidiaries and (i) any such judgments or
decrees or awards shall not be stayed, discharged, paid, bonded or vacated
within 30 days or (ii) enforcement proceedings shall be commenced by any
creditor on any such judgment or decree or award.

                           (k)      Environmental Matters. (i) Any Environmental
Claim shall have been asserted against any Loan Party or any Environmental
Affiliate thereof which, if determined adversely, could have a Material Adverse
Effect, (ii) any release, emission, discharge or disposal of any Material of
Environmental Concern shall have occurred, and such event could form the basis
of an Environmental Claim against any Loan Party or any Environmental Affiliate
thereof which, if determined adversely, could have a Material Adverse Effect, or
(iii) any Loan Party or its Environmental Affiliate shall have failed to obtain
any Environmental Approval necessary for the management, use, control,
ownership, or operation of its business, property or assets or any such
Environmental Approval shall be revoked, terminated, or otherwise cease to be in
full force and effect, in each case, if the existence of such condition could
have a Material Adverse Effect.

                           (l)      Ownership of Certain Assets. The Borrower
and/or its Subsidiaries shall sell, convey or otherwise transfer or dispose of
any material intellectual property or license agreement owned by or licensed to
the Borrower or any of its Subsidiaries or any material license agreement to
which the Borrower or any of its Subsidiaries is a party other than (A) a sale,
conveyance or other transfer (other than a Lien) to a Domestic Subsidiary, (B)
licenses pursuant to Franchise Agreements pledged to the Agent pursuant to the
Security Documents and (C) any Asset Disposition permitted by the terms of any
of the Loan Documents.

                  Section 8.2 Rights and Remedies. Upon the occurrence of any
Event of Default described in Section 8.1(e), the Commitments shall
automatically and immediately terminate and the unpaid principal amount of and
any and all accrued interest on the Loans and any and all accrued Fees and other
Obligations shall automatically become immediately due and payable, with all
additional interest from time to time accrued thereon and without presentation,
demand, or protest or other requirements of any kind (including, without
limitation, valuation and appraisement, diligence, presentment, notice of intent
to demand or accelerate and notice of acceleration), all of which are hereby
expressly waived by Borrower, and the obligation of each Lender to make any Loan
hereunder shall thereupon terminate; and upon the occurrence and during the
continuance of any other Event of Default, the Agent shall at the request, or
may with the consent, of the Required Lenders, by written notice to Borrower,
(i) declare that the Commitments are terminated, whereupon the Commitments and
the obligation of each Lender to make any Loan hereunder shall immediately
terminate, (ii) require the Borrower to Cash Collateralize the L/C Obligations
in an amount equal to the maximum aggregate amount that is, or at any time
thereafter may become, available for drawing under any outstanding Letters of
Credit (whether or not any beneficiary shall have presented, or shall be
entitled at such time to present, the drafts or other documents required to draw
under such Letters of Credit), and (iii) declare the unpaid principal amount of
and any and all accrued and unpaid

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                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

interest on the Loans and any and all accrued Fees and other Obligations to be,
and the same shall thereupon be, immediately due and payable with all additional
interest from time to time accrued thereon and without presentation, demand, or
protest or other requirements of any kind (including, without limitation,
valuation and appraisement, diligence, presentment, notice of intent to demand
or accelerate and notice of acceleration), all of which are hereby expressly
waived by Borrower.

SECTION 9. THE AGENT

                  Section 9.1 Appointment. Each Lender hereby irrevocably
designates and appoints BNP Paribas as the Agent of such Lender under this
Agreement and each other Loan Document, and each such Lender irrevocably
authorizes BNP Paribas as the Agent for such Lender, to take such action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to
the Agent by the terms of this Agreement and each other Loan Document, together
with such other powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Agreement, the Agent shall not have
any duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on the part of the Agent
shall be read into this Agreement or otherwise exist against the Agent. The
provisions of this Section 9 are solely for the benefit of the Agent and the
Lenders and no Loan Party shall have any rights as a third party beneficiary or
otherwise under any of the provisions hereof. In performing its functions and
duties hereunder and under the other Loan Documents, the Agent shall act solely
as the agent of the Lenders and does not assume nor shall be deemed to have
assumed any obligation or relationship of trust or agency with or for any Loan
Party or any of their respective successors and assigns.

                  Section 9.2 Delegation of Duties. The Agent may execute any of
its duties under this Agreement or the other Loan Documents by or through agents
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.

                  Section 9.3 Exculpatory Provisions. The Agent shall not be (i)
liable for any action lawfully taken or omitted to be taken by it or any Person
described in Section 9.2 under or in connection with this Agreement or any other
Loan Document (except for its or such Person's own gross negligence or willful
misconduct), or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by any Loan Party
contained in this Agreement or any other Loan Document or in any certificate,
report, statement or other document referred to or provided for in, or received
under or in connection with, this Agreement or any other Loan Document or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement, or any other Loan Document or for any failure of any Loan
Party to perform their obligations hereunder or thereunder. The Agent shall not
be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of any Loan Party. This Section is intended solely to govern
the relationship between the Agent, on the one hand, and the Lenders, on the
other.

                  Section 9.4 Reliance by Agent. The Agent shall be entitled to
rely, and shall be fully protected in relying, upon any Note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document

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                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to any Loan
Party), independent accountants and other experts selected by the Agent. The
Agent may deem and treat the payee of any Note as the owner thereof for all
purposes unless the Agent shall have received an executed Assignment Agreement
in respect thereof. The Agent shall be fully justified in failing or refusing to
take any action under this Agreement or any other Loan Document unless it shall
first receive such advice or concurrence of the Required Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement
and the other Loan Documents in accordance with a request of the Required
Lenders, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future holders of the
Notes.

                  Section 9.5 Notice of Default. The Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
unless the Agent has received notice from a Lender or the Borrower referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default". In the event that the Agent receives such
a notice, the Agent shall promptly give notice thereof to the Lenders. Subject
to the provisions of Section 10.5, the Agent shall take such action with respect
to such Default or Event of Default as shall be directed by the Required
Lenders; PROVIDED that unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as the Agent shall deem advisable and in the best interests of the
Lenders.

                  Section 9.6 Non-Reliance on Agent and Other Lenders. Each
Lender expressly acknowledges that neither the Agent, nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Agent hereafter
taken, including, without limitation, any review of the affairs of any Loan
Party, shall be deemed to constitute any representation or warranty by the
Agent. Each Lender represents and warrants to the Agent that it has,
independently and without reliance upon the Agent or any other Lender and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
prospects, financial and other conditions and creditworthiness of the Loan
Parties and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement, and to make such investigation as it deems necessary to
inform itself as to the business, operations, property, prospects, financial and
other condition and creditworthiness of the Loan Parties. Except for notices,
reports and other documents expressly required under the Loan Documents to be
furnished to the Lenders by the Agent, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, prospects, financial and other
condition or creditworthiness of the Loan Parties which may come into the
possession of the Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.

                  Section 9.7 Indemnification. The Lenders agree to indemnify
the Agent and its officers, directors, employees, representatives and agents (to
the extent not reimbursed by the Loan Parties and without limiting the
obligation of the Loan Parties to do so), ratably according to their

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                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

Pro Rata Shares, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever (including, without limitation, the fees and
disbursements of counsel for the Agent or such Person in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not the Agent or such Person shall be designated a party thereto)
that may at any time (including, without limitation, at any time following the
payment of the Obligations) be imposed on, incurred by or asserted against the
Agent or such Person as a result of, or arising out of, or in any way related to
or by reason of, any of the Transactions or the execution, delivery or
performance of any Loan Document or any other Transaction Document (but
excluding any such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
gross negligence or willful misconduct of the Agent or such Person as finally
determined by a court of competent jurisdiction); PROVIDED that to the extent
indemnification payments made by the Lenders pursuant to this Section 9.7 are
subsequently recovered from or for the account of the Borrower, the Agent shall
promptly refund such previously paid indemnification payments to the Lenders.

                  Section 9.8 Agent in its Individual Capacity. The Agent and
its affiliates may make loans to, accept deposits from and generally engage in
any kind of business with the Loan Parties as though the Agent were not the
Agent hereunder. With respect to Loans made or renewed by it and any Note issued
to it, the Agent shall have the same rights and powers under this Agreement as
any Lender and may exercise the same as though it were not the Agent, and the
terms "Lender" and "Lenders" shall include the Agent in its individual capacity.

                  Section 9.9 Successor Agent. The Agent may resign as Agent
upon 30 days' notice to the Borrower and the Lenders. If the Agent shall resign
as Agent under this Agreement, then the Required Lenders during such 30-day
period shall appoint from among the Lenders a successor agent, whereupon such
successor agent shall succeed to the rights, powers and duties of the Agent and
the term "Agent" shall mean such successor agent, effective upon its
appointment, and the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent or any of the parties to this Agreement or any holders of the Notes.
Notwithstanding anything herein to the contrary, so long as no Event of Default
has occurred and is continuing, each such successor agent shall be subject to
approval by the Borrower, which approval shall not be unreasonably withheld or
delayed. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 9 and Section 10.1 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under this
Agreement.

SECTION 10. MISCELLANEOUS

                  Section 10.1 Payment of Expenses, Indemnity, etc. The Borrower
shall:

                           (a)      whether or not the transactions hereby
contemplated are consummated, pay all reasonable out-of-pocket costs and
expenses of the Agent in connection with the negotiation, preparation, execution
and delivery of the Loan Documents, the commitment letter related thereto and
the Fee Letter, the syndication of the Loans and the closing of the Transactions
and the documents and instruments referred to therein, in connection therewith,
the creation, perfection or protection of the Agent's Liens in the Collateral
(including, without limitation, fees and expenses for lien searches and filing
and recording fees and, including, without limitation, fees and expenses
incurred in connection with the transactions contemplated by Section 2.21), and
any amendment, waiver or consent relating to any of the Loan Documents
(including, without limitation,

                                       85



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

as to each of the foregoing, the reasonable fees and disbursements of Skadden,
Arps, Slate, Meagher & Flom (Illinois), special counsel to the Agent and any
other attorneys and legal assistants retained by the Agent and allocated costs
of internal counsel and legal assistants) and of the Agent and each Lender in
connection with the preservation of rights under, and enforcement of, the Loan
Documents and the documents and instruments referred to therein or in connection
with any restructuring or rescheduling of the Obligations (including, without
limitation, the reasonable fees and disbursements of counsel for the Agent and
for each of the Lenders);

                           (b)      pay, and hold the Agent and each of the
Lenders harmless from and against, any and all present and future stamp, excise
and other similar taxes with respect to the foregoing matters and hold the Agent
and each Lender harmless from and against any and all liabilities with respect
to or resulting from any delay or omission (other than to the extent
attributable to such Lender) to pay such taxes; and

                           (c)      indemnify the Agent, the Financial Advisor
and each Lender, and each of their Affiliates and their officers, directors,
employees, representatives, trustees, attorneys and agents (each an
"INDEMNITEE") from, and hold each of them harmless against, any and all losses,
liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements of any kind or nature whatsoever
(including, without limitation, the reasonable fees and disbursements of counsel
for such Indemnitee) that may at any time (including, without limitation, at any
time following the payment of the Obligations) be imposed on, asserted against
or incurred by any Indemnitee as a result of, or arising out of, or in any way
related to or by reason of, or in connection with the preparation for a defense
of, any investigation, litigation or proceeding arising out of, related to or in
connection with (i) any of the Transactions or the execution, delivery or
performance of any Loan Document or any other Transaction Document (including,
without limitation, any actual or proposed use by the Borrower or any Subsidiary
of the Borrower of the proceeds of any Loan or Letter of Credit), (ii) any
violation by any Loan Party or its Environmental Affiliate of any applicable
Environmental Law, (iii) any Environmental Claim arising out of the management,
use, control, ownership or operation of property or assets by any of the Loan
Parties or any of their Environmental Affiliates, including, without limitation,
all on-site and off-site activities involving Materials of Environmental
Concern, (iv) the breach of any environmental representation or warranty set
forth in Section 5.19, (v) the grant to the Agent and the Lenders of any Lien in
any property or assets of any of the Loan Parties or any stock or other equity
interest in any of the Loan Parties, and (vi) the exercise by the Agent and the
Lenders of their rights and remedies (including, without limitation,
foreclosure) under any agreements creating any such Lien (but excluding, as to
any Indemnitee, any such losses, liabilities, claims, damages, expenses,
obligations, penalties, actions, judgments, suits, costs or disbursements
incurred solely by reason of the gross negligence or willful misconduct of such
Indemnitee as finally determined by a court of competent jurisdiction). The
Borrower's obligations under this Section shall survive the termination of this
Agreement and the payment of the Obligations.

                  Section 10.2 Right of Setoff. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance of
any Event of Default, each Lender and each of such Lender's Affiliates is hereby
authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to any Loan Party or to any other Person,
any such notice being hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special, time or demand, provisional or
final) and any other indebtedness at any time held or owing by such Lender or
such Affiliate (including, without limitation, by branches and agencies of

                                       86



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

such Lender or such Affiliate wherever located) to or for the credit or the
account of any Loan Party against and on account of the Obligations of the Loan
Parties to such Lender or such Affiliate under this Agreement or under any of
the other Loan Documents, including, without limitation, all interests in
Obligations purchased by such Lender pursuant to Section 10.7, and all other
claims of any nature or description arising out of or connected with this
Agreement or any other Loan Document, irrespective of whether or not such Lender
or such Affiliate shall have made any demand hereunder and although said
Obligations, liabilities or claims, or any of them, shall be contingent or
unmatured.

                  Section 10.3 Notices. Except as otherwise expressly provided
herein, all notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by telecopy, telex, or
cable communication), and shall be deemed to have been duly given or made when
delivered by hand, or five days after being deposited in the United States mail,
postage prepaid, or, in the case of telex notice, when sent, answerback
received, or, in the case of telecopy notice, when sent, or, in the case of a
nationally recognized overnight courier service, one Business Day after delivery
to such courier service, addressed, in the case of each party hereto, at its
address specified opposite its signature below or on the appropriate Assignment
Agreement, or to such other address as may be designated by any party in a
written notice to the other parties hereto, PROVIDED that notices and
communications to the Agent shall not be effective until received by the Agent.

                  Section 10.4 Successors and Assigns; Participation;
Assignments.

                           (a)      Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the Borrower, the Lenders, the
Agent, all future holders of the Notes and their respective successors and
assigns, except that the Borrower may not assign or transfer any of its rights
or obligations under this Agreement without the prior written consent of each
Lender. No Lender may participate, assign or sell any of its Credit Exposure (as
defined in clause (b) below) except as required by operation of law, in
connection with the merger, consolidation or dissolution of any Lender or as
provided in this Section 10.4.

                           (b)      Participation. Any Lender may at any time
sell to one or more Persons (each a "PARTICIPANT") participating interests in
any Loan owing to such Lender, any Note held by such Lender, any Commitment of
such Lender and or any other interest of such Lender hereunder (in respect of
any such Lender, its "CREDIT EXPOSURE"). Notwithstanding any such sale by a
Lender of participating interests to a Participant, such Lender's rights and
obligations under this Agreement shall remain unchanged, such Lender shall
remain solely responsible for the performance thereof, such Lender shall remain
the holder of any such Note for all purposes under this Agreement (except as
expressly provided below), and the Borrower and the Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. The Borrower agrees that if any Obligations
are due and unpaid, or shall have been declared or shall have become due and
payable upon the occurrence and during the continuance of an Event of Default,
each Participant shall be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement and any Note to the
same extent as if the amount of its participating interest were owing directly
to it as a Lender under this Agreement or any Note PROVIDED, that such right of
setoff shall be subject to the obligations of such Participant to share with the
Lenders, and the Lenders agree to share with such Participant, as provided in
Section 10.7. The Borrower also agrees that each Participant shall be entitled
to the benefits of Sections 2.16, 2.17, 2.18 and 2.19, PROVIDED, that no
Participant shall be entitled to receive any greater amount pursuant to such
sections than the transferor Lender would have been entitled to receive in
respect of the amount of the participating interest transferred by such
transferor Lender to

                                       87



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

such Participant had no such transfer occurred. Each Lender agrees that any
agreement between such Lender and any such Participant in respect of such
participating interest shall not restrict such Lender's right to agree to any
amendment, supplement, waiver or modification to this Agreement or any other
Loan Document, except where the result of any of the foregoing would be to
extend the final maturity of any Obligation or any regularly scheduled
installment thereof or reduce the rate or extend the time of payment of interest
thereon or reduce the principal amount thereof or release all or substantially
all of the Collateral (except as expressly provided in the Loan Documents).

                           (c)      Assignments. Any Lender may, in accordance
with applicable law, at any time assign to any Lender or any affiliate thereof,
including, without limitation, a Lender Affiliate or, with the consent of the
Agent, which consent shall not be unreasonably withheld, to any other Person
(each an "ASSIGNEE") all or any part of its Credit Exposure; PROVIDED, that in
the case of any such assignment to a Person that is not another Lender or an
affiliate of the assigning Lender, each such assignment shall be (i) except in
the case of an assignment of the entire remaining amount of the Lender's Credit
Exposure, (A) for a Credit Exposure not less than $5,000,000 in the case of
Revolving Loans and (B) for Credit Exposure not less than $1,000,000 in the case
of Term Loans, PROVIDED, that concurrent assignments of such Lender's Term Loan
Credit Exposure to such Person and the affiliates of such Person, including,
without limitation, Lender Affiliates of such Person, may be for lesser amounts
so long as the aggregate amount of such assignments are not less than
$1,000,000, (ii) to an Assignee approved in writing by the Agent, which approval
shall not be unreasonably withheld and (iii) so long as no Default or Event of
Default shall have occurred and be continuing, to an Assignee approved by the
Borrower, which approval shall not be unreasonably withheld. Such consent of the
Agent shall be substantially in the form attached as Schedule II to Exhibit I
hereto. The Borrower, the Agent and the Lenders agree that to the extent of any
assignment the Assignee shall be deemed to have the same rights and benefits
under the Loan Documents and the same rights of setoff and obligation to share
pursuant to Section 10.7 as it would have had if it were a Lender hereunder;
PROVIDED that the Borrower and the Agent shall be entitled to continue to deal
solely and directly with the assignor Lender in connection with the interests so
assigned to the Assignee unless and until such Assignee becomes a Purchasing
Lender pursuant to clause (d) below.

                           (d)      Assignments to Purchasing Lenders. Any
Lender may at any time and from time to time assign to one or more Persons
("PURCHASING LENDERS") all or any part of its Credit Exposure pursuant to a
supplement to this Agreement, substantially in the form of Exhibit I hereto (an
"ASSIGNMENT AGREEMENT"), executed by such Purchasing Lender, such transferor
Lender and the Agent. Upon (i) such execution of such Assignment Agreement, (ii)
delivery to the Agent of a notice of assignment substantially in the form of
Schedule I to Exhibit I hereto (a "NOTICE OF ASSIGNMENT") with a copy to the
Borrower, together with any consent required pursuant to Section 10.4(c) above
and a copy of the Assignment Agreement, (iii) payment by such Purchasing Lender
to such transferor Lender of an amount equal to the purchase price agreed
between such transferor Lender and such Purchasing Lender and (iv) payment of a
$3,500 fee to the Agent for processing of such assignment, and subject to
acceptance and recording of such Assignment Agreement pursuant to subsection (h)
below, such assignment shall become effective on the effective date specified in
such Assignment Agreement, which effective date shall be at least five (5)
Business Days after delivery of such Notice of Assignment to the Agent (or such
shorter period agreed to by the Agent), such transferor Lender shall be released
from its obligations hereunder to the extent of such assignment and such
Purchasing Lender shall for all purposes be a Lender party to this Agreement and
shall have all the rights and obligations of a Lender under this Agreement to
the same extent as if it were an original party hereto, and no further consent
or action by the Borrower, the Lenders or the Agent shall be required. Such
Assignment Agreement shall be deemed to amend this

                                       88



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

Agreement to the extent, and only to the extent, necessary to reflect the
addition of such Purchasing Lender as a Lender and the resulting adjustment of
the Commitments, if any, arising from the purchase by such Purchasing Lender of
all or a portion of the Credit Exposure of such transferor Lender.

                           (e)      Disclosure of Information. The Borrower
authorizes each Lender to disclose to any Participant, Assignee or Purchasing
Lender (each, a "TRANSFEREE") and any prospective Transferee any and all
financial and other information in such Lender's possession concerning the
Borrower which has been delivered to such Lender by the Borrower pursuant to
this Agreement or which has been delivered to such Lender by the Borrower in
connection with such Lender's credit evaluation of the Borrower prior to
entering into this Agreement.

                           (f)      Pledges by Lenders. Notwithstanding any
other provision set forth in this Agreement, any Lender may at any time assign
and pledge a security interest in all or any portion of its rights under this
Agreement to secure the obligations of such Lender, including, without
limitation, any assignment or pledge to secure obligations to any Federal
Reserve Bank as collateral security pursuant to Regulation A and any Operating
Circular issued by such Federal Reserve Bank; PROVIDED, that no such assignment
or pledge shall release the assigning Lender from its obligations hereunder or
substitute any such assignee or pledgee for such Lender as a party hereto.

                           (g)      Transfer and Exchange of Notes. Promptly
after the consummation of any transfer to a Purchasing Lender pursuant hereto,
the transferor Lender, the Agent and the Borrower shall make appropriate
arrangements so that any Notes held by such transferor Lender shall be
surrendered to the Borrower for cancellation, one or more replacement Notes in
exchange therefor shall be issued to such transferor Lender, and one or more new
Notes shall be issued to such Purchasing Lender, in each case in notional
amounts reflecting such transfer. Each such new Revolving Note and new Term Note
shall be payable to the Purchasing Lender and shall be substantially in the form
of Exhibits A and B, respectively.

                           (h)      Register. The Agent, acting solely for this
purpose as an agent of the Borrower, shall maintain at its address referred to
on its signature page hereto a copy of each Assignment Agreement delivered to it
and a register (the "REGISTER") for the recordation of the names and addresses
of the Lenders and the Commitments of, and the principal amount of the Loans and
the making of payments with respect to any Letter of Credit owing to, each
Lender pursuant to the terms hereof from time to time. The entries in the
Register shall be, to the extent permitted by law, prima facie evidence of the
existence and amounts of the obligations of the Borrower therein recorded, and
the Borrower, the Agent, the Issuing Bank and the Lenders may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as the owner
of the Loans recorded therein for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower and any Lender at any reasonable time and from time
to time upon reasonable prior notice.

                  Section 10.5 Amendments and Waivers.

                           (a)      Neither this Agreement, any Note, any other
Loan Document to which the Borrower or any other Loan Party is a party nor any
terms hereof or thereof may be amended, supplemented, modified or waived except
in accordance with the provisions of this Section. The Required Lenders and the
Borrower (or such other Loan Party, as the case may be) may, from time to time,
enter into written amendments, supplements, modifications or waivers for

                                       89



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

the purpose of adding, deleting, changing or waiving any provisions to this
Agreement, the Notes, or the other Loan Documents to which the Borrower or such
other Loan Party is a party, PROVIDED, that no such amendment, supplement,
modification or waiver shall

                                    (i)      extend the Revolving Loan Maturity
         Date or the Term Loan Maturity Date or extend the time for payment of
         any installment, fee or required prepayment of any Obligations or
         reduce the rate or extend the time of payment of interest on any
         Obligations, or reduce the principal amount of any Obligations or
         reduce any fee payable to the Lenders hereunder, or release or
         subordinate all or substantially all of the Collateral (except as
         expressly contemplated by the Loan Documents) or change the amount of
         any Commitment of any Lender, or amend, modify or waive any provision
         of this Section 10.5, or the definition of Required Lenders, or consent
         to or permit the assignment or transfer by the Borrower of any of its
         rights and obligations under this Agreement or any other Loan Document,
         or modify any provision hereof providing for the pro rata sharing of
         payments, in each case without the written consent of all the Lenders;

                                    (ii)     release Carl Karcher Enterprises,
         Inc., Hardee's or any Subsidiary of Hardee's (other than any such
         Subsidiary which is an Immaterial Subsidiary), from the Guaranty and
         the other applicable Security Documents (including the release of such
         Loan Party's stock certificates from the Borrower Pledge Agreement or
         the Subsidiary Pledge Agreement, as applicable), in each case without
         the written consent of all of the Lenders; or

                                    (iii)    amend, modify or waive any
         provision of Section 9 or any other provision of any Loan Document if
         the effect thereof is to affect the rights or duties of the Agent,
         without the written consent of the then Agent; PROVIDED, FURTHER, that
         the release from the Guaranty and the other applicable Security
         Documents (including the release of such Loan Party's stock
         certificates from the Borrower Pledge Agreement or the Subsidiary
         Pledge Agreement, as applicable) of any Subsidiary of the Borrower
         (other than a Subsidiary of Hardee's) with assets of less than
         $10,000,000 (as determined in accordance with GAAP) shall not require
         the consent of any of the Lenders in any of the foregoing circumstances
         if (x) such Subsidiary (a "SOLD GUARANTOR") is being released from the
         Guaranty because all or a portion of the assets of such Sold Guarantor
         are being sold or otherwise disposed of in an Asset Disposition or the
         Equity Interests of such Sold Guarantor are being sold or otherwise
         disposed of or an issuance of Equity Interests of such Sold Guarantor
         is commenced, and immediately after giving effect to such sale, other
         disposition or issuance of Equity Interests and as a result of such
         sale, other disposition or issuance of Equity Interests, such Sold
         Guarantor is no longer a Subsidiary of the Borrower and (y) any such
         Asset Disposition or sale, other disposition or issuance of Equity
         Interests is otherwise permitted and commenced in accordance with the
         terms of this Agreement (and the Agent is hereby authorized by the
         Lenders to execute and deliver to the Borrower all such documents
         evidencing any such release).

                                    (iv)     amend, modify or waive Section 2.12
         or 2.13 hereof in a manner that would alter the application of any
         prepayment of the Obligations without the consent of each Lender
         adversely affected thereby.

Any such amendment, supplement, modification or waiver shall apply to each of
the Lenders equally and shall be binding upon the Borrower, the Lenders, the
Agent and all future holders of the Notes.

                                       90



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

In the case of any waiver, the Borrower, the Lenders and the Agent shall be
restored to their former position and rights hereunder and under the outstanding
Notes, and any Default or Event of Default waived shall be deemed to be cured
and not continuing, but no such waiver shall extend to any subsequent or other
Default or Event of Default, or impair any right consequent thereon.
Notwithstanding the foregoing, (i) the Fee Letter may be amended or otherwise
modified in a writing executed by only the parties thereto and (ii) a Letter of
Credit may be amended in accordance with Section 3.1(f).

                           (b)      Each of the Lenders agrees that in the event
that such Lender is requested to consent to any amendment, supplement,
modification or waiver of any term or condition of or with respect to this
Agreement or any other Loan Document, the effectiveness of which requires the
consent of all of the Lenders pursuant to the first proviso of Section 10.5(a)
hereof, and such Lender shall fail or refuse to give such consent, such Lender
(the "AFFECTED LENDER") shall be obliged, at the request of the Borrower and
with the consent of the Agent, to assign all of its rights and obligations
hereunder to (i) another Lender or (ii) another qualified financial institution
nominated by the Agent and reasonably acceptable to the Borrower (the
"REPLACEMENT LENDER"), and willing to participate in this Agreement through the
Final Maturity Date in the place of such Affected Lender; PROVIDED that the
Affected Lender receives payment in full, pursuant to an Assignment Agreement,
of an amount equal to such Lender's Pro Rata Share of all unpaid principal and
interest owing to the Lenders and all accrued but unpaid fees and other costs
and expenses payable with respect to its Pro Rata Share. The Agent shall give
written notice to the Borrower of any such assignment.

                  Section 10.6 No Waiver; Remedies Cumulative. No failure or
delay on the part of the Agent or any Lender or any holder of a Note in
exercising any right, power or privilege hereunder or under any other Loan
Document and no course of dealing between any Loan Party and the Agent or any
Lender or the holder of any Note shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege hereunder or
under any other Loan Document preclude any other or further exercise thereof of
the exercise of any other right, power or privilege hereunder or thereunder. The
rights and remedies herein expressly provided are cumulative and not exclusive
of any rights or remedies which the Agent or any Lender or the holder of any
Note would otherwise have. No notice to or demand on any Loan Party in any case
shall entitle any Loan Party to any other or further notice or demand in similar
or other circumstances or constitute a waiver of the rights of the Agent, the
Lenders or the holder of any Note to any other or further action in any
circumstances without notice or demand.

                  Section 10.7 Sharing of Payments. Each of the Lenders agrees
that if it should receive any amount hereunder (whether by voluntary payment, by
realization upon security, by the exercise of the right of setoff or banker's
lien, by counterclaim or cross action, by the enforcement of any right under the
Loan Documents, or otherwise) which is applicable to the payment of any
Obligations, of a sum which with respect to the related sum or sums received by
other Lenders is in a greater proportion than the total of such Obligation then
owed and due to such Lender bears to the total of such Obligation then owed and
due to all of the Lenders immediately prior to such receipt, then such Lender
receiving such excess payment shall purchase for cash without recourse or
warranty from the other Lenders an interest in such Obligations owing to such
Lenders in such amount as shall result in a proportional participation by all of
the Lenders in such amount; PROVIDED that if all or any portion of such excess
amount is thereafter recovered from such Lender, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.

                                       91



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                  Section 10.8 Application of Collateral Proceeds. The Agent
shall, unless otherwise specified at the direction of the Required Lenders which
direction shall be consistent with the last sentence of this Section 10.8, apply
all proceeds of Collateral in the following order:

                                             (A)      first, to pay Obligations
                  in respect of any fees, expense reimbursements or indemnities
                  then due to the Agent;

                                             (B)      second, to pay Obligations
                  in respect of any fees, expenses, reimbursements or
                  indemnities then due to the Lenders and the Issuer;

                                             (C)      third, to pay interest due
                  in respect of the Loans and L/C Obligations;

                                             (D)      fourth, to the ratable
                  payment of principal outstanding on the Loans, Obligations for
                  unreimbursed drawings under all Letters of Credit and net
                  termination amounts payable in respect of Rate Hedging
                  Obligations (with the order of application to the installments
                  of any particular Loan, Obligation for any unreimbursed
                  drawing under any Letter of Credit or net termination amount
                  payable in respect of Rate Hedging Obligation to be determined
                  by the Agent in its sole discretion);

                                             (E)      fifth, to provide required
                  cash collateral if any pursuant to Section 8.2; and

                                             (F)      sixth, to the ratable
                  payment of all other Obligations.

The order of priority set forth in this Section 10.8 and the related provisions
of this Agreement are set forth solely to determine the rights and priorities of
the Agent and the Lenders as among themselves. The order of priority set forth
in clauses (B) through (F) of this Section 10.8 may at any time and from time to
time be changed with the consent of 100% of the Lenders without necessity of
notice to or consent of or approval by the Borrower, or any other Person. The
order of priority set forth in clause (A) of this Section 10.8 may be changed
only with the prior written consent of the Agent.

                  Section 10.9 Governing Law; Submission to Jurisdiction.

                           (a)      THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF
ILLINOIS (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS
OF LAW TO THE EXTENT SUCH PRINCIPLES WOULD REQUIRE THE APPLICATION OF THE LAWS
OF A JURISDICTION OTHER THAN THE STATE OF ILLINOIS).

                           (b)      Any legal action or proceeding with respect
to this Agreement or any other Loan Document and any action for enforcement of
any judgment in respect thereof may be brought in the courts of the State of
Illinois or of the United States of America for the Northern District of
Illinois, and, by execution and delivery of this Agreement, the Borrower hereby
accepts for itself and in respect of its property, generally and
unconditionally, the non-exclusive jurisdiction

                                       92



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

of the aforesaid courts and appellate courts. The Borrower irrevocably consents
to the service of process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, the Borrower at its address set forth opposite its
signature below. The Borrower hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Agreement or any other
Loan Document brought in the courts referred to above and hereby further
irrevocably waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum. Nothing herein shall affect the right of the Agent, any
Lender or any holder of a Note to serve process in any other manner permitted by
law or to commence legal proceedings or otherwise proceed against the Borrower
in any other jurisdiction.

                  Section 10.10 Counterparts. This Agreement may be executed in
any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.

                  Section 10.11 Financial Advisor. The Borrower and each Lender
agrees and acknowledges that the Agent may, in its sole discretion, from time to
time retain a financial advisor (the "FINANCIAL ADVISOR") for the purpose of
advising the Agent and the Lenders as to the financial condition of the Borrower
and its Subsidiaries and such other matters related to the facility provided and
contemplated hereunder as the Agent and the Lenders may desire. The Borrower
agrees to pay all reasonable fees, costs and out-of-pocket expenses of the
Financial Advisor in connection with the performance of its duties under this
Section 10.11 and to indemnify the Financial Advisor in accordance with Section
10.1(c) hereof.

                  Section 10.12 Amendment and Restatement. This Agreement amends
and restates in its entirety the Original Credit Agreement. Upon the
effectiveness of this Agreement, the terms and provisions of the Original Credit
Agreement shall, subject to this Section 10.12, be superseded hereby.
Notwithstanding the amendment and restatement of the Original Credit Agreement
by this Agreement, the Borrower shall continue to be liable to the Lenders party
to the Original Credit Agreement and the Agent with respect to agreements on the
part of the Borrower under the Original Credit Agreement to indemnify any of
such Lenders or the Agent in connection with events or conditions arising or
existing prior to the date hereof, including, but not limited to, those events
and conditions set forth in Section 10 thereof. This Agreement is given in
substitution for the Original Credit Agreement. Upon the effectiveness of this
Agreement, each reference to the Original Credit Agreement in any other
document, instrument or agreement executed and/or delivered in connection
therewith shall mean and be a reference to this Agreement. This Agreement
amends, restates and supersedes only the Original Credit Agreement. This
Agreement is not a novation. Nothing contained herein or in any of the other
Loan Documents, unless expressly herein or therein stated to the contrary, is
intended to amend, modify or otherwise affect any other instrument, document or
agreement executed and/or delivered in connection with the Original Credit
Agreement. The principal amounts of Loans outstanding under the Original Credit
Agreement immediately prior to giving effect to this Agreement to each Lender
that is a party thereto shall be deemed to be Loans made by that Lender
hereunder. Each Letter of Credit issued under the Original Credit Agreement and
outstanding immediately prior to giving effect to this Agreement shall be deemed
to be a Letter of Credit hereunder. To the extent necessary, the Agent shall
reallocate such outstanding Revolving Loans and the participation interests in
such outstanding Letters of Credit ratably among the

                                       93



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

Revolving Lenders after giving effect to this Agreement so that each Revolving
Lender's Pro Rata Share of such Letters of Credit is based on the Total
Revolving Loan Commitment hereunder.

                  Section 10.13 Headings Descriptive. The headings of the
several Sections and subsections of this Agreement are inserted for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Agreement.

                  Section 10.14 Marshalling; Recapture. Neither the Agent nor
any Lender shall be under any obligation to marshall any assets in favor of any
Loan Party or any other party or against or in payment of any or all of the
Obligations. To the extent any Lender receives any payment by or on behalf of
any Loan Party, which payment or any part thereof is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
such Loan Party or its estate, trustee, receiver, custodian or any other party
under any bankruptcy law, state or federal law, common law or equitable cause,
then to the extent of such payment or repayment, the obligation or part thereof
which has been paid, reduced or satisfied by the amount so repaid shall be
reinstated by the amount so repaid and shall be included within the liabilities
of such Loan Party to such Lender as of the date such initial payment, reduction
or satisfaction occurred.

                  Section 10.15 Severability. In case any provision in or
obligation under this Agreement or the Notes or the other Loan Documents shall
be invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.

                  Section 10.16 Independence of Covenants. All covenants
hereunder shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitations of, another
covenant shall not avoid the occurrence of a Default or Event of Default if such
action is taken or condition exists.

                  Section 10.17 Survival. All indemnities set forth herein
including, without limitation, in Sections 2.16, 2.17, 2.18, 2.19, 9.7 and 10.1
shall survive the execution and delivery of this Agreement and the Notes and the
making and repayment of the Loans hereunder.

                  Section 10.18 Domicile of Loans. Each Lender may transfer and
carry its Loans at, to or for the account of any branch office, subsidiary or
affiliate of such Lender.

                  Section 10.19 Limitation of Liability. No claim may be made by
any Loan Party or any other Person against the Agent or any Lender or the
Affiliates, directors, officers, employees, attorneys or agent of any of them
for any special, indirect, consequential or punitive damages in respect of any
claim for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this Agreement or any other
Transactions, or any act, omission or event occurring in connection therewith;
and each Loan Party hereby waives, releases and agrees not to sue upon any claim
for any such damages, whether or not accrued and whether or not known or
suspected to exist in its favor.

                  Section 10.20 Calculations; Computations. The financial
statements to be furnished to the Agent and the Lenders pursuant hereto shall be
made and prepared in accordance with GAAP consistently applied throughout the
periods involved and consistent with GAAP as used in the

                                       94



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

preparation of the financial statements referred to in Section 5.5, and, except
as otherwise specifically provided herein, all computations determining
compliance with Section 7.1 hereof shall utilize GAAP.

                  Section 10.21 WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED
BY APPLICABLE LAW, EACH OF THE BORROWER, THE AGENT AND THE LENDERS HEREBY
IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT OR ANY MATTER ARISING HEREUNDER OR THEREUNDER.

                  Section 10.22 References. Unless otherwise expressly specified
herein, all references to "Article," "Section,""Schedule," or "Exhibit" shall
mean articles and sections of, and schedules and exhibits to, this Agreement.

                            (Signature Pages Follow)

                                       95



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

         IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.

                                            CKE RESTAURANTS, INC.

                                            By: _______________________________
                                            Print Name:
                                            Title:

                                            Address:  6307 Carpinteria Avenue
                                                      Suite A
                                                      Carpinteria, CA 93013

                                                      Attn:      General Counsel

                                                      Telephone: (714) 774-5796
                                                      Telecopy:  (714) 520-4485

                                      S-1



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                                             BNP PARIBAS,
                                             as Agent and as a Lender

                                             By: _______________________________
                                             Print Name: Clark C. King III
                                             Title: Managing Director

                                             By: _______________________________
                                             Print Name:
                                             Title:

                                             Address: 209 S. LaSalle Street
                                                      Suite 500
                                                      Chicago, IL 60604

                                                      Attn: Clark C. King III
                                                      Telephone: (312) 977-2254
                                                      Telecopy: (312) 977-1380

                                                      with a copy to:

                                                      Maureen B. Keating
                                                      BNP Paribas
                                                      787 Seventh Avenue
                                                      New York, NY 10019-6016
                                                      Telephone: (212) 841-2286
                                                      Telecopy: (212) 841-2275

                                      S-2



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                                             FIRST BANK & TRUST

                                             By: _______________________________
                                             Print     Name: Nic Goeres
                                             Title:    Vice President

                                             Address:  4301 MacArthur Blvd.
                                                       Newport Beach, CA  92660

                                                       Attn: Nic Goeres

                                                       Telephone: (949) 475-6320
                                                       Telecopy:  (949) 851-8747

                                      S-3



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                                         WELLS FARGO BANK, N.A.

                                         By: _______________________________
                                         Print      Name:  Stephen Amendt
                                         Title:     Vice  President

                                         Address:   2030 Main Street
                                                    Suite 900
                                                    Irvine, CA  92614

                                         Attn:      Stephen Amendt

                                                    Telephone: (949) 251-4195
                                                    Telecopy:  (949) 261-1830

                                      S-4



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                                             FLEET NATIONAL BANK

                                             By: _______________________________
                                             Print Name:
                                             Title:

                                             Address:

                                             Attn: Heidi Tyng

                                                   Telephone: (617) 434-1087
                                                   Telecopy:  (617) 434-0637

                                      S-5



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                                          U.S. BANK NATIONAL ASSOCIATION

                                          By: _______________________________
                                          Print Name: Janet E. Jordan
                                          Title:      Vice President

                                          Address:    555 S. W. Oak Street, PL-4
                                                      Portland, OR  97204

                                          Attn:       Janet Jordan

                                                      Telephone: (503) 275-5871
                                                      Telecopy:  (503) 275-5428

                                      S-6



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                                           UNION BANK OF CALIFORNIA, N.A.

                                           By: _______________________________
                                           Print Name: Stephen W. Dunne
                                           Title:      Vice President

                                           Address:    18300 Von Karman Ave.
                                                       Suite 310
                                                       Irvine, CA 92612

                                           Attn:       Stephen W. Dunne

                                                       Telephone: (949) 553-6846
                                                       Telecopy:  (949) 553-7122

                                      S-7



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                                             ALLIED IRISH BANKS, P.L.C.

                                             By: _______________________________
                                             Print Name:
                                             Title:

                                             Address:  Bankcentre,
                                                       Ballsbridge
                                                       Dublin 4, Ireland

                                             Attn:     John Timoney

                                                       Telephone: (212) 515-6762
                                                       Telecopy:  (212) 339-8325

                                      S-8



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                                             CITICORP NORTH AMERICA, INC.

                                             By: _______________________________
                                             Print Name:
                                             Title:

                                             Address:  390 Greenwich Street
                                                       1st Floor
                                                       New York, NY 10013

                                             Attn:     Dan Brill

                                                       Telephone: (212) 723-6614
                                                       Telecopy:  (212) 723-8547

                                      S-9



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                                             EAST WEST BANK

                                             By: _______________________________
                                             Print Name:
                                             Title:

                                             Address: 415 Huntington Drive
                                                      San Marino, CA 91108

                                             Attn:    Nancy A. Moore

                                                      Telephone: (626) 685-3636
                                                      Telecopy:  (626) 799-3167

                                      S-10



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT

                                             TORONTO DOMINION (NEW YORK) INC.

                                             By: _______________________________
                                             Print Name:
                                             Title:

                                             Address: 909 Fannin
                                                      Suite 1700
                                                      Houston, TX 77010

                                             Attn:    Stacey, L. Malek

                                                      Telephone: (713) 653-8215
                                                      Telecopy:  (713) 652-0914

                                      S-11



                        Schedule 1.1 to Credit Agreement

                            Lenders and Commitments



     Name of Lender                                     Revolving Loan Commitment
     ---------------                                    -------------------------
                                                     
First Bank and Trust                                         $20,000,000.00
Fleet National Bank                                          $30,000,000.00
BNP Paribas                                                  $25,000,000.00
U.S. Bank National Association                               $15,000,000.00
Wells Fargo Bank, N.A.                                       $25,000,000.00
Union Bank of California                                     $15,000,000.00
Allied Irish Bank                                            $10,000,000.00
Citicorp North America, Inc.                                 $ 5,000,000.00
East West Bank                                               $ 5,000,000.00




     Name of Lender                                      Term Loan Commitment
     --------------                                      --------------------
                                                      
BNP Paribas                                                  $23,000,000.00
Toronto Dominion (New York) Inc.                             $ 2,000,000.00




                                SCHEDULE 4.1(b)

                                 Local Counsel



     State                                Counsel
- -----------------------------------------------------------------
                        
Delaware & California      Stradling Yocca Carlson & Rauth
- -----------------------------------------------------------------
North Carolina             Kilpatrick Stockton
- -----------------------------------------------------------------
Alabama                    Johnston Barton Proctor & Powell LLP
- -----------------------------------------------------------------
Minnesota                  Larkin, Hoffman, Daly & Lindgren, Ltd.
- -----------------------------------------------------------------
Nevada                     Schreck Brignone Godfrey
- -----------------------------------------------------------------


                                  Sch 4.2(b)-1





                                     ANNEX I



DOMESTIC LENDING OFFICE                         EURODOLLAR LENDING OFFICE
- ---------------------------------------------------------------------------
                                          
BNP Paribas                                  BNP Paribas
209 S. LaSalle Street                        209 S. LaSalle Street
Suite 500                                    Suite 500
Chicago, IL 60604                            Chicago, IL 60604
Telephone: (312) 977-2200                    Telephone: (312) 977-2200
Telecopy: (312) 977-1380                     Telecopy: (312) 977-1380

- ---------------------------------------------------------------------------
First Bank & Trust                           First Bank & Trust
4301 MacArthur Blvd.                         4301 MacArthur Blvd.
Newport Beach, CA  92660                     Newport Beach, CA  92660
Telephone: (949) 475-6320                    Telephone: (949) 475-6320
Telecopy: (949) 851-8747                     Telecopy: (949) 851-8747

- ---------------------------------------------------------------------------
Fleet National Bank                          Fleet National Bank
Mail Code:  MA DE  10008H                    Mail Code:  MA DE  10008H
100 Federal Street                           100 Federal Street
Boston, MA  02110                            Boston, MA 02110
Telephone: (617) 434-5777                    Telephone: (617) 434-5777
Telecopy: (617) 434-9933                     Telecopy: (617) 434-9933

- ---------------------------------------------------------------------------
U.S. Bank National Association               U.S. Bank National Association
555 S. W. Oak Street, PL-4                   555 S. W. Oak Street, PL-4
Portland, OR 97204                           Portland, OR 97204
Telephone: (503) 275-5871                    Telephone: (503) 275-5871
Telecopy: (503) 275-5428                     Telecopy: (503) 275-5428

- ---------------------------------------------------------------------------
Wells Fargo Bank, N.A.                       Wells Fargo Bank, N.A.
2030 Main Street                             2030 Main Street
Suite 900                                    Suite 900
Irvine, CA  92614                            Irvine, CA  92614
Telephone: (949) 251-4156                    Telephone: (949) 251-4156
Telecopy: (949) 261-1830                     Telecopy: (949) 261-1830

- ---------------------------------------------------------------------------
Union Bank of California, N.A.               Union Bank of California, N.A.
1980 Saturn Street                           1980 Saturn Street
Monterey Park, CA                            Monterey Park, CA
Telephone: (323) 720 2870                    Telephone: (323) 720 2870
Telecopy: (323) 720-6198                     Telecopy: (323) 720-6198

- ---------------------------------------------------------------------------


                                    Annex I-2



                                 CKE FIFTH AMENDED AND RESTATED CREDIT AGREEMENT



DOMESTIC LENDING OFFICE                         EURODOLLAR LENDING OFFICE
- ------------------------------------------------------------------------------
                                          
Citicorp North America, Inc.                 Citicorp North America, Inc.
2 Penns Way                                  2 Penns Way
Suite 110                                    Suite 110
New Castle, DE 19720                         New Castle, DE 19720
Telephone: (213) 816-7077                    Telephone: (213) 816-7077
Telecopy: (213) 816-2021                     Telecopy: (213) 816-2021

- ------------------------------------------------------------------------------
East West Bank                               East West Bank
407 West Valley Blvd.                        407 West Valley Blvd.
Alhambra, CA 91803                           Alhambra, CA 91803
Telephone: (626) 300-2982                    Telephone: (626) 300-2982
Telecopy: (626) 282-6497                     Telecopy: (626) 282-6497

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Toronto Dominion (New York), Inc.            Toronto Dominion (New York), Inc.
909 Fannin                                   909 Fannin
Suite 1700                                   Suite 1700
Houston, TX 77010                            Houston, TX 77010
Telephone: (713) 653-8200                    Telephone: (713) 653-8200
Telecopy: (713) 951-9921                     Telecopy: (713) 951-9921

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Allied Irish Banks, p.l.c.                   Allied Irish Banks, p.l.c.
Business Support Unit                        Business Support Unit
AIB Bankcentre                               AIB Bankcentre
Ballsbridge                                  Ballsbridge
Dublin 4, Ireland                            Dublin 4, Ireland
Telephone: +353 1 641 6632                   Telephone:  +353 1 641 6632
Telecopier: +353 1 608 9795                  Telecopier:  +353 1 608 9795

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                                   Annex I-3

EX-31.1

Exhibit 31.1

EX-31.2

Exhibit 31.2

EX-32.1

Exhibit 32.1

EX-32.2

Exhibit 32.2