8-K

 

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

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): July 19, 2005

CKE Restaurants, Inc.
__________________________________________
(Exact name of registrant as specified in its charter)

Delaware	1-11313	33-0602639
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)
6307 Carpinteria Ave., Ste. A, Carpinteria, California		93013
_________________________________ (Address of principal executive offices)		___________ (Zip Code)

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

Not Applicable
______________________________________________
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On July 19, 2005, CKE Restaurants, Inc. (the "Company") announced that its Board of Directors (the "Board") has approved a transaction through which William P. Foley will sell all of his outstanding stock options to the Company pursuant to the terms of a Stock Option Purchase Agreement dated as of July 19, 2005 (the "Agreement"). As of July 19, 2005, Mr. Foley held outstanding options to purchase an aggregate of 1,715,512 shares of the Company’s common stock, of which options to purchase 1,665,513 shares were vested and exercisable as of such date and options to purchase 49,999 shares were unvested. Under the Agreement, the Company will purchase Mr. Foley’s outstanding options for an aggregate purchase price of $11,000,000 and, upon payment of such purchase price, the Company will cancel and terminate Mr. Foley’s outstanding options and all rights to purchase shares of the Company’s common stock represented thereunder. In addition, Mr. Foley will deliver to the Company for canc ellation the stock option agreements pursuant to which his outstanding options were granted.

The foregoing description of the stock option purchase transaction does not purport to be complete and is qualified in its entirety by reference to the Stock Option Purchase Agreement entered into in connection with the transaction, which is attached hereto as Exhibit 10.1, and is hereby incorporated by reference.

Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

On July 19, 2005, Mr. Foley amicably resigned as both Chairman and a member of the Board, citing business and personal reasons. Mr. Foley’s resignation is effective immediately. Mr. Foley served on the Board with a term expiring at the Company’s 2006 Annual Meeting of Stockholders. Byron Allumbaugh, Vice Chairman of the Board, has been appointed to serve as the new Chairman of the Board.

Item 7.01 Regulation FD Disclosure.

On July 19, 2005, the Company issued a press release announcing the stock option purchase transaction, Mr. Foley’s resignation as both Chairman and a member of the Board and the appointment of Mr. Allumbaugh as Chairman of the Board. A copy of the press release is attached hereto as Exhibit 99.1.

In accordance with General Instruction B.2 of Form 8-K, the information furnished pursuant to this Item 7.01, including Exhibit 99.1, shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

The following exhibits are included herewith:

Exhibit 10.1 Stock Option Purchase Agreement, dated as of July 19, 2005, by and between CKE Restaurants, Inc. and William P. Foley.

Exhibit 99.1 Press release issued by CKE Restaurants, Inc., dated July 19, 2005, announcing the stock option purchase transaction, the resignation of William P. Foley and the appointment of Byron Allumbaugh.

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 hereunto duly authorized.

	CKE Restaurants, Inc.
July 19, 2005	By:	/s/ Theodore Abajian
		Name: Theodore Abajian
		Title: Executive Vice President and Chief Financial Officer

Exhibit Index

Exhibit No.	Description
10.1	Stock Option Purchase Agreement, dated as of July 19, 2005, by and between CKE Restaurants, Inc. and William P. Foley.
99.1	Press release issued by CKE Restaurants, Inc., dated July 19, 2005, announcing the stock option purchase transaction, the resignation of William P. Foley and the appointment of Byron Allumbaugh.

EX-10.1

STOCK OPTION PURCHASE AGREEMENT

This Stock Option Purchase Agreement (“Agreement”) is entered into as of this 19^th day of July, 2005, by and between CKE Restaurants, Inc., a Delaware corporation (the “Company”), and William P. Foley II, an individual (“Optionee”).

R E C I T A L S:

WHEREAS, Optionee currently holds options (collectively, the “Options”) to purchase an aggregate of 1,715,512 shares of common stock of the Company, as set forth in Exhibit A attached hereto, and desires to sell all of the Options to the Company pursuant to the terms and conditions set forth in this Agreement; and

WHEREAS, the Company is willing to purchase the Options pursuant to the terms and conditions set forth in this Agreement.

A G R E E M E N T:

NOW, THEREFORE, in consideration of the promises and mutual covenants in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. Purchase and Sale of Options.

1.1 Purchase and Sale. The aggregate purchase price payable to Optionee for the Options shall be Eleven Million Dollars ($11,000,000) (the “Purchase Price”). Each party hereto acknowledges that the Purchase Price was the result of arm’s length negotiations and represents the full and fair consideration for the Options and the rights to purchase the shares of the Company’s common stock represented thereby.

1.2 Cancellation and Surrender of Options. Concurrent with the date hereof, Optionee agrees and acknowledges that, upon payment by the Company of the Purchase Price, the Company will cancel and terminate the Options and all rights to purchase shares of common stock of the Company thereunder. In addition, promptly following the payment by the Company of the Purchase Price, Optionee agrees to deliver to the Company for cancellation those stock option agreements pursuant to which the Options were granted. The Optionee agrees that any stock option agreements or similar instruments relating to the Options previously entered into between the Company and the Optionee are hereby irrevocably terminated automatically upon delivery of the Purchase Price to the Optionee and that the Optionee waives and relinquishes any and all rights to the Options, including the right to exercise any such Options prior to, on or after the date hereof.

2. Withholding. Optionee acknowledges that all appropriate federal, state and other tax withholdings may be deducted from the payments provided for in Section 1. Optionee shall be solely responsible for all applicable taxes relating to the payments provided for in Section 1 above.

3. Representations and Warranties of Optionee. Optionee hereby represents and warrants to the Company as follows:

3.1 Title. Optionee owns the Options free and clear of all liens, charges, claims, encumbrances, security interests, equities, restrictions on transfer or other defects in title of any kind or description. Optionee has not transferred any of the Options or granted any option, warrant, right to purchase or any similar right or interest in or to any of the Options.

3.2 Legal Power. Optionee has the full legal right and authority to enter into this Agreement and to consummate the transactions contemplated hereby.

3.3 Enforceability; No Conflict. This Agreement has been duly executed and delivered by Optionee, and constitutes Optionee’s legal, valid and binding obligation, enforceable against him in accordance with its terms. The execution, delivery and performance by Optionee of this Agreement, and the consummation of the transactions contemplated hereby, do not and will not result in or constitute (i) a default, breach or violation under any mortgage, deed of trust, indenture, note, bond, license, lease agreement or other instrument to which he is a party or by which any of his properties or assets are bound or (ii) a violation of any statute, rule, regulation, order, judgment or decree of any court, public body or authority applicable to Optionee or the Options.

3.4 Access to Information; Informed Decision. Optionee is familiar with and understands the Company’s business, assets and operations and the regulatory, industry and market conditions under which the Company operates. Optionee also has been provided access to and the opportunity to review all material financial and business records of the Company, and to ask such questions of the current officers of the Company, as he deemed necessary to make a deliberate and informed decision as to whether to sell the Options on the terms and conditions provided for in this Agreement. In addition, Optionee has retained or has had the opportunity to retain counsel of his own choosing to represent him in connection with the negotiation and preparation of this Agreement and has not relied upon counsel for the Company in connection herewith.

3.5 Consideration. Optionee acknowledges and agrees that no additional consideration has been promised to Optionee and that the consideration to be paid pursuant to the terms of this Agreement is full and fair consideration for the Options.

4. Miscellaneous.

4.1 Severability. Should any provision or portion of this Agreement be held to be unenforceable or invalid for any reason, the remaining provisions and portions of this Agreement shall be unaffected by such holding.

4.2 Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written. No supplement, modification, waiver or termination of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided.

4.3 Further Assurances. Each party hereto shall, from time to time at and after the date hereof, execute and deliver such instruments, documents and assurances and take such further actions as the other party may reasonably request in order to carry out the purpose and intent of this Agreement.

4.4 Governing Law; Successors and Assigns. This Agreement shall be governed by the laws of the State of California without regard for conflicts of laws principles and shall be binding upon the heirs, personal representatives, executors, administrators, successors and assigns of the Optionee.

4.5 Waivers. No waiver of any breach or default hereunder shall be considered valid unless in writing, and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or similar nature.

4.6 Counterparts; Delivery. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall be deemed one instrument. This Agreement may be delivered by facsimile.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, this Stock Option Purchase Agreement has been executed as of the date and year first above written.

OPTIONEE:	COMPANY:
	CKE RESTAURANTS, INC.,
	a Delaware corporation
	/s/ Andrew F. Puzder
/s/ William P. Foley II		—
—	Andrew F. Puzder
William P. Foley II	President and Chief Executive Officer

Exhibit A

Outstanding Options

Date of Option Grant	Number of Options
Vested Options
01/10/96		272,250
11/14/96		226,875
06/18/97		242,000
03/24/99		200,000
04/09/99		179,312
04/09/99		20,688
06/18/02		100,000
06/10/03		33,334
06/14/04		16,667
05/13/99		147,300
01/05/00		73,650
10/25/00		104,337
10/31/01		49,100
Total Vested Options		1,665,513
Unvested Options
06/10/03		16,666
06/14/04		33,333
Total Unvested Options		49,999
Total Outstanding Options		1,715,512

Contact: Ted Abajian
Executive Vice President and Chief Financial Officer
805-745-7725

CKE RESTAURANTS, INC. NAMES LONG-TIME BOARD MEMBER, BYRON ALLUMBAUGH, CHAIRMAN OF THE BOARD
Company Also Announces Purchase of Resigning Chairman’s Options

CARPINTERIA, Calif. – July 19, 2005 – CKE Restaurants, Inc. (NYSE: CKR) announced today that William P. Foley has resigned as Chairman of the Board and as a director of the company. His resignation is effective immediately. Mr. Foley first became a director of CKE Restaurants in 1993, and began serving as Chairman of the Board of Directors in March 1994. He was the company’s CEO from 1995 through March 2000.

“I am very proud of what we have accomplished at CKE since I joined the Board, but I feel it’s time for me to pursue other pressing business and personal commitments,” said Mr. Foley. “This was not an easy decision, as I have enjoyed being a Board member and playing a part in the company’s recovery and success. I remain a shareholder and a supporter of CKE, and believe that, with the current Board and management, the company is in very good hands.”

“I completely understand Bill’s reasons for resigning,” said Andrew F. Puzder, CKE Restaurants, Inc. president and CEO. “Nonetheless, Bill has been a friend and mentor for years and, while he has assured me he will be available for advice and consultation, his presence on our Board will be missed. I believe I speak on behalf of our entire Board and our management team in wishing Bill great success in the future. His contributions to the success of this company will long be remembered.”

The company announced that its Board of Directors approved Byron Allumbaugh as Mr. Foley’s successor as Chairman of the Board. Mr. Allumbaugh, who currently serves as Vice Chairman of the Board, has been a Board member since 1996. He is a business consultant and the former Chairman of the Board and CEO of Ralph’s Grocery Company.

“Having served on the CKE Board of Directors for nearly ten years now, I know the company quite well,” said Allumbaugh. “I look forward to helping the company continue to grow and prosper in the future in my new role as Chairman of the Board.”

In connection with Mr. Foley’s resignation, the company’s Board of Directors approved an agreement pursuant to which the company will purchase all of Mr. Foley’s outstanding options for a cash consideration of $11,000,000, which the company will record as an expense in the current quarter. As of July 18, 2005, Mr. Foley held outstanding options to purchase an aggregate of 1,715,512 shares of the company’s common stock, of which options to purchase 1,665,513 shares were vested and exercisable as of such date, and options to purchase 49,999 shares were unvested. The purchase price for Mr. Foley’s options was determined after arm’s length negotiations using the Black-Scholes methodology. Citigroup Global Markets, Inc. acted as financial advisor to the company in connection with the option purchase.

As of the first fiscal quarter ended May 23, 2005, CKE Restaurants, Inc., through its subsidiaries, had a total of 3,165 franchised or company-owned restaurants in 44 states and in 11 countries, including 1,020 Carl’s Jr.® restaurants, 2,029 Hardee’s® restaurants and 100 La Salsa Fresh Mexican Grill® restaurants.

Safe Harbor Disclosure

Matters discussed in this news release contain forward-looking statements relating to future plans and developments, financial goals, dividend declarations, share repurchase programs and operating performance that are based on management’s current beliefs and assumptions. Such statements are subject to risks and uncertainties. Factors that could cause the Company’s 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 the Company’s products, effectiveness of operating and product 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, employee health insurance costs and general liability premiums and claims experience, changes in the Company’s suppliers’ abilities to provide quality and timely products to the Company, delays in opening new restaurants or completing remodels, severe weather conditions, the operational and financial success of the Company’s franchisees, franchisees’ willingness to participate in our strategy, availability of financing for the Company and its franchisees, unfavorable outcomes on litigation, changes in accounting policies and practices, new legislation or government regulation (including environmental laws), the availability of suitable locations and terms for the sites designed for development, and other factors as discussed in the Company’s filings with the Securities and Exchange Commission.

Forward-looking statements speak only as of the date they are made. The Company undertakes 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.

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