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 quarterly period ended May 17, 2004

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	33-0602639
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)
6307 Carpinteria Avenue, Ste. A, Carpinteria, CA	93013
(Address of Principal Executive Offices)	(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 Exchange Act). Yes x No o

     As of June 16, 2004, 57,509,524 shares of the Registrant’s Common Stock were outstanding.

CKE RESTAURANTS, INC. AND SUBSIDIARIES

INDEX

		Page
	Part I. Financial Information
Item 1	Condensed Consolidated Financial Statements (unaudited):
	Condensed Consolidated Balance Sheets as of May 17, 2004 and January 31, 2004	3
	Condensed Consolidated Statements of Operations for the sixteen weeks ended May 17, 2004 and May 19, 2003	4
	Condensed Consolidated Statement of Stockholders’ Equity for the sixteen weeks ended May 17, 2004	5
	Condensed Consolidated Statements of Cash Flows for the sixteen weeks ended May 17, 2004 and May 19, 2003	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3	Quantitative and Qualitative Disclosures about Market Risk	45
Item 4	Controls and Procedures	46
	Part II. Other Information
Item 1	Legal Proceedings	47
Item 2	Changes in Securities and Use of Proceeds	47
Item 6	Exhibits and Reports on Form 8-K	48
	Signatures	49
EXHIBIT 10.57
EXHIBIT 10.58
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

2

PART 1. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CKE RESTAURANTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except par values)
(Unaudited)

	May 17, 2004			January 31, 2004
ASSETS
Current assets:
Cash and cash equivalents	$	42,740		$	54,355
Accounts receivable, net		22,177			26,729
Related party trade receivables		6,960			7,991
Inventories		18,981			18,492
Prepaid expenses		9,847			15,589
Assets held for sale		18,020			18,760
Advertising fund assets, restricted		19,438			—
Other current assets		1,626			1,656
Total current assets		139,789			143,572
Notes receivable		2,792			2,317
Property and equipment, net		510,688			518,881
Property under capital leases, net		43,297			46,382
Goodwill		22,649			22,649
Other assets		36,772			39,522
Total assets	$	755,987		$	773,323
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of bank indebtedness and other long-term debt	$	2,383		$	26,843
Current portion of capital lease obligations		6,007			7,042
Accounts payable		54,284			47,592
Advertising fund liabilities		19,438			—
Other current liabilities		93,211			107,439
Total current liabilities		175,323			188,916
Bank indebtedness and other long-term debt, less current portion		10,555			22,428
Senior subordinated notes		200,000			200,000
Convertible subordinated notes due 2023		105,000			105,000
Capital lease obligations, less current portion		54,801			57,111
Other long-term liabilities		54,957			53,636
Total liabilities		600,636			627,091
Stockholders’ equity:
Preferred stock, $.01 par value; 5,000,000 shares authorized; none issued or outstanding		—			—
Common stock, $.01 par value; 100,000,000 shares authorized; 59,368,000 shares issued and 57,464,000 shares outstanding at May 17, 2004; 59,216,000 shares issued and 57,631,000 shares outstanding at January 31, 2004		593			592
Additional paid-in capital		465,444			464,689
Officer and non-employee director notes receivable		(2,491	)		(2,530	)
Accumulated deficit		(294,435	)		(306,113	)
Treasury stock at cost, 1,904,000 and 1,585,000 shares at May 17, 2004 and January 31, 2004, respectively		(13,760	)		(10,406	)
Total stockholders’ equity		155,351			146,232
Total liabilities and stockholders’ equity	$	755,987		$	773,323

See Accompanying Notes to Condensed Consolidated Financial Statements

3

CKE RESTAURANTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

	Sixteen Weeks Ended
	May 17, 2004			May 19, 2003
Revenue:
Company-operated restaurants	$	365,871		$	339,042
Franchised and licensed restaurants and other		89,448			80,516
Total revenue		455,319			419,558
Operating costs and expenses:
Restaurant operations:
Food and packaging		105,724			100,097
Payroll and other employee benefit expenses		112,595			112,635
Occupancy and other operating expenses		79,303			79,021
		297,622			291,753
Franchised and licensed restaurants and other		66,986			64,909
Advertising expenses		22,264			21,013
General and administrative expenses		37,784			31,492
Facility action charges, net		7,438			1,062
Total operating costs and expenses		432,094			410,229
Operating income		23,225			9,329
Interest expense		(11,335	)		(12,176	)
Other income (expense), net		220			(636	)
Income (loss) before income taxes and discontinued operations		12,110			(3,483	)
Income tax expense		269			219
Income (loss) from continuing operations		11,841			(3,702	)
Loss from operations of discontinued segment (net of income tax benefit of $0 and $1 for the sixteen-week periods ended May 17, 2004 and May 19, 2003, respectively)		(163	)		(2,114	)
Net income (loss)	$	11,678		$	(5,816	)
Basic income (loss) per common share:
Continuing operations	$	.21		$	(0.06	)
Discontinued operations		(.01	)		(0.04	)
Net income (loss)	$	.20		$	(0.10	)
Diluted income (loss) per common share:
Continuing operations	$	.20		$	(0.06	)
Discontinued operations		—			(0.04	)
Net income (loss)	$	.20		$	(0.10	)
Weighted-average common shares outstanding:
Basic		57,605			57,395
Dilutive effect of stock options, warrants and convertible notes		1,770			—
Diluted		59,375			57,395

See Accompanying Notes to Condensed Consolidated Financial Statements

4

CKE RESTAURANTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(In thousands)
(Unaudited)

	Sixteen Weeks Ended May 17, 2004
	Common Stock												Treasury Stock
							Officer and
	Number of				Additional		Non-Employee												Total
	Shares				Paid-In		Director Notes			Accumulated			Number of						Stockholders’
	Issued		Amount		Capital		Receivable			Deficit			Shares			Amount			Equity
Balance at January 31, 2004		59,216	$	592	$	464,689	$	(2,530	)	$	(306,113	)		(1,585	)	$	(10,406	)	$	146,232
Exercise of stock options		152		1		755		—			—			—			—			756
Collections on officer and non-employee director notes receivable		—		—		—		39			—			—			—			39
Repurchase of common stock		—		—		—		—			—			(319	)		(3,354	)		(3,354	)
Net income		—		—		—		—			11,678			—			—			11,678
Balance at May 17, 2004		59,368	$	593	$	465,444	$	(2,491	)	$	(294,435	)		(1,904	)	$	(13,760	)	$	155,351

See Accompanying Notes to Condensed Consolidated Financial Statements

5

CKE RESTAURANTS, INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Sixteen Weeks Ended
	May 17, 2004			May 19, 2003
Cash flow from operating activities:
Net income (loss)	$	11,678		$	(5,816	)
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation and amortization		19,582			19,045
Amortization of loan fees		1,042			1,413
(Recovery of) provision for losses on accounts and notes receivable		(242	)		2,064
Loss (gain) on investments, sale of property and equipment, capital leases and extinguishment of debts		1,298			(217	)
Facility action charges, net		7,438			1,062
Other non-cash credits		(666	)		(18	)
Net change in refundable income taxes		4			142
Change in estimated liability for closing restaurants and estimated liability for self-insurance		(3,508	)		(3,236	)
Net change in accounts receivable, inventories, prepaid expenses and other current assets		10,015			11,002
Net change in accounts payable and other current liabilities		607			(9,049	)
Loss from operations of discontinued segment		163			2,114
Cash received from (provided to) discontinued operation		28			(165	)
Net cash provided by operating activities		47,439			18,341
Cash flow from investing activities:
Purchases of property and equipment		(16,317	)		(15,087	)
Proceeds from sale of property and equipment		6,557			3,172
Collections on notes receivable and net change in related party receivables		702			630
Increase in cash upon consolidation of variable interest entity		100			—
Net change in other assets		111			172
Net cash used in investing activities		(8,847	)		(11,113	)
Cash flow from financing activities:
Net change in bank overdraft		(8,744	)		(15,225	)
Borrowings under credit facility		—			106,000
Repayments of borrowings under credit facility		(13,926	)		(95,000	)
Repayments of long-term debt		(22,319	)		—
Repayments of capital lease obligations		(2,566	)		(3,129	)
Collections on officer and non-employee director notes receivable		39			—
Payment of deferred financing costs		(12	)		(5	)
Net change in other long-term liabilities		(81	)		532
Repurchase of common stock		(3,354	)		—
Proceeds from exercise of stock options		756			930
Net cash used in financing activities		(50,207	)		(5,897	)
Net (decrease) increase in cash and cash equivalents		(11,615	)		1,331
Cash and cash equivalents at beginning of period		54,355			18,440
Cash and cash equivalents at end of period	$	42,740		$	19,771
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	(14,949	)	$	(14,964	)
Income taxes	$	(2,963	)	$	(190	)
Non-cash investing and financing activities:
Gain recognized on sale and leaseback transactions	$	94		$	94
Consolidation of advertising funds	$	19,438		$	—

See Accompanying Notes to Condensed Consolidated Financial Statement

6

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

NOTE (1) BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS

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 May 17, 2004, the Company’s system-wide restaurant portfolio consisted of:

	Carl’s Jr.		Hardee’s		La Salsa		Other		Total
Company-operated		428		692		63		4		1,187
Franchised and licensed		588		1,389		43		15		2,035
Total		1,016		2,081		106		19		3,222

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 26, 2004. 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 Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure (“SFAS 148”). SFAS 148 amended the disclosure requirements of SFAS No. 123, Accounting for Stock-Based Compensation (“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. Disclosures required by this standard are included in the notes to these condensed consolidated financial statements.

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, except per share amounts)

The assumptions used for grants in the sixteen week periods ended May 17, 2004, and May 19, 2003, are as follows:

	May 17, 2004			May 19, 2003
Annual dividends	$	—		$	—
Expected volatility		73.2	%		56.4	%
Risk-free interest rate (matched to the expected term of the outstanding option)		3.83	%		4.25	%
Expected life of all options outstanding (years)		5.5			6.7
Weighted-average fair value of each option granted	$	5.65		$	2.63

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
	Sixteen Weeks Ended			Sixteen Weeks Ended
Change in Assumption	May 17, 2004			May 19, 2003
10% increase in expected volatility	$	0.48		$	0.28
1% increase in risk-free interest rate		0.09			0.06
1 year increase in expected life of all options outstanding		0.37			0.16
10% decrease in expected volatility		(0.53	)		(0.31	)
1% decrease in risk-free interest rate		(0.09	)		(0.07	)
1 year decrease in expected life of all options outstanding		(0.44	)		(0.18	)

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:

	Sixteen Weeks Ended
	May 17, 2004			May 19, 2003
Net income (loss), as reported	$	11,678		$	(5,816	)
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		(1,114	)		(670	)
Net income (loss) — pro forma	$	10,564		$	(6,486	)
Net income (loss) per common share:
Basic — as reported	$	.20		$	(0.10	)
Basic — pro forma		.18			(0.11	)
Diluted — as reported		.20			(0.10	)
Diluted — pro forma		.18			(0.11	)

NOTE (2) ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS

On May 17, 2004, the Company completed adoption of FASB Interpretation No. 46, Consolidation of Variable Interest Entities — an interpretation of Accounting Research Bulletin (“ARB”) No. 51 (“FIN 46”).

The FASB issued FIN 46 in January 2003. This Interpretation is intended to clarify the application of the majority voting interest requirement of ARB No. 51, Consolidated Financial Statements, to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 requires the consolidation of these entities, known as variable interest entities (“VIEs”), 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 may be applied prospectively with a cumulative-effect adjustment as of the date on which it is first applied or by restating previously issued financial statements for one or more years with a cumulative-effect adjustment as of the beginning

8

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

of the first year restated. FIN 46 was applicable immediately to variable interests in a variable interest entity (“VIE”) created after January 31, 2003.

During the course of 2003, the FASB proposed modifications to FIN 46 and issued FASB Staff Positions (“FSPs”) that changed and clarified FIN 46. These modifications and FSPs were subsequently incorporated into FIN 46 (revised) (“FIN 46R”), which was issued on December 23, 2003, and replaced FIN 46.

FIN 46R excludes operating businesses, as defined, from its scope subject to four conditions, and states the provisions of FIN 46R need not be applied to interests in VIEs created or obtained prior to December 31, 2003, if a company is unable, subject to making and continuing to make an exhaustive effort, to obtain the information necessary to determine whether the entity is a VIE, determine whether the Company is the VIE’s primary beneficiary or perform the accounting required to consolidate the VIE.

The principal entities in which the Company possesses a variable interest include franchise entities, which operate its franchised restaurants. The Company does not possess any ownership interests in its franchisees. Additionally, the Company generally does not provide financial support to its franchisees in a typical franchise relationship. Also, the Company’s franchise agreements currently do not require its franchisees to provide the timely financial information necessary to apply the provisions of FIN 46R to its franchisees.

Upon the adoption of FIN 46R, the Company consolidated one franchise entity that operates six Hardee’s restaurants. The Company subleases to this franchise entity all of its six operating locations and substantially all of its operating equipment, and this franchise entity received no equity contribution from its principals upon its inception. Because the principals did not invest a significant amount of equity, the legal entity within which this franchise operates is considered to not be adequately capitalized and, as a result, is a VIE. Because of the relatively significant financial support it provides to this franchise, the Company determined it is the primary beneficiary of this VIE. The assets and liabilities of this entity included in the accompanying Condensed Consolidated Financial Statements as of May 17, 2004, are as follows:

ASSETS
Cash	$	100
Inventories		43
Property and equipment, net		3
Other assets		15
	$	161
LIABILITIES
Other current liabilities	$	125
Other long-term liabilities		36
	$	161

Although this franchise entity has been included in the Condensed Consolidated Financial Statements, the Company has no rights to the assets, nor does it have any obligation with respect to the liabilities, of this franchise entity. None of the Company’s assets serve as collateral for the creditors of this franchisee or any of the Company’s other franchisees.

There is also a portion of franchised restaurants that are VIEs for which the Company holds a significant variable interest, but for which the Company is not the primary beneficiary. The Company’s significant exposures related to these VIEs and other franchisees relate to the collection of amounts due the Company, which are collected weekly or monthly, guarantees of franchisee debt provided to third party lenders by the Company (see Note 10) and primary lease obligations or fee property ownership underlying sublease and lease arrangements the Company has with several of its franchisees, as more fully described in Note 10 herein and in Note 8 to the Company’s Consolidated Financial Statements presented in the Company’s Annual Report on Form 10-K for the fiscal year ended January 26, 2004.

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 has historically consolidated CJNAF into its financial statements on a net basis, whereby contributions from franchisees 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 (“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. Upon final adoption of FIN 46R on May 17, 2004, the Company consolidated all of the Hardee’s cooperative advertising funds, resulting in the inclusion of $19,438 of “advertising fund assets, restricted” and “advertising fund liabilities” in the Company’s consolidated balance sheet as of May 17, 2004. In future periods, the Hardee’s cooperative advertising funds will be reported in the Company’s statement of operations on a net basis, whereby contributions from franchisees will be recorded as offsets to the Company’s reported advertising expenses. The Company elected to apply FIN 46R prospectively and, upon final adoption thereof, had no cumulative-effect adjustment.

9

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

Advertising fund assets, restricted, and advertising fund liabilities as of May 17, 2004, consisted of the following:

ADVERTISING FUND ASSETS, RESTRICTED
Cash	$	14,880
Accounts and notes receivable, net		4,322
Other assets		236
	$	19,438
ADVERTISING FUND LIABILITIES
Accounts payable and other liabilities	$	9,420
Deferred obligations		10,018
	$	19,438

NOTE (3) INTANGIBLE ASSETS

The table below presents identifiable, definite-lived intangible assets as of May 17, 2004, and May 19, 2003:

			May 17, 2004							May 19, 2003
	Gross					Net		Gross					Net
Intangible	Carrying		Accumulated			Carrying		Carrying		Accumulated			Carrying
Asset	Amount		Amortization			Amount		Amount		Amortization			Amount
Trademarks	$	17,159	$	(1,881	)	$	15,278	$	17,159	$	(1,023	)	$	16,136
Franchises		1,780		(196	)		1,584		1,780		(107	)		1,673
Favorable lease agreements		9,455		(3,919	)		5,536		17,326		(9,563	)		7,763
	$	28,394	$	(5,996	)	$	22,398	$	36,265	$	(10,693	)	$	25,572

Amortization expense related to identifiable definite-lived intangible assets was $687 and $565 for the sixteen week periods ended May 17, 2004, and May 19, 2003, respectively. These intangible assets are amortized over periods of 6-20 years and are included in Other Assets in the Condensed Consolidated Balance Sheets.

NOTE (4) INDEBTEDNESS AND INTEREST EXPENSE

As of May 17, 2004, the Company had outstanding $200,000 aggregate principal amount of 9 1/8% Senior Subordinated Notes due 2009 (“Senior Notes”). The indenture relating to the Senior Notes limits the Company’s ability (and the ability of its subsidiaries) to incur indebtedness to an amount not greater than the senior debt outstanding when the Company issued the Senior Notes, less any contractually required permanent reductions. The indenture also imposes certain restrictions on the Company’s ability (and the ability of its subsidiaries) to pay dividends on, redeem or repurchase capital stock, make restricted payments (as defined in the agreement) over a specified amount, make investments, incur liens on assets, sell assets other than in the ordinary course of business, or enter into certain transactions with affiliates. The Senior Notes represent unsecured general obligations subordinate in right of payment to the Company’s senior indebtedness, including its senior credit facility. All active subsidiaries of the Company are guarantors of the Senior Notes.

As of May 17, 2004, the Company’s senior credit facility (“Facility”) consisted of a $150,000 revolving credit facility and a $25,000 term loan. The $150,000 revolving credit facility included an $80,000 letter of credit sub-facility and was scheduled to mature November 15, 2006. As of May 17, 2004, the Company had cash borrowings outstanding under the term loan portion of the Facility of $10,137, outstanding letters of credit under the revolving portion of the Facility of $63,697 and availability under the revolving portion of the Facility of $86,303. The principal amount of the term loan portion of the Facility was scheduled to be repaid in quarterly installments maturing on April 1, 2008. The proceeds from the $25,000 term loan were used to repay and retire the Company’s 4.25% Convertible Subordinated Notes due 2004 (“2004 Convertible Notes”) during March 2004.

On April 1, 2004, the Company amended the Facility to allow it to repurchase up to $20,000 of its outstanding common stock. During the first quarter of fiscal 2005, the Company repurchased 319,000 shares of its common stock for $3,354 (market value, plus trading commissions) at various prices ranging from $9.93 to $11.00 per share.

10

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

The Facility contained financial performance covenants, which included a minimum EBITDA requirement, minimum fixed charge coverage ratio, minimum consolidated net worth requirements, maximum leverage ratios and capital expenditures and precluded the Company from paying dividends. The Company was in compliance with all covenants as of May 17, 2004.

On June 2, 2004, subsequent to the quarter end, the Company amended and restated the Facility to provide for a $380,000 senior secured credit facility consisting of a $150,000 revolving credit facility and a $230,000 term loan (“Amended Facility”). The revolving credit facility matures on May 1, 2007, and includes an $85,000 letter of credit sub-facility. The principal amount of the term loan will be repaid in quarterly installments, with a balloon payment of the remaining principal balance at maturity on July 2, 2008. The Amended Facility also requires term loan prepayments based upon an annual excess cash flow formula, as defined therein. Subject to certain conditions as defined in the Amended Facility, the maturity of the term loan may be extended to May 1, 2010. The Company used a portion of the proceeds from the $230,000 term loan to repay the balance of the existing Facility term loan. On June 2, 2004, the Company deposited $212,168 with the trustee for its Senior Notes, constituting all funds necessary to retire the Senior Notes obligations, and gave notice of redemption of the Senior Notes to occur on July 2, 2004. On July 2, 2004, the trustee will apply the depository amount to redeem the entire principal of $200,000 under the Senior Notes, and pay the Company’s optional redemption premium of $9,126 and accrued interest. The Company will also incur a charge of approximately $3,100 during its second fiscal quarter to write-off unamortized debt issuance costs associated with the Senior Notes.

The agreement underlying the Amended Facility includes certain restrictive covenants. Among other things, these covenants restrict the Company’s ability to incur debt, incur liens on its assets, make any significant change in its corporate structure or the nature of its business, dispose of assets in the collateral pool securing the Amended Facility, prepay certain debt, engage in a change of control transaction without the member banks’ consents, pay dividends and make investments or acquisitions. The Amended Facility is collateralized by certain restaurant property deeds of trust. Currently, the applicable interest rate on the term loan is LIBOR plus 3.00%. The applicable interest rate on the revolving loan portion of the Amended Facility is LIBOR plus 2.75%. The Company also incurs fees on outstanding letters of credit under the Amended Facility at a rate equal to the applicable margin for LIBOR loans, which is currently 3.00% per annum.

Subject to the terms of the Amended Facility, the Company may make capital expenditures in the amount of $50,000 plus 80% of the amount of actual EBITDA (as defined in the Amended Facility) in excess of $110,000 during the current fiscal year and $45,000 plus 80% of the amount of actual EBITDA (as defined in the Amended Facility) in excess of $110,000 during each subsequent fiscal year. Additionally, in fiscal 2005 and thereafter, the Company may carry forward any unused capital expenditure amounts to the following year. The Amended Facility also permits the Company to repurchase its common stock in the amount of $27,000 plus a portion of excess cash flow and certain net asset sale proceeds (as defined in the Amended Facility) during the term of the Amended Facility.

Consistent with previous amendments and restatements, the Amended Facility contains financial performance covenants, which include a minimum EBITDA requirement, minimum fixed charge coverage ratio, maximum leverage ratios and capital expenditures and precludes the Company from paying dividends.

The Company was in compliance with the covenant requirements under its Senior Notes as of May 17, 2004. However, the incurrence of additional senior indebtedness under the Amended Facility on June 2, 2004, breached the limitation on additional indebtedness in the Senior Note indenture. The indenture allows the Company 30 days to cure this breach before the breach becomes a default. Upon repayment of the entire outstanding balance and the related optional redemption premium and accrued interest under the Senior Notes at the end of the notice period on July 2, 2004, the breached covenant will terminate within the 30-day cure period.

On September 29, 2003, the Company completed an offering of $105,000 of its 4% Convertible Subordinated Notes due 2023 (“2023 Convertible Notes’), and used nearly all of the net proceeds of the offering to repurchase $100,000 of the 2004 Convertible Notes. The 2023 Convertible Notes bear interest at 4.0% annually, are payable in semiannual installments due April 1 and October 1 each year, are unsecured general obligations of the Company,

11

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

contractually subordinate in right of payment to certain other Company obligations including the Facility (and the Amended Facility) and the Senior Notes. On October 1 of 2008, 2013 and 2018, the holders of the 2023 Convertible Notes have the right to require the Company to repurchase all or a portion of the notes at 100% of the face value plus accrued interest. The 2023 Convertible Notes are convertible into the Company’s common stock at a conversion rate of 112.4859 shares per $1,000 principal amount of the notes as follows: 1) at any time after the Company’s common stock has a closing sale price of more than 110% of the conversion price per share ($9.78 per share as of May 17, 2004) for at least 20 days in a period of 30 consecutive trading days ending on the last trading day of the calendar quarter; 2) in each of the five business days after any ten consecutive trading day period in which the trading price, as defined in the agreement, per $1,000 principal amount was less than 98% of the product of a) the average closing sale price of the common stock over the same ten day period and b) the number of shares of common stock issuable upon conversion of $1,000 principal amount of the 2023 Convertible Notes; or 3) during any period in which the 2023 Convertible Notes are a) rated below CCC by Standard & Poor’s Ratings Services or Caa1 by Moody’s Investor Services, b) no longer rated by either one of the aforementioned ratings services, or c) withdrawn or suspended from rating by one of the aforementioned services. The 2023 Convertible Notes were not convertible during the sixteen weeks ended May 17, 2004.

Interest expense consists of the following:

	Sixteen Weeks Ended
	May 17, 2004		May 19, 2003
Facility	$	426	$	482
Senior subordinated notes due 2009		5,615		5,615
Capital lease obligations		2,212		2,416
2004 Convertible subordinated notes		73		1,600
2023 Convertible subordinated notes		1,292		—
Amortization of loan fees		1,042		1,413
Letter of credit fees and other		675		650
Total interest expense	$	11,335	$	12,176

NOTE (5) FACILITY ACTION CHARGES, NET

In late fiscal 2000, the Company embarked on a refranchising initiative to reduce outstanding debt, increase the number of franchise-operated restaurants and close under-performing restaurants. The following transactions pertaining to these efforts have been recorded in the accompanying Condensed Consolidated Statements of Operations 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 values;
(iii)	restaurant closure costs (primarily reflecting the estimated liability to terminate leases);
(iv)	gains (losses) on the sale of restaurants and surplus properties; and
(v)	amortization of discount related to estimated liability for closing restaurants.

Quarterly, the Company evaluates the adequacy of its estimated liability for closing restaurants and subsidizing restaurant lease payments for franchisees and modifies the assumptions used based on actual results from selling surplus properties and terminating leases. The Company also assesses the carrying value of closed restaurant properties each quarter based on estimated property values obtained from a related party real estate broker. The Company closed 30 Hardee’s, no Carl’s Jr. and no La Salsa company-operated restaurants during the sixteen weeks ended May 17, 2004. The Company closed three Hardee’s, no Carl’s Jr. and two La Salsa company-operated

12

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

restaurants during the sixteen weeks ended May 19, 2003. During the sixteen weeks ended May 17, 2004, the Company identified six Hardee’s, three Carl’s Jr. and three La Salsa company-operated restaurants that are still in operation, but whose estimated fair values did not support the related net asset values and, accordingly, an impairment charge was recorded.

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

	Sixteen Weeks Ended
	May 17, 2004			May 19, 2003
Hardee’s
New decisions regarding closing restaurants	$	4,078		$	169
(Favorable)/unfavorable dispositions of leased and fee surplus properties, net		154			(1,061	)
Impairment of assets to be disposed of		65			1,230
Impairment of assets to be held and used		826			122
(Gain) loss on sales of restaurants and surplus properties, net		(811	)		265
Amortization of discount related to estimated liability for closing restaurants		336			731
		4,648			1,456
Carl’s Jr.
New decisions regarding closing restaurants		—			14
Favorable dispositions of leased and fee surplus properties, net		(24	)		—
Impairment of assets to be held and used		1,623			562
Gain on sales of restaurants and surplus properties, net		(175	)		(368	)
Amortization of discount related to estimated liability for closing restaurants		115			122
		1,539			330
La Salsa and Other
New decisions regarding closing restaurants		800			—
(Favorable)/unfavorable dispositions of leased and fee surplus properties, net		39			(655	)
Impairment of assets to be held and used		405			—
(Gain) loss on sales of restaurants and surplus properties, net		6			(69	)
Amortization of discount related to estimated liability for closing restaurants		1			—
		1,251			(724	)
Total
New decisions regarding closing restaurants		4,878			183
(Favorable)/unfavorable dispositions of leased and fee surplus properties, net		169			(1,716	)
Impairment of assets to be disposed of		65			1,230
Impairment of assets to be held and used		2,854			684
Gain on sales of restaurants and surplus properties, net		(980	)		(172	)
Amortization of discount related to estimated liability for closing restaurants		452			853
	$	7,438		$	1,062

Facility action charges for new decisions regarding closing restaurants include (i) $2,628 of provisions associated with 28 Hardee’s restaurants the Company closed during the sixteen weeks ended May 17, 2004, for which the Company had made the decision to close during the fourth quarter of fiscal 2004; and (ii) $1,043 for six lease obligations, for which the Company remained liable, associated with the bankruptcy filing of a Hardee’s franchisee during December 2003.

13

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

The following table summarizes the activity in the estimated liability for closing restaurants:

Balance at January 31, 2004	$	22,325
New decisions regarding closing restaurants		4,878
Usage		(3,523	)
Unfavorable dispositions of leased and fee surplus properties, net		169
Amortization of discount		452
Balance at May 17, 2004		24,301
Less current portion, included in Other Current Liabilities		8,551
Long-term portion, included in Other Long-Term Liabilities	$	15,750

     The following table summarizes trailing 13-period sales per restaurant and total fiscal quarter operating loss for the 30 Hardee’s restaurants the Company closed during the sixteen weeks ended May 17, 2004:

	Sixteen Weeks Ended
	May 17, 2004			May 19, 2003
Sales	$	526		$	549
Operating loss		(591	)		(1,109	)

NOTE (6) INCOME (LOSS) PER SHARE

The Company presents “basic” and “diluted” income (loss) per share. Basic income (loss) per share represents net income (loss) divided by weighted-average shares outstanding. Diluted income (loss) per share represents net income (loss) divided by weighted-average shares outstanding, including all potentially dilutive securities and excluding all potentially anti-dilutive securities.

The dilutive effect of stock options and warrants is determined using the “treasury stock” method, whereby exercise is assumed at the beginning of the reporting period and proceeds from such exercise are assumed to be used to purchase the Company’s common stock at the average market price during the period. The dilutive effect of convertible debt is determined using the “if-converted” method, whereby interest charges, net of taxes, applicable to the convertible debt are added back to income and the convertible debt is assumed to have been converted at the beginning of the reporting period, with the resulting common shares being included in weighted-average shares.

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:

	Sixteen Weeks Ended
	May 17, 2004		May 19, 2003
2004 Convertible Notes		—		2,791
2023 Convertible Notes		11,811		—
Stock Options		3,654		5,776
Warrants		982		982

Potentially dilutive shares related to the 2004 Convertible Notes for the sixteen weeks ended May 19, 2003 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 (see Note 4). Potentially dilutive stock options and warrants were excluded as their effect would have been anti-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

14

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

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, 2004).

	Carl’s Jr.		Hardee’s			La Salsa			Other		Total
Sixteen Weeks Ended May 17, 2004
Revenue	$	237,093	$	202,920		$	14,759		$	547	$	455,319
Operating income (loss)		21,506		3,977			(2,414	)		156		23,225
Income (loss) before income taxes and discontinued operations		20,196		(5,825	)		(2,454	)		193		12,110
Goodwill (as of May 17, 2004)		22,649		—			—			—		22,649
Sixteen Weeks Ended May 19, 2003
Revenue	$	218,723	$	187,137		$	13,139		$	559	$	419,558
Operating income (loss)		18,325		(9,331	)		(188	)		523		9,329
Income (loss) before income taxes and discontinued operations		17,211		(20,916	)		(193	)		415		(3,483	)
Goodwill (as of May 19, 2003)		22,649		—			34,059			—		56,708

NOTE (8) NET ASSETS HELD FOR SALE

In conjunction with the acquisition of Santa Barbara Restaurant Group, Inc. (“SBRG”) in fiscal 2003, 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 fourth quarter of fiscal 2004, the Company received a letter of intent for the sale of Timber Lodge and expects the sale to be completed during the second quarter of fiscal 2005.

Assets held for sale as of May 17, 2004, consisted of the following:

Assets held for sale:
Total assets of Timber Lodge	$	16,490
Other surplus property		1,530
	$	18,020

Net assets of Timber Lodge as of May 17, 2004, consisted of the following:

ASSETS
Current assets	$	1,582
Property and equipment, net		8,508
Other assets		6,400
Total assets		16,490
LIABILITIES
Current liabilities		6,323
Other long-term liabilities		1,674
Total liabilities		7,997
NET ASSETS	$	8,493

Total liabilities of Timber Lodge are included in other current liabilities in the accompanying Condensed Consolidated Balance Sheets.

15

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

The results of Timber Lodge included in the accompanying Condensed Consolidated Statements of Operations as discontinued operations for the sixteen week periods ended May 17, 2004, and May 19, 2003, are as follows:

	Sixteen Weeks Ended
	May 17,			May 19,
	2004			2003
Revenue	$	13,369		$	14,237
Operating loss		(157	)		(2,102	)
Interest expense		6			13
Income tax benefit		—			(1	)
Net loss	$	(163	)	$	(2,114	)

The operating losses for Timber Lodge for the sixteen weeks ended May 17, 2004 and May 19, 2003, include impairment charges of $617 and $1,566, respectively, to reduce the carrying value of Timber Lodge to fair value.

NOTE (9) SUBSIDIARIES’ GUARANTY OF INDEBTEDNESS

CKE is the issuer and all active subsidiaries of CKE are guarantors of the Company’s Senior Notes. Separate financial statements for each guarantor subsidiary are not included in this filing because each guarantor subsidiary is wholly-owned and fully, unconditionally, jointly and severally liable for the Senior Notes. There were no significant restrictions on the ability of CKE or any guarantor subsidiary to obtain funds from its subsidiaries by dividend or loan.

The following condensed consolidating financial information presents the financial position, results of operations and cash flows of (i) CKE, as parent, as if it accounted for its subsidiaries on the equity method; (ii) the guarantor subsidiaries; and the non-guarantor VIEs (included prospectively upon the adoption of FIN 46R on May 17, 2004 as discussed in Note 1). CKE’s independent operations are primarily comprised of the Carl’s Jr. food and packaging distribution business.

16

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

Condensed Consolidating Balance Sheet
May 17, 2004

						Non-
				Guarantor		Guarantor
	Parent			Subsidiaries		VIEs		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	442		$	42,198	$	100	$	—		$	42,740
Accounts receivable, net		9,602			12,575		—		—			22,177
Related party trade receivables		6,043			917		—		—			6,960
Inventories		6,663			12,275		43		—			18,981
Assets held for sale		—			18,020		—		—			18,020
Prepaid and other current assets		1,401			10,072		—		—			11,473
Advertising fund assets, restricted		—			—		19,438		—			19,438
Total current assets		24,151			96,057		19,581		—			139,789
Property and equipment, net		23,487			487,198		3		—			510,688
Property under capital leases, net		—			43,297		—		—			43,297
Goodwill		—			22,649		—		—			22,649
Investments in consolidated subsidiaries		293,434			—		—		(293,434	)		—
Other assets		10,701			28,848		15		—			39,564
Total assets	$	351,773		$	678,049	$	19,599	$	(293,434	)	$	755,987
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt, including capital lease obligations	$	2,131		$	6,259	$	—	$	—		$	8,390
Accounts payable		22,797			31,487		—		—			54,284
Advertising fund liabilities		—			—		19,438		—			19,438
Other current liabilities		12,860			80,226		125		—			93,211
Total current liabilities		37,788			117,972		19,563		—			175,323
Long-term debt and capital lease obligations, excluding current portion		313,219			57,137		—		—			370,356
Other long-term liabilities		1,245			53,676		36		—			54,957
Total liabilities		352,252			228,785		19,599		—			600,636
Stockholders’ equity (deficiency)		(479	)		449,264		—		(293,434	)		155,351
Total liabilities and stockholders’ equity	$	351,773		$	678,049	$	19,599	$	(293,434	)	$	755,987

17

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

Condensed Consolidating Balance Sheet
January 31, 2004

						Non-
				Guarantor		Guarantor
	Parent			Subsidiaries		VIEs		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	25,297		$	29,058	$	—	$	—		$	54,355
Accounts receivable, net		9,750			16,979		—		—			26,729
Related party trade receivables		6,333			1,658		—		—			7,991
Inventories		6,616			11,876		—		—			18,492
Assets held for sale		—			18,760		—		—			18,760
Prepaid and other current assets		1,375			15,870		—		—			17,245
Total current assets		49,371			94,201		—		—			143,572
Property and equipment, net		24,455			494,426		—		—			518,881
Property under capital leases, net		—			46,382		—		—			46,382
Goodwill		—			22,649		—		—			22,649
Investments in consolidated subsidiaries		282,187			—		—		(282,187	)		—
Other assets		12,517			29,322		—		—			41,839
Total assets	$	368,530		$	686,980	$	—	$	(282,187	)	$	773,323
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt, including capital lease obligations	$	26,595		$	7,290	$	—	$	—		$	33,885
Accounts payable		15,973			31,619		—		—			47,592
Other current liabilities		19,103			88,336		—		—			107,439
Total current liabilities		61,671			127,245		—		—			188,916
Long-term debt and capital lease obligations, excluding current portion		325,000			59,539		—		—			384,539
Other long-term liabilities		1,216			52,420		—		—			53,636
Total liabilities		387,887			239,204		—		—			627,091
Stockholders’ equity (deficiency)		(19,357	)		447,776		—		(282,187	)		146,232
Total liabilities and stockholders’ equity	$	368,530		$	686,980	$	—	$	(282,187	)	$	773,323

18

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

Condensed Consolidating Statement of Operations
Sixteen Weeks Ended May 17, 2004

							Non-
				Guarantor			Guarantor
	Parent			Subsidiaries			VIEs		Eliminations			Consolidated
Revenue:
Company-operated restaurants	$	—		$	365,871		$	—	$	—		$	365,871
Franchised and licensed restaurants and other		52,257			37,191			—		—			89,448
Total revenue		52,257			403,062			—		—			455,319
Operating costs and expenses:
Restaurant operations:
Food and packaging		—			105,724			—		—			105,724
Payroll and other employee benefit expenses		—			112,595			—		—			112,595
Occupancy and other operating expenses		—			79,303			—		—			79,303
		—			297,622			—		—			297,622
Franchised and licensed restaurants and other		50,987			15,999			—		—			66,986
Advertising expenses		—			22,264			—		—			22,264
General and administrative expenses		462			37,322			—		—			37,784
Facility action charges, net		53			7,385			—		—			7,438
Total operating costs and expenses		51,502			380,592			—		—			432,094
Operating income		755			22,470			—		—			23,225
Interest expense		(7,232	)		(4,103	)		—		—			(11,335	)
Allocated interest expense		7,232			(7,232	)		—		—			—
Other income, net		23			197			—		—			220
Income before income taxes and discontinued operations		778			11,332			—		—			12,110
Income tax expense		185			84			—		—			269
Income from continuing operations		593			11,248			—		—			11,841
Loss from discontinued operations		—			(163	)		—		—			(163	)
Income before equity in income of consolidated subsidiaries		593			11,085			—		—			11,678
Equity in income of consolidated subsidiaries		11,085			—			—		(11,085	)		—
Net income	$	11,678		$	11,085		$	—	$	(11,085	)	$	11,678

19

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

Condensed Consolidating Statement of Operations
Sixteen Weeks Ended May 19, 2003

							Non-
				Guarantor			Guarantor
	Parent			Subsidiaries			VIEs		Eliminations		Consolidated
Revenue:
Company-operated restaurants	$	—		$	339,042		$	—	$	—	$	339,042
Franchised and licensed restaurants and other		46,579			33,937			—		—		80,516
Total revenue		46,579			372,979			—		—		419,558
Operating costs and expenses:
Restaurant operations:
Food and packaging		—			100,097			—		—		100,097
Payroll and other employee benefit expenses		—			112,635			—		—		112,635
Occupancy and other operating expenses		—			79,021			—		—		79,021
		—			291,753			—		—		291,753
Franchised and licensed restaurants and other		45,429			19,480			—		—		64,909
Advertising expenses		—			21,013			—		—		21,013
General and administrative expenses		546			30,946			—		—		31,492
Facility action charges, net		—			1,062			—		—		1,062
Total operating costs and expenses		45,975			364,254			—		—		410,229
Operating income		604			8,725			—		—		9,329
Interest expense		(7,769	)		(4,407	)		—		—		(12,176	)
Allocated interest expense		7,769			(7,769	)		—		—		—
Other income (expense), net		16			(652	)		—		—		(636	)
Income (loss) before income taxes and discontinued operations		620			(4,103	)		—		—		(3,483	)
Income tax expense		131			88			—		—		219
Income (loss) from continuing operations		489			(4,191	)		—		—		(3,702	)
Loss from discontinued operations		—			(2,114	)		—		—		(2,114	)
Income (loss) before equity in loss of consolidated subsidiaries		489			(6,305	)		—		—		(5,816	)
Equity in loss of consolidated subsidiaries		(6,305	)		—			—		6,305		—
Net loss	$	(5,816	)	$	(6,305	)	$	—	$	6,305	$	(5,816	)

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

Condensed Consolidating Statement of Cash Flows
Sixteen Weeks Ended May 17, 2004

							Non-
				Guarantor			Guarantor
	Parent			Subsidiaries			VIEs		Eliminations		Consolidated
Net cash provided by operating activities	$	3,078		$	44,361		$	—	$	—	$	47,439
Cash flow from investing activities:
Purchases of property and equipment		(998	)		(15,319	)		—		—		(16,317	)
Proceeds from sale of property and equipment		—			6,557			—		—		6,557
Other		9,618			(8,805	)		100		—		913
Net cash provided by (used in) investing activities		8,620			(17,567	)		100		—		(8,847	)
Cash flow from financing activities:
Repayments of long-term debt, including capital lease obligations		(22,319	)		(2,566	)		—		—		(24,885	)
Repayment of borrowings under credit facility		(13,926	)		—			—		—		(13,926	)
Other		(308	)		(11,088	)		—		—		(11,396	)
Net cash used in financing activities		(36,553	)		(13,654	)		—		—		(50,207	)
Net (decrease) increase in cash and cash equivalents		(24,855	)		13,140			100		—		(11,615	)
Cash and cash equivalents at beginning of period		25,297			29,058			—		—		54,355
Cash and cash equivalents at end of period	$	442		$	42,198		$	100	$	—	$	42,740

21

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

Condensed Consolidating Statement of Cash Flows
Sixteen Weeks Ended May 19, 2003

							Non-
				Guarantor			Guarantor
	Parent			Subsidiaries			VIEs		Eliminations		Consolidated
Net cash provided by operating activities	$	3,243		$	15,098		$	—	$	—	$	18,341
Cash flow from investing activities:
Purchases of property and equipment		(1,281	)		(13,806	)		—		—		(15,087	)
Proceeds from sale of property and equipment		—			3,172			—		—		3,172
Other		(9,498	)		10,300			—		—		802
Net cash used in investing activities		(10,779	)		(334	)		—		—		(11,113	)
Cash flow from financing activities:
Repayments of long-term debt, including capital lease obligations		(95,000	)		(3,129	)		—		—		(98,129	)
Proceeds from credit facility term loan		106,000			—			—		—		106,000
Other		(2,701	)		(11,067	)		—		—		(13,768	)
Net cash provided by (used in) financing activities		8,299			(14,196	)		—		—		(5,897	)
Net increase in cash and cash equivalents		763			568			—		—		1,331
Cash and cash equivalents at beginning of period		87			18,353			—		—		18,440
Cash and cash equivalents at end of period	$	850		$	18,921		$	—	$	—	$	19,771

NOTE (10) COMMITMENTS AND CONTINGENT LIABILITIES

In conjunction with the Amended Facility, a letter of credit sub-facility in the amount of $85,000 was established (see Note 4). Several standby letters of credit are outstanding under this facility, which secure the Company’s potential workers’ compensation claims and general and health liability claims. The Company is required to provide letters of credit each year based on its existing claims experience, or set aside a comparable amount of cash or investment securities in a trust account. As of May 17, 2004, the Company had outstanding letters of credit under the revolving portion of the Facility of $63,697.

As of May 17, 2004, the Company has recorded an accrued liability for contingencies related to litigation in the amount of $3,750. Certain of the matters for which the Company maintains an accrued liability for litigation pose risk of loss significantly above the accrued amounts. In addition, as of May 17, 2004, the Company estimates the liability for those losses related to other litigation claims that, in accordance with Statement of Financial Accounting Standards No. 5, Accounting for Contingencies, are not accrued, but that it believes are reasonably possible to result in an adverse outcome, to be in the range of $335 to $645.

For several years, the Company has maintained a program whereby it guarantees the loan obligations of certain franchisees with an independent lending institution. Franchisees have used the proceeds from such loans to acquire certain equipment and pay the costs of remodeling Carl’s Jr. restaurants. In the event a franchisee defaults under the terms of a program loan, the Company is obligated, within 15 days following written demand by the lending institution, to purchase such loan or assume the franchisee’s obligation thereunder by executing an assumption agreement and seeking a replacement franchisee for the franchisee in default. By purchasing such loan, the Company may seek recovery against the defaulting franchisee. As of May 17, 2004, the principal outstanding under program loans guaranteed by the Company totaled approximately $2.1 million, with maturity dates ranging from 2004 through 2009. Additional loans may be granted under this program in the future. The Company’s remaining loss exposure under this program, based on a formula in the program agreement and including the existing loans outstanding, is approximately $4.5 million. As of May 17, 2004, the Company has no accrued liability for expected losses under this program and is not aware of any outstanding loans being in default.

The Company also guarantees a $214 obligation of a former subsidiary to a related party lending institution associated with an equipment leasing transaction. The Company maintains an accrual equal to 50% of this obligation based upon its estimated loss under the guarantee.

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

As of May 17, 2004, the Company had unconditional purchase obligations in the amount of $57,470, which include contracts for goods and services primarily related to restaurant operations.

In prior years, as part of its refranchising program, the Company sold restaurants to franchisees. In some cases, these restaurants were on leased sites. The Company entered into agreements with these franchisees but remained principally liable for the lease obligations. The Company accounts for the sublease payments received as franchising rental income and the payments on the leases as rental expense in franchising expense. The present value of the lease obligations under the master leases’ primary terms remaining is $130,475. Franchisees may, from time to time, experience financial hardship and may cease payment on the sublease obligation to the Company. The present value of the exposure to the Company from franchisees characterized under financial hardship is $20,066.

The Company is, from time to time, the subject of complaints or litigation from customers alleging illness, injury or other food quality, health or operational concerns. Adverse publicity resulting from such allegations may materially adversely affect the Company and its restaurants, regardless of whether such allegations are valid or whether the Company is liable. The Company is also, at times, the subject of complaints or allegations from employees, former employees and franchisees. On October 3, 2001, an action was filed by Adam Huizar and Michael Bolden, individually and on behalf of all others similarly situated, in the Superior Court of the State of California, Los Angeles County, seeking class action status and alleging violations of California wage and hour laws. Similar actions were filed by Mary Jane Amberson and James Bolin, individually and on behalf of others similarly situated, in the Superior Court of the State of California, Los Angeles County, on April 5, 2002 and November 26, 2002, respectively. The complaints allege that salaried restaurant management personnel at the Company’s Carl’s Jr. restaurants in California were improperly classified as exempt from California overtime laws, thereby depriving them of overtime pay. The complaints seek damages in an unspecified amount, injunctive relief, prejudgment interest, costs and attorneys’ fees. The Company believes its employee classifications are appropriate, that it complies with state and federal wage and hour laws and plans to vigorously defend these actions.

NOTE (11) SUBSEQUENT EVENT

As a result of the daily closing sales price levels on the Company’s common stock through June 18, 2004, the 2023 Convertible Notes (see Note 4) will be convertible into the Company’s common stock effective July 1, 2004. Had the dilutive effect of the 2023 Convertible Notes been included in the calculation of diluted income per share for the sixteen weeks ended May 17, 2004, the Company’s weighted average diluted common shares outstanding would have increased from the reported amount of 59,375,000 shares to 71,186,000 shares, and diluted income per share would have decreased from the reported amount of $0.20 per diluted share to $0.19 per diluted share. For this calculation, the dilutive effect is determined using the “if-converted” method, whereby the interest expense ($1,292) and amortization of loan fees ($250) incurred for the 2023 Convertible Notes during the sixteen weeks ended May 17, 2004, are added back to income.

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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, and 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, 2004. 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, the effectiveness of operating initiatives and advertising and promotional efforts (particularly at the Hardee’s brand), changes in economic conditions or prevailing interest rates, 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, delays in opening new restaurants or completing remodels, severe weather conditions, the operational and financial success of our franchisees, our franchisees’ willingness to participate in our strategy, the availability of financing for us and our franchisees, unfavorable outcomes in 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.

Adoption of New Accounting Pronouncements

See Note (2) 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, including goodwill, and establishing 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, property 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;

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

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

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Descriptions of these critical accounting policies follow.

Impairment of Property and Equipment and Other Amortizable Long-Lived Assets 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. 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.

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), the aggregate additional impairment loss would be approximately $30,310. The inflation rate assumed in making this calculation generally is 2.0% for both revenue and expenses.

Additionally, typically restaurants are operated for three years before we test them for impairment. Also, restaurants typically are 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 to the length of time open (time open sensitivity), we would be required to record additional impairment losses of approximately $11,060.

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:

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Carl’s Jr.

	Net Book		Number of		Impairment Under
	Value		Restaurants		Sensitivity Test
Same-store sales sensitivity
Restaurants with positive cash flow	$	99,701		369	$	1,661
Restaurants with negative cash flow		14,606		50		8,897
		114,307		419		10,558
Time open sensitivity
Restaurants with positive cash flow		—		1		—
Restaurants with negative cash flow		306		8		207
		306		9		207
Total
Restaurants with positive cash flow		99,701		370		1,661
Restaurants with negative cash flow		14,912		58		9,104
	$	114,613		428	$	10,765

Hardee’s

	Net Book		Number of		Impairment Under
	Value		Restaurants		Sensitivity Test
Same-store sales sensitivity
Restaurants with positive cash flow	$	128,616		301	$	4,487
Restaurants with negative cash flow		20,323		75		14,357
		148,939		376		18,844
Time open sensitivity
Restaurants with positive cash flow		134,897		263		2,181
Restaurants with negative cash flow		7,831		53		4,343
		142,728		316		6,524
Total
Restaurants with positive cash flow		263,513		564		6,668
Restaurants with negative cash flow		28,154		128		18,700
	$	291,667		692	$	25,368

La Salsa

	Net Book		Number of		Impairment Under
	Value		Restaurants		Sensitivity Test
Same-store sales sensitivity
Restaurants with positive cash flow	$	8,021		39	$	452
Restaurants with negative cash flow		920		5		456
		8,941		44		908
Time open sensitivity
Restaurants with positive cash flow		754		5		—
Restaurants with negative cash flow		6,300		14		4,329
		7,054		19		4,329
Total
Restaurants with positive cash flow		8,775		44		452
Restaurants with negative cash flow		7,220		19		4,785
	$	15,995		63	$	5,237

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Core Concepts Combined

	Net Book		Number of		Impairment Under
	Value		Restaurants		Sensitivity Test
Same-store sales sensitivity
Restaurants with positive cash flow	$	236,338		709	$	6,600
Restaurants with negative cash flow		35,849		130		23,710
		272,187		839		30,310
Time open sensitivity
Restaurants with positive cash flow		135,651		269		2,181
Restaurants with negative cash flow		14,437		75		8,879
		150,088		344		11,060
Total
Restaurants with positive cash flow		371,989		978		8,781
Restaurants with negative cash flow		50,286		205		32,589
	$	422,275		1,183	$	41,370

     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, store count 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 inaccurate, 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. During the first quarter of fiscal year 2005, we performed a valuation of the Carl’s Jr. brand. We concluded that the fair value of the net assets of Carl’s Jr. exceeded the carrying value, and thus no impairment charge was required. As of May 17, 2004, we have $22,649 in goodwill recorded on the balance sheet, all of which relates to Carl’s Jr.

     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 we are not contractually obligated to continue operating the restaurant, we may 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.

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

27

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 early terminations of our lease agreements with the lessors or sublease the property. 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 sublease or terminate leases, we may need to record additional estimated liabilities. If the leases on the vacant restaurants are not terminated or subleased 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 or subleased 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 our operating lease payment obligations on all closed restaurants is approximately $40,145, 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 or sublease the property and, accordingly, we have recorded an estimated liability for operating lease obligations of $18,556 as of May 17, 2004.

     Estimated Liability for Self-Insurance

We are self-insured for a portion of our current and prior years’ losses related to workers’ compensation, property and general liability insurance programs. We have obtained stop loss insurance for individual workers’ compensation, property and general liability claims over $500. Insurance liabilities and reserves are accounted for based on the present value of actuarial estimates of the amount of incurred and unpaid losses, based approximately on a risk-free interest rate. During the fourth quarter of fiscal 2004, we adjusted the rate to 4.5% due to prolonged changes in the interest rate environment. 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 we estimated in conjunction with the actuary. In that event, we will modify the reserve. As such, if we experience a higher than expected number of claims or the costs of claims rise more than expected, then 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 premiums and claim costs continue to increase. Additionally, after several years of increases, our property and general liability insurance premiums have leveled.

     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 (“SFAS 5”),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 condensed consolidated financial statements. If only a range of loss can be determined, we accrue to the low end of the range. In accordance with SFAS 5, as of May 17, 2004, we have recorded an accrued liability for contingencies related to litigation in the amount of $3,750. 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 condensed consolidated financial statement disclosure. The ultimate settlement of contingencies may differ materially from amounts we have accrued in our condensed consolidated financial statements.

In addition, we estimate the liability for those losses related to other litigation claims that, in accordance with SFAS 5, are not accrued, but that we believe are reasonably possible to result in an adverse outcome, to be in the range of $335 to $645. In accordance with SFAS 5, we have not recorded a liability for those losses.

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     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 royalties and rent income from franchisees that are materially delinquent in paying or in default for other reasons and reverse any royalties and rent income 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.

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 consolidated statements of operations. As of May 17, 2004, the present value of our total obligation on such lease arrangements with Hardee’s and Carl’s Jr. franchisees was $39,487 and $90,989, 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 May 17, 2004, the net book value of property under lease to Hardee’s and Carl’s Jr. franchisees was $26,487 and $11,141, 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 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 May 17, 2004, the net book value of land and buildings under lease to Hardee’s franchisees that are considered to be troubled franchisees was approximately $18,609 and is included in the amount above. During fiscal 2005 or thereafter, some of these franchisees may close restaurants and, accordingly, we may record an impairment loss in connection with some of these closures.

In accordance with SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities (“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. Also, 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 $20,066 (six troubled franchisees represent all of this amount). 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

29

royalty rates in the future (see discussion above). 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 Notes 1 and 23 of Notes to Consolidated Financial Statements of our Annual Report on Form 10-K for the fiscal year ended January 31, 2004, 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 Accounting Principles Board (“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 No. 123, Accounting for Stock-Based Compensation (“SFAS 123”). Because of this election, we are required to make certain disclosures of pro forma 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).

     Valuation Allowance for Net Deferred Tax Assets

As disclosed in Note 20 of Notes to Consolidated Financial Statements of our Annual Report on Form 10-K for the fiscal year ended January 31, 2004, 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 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 realized from future taxable income. As of January 31, 2004, our net deferred tax assets and related valuation allowance totaled approximately $171,000.

Significant Known Events, Trends, or Uncertainties Expected to Impact Fiscal 2005 Comparisons with Fiscal 2004

The factors discussed below impact comparability of operating performance for the sixteen weeks ended May 17, 2004, to the sixteen weeks ended May 19, 2003, or could impact comparisons for the remainder of fiscal 2005.

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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 results of Timber Lodge included in our Condensed Consolidated Statements of Operations as discontinued operations for the sixteen week periods ended May 17, 2004 and May 19, 2003, are as follows:

	Sixteen Weeks Ended
	May 17, 2004			May 19, 2003
Revenue	$	13,369		$	14,237
Operating loss		(157	)		(2,102	)
Interest expense		6			13
Income tax benefit		—			(1	)
Net loss	$	(163	)	$	(2,114	)

The operating losses for Timber Lodge for the sixteen weeks ended May 17, 2004, and May 19, 2003, include impairment charges of $617 and $1,566, respectively, to reduce the carrying value of Timber Lodge to fair value. We have a letter of intent for the sale of Timber Lodge and expect the sale to be completed during the second quarter of fiscal 2005.

New Accounting Pronouncements

See Note 2 of Notes to Condensed Consolidated Financial Statements.

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. Fiscal 2005 will be a 53-week fiscal year. The fourth quarter of this fiscal year will have two accounting periods of four weeks and one accounting period of five 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 upon school vacations and improved weather conditions, which affect the public’s dining habits.

Business Strategy

We remain focused on pursuing vigorously a comprehensive business strategy. The main components of our strategy are as follows:

• remain focused on restaurant fundamentals — quality, service and cleanliness;

• offer premium products that compete on quality and taste — not price;

• build on the strength of the Carl’s Jr. brand, including dual branding opportunities with Green Burrito;

• continue to execute and refine the Hardee’s Revolution;

• continue to control costs while increasing revenues;

• leverage our infrastructure and marketing presence to build out existing core markets; and

• strengthen our franchise system and pursue further franchising opportunities.

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We believe a key factor in operating Hardee’s profitably is increasing sales. For the trailing thirteen periods ended May 17, 2004, the average unit volume (“AUV”) at our company-operated Hardee’s restaurants was approximately $823, while franchise-operated AUV was $874. If we are unable to grow sales at Hardee’s to the level at which we estimate the brand would operate profitably and improve operating margins, it will affect our ability to access both the amount and terms of financing available to us in the future (see Liquidity and Capital Resources section below).

Hardee’s Revolution

We completed a comprehensive plan to revitalize Hardee’s involving a repositioning of the brand as a premium burger restaurant (Hardee’s Revolution) during fiscal 2004. The plan included menu adjustments and associated advertising and media strategies. This menu, featuring Angus beef Thickburgers, along with related media, seeks to distinguish Hardee’s as a premium burger specialist.

Franchisees’ Operations

Like others in the quick-service restaurant industry, some of our franchise operators experience financial difficulties from time to time with respect to their operations. Our approach to dealing with financial and operational issues that arise from these situations is described under Critical Accounting Policies above, under the heading “Franchised and Licensed Operations.” Some franchise operators in the Hardee’s system have experienced significant financial problems and, 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 May 17, 2004, our consolidated provision for doubtful accounts of notes receivable was 74% of the gross balance of notes receivable and our consolidated provision for doubtful accounts on accounts receivable was 7% of the gross balance of accounts receivable. During fiscal 2004, we received several notes receivable pursuant to completing workout agreements with several troubled franchisees. Also, as of May 17, 2004, we have not recognized $5,160 in accounts receivable and $6,292 in notes receivable pertaining to royalty and rent revenue due from franchisees that are in default under the terms of their franchise agreements. 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 provisions for doubtful accounts and/or increase the amount of our estimated liability for future lease obligations. The result of increasing the allowances 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 thirteen periods ended May 17, 2004, the effective royalty rates for domestic Carl’s Jr. and Hardee’s were 3.8% and 3.6%, respectively.

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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, the disposal of non-core investments, the reduction of corporate overhead and our efforts to improve margins and repay debt. 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)
	First Fiscal Quarter
Current Year:
Net income	$	11.7
Prior Year:
Net loss	$	(5.8	)
Increase in net income	$	17.5

	First Quarter
	Fiscal Year 2005 vs.
	First Quarter
	Fiscal Year 2004
Items causing net income to increase from the prior year to the current year:
Approximate store margin improvement in Hardee’s restaurants owned at May 17, 2004	$	15.8
Approximate store margin improvement in Carl’s Jr. restaurants owned at May 17, 2004		5.5
Increase in Hardee’s and Carl’s Jr. net franchising income, excluding provisions for doubtful accounts		6.1
Increase in corporate overhead		(6.5	)
Increase in facility action charges		(6.4	)
Decrease in loss from discontinued operations		2.0
Decrease in provisions for doubtful accounts		2.3
Increase in advertising expense, excluding La Salsa and Green Burrito		(1.2	)
Decrease in interest expense		0.8
Increase in operating loss of La Salsa and Green Burrito, excluding facility action charges and provisions for doubtful accounts		(0.6	)
All other, net		(0.3	)
Increase in net income	$	17.5

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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).

	Sixteen Weeks Ended May 17, 2004
	Carl’s Jr.			Hardee’s			La Salsa			Other (A)		Total
Company-operated revenue	$	170,209		$	181,017		$	14,202		$	443	$	365,871
Company-operated average weekly unit volume (actual $- not in thousands)		24,912			16,279			14,462
Company-operated average unit volume (trailing 13 periods)		1,228			823			732
Franchise-operated average unit volume (trailing 13 periods)		1,109			874			759
Average check (actual $- not in thousands) (B)		5.80			4.57			9.51
Company-operated same-store sales increase (C)		9.8	%		11.9	%		6.0	%
Company-operated same-store transactions increase (D)		1.8	%		1.5	%		2.6	%
Franchise-operated same-store sales increase (C)		9.3	%		10.9	%		4.4	%
Operating costs as a % of company-operated revenue:
Food and packaging		28.4	%		29.4	%		27.8	%
Payroll and employee benefits		28.0	%		33.1	%		33.3	%
Occupancy and other operating costs		21.2	%		21.3	%		33.1	%
Restaurant level margin		22.4	%		16.2	%		5.8	%
Advertising as a percentage of company- operated revenue		6.5	%		5.9	%		2.9	%
Franchising revenue:
Royalties	$	7,581		$	13,338		$	524		$	104	$	21,547
Distribution centers		52,257			5,237			—			—		57,494
Rent		6,680			3,212			—			—		9,892
Other		366			116			33			—		515
Total franchising revenue		66,884			21,903			557			104		89,448
Franchising expense:
Administrative expense (including provision for bad debts)		1,352			1,282			451			—		3,085
Distribution centers		50,987			5,410			—			—		56,397
Rent & other occupancy		5,297			2,207			—			—		7,504
Total franchising expense		57,636			8,899			451			—		66,986
Net franchising income	$	9,248		$	13,004		$	106		$	104	$	22,462
Facility action charges, net	$	1,539		$	4,648		$	1,198		$	53	$	7,438
Operating income (loss)	$	21,506		$	3,977		$	(2,414	)	$	156	$	23,225

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	Sixteen Weeks Ended May 19, 2003
	Carl’s Jr.			Hardee’s			La Salsa			Other (A)			Total
Company-operated revenue	$	158,284		$	167,613		$	12,696		$	449		$	339,042
Company-operated average weekly unit volume (actual $- not in thousands)		22,376			14,337			13,888
Company-operated average unit volume (trailing 13 periods)		1,151			756			736
Franchise-operated average unit volume (trailing 13 periods)		1,058			804			635
Average check (actual $- not in thousands) (B)		5.36			4.15			9.10
Company-operated same-store sales decrease (C)		(0.4	)%		(3.8	)%		(1.9	)%
Company-operated same-store transactions decrease (D)		(2.1	)%		(10.0	)%		(5.1	)%
Franchise-operated same-store sales decrease (C)		(1.6	)%		(6.8	)%		(0.4	)%
Operating costs as a % of company-operated revenue:
Food and packaging		28.3	%		30.9	%		26.3	%
Payroll and employee benefits		28.9	%		37.4	%		31.5	%
Occupancy and other operating costs		21.8	%		24.0	%		31.4	%
Restaurant level margin		21.0	%		7.7	%		10.8	%
Advertising as a percentage of company-operated revenue		6.3	%		6.3	%		3.0	%
Franchising revenue:
Royalties	$	6,569		$	10,472		$	413		$	110		$	17,564
Distribution centers		46,579			6,858			—			—			53,437
Rent		7,096			2,119			—			—			9,215
Other		195			75			30			—			300
Total franchising revenue		60,439			19,524			443			110			80,516
Franchising expense:
Administrative expense (including provision for bad debts)		1,359			1,553			135			1			3,048
Distribution centers		45,429			7,367			—			—			52,796
Rent & other occupancy		6,771			2,294			—			—			9,065
Total franchising expense		53,559			11,214			135			1			64,909
Net franchising income	$	6,880		$	8,310		$	308		$	109		$	15,607
Facility action charges (gains), net	$	330		$	1,456		$	—		$	(724	)	$	1,062
Operating income (loss)	$	18,325		$	(9,331	)	$	(188	)	$	523		$	9,329

(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.”
(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.

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

Presentation of Non-GAAP Measures

EBITDA

EBITDA is a typical non-GAAP measure (i.e. a measure calculated and presented on the basis of methodologies other than in accordance with accounting principles generally accepted in the United States of America, or “GAAP”) for companies that issue public debt and a measure used by the lenders under our bank credit facility. 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 earnings before discontinued operations, interest expense, income taxes, depreciation and amortization, facility action charges, impairment of goodwill and impairment of assets held for sale. Because not all companies calculate EBITDA identically, this presentation of EBITDA may not be comparable to similarly titled measures of other companies. Additionally, we believe EBITDA is a more meaningful indicator of earnings available to service debt when certain charges, such as impairment of goodwill and facility action charges are excluded from income (loss) from continuing operations. 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 and cash costs arising from facility actions.

	Sixteen Weeks Ended May 17, 2004
	Carl’s Jr.		Hardee’s			La Salsa			Other			Total
Net income (loss)	$	20,137	$	(5,849	)	$	(2,455	)	$	(155	)	$	11,678
Income from discontinued operations, excluding impairment		—		—			—			(454	)		(454	)
Interest expense		1,681		9,678			(24	)		—			11,335
Income tax expense		59		24			1			185			269
Depreciation and amortization		6,930		11,333			1,264			55			19,582
Facility action charges, net		1,539		4,648			1,198			53			7,438
Impairment of Timber Lodge		—		—			—			617			617
EBITDA	$	30,346	$	19,834		$	(16	)	$	301		$	50,465

	Sixteen Weeks Ended May 19, 2003
	Carl’s Jr.		Hardee’s			La Salsa			Other			Total
Net income (loss)	$	17,012	$	(20,947	)	$	(193	)	$	(1,688	)	$	(5,816	)
Loss from discontinued operations, excluding impairment		—		—			—			548			548
Interest expense		1,535		10,631			3			7			12,176
Income tax expense (benefit)		199		31			—			(11	)		219
Depreciation and amortization		7,551		10,387			1,050			57			19,045
Facility action charges, net		330		1,456			—			(724	)		1,062
Impairment of Timber Lodge		—		—			—			1,566			1,566
EBITDA	$	26,627	$	1,558		$	860		$	(245	)	$	28,800

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

	Sixteen Weeks Ended
	May 17, 2004			May 19, 2003
Cash flow provided by operating activities	$	47,439		$	18,341
Interest expense		11,335			12,176
Income tax expense		269			219
Amortization of loan fees		(1,042	)		(1,413	)
Recovery of (provision for) losses on accounts and notes receivable		242			(2,064	)
(Loss) gain on investments, sales of property and equipment, capital leases and extinguishment of debts		(1,298	)		217
Other non-cash credits		666			18
Net change in refundable income taxes		(4	)		(142	)
Change in estimated liability for closing restaurants and estimated liability for self-insurance		3,508			3,236
Net change in receivables, inventories, prepaid expenses and other current assets		(10,015	)		(11,002	)
Net change in accounts payable and other current liabilities		(607	)		9,049
EBITDA from discontinued operations		460			(536	)
Cash (received from) provided to discontinued segment		(28	)		165
EBITDA, including discontinued operations		50,925			28,264
Less: EBITDA from discontinued operations		(460	)		536
EBITDA	$	50,465		$	28,800

Carl’s Jr.

During the sixteen weeks ended May 17, 2004, we opened two Carl’s Jr. restaurants. Carl’s Jr. franchisees and licensees opened eight restaurants. The following table shows the change in the Carl’s Jr. restaurant portfolio, as well as the change in revenue for the current quarter:

	Restaurant Portfolio							Revenue
	First Fiscal Quarter							First Fiscal Quarter
	2005		2004		Change			2005		2004		Change
Company		428		443		(15	)	$	170,209	$	158,284	$	11,925
Franchised and licensed(a)		588		553		35			66,884		60,439		6,445
Total		1,016		996		20		$	237,093	$	218,723	$	18,370

(a) Includes $52,257 and $46,579 of revenues from distribution of food, packaging and supplies to franchised and licensed restaurants during the sixteen weeks ended May 17, 2004, and May 19, 2003, respectively.

Company-Operated Restaurants

Revenue from company-operated Carl’s Jr. restaurants increased $11,925, or 7.5%, to $170,209 during the sixteen weeks ended May 17, 2004, as compared to the sixteen weeks ended May 19, 2003. This increase resulted primarily from a 9.8% increase in same-store sales, partially offset by the impact of selling 15 company stores located in Arizona to a franchisee in the fourth quarter of fiscal 2004. We believe the launch of several new products during the fiscal quarter ended May 17, 2004, including The Low Carb Six Dollar Burger™ and the Low Carb Breakfast Bowl™, as well as conversion to 100 percent Angus beef in The Six Dollar Burger ™, contributed to the growth in same-store sales. Promotional item sales also increased $1,326 during the sixteen weeks ended May 17, 2004, as compared to the prior year comparable period, primarily due to a current year “bobblehead” promotion featuring members of the National Basketball Association’s (“NBA”) Los Angeles Lakers, which was broader than a similar promotion featuring members of the NBA’s Sacramento Kings in the prior year.

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     The changes in the restaurant-level margin are explained as follows:

Restaurant-level margin for the sixteen weeks ended May 19, 2003	21.0	%
Decrease in labor costs, excluding workers’ compensation	0.8
Decrease in general liability insurance expense	0.3
Increase in cost of promotional items	(0.5	)
Decrease in utilities expense	0.2
Decrease in repair and maintenance expense	0.2
Decrease in depreciation, rent, property taxes and licenses	0.2
Decrease in workers’ compensation expense	0.1
Increase in food and packaging costs	(0.1	)
Other, net	0.2
Restaurant-level margin for the sixteen weeks ended May 17, 2004	22.4	%

Labor costs, excluding workers’ compensation, as a percent of sales decreased during the sixteen weeks ended May 17, 2004, as compared to the sixteen weeks ended May 19, 2003, due mainly to reduced restaurant manager salaries and hourly wages resulting from benefits of sales leverage, partially offset by an increase in restaurant manager bonuses due to improved financial performance. General liability insurance expense decreased during the sixteen weeks ended May 17, 2004, from the comparable prior year period, primarily as a result of lower estimated claims losses. Since the beginning of fiscal 2004, loss development on general liability claims for recent fiscal years has been less than previously estimated.

Promotional items costs as a percent of sales increased during the sixteen weeks ended May 17, 2004, due to the promotional items sales increase noted above.

Utilities expense as a percent of sales decreased during the sixteen weeks ended May 17, 2004, as compared to the prior year, due mainly to benefits of sales leverage, partially offset by recording a decrease to estimated utility costs in the prior year upon finalizing contract terms with a new fixed-rate energy provider. 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 $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 consolidated financial statements.

Repair and maintenance expense, as well as depreciation, rent, property taxes and licenses expenses as percents of sales decreased during the sixteen weeks ended May 17, 2004, from the comparable prior year period, due mainly to sales leverage.

Food and packaging costs as a percent of sales increased slightly during the sixteen weeks ended May 17, 2004, from the comparable prior year period, primarily due to an increase in beef and other commodity costs.

On October 5, 2003, the Governor of California signed Senate Bill 2, known as the “Health Insurance Act of 2003” (“SB2”), 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 dependents, or to pay a fee into a state pool 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. SB2 is currently being challenged on several fronts. We continue to evaluate the status and impact of this legislation, which could be material to our results of operations.

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Franchised and Licensed Restaurants

Franchised and licensed restaurant revenues increased $6,445, or 10.7%, to $66,884 during the sixteen weeks ended May 17, 2004, as compared to the sixteen weeks ended May 19, 2003. The increase is comprised mainly of an increase of $5,678, or 12.2%, in food, paper and supplies sales to franchisees, resulting from the increase in the franchise store base over the comparable prior year period and the food purchasing volume impact of the 9.3% increase in franchise same-store sales. For similar reasons, franchise royalties also grew $1,012, or 15.4%, during the sixteen weeks ended May 17, 2004, as compared to the sixteen weeks ended May 19, 2003.

Net franchising income increased $2,368, or 34.4%, during the sixteen weeks ended May 17, 2004, as compared to the sixteen weeks ended May 19, 2003. The increase is primarily due to increased profits from subleasing facilities to franchisees and the increase in franchise royalties.

Although not required to do so, approximately 88% of Carl’s Jr. franchised and licensed restaurants purchase food, paper and other supplies from us.

Hardee’s

During the sixteen weeks ended May 17, 2004, we closed 30 Hardee’s restaurants and opened one restaurant. During the same period, Hardee’s franchisees and licensees opened five restaurants and closed 16 restaurants. The following table shows the change in the Hardee’s restaurant portfolio, as well as the change in revenue for the current quarter:

	Restaurant Portfolio							Revenue
	First Fiscal Quarter							First Fiscal Quarter
	2005		2004		Change			2005		2004		Change
Company		692		730		(38	)	$	181,017	$	167,613	$	13,404
Franchised and licensed		1,389		1,451		(62	)		21,903		19,524		2,379
Total		2,081		2,181		(100	)	$	202,920	$	187,137	$	15,783

During the fourth quarter of fiscal 2003, we introduced a new menu at Hardee’s pursuant to our “Hardee’s Revolution” strategy. 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 Hardee’s Revolution. These investments significantly impacted our financial results during the sixteen week period ended May 19, 2003. In addition, the deletion of up to 40 menu items pursuant to the Hardee’s Revolution strategy negatively affected sales at both company-operated and franchised Hardee’s restaurants through the first half of fiscal 2004. As the training, implementation and introduction of the Hardee’s Revolution were completed in early fiscal 2004, we have returned to pre-Hardee’s Revolution staffing levels. We have also experienced significant sales trend improvements since the completion of Hardee’s Revolution rollout, including same-store sales growth at company-operated restaurants for 11 consecutive four-week reporting periods through May 17, 2004.

Company-Operated Restaurants

Same-store sales for company-operated Hardee’s restaurants increased 11.9% during the sixteen weeks ended May 17, 2004. We believe this increase reflects positive consumer reception of the Hardee’s Revolution menu changes. A 4% price increase implemented at the beginning of the fourth quarter of fiscal 2004 to address cost pressures, particularly the cost of beef, also contributed to our same-store sales growth. Revenue from company-operated Hardee’s restaurants increased $13,404, or 8.0%, during the sixteen weeks ended May 17, 2004, as compared to the sixteen weeks ended May 19, 2003. This increase is due to the increase in same-store sales during the sixteen weeks ended May 17, 2004, partially offset by the closure of 30 restaurants that did not adequately respond to the Hardee’s Revolution strategy. The average check during the sixteen weeks ended May 17, 2004 was $4.57, as compared to $4.15 during the sixteen weeks ended May 19, 2003, primarily due to our shift to premium products and the price increase in the fourth quarter of fiscal 2004.

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

Restaurant-level margin for the sixteen weeks ended May 19, 2003	7.7	%
Decrease in labor costs, excluding workers’ compensation	4.1
Decrease in food and packaging costs	1.5
Decrease in utilities expense	0.9
Decrease in general liability insurance expense	0.5
Decrease in rent, depreciation, property taxes and licenses	0.4
Decrease in restaurant opening costs	0.4
Decrease in workers’ compensation insurance expense	0.2
Decrease in repair and maintenance expenses	0.2
Decrease in incentive program costs	0.2
Increase in asset retirement expense	(0.2	)
Other, net	0.3
Restaurant-level margin for the sixteen weeks ended May 17, 2004	16.2	%

Labor costs, excluding workers’ compensation, decreased significantly as a percent of sales during the sixteen week period ended May 17, 2004, from the comparable prior year period. This decrease resulted mainly from the return to normal staffing levels after completing the Hardee’s Revolution rollout, the benefits of sales leverage, and certain labor cost management improvements commencing in the fourth quarter of fiscal 2004, slightly offset by increased restaurant manager bonuses due to improved financial performance.

Food and packaging costs decreased from the prior year comparable period as a percent of sales primarily due to lower discounting during the current year versus the prior year while we were still transitioning to the Hardee’s Revolution menu, as well as the price increase implemented in the fourth quarter of fiscal 2004 discussed above. General liability insurance expense decreased from the prior year comparable period as well, primarily due to lower estimated claims losses and a decrease in insurance premiums as a result of recent loss trend improvements.

The decrease in rent, depreciation, property taxes and licenses as a percent of sales from the prior year comparable period primarily resulted from adjustment to deferred rents based on current lease terms (0.3% margin impact) and benefits of sales leverage, partially offset by increased depreciation expense on point-of-sale equipment under capital lease which, in late fiscal 2004, we determined we will replace earlier than originally planned (0.3% margin impact). We do not anticipate similar deferred rent adjustments in future periods. We expect accelerated amortization of point-of-sale equipment to continue into the second quarter of fiscal 2006.

Restaurant opening costs and asset retirement expenses are dependent upon restaurant actions that occur only from time to time. During the sixteen weeks ended May 17, 2004, we opened one Hardee’s restaurant, while in the prior year comparable period we opened three Hardee’s restaurants. In addition, we applied certain new uniform and training costs pursuant to the Hardee’s Revolution conversion to opening costs in the prior year comparable period. During the sixteen weeks ended May 17, 2004, we retired a minor amount of obsolete restaurant cooking equipment assets whereas we had no significant asset retirement activity in the prior year comparable period.

Workers’ compensation and repair and maintenance expenses decreased as percents of sales from the prior year comparable period due mainly to the benefits of sales leverage. Incentive costs decreased due to curtailment of a particular program.

Franchised and Licensed Restaurants

Franchised and licensed restaurant revenues increased $2,379, or 12.2%, to $21,903 during the sixteen weeks ended May 17, 2004, as compared to the sixteen weeks ended May 19, 2003. Franchise royalties grew $2,866, or 27.4%, during the sixteen weeks ended May 17, 2004 as compared to the sixteen weeks ended May 19, 2003, primarily due to improved financial health of certain franchisees, which allowed them to resume royalty payments to us, and the 10.9% increase in franchise same-store sales, partially offset by the decrease in the number of franchised restaurants. Similarly, rent revenues increased $1,093 during the sixteen weeks ended May 17, 2004, as the improved financial health of certain franchisees has allowed them to resume making lease or sublease payments to the Company.

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Distribution revenues decreased $1,621, or 23.6%, to $5,237 during the sixteen weeks ended May 17, 2004 from the prior year comparable period due to decreased equipment sales to franchisees. Equipment sales have slowed after franchisees made significant investments in fiscal 2003 and early fiscal 2004 pursuant to the Star Hardee’s remodel program.

Net franchising income increased $4,694, or 56.5%, during the sixteen weeks ended May 17, 2004 as compared to the sixteen weeks ended May 19, 2003. The increase is primarily due to the increases in franchise royalties and rents noted above.

La Salsa

During the sixteen weeks ended May 17, 2004, we opened two La Salsa restaurants. During the same period, La Salsa franchisees and licensees opened two restaurants. The following table shows the change in the La Salsa restaurant portfolio, as well as the change in revenue at La Salsa for the current quarter:

	Restaurant Portfolio						Revenue
	First Fiscal Quarter						First Fiscal Quarter
	2005		2004		Change		2005		2004		Change
Company		63		57		6	$	14,202	$	12,696	$	1,506
Franchised and licensed		43		40		3		557		443		114
Total		106		97		9	$	14,759	$	13,139	$	1,620

Same-store sales for company-operated La Salsa restaurants increased 6.0% during the sixteen weeks ended May 17, 2004. Revenue from company-operated La Salsa restaurants increased $1,506, or 11.9%, when compared to the sixteen weeks ended May 19, 2003, primarily due to the net increase in the number of company-operated restaurants and the increase in same-store sales.

Restaurant-level margins were 5.8% and 10.8% as a percent of company-operated restaurant revenues for the sixteen-week periods ended May 17, 2004, and May 19, 2003, respectively. Margins were negatively impacted by approximately 150 basis points due to an increase in food and packaging costs as a percent of sales, resulting primarily from higher produce and dairy costs. Margins were also negatively impacted by approximately 180 basis points primarily as a result of increased hourly 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. Occupancy and other expenses negatively impacted margins by approximately 170 basis points, due mainly to amortization of intangible assets (approximately 210 basis points), which had been classified as general and administrative expenses in the prior year comparable period.

Consolidated Advertising Expense

Advertising expenses increased $1,251, or 6.0%, to $22,264 during the sixteen weeks ended May 17, 2004. Advertising expenses as a percentage of company-operated restaurant revenue decreased marginally from 6.2% to 6.1% during the sixteen weeks ended May 17, 2004, due to higher advertising in the prior year during the Hardee’s Revolution rollout at the Hardee’s brand, partially offset by the management decision to slightly increase advertising spending at the Carl’s Jr. brand.

Consolidated General and Administrative Expense

General and administrative expenses were 8.3% of total revenue during the sixteen weeks ended May 17, 2004, as compared to 7.5% during the sixteen weeks ended May 19, 2003. General and administrative expenses increased $6,292, or 20.0%, to $37,784 during the sixteen weeks ended May 17, 2004, as compared to the same period last year. This increase is primarily due to increased incentive compensation expense as a result of our improved financial performance, increased consulting expenses pursuant to payroll services outsourcing and compliance work associated with the Sarbanes-Oxley Act of 2002 (and new corporate governance requirements imposed by the New York Stock Exchange), and increased legal fees with respect to ongoing litigation, partially offset by a decrease in depreciation expense with respect to information systems software.

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Consolidated Interest Expense

During the sixteen weeks ended May 17, 2004, interest expense decreased $841, or 6.9%, to $11,335, as compared to the sixteen weeks ended May 19, 2003, primarily as a result of a decrease in deferred financing cost amortization expense, lower average borrowings under convertible debt financing and further amortization of our capital lease obligations since the prior year comparable period.

Consolidated Other Income (Expense), Net

Other income (expense), net, primarily consists of lease and sublease income from non-franchisee tenants, provisions for bad debts on certain notes receivable from franchisees and other non-operating charges. Other income increased by $856, to $220, during the sixteen weeks ended May 17, 2004, over the prior year comparable period due mainly to a $1,422 provision for bad debts for Hardee’s notes receivable in the prior year comparable period, partially offset by $393 of deferred financing cost write-offs during the current quarter upon prepayment of a portion of the Company’s term loan under its senior credit facility.

Consolidated Income Tax Expense

We recorded income tax expense of $269 and $219 for the sixteen weeks periods ended May 17, 2004, and May 19, 2003, respectively. These amounts for both periods were comprised of foreign income taxes. 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 $171,000 at January 31, 2004.

At January 31, 2004, we had federal net operating loss (“NOL”) carryforwards of approximately $91,970, expiring in varying amounts in the years 2010 through 2024, and state NOL carryforwards totaling approximately $335,948, expiring in varying amounts in the years 2006 through 2024. We have federal NOL carryforwards for alternative minimum tax purposes of approximately $72,210 and an alternative minimum tax credit carryforward of approximately $10,691. We have also generated general business credit carryforwards of approximately $10,952, expiring in varying amounts in the years 2020 through 2024, and foreign tax credits in the amount of $2,829, expiring in varying amounts in the years 2008 and 2009.

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 our capital expenditures. We amended and restated our senior credit facility (“Amended Facility”) on June 2, 2004 (see below). We anticipate that existing cash balances, availability under the Amended 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. On July 2, 2004, we will redeem our $200,000 of Senior Subordinated Notes due 2009 with proceeds from the Amended Facility.

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 May 17, 2004, our current ratio was 0.8 to 1.

On June 2, 2004, we amended and restated our senior credit facility to provide for a $380,000 senior secured credit facility consisting of a $150,000 revolving credit facility and a $230,000 term loan. The revolving credit facility matures on May 1, 2007, and includes an $85,000 letter of credit sub-facility. The principal amount of the term loan will be repaid in quarterly installments, with a balloon payment of the remaining principal balance at maturity on July 2, 2008. The Amended Facility also requires term loan prepayments based upon an annual excess cash flow formula, as defined therein. Subject to certain conditions as defined in the Amended Facility, the maturity of the term loan may be extended to May 1, 2010. We used a portion of the proceeds from the $230,000 term loan to repay the balance of the existing Facility term loan of $10,137 and to pay approximately $5,800 in transaction fees.

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On June 2, 2004, we deposited $212,168 with the trustee for our Senior Notes, constituting all funds necessary to retire the Senior Notes obligations, and gave notice of redemption of the Senior Notes to occur on July 2, 2004. On July 2, 2004, the trustee will apply the depository amount to redeem the entire principal of $200,000, and pay our optional redemption premium of $9,126 and accrued interest, under our 9.125% Senior Subordinated Notes due 2009. We will also incur a charge of approximately $3,100 during our second fiscal quarter to write-off unamortized debt issuance costs associated with the Senior Notes. We anticipate this redemption will result in annual interest savings of approximately $7,000 during the first year. We will use the remaining proceeds of the term loan for general corporate purposes.

We use the Amended Facility to fund letters of credit required for our self-insurance programs. Additionally, the Amended Facility provides working capital during those periods when seasonality affects our cash flow. As of May 17, 2004 (prior to amendment and restatement of the Facility), we had cash borrowings outstanding under the term loan portion of the Facility of $10,137, outstanding letters of credit under the revolving portion of the Facility of $63,697 and availability under the revolving portion of the Facility of $86,303. Upon the closing of the Amended Facility, we had $230,000 outstanding under the term loan, $63,697 of outstanding letters of credit and borrowing availability of $86,303. Borrowings bear interest at either LIBOR plus an applicable margin or the Prime Rate plus an applicable margin, with interest due monthly or quarterly depending on the interest period. Currently, the applicable interest rate on the term loan is LIBOR plus 3.00%. The applicable interest rate on the revolving loan portion of the Amended Facility is LIBOR plus 2.75%. We also incur fees on outstanding letters of credit under the Amended Facility at a rate equal to the applicable margin for LIBOR loans, which is currently 3.00% per annum. Subsequent to May 17, 2004, we repaid $20,000 of the outstanding term loan balance under the Amended Facility in advance of the terms of the Amended Facility.

The agreement underlying the Amended 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 Amended Facility, prepay certain debt, engage in a change of control transaction without the member banks’ consents, pay dividends and make investments or acquisitions.

Subject to the terms of the Amended Facility, we may make capital expenditures in the amount of $50,000 plus 80% of the amount of actual EBITDA (as defined in the Facility) in excess of $110,000 during our current fiscal year and $45,000 plus 80% of the amount of actual EBITDA (as defined in the Facility) in excess of $110,000 during each subsequent fiscal year. Additionally, in fiscal 2005 and thereafter we may carry forward any unused capital expenditure amounts to the following year.

The Amended Facility also permits us to repurchase our common stock in the amount of $27,000 plus a portion of excess cash flow and certain net asset sale proceeds (as defined in the Amended Facility) during the term of the Amended Facility. On April 13, 2004, our Board of Directors authorized a program to allow us to repurchase up to $20,000 of our common stock. Pursuant to this authorization, during the sixteen weeks ended May 17, 2004, we repurchased 319,000 shares of our common stock at an average price of $10.49 per share, for a total cost, including trading commissions, of $3,354. We may make additional repurchases of our common stock if we believe it to be a good investment of our corporate funds and in the best interests of our stockholders.

The Amended Facility also requires that, by no later than August 31, 2004, we enter into an interest rate hedge agreement, for a period expiring no sooner than June 2, 2007, that effectively fixes or caps the interest expense on at least $70,000 of the term loan under the Facility.

The full text of the contractual requirements imposed by this financing is set forth in the Sixth Amended and Restated Credit Agreement, dated as of June 2, 2004, 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 May 17, 2004. Subject in certain instances to cure periods, the lenders under our Amended 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 Amended Facility is declared accelerated by the lenders (which can occur only if we are in default under the Amended Facility), our 4% Convertible Subordinated Notes due 2023 (“2023 Convertible Notes”) may also become accelerated under certain circumstances and after all cure periods have expired.

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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 has been filed with the Securities and Exchange Commission. The indenture contains certain restrictive covenants. We were in compliance with the covenants of the 2023 Convertible Notes as of May 17, 2004. 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 May 17, 2004. 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. On May 1, 2004, we began to have the right to 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. The full text of the contractual requirements imposed 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 May 17, 2004. However, our incurrence of additional senior indebtedness under the Amended Facility on June 2, 2004, breached the limitation on additional indebtedness in the Senior Notes indenture. The indenture allows us 30 days to cure this breach before the breach becomes a default. As noted above, we will repay the entire outstanding balance and the related optional redemption premium and accrued interest under the Senior Notes at the end of the notice period on July 2, 2004, which will result in the termination of the breached covenant within the 30-day cure period.

On March 15, 2004, we repaid and retired the remaining outstanding principal balance of $22,319 on our 2004 Convertible Notes, using a portion of the proceeds of the $25,000 term loan issued under the Facility on November 12, 2003.

The terms of the Amended Facility 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 in Note 4 of Notes to the Condensed Consolidated Financial Statements, 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 sixteen weeks ended May 17, 2004, cash provided by operating activities was $47,439, an increase of $29,098 over the prior year comparable period. The increase resulted mainly from the increase in net income over the prior year and a trend change in the accounts payable balance fluctuation in the current year first fiscal quarter as compared to the prior year first fiscal quarter. Such trend can be vary significantly from quarter to quarter depending upon the timing of large vendor payments.

Cash used in investing activities during the sixteen weeks ended May 17, 2004, totaled $8,847, 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 sixteen weeks ended May 17, 2004, totaled $50,207, which principally consisted of redemption of $22,319 of our 2004 Convertible Notes, repayment of $13,926 of the term loan under our

44

bank credit facility (of which $13,515 represented voluntary prepayment thereof) and a decrease in our bank overdraft position, which is generally not a significant source or use of cash over the long term.

Capital expenditures for the sixteen weeks ended May 17, 2004 were:

New restaurants (including restaurants under development)
Carl’s Jr.	$	1,996
Hardee’s		1,324
La Salsa		202
Remodels/Dual-branding (including construction in process)
Carl’s Jr.		130
Hardee’s		1,734
Other restaurant additions
Carl’s Jr.		3,890
Hardee’s		5,221
La Salsa		718
Corporate/other		1,102
Total	$	16,317

As of May 17, 2004, we had remodeled 80% of the Hardee’s company-operated restaurants to the Star Hardee’s format.

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 in addition to any unearned supplier funding and distributor inventory obligations result in unconditional purchase obligations (see further discussion regarding these obligations in “Item 3 — Quantitative and Qualitative Disclosures About Market Risk”) which, as of May 17, 2004, totaled $57,470.

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 May 17, 2004, we had $10,137 of borrowings and $63,697 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 $738. 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 May 17, 2004. 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, could result in lower restaurant-level operating margins for our restaurant concepts.

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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.

46

CKE RESTAURANTS, INC. AND SUBSIDIARIES
OTHER INFORMATION
(In thousands, except per share amounts)

Part II. Other Information.

Item 1. Legal Proceedings.

Information regarding legal proceedings is incorporated by reference from Note 10 to the Company’s Condensed Consolidated Financial Statements set forth in Part 1 of this report.

Item 2. Changes in Securities and Use of Proceeds.

Issuer Purchase of Equity Securities

	(a)		(b)		(c)		(d)
							Maximum
							Number (or
							Approximate
							Dollar
							Value) of
					Total		Shares (or
					Number of Shares		Units) that
			Average		(or Units)		May Yet Be
	Total		Price		Purchased as Part		Purchased
	Number of Shares		Paid per		of Publicly		Under the
	(or Units)		Share		Announced Plans		Plans or
Period	Purchased		(or Unit)		or Programs		Programs
January 27, 2004 – February 25, 2004		—		—		—		—
February 26, 2004 – March 25, 2004		—		—		—		—
March 26, 2004 – April 25, 2004		319	$	10.49		319	$	16,646
April 26, 2004 – May 17, 2004		—		—		—		—
Total		319	$	10.49		319	$	16,646

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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
10.57	Employment agreement, effective as of January 27, 2004, by and between the Company and Brad R. Haley.*
10.58	Sixth Amended and Restated Credit Agreement, dated as of June 2, 2004, 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 April 7, 2004, was filed during the first quarter of fiscal 2005, furnishing the Company’s financial results for the fourth quarter and Fiscal Year ended January 26, 2004.

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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: June 22, 2004	/s/ Theodore Abajian
	Theodore Abajian
	Executive Vice President
	Chief Financial Officer

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Exhibit Index

Exhibit #	Description
10.57	Employment agreement, effective as of January 27, 2004, by and between the Company and Brad R. Haley.*
10.58	Sixth Amended and Restated Credit Agreement, dated as of June 2, 2004, 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.

EX-10.57

                                                                   EXHIBIT 10.57

                              EMPLOYMENT AGREEMENT

      THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of January
27, 2004 by and between CKE RESTAURANTS, INC., a Delaware corporation (the
"Company"), and BRAD R. HALEY (the "Employee").

                                    RECITALS:

      A.    Employee is a key employee of the Company.

      B.    The Company and Employee desire to enter into this Agreement to set
forth the terms and provisions of Employee's employment by the Company.

      NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, the parties agree as follows:

      1.    Employment and Duties. Subject to the terms and conditions of this
Agreement, the Company employs the Employee to serve in an executive and
managerial capacity as Executive Vice President of Marketing of the Company, and
the Employee accepts such employment and agrees to perform such reasonable
responsibilities and duties commensurate with the aforesaid positions as
directed by the Company's Board of Directors or as set forth in the Articles of
Incorporation and the Bylaws of the Company. Any change in such titles or
delegation of duties inconsistent with such titles without the consent of
Employee, shall be deemed a termination without cause under Section 7(b) below.

      2.    Term. The term of this Agreement shall commence on the first day of
the Company's fiscal year commencing in the year 2004 (the "Effective Date") and
shall terminate on the last day of the Company's fiscal year ending in the year
2007, subject to prior termination as set forth in Section 7 below (the "Term").
The Term may be extended at any time upon mutual written agreement of the
parties.

      3.    Salary. Commencing on the Effective Date, and subject to the other
provisions of this Agreement, the Company shall pay the Employee a minimum base
annual salary of $275,000. The Chief Executive Officer of the Company may, from
time to time, increase such salary in his sole discretion.

      4.    Other Compensation and Fringe Benefits. In addition to any executive
bonus, pension, deferred compensation and stock option grants which the Company
may from time to time make available to the Employee upon mutual agreement, the
Employee shall be entitled to the following:

            (a)   The standard Company benefits enjoyed by the Company's other
top executives;

            (b)   Provision by the Company during the Term and any extensions
thereof to the Employee and his dependents of the medical and other insurance
coverage provided by the Company to its other top executives;



            (c)   Provision by the Company of supplemental disability insurance
sufficient to provide two-thirds of the Employee's pre-disability minimum base
annual salary for a two-year period; and

            (d)   For the fiscal years ending in January 2005, 2006 and 2007,
Employee shall be entitled to a bonus in the amount determined by the Company's
Chief Executive Officer, in his sole discretion.

      The Company shall deduct from all compensation payable under this
Agreement to the Employee any taxes or withholdings the Company is required to
deduct pursuant to state and federal laws or by mutual agreement between the
parties.

      5.    Vacation. For and during each year of the Term and any extensions
thereof, the Employee shall be entitled to reasonable paid vacation periods
consistent with his positions with the Company and in accordance with the
Company's standard policies, or as the Company's Board of Directors may approve.
In addition, the Employee shall be entitled to such holidays consistent with the
Company's standard policies or as the Company's Board of Directors may approve.

      6.    Expense Reimbursement. In addition to the compensation and benefits
provided herein, the Company shall, upon receipt of appropriate documentation,
reimburse the Employee 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.

      7.    Termination.

            (a)   For Cause. The Company may terminate this Agreement
immediately for cause upon written notice to the Employee, in which event the
Company shall be obligated only to pay the Employee that portion of the minimum
base annual salary due him through the date of termination. Cause shall be
limited to (i) the persistent failure to perform duties consistent with a
commercially reasonable standard of care; (ii) the willful neglect of duties;
(iii) criminal or other illegal activities involving dishonesty; or, (iv) a
material breach of this Agreement.

            (b)   Without Cause. Either party may terminate this Agreement
immediately without cause by giving written notice to the other. If the Company
terminates under this Section 7(b) , then it shall pay to the Employee the sum
of (i) all amounts owed through the date of termination, plus (ii) an amount
equal to the product of the Employee's minimum base annual salary in effect as
of the date of termination times the number of years (including partial years)
remaining in the Term. Such payment to be made in a lump sum on or before the
fifth day following the date of termination, and shall be in lieu of all further
salary and bonus obligations under this Agreement. In addition, if the Company
terminates under this Section 7(b), (i) all options granted to the Employee
which had not vested as of the date of such termination shall vest concurrently
with such termination, and, notwithstanding the terms of any option agreements,
Employee may exercise any vested options, including by reason of acceleration,
for a period after such termination which is the greater of what is provided in
the respective option agreement or 30 days, and (ii) the Company shall maintain
in full force and effect for the continued benefit of the Employee for the
remainder of the Term, all employee benefit plans (except for the Company's
stock option plans) and programs in which the Employee was entitled to
participate immediately prior to the date of termination, provided that the
Employee's continued participation is possible under the general terms and
provisions of such plans and programs. In the event that the Employee's
participation in any such plan or program

                                       2


is prohibited, the Company shall, at its expense, arrange to provide the
Employee with benefits substantially similar to those which the Employee would
otherwise have been entitled to receive under such plans and programs from which
his continued participation is prohibited. If the Employee terminates under this
Section 7(b), then the Company shall only be obligated to pay the Employee the
minimum annual base salary due him through the date of termination.

            (c)   Disability. If the Employee fails to perform his duties
hereunder on account of illness or other incapacity for a period of six
consecutive months, then the Company shall have the right upon written notice to
the Employee to terminate this Agreement without further obligation by paying
the Employee the minimum base annual salary, without offset, for the remainder
of the Term in a lump sum or as otherwise directed by the Employee.

            (d)   Death. If the Employee dies during the Term, then this
Agreement shall terminate immediately and the Employee's legal representatives
shall be entitled to receive the minimum annual base salary for the remainder of
the Term in a lump sum or as otherwise directed by the Employee's legal
representative. Executive's outstanding Company options will immediately vest in
full and be exercisable for a period of 90 days from Employee's death.

            (e)   Effect of Termination. Termination for any reason or for no
reason shall not constitute a waiver of the Company's rights under this
Agreement nor a release of the Employee from any obligation hereunder except his
obligation to perform his day-to-day duties as an employee.

            (f)   Mitigation. Employee shall not be required to mitigate the
amount of any payment provided for in this Section 7 by seeking other employment
or otherwise, nor shall any compensation or other payments received by the
Employee after the date of termination reduce any payments due under this
Section 7.

      8.    Non-Delegation of Employee's Rights. The obligations, rights and
benefits of the Employee 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.

      9.    Confidential Information. The Employee acknowledges that in his
capacity as an employee of the Company he will occupy a position of trust and
confidence and he further acknowledges that he will have access to and learn
substantial information about the Company and its operations that is
confidential or not generally known in the industry, including, without
limitation, information that relates to purchasing, sales, customers, marketing,
and the Company's financial position and financing arrangements. The Employee
agrees that all such information is proprietary or confidential, or constitutes
trade secrets and is the sole property of the Company. The Employee will keep
confidential, and will not reproduce, copy or disclose to any other person or
firm, any such information or any documents or information relating to the
Company's methods, processes, customers, accounts, analyses, systems, charts,
programs, procedures, correspondence or records, or any other documents used or
owned by the Company, nor will the Employee advise, discuss with or in any way
assist any other person, firm or entity in obtaining or learning about any of
the items described in this Section 9. Accordingly, the Employee agrees that
during the Term and at all times thereafter he will not disclose, or permit or
encourage anyone else to disclose, any such information, nor will he utilize any
such information, either alone or with others, outside the scope of his duties
and responsibilities with the Company.

                                       3


      10.   Non-Competition During Employment Term. The Employee agrees that,
during the Term and any extensions thereof, he will devote substantially all his
business time and effort, and give undivided loyalty, to the Company, and that
he will not engage in any way whatsoever, directly or indirectly, in any
business that is competitive with the Company or its affiliates, nor solicit, or
in any other manner work for or assist any business which is competitive with
the Company or its affiliates. In addition, during the Term and any extensions
thereof, the Employee will undertake no planning for or organization of any
business activity competitive with the work he performs as an employee of the
Company, and the Employee will not combine or conspire with any other employee
of the Company or any other person for the purpose of organizing any such
competitive business activity.

      11.   Non-Competition After Employment Term. The parties acknowledge that
the Employee will acquire substantial knowledge and information concerning the
business of the Company and its affiliates as a result of his employment. The
parties further acknowledge that the scope of business in which the Company is
engaged as of the Effective Date is national and very competitive and one in
which few companies can successfully compete. Competition by the Employee in
that business after this Agreement is terminated would severely injure the
Company. Accordingly, for a period of two years after this Agreement is
terminated or the Employee leaves the employment of the Company for any reason
whatsoever, except as otherwise stated hereinbelow, the Employee agrees (i) not
to become an employee, consultant, advisor, principal, partner or substantial
shareholder of any firm or business that in any way competes with the Company or
its affiliates in any of their presently-existing or then-existing products and
markets; and (ii) not to solicit any person or business that was at the time of
such termination and remains an executive employee of the Company or any of its
affiliates. Notwithstanding any of the foregoing provisions to the contrary, the
Employee shall not be subject to the restrictions set forth in this Section 11
under the following circumstances:

            (a)   If the Employee's employment with the Company is terminated by
the Company without cause; or

            (b)   If the Employee's employment with the Company is terminated as
a result of the Company's unwillingness to extend the Term of this Agreement.

      12.   Return of Company Documents. Upon termination of this Agreement,
Employee shall return immediately to the Company all records and documents of or
pertaining to the Company and shall not make or retain any copy or extract of
any such record or document.

      13.   Improvements and Inventions. Any and all improvements or inventions
which the Employee may conceive, make or participate in during the period of his
employment shall be the sole and exclusive property of the Company. The Employee
will, whenever requested by the Company, execute and deliver any and all
documents which the Company shall deem appropriate in order to apply for and
obtain patents for improvements or inventions or in order to assign and convey
to the Company the sole and exclusive right, title and interest in and to such
improvements, inventions, patents or applications.

      14.   Actions. The parties agree and acknowledge that the rights conveyed
by this Agreement are of a unique and special nature and that the Company will
not have an adequate remedy at law in the event of a failure by the Employee to
abide by its terms and conditions nor will money damages adequately compensate
for such injury. It is therefore agreed between the parties

                                       4


that, in the event of a breach by the Employee of any of his obligations
contained in this Agreement, the Company shall have the right, among other
rights, to damages sustained thereby and to obtain an injunction or decree of
specific performance from any court of competent jurisdiction to restrain or
compel the Employee to perform as agreed herein. The Employee agrees that this
Section 14 shall survive the termination of his employment and he shall be bound
by its terms at all times subsequent to the termination of his employment for so
long a period as Company continues to conduct the same business or businesses as
conducted during the Term or any extensions thereof. Nothing herein contained
shall in any way limit or exclude any other right granted by law or equity to
the Company.

      15.   Amendment; Integration. 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.

      16.   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.

      17.   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.

      18.   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 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 Employee 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 Employee 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.

      19.   Notices. Any notice, request, or instruction to be given hereunder
shall be in writing and shall be deemed given when personally delivered or three
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.
                        6307 Carpinteria Avenue, Suite A
                        Carpinteria, CA 93013
                        Attention: General Counsel

                                       5


                  To the Employee:

                        Brad R. Haley
                        [ADDRESS]




      20.   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.

      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 & CEO

                                        EMPLOYEE

                                        /s/ Brad R. Haley
                                        ----------------------------------------
                                        Brad R. Haley

                                       6

EX-10.58

                                                                   EXHIBIT 10.58

                           SIXTH AMENDED AND RESTATED
                                CREDIT AGREEMENT

                                      among

                             CKE RESTAURANTS, INC.,

                            THE LENDERS NAMED HEREIN

                                       and

                                  BNP PARIBAS,

                                    As Agent

                            DATED AS OF JUNE 2, 2004



                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                                                                                               
SECTION 1.           DEFINITIONS............................................................       1
   Section 1.1       Definitions............................................................       1
SECTION 2.           AMOUNT AND TERMS OF CREDIT FACILITIES..................................      33
   Section 2.1       Term Loans.............................................................      33
   Section 2.2       Revolving Loans........................................................      35
   Section 2.3       Notice of Borrowing....................................................      36
   Section 2.4       Disbursement of Funds..................................................      36
   Section 2.5       Notes..................................................................      37
   Section 2.6       Interest...............................................................      38
   Section 2.7       Interest Periods.......................................................      39
   Section 2.8       Minimum Amount of Eurodollar Loans.....................................      41
   Section 2.9       Conversion or Continuation.............................................      41
   Section 2.10         Voluntary Reduction of Commitments..................................      42
   Section 2.11         Voluntary Prepayments...............................................      42
   Section 2.12         Mandatory Prepayments...............................................      42
   Section 2.13         Application of Prepayments..........................................      44
   Section 2.14         Method and Place of Payment.........................................      45
   Section 2.15         Fees................................................................      46
   Section 2.16         Interest Rate Unascertainable, Increased Costs, Illegality..........      47
   Section 2.17         Funding Losses......................................................      49
   Section 2.18         Increased Capital...................................................      50
   Section 2.19         Taxes...............................................................      50
   Section 2.20         Use of Proceeds.....................................................      52
   Section 2.21         Collateral Security.................................................      52
   Section 2.22         Replacement of Certain Lenders......................................      55
SECTION 3.           SECTION LETTERS OF CREDIT..............................................      56
   Section 3.1       Issuance of Letters of Credit, etc.....................................      56
   Section 3.2       Letter of Credit Fees..................................................      58
   Section 3.3       Obligation of Borrower Absolute, etc...................................      59
SECTION 4.           SECTION CONDITIONS PRECEDENT...........................................      62
   Section 4.1       Conditions Precedent to the Effectiveness of this Agreement............      62
   Section 4.2       Conditions Precedent to All Loans......................................      71
SECTION 5.           SECTION REPRESENTATIONS AND WARRANTIES.................................      72
   Section 5.1       Corporate Status.......................................................      72
   Section 5.2       Corporate Power and Authority..........................................      72
   Section 5.3       No Violation...........................................................      72
   Section 5.4       Litigation.............................................................      73
   Section 5.5       Financial Statements; Financial Condition; etc.........................      73



                                        i



                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                                                                                               
   Section 5.6       Solvency...............................................................      73
   Section 5.7       Projections............................................................      73
   Section 5.8       Material Adverse Change................................................      74
   Section 5.9       Use of Proceeds; Margin Regulations....................................      74
   Section 5.10         Governmental and Other Approvals....................................      74
   Section 5.11         Security Interests and Liens........................................      74
   Section 5.12         Tax Returns and Payments............................................      75
   Section 5.13         ERISA...............................................................      75
   Section 5.14         Investment Company Act; Public Utility Holding
                        Company Act.........................................................      76
   Section 5.15         Dissolved Subsidiaries; Previously Material Subsidiaries, etc.......      76
   Section 5.16         Representations and Warranties in Subordinated Debt
                        Documents...........................................................      76
   Section 5.17         True and Complete Disclosure........................................      76
   Section 5.18         Corporate Structure; Capitalization.................................      77
   Section 5.19         Environmental Matters...............................................      77
   Section 5.20         Intellectual Property...............................................      79
   Section 5.21         Ownership of Property; Restaurants..................................      79
   Section 5.22         No Default..........................................................      79
   Section 5.23         Licenses, etc.......................................................      79
   Section 5.24         Compliance with Law.................................................      80
   Section 5.25         No Burdensome Restrictions..........................................      80
   Section 5.26         Brokers' Fees.......................................................      80
   Section 5.27         Labor Matters.......................................................      80
   Section 5.28         Indebtedness of the Borrower and Its Subsidiaries...................      80
   Section 5.29         Other Agreements....................................................      80
   Section 5.30         Immaterial Subsidiaries.............................................      80
   Section 5.31         Franchise Agreements and Franchisees................................      81
SECTION 6.           SECTION AFFIRMATIVE COVENANTS..........................................      81
   Section 6.1       Information Covenants..................................................      81
   Section 6.2       Books, Records and Inspections.........................................      86
   Section 6.3       Maintenance of Insurance...............................................      86
   Section 6.4       Taxes..................................................................      87
   Section 6.5       Corporate Franchises...................................................      87
   Section 6.6       Compliance with Law....................................................      87
   Section 6.7       Performance of Obligations.............................................      88
   Section 6.8       Maintenance of Properties..............................................      88
   Section 6.9       Compliance with Terms of Leaseholds....................................      88
   Section 6.10         Compliance with Environmental Laws..................................      88



                                       ii



                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                                                                                              
   Section 6.11         Subsidiary Guarantors...............................................      89
   Section 6.12         Immaterial Subsidiaries.............................................      89
   Section 6.13         Additional Mortgages................................................      89
   Section 6.14         Collateral Account..................................................      90
SECTION 7.           SECTION NEGATIVE COVENANTS.............................................      90
   Section 7.1       Financial Covenants....................................................      90
   Section 7.2       Indebtedness...........................................................      94
   Section 7.3       Liens..................................................................      96
   Section 7.4       Restriction on Fundamental Changes.....................................      98
   Section 7.5       Sale of Assets.........................................................      99
   Section 7.6       Contingent Obligations.................................................     102
   Section 7.7       Dividends..............................................................     102
   Section 7.8       Advances, Investments and Loans........................................     103
   Section 7.9       Transactions with Affiliates...........................................     108
   Section 7.10         Limitation on Voluntary Payments and Modifications of
                        Certain Documents...................................................     108
   Section 7.11         Changes in Business.................................................     110
   Section 7.12         Certain Restrictions................................................     110
   Section 7.13         Lease Obligations...................................................     111
   Section 7.14         Hedging Agreements..................................................     113
   Section 7.15         Plans...............................................................     113
   Section 7.16         Fiscal Year; Fiscal Quarter.........................................     113
   Section 7.17         Partnerships........................................................     113
   Section 7.18         Excluded Resales....................................................     113
   Section 7.19         Designated Senior Indebtedness......................................     113
   Section 7.20         Instruments.........................................................     114
   Section 7.21         Real Estate Collateral Value........................................     114
SECTION 8.           SECTION EVENTS OF DEFAULT..............................................     114
   Section 8.1       Events of Default......................................................     114
   Section 8.2       Rights and Remedies....................................................     118
SECTION 9.           SECTION THE AGENT......................................................     119
   Section 9.1       Appointment............................................................     119
   Section 9.2       Delegation of Duties...................................................     120
   Section 9.3       Exculpatory Provisions.................................................     120
   Section 9.4       Reliance by Agent......................................................     120
   Section 9.5       Notice of Default......................................................     121
   Section 9.6       Non-Reliance on Agent and Other Lenders................................     121
   Section 9.7       Indemnification........................................................     122
   Section 9.8       Agent in its Individual Capacity.......................................     122



                                      iii



                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                                                                                              
   Section 9.9       Successor Agent........................................................     122
SECTION 10.          MISCELLANEOUS..........................................................     123
   Section 10.1         Payment of Expenses, Indemnity, etc.................................     123
   Section 10.2         Right of Setoff.....................................................     125
   Section 10.3         Notices.............................................................     125
   Section 10.4         Successors and Assigns; Participation; Assignments..................     125
   Section 10.5         Amendments and Waivers..............................................     129
   Section 10.6         No Waiver; Remedies Cumulative......................................     132
   Section 10.7         Sharing of Payments.................................................     132
   Section 10.8         Application of Collateral Proceeds..................................     132
   Section 10.9         Governing Law; Submission to Jurisdiction...........................     133
   Section 10.10        Counterparts........................................................     134
   Section 10.11        Financial Advisor...................................................     134
   Section 10.12        Amendment and Restatement...........................................     134
   Section 10.13        Headings Descriptive................................................     135
   Section 10.14        Marshalling; Recapture..............................................     135
   Section 10.15        Severability........................................................     136
   Section 10.16        Independence of Covenants...........................................     136
   Section 10.17        Survival............................................................     136
   Section 10.18        Domicile of Loans...................................................     136
   Section 10.19        Limitation of Liability.............................................     136
   Section 10.20        Calculations; Computations..........................................     137
   Section 10.21        WAIVER OF TRIAL BY JURY.............................................     137
   Section 10.22        References..........................................................     137



                                       iv



                                 CKE SIXTH 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 5.28   -    Existing Indebtedness
Schedule 5.29   -    Joint Ventures; Non-Competition Agreements
Schedule 5.30   -    Immaterial Subsidiaries
Schedule 5.31   -    Franchisees/Licensees
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 SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                   SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                  SIXTH AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June
2, 2004, 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 ("BNP PARIBAS"), 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.

                                       1



                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         "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.

         "AGREEMENT" shall mean this Sixth 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 Term 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 2.75 to 1.0            2.75%                       1.50%                    0.50%

greater than 2.75                            3.00%                       1.75%                    0.50%


                                       2



                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

The Leverage Ratio shall be calculated as of the end of each fiscal quarter of
the Borrower, commencing with the fiscal quarter ending May 17, 2004 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 fiscal quarter of the Borrower ending November 1, 2004,
the Leverage Ratio shall be deemed to be greater than 2.75 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 2.75 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

                                       3



                                 CKE SIXTH 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 the Amended and Restated
Collateral Account Control Agreement, dated as of June 2, 2004, by and among the
Borrower, the Agent and BNP Paribas in its capacity as both a "securities

                                       4



                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

intermediary", as defined in Section 8-102 of the UCC, and a "bank", as defined
in Section 9-102 of the UCC, as the same may from time to time hereafter be
modified, restated, supplemented or amended.

         "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 Fourth 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 Fourth 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.

         "BORROWING" shall mean the incurrence of one Type of Loan of one
Facility from all the Revolving Lenders or the Term Lenders, as the case may be,
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

                                       5


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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, (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

                                       6


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 June 2, 2004.

         "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.

                                       7


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         "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 CURRENT ASSETS" means, as at any date of determination,
the total assets of the Borrower and its Subsidiaries on a consolidated basis
which may properly be classified as current assets in conformity with GAAP,
excluding cash and Cash Equivalents.

         "CONSOLIDATED CURRENT LIABILITIES" means, as at any date of
determination, the total liabilities of the Borrower and its Subsidiaries on a
consolidated basis which may properly be classified as current liabilities in
conformity with GAAP, excluding the current portion of Indebtedness and Hedging
Agreements.

         "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 deducted in the
calculation of Consolidated Net Income for such period, the prepayment premium
of $9,126,000 paid in connection with the redemption of the Senior Subordinated
Notes, plus (vi) to the extent deducted in the calculation of Consolidated Net
Income for such period, all extraordinary losses for such period, PROVIDED,
HOWEVER, that up to $4,000,000 of any loss incurred in connection with the
disposition of Timber Lodge shall be excluded from the calculation of
Consolidated EBITDA, minus (vii) 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.

                                       8


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         "CONSOLIDATED EXCESS CASH FLOW" shall mean, for any period, an amount
(if positive) equal to (i) the sum, without duplication, of the amounts for such
period of (a) Consolidated EBITDA and (b) the Consolidated Working Capital
Adjustment minus (ii) the sum, without duplication, of the amounts for such
period of (a) Capital Expenditures (net of any proceeds of any related
financings with respect to such expenditures), (b) Consolidated Cash Interest
Expense, (c) to the extent deducted in the calculation of Consolidated Net
Income for such period, federal and state income taxes for such period and
payable in cash with respect to such period, (d) amortization of principal of
Capitalized Leases and (e) amortization of principal of the Term Loan as set
forth in Section 2.1.

         "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

                                       9


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

under such lease to the extent that rent payments are actually made, all as
determined on a consolidated basis in accordance with GAAP.

         "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.

         "CONSOLIDATED WORKING CAPITAL" shall mean, as at any date of
determination, the excess (or deficit) of Consolidated Current Assets over
Consolidated Current Liabilities.

         "CONSOLIDATED WORKING CAPITAL ADJUSTMENT" means, for any period on a
consolidated basis, the amount (which may be a negative number) by which
Consolidated Working Capital as of the beginning of such period exceeds (or is
less than) Consolidated Working Capital as of the end of such period.

         "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.

                                       10


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         "CONTROLLING STOCKHOLDERS" shall mean William P. Foley II and 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 Wells Fargo Bank of Minnesota, National
Association (successor-in-interest to 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 and any refinancings or replacements thereof in a
principal amount not exceeding the principal amount of the Indebtedness so
refinanced or replaced (plus premium and accrued interest payable thereon and
fees payable in such refinancing) and with an average life to maturity of not
less than the then average life to maturity of the Indebtedness so refinanced or
replaced; PROVIDED that (i) the Lenders shall receive 10 days prior written
notice thereof and (ii) such refinancings or replacements thereof may not change
or amend any term or provision thereof if the effect of such change or
amendment, together with all other changes or amendments, would be materially
adverse to the Borrower, the Agent or the Lenders, in the Agent's reasonable
determination.

         "CONVERTIBLE SUBORDINATED NOTES" shall mean the convertible
subordinated notes issued by the Borrower pursuant to the 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 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).

                                       11


                                 CKE SIXTH 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).

         "DEFERRED COMPENSATION PLAN" shall mean a deferred compensation plan
substantially in the form provided to the Agent prior to the date hereof, upon
its adoption by the Borrower, as the same may be amended, restated, modified or
supplemented from time to time, PROVIDED, that any such amendments,
restatements, modifications and supplements shall be reasonably satisfactory to
the Agent.

         "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.

                                       12


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         "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 INDEMNITY AGREEMENT" shall mean that certain Amended and
Restated Environmental Indemnity Agreement, dated as of June 2, 2004, among the
Borrower, each Guarantor and the Agent, as amended, restated or otherwise
modified from time to time.

         "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.

         "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."

                                       13


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         "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

                                       14


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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.

         "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.

                                       15


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         "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 April 5, 2004, as amended, restated or
otherwise modified from time to time.

         "FEES" shall have the meaning set forth in Section 2.15(c).

         "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

                                       16


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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
Fourth 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 the Immaterial
Subsidiaries), 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 agreements) and swaps (including, without
limitation, any caps,

                                       17


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 (i) Timber Lodge; PROVIDED that
Timber Lodge shall no longer be an Immaterial Subsidiary in the event that an
Asset Disposition of all or substantially all of the Capital Stock of, or all or
substantially all of the assets of, Timber Lodge has not been consummated prior
to November 30, 2004 or such later date as may be approved in writing by the
Agent in it sole discretion and (ii) 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

                                       18


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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.

         "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).

                                       19


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         "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.

         "JUNIOR RECAPITALIZATION AMOUNT" shall mean, at the time of
determination, and after giving effect to any of the following amounts paid, the
result of $27,000,000 plus, (i) any Net Sale Proceeds of an Asset Disposition
with respect to Timber Lodge, plus (ii) any Consolidated Excess Cash Flow
limited to the extent such Consolidated Excess Cash Flow is not required to be
applied as a mandatory prepayment pursuant to Section 2.12(h), minus, (iii) the
sum of (A) all amounts paid by the Borrower from and after the Closing Date to
and including such time, to redeem, retire, purchase, defease or otherwise
acquire, directly or indirectly, any shares of any class of the Capital Stock of
the Borrower in accordance with to Section 7.7(d), plus (B) all amounts paid by
the Borrower from and after the Closing Date to and including such time, to
prepay, redeem, defease, purchase or acquire for value the Convertible
Subordinated Notes or otherwise segregate funds with respect to the Convertible
Subordinated Notes in accordance with Section 7.10(d)(iv).

         "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 $85,000,000, PROVIDED,
that the L/C

                                       20


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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.

         "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 manager or advisor as such Lender or
by an Affiliate of such Lender or advisor or manager.

         "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

                                       21


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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, the Environmental Indemnity Agreement, 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 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

                                       22


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 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

                                       23


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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
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 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 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.

         "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

                                       24


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 Fifth Amended and
Restated Credit Agreement dated as of November 12, 2003, 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.

         "PATRIOT ACT" shall have the meaning provided in Section 10.23.

         "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 Restaurant 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 Convertible Subordinated Notes or
the Senior Subordinated Notes.

         "PERSON" shall mean and include any individual, partnership, joint
venture, firm, corporation, limited liability company, association, trust or
other enterprise or

                                       25


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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:

         (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

                                       26


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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).

         "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.

         "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

                                       27


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 DATE" shall have the meaning provided in Section 4.1(x).

         "REDEMPTION PRICE" shall have the meaning provided in Section 4.1(x).

         "REFERENCE BANKS" shall mean each of 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;
PROVIDED, HOWEVER, that in the event any such Person shall cease to be a Lender
hereunder, such Person shall cease to be a Reference Bank.

         "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%.

         "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.

                                       28


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         "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 May 1, 2007.

         "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.

         "SENIOR SUBORDINATED NOTE INDENTURE" shall mean that certain Indenture
among the Borrower, certain Subsidiaries of the Borrower, and Wells Fargo Bank
of Minnesota, National Association (as successor-in-interest to 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.

         "SENIOR SUBORDINATED NOTES" shall mean the Senior Subordinated Notes
issued by the Borrower pursuant to the Subordinated Note Indenture, in a maximum
principal amount not to exceed $200,000,000 in the aggregate at the rate of
9-1/8%

                                       29


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

and due 2009, as the same may be amended, restated, supplemented or otherwise
modified in accordance with the terms of this Agreement; PROVIDED, that such
Subordinated Notes shall at all times be subordinated in respect of the
Obligations on subordination terms contained in the Subordinated Note Indenture;
PROVIDED, FURTHER, that the term "Subordinated Notes" shall include any notes or
instruments exchanged for then outstanding Subordinated Notes pursuant to the
Subordinated Note Indenture.

         "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.

         "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 Convertible Subordinated
Notes, the Convertible Subordinated Note Indenture, the Senior Subordinated
Notes and the Senior Subordinated Note Indenture.

         "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

                                       30


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 Fourth 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 Fourth 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 the 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 in the Register, 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.

         "TERM LOAN MATURITY DATE" shall mean July 2, 2008; PROVIDED, HOWEVER
that in the event that on July 2, 2008 either (i) the Leverage Ratio is less
than or equal to 2.5 to 1 or (ii) the aggregate principal amount of the
Convertible Subordinated Notes then outstanding is less than $50,000,000, the
Term Loan Maturity Date shall mean May 1, 2010.

         "TERM LOAN PAYDOWN" shall have the meaning set forth in Section 2.1.

                                       31


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         "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.

                                       32


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         "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.

         "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 $230,000,000. 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"):

                                       33


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT



     DATE                        PAYDOWN AMOUNT
- ---------------                  --------------
                              
July 1, 2004                      $   575,000
October 1, 2004                   $   575,000
January 1, 2005                   $   575,000
April 1, 2005                     $   575,000
July 1, 2005                      $   575,000
October 1, 2005                   $   575,000
January 1, 2006                   $   575,000
April 1, 2006                     $   575,000
July 1, 2006                      $   575,000
October 1, 2006                   $   575,000
January 1, 2007                   $   575,000
April 1, 2007                     $   575,000
July 1, 2007                      $   575,000
October 1, 2007                   $   575,000
January 1, 2008                   $   575,000
April 1, 2008                     $   575,000
July 1, 2008                      $   575,000
October 1, 2008                   $   575,000
January 1, 2009                   $   575,000
April 1, 2009                     $   575,000
July 1, 2009                      $   575,000
October 1, 2009                   $54,481,250
January 1, 2010                   $54,481,250


                                       34


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT



     DATE                        PAYDOWN AMOUNT
- ---------------                  --------------
                              
April 1, 2010                     $54,481,250
May 1, 2010                       $54,481,250


Notwithstanding the foregoing, 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 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.

                                       35


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                           (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

                                       36


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 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

                                       37


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 Term Loan that is a Base Rate
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) 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 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) 1.50%
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.

                           (b) (i) 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) 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 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) 2.75%
plus (y) the relevant

                                       38


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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) 2% plus (y) 1.75%) 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) 2% plus (y) the Applicable Margin
applicable to Term Loans that are Base Rate Loans 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).

                  Section 2.7 Interest Periods.

                                       39


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                           (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.

                                       40


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                                    (vi) 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 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

                                       41


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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, 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

                                       42


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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

                                       43


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 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.

                           (h) In the event that there shall be Consolidated
Excess Cash Flow for any fiscal year of the Borrower (commencing with fiscal
year 2005), the Borrower shall, no later than 90 days after the end of such
fiscal year, prepay the Loans in an aggregate amount equal to 50% of such
Consolidated Excess Cash Flow, minus the aggregate amount of any voluntary
prepayments made pursuant to Section 2.11 during such fiscal year.

                  Section 2.13 Application of Prepayments.

                           (a) All prepayments of the Loans required by clauses
(a) through (c) and (h) 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

                                       44


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 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

                                       45


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 June 15, 2004, 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.

                                       46


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                  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 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

                                       47


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         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).

                                       48


                                 CKE SIXTH 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

                                       49


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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.

                  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

                                       50


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 Assignee
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 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.

                                       51


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                           (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 prepay in full the outstanding principal amount of (A) the Senior
Subordinated Notes and (B) the Borrower's Loans (as defined in the Original
Credit Agreement) pursuant to the Original Credit Agreement 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 (other than
Timber Lodge so long as Timber Lodge is an Immaterial Subsidiary) 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 (other than Timber
Lodge so long as Timber Lodge is an Immaterial Subsidiary) and all

                                       52


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 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

                                       53


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         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.

                                    (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

                                       54


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         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,
         and (B) 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

                                       55


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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, 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

                                       56


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 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

                                       57


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 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 June 15, 2004, 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 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

                                       58


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

Loan Commitments, according to their respective Pro Rata Shares, in each case
payable quarterly in arrears on each Payment Date, commencing on June 15, 2004.
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 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:

                                    (i) any lack of validity or enforceability
         of the Letter of Credit, this Agreement or any other agreement or
         instrument relating thereto;

                                    (ii) 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;

                                    (iii) 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;

                                    (iv) any demand, statement or any other
         document presented under the Letter of Credit proving to be forged,

                                       59


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         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;

                                    (v) 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;

                                    (vi) 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;

                                    (vii) 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;

                                    (viii) the solvency or financial
         responsibility of any party issuing any documents in connection with a
         Letter of Credit;

                                    (ix) any failure or delay in notice of
         shipments or arrival of any property; and

                                    (x) 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

                                       60


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         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

                                       61


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

Bank under or in connection with Letters of Credit issued by it or any related
certificates shall not, in the absence of 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)

                                       62


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         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) 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 November 12, 2003, by the Borrower in favor of the Agent.

                                    (x) Subsidiary Trademark, Patent and
         Copyright Security Agreements. Each Subsidiary of the Borrower (other
         than Timber Lodge) party to the Second Amended and Restated Subsidiary
         Trademark Security Agreement, Second Amended and Restated Subsidiary
         Patent Security Agreement or Second Amended and Restated Subsidiary
         Copyright Security Agreement (as applicable), each dated as of November
         12, 2003 in favor of the Agent, shall have executed and delivered to
         the Agent a third 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.

                                       63


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                           (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.

                                       64


                                 CKE SIXTH 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 26,
2004, 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 that Closing
EBITDA equals at least $117,500,000, (ii) containing conclusions that the
Leverage Ratio, calculated as of the end of the Retail Period of the Borrower
ending April 19, 2004, does not exceed 3.60 and setting forth the calculations
required to establish such Leverage Ratio and (iii) containing conclusions that
the Adjusted Leverage Ratio, calculated as of the end of the Retail Period of
the Borrower ending April 19, 2004, does not exceed 5.0 and setting forth the
calculations required to establish such Adjusted Leverage Ratio.

                           (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

                                       65


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 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 assets and liabilities of the
Borrower and its consolidated Subsidiaries shall be materially consistent with
the projections dated April 27, 2004 and previously delivered by the Borrower to
the Agent.

                                       66


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                           (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, except to the extent that the consummation
of the Transactions may constitute a breach of Section 4.7 of the Senior
Subordinated Note Indenture for 30 days after the Closing Date. 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 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

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                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 LLP 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

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                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 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 26, 2004, 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) Redemption of Senior Subordinated Notes. The
Borrower shall have (i) given notice to the holders of the Senior Subordinated
Notes of the redemption thereof to occur upon the 30th day following the Closing
Date (the "Redemption Date") in accordance with the terms of the Senior
Subordinated Note

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                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

Indenture; and (ii) shall have deposited with the Trustee (as defined in the
Senior Subordinated Note Indenture) in escrow such amounts (the "Redemption
Price") as will be sufficient to pay the principal of, premium, Additional
Interest (as defined in the Senior Subordinated Note Indenture), if any, and
interest on all of the outstanding Senior Subordinated Notes on the Redemption
Date (such amount to be specified in the escrow agreement, dated as of and
delivered on the Closing Date, between the Borrower and the Trustee) and shall
have irrevocably instructed such Trustee to tender for and redeem the Senior
Subordinated Notes on the Redemption Date.

                           (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 April 27, 2004 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 April 27, 2004.

                           (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.

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                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                  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 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 26, 2004 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.

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                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                  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. SECTION 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 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,

                                       72


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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, except to the extent that the
consummation of the Transactions may constitute a breach of Section 4.7 of the
Senior Subordinated Note Indenture for 30 days after the Closing Date 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 April 27, 2004, 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.

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                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                  Section 5.8 Material Adverse Change. Since January 26, 2004,
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

                                       74


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 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

                                       75


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 November 12, 2003 (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.

                  Section 5.16 Representations and Warranties in Subordinated
Debt Documents. All representations and warranties made by any Loan Party in the
Subordinated Debt Documents, 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

                                       76


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

(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

                                       77


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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.

                           (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.

                                       78


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                  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 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

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                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 5.28 hereto is a complete and accurate list
of all Indebtedness of the Borrower and each of its Subsidiaries existing as of
the Closing Date and not otherwise permitted under Section 7.2, showing the
principal amount outstanding thereunder 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 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

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                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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

                                       81


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 2006 commencing on
February 1, 2005), a budget and financial forecast of results of operations and
sources and uses of cash (in form reasonably satisfactory to the 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

                                       82


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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.

                           (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

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                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                                             (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

                                       84


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         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 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

                                       85


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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) [Intentionally Omitted].

                           (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

                                       86


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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.

                           (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

                                       87


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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

                                       88


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

circumstances, unless the Borrower or any of its Subsidiaries is subject to an
order issued by any governmental authority requiring the 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 an Immaterial Subsidiary), a
Subsidiary Pledge Agreement. 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

                                       89


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 the Blocked Account Agreement.

                  Section 6.15 Interest Rate Protection. Within 90 days of the
Closing Date, the Borrower shall enter into and maintain in effect one or more
Interest Rate Agreements with respect to the Loans, in an aggregate notional
principal amount of not less than $70,000,000, each such Interest Rate Agreement
to be in form and substance reasonably satisfactory to Agent and with a term not
to expire prior to the date that is three (3) years from the Closing Date.

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
 --------------                                        -----
                                                    
May 17, 2004                                           3.80

August 9, 2004                                         3.70

November 1, 2004                                       3.60

January 31, 2005                                       3.50

May 23, 2005                                           3.30


                                       90


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT



 Quarter Ending                                        Ratio
 --------------                                        -----
                                                    
August 15, 2005                                        3.20

November 7, 2005                                       3.10

January 30, 2006                                       3.00

May 22, 2006                                           2.90

August 14, 2006 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 May 17, 2004 and each fiscal quarter thereafter to be less than 1.25.

                           (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 fiscal quarter of the Borrower ending on the
date set forth below, to be less than the amount set forth opposite such date:



     Retail Periods Ending                            Amount
     ---------------------                            ------
                                                
May 17, 2004                                       $105,000,000

August 9, 2004                                     $108,000,000

November 1, 2004                                   $110,000,000

January 31, 2005                                   $115,000,000

May 23, 2005                                       $120,000,000

August 15, 2005                                    $122,000,000

November  7, 2005 and thereafter                   $125,000,000


                                       91


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                           (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:



       Quarter Ending                                  Ratio
       --------------                                  -----
                                                    
May 17, 2004                                           5.60

August 9, 2004                                         5.50

November 1, 2004                                       5.45

January 31, 2005                                       5.35

May 23, 2005                                           5.25

August 15, 2005                                        5.15

November 7, 2005                                       5.05

January 30, 2006                                       5.00

May 22, 2006                                           4.90

August 14, 2006                                        4.80

November 6, 2006 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 2005 of the Borrower, not in
         excess of the sum of (I) $50,000,000, 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,

                                       92


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         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 2006 of the Borrower and each
         fiscal year of the Borrower thereafter, the ability of 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

                                       93


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         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).

                  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 5.28 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);

                           (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 , in the case of Capitalized Leases, the lesser of the
purchase price or the fair market value of the asset so financed or, in the case
of purchase money Indebtedness, 90% of the

                                       94


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 (i)
pursuant to the Convertible Subordinated Notes in an aggregate principal amount
not to exceed $105,000,000 and (ii) the Senior Subordinated Notes in an
aggregate original principal amount not to exceed $200,000,000, PROVIDED,
HOWEVER, that the Senior Subordinated Notes shall be permitted only to the
extent the Redemption Price has been irrevocably deposited with the Trustee (as
defined in the Senior Subordinated Note Indenture) on the Closing Date and all
of the outstanding Senior Subordinated Notes are redeemed on the Redemption
Date;

                           (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

                                       95


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 (other than Timber Lodge so long as Timber Lodge
is an Immaterial Subsidiary) 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;

                                       96


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                           (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;

                           (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

                                       97


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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

                           (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

                                       98


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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:

                           (1) 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,

                           (2) except with respect to an Asset Disposition in
         respect of Timber Lodge, 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-

                                       99


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         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, (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,

                           (3) 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),

                           (4) except with respect to an Asset Disposition in
         respect of Timber Lodge, 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,

                           (5) no Default or Event of Default has occurred and
         is continuing or would result from such asset sale, and

                           (6) 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

                                      100


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         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:

                  (A) 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

                  (B) deposit cash into the Collateral Account, which shall be
                  subject to the 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

                                      101


                                 CKE SIXTH 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 Senior Subordinated Note Indenture of obligations of the
Borrower under the Senior Subordinated Notes, PROVIDED, that such guarantees
shall at all times be subordinated in respect of the Obligations on
subordination terms contained in the Senior 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;

                                      102


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                           (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;

                           (d) The Borrower may redeem, retire or purchase any
shares of any class of the Capital Stock of the Borrower PROVIDED, that (i) the
purchase price paid by the Borrower for such Capital Stock shall not exceed, in
the aggregate after giving effect to such payment and all other payments made
pursuant to this Section 7.7(d) and Section 7.10(d)(iv) hereof, the Junior
Recapitalization Amount, (ii) both before and after giving effect to such
redemption, retirement or purchase no Default or Event of Default shall have
occurred and be continuing and (iii) after giving effect to such redemption,
retirement or purchase, no Revolving Loans shall be outstanding.

                           (e) So long as no Default of Event of Default shall
have occurred and be continuing, the Borrower may enter into with its directors
and executive officers a transaction or transactions pursuant to the terms of
the Deferred Compensation Plan whereby an Eligible Stock Option (as defined in
the Deferred Compensation Plan) is exercised by any such directors or executive
officers which results in a Qualifying Gain (as defined in the Deferred
Compensation Plan).

                  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
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

                                      103


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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

                                      104


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                                    (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;

                                    (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;

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                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                                             (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

                                      106


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                  to be delivered under this Section 7.8(f) to which such 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 otherwise, 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;

                                      107


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                           (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 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

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                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         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 Convertible Subordinated
Notes other than:

                                    (i) regularly scheduled semi-annual interest
         payments required to be made in cash;

                                    (ii) conversions of the Convertible
         Subordinated Notes into common stock of the Borrower;

                                    (iii) the redemption, repurchase or
         acquisition for value of Convertible Subordinated Notes, PROVIDED, that
         (A) the purchase price paid by the Borrower for such Convertible
         Subordinated Notes shall not exceed, in the aggregate after giving
         effect to such payment and all other payments made pursuant to Section
         7.7(d) hereof and this Section 7.10(d)(iv) hereof, the Junior
         Recapitalization Amount, (B) both before and after giving effect to
         such redemption, retirement or purchase no Default or Event of Default
         shall have occurred and be continuing and (C) after giving

                                      109


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         effect to such redemption, repurchase or acquisition for value, no
         Revolving Loans shall be outstanding; and

                                    (iv) the redemption, repurchase or
         acquisition for value of the Senior Subordinated Notes (A) by
         depositing the Redemption Price with the Trustee (as defined in the
         Senior Subordinated Note Indenture) on the Closing Date and by a
         redemption on the Redemption Date in accordance with the terms of the
         Senior Subordinated Note Indenture or (B) pursuant to a repurchase by
         the Borrower prior to the Redemption Date PROVIDED, that the purchase
         price paid by the Borrower for any such repurchase of Senior
         Subordinated Notes shall not exceed in the aggregate, the amount that
         would otherwise be required to redeem such Senior Subordinated Notes,
         pursuant to the preceding subclause (A).

                  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 Senior
Subordinated Notes and the Convertible 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

                                      110


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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);

                                             (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

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                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                  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;

                                      112


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                           (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.

                  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) or (b)
Designated Senior

                                      113


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

Indebtedness (as defined in the Senior 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. SECTION 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.

                           (c) Breach of Covenants.

                                    (i) The Borrower shall fail to perform or
         observe any agreement, covenant or obligation arising under Section
         6.1(f), Section 6.15 or Section 7.

                                    (ii) The Borrower shall fail to perform or
         observe any agreement, covenant or obligation arising under this

                                      114


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         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 the Convertible Subordinated Notes or any other
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 (except to the
extent that the consummation of the Transactions may allow the holders of the
Senior Subordinated Notes to accelerate or require a redemption on the
Redemption Date), 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,

                                      115


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 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

                                      116


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 Stockholder 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 Stockholder 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
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 of Control as defined in the Convertible
Subordinated Note Indenture shall have occurred; or (v) a Change of Control as
defined in the Senior Subordinated Note Indenture shall have occurred.

                                      117


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                           (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

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                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 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. SECTION 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

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                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 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

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                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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

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                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 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

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                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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, 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);

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                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                           (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.

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                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                  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 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

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                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 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).

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                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                           (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 (or such lesser amount agreed to by the Agent) and (B) for
Credit Exposure not less than $1,000,000 in the case of Term Loans (or such
lesser amount agreed to by the Agent), 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 (or such lesser amount agreed to by the Agent),
(ii) to an Assignee approved in writing by the Agent, which approval shall not
be unreasonably withheld and (iii) in the case of Revolving Loans, 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. 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.

                           (d) Assignment Requirements. Any Lender may at any
time and from time to time assign to one or more Assignees 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
Assignee, such transferor Lender, the Agent and, if required pursuant to clause
(iii) of Section 10.4(c) above, the Borrower. Upon (i) such execution of such
Assignment Agreement, (ii) delivery to the Agent of any consent required
pursuant to Section 10.4(c) above and a copy of the Assignment Agreement and
(iii) 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 Assignment Agreement (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 Assignee shall for all purposes be a Lender party to this

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                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 Agreement to
the extent, and only to the extent, necessary to reflect the addition of such
Assignee as a Lender and the resulting adjustment of the Commitments, if any,
arising from the purchase by such Assignee 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 or Assignee (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 an Assignee 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 Assignee, in each case in notional amounts reflecting such transfer. Each
such new Revolving Note and new Term Note shall be payable to the Assignee 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

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                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 (with
respect to the Commitments of such Lender) at any reasonable time and from time
to time upon reasonable prior notice. Upon receipt of a duly executed Assignment
Agreement, and satisfaction of the conditions set forth in Section 10.4(c) and
10.4(d), the Agent shall accept such Assignment Agreement and record the
information contained therein in the Register. No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.

                  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 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

                                      129


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

         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).

                                      130


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                                    (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 the Lenders
         adversely affected thereby whose Pro Rata Shares, in the aggregate, are
         greater than 66 2/3%.

                                    (v) waive a Default or Event of Default
         without the consent of the Revolving Lenders whose Pro Rata Shares, in
         the aggregate, are greater than 50% and the Required Lenders.

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. 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.

                                      131


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                  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.

                  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;

                                      132


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                                    (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

                                      133


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 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

                                      134


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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 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,

                                      135


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

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.

                                      136


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                  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 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.

                  Section 10.23 USA PATRIOT Act. Each Lender hereby notifies the
Borrower that pursuant to the requirements of the USA Patriot Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the "Patriot Act"), it is
required to obtain, verify and record information that identifies the Borrower,
which information includes the name and address of the Borrower and other
information that will allow such Lender to identify the Borrower in accordance
with the Patriot Act.

                            (Signature Pages Follow)

                                      137


                                 CKE SIXTH 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 SIXTH 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 SIXTH 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 SIXTH 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 SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                                    FLEET NATIONAL BANK

                                    By:_________________________________________
                                    Print Name: Heidi Tyng
                                    Title:

                                    Address:    100 Federal Street
                                                Boston, MA 02110

                                                Attn: Heidi Tyng
                                                Telephone: (617) 434-1087
                                                Telecopy:  (617) 434-0637

                                      S-5


                                 CKE SIXTH 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, Suite 400
                                                Mail Code: PD-OR-P4CB
                                                Portland, OR 97204

                                                Attn: Janet Jordan
                                                Telephone: (503) 275-5871
                                                Telecopy:  (503) 275-5428

                                      S-6


                                 CKE SIXTH 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 SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                                    ALLIED IRISH BANKS PLC

                                    By:_________________________________________
                                    Print Name:
                                    Title:

                                    Address:    Iona House - 1st Floor
                                                Shelbourne Road, Ballsbridge
                                                Dublin 4, Ireland

                                                Attn: John Timoney
                                                Telephone: (212) 515-6762
                                                Telecopy:  (212) 339-8325

                                      S-8


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                                    GENERAL ELECTRIC CAPITAL CORPORATION

                                    By:_________________________________________
                                    Print Name: Robert M. Kadlick
                                    Title:      Authorized Signatory

                                    Address:    Corporate Financial Services
                                                201 Merritt 7, P.O. Box 5201
                                                Norwalk, CT 06856-5201

                                                Attn: Jayson Gagnon
                                                Telephone: (203) 956-4069
                                                Telecopy:  (203) 956-4003

                                      S-9


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                                    EAST WEST BANK

                                    By:_________________________________________
                                    Print Name: Nancy A. Moore
                                    Title:

                                    Address:    415 Huntington Drive
                                                San Marino, CA 91108

                                                Attn: Nancy A. Moore
                                                Telephone: (626) 685-3636
                                                Telecopy:  (626) 799-3167

                                      S-10


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                                    FAR EAST NATIONAL BANK

                                    By:_________________________________________
                                    Print Name:
                                    Title:

                                    Address:    Two California Plaza
                                                350 South Grand Ave.
                                                41st Floor
                                                Los Angeles, CA 90071

                                                Attn: David Van Noord
                                                Telephone: (510) 267-6809
                                                Telecopy:  (510) 267-6801

                                      S-11


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT

                        Schedule 1.1 to Credit Agreement

                             Lenders and Commitments



            Name of Lender                            Revolving Loan Commitment
- ------------------------------------                  -------------------------
                                                         
Fleet National Bank                                         $28,000,000.00

Wells Fargo Bank N.A.                                       $25,000,000.00

BNP Paribas                                                 $23,000,000.00

First Bank & Trust                                          $20,000,000.00

U.S. Bank National Association                              $15,000,000.00

Union Bank of California, N.A.                              $15,000,000.00

Allied Irish Banks plc                                      $10,000,000.00

Far East National Bank                                      $ 5,000,000.00

General Electric Capital Corporation                        $ 5,000,000.00

East West Bank                                              $ 4,000,000.00


                                   Sch 1.1-1


                                 SCHEDULE 4.1(b)

                                  Local Counsel



       State                                             Counsel
       -----                                             -------
                                         
Delaware & California                       Stradling Yocca Carlson & Rauth
North Carolina                              Kilpatrick Stockton
Alabama                                     Johnston Barton Proctor & Powell LLP
Nevada                                      Schreck Brignone Godfrey


                                  Sch 4.1(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
560 Anglum Rd.                            560 Anglum Rd.
Hazelwood, MO 63042                       Hazelwood, MO 63042
Telephone:  (314) 592-2759                Telephone:  (314) 592-2759
Telecopy:  (314) 592-2760                 Telecopy:  (314) 592-2760

Fleet National Bank                       Fleet National Bank
100 Federal Street                        100 Federal Street
Boston, MA  02110                         Boston, MA  02110
Telephone:  (617) 434-4796                Telephone:  (617) 434-4796
Telecopy:  (617) 434-0800                 Telecopy:  (617) 434-0800

U.S. Bank National Association            U.S. Bank National Association
555 S. W. Oak Street, PD-OR-P7LN          555 S. W. Oak Street, PD-OR-P7LN
Portland, OR 97204                        Portland, OR 97204
Telephone: (503) 275-4395                 Telephone: (503) 275-4395
Telecopy: (503) 275-5428                  Telecopy: (503) 275-5428

Wells Fargo Bank N.A.                     Wells Fargo Bank N.A.
201 Third St., 8th Floor                  201 Third St., 8th Floor
San Francisco, CA 94103                   San Francisco, CA 94103
Telephone:  (415) 477-5431                Telephone:  (415) 477-5431
Telecopy:  (415) 979-0675                 Telecopy:  (415) 979-0675

Union Bank of California, N.A.            Union Bank of California, N.A.
1980 Saturn Street                        1980 Saturn Street
Monterey Park, CA 91755                   Monterey Park, CA 91755
Telephone: (323) 720 2870                 Telephone: (323) 720 2870
Telecopy: (323) 724-6198                  Telecopy: (323) 724-6198

General Electric Capital Corporation      General Electric Capital Corporation
Corporate Financial Services              Corporate Financial Services
201 Merritt 7, P.O. Box 5201              201 Merritt 7, P.O. Box 5201
Norwalk, CT 06856-5201                    Norwalk, CT 06856-5201
Telephone: (203) 229-5802                 Telephone: (203) 229-5802
Telecopy: (203) 229-5792                  Telecopy: (203) 229-5792


                                   Annex I-1


                                 CKE SIXTH AMENDED AND RESTATED CREDIT AGREEMENT



      DOMESTIC LENDING OFFICE                   EURODOLLAR LENDING OFFICE
      -----------------------                   -------------------------
                                       
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

Far East National Bank                    Far East National Bank
Two California Plaza                      Two California Plaza
350 South Grand Ave., 5th Floor           350 South Grand Ave., 5th Floor
Telephone: (213) 687-2588                 Telephone: (213) 687-2588
Telecopy: (213) 687-2581                  Telecopy: (213) 687-2581

Allied Irish Banks plc                    Allied Irish Banks plc
Business Support Unit                     Business Support Unit
Iona House, Shelbourne Road               Iona House, Shelbourne Road
Ballsbridge                               Ballsbridge
Dublin 4, Ireland                         Dublin 4, Ireland
Telephone: +353 1 641 6632                Telephone: +353 1 641 6632
Telecopier: +353 1 608 9672               Telecopier: +353 1 608 9672


                                   Annex I-2

EX-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, Chief Executive Officer of CKE Restaurants, Inc. (the
"Company"), certify that:

1.    I have reviewed this Quarterly Report on Form 10-Q for the period ended
      May 17, 2004, of the Company;

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. 33-8238 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
      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
      controls over financial reporting.

Date: June 22, 2004                          By: /s/ Andrew F. Puzder
                                                --------------------------------
                                                Andrew F. Puzder
                                                Chief Executive Officer

EX-31.2

                                                                    EXHIBIT 31.2

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

I, Theodore Abajian, Chief Financial Officer of CKE Restaurants, Inc. (the
"Company"), certify that:

1.    I have reviewed this Quarterly Report on Form 10-Q for the period ended
      May 17, 2004, of the Company;

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. 33-8238 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
      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
      controls over financial reporting.

Date: June 22, 2004                          By: /s/ Theodore Abajian
                                                --------------------------------
                                                Theodore Abajian
                                                Chief Financial Officer

EX-32.1

                                                                    EXHIBIT 32.1

                  CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER
     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 May
17, 2004, 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 780(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.

      In witness whereof, the undersigned has executed and delivered this
certificate as of the date set forth opposite his signature below.

Date: June 22, 2004                          /s/ Andrew F. Puzder
                                             -----------------------------------
                                             Andrew F. Puzder
                                             Chief Executive Officer

EX-32.2

                                                                    EXHIBIT 32.2

                  CERTIFICATION BY THE CHIEF FINANCIAL OFFICER
     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 May
17, 2004, 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 780(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.

      In witness whereof, the undersigned has executed and delivered this
certificate as of the date set forth opposite his signature below.

Date: June 22, 2004                       /s/ Theodore Abajian
                                          --------------------------------------
                                          Theodore Abajian
                                          Chief Financial Officer