10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)
þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended January 29, 2007
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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 incorporation or organization)	(I.R.S. Employer Identification No.)

6307 Carpinteria Ave., Ste. A

Carpinteria, California 93013

(Address of principal executive offices)

Registrant’s telephone number, including area code

(805) 745-7500

Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $.01 par value	New York Stock Exchange
4% Convertible Subordinated Notes due 2023	New York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act:

None

Indicate by check mark whether the registrant is well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes þ     No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o     No þ

Indicate by check mark 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 þ     No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

(Check one):  Large accelerated filer þ     Accelerated filer o     Non-accelerated filer o

Indicate by check mark if the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o     No þ

The aggregate market value of the voting stock held by non-affiliates of the registrant as of August 14, 2006 was $885,818,062.

The number of outstanding shares of the registrant’s common stock was 67,198,004 as of March 22, 2007.

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the registrant’s Proxy Statement for the 2007 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission within 120 days of January 29, 2007, are incorporated by reference into Part III of this Report.

CKE RESTAURANTS, INC. AND SUBSIDIARIES

INDEX TO ANNUAL REPORT ON FORM 10-K
For the Fiscal Year Ended January 29, 2007

TABLE OF CONTENTS

			Page
			No.
Part I
	Item 1.	Business		1
	Item 1A.	Risk Factors		11
	Item 1B.	Unresolved Staff Comments		15
	Item 2.	Properties		16
	Item 3.	Legal Proceedings		17
	Item 4.	Submission of Matters to a Vote of Security Holders		17
Part II
	Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		18
	Item 6.	Selected Financial Data		20
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		60
	Item 8.	Financial Statements and Supplementary Data		60
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		60
	Item 9A.	Controls and Procedures		61
	Item 9B.	Other Information		63
Part III
	Item 10.	Directors and Executive Officers of the Registrant		64
	Item 11.	Executive Compensation		64
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		64
	Item 13.	Certain Relationships and Related Transactions		65
	Item 14.	Principal Accountant Fees and Services		65
Part IV
	Item 15.	Exhibits and Financial Statement Schedules		66
EXHIBIT 10.79
EXHIBIT 10.80
EXHIBIT 12.1
EXHIBIT 21.1
EXHIBIT 23.1
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

i

PART I

Item 1.   Business

Our fiscal year ends on the last Monday in January each year. In this Annual Report on Form 10-K, we refer to the fiscal years by reference to the calendar year in which they end (e.g., the fiscal year ended January 29, 2007, is referred to as “fiscal 2007,” and the fiscal year ended January 30, 2006, is referred to as “fiscal 2006”). Fiscal 2007 and fiscal 2006 each include 52 weeks, and fiscal 2005 includes 53 weeks. For clarity of presentation, we generally label all fiscal years presented as if the fiscal year ended January 31. All dollar amounts, except per share amounts, presented in this Annual Report on Form 10-K are in thousands, unless otherwise noted.

Company Overview

We own, operate, franchise or license 3,105 quick-service and fast-casual restaurants, which are referred to in our industry as QSRs, primarily under the brand names Carl’s Jr.^®, Hardee’s^® and La Salsa Fresh Mexican Grill^® (“La Salsa”). According to the June 26, 2006 issue of Nation’s Restaurant News, our Hardee’s and Carl’s Jr. chains are the tenth and twelfth largest sandwich restaurant chains in the U.S., respectively, based on U.S. system-wide foodservice sales. Our system-wide restaurant portfolio at January 31, 2007, consisted of:

	Carl’s Jr.		Hardee’s		La Salsa		Other		Total
Company-operated		393		696		55		1		1,145
Franchised and licensed		694		1,210		41		15		1,960
Total		1,087		1,906		96		16		3,105

Carl’s Jr.  The first Carl’s Jr. restaurant was opened in 1956. Our Carl’s Jr. restaurants are located predominantly in the Western United States. Carl’s Jr. restaurants offer superior quality food, a largely burger-based menu with other premium quality dining selections at reasonable prices and attentive customer service to create a quality dining experience for our customers. As of January 31, 2007, 171 of our 393 company-operated Carl’s Jr. restaurants are dual-branded with Green Burrito^®. These dual-branded Carl’s Jr. restaurants typically have both higher sales and profits. Carl’s Jr. is predominantly a lunch and dinner concept, with approximately 85% of Carl’s Jr. company-operated restaurant revenue coming from the lunch and dinner portion of its business in fiscal 2007.

Hardee’s.  The first Hardee’s restaurant was opened in 1960. Our Hardee’s restaurants are located predominantly in the Southeastern and Midwestern United States. Hardee’s lunch and dinner menu is anchored by its super-premium quality line of 1/3-, 1/2- and 2/3-lb. Angus beef Thickburgers^tm, which are complemented with best-in-class charbroiled and crispy chicken sandwiches. Historically, Hardee’s has been known as the best choice for breakfast in the QSR industry, with approximately 44% of company-operated revenue derived from that portion of its business in fiscal 2007. Hardee’s breakfast menu can attribute much of its success to the industry-first Made From Scratch^® biscuits and biscuit breakfast sandwiches. The brand’s emphasis on superior customer service coupled with its more balanced current menu now gives Hardee’s an ideal opportunity to build sales in all meal occasions.

La Salsa.  We acquired La Salsa on March 1, 2002, when we acquired Santa Barbara Restaurant Group, Inc. (“SBRG”). Our La Salsa restaurants are located predominantly in California, and are quality, fast-casual restaurants featuring traditional Mexican food items including tacos, burritos, enchiladas and salads.

Recent Developments

Restatement of Prior Period Financial Results.  As reported in our Current Report on Form 8-K filed on February 28, 2007, the Audit Committee of our Board of Directors, after discussion with management and KPMG LLP, our independent registered public accounting firm, concluded on February 27, 2007, that our previously issued fiscal 2006 consolidated financial statements needed to be restated. As a result of the restatement, the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2006, should no longer be relied upon, and the consolidated financial statements for fiscal 2006 contained in this Annual Report

1

should be relied upon in their place. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Restatement of Previously Issued Financial Statements and Notes to Consolidated Financial Statements — Note 1 — Significant Accounting Policies — Restatement of Previously Issued Financial Statements” for additional information.

Amendment to Sixth Amended and Restated Credit Facility (“Facility”).  On January 22, 2007, we entered into an amendment of our existing senior credit facility, increasing the aggregate amount that we are permitted to expend for stock repurchases and dividend payments by $130,000, and increasing the total amount available to us for revolving loans under the Facility by $100,000 to $250,000. As a result of the increased capacity for stock repurchases under the Facility, our Board of Directors authorized a further expansion of our stock repurchase program, as discussed below.

Seventh Amended and Restated Credit Facility (“Amended Facility”). On March 27, 2007, we amended and restated the Facility by entering into the Amended Facility, which provides for a $320,000 senior secured credit facility consisting of a $200,000 revolving credit facility and a $120,000 term loan. The revolving credit facility matures on March 27, 2012. The principal amount of the term loan is scheduled to be repaid in quarterly installments, with the remaining principal balance scheduled to mature on March 27, 2013.

Repurchase of Common Stock.  Pursuant to a program (“Stock Repurchase Plan”) authorized by our Board of Directors, as modified during fiscal 2007, we are allowed to repurchase up to an aggregate of $200,000 of our common stock in the open market. As part of our Stock Repurchase Plan, we have implemented a stock repurchase plan pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), under which we are allowed to repurchase $5,000 of our common stock in the open market each fiscal quarter through the quarter ending January 28, 2008. Rule 10b5-1 allows us to repurchase our common stock when we might otherwise be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods. As of January 31, 2007, we have repurchased common stock totaling $90,613, with $81,057 of these repurchases occurring during fiscal 2007. Based on the Board of Directors’ authorization and the amount of cumulative repurchase of our common stock that we have already made thereunder, we are permitted to make additional repurchases of our common stock up to $109,387 under the Stock Repurchase Plan as of January 31, 2007.

Expiration of Stockholder Rights Plan.  During fiscal 2006, our Board of Directors approved the adoption of a Stockholder Rights Plan (“Rights Plan”) pursuant to a Rights Agreement between us and Mellon Investor Services, LLC, dated October 10, 2005 (“Rights Agreement”). On December 31, 2006, the Rights expired pursuant to the terms of the Rights Plan. The Rights expired because our Board of Directors determined not to solicit the requisite stockholder approval of the Rights Agreement by December 31, 2006. As a result, the Rights have no further force or effect and the Rights Plan has effectively terminated.

Purchase of Restaurant Assets.  During March 2006, we purchased, for aggregate consideration of $15,762, a total of 36 restaurant locations that we had previously leased from a commercial lessor.

Termination of Franchise Agreement.  During February 2006, we terminated our franchise agreement with a Hardee’s franchisee that operated 90 franchised restaurants as a result of its inability to remedy, on a timely basis, certain defaults under the terms of the agreement. At that time, ten of the affected restaurants were located on property that we owned and leased to the franchisee, and 51 of the affected restaurants were located on leased premises that we sublet to the franchisee. During March 2006, we purchased five additional parcels that we had previously leased from a commercial lessor and sublet to the franchisee. The franchisee continued to operate the affected restaurants pursuant to a temporary license agreement until May 18, 2006, when we terminated the license agreement, leases and subleases and assumed full operational control of the aforementioned 61 restaurants. Since the termination of the license agreement, we have purchased $2,400 of existing equipment, closed 19 of the 61 restaurants and recorded facility action charges of $1,959 related to closing these restaurants. We currently operate the remaining 42 restaurants as company-operated restaurants. The former franchisee’s lenders (through a receiver) kept the remaining 29 restaurant locations, of which they subsequently closed 15. During October 2006, we purchased 11 of these restaurants for $6,538 and an existing franchisee, under a franchise agreement, purchased the remaining three restaurants. The total purchase price included land, buildings and existing equipment.

Adoption of New Accounting Pronouncements. See Note 3 of Notes to Consolidated Financial Statements.

2

Use of Non-GAAP Financial Measurements

In various places throughout this Annual Report on Form 10-K, we use certain non-GAAP financial measures, which we believe provide valuable information to our stockholders. An example of such a non-GAAP financial measure would be Adjusted EBITDA, which is a measure used by our senior lenders under the Facility to evaluate our ability to service debt. Additional information regarding the non-GAAP financial measures used in this Annual Report can be found under the headings “Presentation of Non-GAAP Measurements” and “Liquidity and Capital Resources” in Item 7 of this Annual Report on Form 10-K.

Contact Information; Obtaining Copies of this Annual Report

We are incorporated in the State of Delaware. Our principal offices are located at 6307 Carpinteria Avenue, Suite A, Carpinteria, California, 93013. Our general website address is www.ckr.com.

Electronic copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, are available free of charge by visiting the “Investors” section of www.ckr.com.  These reports are posted as soon as reasonably practicable after they are electronically filed with the Securities and Exchange Commission. You may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (www.sec.gov) that contains our reports.

In addition, print copies of any of the foregoing documents may be obtained free of charge by visiting the “Contact” section of www.ckr.com, or by contacting Investor Relations at (805) 745-7500.

Information contained in our website is not deemed to be a part of this Annual Report.

Competitive Strengths

The QSR industry is highly competitive. In order to maintain or increase their sales, a number of our major competitors have from time to time discounted certain menu items and promoted these discounted “value items.” By contrast, we have developed and implemented a strategy to differentiate our Carl’s Jr. and Hardee’s brands from our competitors that includes the following elements:

•  promotion of distinctive, premium, great tasting products such as the Carl’s Jr. line of Six Dollar Burgers^tm, Hand-Scooped Ice Cream Shakes and Malts^tm and Breakfast Burgers^tm and burritos; as well as Hardee’s line of 1/3-, 1/2- and 2/3-lb. Angus Beef Thickburgers, Hand-Scooped Ice Cream Shakes and Malts^tm, and Made From Scratch^tm breakfast biscuits;

•  utilization of gas-fired charbroilers in all of our Carl’s Jr. and Hardee’s restaurants to improve taste, operations and food safety;

•  implementation of a program to focus on the essentials of restaurant operations — quality, service and cleanliness; and

•  initiation of a program to elevate customer service at Carl’s Jr. and Hardee’s to an industry-leading level.

Carl’s Jr. and Hardee’s further differentiate themselves from their competitors by preparing their products according to exacting standards so that customers receive hot and fresh food, and by offering their customers the convenience of table service once the order is placed.

Carl’s Jr.  Carl’s Jr. is a well-recognized brand that has operated profitably in each of the past ten fiscal years. The brand focuses on selling its signature products, such as the Carl’s Famous Star^® hamburger, The Six Dollar Burger^® and the Green Burrito Taco Salad^tm, and on developing innovative new premium products, such as the Pastrami Burger^tm, Hand-Scooped Ice Cream Shakes and Malts and the Smoked Sausage Breakfast Sandwich^tm, to attract what we characterize as the “young, hungry guy.” Carl’s Jr. focus on this customer type is enhanced through edgy, breakthrough advertising and high visibility sports sponsorships with professional sports teams in its major markets, including the National Basketball Association’s Los Angeles Lakers, Los Angeles Clippers and Sacramento Kings and Major League Baseball’s (“MLB”) Los Angeles Dodgers and Los Angeles Angels of

3

Anaheim. While we continue to build new Carl’s Jr. restaurants, most of the brand’s growth in recent years has come from its strong franchise community and its dual-branding opportunities with our Green Burrito brand.

Hardee’s.  Hardee’s is a well-recognized brand that has completed its turnaround phase and is now focused on long-term growth initiatives. The brand focuses on selling its signature products, such as the Thickburger^® and Made From Scratch breakfast biscuits, and on developing innovative new premium products, such as the Philly Cheesesteak Thickburger^tm, Jalapeño Thickburger^tm, Smoked Sausage Biscuit^tm, Hand-Scooped Ice Cream Shakes and Malts and the Monster Biscuit^tm, to attract what we characterize as the “young, hungry guy.” Hardee’s focus on this customer type is enhanced through edgy, breakthrough advertising and high visibility sports sponsorships with professional sports teams in its major markets, including the MLB’s St. Louis Cardinals. While we believe the greatest opportunity for the brand is within building the lunch and dayparts at our existing restaurants, we will gradually increase the number of new restaurants built and will continue to rollout the test of our Red Burrito dual-branded concept.

La Salsa.  Our La Salsa restaurants, modeled after the “taquerias” of Mexico, primarily cater to the lunch and dinner segment, and feature freshly prepared items such as tacos, burritos, enchiladas, salads and guacamole. La Salsa restaurants emphasize generous portions and quality ingredients including Grade “A” skinless chicken, USDA lean steak, fish, shrimp, real cheddar and Monterey Jack cheeses, long-grain rice, both black and pinto beans and avocado.

All ingredients are fresh, and there are no can openers or microwave ovens in the restaurants. Food is prepared to order, so that each item served will be fresh and hot. The restaurants offer a self-service salsa bar featuring a variety of condiments and freshly made salsas.

Business Strategy

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

•  increase revenues, average unit volumes and operating income at our major brands;

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

•  capitalize on our unique brand positioning and cutting-edge advertising;

•  offer premium products that compete on quality, innovation and taste;

•  continue to capitalize on dual-branding opportunities available with Green Burrito and Red Burrito^tm;

•  control costs and improve capital structure while increasing shareholder distributions;

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

•  remodel our existing store base to remain competitive; and

•  strengthen our franchise system and pursue further franchising opportunities, including new franchisees.

Increasing average unit volume at Hardee’s remains a primary focus of our management team. The key driver in improving Hardee’s profitability is increasing sales. For the fiscal year ended January 31, 2007, the average unit volume (“AUV”) at our company-operated Hardee’s restaurants was approximately $916, up from $874 in fiscal 2006 and $862 in fiscal 2005. Franchise-operated AUV was approximately $949 at the end of fiscal 2007, up from $897 in fiscal 2006 and $891 in fiscal 2005. We can provide no assurance that we will be successful in improving company-operated Hardee’s restaurant AUVs, or maintaining franchise-operated Hardee’s restaurant AUVs.

Franchise Strategy

Our franchise and licensing strategy depends upon on our franchisees’ active involvement in and management of restaurant operations. Candidates are reviewed for appropriate operational experience and financial stability, including specific net worth and liquidity requirements. Generally, area development agreements require franchisees to open a specified number of restaurants in a designated geographic area within a specified period of time. Our franchise strategy is designed to further the development of our restaurant chains and reduce the total capital we need to develop our brands.

4

Carl’s Jr.  Franchise agreements with Carl’s Jr. franchisees, which operate in Alaska, Arizona, California, Colorado, Hawaii, Idaho, Nevada, New Mexico, Oklahoma, Oregon, Texas, Utah and Washington, generally provide for initial fees and continuing royalty payments and advertising fees to us based upon a percentage of gross sales (generally 4.0% for royalties and 5.0% to 6.0% for advertising). As of January 31, 2007, our Carl’s Jr. franchisees and licensees operated 694 Carl’s Jr. restaurants, or approximately 64% of the Carl’s Jr. system. The majority of our Carl’s Jr. franchisees own more than one restaurant, with 17 franchisees owning ten or more restaurants.

Hardee’s.  Franchise agreements with Hardee’s franchisees, who operate restaurants predominantly in the Southeastern and Midwestern United States, generally provide for initial fees and continuing royalty payments to us, and advertising fees to a national fund and/or a regional cooperative fund, based upon a percentage of gross sales (generally 4.0% for royalties and 4.0% to 5.0% for advertising). As of January 31, 2007, our Hardee’s franchisees and licensees operated 1,210 Hardee’s restaurants, or approximately 63% of the Hardee’s system. The majority of our Hardee’s franchisees own more than one restaurant, with 24 franchisees owning ten or more restaurants. Since our acquisition of Hardee’s in 1997, we have worked diligently to develop and enhance productive relationships with our Hardee’s franchisees. We have been supportive of the Hardee’s franchise association, and we believe that we have strong communications with the franchisees.

La Salsa.  Franchise agreements with La Salsa franchisees, which operate restaurants predominantly in California, generally provide for initial fees and continuing royalty payments and advertising fees to us based upon a percentage of gross sales (generally 5.0% for royalties and 1.0% to 2.0% for advertising). As of January 31, 2007, our La Salsa franchisees and licensees operated 41 La Salsa restaurants, or approximately 43% of the La Salsa system.

The results of executing our business strategy have been:

•  We evolved the system-wide mix of restaurants to one that is primarily franchise-operated. At the end of fiscal 2007, approximately 64% of Carl’s Jr. and Hardee’s restaurants combined were franchised.

•  We closed many unprofitable Hardee’s restaurants and increased our AUV for the brand.

•  We believe we have improved the food quality, service and cleanliness at our Hardee’s restaurants.

•  Our same-store sales trends for company-operated restaurants, for each brand by quarter are:

	Carl’s Jr.			Hardee’s			La Salsa
Fiscal 2007
First Quarter		5.6	%		5.6	%		1.0	%
Second Quarter		4.8	%		3.0	%		2.1	%
Third Quarter		6.2	%		5.6	%		2.0	%
Fourth Quarter		2.8	%		4.8	%		(0.2	)%
Fiscal 2006
First Quarter		2.4	%		(0.1	)%		2.0	%
Second Quarter		1.0	%		0.0	%		2.6	%
Third Quarter		(0.1	)%		(3.5	)%		2.6	%
Fourth Quarter		5.3	%		2.9	%		3.7	%

5

•  Quarterly operating income (loss) by segment has been:

												Consolidated
												Operating
	Carl’s Jr.		Hardee’s			La Salsa			Other			Income
Fiscal 2007
First Quarter	$	27,669	$	7,796		$	(1,701	)	$	(130	)	$	33,634
Second Quarter		21,571		13,303			(1,609	)		43			33,308
Third Quarter		17,157		10,764			(3,669	)		3			24,255
Fourth Quarter		17,128		684			(4,402	)		(115	)		13,295
Fiscal 2006
First Quarter	$	21,265	$	4,168		$	(2,233	)	$	(52	)	$	23,148
Second Quarter		18,635		6,903			(1,242	)		(11,087	)		13,209
Third Quarter		17,754		4,275			(904	)		(141	)		20,984
Fourth Quarter		25,119		(1,953	)		(2,628	)		1			20,539

The operating loss for Other, Including Discontinued Operations, for the second quarter of fiscal 2006 includes a charge of $11,000 to purchase and cancel all the outstanding options of Mr. William P. Foley, who resigned from the Board of Directors on July 19, 2005. This charge was recorded as a component of general and administrative expense.

Financial Information about Operating Segments

We are engaged in the development, operation and franchising of quick-service and fast-casual restaurants, primarily under the brand names Carl’s Jr., Hardee’s, and La Salsa, principally in the United States of America. Information about our revenues, operating results and assets is contained in Part II, Items 6 and 7 of this Annual Report on Form 10-K and in Note 22 of Notes to Consolidated Financial Statements. As shown in the table of quarterly operating income (loss) above, Carl’s Jr. and Hardee’s typically generate operating income, while La Salsa generates a loss from operations. In evaluating the profitability of our segments, we allocate much of our general and administrative expenses between these segments.

Investments in Other Restaurant Concepts

We selectively evaluate opportunities to acquire additional interests in other restaurant concepts, and we may make such investments and/or acquisitions in the future depending on the business prospects of the restaurant concept, the availability of financing at attractive terms, alternative business opportunities available to us, the consent of our senior lenders, if required, and general economic conditions.

Restaurant Development

We perform extensive due diligence on prospective restaurant sites before we commit to opening, or permitting a franchisee to open, a restaurant at a location. We intend to continue to open new company-operated restaurants, primarily in established markets. In fiscal 2007, we opened 13 new company-operated restaurants, and our franchisees and licensees opened 62 new restaurants. The average development cost for company-operated restaurants opened in fiscal 2007 is summarized in the following table.

6

	Average per restaurant(1)
	Carl’s Jr.		Hardee’s		La Salsa
Land(2)	$	—	$	456	$	—
Building and leasehold improvements		1,173		884		577
Equipment		327		319		265
Total	$	1,500	$	1,659	$	842

(1)	The averages above are contingent upon a number of factors including, but not limited to, restaurant prototype, geographical area and local zoning requirements.
(2)	The majority of Carl’s Jr. and La Salsa restaurants are constructed on leased land.

Restaurant Operations and Support

We strive to maintain high standards in all products and equipment used by our restaurants, as well as our operations related to food preparation, service and cleanliness. We generally prepare our hamburgers and chicken sandwiches after the customer has placed an order, with the goal of serving them promptly. In addition, we charbroil hamburger patties and chicken breasts in a gas-fired double broiler that sears the meat on both sides in a uniform heating and cooking time. At our La Salsa restaurants, we prepare our fresh-Mexican menu items after the customer has placed an order with the goal of serving them promptly.

Our commitment to quality in both our products and our operations is supported by our training program. Each company-operated Carl’s Jr. and Hardee’s restaurant is operated by a general manager who has received a minimum of nine to twelve weeks of management training. Each company-operated La Salsa restaurant is operated by a general manager who has received a minimum of seven weeks of management training. These training programs involve a combination of classroom instruction and on-the-job training in specially designated training restaurants. The general manager trains other employees in accordance with our guidelines. District managers, who are typically responsible for seven to nine restaurants, also supervise general managers. Approximately 158 Carl’s Jr. and Hardee’s district managers are under the supervision of regional vice presidents or regional directors, who regularly inspect the operations in their respective districts and regions.

Marketing and Advertising

Our marketing and advertising initiatives focus on building brand awareness through the balanced use of television, radio and print advertising. These activities have been supported by contributions of 5.6% of sales from Carl’s Jr. company-operated and approximately 5.3% of sales from franchised restaurants during fiscal 2007.

Hardee’s company-operated restaurants contributed 4.6% of their sales for television, radio and print advertising during fiscal 2007. They also spent an additional 1.3% of sales on local advertising, billboards and point of purchase materials. Hardee’s franchised restaurants contributed 4.2% to 5.6% of their sales for advertising during fiscal 2007.

La Salsa company-operated restaurants have contributed 3.0% of their sales for the production of print and broadcast advertising and marketing material during fiscal 2007, and La Salsa franchised restaurants contributed approximately 1.0% of their sales during fiscal 2007.

Additional discussion of advertising can be found under the heading “Consolidated Expenses” in Item 7 of this Annual Report on Form 10-K.

Purchasing

We purchase most of the food products and packaging supplies used in our Carl’s Jr. restaurant system and warehouse and distribute such items to both company-operated and franchised Carl’s Jr. restaurants. Although not required to do so, our Carl’s Jr. franchisees in California and some adjacent states purchase most of their food, packaging and supplies from us. We have elected not to outsource our Carl’s Jr. distribution activities because we believe our mature procurement process allows us to effectively manage our food costs, provide adequate quantities

7

of food and supplies at competitive prices, generate revenue from Carl’s Jr. franchisees by adding a nominal mark-up to cover direct costs and provide better overall service to our restaurants in California and some adjacent states. We seek competitive bids from suppliers on many of our products, approve suppliers of those products and require them to adhere to our established product specifications.

We currently purchase substantially all of the food, packaging and supplies sold or used in our Hardee’s restaurants from Meadowbrook Meat Company, Inc., dba MBM, Inc. (“MBM”). See “Risk Factors — We depend on our suppliers to deliver quality products to us timely” on page 12. MBM currently distributes products to company-operated restaurants and to many of the franchised Hardee’s restaurants. Pursuant to the terms of our distribution agreements, we are obligated to purchase substantially all of our specified product requirements from MBM through July 14, 2010. The prices and delivery fees we pay for MBM products are subject to adjustment in certain circumstances, which may include increases or decreases resulting from changes in MBM’s cost structure.

We purchase most of the food, packaging and supplies used in our La Salsa restaurants from McLane Foodservice (“McLane”). We have distribution agreements with both McLane, which services restaurants in California, Nevada and Arizona, and Sysco Corporation (“Sysco”), which distributes to a small number of our outer market franchise restaurants. The agreements with McLane and Sysco expire on September 30, 2007 and August 31, 2008, respectively.

Information about our unconditional purchase obligations can be found under the heading “Long-Term Obligations” in Item 7 of this Annual Report on Form 10-K.

Competition and Markets

The restaurant business is intensely competitive and affected by changes in a geographic area, changes in the public’s eating habits and preferences, local and national economic conditions affecting consumer spending habits, population trends and local traffic patterns. Key elements of competition in the industry are the price, quality and value of food products offered, quality and speed of service, advertising effectiveness, brand name identification, restaurant locations and attractiveness of facilities.

We primarily compete with major restaurant chains, some of which dominate the QSR industry, and also compete with a variety of other take-out foodservice companies and fast-food restaurants. Our competitors also include a variety of mid-price, full-service casual-dining restaurants, health and nutrition-oriented restaurants, delicatessens and prepared food restaurants, as well as supermarkets and convenience stores. In selling franchises, we compete with many other restaurant franchisors, some of which have substantially greater financial resources and higher franchise AUVs.

Trademarks and Service Marks

We own numerous trademarks and service marks, and have registered many of those marks with the United States Patent and Trademark Office, including Carl’s Jr., the Happy Star logo, Hardee’s, La Salsa Fresh Mexican Grill and proprietary names for a number of the Carl’s Jr. and Hardee’s menu items. We believe our trademarks and service marks have value and play an important role in our marketing efforts.

Government Regulation

Each company-operated and franchised restaurant must comply with regulations adopted by federal agencies and with licensing and other regulations enforced by state and local health, sanitation, safety, fire and other departments. In addition, these restaurants must comply with federal and state environmental regulations, but those regulations have not had a material effect on the restaurants’ operations. Stringent and varied requirements of local governmental bodies with respect to zoning, land use and environmental factors can delay and sometimes prevent development of new restaurants and remodeling of existing restaurants in particular locations.

We are also subject to federal laws and a substantial number of state laws regulating the offer and sale of franchises. Such laws impose registration and disclosure requirements on franchisors in the offer and sale of franchises and may include substantive standards regarding the relationship between franchisor and franchisee, including limitations on the ability of franchisors to terminate franchise agreements or otherwise alter franchise

8

arrangements. We believe we are operating in substantial compliance with applicable laws and regulations governing our franchise operations.

We, and our franchisees, must comply with the Fair Labor Standards Act and various federal and state laws governing employment matters, such as minimum wages, overtime pay practices, child labor laws, citizenship requirements and other working conditions. Many of our employees are paid hourly rates related to the federal and state minimum wage laws and, accordingly, increases in the minimum wage increase our labor costs. Federal and state laws may also require us to provide new or increased levels of employee benefits to our employees, many of whom are not currently eligible for such benefits.

We monitor our facilities for compliance with the Americans with Disabilities Act (“ADA”) in order to conform to its requirements. Under the ADA, we could be required to expend funds to modify our restaurants to better provide service to, or make reasonable accommodation for the employment of, disabled persons. We believe that such expenditures, if required, would not have a material adverse effect on our consolidated financial position or results of operations.

Environmental Matters

We are subject to various federal, state and local environmental laws. These laws govern discharges to air and water from our restaurants, as well as handling and disposal practices for solid and hazardous wastes. These laws may impose liability for damages from and the costs of cleaning up sites of spills, disposals or other releases of hazardous materials. We may be responsible for environmental conditions relating to our restaurants and the land on which our restaurants are located, regardless of whether we lease or own the restaurants or land in question and regardless of whether such environmental conditions were created by us or by a prior owner or tenant.

We cannot provide assurance that all such environmental conditions have been identified by us. These conditions include the presence of asbestos-containing materials, leaking underground storage tanks and on-site spills. Further, certain properties formerly had landfills, historic industrial use, gasoline stations and/or dry cleaning businesses located on or near the premises. Corrective action, as required by the regulatory agencies, has been undertaken at some of the sites, although the majority of these sites are being remediated by former landowners or tenants. The enforcement of our rights against third parties for environmental conditions, such as off-site sources of contamination, may result in additional costs for us.

Seasonality

We operate on a retail accounting calendar. Our fiscal year is comprised of 13 four-week accounting periods and ends on 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 2007 and fiscal 2006 each include 52 weeks, and fiscal 2005 includes 53 weeks (including one five-week accounting period in our fiscal fourth quarter). For clarity of presentation, we generally label all fiscal years presented as if the fiscal year ended January 31.

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.

Government Contracts

No material portion of our business is subject to renegotiation of profits or termination of contracts or subcontracts at the election of the U.S. government.

Research and Development

We operate research and development facilities in California and Missouri. While research and development activities are important to our business, these expenditures are not material.

9

Employees

We employ approximately 30,000 persons, primarily in company-operated restaurants and in our corporate offices and distribution facilities. Only those hourly employees working at the La Salsa restaurant located in the Luxor Hotel in Las Vegas, Nevada are covered by a collective bargaining agreement. We have never experienced a work stoppage attributable to a labor dispute. Past attempts to unionize our distribution center employees have been rejected by employee votes. We believe our employee relations are good.

Working Capital Practices

Information about our liquidity is contained under the caption “Liquidity and Capital Resources” in Item 7 of this Annual Report on Form 10-K and the accompanying Consolidated Statements of Cash Flows for the fiscal years ended January 31, 2007, 2006 and 2005.

Disclosure Regarding Forward-Looking Statements

Matters discussed in this Annual Report on Form 10-K 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 that are often difficult to predict, are beyond our control and which may cause results to differ materially from expectations. 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, franchisees’ willingness to participate in our strategies, the availability of financing for us and our franchisees, unfavorable outcomes in litigation, changes in accounting policies and practices, effectiveness of internal controls over financial reporting, new legislation or government regulation (including environmental laws), the availability of suitable locations and terms for the sites designated 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.

Executive Officers of the Registrant

The names and ages, as of March 30, 2007, of our executive officers are as follows:

Name	Age		Position
Andrew F. Puzder		56	Chief Executive Officer and President
E. Michael Murphy		55	Executive Vice President, Chief Administrative Officer, General Counsel and Secretary
Theodore Abajian		43	Executive Vice President, Chief Financial Officer
John J. Dunion		49	Executive Vice President, Supply Chain Management
Brad Haley		49	Executive Vice President, Marketing — Carl’s Jr. and Hardee’s

Andrew F. Puzder was appointed to the Board of Directors in May 2001. Mr. Puzder became Chief Executive Officer and President of CKE in September 2000. From February 1997 to September 2000, he served as Executive Vice President, General Counsel and Secretary of CKE. Mr. Puzder was also Executive Vice President of Fidelity National Financial, Inc. (“FNF”) from January 1995 to June 2000. Mr. Puzder was a partner in the Costa Mesa, California law firm of Lewis, D’Amato, Brisbois & Bisgaard from September 1991 to March 1994, and a

10

shareholder in the Newport Beach, California law firm of Stradling Yocca Carlson & Rauth from March 1994 until joining FNF in 1995.

E. Michael Murphy became Executive Vice President, General Counsel and Secretary of CKE in January 2001, after serving as Senior Vice President of the Company and Senior Vice President, General Counsel of Hardee’s Food Systems, Inc. from July 1998. He was also named Chief Administrative Officer of the Company in August 2006. For the prior 10 years, Mr. Murphy was a partner of The Stolar Partnership law firm in St. Louis, Missouri.

Theodore Abajian was appointed Executive Vice President and Chief Financial Officer of the Company in May 2003. From March 2002 to May 2003, he served as Executive Vice President, Chief Administrative Officer. From November 2000 to March 2002, Mr. Abajian served as President and Chief Executive Officer of SBRG, and as its Executive Vice President and Chief Financial Officer from May 1998. In addition, from January 2000 to October 2000, Mr. Abajian held the position of Senior Vice President and Chief Financial Officer for Checkers Drive-In Restaurants, Inc., and served as the Chief Financial Officer of Star Buffet, Inc. from July 1997 to May 1998. Mr. Abajian also served as a director of Staceys Buffet, Inc. from October 1997 to February 1998, and was Vice President and Controller with Summit Family Restaurants, Inc. from 1994 to 1998.

John J. Dunion was appointed Executive Vice President, Supply Chain Management in July 2001. Prior to that, he served the Company as Executive Vice President, Chief Administrative Officer from February 1999, Senior Vice President, Purchasing from April 1998 and Vice President, Purchasing from September 1996. Mr. Dunion was Vice President, Purchasing at Unigate Restaurants, Inc. from 1993 to September 1996. Prior to 1990, Mr. Dunion held management positions with Jack in the Box Inc. and Taco Bell Corp.

Brad R. Haley was appointed Executive Vice President, Marketing for Hardee’s in September 2000. He also assumed responsibility for Carl’s Jr. marketing in January 2004. Prior to joining Hardee’s, Mr. Haley worked as Chief Marketing Officer for Church’s Chicken. From 1992 to 1999, Mr. Haley served as Corporate Vice President of Marketing Communications for Jack in the Box Inc.

Item 1A.   Risk Factors

We are engaged in a business strategy that includes the long-term growth of our Hardee’s operations. The success of a business strategy, by its very nature, involves a significant number of risks, many of which are discussed below:

Our success depends on our ability to judge the impact of competitive products and pricing.

Successful operation of our restaurants requires the ability to identify the effects of product and pricing trends. If we are unable to evaluate the impact of product or pricing trends effectively, we may fail to implement strategies allowing us to capitalize on those trends, which may result in decreased sales or increased costs.

Our success depends on our ability to compete with our competitors.

The foodservice industry is intensely competitive with respect to the quality and value of food products offered, concept service, price, dining experience and location. We compete with major restaurant chains, some of which dominate the QSR segment. Our competitors also include a variety of mid-price, full-service casual-dining restaurants, health and nutrition-oriented restaurants, delicatessens and prepared food restaurants, as well as supermarkets and convenience stores. Many of our competitors have substantially greater brand recognition, as well as greater financial, marketing, operating and other resources than we have, which may give them competitive advantages. Our competitors could also make changes to pricing or other marketing strategies which may impact us detrimentally. As our competitors expand operations, we expect competition to intensify. Such increased competition could have a material adverse effect on our consolidated financial position and results of operations.

11

Restrictive covenants in our credit facility and outstanding senior indebtedness could adversely affect our business.

The Facility, the Amended Facility and our other outstanding senior indebtedness contain restrictive covenants and, in the case of the Amended Facility, requirements that we comply with certain financial ratios. Certain of these covenants limit our ability to take various actions, including the incurrence of additional debt, the guaranteeing of indebtedness and engaging in various types of transactions, including mergers and sales of assets, and making specified distributions or other restricted payments, including investments. These covenants could have an adverse effect on our business by limiting our ability to take advantage of business opportunities. Failure to maintain financial ratios required by the Amended Facility or to comply with the covenants in the Amended Facility or our other indebtedness could also result in acceleration of our indebtedness, which would impair our liquidity and limit our ability to operate.

Failure to continue our revitalization of Hardee’s would have a significant negative effect on our success.

We have been challenged in our efforts to reestablish the connection between Hardee’s and consumers. Our efforts have included developing new marketing strategies, remodeling restaurants, refranchising restaurants, enhancing menu variety and focusing on the fundamentals of quality, service and cleanliness. Hardee’s performance has improved significantly; however, we believe Hardee’s remains an under-performing brand.

Our success depends on our ability to attract and retain key personnel.

We believe that our success will depend, in part, on the continuing services of our key management personnel. The loss of the services of key personnel could have a material impact on our financial results. Additionally, our success may depend on our ability to attract and retain additional skilled management personnel.

Our success depends on our franchisees’ participation in our strategy.

Our franchisees are an integral part of our business. We may be unable to successfully implement our brand strategies if our franchisees do not actively participate in that implementation. The failure of our franchisees to focus on the fundamentals of restaurant operations, such as quality, service and cleanliness, would have a negative impact on our success.

Our financial results are affected by the financial results of our franchisees.

We receive royalties from our franchisees. Our financial results are somewhat contingent upon the operational and financial success of our franchisees, including implementation of our strategic plans, as well as their ability to secure adequate financing. If sales trends or 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. Additionally, refusal on the part of franchisees to renew their franchise agreements may result in decreased royalties. Entering into restructured franchise agreements may result in reduced franchise royalty rates in the future.

We may be unable to recover increased operating costs through price increases.

The QSR segment historically has attracted consumers that are either lower income and/or pressed for time. An economic downturn that decreases our customers’ disposable incomes would have a negative impact on our sales and profitability. In addition, unfavorable macroeconomic trends or developments concerning factors such as increased food, labor and employee benefit costs and availability of experienced employees may also adversely affect our financial condition and results of operations. We may be unable to increase prices to match increased costs without further harming our sales. If we are unable to raise prices in order to recover increased costs for food, fuel, utilities, wages, clothing and equipment, our profitability will be negatively affected.

12

We face commodity price and availability risks.

We purchase energy and agricultural products that are subject to price volatility caused by weather, market conditions and other factors that are not predictable or within our control. Increases in commodity prices could result in higher restaurant operating costs for our restaurant concepts. Occasionally, the availability of commodities can be limited due to circumstances beyond our control. If we are unable to obtain such commodities, we may be unable to offer related products, which would have a negative impact on our profitability.

We depend on our suppliers to deliver quality products to us timely.

Our profitability is dependent on, among other things, our continuing ability to offer fresh, high-quality food at moderate prices. While we continue to operate our own distribution business for most of our Carl’s Jr. system, we rely upon independent distributors for our Hardee’s and La Salsa restaurants. Our Hardee’s restaurants depend on the distribution services of MBM, an independent supplier and distributor of food and other products. MBM is responsible for delivering food, paper and other products from our vendors to our Hardee’s restaurants on a regular basis. MBM also provides distribution services to a large number of our Hardee’s franchisees. Pursuant to the terms of our distribution agreements, we are obligated to purchase substantially all of our specified product requirements from MBM through July 14, 2010. We purchase most of the food, packaging and supplies used in our La Salsa restaurants from McLane. We have distribution agreements with both McLane, which services restaurants in California, Nevada and Arizona, and Sysco, which distributes to a small number of our franchise restaurants outside these states. The agreements with McLane and Sysco expire on September 30, 2007 and August 31, 2008, respectively. In addition, our dependence on frequent deliveries of food and paper products subjects our restaurants to the risk that shortages or interruptions in supply, caused by adverse weather or other conditions, could adversely affect the availability, quality and cost of ingredients. Any disruption in these distribution services could have a material adverse effect on our consolidated financial position and results of operations.

Adverse publicity regarding poultry or beef could negatively impact our business.

Given the events regarding afflictions affecting livestock in various parts of the world, such as “avian flu” and “mad cow” disease, it is possible that the respective production and supply of U.S. poultry or beef could be negatively impacted. A reduction in the supply of poultry or beef could have a material effect on the price at which we could obtain it. In addition, concerns regarding hormones, steroids and antibiotics may cause consumers to reduce or avoid consumption of poultry or beef. Failure to procure poultry or beef at reasonable terms and prices, or any reduction in consumption of poultry or beef by consumers, could have a material adverse effect on our consolidated financial condition and results of operations.

Consumer preferences and perceptions may have significant effects on our business.

Foodservice businesses are often affected by changes in consumer tastes and perceptions. Traffic patterns, demographics and the type, number and locations of competing restaurants may adversely affect the performance of individual restaurants. Multi-unit foodservice businesses such as ours can also be materially and adversely affected by publicity resulting from poor food quality, illness, injury or other health concerns or operating issues stemming from one or a limited number of restaurants. We can be similarly affected by consumer concerns with respect to the nutritional value of quick-service food.

Our operations are seasonal and heavily influenced by weather conditions.

Weather, which is unpredictable, can adversely impact our sales. Harsh weather conditions that discourage customers from dining out result in lost opportunities for our restaurants. A heavy snowstorm can leave an entire metropolitan area snowbound, resulting in a reduction in sales. Our first and fourth quarters, most notably the fourth quarter, include winter months when there is historically a lower level of sales. Because a significant portion of our restaurant operating costs is fixed or semi-fixed in nature, the loss of sales during these periods adversely impacts our profitability. These adverse, weather-driven events principally arise at our Hardee’s restaurants. For these reasons, a sequential quarter-to-quarter comparison may not be a good indication of our performance or how we may perform in the future.

13

Our business may suffer due to our inability to hire and retain qualified personnel and due to higher labor costs.

Given that our restaurant-level workforce requires large numbers of both entry-level and skilled employees, low levels of unemployment could compromise our ability to provide quality service in our restaurants. From time to time, we have had difficulty hiring and maintaining qualified restaurant management personnel. Increases in the minimum wage have impacted our labor costs. Due to the labor-intensive nature of our business, a continuing shortage of labor or increases in minimum wage levels could have a negative effect on our consolidated results of operations.

Our sales and profits may be materially and adversely affected by our inability to integrate acquisitions successfully.

Our future consolidated results of operations and cash flow may depend in part upon our ability to integrate any future acquisitions and mergers. If we are unable to achieve the strategic operating objectives we anticipate from any such acquisitions we may experience increased costs or decreased sales which would have a negative impact on our consolidated results from operations. Strategic operating initiatives that we may be unable to achieve include economies of scale in operations, cost reductions, sales increases and marketing initiatives.

Our business may be impacted by increased insurance and/or self-insurance costs.

In the past, we have been negatively affected by increases in both workers’ compensation and general liability insurance and claims expense due to our claims experience and rising healthcare costs. Although we seek to manage our claims to prevent increases, such increases can occur unexpectedly and without regard to our efforts to limit them. If such increases occur, we may be unable to pass them along to the consumer through product price increases, resulting in decreased operating results.

Our financial results may be impacted by our ability to select appropriate restaurant locations, construct new restaurants or complete remodels.

In recent years, we have not opened a significant number of new restaurants, as available cash was used to repay indebtedness, repurchase common stock and pay dividends. Our strategic plan, and a component of our business strategy, includes the construction of new restaurants and the remodeling of existing restaurants. We and our franchisees face competition from other restaurant operators, retail chains, companies and developers for desirable site locations, which may adversely affect the cost, implementation and timing of our expansion plans. If we experience delays in the construction process we may be unable to complete such construction activities at the planned cost, which would adversely affect our future results from operations. Additionally, we cannot assure you that such remodels and conversions will increase the revenues generated by these restaurants or be sustainable. Likewise, we cannot be sure that the sites we select for new restaurants will result in restaurants whose sales results meet our expectations.

The nature of our business exposes us to potential litigation.

We have thousands of interactions or transactions each day with vendors, franchisees, customers, employees and others. In the ordinary course of business, disputes may arise for a number of reasons. We cannot be certain that we will prevail in every legal action brought against us.

Governmental regulations may change and require us to incur substantial expenditures to comply.

We are subject to governmental regulation at the federal, state and local level in many areas of our business, such as food safety and sanitation, the sale of alcoholic beverages, environmental issues and minimum wage. Governmental entities may change regulations that may require us to incur substantial cost increases in order to comply with such laws and regulations. While we endeavor to comply with all applicable laws and regulations, we cannot assure you that we are in full compliance with all laws and regulations at all times or that we will be able to comply with any future laws or regulations. If we fail to comply with applicable laws and regulations, we may be

14

subject to sanctions or civil remedies, including fines and injunctions. The cost of compliance or the consequences of non-compliance could have a material adverse effect on our business and consolidated results of operations.

Compliance with environmental laws may affect our financial condition.

We are subject to various federal, state and local environmental laws. These laws govern discharges to air and water, as well as handling and disposal practices for solid and hazardous wastes. These laws may also impose liability for damages from and the costs of cleaning up sites of spills, disposals or other releases of hazardous materials. We may be responsible for environmental conditions or contamination relating to our restaurants and the land on which our restaurants are located, regardless of whether we lease or own the restaurant or land in question and regardless of whether such environmental conditions were created by us or by a prior owner or tenant. The costs of any cleanup could be significant and have a material adverse effect on our consolidated financial position and results of operations.

Provisions of our Certificate of Incorporation and Bylaws could limit the ability of our stockholders to effect a change in control.

Our certificate of incorporation and bylaws include several provisions and features intended to render more difficult certain unsolicited or hostile attempts to acquire our business. In addition, our Board of Directors has the authority, without further action by our stockholders, to issue up to 5,000,000 shares of preferred stock in one or more series, and to fix the rights, preferences and restrictions of such preferred stock.

These provisions may discourage a third party from attempting to acquire control of us and could limit the price that investors might be willing to pay in the future for shares of our common stock.

We face risks related to interest rates.

Our principal exposure to financial market risks is the impact that interest rate changes could have on our Facility, the magnitude of which depends on the amount of borrowings we have outstanding. As of January 31, 2007, under the revolving portion of the Facility, we had $43,500 in borrowings that we locked in at a rate of 7.625%, and $2,000 in borrowings that bore interest at Prime plus an applicable margin, or 9.25%. As of January 31, 2007, we also had $69,821 outstanding under the term loan portion of the Facility, which bore interest at LIBOR plus an applicable margin, or 7.375%, and $57,263 in outstanding letters of credit, which bore fees at 2.25%.

Our financial results may be impacted by changes in accounting policies and practices.

In the first quarter of fiscal 2005, we began to include in our Consolidated Financial Statements the operations of one of our Hardee’s franchisees, the Hardee’s National Advertising Fund and approximately 82 Hardee’s local advertising cooperative funds as a result of the adoption of Financial Accounting Standards Board (“FASB”) Interpretation 46R, Consolidation of Variable Interest Entities — an Interpretation of ARB No. 51 (“FIN 46R”).

As of the beginning of fiscal 2007, we adopted the provisions of Statement of Financial Accounting Standards (“SFAS”) 123 (revised 2004), Share-Based Payment (“SFAS 123R”), which required us to measure and record compensation cost for all share-based payments, including employee stock options, at fair value.

Future changes to U.S. generally accepted accounting principles may materially adversely affect our consolidated financial position and results of operations if we are required to change our methods of accounting for transactions. See Note 2 of Notes to Consolidated Financial Statements for a discussion of accounting pronouncements not yet adopted.

Item 1B.   Unresolved Staff Comments

None.

15

Item 2.   Properties

The following table sets forth information regarding our restaurant properties at January 31, 2007:

	Land and		Land Leased		Land and
	Building		and Building		Building
	Owned		Owned		Leased		Total
Carl’s Jr.:
Company-operated		16		111		266		393
Franchise-operated(1)		10		47		171		228
Third party-operated/vacant(2)		4		3		17		24
Subtotal		30		161		454		645
Hardee’s:
Company-operated		357		150		189		696
Franchise-operated(1)		27		39		73		139
Third party-operated/vacant(2)		24		15		54		93
Subtotal		408		204		316		928
La Salsa:
Company-operated		—		4		51		55
Third party-operated/vacant(2)		1		—		6		7
Subtotal		1		4		57		62
Other:
Company-operated		—		—		1		1
Third party-operated/vacant(2)		—		2		1		3
Subtotal		—		2		2		4
Total:
Company-operated		373		265		507		1,145
Franchise-operated(1)		37		86		244		367
Third party-operated/vacant(2)		29		20		78		127
Total		439		371		829		1,639

(1)	“Franchise-operated” properties are those which we own and lease to franchisees, or lease and sublease to franchisees.
(2)	“Third party-operated/vacant” properties are those we own or lease that are either leased or subleased by unaffiliated entities or are currently vacant.

The terms of our leases and subleases vary in length, with primary terms (i.e., before consideration of option periods) expiring on various dates through 2044. We do not expect the expiration of these leases to have a material impact on our operations in any particular year, as the expiration dates are staggered over a number of years and many of the leases contain renewal options.

Our corporate headquarters and Carl’s Jr. brand headquarters are both located in Carpinteria, California and contain approximately 65,000 square feet of space. Our primary administrative service center is located in Anaheim, California and contains approximately 78,000 square feet of space. Our primary distribution center is located in Ontario, California and contains approximately 201,000 square feet of space. A secondary distribution center for the Carl’s Jr. brand is located in Manteca, California, and contains approximately 52,000 square feet of space. Our Hardee’s corporate facility is located in St. Louis, Missouri, and contains approximately 33,000 square

16

feet of space. Our Hardee’s equipment distribution center is located in Rocky Mount, North Carolina, in a facility that contains approximately 81,000 square feet of space.

Item 3.   Legal Proceedings

There are currently a number of claims and lawsuits pending against us. These claims and lawsuits cover a variety of allegations spanning our entire business. The following is a brief description of the more significant of these categories of claims and lawsuits. In addition, we are subject to various federal, state and local regulations that affect our business. We do not believe that any such claims, lawsuits or regulations will have a material adverse effect on our consolidated financial position or results of operations.

Employees

We employ many thousands of persons, both by us and in restaurants owned and operated by subsidiaries of ours. In addition, thousands of persons from time to time seek employment in such restaurants. In the ordinary course of business, disputes arise regarding hiring, firing and promotion practices.

Customers

Our restaurants serve a large cross-section of the public and, in the course of serving that many people, disputes arise as to products, services, accidents and other matters typical of an extensive restaurant business such as ours.

Suppliers

We rely on large numbers of suppliers, who are required to meet and maintain our high standards. On occasion, disputes may arise with our suppliers on a number of issues including, but not limited to, compliance with product specifications and certain business concerns. Additionally, disputes may arise on a number of issues between us and individuals or entities who claim they should have been granted the approval or opportunity to supply products or services to our restaurants.

Franchising

A substantial number of our restaurants are franchised to independent entrepreneurs operating under contractual arrangements with us. In the course of the franchise relationship, disputes occasionally arise between us and our franchisees relating to a broad range of subjects including, without limitation, quality, service and cleanliness issues, contentions regarding grants or terminations of franchises, and delinquent payments. Additionally, occasional disputes arise between us and individuals who claim they should have been granted a franchise.

Intellectual Property

We have registered trademarks and service marks, patents and copyrights, some of which are of material importance to our business. From time to time, we may become involved in litigation to defend and protect our use of our intellectual property.

Summary of Significant Litigation

We are, 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 us and our restaurants, regardless of whether such allegations are valid or whether we are liable. We are also, at times, the subject of complaints or allegations from current or former employees, franchisees, vendors, landlords and others.

Item 4.   Submission of Matters to a Vote of Security Holders

None.

17

PART II

Item 5.   Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is listed on the New York Stock Exchange under the symbol “CKR”. As of March 22, 2007, there were approximately 1,753 record holders of our common stock. The following table sets forth, for the periods indicated, the high and low sales prices of our common stock, as reported on the New York Stock Exchange Composite Tape:

	High		Low
Fiscal 2007
First Quarter	$	18.50	$	15.17
Second Quarter		17.37		14.00
Third Quarter		20.00		14.55
Fourth Quarter		20.04		17.57
Fiscal 2006
First Quarter	$	17.15	$	14.53
Second Quarter		16.77		12.11
Third Quarter		13.87		11.51
Fourth Quarter		15.69		12.45

On January 22, 2007, we amended the Facility to increase the aggregate amount that we are permitted to expend for common stock repurchases and dividend payments by $130,000. During fiscal 2007, we declared aggregate cash dividends of $0.16 per share of common stock, for a total of $10,397.

Pursuant to the Stock Repurchase Plan authorized by our Board of Directors, as modified during fiscal 2007, we are allowed to repurchase up to an aggregate of $200,000 of our common stock. During the fiscal quarter and fiscal year ended January 31, 2007, we repurchased 2,541,992 and 4,607,437 shares of our common stock at an average price of $18.51 and $17.59 per share, for a total cost, including trading commissions, of $47,059 and $81,057, of which we retired 2,523,692 and 4,589,137 shares, respectively. As of January 31, 2007, we had 18,300 shares of common stock that had been repurchased but not yet retired and are shown as common stock held in treasury on the accompanying Consolidated Balance Sheet. These shares were retired subsequent to January 31, 2007. There was no common stock held in treasury at January 31, 2006.

Based on the Board of Directors’ authorization and the amount of cumulative repurchase of our common stock that we have already made thereunder, we are permitted to make additional repurchases of our common stock up to $109,387 under the Stock Repurchase Plan as of January 31, 2007. As part of our Stock Repurchase Plan, we have implemented a share repurchase plan pursuant to Rule 10b5-1 of the Exchange Act, under which we are allowed to repurchase $5,000 of our common stock in the open market each fiscal quarter through the quarter ending January 28, 2008. Rule 10b5-1 allows us to repurchase our common stock when we might otherwise be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods.

18

The following table provides information as of January 29, 2007, with respect to shares of common stock repurchased by us during the fiscal quarter then ended (in thousands, except share and per share amounts):

	(a)		(b)		(c)		(d)
					Total Number of		Maximum Dollar
					Shares Purchased		Value of Shares
	Total		Average		as Part of		that May Yet Be
	Number of		Price		Publicly		Purchased Under
	Shares		Paid per		Announced Plans		the Plans or
Period	Purchased		Share		or Programs		Programs
November 7, 2006 — December 4, 2006		89,400	$	18.92		89,400	$	54,752
December 5, 2006 — December 29, 2006		2,364,192		18.47		2,364,192		11,085
December 30, 2006 — January 29, 2007		88,400		19.18		88,400		109,387
Total		2,541,992	$	18.51		2,541,992	$	109,387

The graph below shows the cumulative total stockholder return of an investment of $100 (and the reinvestment of any dividends thereafter) on January 31, 2002 in (i) our common stock, (ii) the QSR Peer Group and (iii) the Standard and Poor (S&P) Small Cap 600 Index. Our stock price performance shown in the graph below is not indicative of future stock price performance.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among CKE Restaurants, Inc. — CKR, QSR Peer Group
And The S&P Small Cap 600 Index

	2002		2003		2004		2005		2006		2007
CKE Restaurants, Inc	$	100.00	$	37.13	$	78.77	$	139.18	$	162.15	$	206.15
QSR Peer Group(1)	$	100.00	$	63.93	$	104.84	$	129.38	$	147.09	$	170.75
S&P Small Cap 600	$	100.00	$	81.22	$	123.90	$	133.88	$	163.47	$	174.17

*  $100 invested on January 31, 2002 in stock or index-including reinvestment of dividends.

(1) The QSR Peer Group is comprised of the following companies: Jack in the Box Inc., McDonalds Corp., Wendy’s International, Inc. and Yum! Brands, Inc.

19

Item 6.   Selected Financial Data

The information set forth below should be read in conjunction with the Consolidated Financial Statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this Annual Report on Form 10-K. All amounts, except per share amounts, presented in Item 6 are in thousands.

Selected Financial and Operating Data

	Fiscal Year Ended January 31,(1)(2)
	2007			2006(7)			2005			2004(6)			2003(4)(5)
				(as restated)
Consolidated Statements of Operations Data:
Revenue:
Company-operated restaurants	$	1,269,687		$	1,209,456		$	1,217,273		$	1,142,929		$	1,109,646
Franchised and licensed restaurants and other		318,723			308,891			302,608			270,491			253,715
Total revenue	$	1,588,410		$	1,518,347		$	1,519,881		$	1,413,420		$	1,363,361
Operating income (loss)	$	104,492		$	77,880		$	56,780		$	(8,268	)	$	35,617
Interest expense		19,751			23,016			36,748			39,962			39,924
Income tax expense (benefit)		31,899			(123,888	)		(1,592	)		2,417			(7,093	)
Income (loss) from continuing operations		50,172			181,139			18,662			(50,430	)		19,214
Loss from discontinued operations		—			—			(646	)		(2,790	)		(53	)
Income (loss) before cumulative effect of accounting change		50,172			181,139			18,016			(53,220	)		19,161
Cumulative effect of accounting change(5)		—			—			—			—			(175,780	)
Net income (loss)		50,172			181,139			18,016			(53,220	)		(156,619	)
Net income (loss) per share — basic		0.79			3.06			0.31			(0.92	)		(2.76	)
Income (loss) from continuing operations per share — diluted		0.72			2.51			0.31			(0.88	)		0.33
Loss from discontinued operations per share — diluted		—			—			(0.01	)		(0.04	)		—
Income (loss) before cumulative effect of accounting change per share — diluted		0.72			2.51			0.30			(0.92	)		0.33
Cumulative effect of accounting change per share — diluted(5)		—			—			—			—			(3.02	)
Net income (loss) per share — diluted	$	0.72		$	2.51		$	0.30		$	(0.92	)	$	(2.69	)
Weighted-average shares outstanding — diluted		72,377			73,250			59,583			57,536			58,124
Cash dividends declared per common share	$	0.16		$	0.16		$	—		$	—		$	—
Ratio of earnings to fixed charges(3)		2.6	x		2.0	x		1.2	x		—			1.2x

20

	Fiscal Year Ended January 31,(1)(2)
	2007			2006(7)			2005			2004(6)			2003(4)(5)
				(as restated)
Segment Operating Data:
Carl’s Jr.:
Total revenue	$	830,961		$	802,761		$	792,829		$	725,055		$	693,692
Operating income		83,525			82,773			61,656			55,109			52,577
Hardee’s:
Total revenue		706,884			661,509			673,172			642,694			627,785
Operating income (loss)		32,547			13,393			5,293			(26,336	)		(16,361	)
La Salsa:
Total revenue		46,339			49,156			48,794			43,933			39,959
Operating loss(6)		(11,381	)		(7,007	)		(10,270	)		(37,304	)		(397	)
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	18,680		$	21,343		$	18,432		$	54,355		$	18,440
Working capital deficit		(32,861	)		(27,038	)		(74,907	)		(43,820	)		(69,586	)
Total assets		794,422			791,337			668,883			730,404			804,937
Total long-term debt and capital lease obligations, including current portion		178,055			264,662			317,048			418,176			423,275
Stockholders’ equity		378,846			308,938			119,668			100,658			152,660

(1)	Our fiscal year is 52 or 53 weeks, ending the last Monday in January. For clarity of presentation, we generally label all fiscal years presented as if the fiscal year ended January 31. Fiscal 2007 and 2006 include 52 weeks. Fiscal 2005 includes 53 weeks. Fiscal 2004 and 2003 include 52 weeks.
(2)	Fiscal 2007, 2006, 2005, 2004 and 2003, include $8,546, $8,025, $14,320, $17,776 and $5,194, respectively, of facility action charges, net, which are included in operating income (loss).
(3)	For purposes of calculating the ratio of earnings to fixed charges (a) earnings represent income (loss) before income taxes, discontinued operations and cumulative effect of accounting change and fixed charges, and (b) fixed charges consist of interest on all indebtedness, interest related to capital lease obligations, amortization of debt issuance costs and a portion of rental expense that is representative of the interest factor (deemed by us to be one-third). Earnings were sufficient to cover fixed charges for fiscal 2007, 2006, 2005 and 2003, and insufficient to cover fixed charges for fiscal 2004 by $48,013.
(4)	Fiscal 2003 includes operating results of SBRG from the date of acquisition, March 1, 2002.
(5)	During fiscal 2003, we adopted SFAS 142, Goodwill and Other Intangible Assets, resulting in a transitional impairment charge of $175,780 (or $3.02 per diluted common share).
(6)	Fiscal 2004 includes a $34,059 impairment charge to reduce the carrying value of La Salsa goodwill to $0.
(7)	Fiscal 2006 has been restated to correct a $13,443 overstatement of our income tax benefit and deferred income tax assets. Fiscal 2006 (as restated) includes an income tax benefit of $123,888 attributable primarily to the reversal of a previously recorded valuation allowance against deferred tax assets.

21

Selected Financial and Operating Data by Segment

	Fiscal Year Ended January 31,(1)
	2007			2006			2005			2004			2003(3)
Carl’s Jr. Restaurants
Restaurants open (at end of fiscal year):
Company-operated		393			428			428			426			440
Franchised and licensed		694			621			586			580			547
Total		1,087			1,049			1,014			1,006			987
Restaurant sales:
Company-operated restaurants	$	590,613		$	574,663		$	567,960		$	523,945		$	507,526
Franchised and licensed restaurants(2)		795,520			700,590			679,734			596,318			567,048
Average unit volume per company-operated restaurant		1,440			1,341			1,301			1,187			1,152
Percentage increase in comparable company-operated restaurant sales		4.9	%		2.2	%		7.7	%		2.9	%		0.7	%
Restaurant operating costs as a percentage of company-operated revenue		76.3	%		76.6	%		78.9	%		79.8	%		79.2	%
Hardee’s Restaurants
Restaurants open (at end of fiscal year):
Company-operated		696			663			677			721			730
Franchised and licensed		1,210			1,330			1,357			1,400			1,499
Total		1,906			1,993			2,034			2,121			2,229
Restaurant sales:
Company-operated restaurants	$	634,264		$	587,082		$	601,068		$	575,238		$	562,010
Franchised and licensed restaurants(2)		1,156,201			1,173,442			1,203,750			1,186,490			1,251,526
Average unit volume per company-operated restaurant		916			874			862			792			763
Percentage increase (decrease) in comparable company-operated restaurant sales		4.8	%		(0.2	)%		7.0	%		2.5	%		(2.2	)%
Restaurant operating costs as a percentage of company-operated revenue		81.9	%		84.5	%		85.7	%		90.7	%		89.5	%

22

	Fiscal Year Ended January 31,(1)
	2007			2006			2005			2004			2003(3)
La Salsa Restaurants
Restaurants open (at end of fiscal year):
Company-operated		55			59			62			61			57
Franchised and licensed		41			43			39			41			42
Total		96			102			101			102			99
Restaurant sales:
Company-operated restaurants	$	44,460		$	47,277		$	46,950		$	42,310		$	38,550
Franchised and licensed restaurants(2)		36,630			34,457			34,170			28,176			23,802
Average unit volume per company-operated restaurant		797			772			748			723			751
Percentage increase (decrease) in comparable company-operated restaurant sales		1.2	%		2.6	%		5.2	%		(1.3	)%		0.8	%
Restaurant operating costs as a percentage of company-operated revenue		93.5	%		95.0	%		97.6	%		94.7	%		87.9	%

(1)	Our fiscal year is 52 or 53 weeks, ending on the last Monday in January. For clarity of presentation, we generally label all fiscal years presented as if the fiscal year ended January 31. Fiscal 2007 and 2006 include 52 weeks. Fiscal 2005 includes 53 weeks. Fiscal 2004 and 2003 include 52 weeks.
(2)	Franchisee restaurant operations are not included in our Consolidated Financial Statements; however, franchisee sales result in royalties and rental income, which are included in franchised and licensed revenues.
(3)	Fiscal 2003 includes operating results of La Salsa from the date of the SBRG acquisition, March 1, 2002.

23

Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the Consolidated Financial Statements and related notes and Selected Financial and Operating Data included elsewhere in this Annual Report on Form 10-K.

Overview

Highlights from fiscal 2007 include:

•  Consolidated revenue increased 4.6%, to $1,588,410 in fiscal 2007 from $1,518,347 in fiscal 2006.

•  Carl’s Jr. same-store sales increased for the seventh consecutive year in fiscal 2007, growing 4.9% at company-operated restaurants, following a 2.2% increase in fiscal 2006.

•  Hardee’s same-store sales increased 4.8% at company-operated restaurants in fiscal 2007, following a 0.2% decrease in fiscal 2006.

•  Annual average unit volume increased 7.4%, to $1,440, for Carl’s Jr. company-operated restaurants and increased 4.8%, to $916, for Hardee’s company-operated restaurants.

•  Carl’s Jr. total restaurant operating costs as a percent of company-operated revenue decreased 30 basis points to 76.3% in fiscal 2007, as compared to 76.6% in fiscal 2006.

•  Hardee’s total restaurant operating costs as a percent of company-operated revenue decreased 260 basis points to 81.9% in fiscal 2007, as compared to 84.5% in fiscal 2006.

•  Income before income taxes and discontinued operations increased $24,820, or 43.4%, reaching $82,071 in fiscal 2007, as compared to $57,251 in fiscal 2006.

•  Net income decreased to $50,172, or $0.72 per diluted share. This represents a decrease of $130,967 from the prior year net income. Net income in fiscal 2006 (as restated) includes an income tax benefit of $123,888 attributable primarily to the reversal of a previously recorded valuation allowance against deferred tax assets, while net income in fiscal 2007 includes income tax expense of $31,899.

•  During fiscal 2007, we repaid a total of $28,928 of the term loan portion of the Facility.

•  During fiscal 2007, we repurchased 4,607,437 shares of our common stock for $81,057 under our Stock Repurchase Plan.

•  On January 22, 2007, we amended the Facility to increase the aggregate amount that we are permitted to expend for stock repurchases and dividend payments by $130,000, and increase the total amount available to us for revolving loans under the Facility by $100,000 to $250,000. As of January 31, 2007, we are permitted to make additional repurchases of our common stock up to $109,387 under the Stock Repurchase Plan.

•  During fiscal 2007, we declared cash dividends of $0.04 per share of our common stock each quarter for a total of $0.16 per share.

We are a nationwide owner, operator and franchisor of QSRs, operating principally under the Carl’s Jr. and Hardee’s brand names. Based on United States system-wide sales, our Hardee’s and Carl’s Jr. chains are the tenth and twelfth largest quick-service hamburger restaurant chains in the United States of America, respectively, according to the June 26, 2006 issue of Nation’s Restaurant News. As of January 31, 2007, the Carl’s Jr. system included 1,087 restaurants, of which we operated 393 restaurants and our franchisees and licensees operated 694 restaurants. Carl’s Jr. restaurants are located in the Western United States, predominantly in California. As of January 31, 2007, the Hardee’s system consisted of 1,906 restaurants, of which we operated 696 restaurants and our franchisees and licensees operated 1,210 restaurants. Hardee’s restaurants are located primarily throughout the Southeastern and Midwestern United States.

We derive our revenue primarily from sales at company-operated restaurants and revenue from franchisees, including franchise and royalty fees, sales to Carl’s Jr. franchisees and licensees of food and packaging products, rentals under real property leases and revenue from the sale of equipment to our franchisees. Restaurant operating expenses consist primarily of food and packaging costs, payroll and other employee benefits and occupancy and

24

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

other operating expenses of company-operated restaurants. Franchise operating costs include the cost of food and packaging products sold to Carl’s Jr. franchisees and licensees, lease payments or depreciation expense on properties leased or subleased to our franchisees, the cost of equipment sold to franchisees, and franchise administrative support. Our revenue and expenses are directly affected by the number and sales volume of company-operated restaurants and, to a lesser extent, franchised and licensed restaurants.

From time to time, we experience increases in our general operating costs. In the past, we have been successful at passing on such increases through price increases, but it has likely had an impact on transaction counts. If we were unable to pass along such price increases, and at the same time could not increase our transaction counts, the recoverability of the carrying value of our restaurants could be impacted.

Restatement of Previously Issued Financial Statements

In connection with the preparation and review of our income tax provision for fiscal 2007, we identified errors in our income tax provision for fiscal 2006, which resulted primarily from mistakes made in summarizing various computations utilized to determine the cumulative difference between our book and tax bases in our fixed assets.

These errors resulted in an overstatement of our income tax benefit for the fiscal year ended January 31, 2006, by $13,443. For the Consolidated Financial Statements presented herein, we have restated our current and non-current deferred income tax assets; income tax benefit; net income; earnings per share and accumulated deficit as of and for the fiscal year ended January 31, 2006, to reflect the correction of the $13,443 overstatement of income tax benefit noted above. (See Note 20 of Notes to Consolidated Financial Statements for additional information.)

We did not amend our previously filed Annual Report on Form 10-K for the fiscal year ended January 31, 2006. Accordingly, readers of the financial statements should rely upon the restated information in this Annual Report on Form 10-K as opposed to the previously filed information.

See Note 1 of Notes to Consolidated Financial Statements for additional information.

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 consolidated financial position and results of operations. 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 and to establish the estimated liability for closing restaurants and subsidizing lease payments of franchisees;

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

•  determination of appropriate estimated liabilities for loss contingencies;

•  determination of appropriate assumptions to use in evaluating leases for capital versus operating lease treatment, establishing depreciable lives for leasehold improvements and establishing straight-line rent expense periods;

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

25

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

•  determination of the appropriate assumptions to use to estimate the fair value of stock-based compensation; and

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

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

We evaluate the carrying value of individual restaurants when the results of operations have reasonably progressed to a point to adequately evaluate the probability of continuing operating losses or upon expectation that a restaurant will be sold or otherwise disposed of before the end of its previously estimated useful life. We generally estimate the useful life of restaurants on owned property to be 20 to 35 years and estimate the remaining useful life of restaurants subject to leases to range from the end of the lease term then in effect to the end of such lease term including all option periods. We then estimate the future cash flows from operating the restaurant over its 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. We also make assumptions about future same-store sales and operating expenses. Our approach incorporates a probability-weighted approach wherein we estimate the effectiveness of future sales and marketing efforts on same-store sales. If an estimate of the fair value of our assets becomes necessary, we typically base such estimate on forecasted cash flows discounted at an estimated weighted-average cost of capital.

During the second and fourth quarter of each fiscal year, and whenever events and/or circumstances indicate that the carrying value of assets may be impaired, we perform an asset recoverability analysis through which we estimate future cash flows for each of our restaurants 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 to the possibility that impairments exist.

Same-store sales and the rates at which restaurant operating costs will increase in the future are key assumptions used to estimate future cash flow for evaluating recoverability. If our same-store sales do not perform at or above our forecasted level, or if restaurant operating cost increases exceed our forecast and we are unable to recover such costs through price increases, the carrying value of certain of our restaurants may prove to be unrecoverable and we may incur additional impairment charges in the future.

Typically, restaurants are operated for three years before we test them for impairment. Also, restaurants typically are not tested for two years following a 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 could increase substantially. In addition, if recently opened or remodeled restaurants do not eventually establish stronger market presence and build a customer base, the carrying value of certain of these restaurants may prove to be unrecoverable and we may incur additional impairment charges in the future.

As of January 31, 2007, we had a total of 91 restaurants among our three major restaurant concepts that generated negative cash flows on a trailing-13 period basis. These restaurants had combined net book values of $23,202. Included within these totals are 37 restaurants with combined net book values of $15,397 that have not been tested for impairment because they had not yet been operated for a sufficient period of time as of our most recent comprehensive semi-annual asset recoverability analysis in the fourth quarter of fiscal 2007. If these negative cash flow restaurants were not to begin generating positive cash flows within a reasonable period of time, the

26

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

carrying value of these restaurants may prove to be unrecoverable and we may recognize additional impairment charges in the future.

Impairment of Goodwill

In accordance with SFAS 142, goodwill is tested annually for impairment, or more frequently if events or circumstances indicate that the asset might be impaired. We perform our annual impairment test during the first quarter of our fiscal year. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. The impairment test is performed at the reporting unit level. We consider the reporting unit level to be the brand level as 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 test consists of two steps. First, we determine the fair value of a reporting unit and compare it to its carrying amount. Second, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation, in accordance with SFAS 141, Business Combinations. The residual fair value after this allocation is the implied fair value of the reporting unit’s goodwill.

During the first quarter of fiscal year 2007, we evaluated the Carl’s Jr. brand, the only one of our brands for which goodwill is recorded. As a result of our evaluation, 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 January 31, 2007, we had $22,649 in goodwill recorded in our accompanying Consolidated Balance Sheet, all of which relates to Carl’s Jr.

Estimated Liability for Closing Restaurants

We typically make decisions to close restaurants based on prospects for estimated future profitability. However, 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 no less frequently than the second and fourth quarter of each fiscal year. When restaurants continue to perform poorly, we consider a number of factors, including the demographics of the location and the likelihood of being able to improve an unprofitable restaurant. Based on the operators’ judgment and a financial review, 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 decide to close the restaurant.

The estimated liability for closing restaurants on properties vacated is based on the terms of the lease and the lease termination fee, if any, that we expect to pay, as well as estimated maintenance costs until the lease has been abated. The amount of the estimated liability established is the present value of these estimated future payments, net of the present value of expected lease or sublease income, which approximates the fair value of such obligations. The interest rate used to calculate the present value of these liabilities is based on an estimated credit-adjusted risk-free rate at the time the liability is established. The related discount is amortized and shown in facility action charges, net in our accompanying Consolidated Statements of Income.

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. We estimate the cost to maintain leased and owned vacant properties until the lease can be abated or the owned property can be sold. 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 that 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

27

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

operating income. As of January 31, 2007, the present value of our operating lease payment obligations on all closed restaurants was approximately $8,470, which represents the discounted amount we would be required to pay if we are unable to enter into sublease agreements or terminate the leases prior to the terms required in the lease agreements. However, it is our experience that we can often 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 $4,492 as of January 31, 2007.

Estimated Liability for Self-Insurance

We are self-insured for a portion of our current and prior years’ losses related to workers’ compensation, general and auto liability insurance programs. We have obtained stop loss insurance for individual workers’ compensation, general and auto liability claims over $500. Accrued liabilities for self-insurance are recorded based on the present value of actuarial estimates of the amounts of incurred and unpaid losses, based on an estimated risk-free interest rate of 4.5% as of January 31, 2007. In determining our estimated liability, management, with the assistance of our actuary, develops assumptions based on the average historical losses on claims we have incurred and on actuarial observations of historical claim loss development. Our actual future loss development may be better or worse than the development we estimated in conjunction with the actuary, in which case our reserves would require adjustment. As such, if we experience a higher than expected number of claims or the costs of claims rise more than expected, then we would be required to adjust the expected losses upward and increase our future self-insurance expense.

Our actuary provides us with estimated unpaid losses for each loss category, upon which our analysis is based. As of January 31, 2007, our estimated liability for self-insured workers’ compensation, general and auto liability losses was $37,833.

Loss Contingencies

We maintain accrued liabilities for contingencies related to litigation. We account for contingent obligations in accordance with SFAS 5, Accounting for Contingencies, which requires that we assess each loss contingency to determine estimates of the degree of probability and range of possible settlement. Those contingencies that are deemed to be probable and where the amount of such settlement is reasonably estimable are accrued in our Consolidated Financial Statements. If only a range of loss can be determined, with no amount in the range representing a better estimate than any other amount within the range, we accrue to the low end of the range. In accordance with SFAS 5, as of January 31, 2007, we have recorded an accrued liability for contingencies related to litigation in the amount of $630 (see Notes 10 and 27 of Notes to Consolidated Financial Statements for further information). 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 recorded liabilities and related Consolidated Financial Statement disclosure. The ultimate resolution of such loss contingencies may differ materially from amounts we have accrued in our Consolidated Financial Statements.

Accounting for Lease Obligations

We lease a substantial portion of our restaurant properties. At the inception of the lease, each property is evaluated to determine whether the lease is an operating or capital lease. The lease accounting evaluation may require significant exercise of judgment in estimating the fair value and useful life of the leased property and to establish the appropriate lease term. The lease term used for this evaluation includes renewal option periods only in instances in which the exercise of the renewal option can be reasonably assured because failure to exercise such option would result in an economic penalty. Such economic penalty would typically result from our having to abandon buildings and other non-detachable improvements upon vacating the property. The lease term used for this

28

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

evaluation also provides the basis for establishing depreciable lives for buildings subject to lease and leasehold improvements, as well as the period over which we recognize straight-line rent expense.

In addition, the lease term is calculated from the date we are given control of the leased premises through the end of the lease term. There is potential for variability in the “rent holiday” period, which begins on the date we are given control of the leased premises and typically ends upon restaurant opening. Factors that may affect the length of the rent holiday period include construction-related delays. Extension of the rent holiday period due to such delays would result in greater rent expense recognized during the rent holiday period.

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 estimate 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 rental 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 fiscal quarter in which such delinquency or default occurs. 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 six months) 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), 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 likely 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. In such cases, we account for the sublease payments received as franchising rental income and the lease payments we make as rental expense in franchised and licensed restaurants and other expense in our Consolidated Statements of Income. As of January 31, 2007, the present value of our total obligation on lease arrangements with Hardee’s and Carl’s Jr. franchisees (including subsidized leases — see further discussion below) was $21,900 and $85,093, 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, 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 January 31, 2007, the net book value of property under lease to Hardee’s and Carl’s Jr. franchisees was $15,132 and $5,015, respectively. Financially troubled franchisees include those with whom we have entered into workout agreements and who may have liquidity problems in the future. In the event that a financially troubled franchisee closes a restaurant for which we own the property, our options are to operate the restaurant as a company-operated restaurant, transfer the restaurant to another franchisee, 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’s carrying 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 January 31, 2007, the net book value of property under lease to Hardee’s franchisees that are considered to be financially troubled franchisees was approximately $332 and is included in the amount above.

29

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

In accordance with SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities, 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 liability includes an estimation related to the risk that certain lease payments from the franchisee may ultimately be uncollectible.

The amount of the estimated liability is established using the methodology described in “Estimated Liability for Closing Restaurants” above. Because losses are typically not probable and/or able to be reasonably estimated, we have not established an additional estimated liability for potential losses not yet incurred under a significant portion of our franchise sublease arrangements. The present value of future sublease obligations from financially troubled franchisees is approximately $1,078 (three financially troubled franchisees represent approximately 95.7% of this amount). If sales trends or 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. The likelihood of needing to increase the estimated liability for future lease obligations is primarily related to the success of our Hardee’s concept.

During February 2006, we terminated our franchise agreement with a Hardee’s franchisee that operated 90 franchised restaurants as a result of its inability to remedy, on a timely basis, certain defaults under the terms of the agreement. At that time, ten of the affected restaurants were located on property that we owned and leased to the franchisee, and 51 of the affected restaurants were located on leased premises that we sublet to the franchisee. During March 2006, we purchased five additional parcels that we had previously leased from a commercial lessor and sublet to the franchisee. The franchisee continued to operate the affected restaurants pursuant to a temporary license agreement until May 18, 2006, when we terminated the license agreement, leases and subleases and assumed full operational control of the aforementioned 61 restaurants. Since the termination of the license agreement, we have purchased $2,400 of existing equipment, closed 19 of the 61 restaurants and recorded facility action charges of $1,959 related to closing these restaurants. We currently operate the remaining 42 restaurants as company-operated restaurants. The former franchisee’s lenders (through a receiver) kept the remaining 29 restaurant locations, of which they subsequently closed 15. During October 2006, we purchased 11 of these restaurants for $6,538 and an existing franchisee, under a franchise agreement, purchased the remaining three restaurants. The total purchase price included land, buildings and existing equipment.

Share-Based Compensation

As discussed in Notes 1 and 23 of Notes to Consolidated Financial Statements, we have various share-based compensation plans that provide stock options and restricted awards for certain employees and non-employee directors to acquire shares of our common stock. Prior to our adoption of SFAS 123R at the beginning of fiscal 2007, we accounted for share-based compensation in accordance with APB 25, which utilizes the intrinsic value method of accounting, as opposed to using the fair-value method prescribed in SFAS 123R. During fiscal years ended January 31, 2007 and 2006, we recorded share-based compensation expense of $8,368 and $188, respectively. (See Note 23 for analysis of the effect of certain changes in assumptions used to determine the fair value of share-based compensation.)

Valuation Allowance for Net Deferred Tax Assets

Deferred income taxes are provided for the estimated income tax effect of temporary differences between the financial and tax bases of assets and liabilities using the liability method. Deferred tax assets are also provided for net operating loss and income tax credit carryforwards. A valuation allowance to reduce the carrying amount of deferred tax assets is established when it is more likely than not that we will not realize some portion or all of the tax benefit of our deferred tax assets. We evaluate, on a quarterly basis, whether it is more likely than not that our deferred income tax assets are realizable. In performing this analysis, we consider all available evidence, both

30

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

positive and negative, including historical operating results, the estimated timing of future reversals of existing taxable temporary differences, estimated future taxable income exclusive of reversing temporary differences and carryforwards, and potential tax planning strategies that may be employed to prevent operating loss or tax credit carryforwards from expiring unused.

As of January 31, 2005, we maintained a valuation allowance of $190,179 against our net deferred tax assets, since we had determined, based primarily on a history of cumulative losses in recent years and uncertainty regarding the timing and amounts of future taxable income, that realization of our deferred tax assets was not more likely than not. During the fourth quarter of fiscal 2006, after considering a number of factors, including a three-year history of cumulative earnings, utilization of net operating loss carryforwards in fiscal 2006, and estimated taxable income in future years, we determined we would more likely than not realize substantial future tax benefits from our deferred tax assets. As a result of this analysis, we reduced our valuation allowance by $159,959 at January 31, 2006, resulting in a net deferred tax asset of $135,740, as restated. Of the total tax benefit from the reversal of the valuation allowance, $11,971 was recorded to additional paid-in capital for the tax benefit from the exercise of stock options during both the current and prior years.

During the fourth quarter of fiscal 2007, we determined that we would more likely than not realize additional future tax benefits from our deferred tax assets. This determination was based on a number of factors, including our ability, for the first time in several years, to utilize more foreign tax credits than we generated in fiscal 2007 and our projected future foreign source income. As a result of our analysis, we reduced our valuation allowance by $4,884 at January 31, 2007. As of January 31, 2007, our remaining valuation allowance of $27,257 relates to federal and state capital loss carryforwards and certain state net operating loss and income tax credit carryforwards. Realization of the tax benefit of such deferred tax assets may remain uncertain for the foreseeable future, even though we expect to generate taxable income, since they are subject to various limitations and may only be used to offset income of certain entities or of a certain character.

Business Strategy

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

•  increase revenues, average unit volumes and operating income at our major brands;

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

•  capitalize on our unique brand positioning and cutting-edge advertising;

•  offer premium products that compete on quality, innovation and taste;

•  continue to capitalize on dual-branding opportunities available with Green Burrito and Red Burrito^tm;

•  control costs and improve capital structure while increasing shareholder distributions;

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

•  remodel our existing store base to remain competitive; and

•  strengthen our franchise system and pursue further franchising opportunities, including new franchisees.

Franchise Operations

Like others in the quick-service restaurant industry, some of our franchisees 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

31

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

and Licensed Operations.” Some franchisees 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 review the allowance for doubtful accounts and the estimated liability for closed franchise restaurants, 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 January 31, 2007, our consolidated allowance for doubtful accounts on notes receivable was 77.9% of the gross balance of notes receivable and our consolidated allowance for doubtful accounts on accounts receivable was 0.9% of the gross balance of accounts receivable. When appropriate, we establish notes receivable pursuant to completing workout agreements with financially troubled franchisees. As of January 31, 2007, we have not recognized, on a cumulative basis, $151 in accounts receivable and $5,955 in notes receivable, nor the royalty and rent revenue associated with these accounts and notes receivable, 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 allowances for doubtful accounts and/or increase the amount of our estimated liability for future lease obligations.

32

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

Operating Review

The following table sets forth the percentage relationship to total revenue, unless otherwise indicated, of certain items included in our accompanying Consolidated Statements of Income for the years indicated:

	Fiscal Year Ended January 31,
	2007			2006			2005
	(as restated)
Revenue:
Company-operated restaurants		79.9	%		79.7	%		80.1	%
Franchised and licensed restaurants and other		20.1			20.3			19.9
Total revenue		100.0			100.0			100.0
Operating costs and expenses:
Restaurant operating costs(1):
Food and packaging		28.7			29.3			29.6
Payroll and other employee benefits		29.2			29.5			31.0
Occupancy and other		21.8			22.4			22.5
Total restaurant operating costs		79.7			81.2			83.0
Franchised and licensed restaurants and other(2)		75.6			77.2			75.2
Advertising(1)		5.7			5.9			5.9
General and administrative		9.5			9.3			9.1
Facility action charges, net		0.5			0.5			0.9
Operating income		6.6			5.1			3.7
Interest expense		(1.2	)		(1.5	)		(2.4	)
Conversion inducement expense		(0.4	)		—			—
Other income (expense), net		0.2			0.2			(0.2	)
Income before income taxes and discontinued operations		5.2			3.8			1.1
Income tax expense (benefit)		2.0			(8.2	)		(0.1	)
Income from continuing operations		3.2	%		12.0	%		1.2	%

(1)	As a percent of revenue from company-operated restaurants.
(2)	As a percent of revenue from franchised and licensed restaurants and other.

33

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

The following tables are presented to facilitate Management’s Discussion and Analysis of Financial Condition and Results of Operations and are classified in the same way as we present segment information (see Note 22 of Notes to Consolidated Financial Statements).

	Fiscal 2007
	Carl’s Jr.			Hardee’s			La Salsa			Other(A)			Eliminations(B)			Total
Company-operated revenue	$	590,613		$	634,264		$	44,460		$	350		$	—		$	1,269,687
Restaurant operating costs:
Food and packaging		170,142			182,695			11,423			115			—			364,375
Payroll and employee benefits		154,791			201,008			14,791			134			—			370,724
Occupancy and other operating costs		125,574			135,716			15,353			110			—			276,753
Total restaurant operating costs		450,507			519,419			41,567			359			—			1,011,852
Franchised and licensed restaurants and other revenue:
Royalties		29,692			47,546			1,844			487			(70	)		79,499
Distribution centers		187,533			16,995			—			—			(8	)		204,520
Rent		21,371			7,426			—			—			—			28,797
Retail sales of variable interest entity		—			—			—			3,467			—			3,467
Other		1,752			653			35			—			—			2,440
Total franchised and licensed restaurants and other revenue		240,348			72,620			1,879			3,954			(78	)		318,723
Franchised and licensed restaurants and other expenses:
Administrative expense (including provision for bad debts)		5,281			4,336			1,437			—			—			11,054
Distribution centers		185,271			17,840			—			—			—			203,111
Rent and other occupancy		18,280			5,117			—			—			—			23,397
Operating costs of variable interest entity		—			—			—			3,437			(47	)		3,390
Total franchised and licensed restaurants and other expenses		208,832			27,293			1,437			3,437			(47	)		240,952
Advertising		33,318			37,589			1,339			7			—			72,253
General and administrative		54,115			87,542			8,374			284			—			150,315
Facility action charges, net		664			2,494			5,003			385			—			8,546
Operating income (loss)	$	83,525		$	32,547		$	(11,381	)	$	(168	)	$	(31	)	$	104,492
Company-operated average unit volume (trailing-13 periods)	$	1,440		$	916		$	797
Franchise-operated average unit volume (trailing-13 periods)	$	1,205		$	949		$	869
Company-operated same-store sales increase		4.9	%		4.8	%		1.2	%
Franchise-operated same-store sales increase		5.4	%		4.3	%		2.2	%
Company-operated same-store transaction increase (decrease)		0.7	%		1.4	%		(4.5	)%
Average check (actual $)	$	6.49		$	4.89		$	10.84
Restaurant operating costs as a % of company-operated revenue:
Food and packaging		28.8	%		28.8	%		25.7	%
Payroll and employee benefits		26.2	%		31.7	%		33.3	%
Occupancy and other operating costs		21.3	%		21.4	%		34.5	%
Total restaurant operating costs		76.3	%		81.9	%		93.5	%
Advertising as a % of company-operated revenue		5.6	%		5.9	%		3.0	%

34

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

	Fiscal 2006
	Carl’s Jr.			Hardee’s			La Salsa			Other(A)			Eliminations(B)			Total
Company-operated revenue	$	574,663		$	587,082		$	47,277		$	434		$	—		$	1,209,456
Restaurant operating costs:
Food and packaging		166,863			174,611			12,617			148			—			354,239
Payroll and employee benefits		150,559			190,486			15,722			193			—			356,960
Occupancy and other operating costs		122,859			131,149			16,559			149			—			270,716
Total restaurant operating costs		440,281			496,246			44,898			490			—			981,915
Franchised and licensed restaurants and other revenue:
Royalties		26,224			42,050			1,754			433			(86	)		70,375
Distribution centers		179,222			24,458			—			—			(139	)		203,541
Rent		20,968			7,121			—			—			—			28,089
Retail sales of variable interest entity		—			—			—			4,279			—			4,279
Other		1,684			798			125			—			—			2,607
Total franchised and licensed restaurants and other revenue		228,098			74,427			1,879			4,712			(225	)		308,891
Franchised and licensed restaurants and other expenses:
Administrative expense (including provision for bad debts)		4,609			5,169			1,389			—			—			11,167
Distribution centers		174,149			24,930			—			—			—			199,079
Rent and other occupancy		18,213			5,959			—			—			—			24,172
Operating costs of variable interest entity		—			—			—			4,299			(256	)		4,043
Total franchised and licensed restaurants and other expenses		196,971			36,058			1,389			4,299			(256	)		238,461
Advertising		34,660			35,282			1,014			8			—			70,964
General and administrative		46,284			75,877			7,318			11,623			—			141,102
Facility action charges, net		1,792			4,653			1,544			36			—			8,025
Operating income (loss)	$	82,773		$	13,393		$	(7,007	)	$	(11,310	)	$	31		$	77,880
Company-operated average unit volume (trailing-13 periods)	$	1,341		$	874		$	772
Franchise-operated average unit volume (trailing-13 periods)	$	1,160		$	897		$	897
Company-operated same-store sales increase (decrease)		2.2	%		(0.2	)%		2.6	%
Franchise-operated same-store sales increase (decrease)		0.7	%		(2.2	)%		3.9	%
Company-operated same-store transaction decrease		(3.0	)%		(2.7	)%		(1.7	)%
Average check (actual $)	$	6.22		$	4.76		$	10.15
Restaurant operating costs as a % of company-operated revenue:
Food and packaging		29.0	%		29.7	%		26.7	%
Payroll and employee benefits		26.2	%		32.4	%		33.3	%
Occupancy and other operating costs		21.4	%		22.4	%		35.0	%
Total restaurant operating costs		76.6	%		84.5	%		95.0	%
Advertising as a % of company-operated revenue		6.0	%		6.0	%		2.1	%

35

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

	Fiscal 2005
	Carl’s Jr.			Hardee’s			La Salsa			Other(A)		Eliminations(B)			Total
Company-operated revenue	$	567,960		$	601,068		$	46,950		$	1,295	$	—		$	1,217,273
Restaurant operating costs:
Food and packaging		166,120			180,515			12,848			456		—			359,939
Payroll and employee benefits		160,240			200,349			16,285			531		—			377,405
Occupancy and other operating costs		121,779			134,387			16,711			417		—			273,294
Total restaurant operating costs		448,139			515,251			45,844			1,404		—			1,010,638
Franchised and licensed restaurants and other revenue:
Royalties		25,426			43,414			1,732			351		(66	)		70,857
Distribution centers		176,304			18,181			—			—		—			194,485
Rent		22,172			9,985			—			—		—			32,157
Retail sales of variable interest entity		—			—			—			3,506		—			3,506
Other		967			524			112			—		—			1,603
Total franchised and licensed restaurants and other revenue		224,869			72,104			1,844			3,857		(66	)		302,608
Franchised and licensed restaurants and other expenses:
Administrative expense (including provision for bad debts)		4,006			4,758			1,111			—		—			9,875
Distribution centers		171,363			18,379			—			—		—			189,742
Rent and other occupancy		18,040			6,540			—			—		—			24,580
Operating costs of variable interest entity		—			—			—			3,457		(66	)		3,391
Total franchised and licensed restaurants and other expenses		193,409			29,677			1,111			3,457		(66	)		227,588
Advertising		34,413			36,023			1,377			26		—			71,839
General and administrative		52,418			79,840			6,388			70		—			138,716
Facility action charges, net		2,794			7,088			4,344			94		—			14,320
Operating income (loss)	$	61,656		$	5,293		$	(10,270	)	$	101	$	—		$	56,780
Company-operated average unit volume (trailing-13 periods)	$	1,301		$	862		$	748
Franchise-operated average unit volume (trailing-13 periods)	$	1,146		$	891		$	823
Company-operated same-store sales increase		7.7	%		7.0	%		5.2	%
Franchise-operated same-store sales increase		6.6	%		3.6	%		3.7	%
Company-operated same-store transaction increase		1.3	%		0.2	%		1.0	%
Average check (actual $)	$	5.89		$	4.63		$	9.65
Restaurant operating costs as a % of company-operated revenue:
Food and packaging		29.3	%		30.0	%		27.4	%
Payroll and employee benefits		28.2	%		33.3	%		34.6	%
Occupancy and other operating costs		21.4	%		22.4	%		35.6	%
Total restaurant operating costs		78.9	%		85.7	%		97.6	%
Advertising as a % of company-operated revenue		6.1	%		6.0	%		2.9	%

36

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

	Fourth Quarter Fiscal 2007
	Carl’s Jr.			Hardee’s			La Salsa			Other(A)			Eliminations(B)			Total
Company-operated revenue	$	133,041		$	145,030		$	9,349		$	77		$	—		$	287,497
Restaurant operating costs:
Food and packaging		38,805			41,508			2,442			25			—			82,780
Payroll and employee benefits		34,800			46,747			3,315			31			—			84,893
Occupancy and other operating costs		29,253			32,009			3,478			24			—			64,764
Total restaurant operating costs		102,858			120,264			9,235			80			—			232,437
Franchised and licensed restaurants and other revenue:
Royalties		7,214			9,476			386			105			(37	)		17,144
Distribution centers		43,332			3,464			—			—			(2	)		46,794
Rent		5,175			1,326			—			—			—			6,501
Retail sales of variable interest entity		—			—			—			724			—			724
Other		210			98			2			—			—			310
Total franchised and licensed restaurants and other revenue		55,931			14,364			388			829			(39	)		71,473
Franchised and licensed restaurants and other expenses:
Administrative expense (including provision for bad debts)		1,281			1,236			350			—			—			2,867
Distribution centers		43,245			3,618			—			—			—			46,863
Rent and other occupancy		4,332			944			—			—			—			5,276
Operating costs of variable interest entity		—			—			—			742			(16	)		726
Total franchised and licensed restaurants and other expenses		48,858			5,798			350			742			(16	)		55,732
Advertising		7,065			8,817			286			2			—			16,170
General and administrative		12,921			21,450			1,882			63			—			36,316
Facility action charges, net		142			2,381			2,386			111			—			5,020
Operating income (loss)	$	17,128		$	684		$	(4,402	)	$	(92	)	$	(23	)	$	13,295
Company-operated same-store sales increase (decrease)		2.8	%		4.8	%		(0.2	)%
Franchise-operated same-store sales increase		2.6	%		4.1	%		1.1	%
Company-operated same-store transaction (decrease) increase		(2.1	)%		1.9	%		(4.5	)%
Average check (actual $)	$	6.77		$	4.94		$	10.72
Restaurant operating costs as a % of company-operated revenue:
Food and packaging		29.2	%		28.6	%		26.1	%
Payroll and employee benefits		26.1	%		32.2	%		35.5	%
Occupancy and other operating costs		22.0	%		22.1	%		37.2	%
Total restaurant operating costs		77.3	%		82.9	%		98.8	%
Advertising as a % of company-operated revenue		5.3	%		6.1	%		3.1	%

37

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

	Fourth Quarter Fiscal 2006
	Carl’s Jr.			Hardee’s			La Salsa			Other(A)		Eliminations(B)			Total
Company-operated revenue	$	135,133		$	131,025		$	10,265		$	80	$	—		$	276,503
Restaurant operating costs:
Food and packaging		39,403			38,899			2,795			26		—			81,123
Payroll and employee benefits		32,334			43,391			3,501			34		—			79,260
Occupancy and other operating costs		27,895			28,333			3,772			24		—			60,024
Total restaurant operating costs		99,632			110,623			10,068			84		—			220,407
Franchised and licensed restaurants and other revenue:
Royalties		6,464			9,101			405			95		(18	)		16,047
Distribution centers		43,021			4,845			—			—		(6	)		47,860
Rent		5,094			1,301			—			—		—			6,395
Retail sales of variable interest entity		—			—			—			883		—			883
Other		606			154			94			—		—			854
Total franchised and licensed restaurants and other revenue		55,185			15,401			499			978		(24	)		72,039
Franchised and licensed restaurants and other expenses:
Administrative expense (including provision for bad debts)		998			1,407			381			—		—			2,786
Distribution centers		41,546			4,883			—			—		—			46,429
Rent and other occupancy		4,418			1,308			—			—		—			5,726
Operating costs of variable interest entity		—			—			—			878		(6	)		872
Total franchised and licensed restaurants and other expenses		46,962			7,598			381			878		(6	)		55,813
Advertising		6,433			8,141			(30	)		4		—			14,548
General and administrative		11,625			19,465			1,840			67		—			32,997
Facility action charges, net		547			2,552			1,133			6		—			4,238
Operating income (loss)	$	25,119		$	(1,953	)	$	(2,628	)	$	19	$	(18	)	$	20,539
Company-operated same-store sales increase		5.3	%		2.9	%		3.7	%
Franchise-operated same-store sales increase		4.3	%		2.9	%		5.1	%
Company-operated same-store transaction (decrease) increase		(0.4	)%		0.4	%		(0.5	)%
Average check (actual $)	$	6.41		$	4.83		$	10.16
Restaurant operating costs as a % of company-operated revenue:
Food and packaging		29.2	%		29.7	%		27.2	%
Payroll and employee benefits		23.9	%		33.1	%		34.1	%
Occupancy and other operating costs		20.6	%		21.6	%		36.8	%
Total restaurant operating costs		73.7	%		84.4	%		98.1	%
Advertising as a % of company-operated revenue		4.8	%		6.2	%		(0.3	)%

(A)	“Other” consists of Green Burrito and amounts that we do not believe would be proper to allocate to the operating segments.
(B)	“Eliminations” consists of the elimination of royalty revenues and expenses generated between Hardee’s and a variable interest entity franchisee included in our Consolidated Financial Statements.

38

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

Presentation of Non-GAAP Measurements

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP measure used by our senior lenders under our Facility to evaluate our ability to service debt and fund capital expenditures. Adjusted 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. As shown in the table below and defined in the Facility, Adjusted EBITDA is calculated as earnings before cumulative effect of accounting changes, 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 Adjusted EBITDA identically, this presentation of Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Adjusted 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, debt service payments and cash costs arising from facility actions.

The Facility includes a number of financial covenants, including a current requirement that we generate a minimum Adjusted EBITDA of $125,000 on a trailing-13 period basis. In addition, our maximum annual capital expenditures are limited by the Facility, based on a sliding scale driven by our Adjusted EBITDA.

The Adjusted EBITDA amounts presented in the tables below are calculated using the definition in our Facility as of January 31, 2007. On March 27, 2007, we amended and restated our Facility. The Amended Facility modifies the definition of Adjusted EBITDA to include an adjustment for share-based compensation expense. Total share-based compensation expense was $8,368, $188 and $0 for fiscal 2007, 2006 and 2005, respectively.

	2007
	Carl’s Jr.		Hardee’s		La Salsa			Other			Total
Net income (loss)	$	52,146	$	5,956	$	(7,255	)	$	(675	)	$	50,172
Interest expense (income)		3,991		15,491		(17	)		286			19,751
Income tax expense (benefit)		29,388		6,966		(4,089	)		(366	)		31,899
Depreciation and amortization		26,328		32,821		3,050			219			62,418
Facility action charges, net		664		2,494		5,003			385			8,546
Adjusted EBITDA	$	112,517	$	63,728	$	(3,308	)	$	(151	)	$	172,786

	2006 (as restated)
	Carl’s Jr.		Hardee’s			La Salsa			Other			Total
Net income (loss)	$	77,065	$	(3,782	)	$	(6,855	)	$	114,711		$	181,139
Interest expense		4,255		18,641			28			92			23,016
Income tax expense (benefit)		1,955		—			(138	)		(125,705	)		(123,888	)
Depreciation and amortization		24,958		35,473			3,558			166			64,155
Facility action charges, net		1,792		4,653			1,544			36			8,025
Adjusted EBITDA	$	110,025	$	54,985		$	(1,863	)	$	(10,700	)	$	152,447

39

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

	2005
	Carl’s Jr.		Hardee’s			La Salsa			Other			Total
Net income (loss)	$	58,490	$	(32,750	)	$	(10,314	)	$	2,590		$	18,016
Discontinued operations, excluding impairment		—		—			—			(252	)		(252	)
Interest expense (income)		5,071		31,510			(27	)		194			36,748
Income tax expense (benefit)		498		73			2			(2,165	)		(1,592	)
Depreciation and amortization		23,875		38,782			3,965			171			66,793
Facility action charges, net		2,794		7,088			4,344			94			14,320
Premium on early redemption of Senior Notes		—		9,126			—			—			9,126
Impairment of Timber Lodge		—		—			—			898			898
Adjusted EBITDA	$	90,728	$	53,829		$	(2,030	)	$	1,530		$	144,057

The following table reconciles Adjusted EBITDA (a non-GAAP measurement) to cash flows provided by operating activities (a GAAP measurement) for the fiscal years ended January 31, 2007, 2006 and 2005:

	2007			2006			2005
	(as restated)
Cash flows provided by operating activities	$	164,145		$	116,173		$	112,222
Interest expense		19,751			23,016			36,748
Income tax expense (benefit)		31,899			(123,888	)		(1,592	)
Premium on early redemption of Senior Notes		—			—			9,126
Amortization of loan fees		(3,097	)		(3,312	)		(3,637	)
Share-based compensation expense		(8,308	)		(188	)		—
Recovery of (provision for) losses on accounts and notes receivable		192			(176	)		1,940
Loss on sale of property and equipment, capital leases and extinguishment of debt		(3,449	)		(3,180	)		(9,676	)
Deferred income taxes		(25,961	)		125,478			(295	)
Other non-cash charges		(77	)		(88	)		(79	)
Change in estimated liability for closing restaurants and estimated liability for self-insurance		5,204			13,701			5,905
Net change in refundable income taxes		4,356			(612	)		3,366
Net change in receivables, inventories, prepaid expenses and other current assets		3,739			5,002			(1,766	)
Net change in accounts payable and other current liabilities		(15,608	)		521			(8,086	)
Adjusted EBITDA from discontinued operations		—			—			262
Net cash flows from discontinued operations		—			—			(119	)
Adjusted EBITDA, including discontinued operations		172,786			152,447			144,319
Less: Adjusted EBITDA from discontinued operations		—			—			(262	)
Adjusted EBITDA	$	172,786		$	152,447		$	144,057

40

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

Fiscal 2007 Compared with Fiscal 2006 and Fiscal 2006 Compared with Fiscal 2005

Carl’s Jr.

During fiscal 2007, we opened seven and closed two company-operated restaurants, and divested 40 company-operated restaurants to franchisees; Carl’s Jr. franchisees and licensees opened 38 and closed five restaurants, and acquired 40 former company-operated restaurants. As of January 31, 2007, 2006 and 2005, the Carl’s Jr. system consisted of the following:

	Restaurant Portfolio											Fiscal Year Revenue
							2007-2006			2006-2005								2007-2006		2006-2005
	2007		2006		2005		Change			Change		2007		2006		2005		Change		Change
Company		393		428		428		(35	)		—	$	590,613	$	574,663	$	567,960	$	15,950	$	6,703
Franchised and licensed(a)		694		621		586		73			35		240,348		228,098		224,869		12,250		3,229
Total		1,087		1,049		1,014		38			35	$	830,961	$	802,761	$	792,829	$	28,200	$	9,932

(a) Includes $187,533, $179,222 and $176,304 of revenues from distribution of food, packaging and supplies to franchised and licensed restaurants in fiscal 2007, 2006 and 2005, respectively.

Company-Operated Restaurants

Revenue from company-operated restaurants increased $15,950, or 2.8%, to $590,613 during fiscal 2007 as compared to the prior year, mainly due to increases in same-store sales of 4.9%, partially offset by the net impact of the opening of seven new company-operated restaurants, the closing of two restaurants and the divestiture of 40 restaurants to franchisees. Same-store sales were positively impacted by the successful promotion of the popular “meat-as-a-condiment” Pastrami Burger, Jalapeño Burger^tm and Philly Cheesesteak Burger^tm, the latest Hand-Scooped Ice Cream Shakes and Malts mint chip flavor and the introduction of the Smoked Sausage Breakfast Sandwich. AUV for the trailing-13 periods ended January 31, 2007, reached $1,440, a 7.4% increase over the prior year. During the same period, the average guest check increased by 4.3%.

Revenue from company-operated restaurants increased $6,703, or 1.2%, to $574,663 during fiscal 2006 as compared to fiscal 2005, despite the inclusion of a 53rd week in fiscal 2005. This increase resulted primarily from a 2.2% increase in same-store sales driven by a 5.6% increase in the average guest check, partially offset by a decrease in transaction counts.

41

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

The changes in restaurant operating costs as a percent of company-operated revenue are explained as follows:

	2007			2006
Restaurant operating costs as a percent of company-operated revenue for the prior year		76.6	%		78.9	%
Increase (decrease) in workers’ compensation expense		0.6			(1.6	)
Decrease in labor costs, excluding workers’ compensation		(0.5	)		(0.4	)
Increase (decrease) in general liability expense		0.2			(0.3	)
Decrease in food and packaging costs		(0.2	)		(0.3	)
Increase in depreciation and amortization expense		0.1			0.1
Increase in repair and maintenance expense		—			0.1
(Decrease) increase in utilities expense		(0.1	)		0.2
(Decrease) increase in rent expense, property taxes and licenses		(0.1	)		0.1
(Decrease) increase in asset retirement expense		(0.1	)		0.1
Decrease in equipment lease expense		—			(0.2	)
Other, net		(0.2	)		(0.1	)
Restaurant operating costs as a percent of company-operated revenue for the current year		76.3	%		76.6	%

Workers’ compensation expense increased by $3,272 during fiscal 2007 as compared to fiscal 2006 due to the impact of favorable claims reserves adjustments recorded in fiscal 2006, as a result of actuarial analyses of outstanding claims reserves, that did not recur to the same extent in the current year, partially offset by the benefit of greater sales leverage and continued favorable actuarial trends in claim frequency and severity. Workers’ compensation expense decreased by $8,720 during fiscal 2006 as compared to fiscal 2005. The significant decrease in workers’ compensation expense during fiscal 2006 can be largely attributed to favorable actuarial trends related to maturation of various policy periods, within the context of a more favorable, post-reform environment.

Labor costs, excluding workers’ compensation, as a percent of company-operated revenue decreased during fiscal 2007 as compared to fiscal 2006, and in fiscal 2006 as compared to fiscal 2005, mainly due to more effective management of direct labor costs and the benefit of greater sales leverage.

General liability expense increased by $1,101 during fiscal 2007 as compared to fiscal 2006 due to the impact of favorable actuarial adjustments recorded in fiscal 2006 that did not recur to the same extent in the current year. General liability expense decreased by $1,635 during fiscal 2006 as compared with fiscal 2005 due to favorable loss development trends, which resulted in reduced actuarially estimated ultimate losses.

Food and packaging costs as a percent of company-operated revenue decreased during fiscal 2007 as compared to the prior year due primarily to decreases in the cost of several commodities such as beef, pork, poultry and cheese, which were partially offset by an increase in packaging costs and in distribution costs related to the relocation of our main distribution center. Food and packaging costs decreased as a percent of company-operated revenue in fiscal 2006 from fiscal 2005, primarily due to decreases in the cost of several commodities, including bacon, poultry, cheese and frying oil.

Utilities expense as a percent of company-operated revenue decreased during fiscal 2007 as compared to fiscal 2006 mainly due to decreases in the prices of electricity and natural gas. Utilities expense as a percent of company-operated revenue increased during fiscal 2006 as compared to fiscal 2005 mainly due to increases in the prices of electricity and natural gas.

Equipment lease expense as a percent of company-operated revenue decreased during fiscal 2006 as compared to fiscal 2005 mainly due to the expiration of certain operating leases in point-of-sale equipment, which was replaced with purchased equipment.

42

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

Franchised and Licensed Restaurants

Total franchised and licensed restaurants and other revenue increased by $12,250, or 5.4%, to $240,348 in fiscal 2007, as compared to the prior year. Franchise royalties grew $3,468, or 13.2%, during fiscal 2007 as compared to fiscal 2006 due to the net increase of 73 domestic and international franchised restaurants during the trailing-13 periods ended January 31, 2007, and the impact of a 5.4% increase in franchise-operated same-store sales. Food, paper and supplies sales to franchisees increased by $8,311, or 4.6%, due to the increase in the franchise store base over the comparable prior year period, and the food purchasing volume impact of the increase in franchise same-store sales.

Total franchised and licensed restaurants and other revenue increased by $3,229, or 1.4%, to $228,098 in fiscal 2006, as compared to the prior year, despite the inclusion of a 53rd week in fiscal 2005, mainly due to an increase of $2,918, or 1.7%, in sales of food, paper and supplies to franchisees. This increase is primarily due to a net increase of 22 domestic franchised restaurants during fiscal 2006, as well as the impact of a slight increase in franchise-operated same-store sales. Franchise royalties also grew $798, or 3.1%, during fiscal 2006 due to a net increase of 35 domestic and international franchised restaurants and the increase in same store sales discussed above. Franchise fees, which are included in other franchise revenue, increased $717, or 74.1%, also due to the opening of new franchise units discussed above and the renewal of franchise agreements. Rental income decreased $1,204, or 5.4%, due to the expiration of certain leases on property we had previously sublet to franchisees. For most of these leases, the franchisees directly negotiated lease renewals with the landlord.

Total franchised and licensed operating and other expenses increased by $11,861, or 6.0%, to $208,832 in fiscal 2007, as compared to fiscal 2006. This increase is primarily due to higher distribution center costs of $11,122, or 6.4%, which can be attributed mainly to the increase in the cost of food, paper and supplies due to a corresponding increase in sales to franchisees and an increase in costs related to the relocation of our main distribution center.

Total franchised and licensed operating and other expenses increased by $3,562, or 1.8%, to $196,971 in fiscal 2006, as compared to fiscal 2005, primarily due to an increase of $2,786, or 1.6%, in the cost of food, paper and supplies sold to franchisees. Franchising administrative expense increased by $603, or 15.1%, primarily as a result of increased provision for doubtful accounts due to prior year recoveries of bad debts that did not recur in fiscal 2006.

Although not required to do so, approximately 86.8% of Carl’s Jr. franchised and licensed restaurants purchase food, paper and other supplies from us.

Hardee’s

During fiscal 2007, we opened four and closed 43 company-operated restaurants. During the same period, we also terminated our franchise agreement, leases and subleases with one franchisee and acquired 61 of their restaurants, of which we subsequently closed 19 and currently operate 42 as company-operated restaurants. During the same period, we acquired 11 restaurants from the lender of a former franchisee. Hardee’s franchisees and licensees opened 22 and closed 70 restaurants; they also divested 72 restaurants (including those divested by a lender of a former franchisee) to us, of which we closed 19. As of January 31, 2007, 2006 and 2005, the Hardee’s system consisted of the following:

	Restaurant Portfolio												Fiscal Year Revenue
							2007-2006			2006-2005									2007-2006			2006-2005
	2007		2006		2005		Change			Change			2007		2006		2005		Change			Change
Company		696		663		677		33			(14	)	$	634,264	$	587,082	$	601,068	$	47,182		$	(13,986	)
Franchised and licensed		1,210		1,330		1,357		(120	)		(27	)		72,620		74,427		72,104		(1,807	)		2,323
Total		1,906		1,993		2,034		(87	)		(41	)	$	706,884	$	661,509	$	673,172	$	45,375		$	(11,663	)

43

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

Company-Operated Restaurants

Revenue from company-operated restaurants increased $47,182 or 8.0%, to $634,264 in fiscal 2007 from fiscal 2006. The increase is mostly due to an increase in same-store sales of 4.8% and a net increase of 33 restaurants during the fiscal year. Same-store sales in fiscal 2006 were significantly affected by three named tropical storms and hurricanes that occurred during the third fiscal quarter, which contributed to record high gasoline prices during late summer. We believe these factors had a negative impact on consumers’ discretionary spending in the prior fiscal year. AUV for the trailing-13 periods ended January 31, 2007, reached $916, an increase of 4.8% over the similar period ended January 31, 2006. During the same period, the average guest check increased by 2.7% due to the introduction of several new premium products such as our Philly Cheesesteak Thickburger, Smoked Sausage Biscuit, Jalapeño Thickburger, and our new Monster Biscuit, as well as the continued promotion of premium products such as our Hand-Scooped Ice Cream Shakes & Malts, Monster Thickburger and Loaded Breakfast Burrito^tm.

Revenue from company-operated Hardee’s restaurants decreased $13,986, or 2.3%, to $587,082 in fiscal 2006 from fiscal 2005, primarily due to the inclusion of a 53rd week in fiscal 2005, a net decrease of 14 restaurants and to a reduction of 0.2% in same-store sales.

The changes in restaurant operating costs as a percent of company-operated revenue are explained as follows:

	2007			2006
Restaurant operating costs as a percent of company-operated revenue for the prior year		84.5	%		85.7	%
Decrease in labor costs, excluding workers’ compensation		(1.0	)		(0.2	)
Decrease in food and packaging costs		(0.9	)		(0.3	)
Decrease in depreciation and amortization expense		(0.7	)		(0.3	)
(Decrease) increase in rent expense, property taxes and licenses		(0.4	)		0.1
Increase (decrease) in workers’ compensation expense		0.3			(0.7	)
Increase (decrease) in general liability expense		0.3			(0.4	)
(Decrease) increase in utilities expense		(0.1	)		0.4
Other, net		(0.1	)		0.2
Restaurant operating costs as a percent of company-operated revenue for the current year		81.9	%		84.5	%

Labor costs, excluding workers’ compensation, decreased as a percent of company-operated revenue in fiscal 2007 as compared to fiscal 2006 primarily due to the benefit of greater sales leverage. Labor costs, excluding workers’ compensation, decreased as a percent of company-operated revenue in fiscal 2006 as compared to fiscal 2005 mainly due to the benefit of adjustments to our labor management system that were designed to use labor more efficiently, partially offset by the impact of a slight decrease in same-store sales.

Food and packaging costs as a percent of company-operated revenue decreased during fiscal 2007 as compared to fiscal 2006 partially due to reduced costs for beef, pork, poultry and cheese. These reductions were partially offset by slightly higher packaging costs and increased vending expenses due to the reopening of two toll road restaurants with company-operated gift shops. Food and packaging costs as a percent of company-operated revenue decreased in fiscal 2006, as compared to fiscal 2005, partially due to reduced costs for pork, cheese and frying oil, as well as a rebate of food costs that we received from our major supplier that resulted from a reconciliation of pricing differences.

Depreciation and amortization expense as a percent of company-operated revenue decreased during fiscal 2007 as compared to fiscal 2006 primarily due to the expiration of certain equipment capital leases during fiscal

44

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

2006, as well as the continued use of certain fully depreciated assets and the benefit of greater sales leverage, partially offset by additional depreciation related to the purchase of 36 restaurant locations in March 2006. Depreciation expense decreased in fiscal 2006, as compared to fiscal 2005, due to the expiration of certain point-of-sale equipment capital leases during fiscal 2006, as well as the continued use of certain fully depreciated assets, partially offset by increased depreciation for new company-operated restaurants and the impact of a slight reduction in same-store sales.

Rent, property taxes and license expense decreased as a percent of company-operated revenue in fiscal 2007, as compared to fiscal 2006, primarily due to the March 2006 purchase of 36 restaurant locations that we had previously leased from a commercial lessor and, to a lesser extent, the benefit of greater sales leverage.

Workers’ compensation expense increased by $2,032 during fiscal 2007 as compared to fiscal 2006 due to the impact of favorable claims reserves adjustments recorded in the prior year, as a result of actuarial analyses of outstanding claims reserves, which did not recur to the same extent in the current year. The impact of these increases was partially offset by the benefit of greater sales leverage during the current year. Workers’ compensation expense decreased by $4,091 in fiscal 2006, as compared to fiscal 2005, mainly due to favorable loss development trends which resulted in reduced actuarially estimated ultimate losses.

General liability expense increased by $2,145 during fiscal 2007 as compared to fiscal 2006 due to the impact of favorable actuarial adjustments recorded in fiscal 2006 that did not recur to the same extent in the current year. General liability expense decreased by $2,638 during fiscal 2006 as compared with fiscal 2005 due to favorable loss development trends, which resulted in reduced actuarially estimated ultimate losses.

Utilities expense as a percent of company-operated revenue decreased during fiscal 2007 as compared to fiscal 2006 mostly due to the benefit of greater sales leverage and the normalization of rates that had spiked in fiscal 2006 after Hurricane Katrina. Utilities expense increased as a percent of company-operated revenue in fiscal 2006, as compared to fiscal 2005, due mainly to higher prices for natural gas and electricity.

Franchised and Licensed Restaurants

Total franchised and licensed restaurants and other revenue decreased $1,807, or 2.4%, to $72,620 during fiscal 2007 as compared to fiscal 2006. The decrease is primarily due to a $7,463, or 30.5%, decrease in distribution center revenues related to reduced franchise remodel activity in the current fiscal year and the ice cream equipment rollout in the prior year, partially offset by franchise royalties, which increased by $5,496, or 13.1%, and franchise rental income, which increased $305, or 4.3%. The increase in royalty revenue is mainly due to a 4.3% increase in franchise-operated same-store sales and greater collections of previously unrecognized royalties, partially offset by the reduction in the number of franchise restaurants discussed above. During fiscal 2007, we collected $4,747 of previously unrecognized royalties from significantly past due franchisees, compared to $1,621 of collections in the prior year. We expect minimal collections of previously unrecognized royalties in fiscal 2008. The increase in rental income is primarily due to collection of previously unrecognized rental income, partially offset by a decrease due to the termination of a franchise agreement with a franchisee that had previously leased ten of our owned locations and subleased 51 of our leased locations.

Total franchised and licensed restaurants and other revenue increased $2,323, or 3.2%, in fiscal 2006 from fiscal 2005. The increase was primarily due to a $6,277, or 34.5%, increase in distribution center revenues related to equipment sales to franchisees and increased franchise remodel activity, partially offset by franchise royalties, which decreased by $1,364, or 3.1%, and franchise rental income, which decreased $2,864, or 28.7%. The $1,364 decrease in royalty revenue was primarily due to a reduction in the number of franchise restaurants and a 2.2% decline in domestic franchise-operated same-store sales, partially offset by an increase in international royalties. The decrease in rental income was primarily due a $2,144 reduction in rent collections from financially troubled

45

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

franchisees during fiscal 2006 and the expiration of certain leases on property we previously sublet to franchisees that are now leased directly from the landlord.

Total franchised and licensed restaurants and other expenses decreased by $8,765, or 24.3%, to $27,293 in fiscal 2007, as compared to fiscal 2006, mainly due to a decrease of $7,090, or 28.4%, in the cost of equipment sales as the result of a corresponding decrease in equipment sales to franchisees and the closure of several franchise restaurant locations. Decreases of $842, or 14.1%, in rent expense and $833, or 16.1%, in administrative expenses also contributed to the reduction in franchising expense.

Total franchised and licensed restaurants and other expenses increased by $6,381, or 21.5%, to $36,058 in fiscal 2006, as compared to fiscal 2005, primarily due to an increase of $6,551, or 35.6%, in the cost of equipment sold to franchisees, which was a direct result of the increased distribution center revenues.

La Salsa

During fiscal 2007, we opened two and closed six company-operated restaurants; during the same period La Salsa franchisees and licensees opened two and closed four restaurants. As of January 31, 2007, 2006 and 2005, the La Salsa system consisted of the following:

	Restaurant Portfolio												Fiscal Year Revenue
							2007-2006			2006-2005									2007-2006			2006-2005
	2007		2006		2005		Change			Change			2007		2006		2005		Change			Change
Company		55		59		62		(4	)		(3	)	$	44,460	$	47,277	$	46,950	$	(2,817	)	$	327
Franchised and licensed		41		43		39		(2	)		4			1,879		1,879		1,844		—			35
Total		96		102		101		(6	)		1		$	46,339	$	49,156	$	48,794	$	(2,817	)	$	362

Revenue from company-operated La Salsa restaurants decreased $2,817, or 6.0%, during fiscal 2007 as compared to the prior year, primarily due to the impact of closing six company-operated restaurants, partially offset by 1.2% increase in company-operated same-store sales, resulting from the net impact of a 6.8% increase in average guest check and a 4.5% decrease in transaction counts, and the opening of two new company-operated restaurants.

Revenue from company-operated La Salsa restaurants increased $327, or 0.7%, during fiscal 2006 as compared to the prior year, despite the inclusion of a 53rd week in fiscal 2005, primarily due to a 2.6% increase in company-operated same-store sales, partially offset by the impact of closing three company-operated restaurants. The increase in same-store sales resulted primarily from a 5.2% increase in the average guest check, partially offset by a 1.7% decrease in transaction counts.

Restaurant operating costs as a percent of company-operated revenue were 93.5% and 95.0% for fiscal 2007 and fiscal 2006, respectively. Food and packaging costs decreased by 1.0% as a percent of company-operated revenue for fiscal 2007 as compared to fiscal 2006 primarily due to reduced costs for dairy, avocado and seafood products. Payroll and employee benefits remained flat as a percent of company-operated revenue for fiscal 2007. Occupancy and other costs decreased 0.5% as a percent of company-operated revenue for fiscal 2007 as compared to fiscal 2006, mainly due to lower depreciation and asset retirement expense.

Restaurant operating costs as a percent of company-operated revenue were 95.0% and 97.6% for fiscal 2006 and fiscal 2005, respectively. Operating costs decreased by 1.7% as a percent of company-operated revenue due to reduced depreciation and amortization expense that resulted from the impairment of 16 La Salsa restaurants during fiscal 2006. Workers’ compensation and general liability expenses decreased 1.6% as a percent of company-operated revenue as a result of favorable actuarial claims development trends. Since our company-operated La Salsa restaurants are located predominantly in California, our workers’ compensation expense was favorably impacted by California legislative reform. These cost reductions were partially offset by a 0.4% increase in asset retirement expense due to the retirement of certain point-of-sale equipment.

46

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

Consolidated Expenses

Consolidated Variable Interest Entities

We consolidate the results of one franchise variable interest entity (“VIE”), which operates five Hardee’s restaurants. We do not possess any ownership interest in the franchise VIE. Retail sales and operating expenses of the franchise VIE are included within franchised and licensed restaurants and other. The assets and liabilities of, and minority interest in, this entity are included in our accompanying Consolidated Balance Sheets, and are not significant to our consolidated financial position. The results of operations of this entity are included within our accompanying Consolidated Statements of Income and are not significant to our consolidated results of operations. The minority interest in the income or loss of this franchise entity is classified in other income (expense), net, in our accompanying Consolidated Statements of Income, and in other long-term liabilities in the accompanying Consolidated Balance Sheets. We have no rights to the assets, nor do we have any obligation with respect to the liabilities, of this franchise entity. None of our assets serve as collateral for the creditors of this franchisee or any of our other franchisees. (See Note 1 of Notes to Consolidated Financial Statements for further discussion of the franchise VIE.)

We also consolidate the Hardee’s cooperative advertising funds, which consist of the Hardee’s National Advertising Fund and approximately 82 local advertising cooperative funds because we have determined we are the primary beneficiaries of these funds. Each of these funds is a separate non-profit association with all the proceeds segregated and managed by a third-party accounting service company. The group of funds has been reported in our accompanying Consolidated Balance Sheets as advertising fund assets, restricted, and advertising fund liabilities within current assets and current liabilities, respectively. The funds are reported as of the latest practicable date, which is the last day of the calendar quarter immediately preceding the balance sheet date.

Advertising Expense

Advertising expense increased $1,289, or 1.8%, to $72,253 in fiscal 2007 from fiscal 2006. Advertising expense, as a percent of company-operated revenue, decreased by 0.2% to 5.7% in fiscal 2007 as compared to fiscal 2006. Advertising expense decreased $875, or 1.2%, to $70,964 during fiscal 2006 from fiscal 2005. Advertising expense, as a percent of company-operated revenue, remained constant at 5.9% in fiscal 2006 as compared to fiscal 2005.

General and Administrative Expenses

General and administrative expenses increased $9,213, or 6.5%, to $150,315 in fiscal 2007 from fiscal 2006. This increase was mainly due to an increase of $8,180 in share-based compensation expense, as a result of the adoption of SFAS 123R and issuance of additional options and awards; higher management bonus expense of $4,650, based on our performance relative to executive management and operations bonus criteria; increased information technologies expense primarily related to higher consulting fees related to various systems implementations and upgrades; increases in our accrued liability for litigation; and increases in professional services and various other expenses. These increases were partially offset by the fact that general and administrative expenses for fiscal 2006 included $11,000 to purchase and retire the outstanding options of our retired Chairman of the Board of Directors, and there was no comparable expense in the current year period. General and administrative expenses were 9.5% of total revenue in fiscal 2007, as compared to 9.3% in fiscal 2006.

General and administrative expenses increased $2,386 or 1.7% to $141,102 during fiscal 2006, as compared to the prior fiscal year. This increase is primarily due to an $11,000 charge incurred in fiscal 2006 to purchase and cancel the options of our former Chairman, partially offset by the impact of legal settlement charges incurred during fiscal 2005 that did not recur in fiscal 2006. General and administrative expenses were 9.3% of total revenue in fiscal 2006, as compared to 9.1% in fiscal 2005.

47

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

Facility Action Charges

Facility action charges arise from closure of company-operated restaurants, sublease of closed facilities at amounts below our primary lease obligation, impairment of long-lived assets to be disposed of or held and used, gains or losses upon disposal of surplus property, and discount amortization for obligations related to closed or subleased facilities to their future costs.

Net facility action charges increased $521 or 6.5%, to $8,546 during fiscal 2007, as compared to the prior fiscal year. The increase is mainly due to an increase of $2,615 in new decisions to close restaurants, of which $1,948 relates to Hardee’s restaurants that we acquired from a terminated franchisee and subsequently decided to close; an increase in unfavorable dispositions of surplus properties of $1,087; and an increase in asset impairments of $453, which were mostly offset by an increase in gains on sales of closed restaurants of $3,459.

Facility action charges decreased $6,295 or 44.0%, to $8,025 during fiscal 2006, as compared to the prior fiscal year. The decrease was primarily due to a $4,290 reduction in charges required to establish liabilities for remaining lease payments for Hardee’s restaurants that closed during fiscal 2006 as compared to fiscal 2005. In addition, asset impairment charges decreased by $3,708 in fiscal 2006 as compared to fiscal 2005, primarily as a result of lower impairments at Carl’s Jr. and La Salsa. The foregoing decreases were partially offset by a decrease of $1,621 in favorable dispositions of closed restaurants, as there were fewer previously closed restaurants to be disposed of.

See Note 5 of Notes to Consolidated Financial Statements included herein for additional detail of the components of facility action charges.

Interest Expense

Interest expense for fiscal 2007, 2006 and 2005 was as follows:

	2007		2006		2005
Facility	$	6,895	$	7,522	$	6,310
Senior subordinated notes due 2009		—		—		7,855
Capital lease obligations		5,665		6,257		6,950
2004 convertible subordinated notes		—		—		73
2023 convertible subordinated notes		2,553		4,200		4,258
Amortization of loan fees		3,096		3,312		3,637
Write-off of unamortized loan fees, term loan due July 2, 2008		242		500		1,452
Write-off of unamortized loan fees, term loan repaid June 2, 2004		—		—		664
Write-off of unamortized loan fees, senior subordinated notes due 2009		—		—		3,068
Letter of credit fees and other		1,300		1,225		2,481
Total interest expense	$	19,751	$	23,016	$	36,748

The decrease from 2006 to 2007 was primarily due to lower average borrowings, further reduction of our capital lease obligations and the conversion of a significant portion of our 2023 Convertible Notes into shares of our common stock during fiscal year 2007.

The decrease from 2005 to 2006 was primarily due to lower average borrowings, lower interest rates upon refinancing our Senior Notes with a lower cost bank term loan, and further amortization of our capital lease obligations, as well as the write-off in fiscal 2005 of unamortized loan fees related to our Senior Notes, for which there was no comparable write-off in fiscal 2006.

48

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

Conversion Inducement Expense

During fiscal 2007, we recorded conversion inducement expense of $6,406 as a result of payments made, in response to unsolicited offers, to induce the holders of $89,833 of our 2023 Convertible Notes to convert their notes into 10,224,424 shares of our common stock, respectively. No comparable expense was recorded during fiscal 2006 or 2005, and we do not expect to incur comparable conversion inducement expense in future periods.

Other Income (Expense), Net

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

	Fiscal Year Ended January 31,
	2007		2006			2005
Premium incurred upon early redemption of debt	$	—	$	—		$	(9,126	)
Interest income on notes receivable from franchisees, disposition properties and capital leases		1,042		1,116			1,784
Rental income from properties leased to third parties, net		1,813		1,352			2,060
Other, net		881		(81	)		2,320
Total other income (expense), net	$	3,736	$	2,387		$	(2,962	)

Income Taxes

We recorded income tax expense for the fiscal year ended January 31, 2007 of $31,899, which is comprised of current provisions for foreign income taxes of $1,124 and federal and state income taxes of $4,814, and a deferred tax provision of $25,961. During the fourth quarter of fiscal 2007, we determined that we would more likely than not realize future tax benefits from certain of our deferred tax assets for which we previously maintained a valuation allowance. This determination was based on a number of factors, including our ability, for the first time in several years, to utilize more foreign tax credits than we generated in fiscal 2007 and our projected future foreign source income. As a result of our analysis, we reduced our valuation allowance by $4,884 at January 31, 2007, resulting in a net deferred tax asset of $109,779.

We recorded income tax benefit for the fiscal year ended January 31, 2006 of $123,888, which is comprised of current provisions for foreign income taxes of $905 and federal and state income taxes of $685, and a benefit from deferred taxes of $125,478, as restated. During the fourth quarter of fiscal 2006, after considering a number of factors, including a three-year history of cumulative earnings, expected utilization of net operating loss (“NOL”) carryforwards in fiscal 2006, and estimated taxable income in future years, we determined we would more likely than not realize substantial future tax benefits from our deferred tax assets. As a result of this analysis, we reduced our valuation allowance by $159,959 at January 31, 2006, resulting in a net deferred tax asset of $135,740, as restated. Of the total tax benefit from the reversal of the valuation allowance, $11,971 was recorded to additional paid-in capital for the tax benefit from the exercise of stock options during both the current and prior years. We generated income for tax purposes during fiscal 2006, before utilization of NOL carryforwards.

Our effective rate differs from the federal statutory rate primarily as a result of changes in our valuation allowance, the impact of state income taxes and certain expenses that are nondeductible for income tax purposes. During fiscal 2008, we expect our effective tax rate to be approximately 40%. As a result of our income tax credit carryforwards and expected reversals of temporary differences, we expect that our cash requirements for U.S. federal and state income taxes will be approximately 15% to 20% of our taxable earnings in fiscal 2008. This rate results primarily from U.S. federal tax reduced by available alternative minimum tax (“AMT”) and general business tax credits.

49

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

Our actual cash requirements for income taxes could vary significantly from our expectations for a number of reasons, including, but not limited to, unanticipated fluctuations in our deferred tax assets and liabilities, unexpected gains from significant transactions, unexpected outcomes of income tax audits, and changes in tax law. We expect to continue to incur foreign taxes on our income earned outside the U.S., which we expect to result in a credit against our U.S. federal income tax liability.

During fiscal 2007, we utilized all of our federal NOL carryforwards and a portion of our federal tax credit carryforwards. At January 31, 2007, we have federal AMT credit, general business tax credit and foreign tax credit carryforwards of approximately $18,446. Our AMT credits will be carried forward until utilized, and our general business tax credits and foreign tax credits would expire, if unused, in varying amounts in the years 2012 through 2027. At January 31, 2007, we have state NOL carryforwards in the amount of approximately $329,207, which expire in varying amounts in the years 2008 through 2027. As of January 31, 2007, we have recognized $859 of net deferred tax assets related to our state NOL carryforwards, which represents our expected future tax savings from such NOL carryforwards.

We have recognized a net deferred tax asset of $109,779 as of January 31, 2007, which resulted from our net deferred tax assets and valuation allowance of approximately $137,036 and $27,257, respectively.

Fiscal Fourth Quarter 2007 Compared with Fiscal Fourth Quarter 2006

Carl’s Jr.

Company-Operated Restaurants

Company-operated restaurant revenue decreased by $2,092, or 1.5%, for the fourth quarter of fiscal 2007 as compared to the fourth quarter of fiscal 2006, due mainly to the divestiture of 40 company-operated restaurants to franchisees. This decrease was partially offset by the addition of two company-operated restaurants and a 2.8% increase in same-store sales.

The changes in the restaurant operating costs as a percent of company-operated revenue from the fiscal fourth quarter 2006 to the fiscal fourth quarter 2007 are explained as follows:

Restaurant operating costs as a percent of company-operated revenue for the prior year	73.7	%
Increase in workers’ compensation expense	2.7
Increase in depreciation and amortization expense	0.6
Increase in general liability insurance expense	0.5
Decrease in utilities expense	(0.5	)
Increase in rent and property taxes	0.4
Decrease in labor costs, excluding workers’ compensation	(0.4	)
Increase in banking expenses	0.1
Increase in equipment lease expense	0.1
Increase in repairs and maintenance expense	0.1
Restaurant operating costs as a percent of company-operated revenue for the current year	77.3	%

Workers’ compensation expense increased by $3,578 during the fourth quarter of fiscal 2007 as compared to the fourth quarter of fiscal 2006, due to the impact of a favorable claims reserves adjustment recorded in the prior year period, as a result of a quarterly actuarial analysis of outstanding claims reserves, that did not recur to the same extent in the current year period, partially offset by the benefit of sales leverage and continued favorable actuarial trends in claim frequency and severity.

50

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

Depreciation expense increased as a percent of company-operated revenue during the fourth quarter of fiscal 2007 as compared to the fourth quarter of fiscal 2006 primarily due to the addition of new assets related to the rollout of new POS software and related hardware and the addition of new assets for newly opened and newly remodeled restaurants.

General liability expense increased by $614 or 0.5% as a percent of company-operated revenue during the fourth quarter of fiscal 2007 as compared to fiscal 2006 as a result of favorable actuarial adjustments recorded in the prior year period that did not recur to the same extent in the current year period.

Utilities expense as a percent of company-operated revenue decreased during the fourth quarter of fiscal 2007 as compared to the fourth quarter of fiscal 2006 mainly due to decreases in the prices of electricity and natural gas.

Rent and property tax expense increased as a percent of company-operated revenue in the fourth quarter of fiscal 2007 as compared to fiscal 2006, primarily due to rental rate increases resulting from Consumer Price Index related rental adjustments.

Labor costs, excluding workers’ compensation, as a percent of company-operated revenue decreased during the fourth quarter of fiscal 2007 compared to fiscal 2006, mainly due to more effective management of direct labor costs and the benefit of greater sales leverage.

Banking expenses increased as a percent of company-operated revenue in the fourth quarter of fiscal 2007 from the fourth quarter of fiscal 2006 primarily due to increased credit card usage by our guests during the fourth quarter of fiscal 2007.

Franchised and Licensed Restaurants

Total franchised and licensed restaurants and other revenue increased $746, or 1.4%, in the fourth quarter of fiscal 2007 from the comparable fiscal 2006 period primarily due to an increase of $750, or 11.6%, in royalties received from franchisees and licensees due to new franchised and licensed restaurants coupled with an increase in AUV. Food, paper and supplies sales to franchisees increased by $311, or 0.7%, due to the increase in the franchise store base over the comparable prior year period, and the food purchasing volume impact of the increase in franchise same-store sales.

Total franchised and licensed restaurants and other expenses increased $1,896, or 4.0%, in the fourth quarter of fiscal 2007 from the comparable fiscal 2006 period due primarily to an increase in distribution center costs of $1,699, or 4.1%, which can be attributed mainly to increases in the cost of food, paper and supplies as a result of a corresponding increase in sales to franchisees and an increase in costs related to the relocation of our main distribution center.

Hardee’s

Company-Operated Restaurants

Revenue from company-operated restaurants increased $14,005 or 10.7%, in the fourth quarter of fiscal 2007 compared to the fourth quarter of fiscal 2006. $9,467 of this increase arose as a result of the net increase in the number of company-operated restaurants from prior year and a 4.8% increase in same-store sales.

51

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

The changes in the restaurant operating costs as a percent of company-operated revenue from the fiscal fourth quarter 2006 to the fiscal fourth quarter 2007 are explained as follows:

Restaurant operating costs as a percent of company-operated revenue	84.4	%
Increase in general liability insurance expense	1.4
Decrease in labor costs, excluding workers’ compensation	(1.2	)
Decrease in food and packaging costs	(1.1	)
Decrease in utilities expense	(0.7	)
Decrease in rent and property taxes	(0.5	)
Decrease in depreciation and amortization expense	(0.5	)
Increase in repair and maintenance expense	0.4
Increase in asset retirement expense	0.3
Increase in workers’ compensation expense	0.3
Other, net	0.1
Restaurant operating costs as a percent of company-operated revenue for the current year	82.9	%

General liability expense increased by $1,970 during the fourth quarter of fiscal 2007 as compared to the fourth quarter of fiscal 2006 as a result of favorable actuarial adjustments recorded in the prior year period that did not recur to the same extent in the current year period.

Labor costs, excluding workers’ compensation, decreased as a percent of company-operated revenue in the fourth quarter of fiscal 2007 as compared to the fourth quarter of fiscal 2006 mainly due to the benefit of greater sales leverage.

Food and packaging costs as a percent of company-operated revenue decreased in the fourth quarter of fiscal 2007 as compared to the fourth quarter of fiscal 2006 primarily due to reduced costs for beef, pork, poultry and cheese.

Utilities expense as a percent of company-operated revenue decreased in the fourth quarter of fiscal 2007 as compared to the fourth quarter of fiscal 2006 mostly due to the benefit of greater sales leverage and the normalization of rates that had spiked in fiscal 2006 after Hurricane Katrina.

Rent and property tax expense as a percent of company-operated revenue decreased in the fourth quarter of fiscal 2007 as compared to the fourth quarter of fiscal 2006 due to the March 2006 purchase of 36 restaurant locations that had previously been leased from a commercial lessor and the benefit of greater sales leverage.

Depreciation and amortization expense as a percent of company-operated revenue decreased in the fourth quarter of fiscal 2007 as compared to the fourth quarter of fiscal 2006 primarily due to the expiration of certain equipment capital leases during fiscal 2006, as well as the continued use of certain fully depreciated assets and the benefit of greater sales leverage, partially offset by additional depreciation related to the purchase of 36 restaurant locations in March 2006.

Repair and maintenance costs increased as a percent of company-operated revenue in the fourth quarter of fiscal 2007 as compared to the fourth quarter of fiscal 2006 mainly due to higher repairs and maintenance costs for the restaurants acquired in connection with the termination of a franchise agreement. There were also higher maintenance costs for a new POS system support contract, while no similar costs were incurred during the same prior year period.

Asset retirement expense as a percent of company-operated revenue increased in the fourth quarter of fiscal 2007 as compared to the fourth quarter of fiscal 2006 mainly due to increased write-offs for a restaurant that closed

52

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

during the quarter so that it could be demolished and rebuilt in early fiscal 2008. There were no similar costs in the prior year period.

Workers’ compensation expense increased by $518 during the fourth quarter of fiscal 2007 as compared to the fourth quarter of fiscal 2006, due to the impact of a favorable claims reserves adjustment recorded in the prior year period, as a result of a quarterly actuarial analysis of outstanding claims reserves, that did not recur to the same extent in the current year period, partially offset by the benefit of greater sales leverage and continued favorable actuarial trends in claim frequency and severity.

Franchised and Licensed Restaurants

Total franchised and licensed restaurants and other revenue decreased by $1,037, or 6.7%, in the fourth quarter of fiscal 2007 from the fourth quarter of fiscal 2006 as a result of a $1,381, or 28.5%, decrease in distribution center revenues related to reduced franchise remodel activity in the current fiscal year and the ice cream equipment rollout in the prior year, partially offset by franchise royalties, which increased by $375, or 4.1%.

Total franchised and licensed restaurants and other expenses decreased $1,800 or 23.7% during the fourth quarter of fiscal 2007 from the fourth quarter of fiscal 2006 primarily due to a $1,265, or 25.9%, decrease in the cost of equipment sales due to a corresponding decrease in equipment sales and the closure of several franchised restaurant locations.

La Salsa

Revenue from company-operated La Salsa restaurants decreased $916, or 8.9%, during the fourth quarter of fiscal 2007 as compared to the prior year quarter, primarily due to the impact of a reduction in the number of company-operated restaurants and a slight decrease in same-store sales.

La Salsa restaurant operating costs as a percent of company-operated revenue increased to 98.8% in the fourth quarter of fiscal 2007, from 98.1% in the fourth quarter of fiscal 2006. Payroll and employee benefits costs increased 1.4% as a percent of company-operated revenue due to an increase in worker’s compensation costs as a result of a favorable claims reserve adjustment recorded in the prior year period, as a result of a quarterly actuarial analysis of outstanding claims reserves that did not recur to the same extent in the current year period, offset by a reduction in direct labor and associated employee benefit costs. Occupancy and other operating costs increased 0.4% as a percent of company-operated revenue due to increases in general and liability insurance, utility rates and repairs and maintenance costs, partially offset by a reduction in depreciation expense. These cost increases were offset by a 1.1% decrease in food and packaging costs, as a percent of company-operated revenue, due to reduced costs for dairy, poultry and avocados.

Accounting Pronouncements Not Yet Adopted

In February 2006, the FASB issued SFAS 155, Accounting for Certain Hybrid Financial Instruments — an amendment of FASB Statements No. 133 and 140. SFAS 155 allows financial instruments that contain an embedded derivative and that otherwise would require bifurcation to be accounted for as a whole on a fair value basis, at the holders’ election. SFAS 155 also clarifies and amends certain other provisions of SFAS 133, Accounting for Derivative Instruments and Hedging Activities and SFAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities — a replacement of FASB Statement 125. This statement is effective for all financial instruments acquired or issued in fiscal years beginning after September 15, 2006, which for us is the beginning of fiscal 2008. We are currently evaluating the impact of SFAS 155 on our consolidated financial position and results of operations.

In March 2006, the FASB issued SFAS 156, Accounting for Servicing of Financial Assets — an amendment of FASB Statement No. 140. SFAS 156 provides guidance on the accounting for servicing assets and liabilities when an

53

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

entity undertakes an obligation to service a financial asset by entering into a servicing contract. This statement is effective for all transactions in fiscal years beginning after September 15, 2006, which for us is the beginning of fiscal 2008. We are currently evaluating the impact of SFAS 156 on our consolidated financial position and results of operations.

In June 2006, the FASB issued FIN 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109, which clarifies the accounting for uncertainty in income taxes recognized in financial statements. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 requires the recognition, in the financial statements, of the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure. FIN 48 is effective for fiscal years beginning after December 15, 2006, which for us is the beginning of fiscal 2008. We are currently evaluating the impact of FIN 48 on our consolidated financial position and results of operations.

In June 2006, the FASB ratified Emerging Issues Task Force (“EITF”) consensus 06-3, How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That is, Gross versus Net Presentation). This EITF addresses the presentation of taxes in the income statement. Gross or net presentation may be elected for each different type of tax, but similar taxes should be presented consistently. Taxes within the scope of this EITF would include taxes that are imposed on a revenue transaction between a seller and a customer, for example, sales taxes, use taxes, value-added taxes, and some types of excise taxes. EITF 06-3 is effective for interim and annual periods beginning after December 15, 2006, which for us is the first quarter of fiscal 2008. We are currently evaluating the impact of EITF 06-3 on our consolidated financial position and results of operations.

In September 2006, the FASB issued SFAS 157, Fair Value Measurements. SFAS 157 establishes a framework for measuring fair value under GAAP and expands disclosures about fair value measurement. SFAS 157 also creates consistency and comparability in fair value measurements among the many accounting pronouncements that require fair value measurements but does not require any new fair value measurements. SFAS 157 is effective for fiscal years (including interim periods) beginning after November 15, 2007, which for us is the first quarter of fiscal 2009. We are currently evaluating the impact of SFAS 157 on our consolidated financial position and results of operations.

In February 2007, the FASB issued SFAS 159, The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115 . This standard amends SFAS 115, Accounting for Certain Investment in Debt and Equity Securities, with respect to accounting for a transfer to the trading category for all entities with available-for-sale and trading securities electing the fair value option. This standard allows companies to elect fair value accounting for many financial instruments and other items that currently are not required to be accounted as such, allows different applications for electing the option for a single item or groups of items, and requires disclosures to facilitate comparisons of similar assets and liabilities that are accounted for differently in relation to the fair value option. SFAS 159 is effective for fiscal years beginning after November 15, 2007, which for us is fiscal 2009. We are currently evaluating the impact of SFAS 159 on our consolidated financial position and results of operations.

Impact of Inflation

Inflation has an impact on food and packaging, construction, occupancy, labor and benefit, and general and administrative costs, all of which can significantly affect our operations. Historically, consistent with the industry, we have been able to pass along to our customers, through price increases, higher costs arising from these inflationary factors.

54

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

Seasonality

Our business is affected by seasonality. Average restaurant sales are normally higher in the summer months than during the winter months for each of our restaurant concepts. In comparison with our Carl’s Jr. and La Salsa restaurant concepts, inclement weather has a greater impact on restaurant sales at our Hardee’s restaurants, because a significant number of them are located in areas that experience severe winter conditions, principally in the Midwest and certain East Coast locations.

Competition

As discussed above in “Business” in Item 1 of this Annual Report on Form 10-K, the foodservice industry is intensively competitive. We compete with a diverse group of food service companies (major restaurant chains, casual dining restaurants, nutrition-oriented restaurants and prepared food stores), making it difficult to attribute specific results of operations to the actions of any of our competitors.

Liquidity and Capital Resources

We currently finance our business through cash flow from operations and borrowings under the Facility. We believe our most significant use of cash during the next 12 months will be for capital expenditures. We amended and restated the Facility on June 2, 2004, and amended the Facility again on November 4, 2004, April 21, 2005, and January 22, 2007 (see below). Subsequent to fiscal 2007, on March 27, 2007, we amended and restated the Facility. The full text of the contractual requirements imposed by the Amended Facility is set forth in the Seventh Amended and Restated Credit Agreement, dated as of March 27, 2007, which we are filing with the Securities and Exchange Commission concurrently with this Annual Report on Form 10-K, and in the ancillary loan documents described therein.

We anticipate that existing cash balances, borrowing capacity under the Amended Facility, and cash provided by operations will be sufficient to service existing debt and to meet our operating and capital requirements for at least the next 12 months. We have no potential mandatory payments of principal on our 4% Convertible Subordinated Notes due 2023 until October 1, 2008.

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 January 31, 2007, our current ratio was 0.82 to 1.

The Facility provided for a $480,000 senior secured credit facility consisting of a $250,000 revolving credit facility and a $230,000 term loan. The Amended Facility provides for $320,000 senior secured credit facility consisting of a $200,000 revolving credit facility and a $120,000 term loan. The revolving credit facility matures on March 27, 2012. The principal amount of the term loan is scheduled to be repaid in quarterly installments of $300, with the remaining principal balance scheduled to mature on March 27, 2013.

During the fiscal year ended January 31, 2007, we voluntarily prepaid $28,112 of the $230,000 term loan, in addition to the $816 regularly scheduled principal payments. As of January 31, 2007, we had (i) borrowings outstanding under the term loan portion of the Facility of $69,821, (ii) borrowings outstanding under the revolving portion of the Facility of $45,500, (iii) outstanding letters of credit under the revolving portion of the Facility of $57,263, and (iv) availability under the revolving portion of the Facility of $147,237.

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

55

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

change of control transaction without the member banks’ consents and make investments or acquisitions. The Facility was collateralized by a lien on all of our personal property assets and liens on certain restaurant properties. The Amended Facility contains reduced restrictions under the covenants and modifies our collateral pool and various other items.

As of January 31, 2007, the applicable interest rate on the term loan was LIBOR plus 2.00%, or 7.375%, per annum. For the revolving portion of the Facility, the applicable rate was Prime plus 1.00%, or 9.25%, per annum. Under the terms of the Facility, we were permitted to lock in favorable rates for the revolving portion based on LIBOR plus 2.25% over terms ranging from 30 to 90 days. As of January 31, 2007 we had $43,500 in borrowings outstanding under the revolving portion of the Facility that we locked in at a rate of approximately 7.625%. We also incurred fees on outstanding letters of credit under the Facility at a rate equal to the applicable margin for LIBOR revolving loans, which was 2.25% per annum as of January 31, 2007. Under the Amended Facility, the applicable interest rate on the term loan portion is LIBOR plus 1.375% per annum. For the revolving portion of the Amended Facility, the applicable interest rate is Prime plus 0.50% per annum. Under the terms of the Amended Facility, we are permitted to lock in favorable rates for the revolving portion based on LIBOR plus 1.50% over terms ranging from 30 to 90 days. We also incur fees on outstanding letters of credit under the Amended Facility at a per annum rate equal to 1.50% times the stated amounts.

The Facility required us to enter into interest rate protection agreements in an aggregate notional amount of at least $70,000 for a term of at least three years. Pursuant to this requirement, on July 26, 2004, we entered into two interest rate cap agreements in an aggregate notional amount of $70,000. Under the terms of each agreement, if LIBOR exceeds 5.375% on the measurement date for any quarterly period, we will receive payments equal to the amount LIBOR exceeds 5.375%, multiplied by (i) the notional amount of the agreement and (ii) the fraction of a year represented by the quarterly period. The agreements expire on July 28, 2007. The agreements were not designated as cash flow hedges under the provisions of SFAS 133. Accordingly, the change in the fair value of the interest rate cap premiums is recognized quarterly in interest expense in our accompanying Consolidated Statements of Income. During the year ended January 31, 2007, we recognized a charge of $43 to interest expense to reduce the carrying value of the interest rate cap premiums to their fair value of $13 at January 31, 2007. As a matter of policy, we do not enter into derivative instruments unless there is an underlying exposure. However, the remaining outstanding principal balance of our term loan is now less than the notional amount of our existing interest rate caps as a result of voluntary prepayments and regularly scheduled principal payments. We are no longer required to enter into interest rate protection agreements under the Amended Facility.

We are permitted to repurchase our common stock and/or pay dividends in an aggregate amount up to $263,441, calculated under the Amended Facility, using balances as of January 31, 2007. In addition, the amount that we may spend to repurchase our common stock and/or pay dividends is increased each year by a portion of excess cash flow (as defined in the Amended Facility) during the term of the Amended Facility.

During the fiscal year ended January 31, 2007, we declared cash dividends of $0.16 per share of common stock, for a total of $10,397. As of January 31, 2007, dividends payable of $2,694 have been included in other current liabilities in our accompanying Consolidated Balance Sheet. These dividends were subsequently paid on February 20, 2007.

Subject to the terms of the Amended Facility, we may make annual capital expenditures in the amount of $85,000, plus 80% of the amount of actual Adjusted EBITDA (as defined in the Amended Facility) in excess of $150,000. We may also carry forward certain unused capital expenditure amounts to the following year. Based on these terms, assuming Adjusted EBITDA in fiscal 2008 as calculated under the definition in the Amended Facility is equal to Adjusted EBITDA in fiscal 2007 as calculated under the definition in the Amended Facility, the Amended Facility would permit us to make capital expenditures of $135,154 in fiscal 2008, which could increase or decrease based on our performance versus the Adjusted EBITDA formula described above.

56

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

The Facility contained financial performance covenants, which included a minimum fixed charge coverage ratio and maximum leverage ratios. In addition, we were required under the Facility to generate a minimum Adjusted EBITDA, as defined, of at least $125,000 on a trailing-13 period basis. The calculation of our Adjusted EBITDA is included under the caption “Presentation of Non-GAAP Measurements,” in Item 7 of this Annual Report on Form 10-K. We were in compliance with these covenants and all other requirements of the Facility as of January 31, 2007. The Amended Facility eliminated certain financial performance covenants, such as minimum Adjusted EBITDA, minimum fixed charge coverage ratio, and adjusted leverage ratio.

The full text of the contractual requirements imposed by the Facility is set forth in the Sixth Amended and Restated Credit Agreement, dated as of June 2, 2004, and the amendments thereto, which we have filed with the Securities and Exchange Commission, and in the ancillary loan documents described therein. The full text of the contractual requirements imposed by the Amended Facility is set forth in the Seventh Amended and Restated Credit Agreement, dated as of March 27, 2007, which we are filing with the Securities and Exchange Commission concurrently with this Annual Report on Form 10-K, and in the ancillary loan documents described therein. Subject to cure periods in certain instances, the lenders under our Amended Facility may demand repayment of borrowings prior to stated maturity upon certain events of default, including, but not limited to, 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 on other significant obligations. In the event the Amended Facility is declared accelerated by the lenders (which can occur only upon certain events of default under the Amended Facility), our 2023 Convertible Notes (described below) may also become accelerated under certain circumstances and after all cure periods have expired.

The 2023 Convertible Notes bear interest at 4.0% annually, payable in semiannual installments due April 1 and October 1 each year, are unsecured general obligations of ours, and are contractually subordinate in right of payment to certain other of our obligations, including the Facility. On October 1 of 2008, 2013 and 2018, the holders of the 2023 Convertible Notes have the right to require us to repurchase all or a portion of the notes at 100% of the face value plus accrued interest. On October 1, 2008 and thereafter, we have the right to call all or a portion of the notes at 100% of the face value plus accrued interest. The 2023 Convertible Notes became convertible into our common stock effective July 1, 2004, and will remain convertible throughout the remainder of their term.

During fiscal 2007, in response to unsolicited offers from the holders of $89,833 of the 2023 Convertible Notes, we made cash payments to the holders, comprised of accrued interest through the dates of conversion and inducements for the holders to convert in lieu of payment of future interest on the converted notes. The inducement payments were $6,406, and are included in the conversion inducement expense in our accompanying Consolidated Statements of Income for the year ended January 31, 2007. Pursuant to their terms, these notes converted into an aggregate of 10,224,424 shares of our common stock. As a result of these conversions, as of January 31, 2007, bank indebtedness and other long-term debt decreased $89,833; other assets, net, decreased $1,356; common stock increased $102; and additional paid-in capital increased $88,375. As of January 31, 2007, the remaining $15,167 of 2023 Convertible Notes are convertible into our common stock at a conversion price of approximately $8.79 per share, based on a conversion rate of 113.8160 shares per $1 of the notes.

The terms of the Amended Facility are not dependent on any change in our credit rating. 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 flows from operations, asset collateral bases and the level of our equity capital relative to our debt obligations. In addition, as noted above, our existing debt 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.

Pursuant to the Stock Repurchase Plan authorized by our Board of Directors, as modified during fiscal 2007, we are allowed to repurchase up to an aggregate of $200,000 of our common stock. During fiscal 2007, we repurchased 4,607,437 shares of our common stock at an average price of $17.58 per share, for a total cost,

57

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

including trading commissions, of $81,057, of which we retired 4,589,137 shares. As of January 31, 2007, we had 18,300 shares of common stock that had been repurchased but not yet retired and are shown as common stock held in treasury on the accompanying Consolidated Balance Sheet. These shares were retired subsequent to January 31, 2007. There was no common stock held in treasury at January 31, 2006.

Based on the Board of Directors’ authorization and the amount of cumulative repurchase of our common stock that we have already made thereunder, we are permitted to make additional repurchases of our common stock up to $109,387 under the Stock Repurchase Plan as of January 31, 2007. As part of our Stock Repurchase Plan, we have implemented a share repurchase plan pursuant to Rule 10b5-1 of the Exchange Act, under which we are allowed to repurchase $5,000 of our common stock in the open market each fiscal quarter through the quarter ending January 28, 2008. Rule 10b5-1 allows us to repurchase our common stock when we might otherwise be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods.

During the fiscal year ended January 31, 2007, cash provided by operating activities was $164,145, an increase of $47,972, or 41.3%, over the prior year. This increase is primarily attributable to increases of $151,439 and $8,120 in non-cash charges related to deferred income taxes and share-based compensation expense, respectively, partially offset by a $130,967 decrease in net income from fiscal 2006 (as restated). The remaining fluctuation is attributable primarily to changes in operating assets and liabilities, including accounts receivable, accounts payable and other liability accounts. Working capital account balances can vary significantly from quarter to quarter, depending upon the timing of large customer receipts and payments to vendors, but they are not anticipated to be a significant source or use of cash over the long term.

Cash used in investing activities during the fiscal year ended January 31, 2007 totaled $92,528, which principally consisted of purchases of property and equipment, partially offset by proceeds from the sale of property and equipment. Capital expenditures for the fiscal years ended January 31, 2007 and 2006 were as follows:

	2007		2006
New restaurants (including restaurants under development)
Carl’s Jr.	$	14,514	$	8,739
Hardee’s		3,362		13,118
La Salsa		1,701		173
Remodels/Dual-branding (including construction in process)
Carl’s Jr.		10,428		3,417
Hardee’s		4,977		5,251
La Salsa		328		131
Other restaurant additions
Carl’s Jr.		25,388		11,712
Hardee’s		42,442		19,889
La Salsa		455		588
Corporate/other		13,673		5,458
Total	$	117,268	$	68,476

Capital expenditures for the fiscal year ended January 31, 2007, increased $48,792, or 71.3%, over the prior year mainly due to the acquisition of real property at 36 restaurant locations that we had previously leased from a commercial lessor, the purchase of 11 restaurant properties from a former franchisee’s lender, the rollout of new POS software and related hardware at our restaurants and additions, which include a new warehouse management software system and other leasehold improvements, related to the relocation of our main distribution center, partially offset by a decrease in new construction. We currently anticipate capital expenditures for fiscal 2008 will

58

CKE RESTAURANTS, INC. AND SUBSIDIARIES

Management’s Discussion and Analysis — (Continued)

(Dollars in thousands)

be between $110,000 and $125,000. Based on our current capital spending projections, we expect capital expenditures for the next five fiscal years to be approximately $650,000.

Cash used in financing activities during the fiscal year ended January 31, 2007, was $74,280, which principally consisted of payment of $80,697 for the repurchase of common stock, repayment of $28,928 of term loans under the Facility (of which $28,112 represented voluntary prepayment thereof), repayment of $4,937 of capital lease obligations, and payment of $10,126 of dividends, partially offset by net borrowings of $37,500 under the revolving portion of the Facility and receipts from the exercise of stock options and warrants of $10,327. We currently anticipate that quarterly dividends and common stock repurchases will be at least $35,000 during fiscal 2008.

Long-Term Obligations

Contractual Cash Obligations

The following table presents our long-term contractual cash obligations as of January 31, 2007:

	Payments Due by Periods
			Less Than						After
	Total		One Year		1-3 Years		3-5 Years		5 Years
Long-term debt(1)(2)	$	131,609	$	1,500	$	2,586	$	2,450	$	125,073
Capital lease obligations(3)(4)		72,316		10,476		20,093		17,177		24,570
Operating leases(3)		609,714		84,152		147,571		112,225		265,766
Unconditional purchase obligations(5)		43,796		40,844		2,922		30		—
Total contractual cash obligations	$	857,435	$	136,972	$	173,172	$	131,882	$	415,409

(1)	Assumes holders of the 2023 Convertible Notes do not exercise redemption rights in October 2008.
(2)	Gives effect to the terms of the Amended Facility.
(3)	The amounts reported above as operating leases and capital lease obligations include leases contained in the estimated liability for closing restaurants and leases for which we are the obligee to the property owner and sublease to franchisees. Additional information regarding operating leases and capital lease obligations can be found in Note 8 of Notes to Consolidated Financial Statements.
(4)	Represents the undiscounted value of capital lease payments.
(5)	Unconditional purchase obligations include contracts for goods and services, primarily related to system restaurant operations and contractual commitments for marketing and sponsorship arrangements.

The following table presents our other commercial commitments including letters of credit and guarantees. The specific commitments are discussed previously in Item 7, as well as in Note 27 of Notes to Consolidated Financial Statements.

Other Commercial Commitments

	Amount of Commitment Expirations Per Period
	Total
	Amounts		Less Than		1-3		3-5
	Committed		One Year		Years		Years
Standby letters of credit under our Facility	$	57,263	$	44,447	$	12,816	$	—
Guarantees		369		151		218		—
Total other commercial commitments	$	57,632	$	44,598	$	13,034	$	—

59

Item 7A.   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 the Facility. As of January 31, 2007, we had $115,321 of borrowings and $57,263 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 our annual pre-tax earnings of $1,153. The estimated reduction is based upon the outstanding balance of the borrowings under the Facility and the weighted-average interest rate for the fiscal year and assumes no change in the volume, index or composition of debt as in effect on January 31, 2007. As of January 31, 2007, a hypothetical increase of 100 basis points in short-term interest rates would also cause the fair value of our convertible subordinated notes due 2023 to decrease approximately $241, and a hypothetical decrease of 100 basis points in short-term interest rates would cause the fair value of our convertible subordinated notes due 2023 to increase approximately $246. The changes in fair value were determined by discounting the projected cash flows assuming redemption on October 1, 2008.

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 accompanying Consolidated Balance Sheets. 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 increase restaurant operating costs as a percent of company-operated revenue for our restaurant concepts.

Derivative Financial Instruments

On July 26, 2004, we entered into two interest rate cap agreements in an aggregate notional amount of $70,000. Under the terms of each agreement, if LIBOR exceeds 5.375% on the measurement date for any quarterly period, we will receive payments equal to the amount LIBOR exceeds 5.375%, multiplied by (i) the notional amount of the agreement and (ii) the fraction of a year represented by the quarterly period. The agreements expire on July 28, 2007. The agreements were not designated as cash flow hedges under the terms of SFAS 133. Accordingly, the change in the fair value of the interest rate cap premiums will be recognized quarterly in interest expense in our Consolidated Statements of Income. We recorded interest expense of $43 and $52 during the years ended January 31, 2007 and 2006, respectively, to adjust the carrying value of the interest rate cap premiums to their fair values. The fair values of the interest rate cap premiums are included in other assets, net, in our accompanying Consolidated Balance Sheets, and were $13 and $56 at January 31, 2007 and 2006, respectively. As a matter of policy, we do not enter into derivative instruments unless there is an underlying exposure. However, the remaining outstanding principal balance of our term loan is now less than the notional amount of our existing interest rate caps as a result of voluntary prepayments and regularly scheduled principal payments.

Item 8.   Financial Statements and Supplementary Data

See the Index included at Item 15 — Exhibits and Financial Statement Schedules.

Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

60

Item 9A.   Controls and Procedures

  (a)   Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognized that any system of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

In connection with the preparation of this Annual Report on Form 10-K, an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Annual Report on Form 10-K to ensure that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and to ensure that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

  (b)   Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our internal control system is designed to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Management has assessed the effectiveness of our internal control over financial reporting as of January 31, 2007. In making its assessment of internal control over financial reporting, management used the criteria set forth in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Management has concluded that, as of January 31, 2007, our internal control over financial reporting was effective.

Our independent registered public accounting firm, KPMG LLP, has issued an audit report on our assessment of our internal control over financial reporting, which is included herein.

  (c)   Changes in Internal Control over Financial Reporting

As discussed elsewhere in this Annual Report on Form 10-K, we have restated our Consolidated Financial Statements for the fiscal year ended January 31, 2006 and the notes thereto, as well as Selected Financial Data for the fiscal year ended January 31, 2006. As a result, we have concluded that we had a material weakness in our internal control over financial reporting relating to income taxes as of January 31, 2006. During the year ended January 31, 2007, we implemented improvements to our income tax provision process that include automating certain tax depreciation calculations that were previously done manually and enhancing our internal controls over review and reconciliation procedures related to our income tax provision. We believe that the material weakness that existed as of January 31, 2006 was remediated at January 31, 2007.

61

There have been no other changes in our internal control over financial reporting during the fourth quarter of our fiscal year ended January 31, 2007, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

  (d)   Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

CKE Restaurants, Inc.:

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control over Financial Reporting (Item 9A(b)), that CKE Restaurants, Inc. (the Company) maintained effective internal control over financial reporting as of January 31, 2007, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that the Company maintained effective internal control over financial reporting as of January 31, 2007, is fairly stated, in all material respects, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2007, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

62

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of CKE Restaurants, Inc. and subsidiaries as of January 31, 2007 and 2006, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the years in the three-year period ended January 31, 2007, and our report dated March 28, 2007, expressed an unqualified opinion on those consolidated financial statements.

/s/  KPMG LLP

Costa Mesa, California

March 28, 2007

  (e)   Certifications

The certifications of our Chief Executive Officer and Chief Financial Officer required under Section 302 of the Sarbanes-Oxley Act of 2002 have been filed as Exhibits 31.1 and 31.2 to the Annual Report on Form 10-K. Additionally, in 2006 our Chief Executive Officer timely submitted to the New York Stock Exchange (“NYSE”) an Annual Chief Executive Officer Certification, as required by the commentary to Section 303A.12(a) of the NYSE Listed Company Manual, indicating that he was not aware of any violations by the Company of the NYSE’s corporate governance listing standards. Such certification was unqualified.

Item 9B.   Other Information

Not Applicable.

63

PART III

Item 10.   Directors and Executive Officers of the Registrant

The information pertaining to directors and executive officers of the registrant is hereby incorporated by reference from our Proxy Statement to be used in connection with our 2007 Annual Meeting of Stockholders, to be filed with the Commission within 120 days of January 29, 2007. Information concerning the current executive officers is contained in Item 1 of Part I of this Annual Report on Form 10-K.

Code of Ethics and Corporate Governance Information

We have adopted a code of business conduct and ethics (“Code of Conduct”) to help ensure our directors and employees conduct the business of CKE fairly, free of conflicts of interest, and in an ethical and proper manner. We have also adopted a code of ethics (“Code of Ethics”) for our CEO and senior financial officers, including our principal financial officer and principal accounting officer or controller, or persons performing similar functions. The Code of Conduct and the Code of Ethics can be found on our website at www.ckr.com. We will satisfy the disclosure requirement under Item 10 of Form 8-K, as necessary, regarding any amendment to, or waiver from, any applicable provision (related to elements listed under Item 406(b) of Regulation S-K) of the Code of Conduct or the Code of Ethics by posting such information on our website.

The Board of Directors has adopted and approved the Code of Conduct, Code of Ethics, Corporate Governance Guidelines, and written charters for its Nominating and Corporate Governance, Audit and Compensation Committees. All of the foregoing documents are available on our website at www.ckr.com, and a copy of the foregoing will be made available (without charge) to any stockholder upon request.

Item 11.   Executive Compensation

The information pertaining to executive compensation is hereby incorporated by reference from our Proxy Statement to be used in connection with our 2007 Annual Meeting of Stockholders, to be filed with the Commission within 120 days of January 29, 2007.

Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information pertaining to security ownership of certain beneficial owners and management and related stockholder matters is hereby incorporated by reference from our Proxy Statement to be used in connection with our 2007 Annual Meeting of Stockholders, to be filed with the Commission within 120 days of January 29, 2007.

64

Equity Compensation Plan Information

Equity compensation plans as of January 31, 2007 were:

					Number of Securities
					Remaining Available
					for Future Issuance
	Number of Securities		Weighted-Average		Under Equity
	to be Issued Upon		Exercise Price of		Compensation Plans
	Exercise of		Outstanding		(Excluding
	Outstanding Options,		Options, Warrants		Securities Reflected
Plan Category	Warrants and Rights		and Rights		in Column (a))
	(a)		(b)		(c)
Equity compensation plans approved by security holders		5,003,784	$	13.74		1,210,643
Equity compensation plans not approved by security holders(1)		370,522		8.24		93,529
Total		5,374,306	$	13.36		1,304,172

(1) Represents options that are part of a “broad-based plan” as then defined by the New York Stock Exchange. See Note 23 of Notes to Consolidated Financial Statements.

Item 13.   Certain Relationships and Related Transactions

The information pertaining to certain relationships and related transactions of the registrant is hereby incorporated by reference from our Proxy Statement to be used in connection with our 2007 Annual Meeting of Stockholders, to be filed with the Commission within 120 days of January 29, 2007.

Item 14.   Principal Accountant Fees and Services

The information pertaining to principal accountant fees and services is hereby incorporated by reference from our Proxy Statement to be used in connection with our 2007 Annual Meeting of Stockholders, to be filed with the Commission within 120 days of January 29, 2007.

65

PART IV

Item 15.   Exhibits and Financial Statement Schedules

		Page
(a)(1)	Index to Consolidated Financial Statements:
	Report of Independent Registered Public Accounting Firm		69
	Consolidated Balance Sheets — as of January 31, 2007 and 2006		70
	Consolidated Statements of Income — for the fiscal years ended January 31, 2007, 2006 and 2005		71
	Consolidated Statements of Stockholders’ Equity — for the fiscal years ended January 31, 2007, 2006 and 2005		72
	Consolidated Statements of Cash Flows — for the fiscal years ended January 31, 2007, 2006 and 2005		73
	Notes to Consolidated Financial Statements		74
	All schedules are omitted since the required information is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the Consolidated Financial Statements or the notes thereto.
(a)(2)	Exhibits: An “Exhibit Index” has been filed as a part of this Annual Report on Form 10-K beginning on page 112 hereof and is incorporated herein by reference

66

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

By:  /s/  Andrew F. Puzder

Andrew F. Puzder,

President and Chief Executive Officer

Date: March 30, 2007

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/  Byron Allumbaugh Byron Allumbaugh	Chairman of the Board	March 30, 2007
/s/  Andrew F. Puzder Andrew F. Puzder	President and Chief Executive Officer (Principal Executive Officer)	March 30, 2007
/s/  Theodore Abajian Theodore Abajian	Executive Vice President, Chief Financial Officer (Principal Financial Officer)	March 30, 2007
/s/  Peter Churm Peter Churm	Director	March 30, 2007
/s/  Matthew Goldfarb Matthew Goldfarb	Director	March 30, 2007
/s/  Carl L. Karcher Carl L. Karcher	Director	March 30, 2007
/s/  Janet E. Kerr Janet E. Kerr	Director	March 30, 2007
/s/  Daniel D. Lane Daniel D. Lane	Director	March 30, 2007
/s/  Daniel E. Ponder, Jr. Daniel E. Ponder, Jr.	Director	March 30, 2007

67

Signature	Title	Date
/s/  Jerold H. Rubinstein Jerold H. Rubinstein	Director	March 30, 2007
/s/  Frank P. Willey Frank P. Willey	Director	March 30, 2007

68

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

CKE Restaurants, Inc.:

We have audited the accompanying consolidated balance sheets of CKE Restaurants, Inc. and subsidiaries as of January 31, 2007 and 2006, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the years in the three-year period ended January 31, 2007. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of CKE Restaurants, Inc. and subsidiaries as of January 31, 2007 and 2006, and the results of their operations and their cash flows for each of the years in the three-year period ended January 31, 2007, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 3 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment, and changed its method of quantifying errors in fiscal 2007. As discussed in Note 1 to the consolidated financial statements, the consolidated financial statements for fiscal 2006 have been restated.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of January 31, 2007, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 28, 2007, expressed an unqualified opinion on management’s assessment of, and the effective operation of, internal control over financial reporting.

/s/ KPMG LLP

Costa Mesa, California

March 28, 2007

69

CKE RESTAURANTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	January 31,			January 31,
	2007			2006
				(as restated)
	(In thousands, except
	par values)
ASSETS
Current assets:
Cash and cash equivalents	$	18,680		$	21,343
Accounts receivable, net		42,804			36,153
Related party trade receivables		4,644			4,987
Inventories, net		21,965			20,953
Prepaid expenses		14,174			13,101
Assets held for sale		3,949			—
Advertising fund assets, restricted		17,896			17,226
Deferred income tax assets, net		25,998			31,820
Other current assets		2,168			2,251
Total current assets		152,278			147,834
Notes receivable, net		775			1,968
Property and equipment, net		488,590			460,083
Property under capital leases, net		25,153			29,364
Deferred income tax assets, net		83,781			103,920
Goodwill		22,649			22,649
Other assets, net		21,196			25,519
Total assets	$	794,422		$	791,337
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of bank indebtedness and other long-term debt	$	1,500		$	9,247
Current portion of capital lease obligations		5,323			4,960
Accounts payable		64,287			53,883
Advertising fund liabilities		17,896			17,226
Other current liabilities		96,133			89,556
Total current liabilities		185,139			174,872
Bank indebtedness and other long-term debt, less current portion		114,942			98,731
Convertible subordinated notes due 2023		15,167			105,000
Capital lease obligations, less current portion		41,123			46,724
Other long-term liabilities		59,205			57,072
Total liabilities		415,576			482,399
Subsequent events (Note 11)
Commitments and contingencies (Notes 8, 10, 11, 12 and 27)
Stockholders’ equity:
Preferred stock, $.01 par value; authorized 5,000 shares; none issued or outstanding		—			—
Series A Junior Participating Preferred stock, $.01 par value; 1,500 shares authorized; none issued or outstanding		—			—
Common stock, $.01 par value; authorized 100,000 shares; 67,247 shares issued and 67,229 shares outstanding as of January 31, 2007 and 59,803 shares issued and outstanding as of January 31, 2006		672			598
Common stock held in treasury, at cost; 18 shares as of January 31, 2007 and none as of January 31, 2006		(360	)		—
Additional paid-in capital		501,437			472,834
Unearned compensation on restricted stock		—			(1,816	)
Accumulated deficit		(122,903	)		(162,678	)
Total stockholders’ equity		378,846			308,938
Total liabilities and stockholders’ equity	$	794,422		$	791,337

See Accompanying Notes to Consolidated Financial Statements

70

CKE RESTAURANTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

	Fiscal Years Ended January 31,
	2007			2006			2005
	(as restated)
	(In thousands, except per share amounts)
Revenue:
Company-operated restaurants	$	1,269,687		$	1,209,456		$	1,217,273
Franchised and licensed restaurants and other		318,723			308,891			302,608
Total revenue		1,588,410			1,518,347			1,519,881
Operating costs and expenses:
Restaurant operating costs:
Food and packaging		364,375			354,239			359,939
Payroll and other employee benefits		370,724			356,960			377,405
Occupancy and other		276,753			270,716			273,294
Total restaurant operating costs		1,011,852			981,915			1,010,638
Franchised and licensed restaurants and other		240,952			238,461			227,588
Advertising		72,253			70,964			71,839
General and administrative		150,315			141,102			138,716
Facility action charges, net		8,546			8,025			14,320
Total operating costs and expenses		1,483,918			1,440,467			1,463,101
Operating income		104,492			77,880			56,780
Interest expense		(19,751	)		(23,016	)		(36,748	)
Conversion inducement expense		(6,406	)		—			—
Other income (expense), net		3,736			2,387			(2,962	)
Income before income taxes and discontinued operations		82,071			57,251			17,070
Income tax expense (benefit)		31,899			(123,888	)		(1,592	)
Income from continuing operations		50,172			181,139			18,662
Discontinued operations:
Loss from discontinued operations (net of income tax benefit of $0 for 2005)		—			—			(646	)
Net income	$	50,172		$	181,139		$	18,016
Basic income per common share:
Continuing operations	$	0.79		$	3.06		$	0.32
Discontinued operations		—			—			(0.01	)
Net income	$	0.79		$	3.06		$	0.31
Diluted income per common share:
Continuing operations	$	0.72		$	2.51		$	0.31
Discontinued operations		—			—			(0.01	)
Net income	$	0.72		$	2.51		$	0.30
Dividends per common share	$	0.16		$	0.16		$	—
Weighted-average common shares outstanding:
Basic		63,562			59,226			57,615
Dilutive effect of stock options, warrants, convertible notes and restricted stock		8,815			14,024			1,968
Diluted		72,377			73,250			59,583

See Accompanying Notes to Consolidated Financial Statements

71

CKE RESTAURANTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

																			Officer and
																			Non-
																Unearned			Employee
							Common Stock						Additional			Compensation			Director						Total
	Common Stock						Held in Treasury						Paid-In			On Restricted			Notes			Accumulated			Stockholders’
	Shares			Amount			Shares			Amount			Capital			Stock			Receivable			Deficit			Equity
Balance at January 31, 2004		59,216		$	592			(1,585	)	$	(10,406	)	$	464,689		$	—		$	(2,530	)	$	(351,687	)	$	100,658
Exercise of stock options		970			10			—			—			4,013			—			—			—			4,023
Collection of officer and non-employee director notes receivable		—			—			—			—			—			—			2,530			—			2,530
Repurchase and retirement of common stock		(2,104	)		(21	)		1,585			10,406			(15,311	)		—			—			(633	)		(5,559	)
Net income		—			—			—			—			—			—			—			18,016			18,016
Balance at January 31, 2005		58,082			581			—			—			453,391			—			—			(334,304	)		119,668
Cash dividends declared		—			—			—			—			—			—			—			(9,513	)		(9,513	)
Issuance of restricted stock awards, net of forfeitures		150			1			—			—			2,003			(2,004	)		—			—			—
Amortization of unearned compensation		—			—			—			—			—			188			—			—			188
Exercise of stock options and warrants		1,868			19			—			—			9,464			—			—			—			9,483
Tax benefit from exercise of stock options		—			—			—			—			11,971			—			—			—			11,971
Repurchase and retirement of common stock		(297	)		(3	)		—			—			(3,995	)		—			—			—			(3,998	)
Net income (as restated)		—			—			—			—			—			—			—			181,139			181,139
Balance at January 31, 2006 (as restated)		59,803			598			—			—			472,834			(1,816	)		—			(162,678	)		308,938
Cash dividends declared		—			—			—			—			—			—			—			(10,397	)		(10,397	)
Issuance of restricted stock awards, net of forfeitures		634			6			—			—			(6	)		—			—			—			—
Reclassification of unearned compensation pursuant to SFAS 123R adoption		—			—			—			—			(1,816	)		1,816			—			—			—
Exercise of stock options		1,175			12			—			—			10,315			—			—			—			10,327
Conversion of 2023 Convertible Notes into common stock		10,224			102			—			—			88,375			—			—			—			88,477
Tax benefit from exercise of stock options		—			—			—			—			4,078			—			—			—			4,078
Share-based compensation expense		—			—			—			—			8,308			—			—			—			8,308
Repurchase and retirement of common stock		(4,589	)		(46	)		(18	)		(360	)		(80,651	)		—			—			—			(81,057	)
Net income		—			—			—			—			—			—			—			50,172			50,172
Balance at January 31, 2007		67,247		$	672			(18	)	$	(360	)	$	501,437		$	—		$	—		$	(122,903	)	$	378,846

See Accompanying Notes to Consolidated Financial Statements

72

CKE RESTAURANTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Fiscal Years Ended January 31,
	2007			2006			2005
	(as restated)
Cash flows from operating activities:
Net income	$	50,172		$	181,139		$	18,016
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		62,418			64,155			66,793
Amortization of loan fees		3,097			3,312			3,637
Share-based compensation expense		8,308			188			—
(Recovery of) provision for losses on accounts and notes receivable		(192	)		176			(1,940	)
Loss on sale of property and equipment, capital leases and extinguishment of debt		3,449			3,180			9,676
Facility action charges, net		8,546			8,025			14,320
Deferred income taxes		25,961			(125,478	)		295
Other non-cash charges		77			88			79
Net changes in operating assets and liabilities:
Estimated liability for closing restaurants and estimated liability for self-insurance		(5,204	)		(13,701	)		(5,905	)
Refundable income taxes		(4,356	)		612			(3,366	)
Receivables, inventories, prepaid expenses and other current and non-current assets		(3,739	)		(5,002	)		1,766
Accounts payable and other current and long-term liabilities		15,608			(521	)		8,086
Operating cash flows of discontinued operations		—			—			765
Net cash provided by operating activities		164,145			116,173			112,222
Cash flows from investing activities:
Purchases of property and equipment		(117,268	)		(68,476	)		(58,621	)
Proceeds from sales of property and equipment		21,929			7,993			12,881
Collections on notes receivable		2,749			898			1,527
Increase in cash upon consolidation of variable interest entity		—			—			100
Disposition of brand, net of cash surrendered		—			—			6,954
Other investing activities		62			(454	)		132
Investing cash flows of discontinued operations		—			—			(269	)
Net cash used in investing activities		(92,528	)		(60,039	)		(37,296	)
Cash flows from financing activities:
Net change in bank overdraft.		2,620			108			(5,018	)
Borrowings under revolving credit facility		127,000			136,500			55,000
Repayments of borrowings under revolving credit facility		(89,500	)		(143,000	)		(40,500	)
Proceeds from credit facility term loan		—			—			230,000
Repayment of credit facility term loan		(28,928	)		(39,902	)		(115,411	)
Repayment of senior subordinated notes due 2009		—			—			(200,000	)
Repayment of convertible subordinated notes due 2004		—			—			(22,319	)
Repayment of other long-term debt		(145	)		(179	)		(152	)
Borrowings by consolidated variable interest entity		38			75			—
Repayments of capital lease obligations		(4,937	)		(5,089	)		(7,143	)
Collections on officer and non-employee director notes receivable		—			—			2,530
Payment of deferred loan fees		(2,733	)		(102	)		(6,193	)
Repurchase of common stock		(80,697	)		(3,998	)		(5,559	)
Proceeds from exercises of stock options and warrants		10,327			9,483			4,023
Tax benefit from exercise of stock options		2,801			—			—
Dividends paid on common stock		(10,126	)		(7,119	)		—
Financing cash flows of discontinued operations		—			—			(107	)
Net cash used in financing activities		(74,280	)		(53,223	)		(110,849	)
Net (decrease) increase in cash and cash equivalents		(2,663	)		2,911			(35,923	)
Cash and cash equivalents at beginning of year		21,343			18,432			54,355
Cash and cash equivalents at end of year	$	18,680		$	21,343		$	18,432

See Accompanying Notes to Consolidated Financial Statements

73

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fiscal Years Ended January 31, 2007, 2006 and 2005
(Dollars in thousands, except per share amounts)

Note 1 — Significant Accounting Policies

A summary of certain significant accounting policies is set forth below.

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, Green Burrito and La Salsa restaurant concepts. References to CKE Restaurants, Inc. throughout these Notes to Consolidated Financial Statements are made using the first person notations of “we,” “us” and “our.”

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-branded Carl’s Jr. restaurants. La Salsa restaurants are primarily located in California. As of January 31, 2007, our system-wide restaurant portfolio consisted of:

	Carl’s Jr.		Hardee’s		La Salsa		Other		Total
Company-operated		393		696		55		1		1,145
Franchised and licensed		694		1,210		41		15		1,960
Total		1,087		1,906		96		16		3,105

Basis of Presentation and Fiscal Year

The Consolidated Financial Statements include the accounts of CKE, our wholly-owned subsidiaries, and certain variable interest entities for which we are the primary beneficiary. All significant intercompany transactions are eliminated. Our fiscal year is 52 or 53 weeks, ending on the last Monday in January each year. Fiscal 2007 and 2006 each include 52 weeks of operations. Fiscal 2005 includes 53 weeks of operations. For clarity of presentation, we generally label all years presented as if the fiscal year ended January 31.

Restatement of Previously Issued Financial Statements

In connection with the preparation and review of our income tax provision for fiscal 2007, we identified errors in our income tax provision for fiscal 2006, which resulted primarily from mistakes made in summarizing various computations utilized to determine the cumulative difference between our book and tax bases in our fixed assets.

These errors resulted in an overstatement of our income tax benefit for the fiscal year ended January 31, 2006, by $13,443. For the Consolidated Financial Statements presented herein, we have restated our current and non-current deferred income tax assets; income tax benefit; net income; earnings per share and accumulated deficit as of and for the fiscal year ended January 31, 2006, to reflect the correction of the $13,443 overstatement of income tax benefit noted above. (See Note 20 for additional information.)

74

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The impacts of the restatement on the previously issued Consolidated Financial Statements for fiscal 2006 are summarized as follows:

	Previously
	Reported			Adjustments			As Restated
Fiscal 2006
Consolidated Balance Sheet Data
Deferred income tax assets, net	$	31,413		$	407		$	31,820
Total current assets		147,427			407			147,834
Deferred income tax assets, net		117,770			(13,850	)		103,920
Total assets		804,780			(13,443	)		791,337
Accumulated deficit		(149,235	)		(13,443	)		(162,678	)
Total stockholders’ equity		322,381			(13,443	)		308,938
Total liabilities and stockholders’ equity		804,780			(13,443	)		791,337
Consolidated Statement of Income Data
Income tax benefit		(137,331	)		13,443			(123,888	)
Income from continuing operations		194,582			(13,443	)		181,139
Net income		194,582			(13,443	)		181,139
Basic income per common share:
Continuing operations		3.29			(0.23	)		3.06
Net income		3.29			(0.23	)		3.06
Diluted income per common share:
Continuing operations		2.70			(0.19	)		2.51
Net income		2.70			(0.19	)		2.51
Consolidated Statement of Cash Flows Data
Cash flows from operating activities:
Net income		194,582			(13,443	)		181,139
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes		(138,921	)		13,443			(125,478	)

Variable Interest Entities

As required by Financial Accounting Standards Board (“FASB”) Interpretation 46R, Consolidation of Variable Interest Entities — an interpretation of ARB No. 51 (“FIN 46R”), we consolidate one franchise entity that operates five Hardee’s restaurants since we have concluded that we are the primary beneficiary of this variable interest entity (“VIE”). The assets and liabilities of, and minority interest in, this VIE have been included in our accompanying Consolidated Balance Sheets and are not significant to our consolidated financial position. The operating results of this VIE have been included in our accompanying Consolidated Statements of Income for the fiscal years ended January 31, 2007, 2006 and 2005, and are not significant to our consolidated results of operations.

We also consolidate a national and approximately 82 local co-operative advertising funds (“Hardee’s Funds”). We have included $17,896 of advertising fund assets, restricted, and advertising fund liabilities in our accompanying Consolidated Balance Sheet as of January 31, 2007, and $17,226 of advertising fund assets, restricted, and advertising fund liabilities in our accompanying Consolidated Balance Sheet as of January 31, 2006. Advertising fund assets, restricted, are comprised primarily of cash and receivables. Advertising fund liabilities are

75

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

comprised primarily of accounts payable and deferred obligations. The Hardee’s Funds have been included in our accompanying Consolidated Statements of Income for the fiscal years ended January 31, 2007, 2006 and 2005, on a net basis, whereby, in accordance with Statement of Financial Accounting Standards (“SFAS”) 45, Accounting for Franchise Fee Revenue, we do not reflect franchisee contributions as revenue, but rather as an offset to reported advertising expenses.

Although the VIEs referred to above have been included in our accompanying Consolidated Financial Statements as of and for the fiscal years ended January 31, 2007, 2006 and 2005, we have no rights to the assets, nor do we have any obligation with respect to the liabilities, of these VIEs. None of our assets serve as collateral for the creditors of these VIEs.

Certain of our Carl’s Jr. franchisees, which combine to operate approximately 8.9% of all Carl’s Jr. franchise restaurants, are VIEs in which we hold a significant variable interest, but for which we are not the primary beneficiary. Our significant exposures related to these VIEs relate to the collection of amounts due to us, guarantees of franchisee debt that we provide to third-party lenders (see Note 27), and primary lease obligations or fee property ownership underlying sublease and lease arrangements that we have with these entities (see Note 8).

Cash and Cash Equivalents

For purposes of reporting cash and cash equivalents, highly liquid investments purchased with original maturities of three months or less, are considered cash equivalents. The carrying amounts reported in our accompanying Consolidated Balance Sheets for these instruments approximate their fair values.

Inventories

Inventories are stated at the lower of cost (on a first-in, first-out basis) or market, and consist primarily of restaurant food, paper, equipment and supplies.

Deferred Financing Costs

Costs related to the issuance of debt are deferred and amortized, utilizing the effective interest method, as a component of interest expense over the terms of the respective debt issues. Upon entering into or modifying our financing arrangements, we account for deferred financing costs in accordance with Emerging Issues Task Force (“EITF”) 98-14, Debtor’s Accounting for Changes in Line of Credit or Revolving-Debt Arrangements, and EITF 96-19, Debtor’s Accounting for a Modification or Exchange of Debt Instruments.

Assets Held for Sale

Assets held for sale consist of individual properties we have decided to divest that we expect to sell within one year. Such assets are classified as current assets upon meeting the requirements of SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets. Upon classification of such assets as assets held for sale, we no longer depreciate such assets.

As of January 31, 2007, assets of $3,949 were classified as held for sale in our Carl’s Jr. ($1,316) and Hardee’s ($2,633) operating segments, respectively. There were no assets held for sale as of January 31, 2006.

Property and Equipment

Property and equipment are recorded at cost, less accumulated depreciation, amortization and impairment write-downs. Depreciation is computed using the straight-line method based on the assets’ estimated useful lives, which generally range from three to 40 years. Leasehold improvements are amortized on a straight-line basis over the shorter of the estimated useful lives of the assets or the related lease term, as determined in accordance with

76

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

SFAS 13, Accounting for Leases, as amended. In circumstances in which leasehold improvements are made during the course of a lease term such that the exercise of options available to us to extend the lease term becomes reasonably assured, such leasehold improvements may be amortized over periods that include one or more lease option terms.

Capitalized Costs

We have elected to account for construction costs in a manner similar to SFAS 67, Accounting for Costs and Initial Rental Operations of Real Estate Projects. As such, costs that have a future benefit for the project(s) are capitalized. If we subsequently make a determination that a site for which development costs have been capitalized will not be acquired or developed, any previously capitalized development costs are expensed and included in general and administrative expenses.

Goodwill

In accordance with SFAS 142, Goodwill and Other Intangible Assets, goodwill is tested annually for impairment, or more frequently if events or circumstances indicate that the asset might be impaired. We perform our annual impairment test during the first quarter of our fiscal year. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. The impairment test is performed at the reporting unit level, which we have determined to be the brand level. The impairment test consists of two steps. First, we determine the fair value of a reporting unit and compare it to its carrying amount. Second, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation, in accordance with SFAS 141, Business Combinations. The residual fair value after this allocation is the implied fair value of the reporting unit’s goodwill.

Facility Action Charges

From time to time, we identify under-performing restaurants that have carrying values in excess of their fair values and, as a result, we may record an impairment charge. We may also close or refranchise these or other restaurants and lease or sublease the restaurant property to a franchisee or to a business other than one of our restaurant concepts. The following costs that result from these actions are recorded in our accompanying Consolidated Statements of Income as facility action charges, net:

(i) impairment of long-lived assets for under-performing restaurants to be disposed of or held and used;

(ii) store closure costs, including sublease of closed facilities at amounts below our primary lease obligation;

(iii) gains (losses) on the sale of restaurants; and

(iv) amortization of discount related to estimated liability for closing restaurants.

Considerable management judgment is necessary to estimate future cash flows, including cash flows from continuing use, terminal value, closure costs, expected sublease income and refranchising proceeds. Accordingly, actual results could vary significantly from our estimates.

(i) Impairment of Long-Lived Assets

In accordance with SFAS 144, long-lived assets, such as property, plant and equipment and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset (including the value of associated intangible assets) to

77

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

its related estimated undiscounted future cash flows. If the undiscounted future cash flows are less than the carrying value, an impairment charge is recognized to the extent that the carrying amount of the asset exceeds the fair value of the asset. We typically estimate the fair value of assets based on the estimated future cash flows discounted at an estimated weighted-average cost of capital. Upon recording the impairment charge, the estimated fair value becomes the asset’s new cost basis.

For purposes of the recoverability analysis, assets are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities, which is generally the individual restaurant level for fixed assets, capital lease assets and favorable leases. However, intangible assets, such as trademarks and franchise agreements, are grouped at a higher level, such as the concept level or franchise operations thereof, since we have determined such groupings to be the lowest level at which largely independent cash flows associated with these assets can be identified.

(ii) Store Closure Costs

We typically make decisions to close restaurants based on prospects for estimated future profitability. However, 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 on a quarterly basis. When restaurants continue to perform poorly, we consider a number of factors, including the demographics of the location and the likelihood of being able to improve an unprofitable restaurant. Based on the operator’s judgment and a financial review, 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 decide to close the restaurant.

We establish the estimated liability on the actual closure date. Prior to the adoption of SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities, on January 1, 2003, we established the estimated liability when management identified a restaurant for closure, which may or may not have been the actual closure date. The estimated liability for closing restaurants is generally based on the remaining obligation through the end of the lease term, net of estimated sublease revenues, as well as estimated maintenance costs.

The amount of the estimated liability established is the present value of these estimated future net payments. The interest rate used to calculate the present value of these liabilities is based on an estimated credit-adjusted risk-free rate at the time the liability is established, which was 9.0% as of January 31, 2007. The related discount is amortized and shown as an additional component of facility action charges, net, in our accompanying Consolidated Statements of Income.

(iii) Gains (Losses) on the Sale of Restaurants

We record gains and losses on the sale of restaurants as the difference between the net proceeds received and net carrying values of the net assets of the restaurants sold.

(iv) Amortization of Discount Related to Estimated Liability for Closing Restaurants

We record this amortization as a component of facility action charges, net.

Guarantees

We apply FASB Interpretation (“FIN”) 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others, an interpretation of SFAS 5, SFAS 57 and SFAS 107 and a rescission of FASB Interpretation 34. FIN 45 elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees issued. FIN 45 also clarifies that a guarantor is required to recognize, at inception of a guarantee, a liability for the fair value of certain

78

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

obligations undertaken. The initial recognition and measurement provisions were applicable to certain guarantees issued or modified after December 31, 2002.

Loss Contingencies

As required by SFAS 5, Accounting for Contingencies, we assess each loss 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 can be reasonably estimated are accrued in our Consolidated Financial Statements. We do not record liabilities for losses we believe are only reasonably possible to result in an adverse outcome. See Note 27 for further discussion.

Self-Insurance

We are self-insured for a portion of our current and prior years’ losses related to worker’s compensation, general and auto liability insurance programs. We have obtained stop-loss insurance for individual workers’ compensation, general and auto liability claims over $500. Accrued liabilities for self-insurance are recorded based on the present value of actuarial estimates of the amounts of incurred and unpaid losses, based on an estimated risk-free interest rate of 4.5% as of January 31, 2007. These estimates rely on actuarial observations of historical claim loss development. Our actual future loss development may be better or worse than these estimates.

Our actuary provides us with estimated unpaid losses for each insurance category, upon which our analysis is based. As of January 31, 2007, our estimated liability for self-insured workers’ compensation, general and auto liability losses was $37,833.

Leases and Leasehold Improvements

We account for our leases in accordance with SFAS 13, as amended, and other related guidance. At the inception of the lease, each property is evaluated to determine whether the lease is an operating or capital lease. When determining the lease term, we include option periods for which failure to renew the lease imposes a penalty on us in such an amount that a renewal appears, at the inception of the lease, to be reasonably assured. The primary penalty to which we are subject is the economic detriment associated with the existence of leasehold improvements which might be impaired if we choose not to continue the use of the leased property.

We record rent expense for leases that contain scheduled rent increases on a straight-line basis over the term of the lease. The lease term used for straight-line rent expense is calculated from the date we are given control of the leased premises through the end of the lease term, as established in accordance with SFAS 13, which may include a rent holiday period prior to our opening the restaurant on the leased premises. The lease term used for this evaluation also provides the basis for establishing depreciable lives for buildings subject to lease and leasehold improvements, as well as the period over which we record straight-line rent expense. Contingent rentals are generally based on revenue in excess of stipulated amounts, and thus are not considered minimum lease payments and are included in rent expense as they are incurred. We generally do not receive rent concessions or leasehold improvement incentives upon opening a store that is subject to a lease.

Franchise and Licensed Operations

We execute franchise or license agreements for each brand that set out the terms of its arrangement with the franchisee or licensee. Our franchise and certain license agreements require the franchisee or licensee to pay an initial, non-refundable fee and continuing fees based upon a percent of gross sales. Subject to our approval and payment of a renewal fee, a franchisee may generally renew the franchise agreement upon its expiration.

We incur expenses that benefit both our franchisee and licensee communities. These expenses, along with other costs of sales and servicing of franchise and license agreements, are charged to franchised and licensed

79

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

restaurants and other expense as incurred. Franchised and licensed restaurants and other revenue also includes rent income from leasing or subleasing restaurants to franchisees. The related occupancy costs are included in franchised and licensed restaurants and other expense. If we lease restaurants to a franchisee that results in a probable loss over the term of the lease, a lease subsidy allowance is established at inception and charged to facility action charges, net.

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 estimate 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 rental 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 fiscal quarter in which such delinquency or default occurs. 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 six months) 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), 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 likely course of action that will occur.

Revenue Recognition

Revenues for company-operated restaurants are recognized upon the sale of food or beverage to a customer in the restaurant. Revenues from franchised and licensed restaurants include continuing rent and service fees, initial fees and royalties. Continuing fees and royalties are recognized in the period earned. Initial fees are recognized upon the opening of a restaurant, which is when we have performed substantially all initial services required by the franchise agreement. Renewal fees are recognized when a renewal agreement becomes effective. Rental income is recognized in the period earned. Sales of food and equipment to franchisees are recognized at the time of delivery to the franchisees.

Advertising

We utilize a single advertising fund (“Carl’s Jr. Fund”) to administer our Carl’s Jr. advertising programs and the Hardee’s Funds to administer our Hardee’s advertising programs. As the contributions to these cooperatives collectively, are designated and segregated for advertising, we act as an agent for the franchisees and licensees with regard to these contributions. We consolidate the Carl’s Jr. Fund into our financial statements on a net basis, whereby contributions from franchisees, when received, are recorded as offsets to our reported advertising expenses, in accordance with SFAS 45.

We charge Carl’s Jr. and La Salsa marketing costs to expense ratably in relation to revenues over the year in which incurred and, in the case of advertising production costs, when the commercial is first aired. To the extent we participate in Hardee’s advertising cooperatives, our contributions are expensed as incurred.

80

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Income Taxes

Our current provision for income taxes is based on our estimated taxable income in each of the jurisdictions in which we operate, after considering the impact on our taxable income of temporary differences resulting from disparate treatment of items, such as depreciation, estimated liability for closing restaurants, estimated liabilities for self-insurance, tax credits and net operating losses (“NOL”) for tax and financial reporting purposes. Deferred income taxes are provided for the estimated future income tax effect of temporary differences between the financial and tax bases of assets and liabilities using the liability method. Deferred tax assets are also provided for NOL and income tax credit carryforwards. A valuation allowance to reduce the carrying amount of deferred tax assets is established when it is more likely than not that we will not realize some portion or all of the tax benefit of our deferred tax assets. We evaluate, on a quarterly basis, whether it is more likely than not that our deferred income tax assets are realizable. In performing this analysis, we consider all available evidence, both positive and negative, including historical operating results, the estimated timing of future reversals of existing taxable temporary differences, estimated future taxable income exclusive of reversing temporary differences and carryforwards, and potential tax planning strategies that may be employed to prevent an operating loss or tax credit carryforwards from expiring unused. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Estimations

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Our most significant areas of estimation are:

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

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

•  determination of appropriate estimated liabilities for loss contingencies;

•  determination of appropriate assumptions to use in evaluating leases for capital versus operating lease treatment, establishing depreciable lives for leasehold improvements and establishing straight-line rent expense periods;

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

•  determination of the appropriate assumptions to use to estimate the fair value of share-based compensation; and

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

Income Per Share

We present “basic” and “diluted” income per share. Basic income per share represents net income divided by weighted-average shares outstanding. Diluted income per share represents net income plus the interest and fees

81

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

relating to any dilutive convertible debt outstanding, 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, unamortized compensation on share-based awards, and tax benefits arising in connection with share-based compensation, are assumed to be used to purchase our 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 and amortization of debt issuance costs, 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 table below presents the computation of basic and diluted earnings per share for the fiscal years ended January 31, 2007, 2006 and 2005 as follows:

	2007		2006		2005
	(as restated)
Net income for computation of basic earnings per share	$	50,172	$	181,139	$	18,016
Weighted-average shares for computation of basic earnings per share		63,562		59,226		57,615
Basic net income per share	$	0.79	$	3.06	$	0.31
Net income for computation of basic earnings per share	$	50,172	$	181,139	$	18,016
Add: Interest and amortization costs for Convertible Subordinated Notes due 2023, net of related tax effect		1,880		3,070		—
Net income for computation of diluted earnings per share	$	52,052	$	184,209	$	18,016
Weighted-average shares for computation of basic earnings per share		63,562		59,226		57,615
Dilutive effect of stock options, warrants and restricted stock		1,509		2,181		1,968
Dilutive effect of Convertible Subordinated Notes due 2023		7,306		11,843		—
Weighted-average shares for computation of diluted earnings per share		72,377		73,250		59,583
Diluted net income per share	$	0.72	$	2.51	$	0.30

The following table presents the number of potentially dilutive shares, in thousands, of our common stock excluded from the computation of diluted income per share as their effect would have been anti-dilutive for the fiscal years ended January 31, 2007, 2006 and 2005:

	2007		2006		2005
Convertible Subordinated Notes due 2023		—		—		11,811
Stock Options and Restricted Stock		1,897		2,175		2,813
Warrants		—		—		982

Share-Based Compensation

At January 31, 2007, we had several stock-based employee compensation plans in effect, which are described more fully in Note 23. Prior to fiscal 2007, we accounted for our stock-based employee compensation plans under the recognition and measurement principles of Accounting Principles Board Opinion 25, Accounting for Stock

82

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Issued to Employees (“APB 25”), and related Interpretations. We adopted SFAS 123 (revised 2004), Share-Based Payment (“SFAS 123R”), at the beginning of fiscal 2007 using the modified prospective method. See Note 23 for a description of the impact of this adoption on our consolidated financial position and results of operations.

Derivative Financial Instruments

We do not use derivative instruments for trading purposes. Our only free standing current derivative instruments are interest rate cap agreements entered into with financial institutions.

We account for these derivative financial instruments in accordance with SFAS 133, Accounting for Derivative Instruments and Hedging Activities, as amended. SFAS 133 requires that all derivative instruments be recognized in our Consolidated Balance Sheets at fair value. Our interest rate cap agreements are not designated as hedging instruments. Accordingly, the gain or loss as a result of the change in fair value is recognized in the results of operations immediately. See Note 11 for a discussion of our use of interest rate cap agreements.

Credit Risks

Accounts receivable consists primarily of amounts due from franchisees and licensees for initial and continuing fees. In addition, we have notes and lease receivables from certain of our franchisees. The financial condition of these franchisees and licensees is largely dependent upon the underlying business trends of our brands. This concentration of credit risk is mitigated, in part, by the large number of franchisees and licensees of each brand and the short-term nature of the franchise and license fee receivables.

Credit risk from interest rate cap agreements is dependent both on movement in interest rates and the possibility of non-payment by counterparties. We mitigate credit risk by entering into these agreements with high-quality counterparties.

Comprehensive Income

We did not have any items of other comprehensive income requiring reporting under SFAS 130, Reporting Comprehensive Income during fiscal 2007, 2006 and 2005.

Segment Information

Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Our segments are determined at the brand level (see Note 22).

Reclassifications

Certain prior year amounts in the Consolidated Financial Statements have been reclassified to conform to current year presentation.

Note 2 — Accounting Pronouncements Not Yet Adopted

In February 2006, the FASB issued SFAS 155, Accounting for Certain Hybrid Financial Instruments — an amendment of FASB Statements No. 133 and 140. SFAS 155 allows financial instruments that contain an embedded derivative and that otherwise would require bifurcation to be accounted for as a whole on a fair value basis, at the holders’ election. SFAS 155 also clarifies and amends certain other provisions of SFAS 133 and SFAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities — a replacement of FASB Statement 125. This statement is effective for all financial instruments acquired or issued in fiscal years

83

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

beginning after September 15, 2006, which for us is the beginning of fiscal 2008. We are currently evaluating the impact of SFAS 155 on our consolidated financial position and results of operations.

In March 2006, the FASB issued SFAS 156, Accounting for Servicing of Financial Assets — an amendment of FASB Statement No. 140. SFAS 156 provides guidance on the accounting for servicing assets and liabilities when an entity undertakes an obligation to service a financial asset by entering into a servicing contract. This statement is effective for all transactions in fiscal years beginning after September 15, 2006, which for us is the beginning of fiscal 2008. We are currently evaluating the impact of SFAS 156 on our consolidated financial position and results of operations.

In June 2006, the FASB issued FIN 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109, which clarifies the accounting for uncertainty in income taxes recognized in financial statements. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 requires the recognition, in the financial statements, of the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure. FIN 48 is effective for fiscal years beginning after December 15, 2006, which for us is the beginning of fiscal 2008. We are currently evaluating the impact of FIN 48 on our consolidated financial position and results of operations.

In June 2006, the FASB ratified EITF consensus 06-3, How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation). This EITF addresses the presentation of taxes in the income statement. Gross or net presentation may be elected for each different type of tax, but similar taxes should be presented consistently. Taxes within the scope of this EITF would include taxes that are imposed on a revenue transaction between a seller and a customer, for example, sales taxes, use taxes, value-added taxes, and some types of excise taxes. Our accounting policy is to present the taxes within the scope of EITF 06-3 on a net basis. EITF 06-3 is effective for interim and annual periods beginning after December 15, 2006, which for us is the first quarter of fiscal 2008. We are currently evaluating the impact of EITF 06-3 on our consolidated results of operations.

In September 2006, the FASB issued SFAS 157, Fair Value Measurements. SFAS 157 establishes a framework for measuring fair value under GAAP and expands disclosures about fair value measurement. SFAS 157 also creates consistency and comparability in fair value measurements among the many accounting pronouncements that require fair value measurements but does not require any new fair value measurements. SFAS 157 is effective for fiscal years (including interim periods) beginning after November 15, 2007, which for us is the first quarter of fiscal 2009. We are currently evaluating the impact of SFAS 157 on our consolidated financial position and results of operations.

In February 2007, the FASB issued SFAS 159, The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115. This standard amends SFAS 115, Accounting for Certain Investment in Debt and Equity Securities, with respect to accounting for a transfer to the trading category for all entities with available-for-sale and trading securities electing the fair value option. This standard allows companies to elect fair value accounting for many financial instruments and other items that currently are not required to be accounted as such, allows different applications for electing the option for a single item or groups of items, and requires disclosures to facilitate comparisons of similar assets and liabilities that are accounted for differently in relation to the fair value option. SFAS 159 is effective for fiscal years beginning after November 15, 2007, which for us is fiscal 2009. We are currently evaluating the impact of SFAS 159 on our consolidated financial position and results of operations.

84

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 3 — Adoption of New Accounting Pronouncements

In November 2004, the FASB issued SFAS 151, Inventory Costs — an amendment of ARB No. 43, Chapter 4.  SFAS 151 clarifies that abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be recognized as current period charges and requires the allocation of fixed production overheads to inventory based on the normal capacity of the production facilities. Our adoption of SFAS 151 at the beginning of fiscal 2007 did not have a material impact on our consolidated financial position or results of operations.

In December 2004, the FASB issued SFAS 123R which requires that companies recognize compensation expense equal to the fair value of stock options or other share-based payments. We adopted SFAS 123R at the beginning of fiscal 2007 using the modified prospective method. See Note 23 for a description of the impact of this adoption on our consolidated financial position and results of operations.

In May 2005, the FASB issued SFAS 154, Accounting Changes and Error Corrections — a replacement of APB Opinion No. 20 and FASB Statement No. 3. Previously, the cumulative effect of most changes in accounting principles was recognized in the period of the change. SFAS 154 requires companies to recognize changes in accounting principle, including changes required by a new accounting pronouncement when the pronouncement does not include specific transition provisions, retrospectively to prior periods’ financial statements. Our adoption of SFAS 154 at the beginning of fiscal 2007 did not have a material impact on our consolidated financial position or results of operations. We will apply the provisions of SFAS 154 in future periods, when applicable.

In October 2005, the FASB issued FASB Staff Position (“FSP”) FAS 13-1, Accounting for Rental Costs Incurred during a Construction Period, which requires that rental costs associated with ground or building operating leases that are incurred during a construction period must be recognized as rental expense and allocated over the lease term beginning on the date that the lessee is given control of the property. Our adoption of this FSP at the beginning of fiscal 2007 did not have a material impact on our consolidated financial position or results of operations.

In September 2006, the FASB issued SFAS 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106 and 132(R). SFAS 158 requires the balance sheet recognition of the funded status of defined benefit pension and other postretirement plans, along with a corresponding after-tax adjustment to stockholders’ equity. Our adoption of SFAS 158 at the end of fiscal 2007 did not have a material impact on our consolidated financial position or results of operations.

In September 2006, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin (“SAB”) 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. SAB 108 provides interpretive guidance on how the effects of the carryover or reversal of prior year misstatements should be considered in quantifying a current year misstatement for the purpose of the materiality assessment. Our adoption of SAB 108 at the end of fiscal 2007 did not have a material impact on our consolidated financial position or results of operations.

Note 4 — Goodwill

As required by SFAS 142, we test goodwill for impairment, at least annually, at the reporting unit level, which we have determined to be the brand level. During the first quarters of fiscal 2007 and 2006, we completed our annual assessments of the valuation of the Carl’s Jr. brand. Those assessments concluded that the fair value of the brand exceeded the carrying value and no impairment was recorded. As of January 31, 2007 and 2006, we had $22,649 in goodwill recorded on our accompanying Consolidated Balance Sheets.

85

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 5 — Facility Action Charges, Net

The components of facility action charges (gains) for the fiscal years ended January 31, 2007, 2006 and 2005 are as follows:

	2007			2006			2005
Carl’s Jr.
New decisions regarding closing restaurants	$	74		$	—		$	269
Unfavorable dispositions of leased and fee surplus properties, net		629			846			120
Impairment of assets to be disposed of		—			—			28
Impairment of assets to be held and used		364			1,431			2,693
Gain on sales of restaurants and surplus property, net		(651	)		(732	)		(611	)
Amortization of discount related to estimated liability for closing restaurants		248			247			295
		664			1,792			2,794
Hardee’s
New decisions regarding closing restaurants		3,038			957			5,247
Unfavorable (favorable) dispositions of leased and fee surplus properties, net		4			(29	)		(1,364	)
Impairment of assets to be disposed of		2,148			23			683
Impairment of assets to be held and used		680			2,521			2,428
(Gain) loss on sales of restaurants and surplus property, net		(3,859	)		504			(917	)
Amortization of discount related to estimated liability for closing restaurants		483			677			1,011
		2,494			4,653			7,088
La Salsa and Other
New decisions regarding closing restaurants		617			157			1,074
Unfavorable (favorable) dispositions of leased and fee surplus properties, net		1,003			(268	)		172
Impairment of assets to be disposed of		—			—			755
Impairment of assets to be held and used		2,574			1,338			2,434
Loss (gain) on sales of restaurants and surplus properties, net		1,170			347			(3	)
Amortization of discount related to estimated liability for closing restaurants		24			6			6
		5,388			1,580			4,438

86

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	2007			2006		2005
Total
New decisions regarding closing restaurants	$	3,729		$	1,114	$	6,590
Unfavorable (favorable) dispositions of leased and fee surplus properties, net		1,636			549		(1,072	)
Impairment of assets to be disposed of		2,148			23		1,466
Impairment of assets to be held and used		3,618			5,290		7,555
(Gain) loss on sales of restaurants and surplus property, net		(3,340	)		119		(1,531	)
Amortization of discount related to estimated liability for closing restaurants		755			930		1,312
	$	8,546		$	8,025	$	14,320

Impairment charges recognized in facility action charges were recorded against the following asset categories during the fiscal years ended January 31, 2007, 2006 and 2005:

	2007		2006		2005
Property and equipment
Carl’s Jr.	$	332	$	980	$	2,721
Hardee’s		2,779		2,382		2,868
La Salsa and Other		2,536		658		3,189
		5,647		4,020		8,778
Property under capital leases
Carl’s Jr.		—		451		—
Hardee’s		49		162		225
		49		613		225
Favorable lease rights
Carl’s Jr.		32		—		—
Hardee’s		—		—		18
La Salsa		38		680		—
		70		680		18
Total
Carl’s Jr.		364		1,431		2,721
Hardee’s		2,828		2,544		3,111
La Salsa and Other		2,574		1,338		3,189
	$	5,766	$	5,313	$	9,021

87

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the activity in our estimated liability for closing restaurants for the fiscal years ended January 31, 2005, 2006 and 2007:

							La Salsa
	Carl’s Jr.			Hardee’s			and Other			Total
Balance at January 31, 2004	$	5,008		$	17,115		$	202		$	22,325
New decisions regarding closing restaurants		269			5,247			1,074			6,590
Usage		(1,478	)		(8,934	)		(868	)		(11,280	)
Unfavorable (favorable) dispositions of leased and fee surplus properties, net		120			(1,364	)		172			(1,072	)
Amortization of discount		295			1,011			6			1,312
Balance at January 31, 2005		4,214			13,075			586			17,875
New decisions regarding closing restaurants		—			957			157			1,114
Usage		(1,692	)		(4,815	)		(361	)		(6,868	)
Unfavorable (favorable) dispositions of leased and fee surplus properties, net		846			(29	)		(268	)		549
Amortization of discount		247			677			6			930
Balance at January 31, 2006		3,615			9,865			120			13,600
New decisions regarding closing restaurants		74			3,038			617			3,729
Usage		(1,380	)		(4,217	)		(94	)		(5,691	)
Unfavorable dispositions of leased and fee surplus properties, net		629			4			1,003			1,636
Amortization of discount		248			483			24			755
Balance at January 31, 2007		3,186			9,173			1,670			14,029
Less current portion, included in other current liabilities		1,036			2,829			556			4,421
Long-term portion, included in other long-term liabilities	$	2,150		$	6,344		$	1,114		$	9,608

Note 6 — Accounts Receivable, Net, and Notes Receivable, Net

Accounts receivable, net as of January 31, 2007 and 2006 consists of the following:

	2007			2006
Trade receivables	$	34,686		$	31,296
Refundable income taxes		8,253			3,896
Notes receivable, current portion		704			3,676
Other		63			118
Allowance for doubtful accounts		(902	)		(2,833	)
	$	42,804		$	36,153

88

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The long-term portion of notes receivable, net as of January 31, 2007 and 2006 consists of the following:

	2007			2006
Franchisees	$	1,243		$	5,804
Employees		36			71
Other		2,282			2,350
Allowance for doubtful accounts		(2,786	)		(6,257	)
	$	775		$	1,968

The following table summarizes the activity in the allowances for doubtful accounts for the fiscal years ended January 31, 2005, 2006 and 2007:

	Accounts			Notes
	Receivable			Receivable			Total
Balance at January 31, 2004	$	5,580		$	6,186		$	11,766
Provision (recovery of provision)		(2,835	)		895			(1,940	)
Charge-offs		(334	)		—			(334	)
Recoveries		131			—			131
Balance at January 31, 2005		2,542			7,081			9,623
Provision (recovery of provision)		663			(487	)		176
Charge-offs		(441	)		(337	)		(778	)
Recoveries		69			—			69
Balance at January 31, 2006		2,833			6,257			9,090
Provision (recovery of provision)		(1,436	)		1,244			(192	)
Charge-offs		(495	)		(4,715	)		(5,210	)
Balance at January 31, 2007	$	902		$	2,786		$	3,688

Note 7 — Property and Equipment

Property and equipment consists of the following as of January 31, 2007 and 2006:

	Estimated
	Useful Life		2007			2006
Land			$	137,561		$	129,635
Leasehold improvements		3-25 years		212,364			198,982
Buildings and improvements		7-40 years		283,056			261,111
Equipment, furniture and fixtures		3-10 years		306,309			301,357
				939,290			891,085
Less: accumulated depreciation and amortization				(450,700	)		(431,002	)
			$	488,590		$	460,083

During fiscal 2007, 2006 and 2005, we capitalized interest costs in the amounts of $841, $617 and $546, respectively.

89

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 8 — Leases

We occupy land and buildings under lease agreements expiring on various dates through 2044. Many leases provide for future rent escalations and renewal options. In addition, contingent rentals, determined as a percentage of revenue in excess of specified levels, are often required. Most leases obligate us to pay costs of maintenance, insurance and property taxes.

Property under capital leases consists of the following as of January 31, 2007 and 2006:

	2007			2006
Buildings	$	69,726		$	72,203
Equipment		312			344
		70,038			72,547
Less: accumulated amortization		(44,885	)		(43,183	)
	$	25,153		$	29,364

Amortization is calculated on a straight-line basis over the respective lease term, including any option periods considered in the determination of the lease term. When determining the lease term, we include option periods for which failure to renew the lease imposes a penalty on us in such an amount that a renewal appears, at the inception of the lease, to be reasonably assured.

Minimum lease payments for all leases, including those in the estimated liability for closing restaurants, automobile and distribution center truck leases, and the present value of net minimum lease payments for capital leases as of January 31, 2007 are as follows:

	Capital			Operating
Fiscal Year:
2008	$	10,476		$	84,152
2009		10,286			76,915
2010		9,807			70,656
2011		9,066			61,069
2012		8,111			51,156
Thereafter		24,570			265,766
Total minimum lease payments		72,316		$	609,714
Less: amount representing interest		(25,870	)
Present value of minimum lease payments (interest rates primarily ranging from 8% to 14%)		46,446
Less: current portion		(5,323	)
Capital lease obligations, excluding current portion	$	41,123

Total minimum lease payments have not been reduced for future minimum sublease rentals of $164,843 expected to be received under certain operating subleases.

90

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

We have net investments in lease receivables that pertain to finance leases. As of January 31, 2007 and 2006, components of the net investment in leases receivable, included in other current assets and other assets, are as follows:

	2007			2006
Net minimum lease payments receivable	$	1,017		$	1,227
Less: unearned income		(345	)		(436	)
Net investment	$	672		$	791

We have leased and subleased land and buildings to others, primarily as a result of the franchising of certain restaurants. Many of these leases provide for fixed payments with contingent rent when revenue exceeds certain levels, while others provide for monthly rentals based on a percentage of revenue. Lessees generally bear the cost of maintenance, insurance and property taxes. The carrying value of assets leased to others as of January 31, 2007 and 2006 is as follows:

	2007			2006
Land	$	15,461		$	15,863
Leasehold improvements		5,349			6,577
Buildings and improvements		17,198			17,909
Equipment, furniture and fixtures		1,446			1,102
		39,454			41,451
Less: accumulated depreciation and amortization		(13,404	)		(14,904	)
	$	26,050		$	26,547

As of January 31, 2007, minimum future lease and sublease rentals expected to be received including amounts reducing the estimated liability for closing restaurants, are as follows:

	Capital		Operating
	Leases or		Lessor
	Subleases		Leases
Fiscal Year:
2008	$	142	$	28,552
2009		142		26,551
2010		142		23,066
2011		142		19,693
2012		142		14,634
Thereafter		307		52,347
Total minimum future rentals	$	1,017	$	164,843

Total minimum future rentals do not include contingent rentals, which may be received under certain leases.

91

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Aggregate rents under non-cancelable operating leases for the fiscal years ended January 31, 2007, 2006 and 2005 were as follows:

	2007			2006			2005
Minimum rentals	$	92,288		$	91,886		$	98,730
Contingent rentals		4,515			5,206			5,013
		96,803			97,092			103,743
Less: sublease rentals		(31,801	)		(33,221	)		(36,444	)
	$	65,002		$	63,871		$	67,299

During fiscal 2002, we entered into certain sale leaseback transactions relating to restaurant properties we currently operate through which we generated net gains of $5,158. The net gains from such transactions were deferred and are being amortized as a reduction to occupancy and other operating expenses over the terms of the leases.

Rent expense for the fiscal years ended January 31, 2007, 2006 and 2005 was $96,803, $97,092 and $103,743, respectively.

Note 9 — Other Assets

Other assets as of January 31, 2007 and 2006 consist of the following:

	2007		2006
Intangible assets (see below)	$	15,443	$	16,836
Deferred financing costs		3,697		5,708
Net investment in lease receivables, less current portion		610		748
Other		1,446		2,227
	$	21,196	$	25,519

As of January 31, 2007 and 2006, intangible assets with finite useful lives were primarily comprised of intangible assets obtained through our acquisition of Santa Barbara Restaurant Group, Inc. (“SBRG”) in fiscal 2003 and our Hardee’s acquisition transactions in fiscal 1999 and 1998. Such intangible assets have amortization periods ranging from three to 20 years and are included in other assets, net, in the accompanying Consolidated Balance Sheets.

The table below presents identifiable, definite-lived intangible assets as of January 31, 2007 and 2006:

			January 31, 2007							January 31, 2006
	Weighted-
	Average		Gross					Net		Gross					Net
	Life		Carrying		Accumulated			Carrying		Carrying		Accumulated			Carrying
Intangible Asset	(Years)		Amount		Amortization			Amount		Amount		Amortization			Amount
Trademarks		20	$	17,171	$	(4,224	)	$	12,947	$	17,171	$	(3,365	)	$	13,806
Franchise agreements		20		1,780		(417	)		1,363		1,780		(328	)		1,452
Favorable lease agreements		16		3,194		(2,061	)		1,133		4,034		(2,456	)		1,578
			$	22,145	$	(6,702	)	$	15,443	$	22,985	$	(6,149	)	$	16,836

Amortization expense related to these intangible assets for fiscal 2007, 2006 and 2005 was $1,233, $1,547 and $2,158, respectively. For these assets, amortization expense is expected to be approximately $1,156 in fiscal 2008, $1,083 in fiscal 2009, $1,079 in fiscal 2010, $1,069 in fiscal 2011 and $1,061 in fiscal 2012.

92

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 10 — Other Current Liabilities

Other current liabilities as of January 31, 2007 and 2006 consist of the following:

	2007		2006
Salaries, wages and other benefits	$	37,108	$	32,439
State sales taxes		6,747		7,288
Estimated liability for closing restaurants		4,421		4,417
Accrued interest		856		1,924
Estimated liability for property taxes		4,955		4,258
Estimated liability for litigation		630		1,412
Accrued utilities		4,111		3,935
Estimated liability for self-insurance, current portion		11,182		11,141
Other accrued liabilities		26,123		22,742
	$	96,133	$	89,556

Note 11 — Long-Term Debt and Bank Indebtedness

Long-term debt as of January 31, 2007 and 2006 consists of the following:

	2007			2006
Borrowings under revolving portion of the Facility	$	45,500		$	8,000
Term loan under the Facility		69,821			98,749
Convertible subordinated notes due 2023, interest at 4.00%		15,167			105,000
Other long-term debt		1,121			1,229
		131,609			212,978
Less: current portion		(1,500	)		(9,247	)
	$	130,109		$	203,731

We amended and restated our senior credit facility (“Facility”) on June 2, 2004, and amended the Facility again on November 4, 2004, April 21, 2005 and January 22, 2007 (see below). Subsequent to fiscal 2007, on March 27, 2007, we amended and restated the Facility (“Amended Facility”) (see below). We have no potential mandatory payments of principal on our remaining $15,167 of 4% Convertible Subordinated Notes due 2023 until October 1, 2008.

The Facility provided for a $480,000 senior secured credit facility consisting of a $250,000 revolving credit facility and a $230,000 term loan. The Amended Facility provides for $320,000 senior secured credit facility consisting of a $200,000 revolving credit facility and a $120,000 term loan. The revolving credit facility matures on March 27, 2012. The principal amount of the term loan is scheduled to be repaid in quarterly installments of $300, with the remaining principal balance scheduled to mature on March 27, 2013.

During the fiscal year ended January 31, 2007, we voluntarily prepaid $28,112 of the $230,000 term loan, in addition to the $816 regularly scheduled principal payments. As of January 31, 2007, we had (i) borrowings outstanding under the term loan portion of the Facility of $69,821, (ii) borrowings outstanding under the revolving portion of the Facility of $45,500, (iii) outstanding letters of credit under the revolving portion of the Facility of $57,263, and (iv) availability under the revolving portion of the Facility of $147,237.

93

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The terms of the Facility included certain restrictive covenants. Among other things, these covenants restricted our ability to incur debt, incur liens on our assets, make any significant change in our corporate structure or the nature of our business, dispose of assets in the collateral pool securing the Facility, prepay certain debt, engage in a change of control transaction without the member banks’ consents and make investments or acquisitions. The Facility was collateralized by a lien on all of our personal property assets and liens on certain restaurant properties. The Amended Facility contains reduced restrictions under the covenants and modifies our collateral pool and various other items.

As of January 31, 2007, the applicable interest rate on the term loan was LIBOR plus 2.00%, or 7.375%, per annum. For the revolving portion of the Facility, the applicable rate was Prime plus 1.00%, or 9.25%, per annum. Under the terms of the Facility, we were permitted to lock in favorable rates for the revolving portion based on LIBOR plus 2.25% over terms ranging from 30 to 90 days. As of January 31, 2007 we had $43,500 in borrowings outstanding under the revolving portion of the Facility that we locked in at a rate of approximately 7.625%. We also incurred fees on outstanding letters of credit under the Facility at a rate equal to the applicable margin for LIBOR revolving loans, which was 2.25% per annum as of January 31, 2007. Under the Amended Facility, the applicable interest rate on the term loan portion is LIBOR plus 1.375% per annum. For the revolving portion of the Amended Facility, the applicable interest rate is Prime plus 0.50% per annum. Under the terms of the Amended Facility, we are permitted to lock in favorable rates for the revolving portion based on LIBOR plus 1.50% over terms ranging from 30 to 90 days. We also incur fees on outstanding letters of credit under the Amended Facility at a per annum rate equal to 1.50% times the stated amounts.

The Facility required us to enter into interest rate protection agreements in an aggregate notional amount of at least $70,000 for a term of at least three years. Pursuant to this requirement, on July 26, 2004, we entered into two interest rate cap agreements in an aggregate notional amount of $70,000. Under the terms of each agreement, if LIBOR exceeds 5.375% on the measurement date for any quarterly period, we will receive payments equal to the amount LIBOR exceeds 5.375%, multiplied by (i) the notional amount of the agreement and (ii) the fraction of a year represented by the quarterly period. The agreements expire on July 28, 2007. The agreements were not designated as cash flow hedges under the provisions of SFAS 133. Accordingly, the change in the fair value of the interest rate cap premiums is recognized quarterly in interest expense in our accompanying Consolidated Statements of Income. During the year ended January 31, 2007, we recognized a charge of $43 to interest expense to reduce the carrying value of the interest rate cap premiums to their fair value of $13 at January 31, 2007. As a matter of policy, we do not enter into derivative instruments unless there is an underlying exposure. However, the remaining outstanding principal balance of our term loan is less than the notional amount of our existing interest rate caps as of January 31, 2007 as a result of voluntary prepayments and regularly scheduled principal payments. We are no longer required to enter into interest rate protection agreements under the Amended Facility.

We are permitted to repurchase our common stock and/or pay dividends in an aggregate amount up to $263,441, calculated under the Amended Facility, using balances as of January 31, 2007. In addition, the amount that we may spend to repurchase our common stock and/or pay dividends is increased each year by a portion of excess cash flow (as defined in the Amended Facility) during the term of the Amended Facility.

During the fiscal year ended January 31, 2007, we declared cash dividends of $0.16 per share of common stock, for a total of $10,397. As of January 31, 2007, dividends payable of $2,694 have been included in other current liabilities in our accompanying Consolidated Balance Sheet. These dividends were subsequently paid on February 20, 2007.

Subject to the terms of the Amended Facility, we may make annual capital expenditures in the amount of $85,000, plus 80% of the amount of our actual Adjusted EBITDA (as defined in the Amended Facility) in excess of $150,000. We may also carry forward certain unused capital expenditure amounts to the following year. Based on these terms, assuming Adjusted EBITDA in fiscal 2008 as calculated under the definition in the Amended Facility is equal to Adjusted EBITDA in fiscal 2007 as calculated under the definition in the Amended Facility, the Amended Facility would permit us to make capital expenditures of $135,154 in fiscal 2008, which could increase or decrease based on our performance versus the Adjusted EBITDA formula described above.

94

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Facility contained financial performance covenants, which included a minimum fixed charge coverage ratio and maximum leverage ratios. In addition, we were required under the Facility to generate a minimum Adjusted EBITDA, as defined, of at least $125,000 on a trailing-13 period basis. We were in compliance with these covenants and all other requirements of the Facility as of January 31, 2007. The Amended Facility eliminated certain financial performance covenants, such as minimum Adjusted EBITDA, minimum fixed charge coverage ratio, and adjusted leverage ratio.

The full text of the contractual requirements imposed by the Facility is set forth in the Sixth Amended and Restated Credit Agreement, dated as of June 2, 2004, and the amendments thereto, which we have filed with the SEC, and in the ancillary loan documents described therein. The full text of the contractual requirements imposed by the Amended Facility is set forth in the Seventh Amended and Restated Credit Agreement, dated as of March 27, 2007, and in the ancillary loan documents described therein. Subject to cure periods in certain instances, the lenders under our Amended Facility may demand repayment of borrowings prior to stated maturity upon certain events of default, including, but not limited to, 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 on other significant obligations. In the event the Amended Facility is declared accelerated by the lenders (which can occur only upon certain events of default under the Amended Facility), our 2023 Convertible Notes (described below) may also become accelerated under certain circumstances and after all cure periods have expired.

The 2023 Convertible Notes bear interest at 4.0% annually, payable in semiannual installments due April 1 and October 1 each year, are unsecured general obligations of ours, and are contractually subordinate in right of payment to certain other of our obligations, including the Facility. On October 1 of 2008, 2013 and 2018, the holders of the 2023 Convertible Notes have the right to require us to repurchase all or a portion of the notes at 100% of the face value plus accrued interest. On October 1, 2008 and thereafter, we have the right to call all or a portion of the notes at 100% of the face value plus accrued interest. The 2023 Convertible Notes became convertible into our common stock effective July 1, 2004, and will remain convertible throughout the remainder of their term.

During fiscal 2007, in response to unsolicited offers from the holders of $89,833 of the 2023 Convertible Notes, we made cash payments to the holders, comprised of accrued interest through the dates of conversion and inducements for the holders to convert in lieu of payment of future interest on the converted notes. The inducement payments were $6,406, and are included in the conversion inducement expense in our accompanying Consolidated Statements of Income for the year ended January 31, 2007. Pursuant to their terms, these notes converted into an aggregate of 10,224,424 shares of our common stock. As a result of these conversions, as of January 31, 2007, bank indebtedness and other long-term debt decreased $89,833; other assets, net, decreased $1,356; common stock increased $102; and additional paid-in capital increased $88,375. As of January 31, 2007, the remaining $15,167 of 2023 Convertible Notes are convertible into our common stock at a conversion price of approximately $8.79 per share, based on a conversion rate of 113.8160 shares per $1 of the notes.

The terms of the Amended Facility are not dependent on any change in our credit rating. 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 flows from operations, asset collateral bases and the level of our equity capital relative to our debt obligations. In addition, as noted above, our existing debt 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.

95

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Long-term debt matures in fiscal years ending after January 31, 2007 as follows, after giving effect to the terms of the Amended Facility:

Fiscal Year:
2008	$	1,500
2009		1,364
2010		1,222
2011		1,224
2012		1,226
Thereafter(1)		125,073
	$	131,609

(1) Assumes holders of the 2023 Convertible Notes do not exercise redemption rights in October 2008.

Note 12 — Other Long-Term Liabilities

Other long-term liabilities as of January 31, 2007 and 2006 consist of the following:

	2007		2006
Estimated liability for closing restaurants	$	9,608	$	9,183
Estimated liability for self-insurance		26,651		26,272
Estimated liability for deferred rent		11,442		10,068
Other		11,504		11,549
	$	59,205	$	57,072

We are self-insured for our primary workers’ compensation, general and auto liability insurance exposures not covered by our stop-loss policy. A total of $37,833 and $37,413 was accrued as of January 31, 2007 and 2006, respectively (including the long-term portions noted in the above table and the current portions included in other current liabilities, as discussed in Note 10), based upon of the present value of an independent actuarial valuation of our workers’ compensation, general and auto liability claims. See Note 1 for further discussion.

Note 13 — Stockholders’ Equity

On January 22, 2007, we amended the Facility to increase the aggregate amount that we are permitted to expend for common stock repurchases and dividend payments by $130,000. During fiscal 2007, we declared aggregate cash dividends of $0.16 per share of common stock, for a total of $10,397.

Pursuant to a program (“Stock Repurchase Plan”) authorized by our Board of Directors, as modified during fiscal 2007, we are allowed to repurchase up to an aggregate of $200,000 of our common stock. During fiscal 2007, we repurchased 4,607,437 shares of our common stock at an average price of $17.58 per share, for a total cost, including trading commissions, of $81,057, of which we retired 4,589,137 shares. As of January 31, 2007, we had 18,300 shares of common stock that had been repurchased, but not yet retired and are shown as common stock held in treasury in the accompanying Consolidated Balance Sheet. These shares were retired subsequent to January 31, 2007. There was no common stock held in treasury at January 31, 2006.

Based on the Board of Directors’ authorization and the amount of cumulative repurchase of our common stock that we have already made thereunder, we are permitted to make additional repurchases of our common stock up to $109,387 under the Stock Repurchase Plan as of January 31, 2007. As part of our Stock Repurchase Plan, we have implemented a share repurchase plan pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (“Exchange Act”),

96

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

under which we are allowed to repurchase $5,000 of our common stock in the open market each fiscal quarter through the quarter ending January 28, 2008. Rule 10b5-1 allows us to repurchase our common stock when we might otherwise be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods.

During fiscal 2006, our Board of Directors approved the adoption of a Stockholder Rights Plan (“Rights Plan”) pursuant to a Rights Agreement between us and Mellon Investor Services, LLC, dated October 17, 2005 (“Rights Agreement”). On December 31, 2006, the Rights expired pursuant to the terms of the Rights Plan. The Rights expired because our Board of Directors determined not to solicit the requisite stockholder approval of the Rights Agreement by December 31, 2006. As a result, the Rights have no further force or effect and the Rights Plan has effectively terminated.

Note 14 — Purchase and Cancellation of Stock Options

During the twelve weeks ended August 15, 2005, we purchased and canceled all of the outstanding options of Mr. William P. Foley, who resigned from the Board of Directors on July 19, 2005, for cash consideration of $11,000, which has been recorded as a component of general and administrative expense in the accompanying Consolidated Statement of Income for the fiscal year ended January 31, 2006. As of July 18, 2005, Mr. Foley held outstanding options to purchase an aggregate of 1,715,512 shares of our 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 negotiations between the parties using the Black-Scholes methodology. We retained a third-party valuation specialist to advise us in connection with this option purchase.

Note 15 — Fair Value of Financial Instruments

The following table presents information on our financial instruments as of January 31, 2007 and 2006:

	2007				2006
	Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value		Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	18,680	$	18,680	$	21,343	$	21,343
Notes receivable, net of allowance for doubtful accounts		944		778		3,666		3,309
Interest rate cap agreements		13		13		56		56
Financial liabilities:
Long-term debt, including current portion		131,609		150,519		212,978		316,090

The fair value of cash and cash equivalents approximates its carrying amount due to its short maturity. The estimated fair value of notes receivable was determined by discounting future cash flows using current rates at which similar loans might be made to borrowers with similar credit ratings. The estimated fair value of interest rate cap agreements was based upon market quotes received from the financial institutions that are the counter parties to the agreements. The estimated fair value of long-term debt was determined by discounting future cash flows using rates currently available to us for debt with similar terms and remaining maturities, using market quotes for our 2023 Convertible Notes and using a combination of discounting future cash flows using rates currently available to us for debt with similar terms and remaining maturities.

Note 16 — Related Party Transactions

Certain members of the Board of Directors and the Karcher family are franchisees of CKE. These franchisees regularly pay royalties and purchase food and other products from us on the same terms and conditions as other franchisees.

97

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In fiscal 1994, the Chairman Emeritus was granted future retirement benefits for past services consisting principally of annual cash payments for life and supplemental health benefits. In fiscal 2005, this retirement benefit arrangement was amended to provide payments of $300 in calendar 2005, decreasing annually to $210 per year for calendar 2009 and thereafter. The amended arrangement also includes health benefits and provision of certain administrative support. A total of $1,061 and $1,259 remained accrued in other long-term liabilities as of January 31, 2007 and 2006, respectively, based on actuarial calculations. We anticipate funding these obligations as they become due.

We lease various properties, including certain of our corporate offices and three restaurants from the Chairman Emeritus. Lease payments under these leases for fiscal 2007, 2006 and 2005 amounted to $1,948, 1,836 and $1,756, respectively. This was net of sublease rentals of $0, $0 and $27 in fiscal 2007, 2006 and 2005, respectively.

In fiscal 2006 and 2005, we had several leases with wholly-owned subsidiaries of Fidelity National Financial, Inc, (“FNF”), of which the former Chairman of the Board of CKE is also Chairman of the Board, for point-of-sale equipment, a corporate office facility, and expenses associated with the Company’s leased aircraft. We paid $1,884 and $4,468 in fiscal 2006 and 2005, respectively to FNF under these lease agreements. During the second quarter of fiscal 2005, we paid $1,479 to FNF, representing our share of the loss upon FNF’s sale of one of our two leased aircraft.

In fiscal 2001, we entered into an agreement with a wholly-owned subsidiary of FNF to assist in the disposition of surplus real estate properties and negotiate the termination of leases for closed restaurants. The affiliate was paid a fee for each property sold or each lease terminated. We paid this affiliate $652 during fiscal 2005. This contract expired in early fiscal 2006, and there were no payments made to this affiliate during fiscal 2006.

Note 17 — Franchise and License Operations

Franchise arrangements generally provide for initial fees and continuing royalty payments to us based upon a percentage of gross revenue. We generally charge an initial franchise fee for each new franchised restaurant that is added to our system, and in some cases, an area development fee, which grants exclusive rights to develop a specified number of restaurants in a designated geographic area within a specified time period. Similar fees are charged in connection with our international licensing operations. These fees are recognized ratably when substantially all the services required of us are complete and the restaurants covered by these agreements commence operations.

Certain franchisees also purchase food, paper, supplies and equipment from us. Additionally, franchisees may be obligated to remit lease payments for the use of restaurant facilities owned or leased by us, generally for periods up to 20 years. Under the terms of these leases, franchisees are generally required to pay related occupancy costs, which include maintenance, insurance and property taxes.

Revenue from franchised and licensed restaurants for the fiscal years ended January 31, 2007, 2006 and 2005 consisted of the following:

	2007		2006		2005
Royalties	$	79,499	$	70,375	$	70,857
Foodservice		187,533		179,222		176,304
Equipment sales		16,987		24,319		18,181
Rental income		28,797		28,089		32,157
Initial fees and other		5,907		6,886		5,109
	$	318,723	$	308,891	$	302,608

98

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Operating costs and expenses for franchised and licensed restaurants for the fiscal years ended January 31, 2007, 2006 and 2005 consisted of the following:

	2007		2006		2005
Foodservice costs of sales	$	185,271	$	174,149	$	171,363
Equipment division cost of sales and operating expenses		17,840		24,930		18,379
Occupancy and other operating expenses		37,841		39,382		37,846
	$	240,952	$	238,461	$	227,588

Note 18 — Interest Expense

Interest expense for the fiscal years ended January 31, 2007, 2006 and 2005 consisted of the following:

	2007		2006		2005
Facility	$	6,895	$	7,522	$	6,310
Senior subordinated notes due 2009		—		—		7,855
Capital lease obligations		5,665		6,257		6,950
2004 convertible subordinated notes		—		—		73
2023 convertible subordinated notes		2,553		4,200		4,258
Amortization of loan fees		3,096		3,312		3,637
Write-off of unamortized loan fees, term loan due July 2, 2008		242		500		1,452
Write-off of unamortized loan fees, term loan repaid June 2, 2004		—		—		664
Write-off of unamortized loan fees, senior subordinated notes due 2009		—		—		3,068
Letter of credit fees and other		1,300		1,225		2,481
Total interest expense	$	19,751	$	23,016	$	36,748

Note 19 — Other Income (Expense), Net

Other income (expense), net, for the fiscal years ended January 31, 2007, 2006 and 2005 consisted of the following:

	2007		2006			2005
Premium incurred upon early redemption of debt	$	—	$	—		$	(9,126	)
Interest income on notes receivable from franchisees, disposition properties and capital leases		1,042		1,116			1,784
Rental income from properties leased to third parties, net		1,813		1,352			2,060
Other, net		881		(81	)		2,320
Total other income (expense), net	$	3,736	$	2,387		$	(2,962	)

99

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 20 — Income Taxes

Income tax expense (benefit) for the fiscal years ended January 31, 2007, 2006 and 2005 consisted of the following:

	2007		2006			2005
	(as restated)
Current:
Federal	$	4,070	$	502		$	(2,493	)
State		744		183			(214	)
Foreign		1,124		905			820
		5,938		1,590			(1,887	)
Deferred:
Federal		21,929		(109,871	)		214
State		4,032		(15,607	)		81
		25,961		(125,478	)		295
Total	$	31,899	$	(123,888	)	$	(1,592	)

Our federal income tax benefit in fiscal 2005 is comprised primarily of refundable income taxes recorded for the expected benefit from the carryback of certain deductible expenses incurred in fiscal 2001 and fiscal 2003 through 2005.

A reconciliation of income tax expense (benefit) attributable to continuing operations at the federal statutory rate of 35% to our income tax expense (benefit) is as follows:

	2007			2006			2005
	(as restated)
Income tax expense at statutory rate	$	28,780		$	20,038		$	5,975
State income taxes, net of federal income tax benefit		3,104			(10,025	)		(86	)
Tax credits		(300	)		(442	)		(677	)
Decrease in valuation allowance, federal		(4,842	)		(136,264	)		(7,146	)
Nondeductible compensation		2,390			1,793			20
Other, net		2,767			1,012			322
	$	31,899		$	(123,888	)	$	(1,592	)

100

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Temporary differences and carryforwards gave rise to a significant amount of deferred tax assets and liabilities as follows:

	2007			2006
				(as restated)
Estimated liability for closing restaurants	$	5,641		$	5,505
Net operating loss carryforwards		21,761			36,509
Basis difference in fixed assets		13,555			9,071
Goodwill and other intangible assets		32,010			38,745
Reserves and allowances		25,622			31,930
Capital leases		12,583			12,107
Federal and state tax credits		20,275			30,170
Other		5,589			1,923
		137,036			165,960
Valuation allowance		(27,257	)		(30,220	)
Net deferred tax asset	$	109,779		$	135,740

As of January 31, 2005, we maintained a valuation allowance of $190,179 against our net deferred tax assets, since we had determined, based primarily on a history of cumulative losses in recent years and uncertainty regarding the timing and amounts of future taxable income, that realization of our deferred tax assets was not more likely than not. During fiscal 2006, after considering a number of factors, including a three-year history of cumulative earnings, utilization of NOL carryforwards in fiscal 2006, and estimated taxable income in future years, we determined we would more likely than not realize substantial future tax benefits from our deferred tax assets and we reduced our valuation allowance by $159,959 at January 31, 2006, resulting in a net deferred tax asset of $135,740 (see Note 1 — Restatement of Previously Issued Financial Statements). Of the total tax benefit from the reversal of the valuation allowance, $11,971 was recorded to additional paid-in capital for the tax benefit from the exercise of stock options during both the current and prior years.

During the fourth quarter of fiscal 2007, we determined that we would more likely than not realize future tax benefits from certain of our deferred tax assets for which we previously maintained a valuation allowance. This determination was based on a number of factors, including our ability, for the first time in several years, to utilize more foreign tax credits than we generated in fiscal 2007 and our projected future foreign source income. As a result of our analysis, we reduced our valuation allowance by $4,884 at January 31, 2007. As of January 31, 2007, our remaining valuation allowance of $27,257 relates to federal and state capital loss carryforwards and certain state NOL and tax credit carryforwards. Realization of the tax benefit of such deferred tax assets may remain uncertain for the foreseeable future, even though we expect to generate taxable income, since they are subject to various limitation and may only be used to offset income of certain entities or of a certain character.

During fiscal 2007, we utilized all of our federal NOL carryforwards and a portion of our federal tax credit carryforwards. At January 31, 2007, we have federal alternative minimum tax (“AMT”) credit, general business tax credit and foreign tax credit carryforwards of approximately $18,446. Our AMT credits will be carried forward until utilized, and our general business tax credits and foreign tax credits would expire, if unused, in varying amounts in the years 2012 through 2027. At January 31, 2007, we have state NOL carryforwards in the amount of approximately $329,207, which expire in varying amounts in the years 2008 through 2027. As of January 31, 2007, we have recognized $859 of net deferred tax assets related to our state NOL carryforwards, which represents our expected future tax savings from such NOL carryforwards.

101

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 21 — Discontinued Operations

In conjunction with the acquisition of SBRG in fiscal 2003, we made the decision to divest Timber Lodge Steakhouse, Inc. (“Timber Lodge”) as the concept did not fit with our core concepts of quick-service and fast-casual restaurants. The sale of Timber Lodge was completed on September 3, 2004.

The results of Timber Lodge included in the accompanying Consolidated Statements of Income as discontinued operations for the fiscal year ended January 31, 2005 are as follows:

Revenue	$	24,129
Operating loss	$	(636	)
Interest expense		10
Net loss	$	(646	)

The operating loss for Timber Lodge for the fiscal year ended January 31, 2005 includes impairment charges of $898, to reduce the carrying value of Timber Lodge to fair value.

Note 22 — Segment Information

We are principally engaged in developing, operating and franchising our Carl’s Jr. and Hardee’s quick-service restaurants and our La Salsa fast-casual restaurants, each of which is considered an operating segment that is managed and evaluated separately. Management evaluates the performance of our 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 and 2023 Convertible Notes and conversion inducement expense related to the 2023 Convertible Notes have been allocated to Hardee’s based on the use of funds. Certain amounts that we do not believe would be proper to allocate to the operating segments are included in “Other” (i.e., gains or losses on sales of long-term investments and the results of operations of consolidated VIEs). The accounting policies of the segments are the same as those described in our summary of significant accounting policies (see Note 1).

102

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Carl’s Jr.		Hardee’s		La Salsa			Other			Total
2007
Revenue	$	830,961	$	706,884	$	46,339		$	4,226		$	1,588,410
Segment operating income (loss)		83,525		32,547		(11,381	)		(199	)		104,492
Interest expense		3,991		15,491		(17	)		286			19,751
Total assets		212,480		369,954		20,958			191,030			794,422
Capital expenditures		61,280		53,406		2,564			18			117,268
Goodwill		22,649		—		—			—			22,649
Depreciation and amortization		26,328		32,821		3,050			219			62,418
Income tax expense (benefit)		29,388		6,966		(4,089	)		(366	)		31,899
2006 (as restated)
Revenue	$	802,761	$	661,509	$	49,156		$	4,921		$	1,518,347
Segment operating income (loss)		82,773		13,393		(7,007	)		(11,279	)		77,880
Interest expense		4,255		18,641		28			92			23,016
Total assets		195,729		359,342		24,966			211,300			791,337
Capital expenditures		28,754		38,601		910			211			68,476
Goodwill		22,649		—		—			—			22,649
Depreciation and amortization		24,958		35,473		3,558			166			64,155
Income tax expense (benefit)		1,955		—		(138	)		(125,705	)		(123,888	)
2005
Revenue	$	792,829	$	673,172	$	48,794		$	5,086		$	1,519,881
Segment operating income (loss)		61,656		5,293		(10,270	)		101			56,780
Interest expense		5,071		31,510		(27	)		194			36,748
Total assets		219,974		362,004		29,682			57,223			668,883
Capital expenditures		24,773		30,056		3,705			87			58,621
Goodwill		22,649		—		—			—			22,649
Depreciation and amortization		23,875		38,782		3,965			171			66,793
Income tax expense (benefit)		498		73		2			(2,165	)		(1,592	)

Note 23 — Share-Based Compensation

As of the beginning of fiscal 2007, we adopted SFAS 123R using the modified prospective approach. SFAS 123R replaces SFAS 123, Accounting for Stock-Based Compensation, and supersedes APB 25. SFAS 123R requires the cost of all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values measured at the grant date, or the date of later modification, over the requisite service period. In addition, under the modified prospective approach, SFAS 123R requires unrecognized cost (based on the amounts previously disclosed in pro forma footnote disclosures) related to awards vesting after the date of initial adoption to be recognized in the financial statements over the remaining requisite service period. Therefore, the amount of compensation costs to be recognized over the requisite service period on a prospective basis after January 31, 2006 will include: (i) previously unrecognized compensation cost for all share-based payments granted prior to, but not yet vested as of, January 31, 2006 based on their fair values measured at the grant date, (ii) compensation cost of all share-based payments granted subsequent to January 31, 2006 based on their respective grant date fair value, and (iii) the incremental fair value of awards modified subsequent to January 31, 2006 measured as of the date of such modification.

103

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

When recording compensation cost for equity awards, SFAS 123R requires companies to estimate at the date of grant the number of equity awards granted that are expected to be forfeited and to subsequently adjust the estimated forfeitures to reflect actual forfeitures.

For tax purposes, we expect to be entitled to a tax deduction, subject to certain limitations, based on the fair value of certain equity awards when the restrictions lapse or stock options are exercised. SFAS 123R requires that compensation cost be recognized in the financial statements based on the fair value measured at the grant date, or the date of later modification, over the requisite service period. The cumulative compensation cost recognized for certain equity awards pursuant to SFAS 123R and amounts that ultimately will be deductible for tax purposes are temporary differences as prescribed by SFAS 109, Accounting for Income Taxes. The tax effect of compensation deductions for tax purposes in excess of compensation cost recognized in the financial statements, if any, will be recorded as an increase to additional paid-in capital when realized. A deferred tax asset recorded for compensation cost recognized in the financial statements that exceeds the amount that is ultimately realized on the tax return, if any, will be charged to income tax expense when the restrictions lapse or stock options are exercised or expire unless we have an available additional paid-in capital pool, as defined pursuant to SFAS 123R.

SFAS 123R also amends SFAS 95, Statement of Cash Flows, to require companies to change the classification in the statement of cash flows of any tax benefits realized upon the exercise of stock options or issuance of nonvested share unit awards in excess of that which is associated with the expense recognized for financial reporting purposes. These amounts are required to be reported as a financing cash inflow rather than as a reduction of income taxes paid in operating cash flows.

The incremental pre-tax share-based compensation expense recognized pursuant to the adoption of SFAS 123R for the fiscal year ended January 31, 2007 was $4,860. This incremental pre-tax share-based compensation expense had the following effects on the accompanying Consolidated Statement of Income for fiscal 2007:

Decrease in income before income taxes	$	4,860
Decrease in net income		2,999
Decrease in basic net income per common share		0.05
Decrease in diluted net income per common share		0.04

Total share-based compensation expense recognized under SFAS 123R, including the incremental pre-tax share-based compensation expense above, was $8,368, with associated tax benefits of $2,068, and was included in general and administrative expense in our accompanying Consolidated Statement of Income for the fiscal year ended January 31, 2007.

Prior to January 31, 2006, we accounted for share-based compensation plans in accordance with the provisions of APB 25, as permitted by SFAS 123, and accordingly, did not recognize compensation expense for stock options with an exercise price equal to or greater than the market price of the underlying stock at the date of grant. Total share-based compensation expense was $188, with associated tax benefits of $72, and was included in general and administrative expense in our accompanying Consolidated Statement of Income for the fiscal year ended January 31, 2006.

104

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Had the fair value-based method prescribed by SFAS 123 been applied, additional compensation expense would have been recognized for the fiscal years ended January 31, 2006 and 2005, and the effect on net income and net income per share would have been as follows:

	2006			2005
	(as restated)
Net income, as reported	$	181,139		$	18,016
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects		116			—
Deduct: Total share-based employee compensation expense determined under fair value based method, net of related tax effects		(2,933	)		(4,651	)
Net income — pro forma	$	178,322		$	13,365
Net income per common share:
Basic — as reported	$	3.06		$	0.31
Basic — pro forma		3.01			0.23
Diluted — as reported		2.51			0.30
Diluted — pro forma		2.43			0.22

Employee Stock Purchase Plan

In fiscal 1995, our Board of Directors adopted, and stockholders subsequently approved in fiscal 1996, an Employee Stock Purchase Plan (“ESPP”). Under the terms of the ESPP and subsequent amendments, eligible employees may voluntarily purchase, at current market prices, up to 3,907,500 shares of our common stock through payroll deductions.

Pursuant to the ESPP, employees may contribute an amount between 3% and 15% of their base salaries. We contribute varying amounts as specified in the ESPP. During fiscal 2007, 2006 and 2005, 197,240, 138,281 and 132,502 shares, respectively, were purchased and allocated to employees, based upon their contributions, at an average price of $16.79, $14.10 and $11.46 per share, respectively. We contributed $752 or an equivalent of 45,369 shares for the year ended January 31, 2007, $535 or an equivalent of 37,977 shares for the year ended January 31, 2006 and $482 or an equivalent of 42,536 shares for the year ended January 31, 2005. As of January 31, 2007, 685,708 shares are available for purchase under the ESPP.

Stock Incentive Plans

The 2005 Omnibus Incentive Compensation Plan (“2005 Plan”) that was approved by our stockholders in June 2005 is an “omnibus” stock plan consisting of a variety of equity vehicles to provide flexibility in implementing equity awards, including incentive stock options, non-qualified stock options, restricted stock awards, unrestricted stock grants, stock appreciation rights and stock units. Participants in the 2005 Plan may be granted any one of the equity awards or any combination thereof, as determined by the Compensation Committee of our Board of Directors. A total of 2,500,000 shares were initially available for grant under the 2005 Plan. Options generally have a term of ten years from the date of grant and vest as prescribed by the Compensation Committee. Options are generally granted at a price equal to or greater than the fair market value of the underlying common stock on the date of grant. Restricted stock awards are generally awarded with an exercise price of $0. The 2005 Plan will terminate on March 22, 2015, unless the Board of Directors, at its discretion, terminates the Plan at an earlier date. For restricted stock awards prior to our adoption of SFAS 123R, the difference between the market price of the underlying common stock on the date of grant and the exercise price of restricted stock awards was initially recorded as unearned compensation on restricted stock within the stockholders’ equity section of our accompanying Consolidated Balance Sheet and was being subsequently amortized over the vesting period. The balance of

105

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

unearned compensation related to the unearned portion of these awards was eliminated against additional paid-in capital upon our adoption of SFAS 123R as of the beginning of fiscal 2007. As of January 31, 2007, 1,172,500 shares are available for future grants of options or other awards under the 2005 Plan. As of January 31, 2007, 610,000 options were outstanding under the 2005 Plan with exercise prices ranging from $12.71 per share to $16.50 per share.

Our 2001 Stock Incentive Plan (“2001 Plan”) was approved by our Board of Directors in September 2001. The 2001 Plan has been established as a “broad based plan” as defined by the New York Stock Exchange, whereby at least a majority of the options awarded under the 2001 Plan must be awarded to employees of CKE who are not executive officers or directors within the first three years of the 2001 Plan’s existence. Awards granted to eligible employees under the 2001 Plan are not restricted as to any specified form or structure, with such form, vesting and pricing provisions determined by the Compensation Committee of our Board of Directors. Options generally have a term of ten years from the date of grant. Options are generally granted at a price equal to or greater than the fair market value of the underlying common stock on the date of grant. As of January 31, 2007, 93,529 shares are available for future grants of options or other awards under the 2001 Plan. As of January 31, 2007, 370,522 options were outstanding under the 2001 Plan with exercise prices ranging from $5.75 per share to $15.66 per share.

Our 1999 Stock Incentive Plan (“1999 Plan”) was approved by stockholders in June 1999 and amended and again approved in June 2000. Awards granted to eligible employees under the 1999 Plan are not restricted as to any specified form or structure, with such form, vesting and pricing provisions determined by the Compensation Committee of our Board of Directors. Options generally have a term of ten years from the date of grant, except for incentive stock options granted to 10% or greater stockholders of CKE, which have a term of five years from the date of grant. Options are generally at a price equal to or greater than the fair market value of the underlying common stock on the date of grant, except that incentive stock options granted to 10% or greater stockholders of CKE may not be granted at less than 110% of the fair market value of the common stock on the date of grant. Restricted stock awards are generally awarded with an exercise price of $0 per share. As of January 31, 2007, 38,143 shares are available for future grants of options or other awards under the 1999 Plan, as amended, with such amount of available shares increased by 350,000 shares on the date of each annual meeting of stockholders. As of January 31, 2007, 3,028,491 options were outstanding under the 1999 Plan with exercise prices ranging from $2.63 per share to $19.13 per share.

Our 1994 Stock Incentive Plan expired in April 1999 and all outstanding options under the plan are fully vested. Outstanding options generally have a term of five years from the date of grant for the non-employee directors and ten years from the date of grant for employees and were priced at the fair market value of the shares on the date of grant. As of January 31, 2007, there were no shares available for future grants of options or other awards under this plan. As of January 31, 2007, there were 907,205 stock options outstanding under this plan with exercise prices ranging from $17.67 per share to $36.65 per share.

In conjunction with the acquisition of SBRG, we assumed the options outstanding under various SBRG stock plans. As of January 31, 2007, 458,088 of those options were outstanding, with an average exercise price of $5.43 per share. We also assumed warrants to purchase 981,998 shares of our common stock. During the sixteen weeks ended May 23, 2005, approximately 109,838 warrants were exercised. The remaining 872,160 warrants expired on May 1, 2005.

In general, options issued under our stock incentive plans have a term of ten years and vest over a period of three years. We generally issue new shares of common stock for option exercises. The grant date fair value is calculated using a Black-Scholes option valuation model.

106

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The weighted-average assumptions used for grants in the fiscal years ended January 31, 2007, 2006 and 2005 are as follows:

	2007			2006			2005
Annual dividend yield		1.09	%		1.13	%		—
Expected volatility		48.66	%		63.6	%		72.6	%
Risk-free interest rate (matched to the expected term of the outstanding option)		4.76	%		4.39	%		3.46	%
Expected life (years)		5.97			5.29			5.43
Weighted-average fair value of each option granted	$	8.95		$	7.14		$	7.15

The assumptions used to determine the fair value of each option granted are highly subjective. Changes in the assumptions used would increase (decrease) the fair value of the options granted in the fiscal years ended January 31, 2007, 2006 and 2005 as follows:

Change in Assumption	2007			2006			2005
10% increase in expected volatility	$	1.23		$	0.79		$	0.63
1% increase in risk-free interest rate		0.28			0.15			0.11
1 year increase in expected life		0.55			0.46			0.47
10% decrease in expected volatility		(1.31	)		(0.86	)		(0.69	)
1% decrease in risk-free interest rate		(0.28	)		(0.15	)		(0.12	)
1 year decrease in expected life		(0.65	)		(0.56	)		(0.56	)

Transactions under all plans, including assumed warrants, for the fiscal year ended January 31, 2007 are as follows:

Stock options outstanding:

						Weighted-Average		Aggregate
				Weighted-Average		Remaining		Intrinsic
	Shares			Exercise Price		Contractual Life		Value
Outstanding at January 31, 2006		6,162,082		$	12.08		5.67
Granted		553,144			18.73
Exercised		(1,174,891	)		8.79
Forfeited		(68,470	)		13.42
Expired		(97,559	)		17.84
Outstanding at January 31, 2007		5,374,306		$	13.36		5.38	$	39,839
Exercisable at January 31, 2007		3,929,823		$	12.65		4.12	$	33,353
Expected to vest at January 31, 2007		1,313,381		$	15.24		8.76	$	5,968

The following table summarizes certain stock option exercise activity for the fiscal years ended January 31, 2007, 2006 and 2005:

	2007		2006		2005
Total intrinsic value of stock options exercised	$	11,147	$	19,525	$	8,609

107

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes information related to stock options outstanding and exercisable at January 31, 2007:

					Options Outstanding						Options Exercisable
					(000’s)				Weighted-Average		(000’s)
Range of					Options		Weighted-Average		Remaining		Shares		Weighted-Average
Exercise Prices					Outstanding		Exercise Price		Contractual Life		Exercisable		Exercise Price
$	2.04	to	$	3.31		693	$	2.84		3.80		693	$	2.84
	3.38			6.71		662		5.52		5.57		662		5.52
	8.39			11.24		501		10.49		4.43		493		10.52
	11.26			11.26		641		11.26		7.37		405		11.26
	11.50			13.15		679		13.08		8.57		237		13.06
	13.53			16.50		664		15.18		5.78		393		14.82
	17.67			19.13		850		18.68		6.39		363		18.09
	23.66			36.65		684		27.59		0.79		684		27.59
$	2.04		$	36.65		5,374	$	13.36		5.38		3,930	$	12.65

Restricted stock awards:

				Weighted-Average
				Grant Date
	Shares			Fair Value
Restricted stock awards at January 31, 2006		150,000		$	13.33
Granted		639,349		$	18.30
Awards vested		(168,337	)	$	17.46
Forfeited		(5,000	)	$	13.53
Restricted stock awards at January 31, 2007		616,012		$	17.36

Unvested restricted stock awards as of January 31, 2007 consist of 376,012 restricted stock awards that have vesting periods ranging from two to four years and 240,000 performance-vested restricted stock awards that were awarded to certain key executives, pursuant to their amended employment agreements. Performance-vested awards vest upon the achievement of specific performance goals over specified performance periods. Performance-vested awards as of January 31, 2007 are subject to adjustment based on the final performance relative to the goals, resulting in a minimum award of no shares and a maximum award of 240,000 shares. We begin recognizing the share-based compensation expense related to these awards when we deem the achievement of performance goals to be probable. During the fiscal year ended January 31, 2007, we recognized $2,296 of share-based compensation expense related to performance-vested restricted stock awards.

As of January 31, 2007, there was $7,630 of unamortized compensation expense related to stock options. We expect to recognize this expense over a weighted-average period of 1.80 years. As of January 31, 2007, there was $8,631 of unrecognized compensation expense related to restricted stock awards. We expect to recognize this expense over a weighted-average period of 2.44 years.

108

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 24 — Employee Benefit and Retirement Plans

Savings and Profit Sharing Plan

We sponsor a contributory plan (“401(k) Plan”) to provide retirement benefits under the provisions of Section 401(k) of the Internal Revenue Code (“IRC”) for eligible employees other than operations hourly employees and highly compensated employees. Participants may elect to contribute up to 25% of their annual salaries on a pre-tax basis to the 401(k) Plan, subject to the maximum contribution allowed by the IRC. Our matching contributions are determined at the discretion of our Board of Directors. For fiscal 2007, 2006 and 2005, we did not make matching contributions to the 401(k) Plan.

Deferred Compensation Plan

On June 28, 2005, our Board of Directors approved the CKE Restaurants, Inc. Deferred Compensation Plan (“Plan”). Under the Plan, participants may elect to defer, on a pre-tax basis, a portion of their base salary (in an amount not to exceed 80%), quarterly or annual bonus (in an amount not to exceed 100%), or, in the case of non-employee directors, annual stipend and meeting fees (in an amount not to exceed 100%). Any amounts deferred by a participant will be credited to such participant’s deferred compensation account, a bookkeeping device utilized solely for the purpose of determining the benefits payable to a participant under the Plan. The Plan further states that we may make discretionary contributions to a plan participant’s deferred compensation account. Each Plan participant will be vested in the amounts held in such plan participant’s deferred compensation account as follows: (i) one hundred percent (100%) vested at all times with respect to all amounts of deferred compensation; and (ii) vested as determined by the Board of Directors and the Compensation Committee of the Board of Directors with respect to all discretionary contributions that we make. We made no discretionary contributions to Plan participant’s accounts in fiscal 2007 or 2006.

The Plan provides that any amounts deferred under the Plan may not be distributed to a plan participant earlier than: (i) the Plan participant’s separation from service with CKE; (ii) the Plan participant’s retirement from CKE; (iii) the Plan participant’s disability; (iv) the Plan participant’s death; (v) the occurrence of a change in control; (vi) the occurrence of an unforeseeable emergency; or (vii) such other date as set forth in the plan participant’s deferral election, including a date that occurs prior to the Plan participant’s separation from service with CKE. Any amounts distributed to a Plan participant will be paid in a form specified by the Plan participant, or in the form of either a lump sum payment in an amount equal to the Plan participant’s deferred compensation account balance or equal annual installments of the Plan participant’s deferred compensation account balance over a period not to exceed (i) fifteen years in the case of a distribution on or after a Plan participant’s attainment of the normal retirement age set forth in the Plan or (ii) five years in all other cases.

Note 25 — Supplemental Cash Flow Information

The following table presents supplemental cash flow information for the fiscal years ended January 31, 2007, 2006 and 2005:

	2007		2006		2005
Cash paid for:
Interest, net of amounts capitalized	$	17,687	$	19,777	$	32,099
Income taxes, net of refunds received		5,324		1,362		5,482
Non-cash investing and financing activities:
Gain recognized on sale and leaseback transactions		368		361		305
Dividends declared, not paid		2,694		2,394		—
Capital lease obligations incurred to acquire assets		302		344		—

109

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The cash used in financing activities related to the repurchase of common stock for the fiscal year ended January 31, 2007, differs from the repurchase of common stock in the statement of stockholders’ equity, by $360, reflecting the timing difference between the recognition of share repurchase transactions and their settlement for cash. The $360 liability for unsettled repurchases of common stock is included in other current liabilities in the accompanying Consolidated Balance Sheet as of January 31, 2007.

Note 26 — Selected Quarterly Financial Data (Unaudited)

The following table presents summarized quarterly results:

	Quarter
	1st		2nd		3rd		4th
Fiscal 2007
Total revenue	$	488,557	$	375,965	$	364,918	$	358,970
Operating income		33,634		33,308		24,255		13,295
Net income		16,168		14,216		9,457		10,331
Basic income per common share		0.27		0.24		0.14		0.15
Diluted income per common share		0.23		0.20		0.13		0.15
Fiscal 2006 (as restated)
Total revenue	$	465,909	$	359,783	$	344,113	$	348,542
Operating income		23,148		13,209		20,984		20,539
Net income		15,999		8,448		15,823		140,869
Basic income per common share		0.27		0.14		0.27		2.37
Diluted income per common share		0.24		0.13		0.23		1.95

Quarterly operating results are not necessarily representative of operations for a full year for various reasons, including the seasonal nature of the quick-service restaurant industry and unpredictable adverse weather conditions, which may affect sales volume and food costs. In addition, all quarters have 12-week accounting periods, except the first quarters of fiscal 2007 and 2006, which have 16-week accounting periods.

Fourth Quarter Adjustment

During the fourth quarter of fiscal 2007, we recorded impairment charges of $2,161 related to assets to be held and used.

Note 27 — Commitments and Contingent Liabilities

In prior years, as part of our refranchising program, we sold restaurants to franchisees. In some cases, these restaurants were on leased sites. We entered into sublease agreements with these franchisees but remained principally liable for the lease obligations. We account for the sublease payments received as franchising rental income and the payments on the leases as rental expense in franchised and licensed restaurants and other expense. As of January 31, 2007, the present value of the lease obligations under the remaining master leases’ primary terms is $106,993. Franchisees may, from time to time, experience financial hardship and may cease payment on the sublease obligation to us. The present value of the exposure to us from franchisees characterized as under financial hardship is $2,198, of which $1,120 is reserved for in our estimated liability for closing restaurants as of January 31, 2007.

Pursuant to the Facility, a letter of credit sub-facility in the amount of $85,000 was established (see Note 11). Several standby letters of credit are outstanding under this sub-facility, which secure our potential workers’ compensation, general and auto liability obligations. We are required to provide letters of credit each year, or set

110

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

aside a comparable amount of cash or investment securities in a trust account, based on our existing claims experience. As of January 31, 2007, we had outstanding letters of credit of $57,263, expiring at various dates through November 2007.

As of January 31, 2007, our standby letter of credit agreements with various banks expire as follows:

March 2007	$	26,807
April 2007		1,003
July 2007		7,279
November 2007		8,805
December 2007		553
February 2008		12,816
	$	57,263

As of January 31, 2007, we had unconditional purchase obligations in the amount of $43,796, which primarily include contracts for goods and services related to restaurant operations and contractual commitments for marketing and sponsorship arrangements.

We have employment agreements with certain key executives (“Agreements”). These Agreements include provisions for lump sum payments to the executives that may be triggered by the termination of employment under certain conditions, as defined in each Agreement. If such provisions were triggered, each affected executive would receive an amount ranging from one to three times his base salary for the remainder of his employment term plus, in some instances, either all of or a pro-rata portion of the bonus in effect for the year in which the termination occurs. Additionally, all options and restricted stock awarded to the affected executives which have not vested as of the date of termination would vest immediately, and restricted stock awards which have not yet been awarded would be awarded immediately. If all of these Agreements had been triggered as of January 31, 2007, we would have been required to make cash payments of approximately $14,650.

We are, 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 us and our restaurants, regardless of whether such allegations are valid or whether we are liable. We are also, at times, the subject of complaints or allegations from current or former employees, franchisees, vendors, landlords and others.

As of January 31, 2007, we had recorded an accrued liability for contingencies related to litigation in the amount of $630, which relates to certain employment, real estate and other business disputes. Certain of the matters for which we maintain an accrued liability for litigation pose risk of loss significantly above the accrued amounts.

For several years, we offered a program whereby we guaranteed the loan obligations of certain franchisees to independent lending institutions. 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, we are 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, we may seek recovery against the defaulting franchisee. As of January 31, 2007, the principal outstanding under program loans guaranteed by us totaled approximately $369, with maturity dates ranging from 2007 through 2009. As of January 31, 2007, we had no accrued liability for expected losses under this program and were not aware of any outstanding loans being in default.

111

EXHIBIT INDEX

Exhibits			Description
	3	.1	Certificate of Incorporation of the Company, incorporated herein by reference to Exhibit 3.1 to the Company’s Form S-4 Registration Statement Number 33-52523.
	3	.2	Certificate of Amendment of Certificate of Incorporation, as filed with the Delaware Secretary of State on December 9, 1997, filed as Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 26, 1998, and is hereby incorporated by reference.
	3	.3	Bylaws of the Company, incorporated herein by reference to Exhibit 3.2 to the Company’s Form S-4 Registration Statement Number 33-52523.
	3	.4	Certificate of Amendment of Bylaws, incorporated herein by reference to Exhibit 3.4 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 26, 2004.
	3	.5	Certificate of Amendment of Bylaws, incorporated herein by reference to Exhibit 3.5 to the Company’s Current Report on Form 8-K filed December 13, 2006.
	4	.6	Indenture, dated as of September 29, 2003, by and between the Company and J.P. Morgan Trust Company, National Association, as Trustee, filed as Exhibit 4.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended November 3, 2003, and is hereby incorporated by reference.
	4	.7	Form of Notes (included in Exhibit 4.6).
	4	.8	Registration Rights Agreement, dated as of September 29, 2003, by and among the Company and Citigroup Global Markets, Inc., for itself and the other initial purchasers, filed as Exhibit 4.8 to the Company’s Quarterly Report on Form 10-Q for the quarter ended November 3, 2003, and is hereby incorporated by reference.
	10	.1	Carl Karcher Enterprises, Inc. Profit Sharing Plan, as amended, filed as Exhibit 10.21 to the Company’s Form S-1 Registration Statement Number 2-73695, and is hereby incorporated by reference.(1)
	10	.4	CKE Restaurants, Inc. 1994 Stock Incentive Plan, as amended, incorporated herein by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement Number 333-12399.(1)
	10	.5	CKE Restaurants, Inc. 1999 Stock Incentive Plan, incorporated herein by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement Number 333-83601.(1)
	10	.7	Employment Agreement dated January 1, 1994, by and between Carl Karcher Enterprises, Inc. and Carl N. Karcher, filed as Exhibit 10.89 to the Company’s Annual Report on Form 10-K for fiscal year ended January 31, 1994, and is hereby incorporated by reference.(1)
	10	.8	First Amendment to Employment Agreement dated November 1, 1997, by and between Carl N. Karcher and Carl Karcher Enterprises, Inc., filed as Exhibit 10.8 to the Company’s Annual Report on Form 10-K for fiscal year ended January 26, 1998, and is hereby incorporated by reference.(1)
	10	.15	Employment Agreement dated as of April 9, 1999, by and between the Company and John J. Dunion, filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended May 17, 1999, and is hereby incorporated by reference.(1)
	10	.19	First Amendment to Settlement and Development Agreement by and between Carl Karcher Enterprises, Inc., CKE Restaurants, Inc. and GB Foods Corporation dated as of February 20, 1997, filed as Exhibit 10.31 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 27, 1997, and is hereby incorporated by reference.
	10	.48	CKE Restaurants, Inc. 2001 Stock Incentive Plan, Incorporated herein by reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement Number 333-76884.(1)
	10	.51	Distribution Service Agreement, dated as of November 7, 2003, by and between La Salsa, Inc. and McCabe’s Quality Foods, filed as Exhibit 10.51 to the Company’s Quarterly Report on Form 10-Q for the quarter ended November 3, 2003, and is hereby incorporated by reference.
	10	.53	Employment Agreement, effective as of January 27, 2004, by and between the Company and Theodore Abajian, incorporated herein by reference to the like-numbered exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended January 26, 2004.(1)
	10	.54	Second Amendment to Employment Agreement, effective as of January 1, 2004, by and between the Company and Carl N. Karcher, incorporated herein by reference to the like-numbered exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended January 26, 2004.(1)

112

Exhibits			Description
	10	.55	Employment Agreement, effective as of April 4, 2004, by and between the Company and Andrew F. Puzder, incorporated herein by reference to the like-numbered exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended January 26, 2004.(1)
	10	.56	Employment Agreement, effective as of January 27, 2004, by and between the Company and E. Michael Murphy, incorporated herein by reference to the like-numbered exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended January 26, 2004.(1)
	10	.57	Employment Agreement, effective as of January 27, 2004, by and between the Company and Brad R. Haley, incorporated herein by reference to the like-numbered exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 17, 2004.(1)
	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, incorporated herein by reference to the like-numbered exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 17, 2004.
	10	.59	Amendment No. 1 to Sixth Amended and Restated Credit Agreement, dated as of November 4, 2004, by and among the Company, BNP Paribas, a bank organized under the laws of France acting through its Chicago branch, as agent, and the lenders party to the Sixth Amended and Restated Credit Agreement, dated as of June 2, 2004, by and among those parties, incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 12, 2004.
	10	.60	Amendment to Employment Agreement between the Company and Andrew F. Puzder, effective as of February 1, 2005, incorporated herein by reference to Exhibit 10.60 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2005.(1)
	10	.61	Amendment No. 2 to Sixth Amended and Restated Credit Agreement, dated as of April 21, 2005, by and among the Company, BNP Paribas, a bank organized under the laws of France acting through its Chicago branch, as agent, and the lenders party to the Sixth Amended and Restated Credit Agreement, dated as of June 2, 2004, by and among those parties, incorporated herein by reference to Exhibit 10.61 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2005.
	10	.62	CKE Restaurants, Inc. 2005 Omnibus Incentive Compensation Plan, incorporated herein by reference to Annex A of the Company’s Definitive Proxy Statement on Schedule 14A filed May 20, 2005.(1)
	10	.63	CKE Restaurants, Inc. 1994 Employee Stock Purchase Plan, as amended, incorporated herein by reference to Annex B of the Company’s Definitive Proxy Statement on Schedule 14A filed May 20, 2005.(1)
	10	.64	Form of Stock Option Agreement under the 2005 Omnibus Incentive Compensation Plan, incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed June 30, 2005.(1)
	10	.65	Form of Restricted Stock Award Agreement under the 2005 Omnibus Incentive Compensation Plan, incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed June 30, 2005.(1)
	10	.66	Form of Stock Appreciation Rights Award Agreement under the 2005 Omnibus Incentive Compensation Plan, incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed June 30, 2005.(1)
	10	.67	Form of Restricted Stock Unit Award Agreement under the 2005 Omnibus Incentive Compensation Plan, incorporated herein by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed June 30, 2005.(1)
	10	.68	Form of Stock Award Agreement under the 2005 Omnibus Incentive Compensation Plan, incorporated herein by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed June 30, 2005.(1)
	10	.69	CKE Restaurants, Inc. Deferred Compensation Plan, incorporated herein by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed June 30, 2005.(1)
	10	.70	Stock Option Purchase Agreement, dated as of July 19, 2005, by and between the Company and William P. Foley, II, incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July 19, 2005.
	10	.71	Amendment No. 2 to Employment Agreement between the Company and Andrew F. Puzder, effective as of December 6, 2005, incorporated herein by reference to Exhibit 10.71 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2006.(1)

113

Exhibits			Description
	10	.72	Amendment No. 1 to Employment Agreement between the Company and E. Michael Murphy, effective as of December 6, 2005, incorporated herein by reference to Exhibit 10.72 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2006.(1)
	10	.73	Amendment No. 1 to Employment Agreement between the Company and Theodore Abajian, effective as of December 6, 2005, incorporated herein by reference to Exhibit 10.73 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2006.(1)
	10	.74	Amendment No. 1 to Employment Agreement between the Company and Brad R. Haley, effective as of December 6, 2005, incorporated herein by reference to Exhibit 10.74 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2006.(1)
	10	.75	Amendment No. 3 to Employment Agreement between the Company and Andrew F. Puzder, effective as of October 12, 2006, incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 17, 2006.(1)
	10	.76	Amendment No. 2 to Employment Agreement between the Company and E. Michael Murphy, effective as of October 12, 2006, incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed October 17, 2006.(1)
	10	.77	Amendment No. 2 to Employment Agreement between the Company and Theodore Abajian, effective as of October 12, 2006, incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed October 17, 2006.(1)
	10	.78	Amendment No. 3 to the Sixth Amended and Restated Credit Agreement, dated as of January 22, 2007, by and among the Company, BNP Paribas, a bank organized under the laws of France acting through its Chicago branch, as agent, and the lenders party to the Sixth Amended and Restated Credit Agreement, dated as of June 2, 2004, by and among those parties, incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed January 25, 2007.
	10	.79	Seventh Amended and Restated Credit Agreement, dated as of March 27, 2007, 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 Administrative Agent, and Citigroup Global Markets, Inc. and Bank of America, N.A., as Co-Syndication Agents.
	10	.80	Amendment No. 2 to Employment Agreement between the Company and Brad R. Haley, effective as of March 20, 2007.(1)
	11	.1	Computation of Per Share Earnings, included in Note 1 of Notes to Consolidated Financial Statements.
	12	.1	Computation of Ratios.
	14	.1	CKE Restaurants, Inc. Code of Ethics for CEO and Senior Financial Officers, as approved by the Company’s Board of Directors on March 3, 2004, incorporated herein by reference to the like-numbered exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended January 26, 2004.
	21	.1	Subsidiaries of Company.
	23	.1	Consent of Independent Registered Public Accounting Firm.
	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.

*	Schedules or exhibits omitted. The Company shall furnish supplementally to the Securities and Exchange Commission a copy of any omitted schedule or exhibit upon request.
(1)	A management contract or compensatory plan or arrangement required to be filed as an exhibit to this report pursuant to Item 15(c) of Form 10-K.

114

EX-10.79

                                                                   EXHIBIT 10.79

                          SEVENTH AMENDED AND RESTATED
                                CREDIT AGREEMENT

                           dated as of March 27, 2007

                                      among

                             CKE RESTAURANTS, INC.,

                            THE LENDERS NAMED HEREIN

                                       and

                                  BNP PARIBAS,
                            as Administrative Agent,

                          BNP PARIBAS SECURITIES CORP.,
                 as Lead Arranger and Sole Bookrunning Manager,

                                       and

                       CITIGROUP GLOBAL MARKETS, INC. AND
                              BANK OF AMERICA, N.A.
                            as Co-Syndication Agents


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT


                                                                          
SECTION 1.       DEFINITIONS..............................................     6
   Section 1.1   Definitions..............................................     6

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......................................    35
   Section 2.4   Disbursement of Funds....................................    36
   Section 2.5   Notes....................................................    37
   Section 2.6   Interest.................................................    37
   Section 2.7   Interest Periods.........................................    39
   Section 2.8   Minimum Amount of Eurodollar Loans.......................    40
   Section 2.9   Conversion or Continuation...............................    40
   Section 2.10  Voluntary Reduction of Commitments.......................    40
   Section 2.11  Voluntary Prepayments....................................    41
   Section 2.12  Mandatory Prepayments....................................    41
   Section 2.13  Application of Prepayments...............................    43
   Section 2.14  Method and Place of Payment..............................    43
   Section 2.15  Fees.....................................................    44
   Section 2.16  Interest Rate Unascertainable, Increased Costs,
                 Illegality...............................................    44
   Section 2.17  Funding Losses...........................................    46
   Section 2.18  Increased Capital........................................    47
   Section 2.19  Taxes....................................................    47
   Section 2.20  Use of Proceeds..........................................    49
   Section 2.21  Collateral Security......................................    49
   Section 2.22  Replacement of Certain Lenders...........................    52
   Section 2.23  Increased Amounts........................................    52

SECTION 3.       LETTERS OF CREDIT........................................    54
   Section 3.1   Issuance of Letters of Credit, etc.......................    54
   Section 3.2   Letter of Credit Fees....................................    56
   Section 3.3   Obligation of Borrower Absolute, etc.....................    56

SECTION 4.       CONDITIONS PRECEDENT.....................................    59
   Section 4.1   Conditions Precedent to the Effectiveness of this
                 Agreement................................................    59
   Section 4.2   Conditions Precedent to All Loans........................    65

SECTION 5.       REPRESENTATIONS AND WARRANTIES...........................    66
   Section 5.1   Corporate Status.........................................    66
   Section 5.2   Corporate Power and Authority............................    67
   Section 5.3   No Violation.............................................    67
   Section 5.4   Litigation...............................................    67




                                        i


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

                                                                          
   Section 5.5   Financial Statements; Financial Condition; etc...........    67
   Section 5.6   Solvency.................................................    68
   Section 5.7   Projections..............................................    68
   Section 5.8   Material Adverse Change..................................    68
   Section 5.9   Use of Proceeds; Margin Regulations......................    68
   Section 5.10  Governmental and Other Approvals.........................    68
   Section 5.11  Security Interests and Liens.............................    69
   Section 5.12  Tax Returns and Payments.................................    69
   Section 5.13  ERISA....................................................    69
   Section 5.14  Investment Company Act...................................    70
   Section 5.15  Dissolved Subsidiaries; Previously Material
                 Subsidiaries, etc........................................    70
   Section 5.16  Representations and Warranties in Subordinated Debt
                 Documents................................................    70
   Section 5.17  True and Complete Disclosure.............................    70
   Section 5.18  Organizational Structure; Capitalization.................    70
   Section 5.19  Environmental Matters....................................    71
   Section 5.20  Intellectual Property....................................    72
   Section 5.21  Ownership of Property; Restaurants.......................    72
   Section 5.22  No Default...............................................    72
   Section 5.23  Licenses, etc............................................    72
   Section 5.24  Compliance with Law......................................    72
   Section 5.25  No Burdensome Restrictions...............................    73
   Section 5.26  Brokers' Fees............................................    73
   Section 5.27  Labor Matters............................................    73
   Section 5.28  Indebtedness of the Borrower and Its Subsidiaries........    73
   Section 5.29  Other Agreements.........................................    73
   Section 5.30  Immaterial Subsidiaries..................................    73
   Section 5.31  Franchise Agreements and Franchisees.....................    73

SECTION 6.       AFFIRMATIVE COVENANTS....................................    74
   Section 6.1   Information Covenants....................................    74
   Section 6.2   Books, Records and Inspections...........................    78
   Section 6.3   Maintenance of Insurance.................................    78
   Section 6.4   Taxes....................................................    78
   Section 6.5   Corporate Franchises.....................................    79
   Section 6.6   Compliance with Law......................................    79
   Section 6.7   Performance of Obligations...............................    79
   Section 6.8   Maintenance of Properties................................    79
   Section 6.9   Compliance with Terms of Leaseholds......................    79
   Section 6.10  Compliance with Environmental Laws.......................    80




                                       ii


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

                                                                          
   Section 6.11  Subsidiary Guarantors....................................    80
   Section 6.12  Immaterial Subsidiaries..................................    80
   Section 6.13  [Reserved]...............................................    81
   Section 6.14  Collateral Account.......................................    81
   Section 6.15  [Reserved]...............................................    81
   Section 6.16  Conditions Subsequent to the Closing Date................    81

SECTION 7.       NEGATIVE COVENANTS.......................................    82
   Section 7.1   Financial Covenants......................................    82
   Section 7.2   Indebtedness.............................................    83
   Section 7.3   Liens....................................................    85
   Section 7.4   Restriction on Fundamental Changes.......................    87
   Section 7.5   Sale of Assets...........................................    88
   Section 7.6   Contingent Obligations...................................    89
   Section 7.7   Dividends................................................    89
   Section 7.8   Advances, Investments and Loans..........................    90
   Section 7.9   Transactions with Affiliates.............................    94
   Section 7.10  Limitation on Voluntary Payments and Modifications of
                 Certain Documents........................................    95
   Section 7.11  Changes in Business......................................    96
   Section 7.12  Certain Restrictions.....................................    96
   Section 7.13  Lease Obligations........................................    97
   Section 7.14  Hedging Agreements.......................................    98
   Section 7.15  Plans....................................................    98
   Section 7.16  Fiscal Year; Fiscal Quarter..............................    98
   Section 7.17  Partnerships.............................................    98
   Section 7.18  Excluded Resales.........................................    99
   Section 7.19  Designated Senior Indebtedness...........................    99
   Section 7.20  Instruments..............................................    99
   Section 7.21  [Reserved]...............................................    99

SECTION 8.       EVENTS OF DEFAULT........................................    99
   Section 8.1   Events of Default........................................    99
   Section 8.2   Rights and Remedies......................................   103

SECTION 9.       THE AGENTS...............................................   103
   Section 9.1   Appointment..............................................   103
   Section 9.2   Delegation of Duties.....................................   104
   Section 9.3   Exculpatory Provisions...................................   104
   Section 9.4   Reliance by an Agent.....................................   104
   Section 9.5   Notice of Default........................................   105
   Section 9.6   Non-Reliance on Agents and Other Lenders.................   105




                                       iii


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

                                                                          
   Section 9.7   Indemnification..........................................   105
   Section 9.8   An Agent in its Individual Capacity......................   106
   Section 9.9   Successor Administrative Agent...........................   106
   Section 9.10  Additional Agents........................................   107

SECTION 10.      MISCELLANEOUS............................................   107
   Section 10.1  Payment of Expenses, Indemnity, etc......................   107
   Section 10.2  Right of Setoff..........................................   108
   Section 10.3  Notices..................................................   109
   Section 10.4  Successors and Assigns; Participation; Assignments.......   109
   Section 10.5  Amendments and Waivers...................................   112
   Section 10.6  No Waiver; Remedies Cumulative...........................   115
   Section 10.7  Sharing of Payments......................................   115
   Section 10.8  Application of Collateral Proceeds.......................   115
   Section 10.9  Governing Law; Submission to Jurisdiction................   116
   Section 10.10 Counterparts.............................................   117
   Section 10.11 Financial Advisor........................................   117
   Section 10.12 Amendment and Restatement................................   117
   Section 10.13 Headings Descriptive.....................................   118
   Section 10.14 Marshalling; Recapture...................................   118
   Section 10.15 Severability.............................................   118
   Section 10.16 Independence of Covenants................................   119
   Section 10.17 Survival.................................................   119
   Section 10.18 Domicile of Loans........................................   119
   Section 10.19 Limitation of Liability..................................   119
   Section 10.20 Calculations; Computations...............................   119
   Section 10.21 WAIVER OF TRIAL BY JURY..................................   119
   Section 10.22 References...............................................   120
   Section 10.23 USA PATRIOT Act..........................................   120
   Section 10.24 Waiver and Acknowledgment................................   120




                                       iv


                               CKE SEVENTH 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
Exhibit K - Form of Confirmation of Guaranty and Security Interest
Exhibit L - Form of Additional Commitment Agreement

Schedule 1.1  - Lenders and Revolving Loan Commitments
Schedule 5.10 - Governmental Approvals
Schedule 5.11 - Prior Liens
Schedule 5.13 - ERISA
Schedule 5.15 - Dissolved Entities
Schedule 5.18 - Organizational Structure and Capitalization
Schedule 5.21 - Real Property
Schedule 5.27 - Labor Matters
Schedule 5.28 - Existing Indebtedness
Schedule 5.29 - Joint Venture and Partnership Agreements;
                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 SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

                  SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

          SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT, dated as of March 27,
2007, among CKE Restaurants, Inc., a Delaware corporation (the "BORROWER"), the
Lenders (as hereinafter defined), BNP Paribas ("BNP PARIBAS"), as administrative
agent for the Lenders (in such capacity, the "ADMINISTRATIVE AGENT"), and
Citigroup Global Markets, Inc., ("CITIGROUP") and Bank of America, N.A., as
co-syndication agents for the Lenders (in such capacity, the "CO-SYNDICATION
AGENTS").

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.

     "ADDITIONAL AGENTS" shall have the meaning provided in Section 9.10.

     "ADDITIONAL COMMITMENTS" shall have the meaning provided in Section
2.23(a).

     "ADDITIONAL COMMITMENT AGREEMENT" shall have the meaning provided in
Section 2.23(c).

     "ADDITIONAL LOANS" shall have the meaning provided in Section 2.23(a).

     "ADDITIONAL REVOLVING COMMITMENT" shall have the meaning provided in
Section 2.23(a).

     "ADDITIONAL REVOLVING LOAN" shall have the meaning provided in Section
2.23(a).


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

     "ADDITIONAL TERM COMMITMENT" shall have the meaning provided in Section
2.23(a).

     "ADDITIONAL TERM LOANS" shall have the meaning provided in Section 2.23(a).

     "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.

     "ADMINISTRATIVE AGENT" shall have the meaning assigned to that term in the
introduction to this Agreement and also shall mean and include any successor
administrative agent appointed in accordance with Section 9.9.

     "ADMINISTRATIVE AGENT'S OFFICE" shall mean the office of the Administrative
Agent located at Chicago, Illinois, or such other office as the Administrative
Agent may hereafter designate in writing as such to the other parties hereto.

     "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 the Administrative Agent or either Co-Syndication Agent,
as the context may require, and "AGENTS" means the Administrative Agent and the
Co-Syndication Agents.

     "AGREEMENT" shall mean this Seventh 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:


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT



Eurodollar Loans   Base Rate Loans   Commitment Fee
- ----------------   ---------------   --------------
                               
     1.375%             0.375%            0.50%


     "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 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 Administrative Agent pursuant to Section 2.21 have been
delivered to the Administrative Agent and the Borrower has provided the
Administrative 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 Administrative 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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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 Administrative Agent and BNP Paribas in its capacity as both a "securities
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 Administrative
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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

property, plant or equipment" or comparable items in the consolidated financial
statements of the Borrower and its Subsidiaries (excluding any expenditures for
assets that would be included in "capital expenditures," "additions to property,
plant or equipment" or in comparable items in the consolidated financial
statements of the Borrower and its Subsidiaries in conformity with GAAP which
assets are acquired in a Permitted Acquisition).

     "CAPITAL STOCK" shall mean any and all shares of, or interests or
participations in, corporate stock (or other instruments or securities
evidencing ownership).

     "CAPITALIZED LEASE" shall mean with respect to any Person, (i) any lease of
property, real or personal, the obligations under which are capitalized on the
consolidated balance sheet of such Person, and (ii) any other such lease of such
Person to the extent that the then present value of the minimum rental
commitment thereunder should, in accordance with GAAP, be capitalized on a
balance sheet of the lessee.

     "CAPITALIZED LEASE OBLIGATIONS" with respect to any Person, shall mean at
any time of determination all obligations of such Person under or in respect of
Capitalized Leases of such Person.

     "CASH COLLATERALIZE" shall mean the pledge and deposit with or delivery to
the Administrative Agent, for the benefit of the Administrative Agent, the
Issuing Bank and the Lenders, cash or deposit account balances pursuant to
documentation in form and substance reasonably satisfactory to the
Administrative Agent and the Issuing Bank; such documentation shall irrevocably
authorize the Administrative 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
Administrative 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 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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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 March 27, 2007.

     "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, plus (vi) to the extent deducted in the calculation of
Consolidated Net Income for such period, Consolidated Share-Based Compensation
Expense, minus (vii) 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 Administrative Agent or any Lender or any Interest
Rate Hedge Provider under any of the Security Documents.

     "COLLATERAL ACCOUNT" shall have the meaning set forth in the Borrower
Security Agreement."

     "COMMITMENT FEE" shall have the meaning provided in Section 2.15(b).

     "COMMITMENTS" shall mean, collectively, the Term Loan Commitments and the
Revolving Loan Commitments and "COMMITMENT" shall mean either of such
Commitments.

     "COMPLIANCE CERTIFICATE" shall have the meaning provided in Section 6.1(e).

     "CONFIRMATION OF GUARANTY AND SECURITY INTEREST" shall mean a confirmation
substantially in the form of Exhibit K attached hereto duly executed and
delivered to the Administrative Agent by the Borrower and each Subsidiary of the
Borrower (other than the


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

Immaterial Subsidiaries), as the same may be amended, restated, supplemented or
otherwise modified from time to time.

     "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, all extraordinary losses for such
period, plus (vi) to the extent deducted in the calculation of Consolidated Net
Income for such period, Consolidated Share-Based Compensation Expense, 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.

     "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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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

     "CONSOLIDATED SHARE-BASED COMPENSATION EXPENSE" shall mean, for any Person
and for any period, the total share-based compensation expense (including,
without limitation, share-based compensation expense attributable to stock
option grants and restricted stock awards in accordance with GAAP) of such
Person and its Subsidiaries for such period 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.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

     "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.

     "CONVERSION" shall have the meaning provided in Section 2.21(b).

     "CONVERTIBLE BOND HEDGE TRANSACTIONS" shall mean any Hedging Agreement
entered into by the Borrower at the time of entering into an agreement to sell
any Permitted Convertible Debt, the effect of which (individually or in the
aggregate) is to reduce the economic dilution to the Borrower resulting from the
issuance of shares of common stock by the Borrower pursuant to the terms of such
Permitted Convertible Debt.

     "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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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
Administrative Agent or the Lenders, in the Administrative 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 $15,200,000,
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.

     "CO-SYNDICATION AGENTS" shall have the meaning assigned to that term in the
introduction to this Agreement.

     "CREDIT EXPOSURE" shall have the meaning provided in Section 10.4(b).

     "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 Administrative 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 Administrative 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 Administrative 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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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 $150,000,000.

     "EMPLOYEE STOCK LOAN" shall mean a loan made by the Borrower or any of its
Subsidiaries to an employee or director of the Borrower or any of its
Subsidiaries, the purpose of which is to finance the acquisition by such
employee or director of the capital stock of the Borrower.

     "ENVIRONMENTAL AFFILIATE" shall mean, with respect to any Person, any other
Person whose liability for any Environmental Claim such Person has or may have
retained, assumed or otherwise become liable for (contingently or otherwise),
either contractually or by operation of law.

     "ENVIRONMENTAL APPROVALS" shall mean any permit, license, approval, ruling,
variance, exemption or other authorization required under applicable
Environmental Laws.

     "ENVIRONMENTAL CLAIM" shall mean, with respect to any Person, any notice,
claim, demand or similar communication (written or oral) by any other Person
alleging potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, fines or penalties arising out of, based on or resulting from
(i) the presence, or release into the environment, of any Material of
Environmental Concern at any location, whether or not owned by such Person or
(ii) circumstances forming the basis of any violation, or alleged violation, of
any Environmental Law.

     "ENVIRONMENTAL 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 Administrative Agent, as amended, restated,
supplemented 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.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

     "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."

     "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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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
Administrative 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 Administrative Agent on
the basis of applicable rates furnished to and received by the Administrative
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 Administrative 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).


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

     "EXISTING PROPERTY SALE AND LEASEBACK TRANSACTION" shall have the meaning
provided in Section 7.13(a)(i).

     "FACILITY" shall mean either or both of the Term Loans and the Revolving
Loans.

     "FEDERAL FUNDS RATE" shall mean, for any day, an interest rate per annum
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago
time) on such day on such transactions received by the Administrative Agent from
three (3) Federal funds brokers of recognized standing selected by the
Administrative 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 Administrative Agent dated March 27, 2007, as amended,
restated, supplemented 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.

     "FRANCHISE AGREEMENTS" shall mean any and all agreements that create a
franchise or license to which the Borrower or any of its Subsidiaries is a party
(as franchisee, licensee, franchisor or licensor) relating to the operation or
development of any Restaurant or Restaurants, including such franchise and/or
license agreements to which any of Borrower or any of its Subsidiaries is a
party as of the Closing Date and such franchise and/or license agreements
entered into from time to time after the Closing Date by the Borrower or any of
its Subsidiaries and shall include all other rights under such agreements
regardless of their nature.

     "FRANCHISEE CONSTRUCTION DEBT" shall have the meaning provided in Section
7.2(j).

     "GAAP" shall mean (i) for purposes of determining compliance with the
covenants set forth in Section 7 hereof, United States generally accepted
accounting principles as in effect on


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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 Administrative 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, supplemented or
otherwise modified 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, floors, collars, options, futures and similar agreements)
relating to currencies, commodities or securities, and similar agreements.

     "IMMATERIAL INVESTMENTS" shall mean, at any time, (a) any Investment owned
by the Borrower or any Subsidiary consisting of Capital Stock of any Person that
is not a Subsidiary of the Borrower and which, when added to all other
Investments held by the Borrower and/or its Subsidiaries consisting of Capital
Stock of such Person does not exceed $1,000,000 at any one time outstanding and
(b) any Investment owned by the Borrower or any Subsidiary consisting of an
Instrument payable by any Person that is not a Subsidiary of the Borrower and
which, when added to all other Investments held by the Borrower and/or its
Subsidiaries consisting of Instruments payable by such Person does not exceed
$2,000,000 at any one time outstanding.

     "IMMATERIAL SUBSIDIARIES" shall mean any Subsidiary of the Borrower with
assets of less than $1,500,000 (as determined in accordance with GAAP), which is
designated by the Borrower as an Immaterial Subsidiary on Schedule 5.30 or
pursuant to Section 6.12; PROVIDED that the aggregate amount of assets of all
Subsidiaries designated as Immaterial Subsidiaries shall not at any time exceed
$10,000,000 (as determined in accordance with GAAP).


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

     "INCREASE EFFECTIVE DATE" shall have the meaning provided in Section
2.23(b).

     "INDEBTEDNESS" of any Person shall mean, without duplication, (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than trade payables on terms of 90 days or
less incurred in the ordinary course of business of such Person), (ii) all
indebtedness of such Person evidenced by a note, bond, debenture, acceptance or
similar instrument, (iii) the principal component of all Capitalized Lease
Obligations of such Person, (iv) the face amount of all letters of credit issued
for the account of such Person and, without duplication, all unreimbursed
amounts drawn thereunder, and all obligations of such Person, contingent or
otherwise, under acceptances or similar facilities, (v) all indebtedness of any
other Person secured by any Lien on any property owned by such Person, whether
or not such indebtedness has been assumed in an amount equal to the lesser of
the fair market value at such date of such property subject to such Lien
securing such Indebtedness and the amount of the Indebtedness secured by such
Lien, (vi) all indebtedness of such Person created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even if the rights and remedies of the seller or lender
under such agreement in the event of default are limited to repossession or sale
of such property), (vii) all Contingent Obligations of such Person, (viii) all
payment obligations, whether absolute or contingent, matured or unmatured,
present or future, due or to become due, now existing or hereafter arising, of
such Person under any Hedging Agreements, (ix) all Redeemable Stock and (x) all
indebtedness and other obligations of the types specified in clauses (i) through
(ix) above of any joint venture or partnership for which such Person is liable.

     "INDEMNITEE" shall have the meaning provided in Section 10.1(c).

     "INS" shall mean the United States Immigration and Naturalization Service
or any governmental body succeeding to its functions.

     "INSTRUMENT" shall have the meaning ascribed thereto in the UCC.

     "INTELLECTUAL PROPERTY" has the meaning set forth in Section 5.20.

     "INTEREST PERIOD" shall have the meaning provided in Section 2.7.

     "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).


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

     "INVESTMENT" of a Person shall mean any loan, advance, extension of credit
or commitment to make any such loan, advance or extension of credit (other than
accounts receivable arising in the ordinary course of business), deposit account
or contribution of capital by such Person to any other Person or any investment
in, or purchase or other acquisition (whether by purchase, merger, consolidation
or otherwise) of, the stock, partnership interests, notes, bonds, debentures or
other securities, including options and warrants, of, or other ownership
interests in, any other Person made by such Person (whether for cash, property,
services, securities or otherwise).

     "ISSUE" shall mean, with respect to any Letter of Credit, to issue or to
extend the expiry of, or to renew or increase the amount of, such Letter of
Credit; and the terms "Issued," "Issuing" and "Issuance" have corresponding
meanings.

     "ISSUING BANK" shall mean BNP Paribas or, with the consent of BNP Paribas,
any other Revolving Lender (and their respective successors) that agrees to be
an Issuing Bank hereunder, in its capacity as issuer of one or more Letters of
Credit hereunder.

     "JUNIOR RECAPITALIZATION AMOUNT" shall mean, at the time of determination,
and after giving effect to any of the following amounts paid, the result of
$220,000,000, plus, (i) any Consolidated Excess Cash Flow for the previous
fiscal year of the Borrower 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 (ii) the sum of (A) all amounts paid by the Borrower from and
after the close of fiscal year 2007 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
Section 7.7(d), plus (B) all amounts paid by the Borrower from and after the
close of fiscal year 2007 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), plus (C) all cash dividends paid by the
Borrower on any common stock of the Borrower from and after the close of fiscal
year 2007 to and including such time, to pay such cash dividends in accordance
with Section 7.7(d).

     "LA SALSA" shall mean, collectively, La Salsa, 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.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

     "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 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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

same effect as any of the foregoing and the filing of any financing statement or
similar instrument under the Uniform Commercial Code or comparable law of any
jurisdiction, domestic or foreign.

     "LIQUIDATING DISTRIBUTION" shall mean any extraordinary, liquidating or
other distribution in return of capital with respect to any Equity Interest of
any Person (other than a Subsidiary of any Domestic Subsidiary) owned by a Loan
Party which Equity Interest is pledged pursuant to any of the Security
Documents.

     "LOAN DOCUMENTS" shall mean this Agreement, the Notes, the Guaranty, each
Letter of Credit, each L/C Related Document, the Fee Letter, the Security
Documents, 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 Administrative 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 Administrative
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.

     "MORTGAGE AMENDMENTS" shall have the meaning provided in Section 6.16.

     "MORTGAGES" shall mean collectively, each mortgage, deed of trust,
leasehold mortgage, leasehold deed of trust or other similar instrument executed
and delivered by the Borrower or


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

any of its Subsidiaries to the Administrative 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 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

                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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).

     "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 Administrative Agent or any Lender or any
Indemnitee under or in connection with this Agreement or any other Loan
Document, whether direct or indirect, primary or secondary, joint or several,
absolute or contingent, due or to become due, now existing or hereafter arising
and however acquired and shall include, without limitation, all principal and
interest on the Loans and, to the extent chargeable under any Loan Document, all
charges, expenses, fees and attorney's fees.

     "ORIGINAL CREDIT AGREEMENT" shall mean that certain Sixth Amended and
Restated Credit Agreement dated as of June 2, 2004, among the Borrower, the
lenders party thereto and BNP Paribas, as agent, as amended, restated,
supplemented or otherwise modified 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.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

     "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 CONVERTIBLE DEBT" shall mean up to $220,000,000 in aggregate
principal amount of Indebtedness of the Borrower or any Subsidiary of the
Borrower permitted to be incurred hereunder, entered into after the Closing Date
through the sale of securities through one or more initial purchasers or
underwriters, providing for the conversion thereof by the holder into shares of
common stock of the Borrower, or, to the extent such Indebtedness is "Net Share
Settled Convertible Debt," into cash (in an amount of up to the principal amount
thereof) in an amount measured by reference to such shares of common stock,
PROVIDED that (i) such Indebtedness is unsecured pari passu debt or subordinate
to the Loans, (ii) such Indebtedness matures at a date later than the Revolving
Loan Maturity Date and the Term Loan Maturity Date and any call or put option
contained within such Indebtedness shall not be exercisable prior to the
Revolving Loan Maturity Date and the Term Loan Maturity Date and (iii) the
proceeds of such Indebtedness are used to pay or prepay the Term Loans or the
Additional Loans (or if the Additional Loans have not then been drawn, to
permanently reduce the availability thereof).

     "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 Administrative Agent and in any event shall not
include Indebtedness issued pursuant to the Convertible Subordinated Notes.

     "PERSON" shall mean and include any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or other
enterprise or any government or political subdivision or agency, department or
instrumentality thereof.

     "PLAN" means any employee benefit plan covered by Title IV of ERISA, the
funding requirements of which:

     (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,


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

     (ii) are currently the responsibility of the Borrower or a member of its
     ERISA Controlled Group, or

     (iii) hereafter become the responsibility of the Borrower or a member of
     its ERISA Controlled Group,

including any such plans as may have been, or may hereafter be, terminated for
whatever reason.

     "PREPAYMENT" shall have the meaning provided in Section 7.10(a)(i).

     "PRO RATA SHARE" as to any Lender shall mean:

          (a) with respect to all payments, computations and determinations
relating to the Term Loan Commitment or the Term Loan of any Lender, the
percentage obtained by dividing (i) the outstanding principal balance of such
Lender's Term Loan by (ii) the aggregate outstanding principal balance of the
Term Loans;

          (b) with respect to all payments, computations and determinations
relating to the Revolving Loan Commitment or the Revolving Loans of any Lender,
or such Lender's interest in Letters of Credit (including, without limitation,
determinations of the Commitment Fee under Section 2.15(b) and letter of credit
fees under Section 3.2), the percentage obtained by dividing (i) such Lender's
Revolving Loan Commitment (or the aggregate outstanding principal balance of
such Lender's Revolving Loans and all L/C Obligations in which such Lender has
an interest, if the Revolving Loan Commitments have been terminated pursuant to
the terms of this Agreement) by (ii) the Total Revolving Loan Commitment (or the
aggregate outstanding principal balance of the Revolving Loans and all L/C
Obligations, if the Revolving Loan Commitments have been terminated pursuant to
the terms of this Agreement); and

          (c) for all other purposes with respect to each Lender, the percentage
obtained by dividing (i) the sum of (A) the outstanding principal balance of
such Lender's Term Loan and (B) such Lender's Revolving Loan Commitment (or the
aggregate outstanding principal balance of such Lender's Revolving Loans and all
L/C Obligations in which such Lender has an interest, if the Revolving Loan
Commitments have been terminated pursuant to the terms of this Agreement) by
(ii) the sum of (A) the aggregate outstanding principal balance of the Term
Loans and (B) the Total Revolving Loan Commitment (or the aggregate outstanding
principal balance of the Revolving Loans and all L/C Obligations, if the
Revolving Loan Commitments have been terminated pursuant to the terms of this
Agreement).

     "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).


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

     "REAL ESTATE COLLATERAL" shall mean Collateral subject to or purported to
be subject to the Lien of the Mortgages.

     "REDEEMABLE STOCK" shall mean any Equity Interest which, by its terms, or
upon the happening of any event matures, is mandatorily redeemable or
repurchaseable (other than for Capital Stock not constituting Redeemable Stock),
in whole or in part, prior to one year and one day after the Final Maturity
Date, or is, by its terms or upon the happening of any event, required to be
redeemed or repurchased, redeemable or repurchaseable at the option of the
holder thereof, in whole or in part, at any time prior to one year and one day
after the Final Maturity Date.

     "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 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.


                               CKE SEVENTH 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 (a) increased from
time to time pursuant to Section 2.23 and/or (b) reduced from time to time
pursuant to the terms of this Agreement.

     "REVOLVING LOAN MATURITY DATE" shall mean March 27, 2012.

     "REVOLVING LOANS" shall have the meaning provided in Section 2.2(a).

     "REVOLVING NOTE" shall have the meaning provided in Section 2.5(a).

     "SALE AND LEASEBACK TRANSACTIONS" shall mean Existing Property Sale and
Leaseback Transactions and New Property Sale and Leaseback Transactions, in each
case, permitted to be entered into by the Borrower or any of its Subsidiaries
pursuant to Section 7.13(a).

     "SECURED PARTIES" shall have the meaning provided in the Borrower Security
Agreement and the Subsidiary Security Agreement.

     "SECURITY DOCUMENTS" shall mean and include the Borrower Security
Agreement, the Subsidiary Security Agreement, the Guaranty, the Borrower Pledge
Agreement, the Subsidiary Pledge Agreements, the Mortgages and all other
security agreements, pledge agreements, mortgages, leasehold mortgages,
assignments and similar agreements executed in connection with the Loan
Documents.

     "SOLVENT" as to any Person shall mean that (i) the sum of the assets of
such Person, both at a fair valuation and at present fair salable value, will
exceed its liabilities, including contingent liabilities, (ii) such Person will
have sufficient capital with which to conduct its business as presently
conducted and as proposed to be conducted and (iii) such Person has not incurred
debts, and does not intend to incur debts, beyond its ability to pay such debts
as they mature. For purposes of this definition, "debt" means any liability on a
claim, and "claim" means (x) a right to payment, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured, or (y)
a right to an equitable remedy for breach of performance if such breach gives
rise to a payment, whether or not such right to an equitable remedy is reduced
to judgment, fixed, contingent, matured, unmatured, disputed, undisputed,
secured, or unsecured. With respect to any such contingent liabilities, such
liabilities shall be computed at the amount which, in light of


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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
and the Convertible 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 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
Administrative Agent by each Subsidiary of the Borrower which owns any equity
interest of any Person, as the same may be amended, restated, supplemented or
otherwise modified 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
Administrative Agent by each Subsidiary of the Borrower (other than the
Immaterial Subsidiaries), as the same may be amended, restated, supplemented or
otherwise modified 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 (a)
increased from time to time pursuant to Section 2.23 and/or (b) reduced from
time to time pursuant to the terms of this Agreement.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT 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 March 27, 2013.

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

     "TERM NOTE" shall have the meaning provided in Section 2.5(a).

     "TERMINATION EVENT" shall mean (i) a Reportable Event, or (ii) the
initiation of any action by the Borrower, any member of the Borrower's ERISA
Controlled Group or any ERISA Plan fiduciary to terminate an ERISA Plan or the
treatment of an amendment to an ERISA Plan as a termination under ERISA, or
(iii) the institution of proceedings by the PBGC under Section 4042 of ERISA to
terminate an ERISA Plan or to appoint a trustee to administer any ERISA Plan.

     "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.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

     "UCC" shall mean the Uniform Commercial Code as in effect from time to time
in the applicable jurisdiction.

     "UNFUNDED BENEFIT LIABILITIES" shall mean with respect to any Plan at any
time, the amount (if any) by which (i) the present value of all benefit
liabilities under such Plan as defined in Section 4001(a)(16) of ERISA, exceeds
(ii) the fair market value of all Plan assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plan (on the basis
of assumptions prescribed by the PBGC for the purpose of Section 4044 of ERISA).

     "UNUSED PORTION" shall mean at any time with respect to the Revolving
Loans, the amount by which the Total Revolving Loan Commitment in effect at such
time exceeds the sum of (i) the aggregate principal amount of the Revolving
Loans outstanding at such time and (ii) the aggregate amount of L/C Obligations
outstanding at such time.

     "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 $120,000,000. 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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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"):



      DATE        PAYDOWN AMOUNT
      ----        --------------
               
July 1, 2007        $   300,000
October 1, 2007     $   300,000
January 1, 2008     $   300,000
April 1, 2008       $   300,000
July 1, 2008        $   300,000
October 1, 2008     $   300,000
January 1, 2009     $   300,000
April 1, 2009       $   300,000
July 1, 2009        $   300,000
October 1, 2009     $   300,000
January 1, 2010     $   300,000
April 1, 2010       $   300,000
July 1, 2010        $   300,000
October 1, 2010     $   300,000
January 1, 2011     $   300,000
April 1, 2011       $   300,000
July 1, 2011        $   300,000
October 1, 2011     $   300,000
January 1, 2012     $   300,000
April 1, 2012       $28,500,000
July 1, 2012        $28,500,000
October 1, 2012     $28,500,000
January 1, 2013     $28,800,000


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.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

          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 $200,000,000. 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
Administrative Agent.

               (c) Each Borrowing of Revolving Loans shall be in the aggregate
minimum amount of $500,000 or any integral multiple of $500,000 in excess
thereof.

          Section 2.3 Notice of Borrowing.

               (a) Whenever the Borrower desires to borrow Revolving Loans
hereunder, it shall give the Administrative Agent at the Administrative 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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

(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
Administrative 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 Administrative Agent's Office. After the
Administrative Agent's receipt of the proceeds of such Revolving Loans, the
Administrative Agent will make available to the Borrower by depositing in the
Borrower's account at the Administrative Agent's Office the aggregate of the
amounts so made available in the type of funds actually received.

               (b) Unless the Administrative 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 Administrative Agent its portion of the Revolving Loans to
be made on such date, the Administrative Agent may assume that such Lender has
made such amount available to the Administrative Agent on such date and the
Administrative Agent in its sole discretion may, in reliance upon such
assumption, make available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Administrative Agent
by such Lender and the Administrative Agent has made such amount available to
the Borrower, the Administrative 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 Administrative Agent's demand
therefor, the Administrative Agent shall promptly notify the Borrower and the
Borrower shall immediately repay such corresponding amount to the Administrative
Agent. The Administrative 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 Administrative Agent to the Borrower to the date such
corresponding amount is recovered by the Administrative 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
Administrative 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 Administrative Agent as a result of such Lender's failure to fund its
Revolving Loans hereunder.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

          Section 2.5 Notes.

               (a) The Borrower's obligation to pay the principal of, and
interest on, each Lender's Loans shall be evidenced by (i) in the case of such
Lender's Term Loans, a promissory note (as the same may be amended, restated,
supplemented or otherwise modified from time to time, a "TERM NOTE") duly
executed and delivered by the Borrower substantially in the form of Exhibit A
hereto in a principal amount equal to such Lender's Term Loan with blanks
appropriately completed in conformity herewith and (ii) in the case of such
Lender's Revolving Loans, a promissory note (as the same may be amended,
restated, supplemented or otherwise modified from time to time, a "REVOLVING
NOTE") duly executed and delivered by the Borrower substantially in the form of
Exhibit B hereto in a principal amount equal to such Lender's Revolving Loan
Commitment, with blanks appropriately completed in conformity herewith. Each
Note issued to a Lender shall (x) be payable to the order of such Lender, (y) be
dated the date such Note was issued, and (z) mature on the Term Loan Maturity
Date or the Revolving Loan Maturity Date, as the case may be.

               (b) Each Lender is hereby authorized, at its option, either (i)
to endorse on the schedule attached to its Revolving Note (or on a continuation
of such schedule attached to such Revolving Note and made a part thereof) an
appropriate notation evidencing the date and amount of each Revolving Loan
evidenced thereby and the date and amount of each principal and interest payment
in respect thereof, or (ii) to record such Revolving Loans and such payments in
its books and records. Such schedule or such books and records, as the case may
be, shall constitute prima facie evidence of the accuracy of the information
contained therein.

          Section 2.6 Interest.

               (a) (i) The Borrower agrees to pay interest in respect of the
unpaid principal amount of each 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) 0.50% 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.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

               (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) 1.50% plus (y)
the relevant Eurodollar Rate, such interest to be computed on the basis of a
360-day year and paid for the actual number of days elapsed, subject to the
provisions of clause (c) of this Section 2.6.

               (c) In the event that, and for so long as, any Event of Default
shall have occurred and be continuing, the outstanding principal amount of all
Loans and, to the extent permitted by law, overdue interest in respect of all
Loans, shall bear interest at a rate per annum (the "DEFAULT RATE") equal to 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
Administrative 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 Administrative 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 Administrative Agent for the
purpose of determining any such interest rate, the Administrative Agent shall
determine such interest rate on the basis of timely information furnished by the
remaining Reference Banks. The Administrative Agent shall give prompt notice to
the Borrower and the Lenders of the applicable interest rate determined by the
Administrative 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).


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

          Section 2.7 Interest Periods.

               (a) The Borrower shall, in each Notice of Borrowing or Notice of
Conversion or Continuation in respect of the making of, conversion into or
continuation of a Eurodollar Loan, select the interest period (each an "INTEREST
PERIOD") applicable to such Eurodollar Loan, which Interest Period shall, at the
option of the Borrower, be either a one-month, two-month, three-month or
six-month period, PROVIDED that:

                    (i) the initial Interest Period for any Eurodollar Loan
     shall commence on the date of the making of such Loan (including the date
     of any conversion from a Base Rate Loan) and each Interest Period occurring
     thereafter in respect of such Loan shall commence on the date on which the
     next preceding Interest Period expires;

                    (ii) if any Interest Period would otherwise expire on a day
     which is not a Business Day, such Interest Period shall expire on the next
     succeeding Business Day, PROVIDED, HOWEVER, that if any Interest Period
     would otherwise expire on a day which is not a Business Day but is a day of
     the month after which no further Business Day occurs in such month, such
     Interest Period shall expire on the next preceding Business Day;

                    (iii) if any Interest Period begins on a day for which there
     is no numerically corresponding day in the calendar month at the end of
     such Interest Period, such Interest Period shall end on the last Business
     Day of such calendar month;

                    (iv) no Interest Period in respect of any Revolving Loan or
     any Term Loan shall extend beyond the Revolving Loan Maturity Date or the
     Term Loan Maturity Date, as the case may be; and

                    (v) no Interest Period in respect of a Term Loan shall
     extend beyond any date upon which a repayment of the Term Loans is required
     to be made pursuant to Section 2.1 unless the aggregate principal amount of
     Term Loans which are Base Rate Loans or which have Interest Periods which
     will expire on or before such date is equal to or in excess of the amount
     of the Term Loan repayment required to be made on such date.

                    (vi) If upon the expiration of any Interest Period, the
     Borrower has failed to elect a new Interest Period to be applicable to the


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

     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 Administrative Agent no later than 12:00
Noon, Chicago time, (i) on the Business Day of the proposed conversion date in
the case of a conversion to a Base Rate Loan and (ii) at least three Business
Days in advance of the proposed conversion or continuation date in the case of a
conversion to, or a continuation of, a Eurodollar Loan. A Notice of Conversion
or Continuation shall specify (w) the requested conversion or continuation date
(which shall be a Business Day), (x) the amount, Facility and Type of the Loan
to be converted or continued, (y) whether a conversion or continuation is
requested, and (z) in the case of a conversion to, or a continuation of, a
Eurodollar Loan, the requested Interest Period. Promptly after receipt of a
Notice of Conversion or Continuation under this Section 2.9(b), the
Administrative 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 Administrative Agent (which notice the
Administrative 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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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 Administrative 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 Administrative 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 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 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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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 any Default or Event
of Default has occurred and is continuing as a result of the Borrower's failure
to deliver any financial statement or Compliance Certificate as and when
required pursuant to Sections 6.1(a), 6.1(b) or 6.1(e), as applicable, in each
case in accordance with the provisions of Section 2.13.

               (c) On each date on which the Borrower or any of its Subsidiaries
receives any Net Debt Proceeds or becomes or remains liable with respect to
Indebtedness with respect to Capitalized Leases in excess of $100,000,000 in the
aggregate at any one time outstanding for the Borrower and its Subsidiaries, the
Borrower shall prepay the outstanding Loans in an amount equal to 100% of such
Net Debt Proceeds or 100% of the amount by which the aggregate amount of
Indebtedness of the Borrower and its Subsidiaries with respect to Capitalized
Leases exceeds $100,000,000 on such date, respectively, in accordance with the
provisions of Section 2.13.

               (d) On each day on which the Total Revolving Loan Commitment is
reduced pursuant to Section 2.10 the Borrower shall prepay the Revolving Loans
to the extent, if any, that the outstanding principal amount of the Revolving
Loans exceeds such reduced Total Revolving Loan Commitment.

               (e) If at any time and for any reason the aggregate principal
amount of Revolving Loans plus the L/C Obligations then outstanding are greater
than the Total Revolving Loan Commitment, the Borrower shall immediately prepay
the Revolving Loans in an amount equal to such excess. In addition, to the
extent at any time and for any reason, the Total Revolving Loan Commitment minus
the aggregate principal amount of Revolving Loans then outstanding, is less than
the amount of L/C Obligations outstanding at such time, the Borrower shall Cash
Collateralize the 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 2008), the
Borrower shall, no later than 90 days after the end of such fiscal year, prepay
the Loans in an aggregate amount equal to


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

25% 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
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 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 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 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, 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
Administrative Agent for


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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
States of America in immediately available funds at the Administrative Agent's
Office, and any funds received by the Administrative 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 Administrative 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 Administrative 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, 2007, 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.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

          Section 2.16 Interest Rate Unascertainable, Increased Costs,
Illegality.

               (a) In the event that the Administrative 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 contingency occurring after the Closing Date which materially and
     adversely affects the interbank Eurodollar market;

then, and in any such event, the Administrative 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 Administrative
Agent of such determination (which notice the Administrative 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 Administrative Agent, such additional amounts (in the form of an
increased

                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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
Administrative 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).

               (c) In the event that the Administrative 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 Administrative 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 Administrative 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 Administrative 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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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 any payment as a result of the applicability of Section 2.22 or
Section 10.5(b)) or conversion of any of its Eurodollar Loans occurs on a date
which is not the last day of the Interest Period applicable thereto, (iii) if
any prepayment of any of its Eurodollar Loans is not made on any date specified
in a notice of prepayment given by the Borrower, or (iv) as a consequence of any
default by the Borrower in repaying its Eurodollar Loans or any other amounts
owing hereunder in respect of its Eurodollar Loans when required by the terms of
this Agreement. Calculation of all amounts payable to a Lender under this
Section 2.17 shall be made on the assumption that such Lender has funded its
relevant Eurodollar Loan through the purchase of a Eurodollar deposit bearing
interest at the Eurodollar Rate in an amount equal to the amount of such
Eurodollar Loan with a maturity equivalent to the Interest Period applicable to
such Eurodollar Loan, and through the transfer of such Eurodollar deposit from
an offshore office of such Lender to a domestic office of such Lender in the
United States of America, PROVIDED that each Lender may fund its Eurodollar
Loans in any manner that it in its sole discretion chooses and the foregoing
assumption shall only be made in order to calculate amounts payable under this
Section 2.17.

          Section 2.18 Increased Capital. If any Lender shall have determined
that compliance with any applicable law, rule, regulation, guideline, request or
directive (whether or not having the force of law) of any governmental
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on the capital or assets of such Lender or any
Person controlling such Lender as a consequence of its commitments or
obligations hereunder, then from time to time, upon such Lender's delivering a
written demand therefor to the Administrative Agent and the Borrower (with a
copy to the Administrative 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 each Agent and each Lender, net income and franchise taxes
imposed on such Agent or such Lender by the jurisdiction under the laws of which
such 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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

withholdings being hereinafter called "TAXES"). If any Taxes are required to be
withheld from any amounts payable to any Agent or any Lender hereunder or under
the Notes, the amounts so payable to such Agent or such Lender shall be
increased to the extent necessary to yield to such 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 Administrative Agent for its own account, for the
account of either Co-Syndication Agent, or for the account of such Lender, as
the case may be, a certified copy of an original official receipt received by
the Borrower showing payment thereof. If the Borrower fails to pay any Taxes
when due to the appropriate taxing authority or fails to remit to the
Administrative Agent the required receipts or other required documentary
evidence, the Borrower shall indemnify the Agents and the Lenders for any
incremental taxes, interest or penalties that may become payable by any 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 Administrative 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 Administrative 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 Administrative 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.


                               CKE SEVENTH 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 each 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 such 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 a Lender or an 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 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 Administrative Agent, for the ratable benefit
of the Lenders, a first priority perfected Lien on and security interest in all
of the following, whether now or hereafter existing or acquired subject only to
the Liens permitted to be incurred pursuant to Section 7.3 hereof: (i) all of
the shares of capital stock (or other equity interests of each Subsidiary if
such Subsidiary is not a corporation) of each Subsidiary of the Borrower now or
hereafter directly or indirectly owned by the Borrower and all proceeds thereof,
all as more specifically described in the Borrower Pledge Agreement and the
Subsidiary Pledge Agreements; (ii) certain of the assets of the Borrower and all
proceeds thereof, all as more specifically described in the Borrower Security
Agreement and the Mortgages; and (iii) certain of the assets of each Subsidiary
now or hereafter directly or indirectly owned by the Borrower and all proceeds
thereof, all as more specifically described in the Subsidiary Security Agreement
and the Mortgages. To the extent the Administrative 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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

Agreement, the Borrower will grant, and cause each other Loan Party to
grant, to the Administrative 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 Administrative 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 Administrative Agent all of the certificates representing
     the capital stock (or other equity interest if such equity interests are
     represented by a certificate or certificates) of such new Subsidiary which
     is being acquired or formed or converted (or Investment if such Investment
     is not an Immaterial Investment), beneficially owned by the Borrower or
     such Acquiring Subsidiary, as additional collateral for the Obligations, to
     be held by the Administrative 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 Administrative Agent (1) duly executed counterpart
     signature pages to each of the Guaranty, and the Subsidiary Security
     Agreement, in the forms attached respectively thereto as Appendix I,
     together with the authorization to the Administrative 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,


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

     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 Administrative Agent, (3) such
     Uniform Commercial Code financing statements as shall be required to
     perfect the security interest of the Administrative 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 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 Administrative 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 Administrative Agent, (C) any additional instruments or
     documents evidencing the security interest of the Administrative Agent
     reasonably required by the Administrative 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 Administrative Agent, articles of incorporation,
     by-laws and resolutions (or equivalent organizational and authorization
     documents), which in the reasonable opinion of the Administrative 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 Administrative 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.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

               (c) [Reserved]

          Section 2.22 Replacement of Certain Lenders. If a Lender ("AFFECTED
LENDER") shall have requested compensation from the Borrower under Sections
2.16, 2.18 or 2.19 to recover Taxes or other additional costs incurred by such
Lender which are not being incurred generally by the other Lenders, or delivered
a notice pursuant to Section 2.16(a)(iii) claiming that such Lender is unable to
extend Eurodollar Loans to the Borrower for reasons not generally applicable to
the other Lenders, then, in any such case, so long as no Default or Event of
Default exists, the Borrower may make written demand on such Affected Lender
(with a copy to the Administrative 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 Administrative 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 2.23 Increased Amounts.

               (a) The Borrower shall have the right from time to time after the
Closing Date and, with respect to any Additional Revolving Commitment, prior to
the Revolving Loan Maturity Date, and, with respect to any Additional Term Loan,
the Term Loan Maturity Date, with the consent of the Administrative Agent and
subject to the terms of this Section 2.23, to elect the establishment of (i) an
increase in the Revolving Loan Commitment (the "ADDITIONAL REVOLVING
COMMITMENT", and any Loan made pursuant to such Additional Revolving Commitment,
an "ADDITIONAL REVOLVING LOAN") and/or (ii) one or more tranches of additional


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

term loans (the "ADDITIONAL TERM LOANS", and a commitment to make an Additional
Term Loan, an "ADDITIONAL TERM COMMITMENT" and together with the Additional
Revolving Commitment, the "ADDITIONAL COMMITMENTS"), PROVIDED that (A) the
aggregate principal amount of the Additional Commitments shall not exceed
$100,000,000, (B) each Borrowing of Additional Revolving Loans or Additional
Term Loans (collectively, the "ADDITIONAL LOANS") shall be in an aggregate
minimum amount of $500,000 or any integral multiple of $500,000 in excess
thereof, (C) no Lender's Commitment shall be increased without the consent of
such Lender, (D) the conditions precedent set forth in Section 4.2 shall have
been satisfied, (E) after giving pro forma effect to the Additional Loans, the
Borrower shall be in compliance with each of the covenants contained in Section
7.1, and (F) the Borrower shall deliver or caused to be delivered any documents
reasonably requested by the Administrative Agent in connection with the
transaction.

               (b) Borrower shall give the Administrative Agent not less than 10
Business Days advance written notice of its election pursuant to this Section
2.23, which notice shall specify the amount of the requested increase, whether
the Borrower requests an Additional Term Commitment or an Additional Revolving
Commitment, the requested effective date of the Additional Revolving
Commitment(s) and/or Additional Term Loan(s) (the "INCREASE EFFECTIVE DATE"),
the time period within which each applicable existing Lender is requested to
respond, the names and proposed Commitments of each Lender, including new
lenders providing the Additional Commitments, and such other information as the
Administrative Agent reasonably requests. The Administrative Agent shall
promptly notify each Term Loan Lender, in the case of an Additional Term
Commitment, and each Revolving Lender, in the case of an Additional Revolving
Commitment, of such notice and of the proposed terms and conditions of the
Additional Commitments agreed between the Borrower and the Administrative Agent.
Each such Lender shall notify the Administrative Agent within the specified time
period whether or not it agrees to make an Additional Commitment. Any Lender not
responding within such time period shall be deemed to have declined to make an
Additional Commitment. No Additional Commitment shall require the approval or
consent of any Lender other than the Lender making such Additional Term Loan or
an Additional Revolving Commitment.

               (c) Each Lender agreeing to make an Additional Commitment shall
execute and deliver to the Administrative Agent an agreement substantially in
the form of Exhibit L attached hereto (an "ADDITIONAL COMMITMENT AGREEMENT").
Upon receipt of such Additional Commitment Agreement, if the Administrative
Agent consents to the proposed Additional Commitment and/or Additional Loan, (i)
such Additional Commitment and/or Additional Loan shall become effective, (ii)
any new Lender making an Additional Commitment and/or Additional Loan shall be
deemed to be a party in all respects to this Agreement as of the date of the
Additional Commitment Agreement, with its Commitment as set forth in such
Additional Commitment Agreement, (iii) the Revolving Loan Commitment of an
existing Lender making an Additional Revolving Commitment shall increase as
specified in the Additional Commitment Agreement and (iv) the Administrative
Agent shall record the applicable


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

information with respect to such Additional Commitment and/or Additional Loan in
the Register. If the Administrative Agent does not consent to the proposed
Additional Commitment and/or Additional Loan, such Additional Commitment and/or
Additional Loan shall not be effective.

               (d) An Additional Term Commitment shall be deemed to be a Term
Loan Commitment under this Agreement. Additional Term Loans (i) shall rank pari
passu in all respects to the Term Loans made pursuant to Section 2.1, (ii) for
purposes of prepayments, shall be treated the same as the Term Loans and (iii)
shall have terms and conditions that are substantially similar to those
applicable to the Term Loans.

               (e) An Additional Revolving Commitment shall be deemed to be a
Revolving Loan Commitment under this Agreement. Additional Revolving Loans (i)
shall rank pari passu in all respects to the Revolving Loans made pursuant to
Section 2.2, (ii) for purposes of prepayments, shall be treated the same as the
Revolving Loans and (iii) shall have terms and conditions that are substantially
similar to those applicable to the Revolving Loans.

SECTION 3. LETTERS OF CREDIT.

          Section 3.1 Issuance of Letters of Credit, etc.

               (a) Subject to the terms and conditions hereof, at any time and
from time to time from the Closing Date through the day prior to the Revolving
Loan Maturity Date, the Issuing Bank shall issue such Letters of Credit for the
account of the Borrower or any Subsidiary of the Borrower which is a party to
the Guaranty as Borrower may request by an L/C Application; PROVIDED that,
giving effect to such Letter of Credit, (x) the sum of the L/C Obligations then
outstanding plus the then outstanding aggregate principal amount of the
Revolving Loans shall not exceed the Total Revolving Loan Commitment and (y) the
aggregate L/C Obligations then outstanding shall not exceed the L/C Commitment.
Unless all the Revolving Lenders and the Issuing Bank otherwise consent in
writing, the Borrower and its Subsidiaries shall not request any Letter of
Credit (i) whose term exceeds 12 months or (ii) which expires after the
Revolving Loan Maturity Date unless such Letter of Credit is Cash Collateralized
at least two (2) Business Days prior to the Revolving Loan Maturity Date. No
Letter of Credit shall be issued except in the ordinary course of business of
the Borrower or any of its Subsidiaries or in connection with Permitted
Acquisitions with respect to which the conditions set forth in Section 7.8(f)
have been satisfied, each Letter of Credit shall be used solely (a) to support
obligations of the Borrower and its Subsidiaries not prohibited hereunder, other
than Indebtedness for borrowed money, and (b) for the purposes described in the
definition of "Trade Letter of Credit".

               (b) The Borrower shall submit the L/C Application for the
Issuance of any Letter of Credit to the Issuing Bank at least five Business Days
prior to the date when


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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 Administrative Agent shall without notice to or
the consent of Borrower cause Revolving Loans to be made by the Revolving
Lenders in an aggregate amount equal to the amount paid by the Issuing Bank on
that Letter of Credit, but not exceeding the Total Revolving Loan Commitment
minus the then outstanding principal amount of Revolving Loans and minus all
other then outstanding L/C Obligations, and for this purpose, the conditions
precedent set forth in Section 4 hereof shall not apply. The proceeds of such
Revolving Loans shall be paid to the Issuing Bank to reimburse it for the
payment made by it under the Letter of Credit. Promptly following any Revolving
Loans made under this Section 3.1(d), the Administrative 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).


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

               (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 Administrative Agent equal to (x) a per annum rate equal to
1.50% times (y) the stated amount of each Standby Letter of Credit for the term
of each such Letter of Credit for the account of the Lenders who have made
Revolving Loan Commitments, according to their respective Pro Rata Shares, in
each case payable quarterly in arrears on each Payment Date, commencing on June
15, 2007, and (ii) a letter of credit fee to the Administrative Agent equal to
(x) a per annum rate equal to 1.50% times (y) the stated amount of each Trade
Letter of Credit as of the date of Issuance thereof, payable for the account of
the Lenders who have made Revolving Loan Commitments, according to their
respective Pro Rata Shares, in each case payable quarterly in arrears on each
Payment Date, commencing on June 15, 2007. Upon (A) the issuance of each Letter
of Credit, the Borrower shall also pay to the Administrative 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 Administrative
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 Administrative 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;


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

                    (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, any 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, 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
Administrative 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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

Letter of Credit, the Administrative Agent, the Issuing Bank and the Lenders
shall not be responsible:

                    (i) for the form, validity, sufficiency, accuracy,
     genuineness or legal effect of any document submitted by any party in
     connection with the application for and issuance of the Letters of Credit,
     even if it should in fact prove to be in any or all respects invalid,
     insufficient, inaccurate, fraudulent or forged;

                    (ii) for the validity or sufficiency of any instrument
     transferring or assigning or purporting to transfer or assign a Letter of
     Credit or the rights or benefits thereunder or proceeds thereof, in whole
     or in part, which may prove to be invalid or ineffective for any reason;

                    (iii) for the failure of the beneficiary of a Letter of
     Credit to comply duly with conditions required in order to draw upon such
     Letter of Credit;

                    (iv) for errors, omissions, interruptions or delays in
     transmission or delivery of any messages, by mail, cable, telegraph, telex,
     or other similar form of teletransmission or otherwise;

                    (v) for errors in interpretation of technical trade terms;

                    (vi) for any loss or delay in the transmission or otherwise
     of any document required in order to make a drawing under any Letter of
     Credit or of the proceeds thereof;

                    (vii) for the misapplication by the beneficiary of a Letter
     of Credit of the proceeds of any drawing under such Letter of Credit; and

                    (viii) for any consequences arising from causes beyond the
     control of the Administrative Agent, the Issuing Bank and the Lenders
     including, without limitation, any act or omission, whether rightful or
     wrongful, of any present or future de jure or de facto government or
     governmental authority.

None of the above shall affect, impair, or prevent the vesting of any of the
Issuing Bank's rights or powers hereunder.

               (c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by the
Issuing Bank under or in connection with Letters of Credit issued by it or any
related certificates shall not, in the absence


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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 Administrative 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 Administrative 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) [Intentionally Omitted.]

                    (iv) [Intentionally Omitted.]

                    (v) [Intentionally Omitted.]

                    (vi) [Intentionally Omitted.]

                    (vii) [Intentionally Omitted.]

                    (viii) [Intentionally Omitted.]

                    (ix) [Intentionally Omitted.]

                    (x) [Intentionally Omitted.]

                    (xi) Confirmation of Guaranty and Security Interest. The
     Borrower and each Subsidiary of the Borrower (other than any such
     Subsidiary which is an Immaterial Subsidiary) shall have executed and
     delivered to the Administrative Agent a Confirmation of Guaranty and
     Security Interest.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

               (b) Opinions of Counsel. The Administrative 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 and (B) such other legal opinions, each dated the
Closing Date, from local counsel to the Loan Parties as requested by the
Administrative Agent with respect to such matters as requested by the
Administrative Agent and in form and substance satisfactory to the
Administrative Agent.

               (c) Corporate Documents. The Administrative 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, restated, supplemented or otherwise modified on or
prior 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, 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 Administrative 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 the Borrower's
Board of Directors approving and authorizing the execution, delivery and
performance of all Transaction Documents executed by the Borrower, 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 Administrative 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, PROVIDED that no such document shall be required to be delivered
to the Administrative Agent if (i) such document was delivered to the
Administrative Agent pursuant to Section 4.1(e) of the Original Credit Agreement
and (ii) such document has not been amended, restated, supplemented or otherwise
modified since such delivery to the Administrative Agent (unless the documents
evidencing each such amendment, restatement, supplement or other modification
have been delivered to the Administrative Agent).


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

               (f) Process Agent. Each Loan Party shall have appointed an agent
satisfactory to the Administrative 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 Administrative 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 Administrative Agent, or
waived, except as disclosed to the Administrative 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 29, 2007, no event or change has occurred that has caused or evidences a
Material Adverse Effect.

               (h) Closing Compliance Certificate. The Administrative 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 $175,000,000, (ii) containing conclusions that the
Leverage Ratio, calculated as of the end of the Retail Period of the Borrower
ending January 29, 2007, does not exceed 1.25 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 January 29, 2007, does not exceed 3.50 and setting forth the
calculations required to establish such Adjusted Leverage Ratio.

               (i) Insurance. The Administrative 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 Administrative Agent and which name the
Administrative Agent as an additional insured or loss payee, as applicable.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

               (j) [Intentionally Omitted.]

               (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 Administrative 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
Administrative 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 March 1, 2007 and previously delivered by the Borrower to the
Administrative Agent.

               (o) Existing Indebtedness. The Administrative Agent shall have
received evidence satisfactory to the Administrative 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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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 Administrative
Agent shall be satisfied that the execution and delivery of, and the performance
by each of the Borrower and its Subsidiaries of its respective obligations
under, each Transaction Document to which it is a party and consummation of the
Transactions does not violate, conflict with or cause a default under any
document or instrument evidencing Existing Debt. The Administrative Agent shall
have received (i) payoff and lien termination and release agreements, in form
and substance satisfactory to the Administrative 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
Administrative Agent, as the Administrative Agent shall request, duly executed
by the appropriate Person in favor of which such Liens were granted.

               (p) Environmental Matters. The Administrative Agent shall have
received, if the Administrative Agent deems it necessary, a written report of an
investigation, conducted to the Administrative Agent's satisfaction, from an
environmental consultant acceptable to the Administrative Agent, as to any
environmental, health or safety violations, hazards or liabilities which it
deems material. The Administrative 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 Administrative Agent in
its reasonable judgment in connection with any past or present treatment,
storage, recycling, disposal or release or threatened release, at any property
location regardless of whether owned or operated by the Borrower or any of its
Subsidiaries or any other Loan Party, of any Materials of Environmental Concern
or in connection with any Environmental Law or other health or safety laws or
regulations, and that their operations taken as a whole comply in all material
respects (in the Administrative Agent's reasonable judgment) with all
Environmental Laws or other health or safety laws or regulations and (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 Administrative Agent) is
needed to respond to any release or other presence of Materials of Environmental
Concern.

               (q) Fees and Expenses. The Administrative 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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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 Administrative 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 Administrative Agent. No law or regulation shall be
applicable that could reasonably be expected to restrain, prevent or otherwise
impose adverse conditions on the validity and enforceability of the Transaction
Documents, or the Transactions. The Borrower shall have delivered to the
Administrative Agent such evidence as the Administrative 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 Administrative 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 Administrative Agent certified by an officer of
the Borrower, and each such contract shall be satisfactory in form and substance
to the Administrative Agent.

               (t) [Reserved]

               (u) No Material Adverse Change; No Default. No event, act or
condition shall have occurred after January 29, 2007, 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 Administrative 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 Administrative
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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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, the Borrower or the other Loan Parties.

               (x) [Intentionally Omitted.]

               (y) [Intentionally Omitted.]

               (z) Financial Statements. The Administrative 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 (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 Administrative Agent prior to March 1, 2007
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 Administrative Agent prior to March 1, 2007.

               (aa) Additional Matters. The Administrative Agent shall have
received such other certificates, opinions, documents and instruments relating
to the Transactions as may have been reasonably requested by the Administrative
Agent or any Lender, and all corporate and other proceedings and all other
documents (including, without limitation, all documents referred to herein and
not appearing as exhibits hereto) and all legal matters in connection with the
Transactions shall be satisfactory in form and substance to the Lenders.

          Section 4.2 Conditions Precedent to All Loans. The obligation of each
Lender to make any Loan at any time on or after the date hereof and of the
Issuing Bank to issue any Letter of 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.

                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

               (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 29, 2007 which, in the judgment of the Required
Lenders, has had or could have a Material Adverse Effect.

               (e) Notice of Borrowing or Issuance. The Administrative 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 Administrative Agent and each of the Lenders that all of the
conditions required to be satisfied under this Section 4 in connection with the
making of such Loan or the Issuance of such Letter of Credit have been
satisfied.

          All of the Notes, certificates, agreements, legal opinions and other
documents and papers referred to in this Section 4, unless otherwise specified,
shall be delivered to the Administrative 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 Administrative
Agent and each Lender in its sole discretion.

SECTION 5. REPRESENTATIONS AND WARRANTIES.

          In order to induce the Lenders to enter into this Agreement and to
make the Loans and to induce the Issuing Bank to issue Letters of Credit, the
Borrower makes the following representations and warranties, which shall survive
the execution and delivery of this Agreement and the Notes and the making of the
Loans and the Issuance of the Letters of Credit:

          Section 5.1 Corporate Status. Each Loan Party (i) is duly organized
and validly existing and in good standing under the laws of the jurisdiction of
its organization, (ii) has the corporate or other requisite power and authority
to own its property and assets and to


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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, any of the terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien (except pursuant
to the Security Documents) upon any of the property or assets of any Loan Party
pursuant to the terms of, any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which such Loan Party is a party or by which it
or any of its property or assets is bound or to which it may be subject or (iii)
will violate any provision of its certificate of incorporation, by-laws,
partnership agreement or limited liability company agreement (or other relevant
organizational documents) of any Loan Party.

          Section 5.4 Litigation. There are no actions, suits, governmental
investigations, arbitrations or proceedings pending or threatened (i) with
respect to any of the Transactions or the Transaction Documents or (ii) that
could, individually or in the aggregate, result in a Material Adverse Effect.

          Section 5.5 Financial Statements; Financial Condition; etc. Each of
the financial statements and financial certificates delivered pursuant to
Section 4.1(z) were prepared in accordance with GAAP consistently applied and
fairly present the financial condition and the results of operations of the
entities covered thereby on the dates and for the periods covered thereby,
except as disclosed in the notes thereto and, with respect to interim financial
statements, subject to normally recurring year-end adjustments. No Loan Party
has any material liability (contingent or otherwise) not reflected in such
financial statements or in the notes thereto.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

          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 January 29, 2007, 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.

          Section 5.8 Material Adverse Change. Since January 29, 2007, 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 any 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.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

          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 Administrative
Agent for the ratable benefit of the Lenders, and subject to no other Liens
(other than Liens expressly permitted by Section 7.3 hereof). Such security
interests in and Liens on the Collateral are 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 Administrative
Agent pursuant to Section 6.1(h)(i)(E). The Borrower and each member of its
ERISA Controlled Group have complied with the requirements of Section 515 of
ERISA with respect to each Multiemployer Plan and is not in "default" (as
defined in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan. The aggregate potential total withdrawal liability, and the
aggregate potential annual withdrawal liability payments of the Borrower and the
members of its ERISA Controlled Group as determined in accordance with Title IV
of ERISA as if the Borrower and the members of its ERISA Controlled Group had
completely withdrawn from all Multiemployer Plans is not greater than
$2,000,000. To the best knowledge of the Borrower and each member of its ERISA
Controlled Group, no Multiemployer Plan is or is likely to be in reorganization
(as defined in Section 4241 of ERISA or Section 418 of the Code) or is insolvent
(as defined in Section 4245 of ERISA). No material liability to the PBGC (other
than required premium payments), the Internal Revenue Service, any Plan or any
trust established under Title IV of ERISA has been, or is expected by the
Borrower or any member of its ERISA Controlled Group to be, incurred by the
Borrower or any member of its ERISA Controlled Group. Neither the Borrower nor
any member of its ERISA Controlled Group has any contingent liability with
respect to any post-retirement benefit under any "welfare plan" (as defined in
Section 3(1) of ERISA), other than liability for continuation coverage under
Part 6 of Title I of ERISA and other than contingent liabilities under Hardee's
Retiree Medical Insurance Plan, and the aggregate present value of all
post-retirement benefit liabilities of the Borrower and its Subsidiaries under
Hardee's Retiree Medical Insurance Plan as of the Closing Date does not exceed
$4,800,000. No lien under Section 412(n) of the Code or Section 302(f) of ERISA
or requirement to provide security under Section 401(a)(29) of the Code or
Section 307


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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. 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, or (y)
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
Administrative Agent or any Lender on or prior to the Closing Date, for purposes
of or in connection with this Agreement or any of the Transactions is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of any Loan Party in writing to the Administrative 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 Organizational 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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

equity interests, owned by such Loan Party free and clear of all Liens. Except
for the Convertible Subordinated Notes or as disclosed in Schedule 5.18, neither
any Loan Party nor any such Subsidiary has outstanding any securities
convertible into or exchangeable for its capital stock or other outstanding
equity interest nor does any Loan Party or any such Subsidiary have outstanding
any rights to subscribe for or to purchase, or any options for the purchase of,
warrants or any agreements providing for the issuance (contingent or otherwise)
of, or any calls, commitments or claims of any character relating to, its
capital stock or other outstanding equity interest.

          Section 5.19 Environmental Matters.

               (a) (i) Each of the Loan Parties and their Environmental
Affiliates are in compliance with all applicable Environmental Laws except where
noncompliance, individually or in the aggregate, could not have a Material
Adverse Effect, (ii) each of the Loan Parties and their Environmental Affiliates
have all Environmental Approvals required to operate their businesses as
presently conducted or as reasonably anticipated to be conducted except where
the failure to obtain any such Environmental Approval, individually or in the
aggregate, could not have a Material Adverse Effect, (iii) none of the Loan
Parties nor any of their Environmental Affiliates has received any communication
(written or oral), whether from a governmental authority, citizens group,
employee or otherwise, that alleges that such Loan Party or Environmental
Affiliate is not in full compliance with all Environmental Laws and where such
noncompliance, individually or in the aggregate, could have a Material Adverse
Effect, and (iv) to the Borrower's best knowledge after due inquiry, there are
no circumstances that may prevent or interfere with such full compliance in the
future except where such noncompliance, individually or in the aggregate, could
not have a Material Adverse Effect.

               (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) [Reserved]

               (e) [Reserved]


                               CKE SEVENTH 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 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.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

          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
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 Administrative 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.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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
Administrative 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 Administrative Agent and the Required
Lenders and indicating that its audit of the consolidated financial statements
of the Borrower was conducted in accordance with generally accepted auditing
standards.

               (c) Management Letters. Promptly after the Borrower's receipt
thereof, a copy of any "management letter" or other material report received by
the Borrower from its certified public accountants.

               (d) Budgets. Within 60 days after the first day of each fiscal
year of the Borrower, a budget and financial forecast of results of operations
and sources and uses of cash (in form reasonably satisfactory to the
Administrative 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.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

               (e) Officer's Certificates. At the time of the delivery of the
financial statements under clauses (a) and (b) above, a certificate of the chief
financial officer of the Borrower which certifies (x) that such financial
statements fairly present the financial condition and the results of operations
of the Borrower and its Subsidiaries on the dates and for the periods indicated,
subject, in the case of interim financial statements, to normally recurring
year-end adjustments, and that such financial statements were prepared in
accordance with GAAP and (y) that such officer has reviewed the terms of the
Loan Documents and has made, or caused to be made under his or her supervision,
a review in reasonable detail of the business and condition of the Borrower and
its Subsidiaries during the accounting period covered by such financial
statements, and that as a result of such review such officer has concluded that
no Default or Event of Default has occurred during the period commencing at the
beginning of the accounting period covered by the financial statements
accompanied by such certificate and ending on the date of such certificate or,
if any Default or Event of Default has occurred, specifying the nature and
extent thereof and, if continuing, the action the Borrower proposes to take in
respect thereof (the "COMPLIANCE CERTIFICATE"). Such certificate shall set forth
the calculations required to establish whether the Borrower was in compliance
with the provisions of Sections 6.11, 6.12, 7.1, 7.2, 7.3, 7.7, 7.8 and 7.18
during and as at the end of the accounting period covered by the financial
statements accompanied by such certificate.

               (f) Notice of Default. Promptly and in any event within one
Business Day after any Loan Party obtains knowledge thereof, notice (i) of the
occurrence of any Default or Event of Default together with a certificate of an
Authorized Officer of the Borrower specifying the nature and period of existence
thereof and the Borrower's proposed response thereto, (ii) that any holder of
Indebtedness of the Borrower or any Subsidiary of the Borrower having an
outstanding principal balance exceeding $5,000,000 has given any written notice
to the Borrower or any Subsidiary of the Borrower or taken any other action with
respect to a claimed default or event or condition of the type referred to in
Section 8.1(d) specifying (A) the nature and period of existence of any such
claimed default, condition or event, (B) the notice given or action taken by
such Person in connection therewith, and (C) the Borrower's proposed response
thereto and (iii) of the occurrence of any default or event of default under any
Subordinated Debt Document specifying (A) the nature and period of existence of
any such default, condition or event, (B) any notice given or action taken by
any holder or trustee thereunder in connection therewith, and (C) the Borrower's
proposed response thereto.

               (g) Notice of Litigation. Promptly after (i) the occurrence
thereof, notice of the institution of, or any material development in, any
action, suit, litigation, proceeding, investigation or arbitration, before any
court or arbitrator or any governmental or administrative body, agency or
official, against the Borrower, any of its Subsidiaries or any material property
of any thereof which, individually or in the aggregate, could have a Material
Adverse Effect, or (ii) actual knowledge thereof, notice of the threat of any
such action, suit, proceeding, investigation or arbitration.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

               (h) ERISA.

                    (i) As soon as possible and in any event within 10 days
     after the Borrower or any member of its ERISA Controlled Group knows, or
     has reason to know, that:

                         (A) any Termination Event with respect to a Plan has
     occurred or will occur, or

                         (B) any condition exists with respect to a Plan which
     presents a material risk of termination of the Plan or imposition of an
     excise tax or other liability on the Borrower or any member of its ERISA
     Controlled Group, or

                         (C) the Borrower or any member of its ERISA Controlled
     Group has applied for a waiver of the minimum funding standard under
     Section 412 of the Code or Section 302 of ERISA, or

                         (D) the Borrower or any member of its ERISA Controlled
     Group has engaged in a "prohibited transaction," as defined in Section 4975
     of the Code or as described in Section 406 of ERISA, that is not exempt
     under Section 4975 of the Code and Section 408 of ERISA, or

                         (E) the aggregate present value of the Unfunded Benefit
     Liabilities under all Plans has in any year increased by $500,000 or to an
     amount in excess of $2,000,000, or

                         (F) any condition exists with respect to a
     Multiemployer Plan which presents a material risk of a partial or complete
     withdrawal (as described in Section 4203 or 4205 of ERISA) by the Borrower
     or any member of its ERISA Controlled Group from a Multiemployer Plan, or

                         (G) the Borrower or any member of its ERISA Controlled
     Group is in "default" (as defined in Section 4219(c)(5) of ERISA) with
     respect to payments to a Multiemployer Plan, or

                         (H) a Multiemployer Plan is in "reorganization" (as
     defined in Section 418 of the Code or Section 4241 of ERISA) or is
     "insolvent" (as defined in Section 4245 of ERISA), or

                         (I) the potential withdrawal liability (as determined
     in accordance with Title IV of ERISA) of the Borrower and the members of
     its ERISA Controlled Group with respect to all Multiemployer Plans has in
     any year increased by $500,000 or to an amount in excess of $2,000,000, or


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

                         (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 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.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

               (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 Administrative Agent may desire, PROVIDED
that no such prior notice shall be required if an Event of Default has occurred
and is continuing.

          Section 6.3 Maintenance of Insurance. The Borrower shall, and shall
cause each of its Subsidiaries to, (a) maintain with financially sound and
reputable insurance companies insurance on itself and its properties (including
all real properties leased or owned by them) in at least such amounts and
against at least such risks as are customarily insured against in the same
general area by companies engaged in the same or a similar business similarly
situated, which insurance shall in any event not provide for materially less
coverage than the insurance in effect on the Closing Date and shall name the
Administrative 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.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

          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 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,


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

(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
Administrative Agent of any default by any party with respect to such Material
Leases and cooperate with the Administrative Agent in all respects to cure any
such default.

          Section 6.10 Compliance with Environmental Laws. The Borrower shall,
and shall cause each of its Subsidiaries and all lessees and other Persons
occupying its properties to (a) comply in all material respects, with all
Environmental Laws and Environmental Approvals applicable to its respective
operations and properties; (b) obtain and renew all Environmental Approvals
necessary for its respective operations and properties; and (c) conduct any
investigation, study, sampling and testing, and undertake any cleanup, removal,
remedial or other action necessary to remove and clean up all Materials of
Environmental Concern from any of its respective properties, in accordance with
the requirements of all Environmental Laws; PROVIDED, HOWEVER, that neither the
Borrower nor any of its Subsidiaries shall be required to undertake any such
cleanup, removal, remedial or other action to the extent that its obligation to
do so is being contested in good faith and by proper proceedings and appropriate
reserves are being maintained with respect to such circumstances, unless the
Borrower or any of its Subsidiaries is subject to an order issued by any
governmental authority requiring the 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 Administrative
Agent a legal opinion in form and substance reasonably satisfactory to the
Administrative 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 Administrative 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 Administrative 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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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 [Reserved].

          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 [Reserved].

          Section 6.16 Conditions Subsequent to the Closing Date. (a) Not later
than sixty (60) days after the Closing Date (unless the Administrative Agent
shall have extended such date in its sole discretion), the Borrower shall
execute and deliver, or cause CKE Distribution, LLC, a California limited
liability company, to execute and deliver, to the Administrative Agent
documents, in form and substance satisfactory to the Administrative Agent, to
cause CKE Distribution, LLC to become a party to the Guaranty and the Subsidiary
Security Agreement and the Borrower to pledge its equity interest in CKE
Distribution, LLC to the Administrative Agent, and the Borrower shall execute
and/or deliver, or cause CKE Distribution, LLC to execute and/or deliver, such
financing statements, stock powers and other documents reasonably requested by
the Administrative Agent in connection with this Section 6.16.

          (b) Not later than sixty (60) days after the Closing Date, the
Borrower shall deliver to the Administrative Agent (i) an amendment to each
Mortgage that recites the maturity date of the Loans (collectively, the
"MORTGAGE AMENDMENTS"), in recordable form and otherwise in form and substance
reasonably acceptable to the Administrative Agent, evidencing the extension of
such maturity date to the Final Maturity Date, duly executed by the Borrower or
its Subsidiary, as applicable, together with evidence that (A) counterparts of
the Mortgage Amendments have been duly delivered for filing or recording in all
filing or recording offices that the Administrative Agent may reasonably deem
necessary or desirable and (B) all filing and recording taxes and fees necessary
to properly record the Mortgage Amendments in such offices have been paid and
(ii) a legal opinion with respect to the Mortgage Amendments in form and
substance satisfactory to the Administrative Agent.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

          (c) Not later than thirty (30) days after the Closing Date, the
Borrower shall have delivered to the Administrative Agent a legal opinion from
Stradling Yocca Carlson & Rauth, counsel to the Loan Parties, in form and
substance satisfactory to the Administrative Agent, that the execution, delivery
and performance by the Borrower of each of the Transaction Documents (as defined
in the legal opinion delivered pursuant to Section 4.1(b)(A) as of the date
hereof) and the performance by the Borrower of its obligations under each of the
Transaction Documents does not constitute a violation of, or a default under,
any material agreements or material instruments requested by the Administrative
Agent.

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 of the
respective fiscal year set forth below to exceed the ratio set forth opposite
such fiscal year:



Fiscal Year      Ratio
- -----------      -----
              
2008              2.50
2009              2.25
2010 and each
   fiscal year
   thereafter     2.00


               (b) [Reserved]

               (c) [Reserved]

               (d) [Reserved]

               (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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

     and its Subsidiaries in an aggregate amount not in excess of the sum of (I)
     $85,000,000, 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. For the avoidance of doubt, the maximum aggregate amount
     of Capital Expenditures permitted to be made or incurred for fiscal year
     2008 shall be increased by an amount equal to the difference between (A)
     the maximum amount of Capital Expenditures permitted to be made or incurred
     by the Borrower during fiscal year 2007 as determined pursuant to this
     Section 7.1(e)(i) and (B) the aggregate amount of Capital Expenditures made
     or incurred by the Borrower during fiscal year 2007.

                    (ii) [Reserved]

                    (iii) Notwithstanding any other provision of this Section
     7.1(e), if at any time the Unused Portion of the Revolving Loans shall be
     less than $15,000,000, and until such time as such Unused Portion has been
     restored to at least $15,000,000, the Borrower shall not make or incur and
     shall not permit any of its Subsidiaries to make or incur any Capital
     Expenditures (other than Capital Expenditures otherwise permitted by this
     Section 7.1(e) and made or incurred pursuant to contractual commitments to
     make or incur such Capital Expenditures entered into by the Borrower or any
     of its Subsidiaries at a time when such Unused Portion was at least
     $15,000,000).

          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);


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

               (c) Indebtedness permitted under Sections 7.6(a) and 7.6(b);

               (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 lesser of the purchase price or the fair
market value of the asset so financed, (B) at the time of such incurrence, no
Default or Event of Default has occurred and is continuing or would result from
such incurrence, and (C) such Indebtedness has a scheduled maturity and is not
due on demand;

               (f) any extensions, renewals, refundings and refinancings of the
Indebtedness described in clause (b) above, so long as the terms of any such
extension, renewal, refunding or refinancing Indebtedness, and of any agreement
entered into and of any instrument issued in connection therewith, are otherwise
permitted by the Loan Documents; PROVIDED, FURTHER, that the principal amount of
such Indebtedness shall not be increased above the principal amount thereof
outstanding immediately prior to such extension, renewal, refunding or
refinancing, and the direct and contingent obligors therefor shall not be
changed, as a result of or in connection with such extension, renewal, refunding
or refinancing;

               (g) Indebtedness of any Domestic Subsidiary of the Borrower owed
to the Borrower or to any Domestic Subsidiary of the Borrower;

               (h) Permitted Subordinated Debt in an aggregate principal amount
not to exceed $5,000,000 at any one time outstanding incurred in connection with
a Permitted Acquisition with respect to which all of the conditions set forth in
Section 7.8(f) have been satisfied and incurred to pay all or part of the
purchase price thereof which Permitted Subordinated Debt, if secured, is secured
only by Liens permitted pursuant to Section 7.3(i);

               (i) Indebtedness of the Borrower incurred pursuant to the
Convertible Subordinated Notes in an aggregate principal amount not to exceed
$15,200,000;


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

               (j) unsecured Indebtedness of the Borrower or any of its
Subsidiaries consisting of guarantees of Indebtedness of a franchisee incurred
to finance a remodeling, construction or purchase of a retail unit of such
franchisee or capital expenditures of such franchisee ("FRANCHISEE CONSTRUCTION
DEBT"); PROVIDED, that (i) the amount of the obligations of the Borrower and its
Subsidiaries under or with respect to such guarantees shall not exceed
$40,000,000 in the aggregate outstanding at any time; (ii) the amount of the
obligations of the Borrower and its Subsidiaries under or with respect to
guarantees of more than 20% of the principal amount of the Franchisee
Construction Debt of a franchisee shall not exceed $5,000,000 in the aggregate
outstanding at any time; and (iii) except for the guarantees described in the
foregoing clause (ii), the amount of the obligations of the Borrower and its
Subsidiaries under or with respect to guarantees of Franchisee Construction Debt
of any franchisee shall not exceed 20% of the Franchisee Construction Debt of
such franchisee;

               (k) unsecured Indebtedness of the Borrower or any of its
Subsidiaries owing to former franchisees and representing the deferred purchase
price (or a deferred portion of such purchase price) payable by the Borrower or
such Subsidiary to such former franchisee in connection with the purchase by the
Borrower or such Subsidiary of one or more retail outlets from such former
franchisee in an aggregate principal amount for all such Indebtedness not to
exceed $5,000,000 at any one time outstanding;

               (l) Indebtedness of any entity acquired pursuant to a Permitted
Acquisition with respect to which all of the conditions set forth in Section
7.8(f) have been satisfied, which Indebtedness (i) is existing prior to such
Permitted Acquisition, (ii) is assumed by the Borrower or any Subsidiary of the
Borrower in connection with any such Permitted Acquisition and (iii) is not
incurred in contemplation of such Permitted Acquisition; PROVIDED, that the
aggregate principal amount of all such Indebtedness shall not exceed $5,000,000
at any time outstanding;

               (m) Indebtedness with respect to Sale and Leaseback Transactions
permitted under Section 7.13(a); and

               (n) Permitted Convertible Debt and Indebtedness under any
Convertible Bond Hedge Transactions.

          Section 7.3 Liens. The Borrower shall not, and shall not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist, directly or
indirectly, any Lien on any of its property now owned or hereafter acquired,
other than the following PROVIDED, that none of the creation, incurrence,
assumption or existence of any of the following result in the creation or
imposition of a Lien under any Subordinated Debt Document:

                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

               (a) Liens existing on the Closing Date and set forth on Schedule
7.3 hereto;

               (b) Liens for taxes not yet due or which are being contested in
good faith by appropriate proceedings diligently conducted and with respect to
which adequate reserves are being maintained in accordance with GAAP;

               (c) Statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by Law (other than
any Lien imposed by ERISA or pursuant to any Environmental Law) created in the
ordinary course of business for amounts not yet due or which are being contested
in good faith by appropriate proceedings diligently conducted and with respect
to which adequate bonds have been posted;

               (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 Administrative Agent or the Lenders therein;

               (f) Liens granted to the Administrative Agent for the benefit of
the Lenders pursuant to the Security Documents securing the Obligations;

               (g) Liens created pursuant to Capitalized Leases and to secure
other purchase-money Indebtedness permitted pursuant to Section 7.2(e),
PROVIDED, that such Liens are only in respect of the property or assets subject
to, and secure only, the respective Capitalized Lease or other purchase-money
Indebtedness;

               (h) Liens arising out of the replacement, extension or renewal of
any Lien permitted by clause (a) above upon or in the same property theretofore
subject thereto in connection with the refunding, refinancing, extension or
renewal (without increase in the amount or change in any direct or contingent
obligor) of the Indebtedness secured thereby permitted pursuant to Section
7.2(f);


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

               (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
Administrative Agent and the Lenders on terms approved in writing by the
Administrative 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 Administrative Agent in connection with the Real Estate Collateral.

          Section 7.4 Restriction on Fundamental Changes.

               (a) The Borrower shall not, and shall not permit any of its
Subsidiaries to, enter into any merger or consolidation, or liquidate, wind-up
or dissolve (or suffer any liquidation or dissolution), discontinue its business
or convey, lease, sell, transfer or otherwise dispose of, in one transaction or
series of transactions, all or any substantial part of its business or property,
whether now or hereafter acquired, except (i) as otherwise permitted under
Section 7.5, (ii) any wholly-owned Subsidiary of the Borrower may merge into or
convey, sell, lease or transfer all or substantially all of its assets to, the
Borrower or any other Domestic Subsidiary of the Borrower, PROVIDED, that in any
such merger involving the Borrower, the Borrower shall be the surviving
corporation and any such Subsidiary merging into the Borrower or any such
Domestic Subsidiary shall be Solvent, (iii) any Solvent Person acquired by the
Borrower or a Subsidiary of the Borrower in a Permitted Acquisition permitted
hereunder may merge with the Borrower or any wholly-owned Subsidiary of the
Borrower, PROVIDED, that in any such merger, the Borrower or such wholly-owned
Subsidiary shall be the surviving corporation, PROVIDED, FURTHER, that in each
case, (A) any such wholly-owned Subsidiary of the Borrower which is the
surviving corporation of any such merger or to which any business or property is
so transferred shall be a party to the Guaranty and the Subsidiary Security
Agreement and if required by Section 2.21, a Subsidiary Pledge Agreement, (B)
the Borrower shall give the Administrative


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

Agent at least ten (10) days prior written notice of any such sale, merger or
other transfer, (C) the Administrative 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 Administrative 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) the purchase price for such asset shall be paid to the
     Borrower or such Subsidiary solely in cash, Cash Equivalents or non-cash
     consideration in the form of promissory notes, PROVIDED, that in the case
     of non-cash consideration received in the form of promissory notes, (A)
     such consideration shall not exceed 25% of the aggregate purchase price for
     such asset, (B) such promissory notes shall mature no later than 3 years
     after the date of issuance, (C) such promissory notes shall be pledged to
     the Administrative Agent, for the benefit of the Lenders, pursuant to a
     pledge agreement in form and substance satisfactory to the Administrative
     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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

     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) 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, the Borrower sells such Real Estate Collateral in the ordinary
     course of business; and

               (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).

               (c) Notwithstanding the foregoing, the Borrower or any Subsidiary
of the Borrower may from time to time sell its ownership interest in La Salsa or
all or any portion of its property or assets owned by La Salsa on or before the
date hereof.

          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; and

               (c) Contingent Obligations permitted pursuant to Section 7.2(j).

          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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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;

               (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;

               (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, and/or declare and pay dividends in
cash with respect to any common stock of the Borrower PROVIDED, that (i) the
cumulative amount of (A) the purchase price paid by the Borrower for such
Capital Stock and (B) the cash dividends paid by the Borrower on such common
stock shall not exceed, in the aggregate after giving effect to such payments
and all other payments made pursuant to this Section 7.7(d) and Section
7.10(d)(iii) hereof, the Junior Recapitalization Amount, (ii) both before and
after giving effect to any such redemption, retirement or purchase, and/or any
such declaration and payment of any dividend, no Default or Event of Default
shall have occurred and be continuing and (iii) after giving effect to such
redemption, retirement or purchase, and/or such declaration and payment of any
dividend, the Unused Portion shall be at least $25,000,000;

               (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); and

               (f) The Borrower may enter into any Convertible Bond Hedge
Transactions.

          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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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 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;


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

                    (ii) the Borrower shall have delivered to the Administrative
     Agent a certificate of the chief financial officer of the Borrower, in form
     and substance satisfactory to the Administrative Agent, demonstrating:

                    (1) compliance by the Borrower and its Subsidiaries with the
          covenants set forth in Section 7.1, on a pro forma basis after giving
          effect to such Acquisition, for a period of four consecutive fiscal
          quarters after the date of such Acquisition, and

                    (2) the Consolidated EBITDA of the Person and any of its
          Subsidiaries, if any, to be acquired, for the twelve-month period most
          recently ended shall be a positive number;

                    (iii) the representations and warranties contained in each
     Loan Document are correct in all material respects on and as of the date of
     such Acquisition, after giving effect to such Acquisition, as though made
     on and as of such date, other than any such representations and warranties
     that by their terms are specifically made as of a date other than such
     date;

                    (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 after giving effect to such Permitted Acquisition,
     minus the amount of any L/C Obligations outstanding on the date of such
     Permitted Acquisition after giving effect to 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
     Administrative 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;


                               CKE SEVENTH 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 Administrative Agent or the Required Lenders through the
     Administrative Agent shall have reasonably requested, including, without
     limitation, actual and pro forma financial statements and projections
     relating to such Person or assets;

                         (3) In the case of each Permitted Acquisition, to the
     extent that such Acquisition consists of the acquisition by the Borrower or
     any of its Subsidiaries of stock, partnership or other Equity Interests of
     any Person (or assets in the case of clause (A) below):

                              (A) All documents required to be delivered
          pursuant to Section 2.21 and Section 6.11;

                              (B) A copy of the charter or other organizational
          document of such Person and each amendment thereto, if any, certified
          by the Secretary of State of its jurisdiction of organization, as of a
          date reasonably near the date of such Borrowing, as being a true and
          correct copy thereof;

                              (C) An officer's certificate signed on behalf of
          such Person by an appropriate officer of such Person, certifying as to
          (i) the absence of any amendment to the charter or other
          organizational document of such Person since the date of the Secretary
          of State's certificate referred to in clause (B) above, (ii) a true
          and correct copy of the by-laws or similar organizational document of
          such Person, (iii) a true and correct copy of the resolutions adopted
          by the Board of Directors or equivalent governing body of such Person
          approving the documents or instruments to be delivered under this
          Section 7.8(f) to which such 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 Administrative
          Agent and the Lenders that the Borrower, its Subsidiaries and the
          Person being acquired has made and obtained


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

          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;

               (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;

               (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; and

               (k) Convertible Bond Hedge Transactions.

          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;


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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 after giving effect to such Prepayment (x) no event or
     condition has occurred and is continuing, or would result from such
     Prepayment, that constitutes a Default or an Event of Default, and (y)
     after giving effect to such Prepayment, the Total Revolving Loan Commitment
     minus the aggregate principal amount of the Revolving Loans outstanding on
     the date of such Prepayment minus the amount of any L/C Obligations
     outstanding on the date of such Prepayment shall equal at least
     $20,000,000; PROVIDED, HOWEVER, that notwithstanding the foregoing, the
     Borrower shall not, and shall not permit any of its Subsidiaries to, make
     any Prepayment of any Indebtedness referred to in Section 7.2(h);


                    (ii) make regularly scheduled or required repayments of
     Indebtedness permitted pursuant to Section 7.2; and

                    (iii) the conversion of the Indebtedness consisting of any
     Permitted Convertible Debt in accordance with the terms and conditions
     thereof and any settlement pursuant to the terms of any Convertible Bond
     Hedge Transactions.

               (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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

               (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; and

                    (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)(iii)
     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
     effect to such redemption, repurchase or acquisition for value, no
     Revolving Loans shall be outstanding.

          Section 7.11 Changes in Business. The Borrower shall not, and shall
not permit any of its Subsidiaries to, enter into any business which is
substantially different from that conducted by the Borrower or such Loan Party,
as the case may be, on the Closing Date after giving effect to the Transactions.

          Section 7.12 Certain Restrictions. The Borrower shall not, and shall
not permit any of its Subsidiaries to, enter into or permit to exist any
agreement, instrument or other document which directly or indirectly restricts
the ability of the Borrower or any of its Subsidiaries to (a) enter into
amendments, modifications or waivers of the Loan Documents, (b) sell, transfer
or otherwise dispose of its assets, (c) create, incur, assume or suffer to exist
any Lien upon any of its property, (d) create, incur, assume, suffer to exist or
otherwise become liable with respect to any Indebtedness, (e) make loans or
advances to the Borrower, or (f) pay any Dividend or repay any Indebtedness owed
to the Borrower or any of its Subsidiaries; PROVIDED, that Capitalized Leases or
agreements governing purchase money Indebtedness which contain restrictions of
the types referred to in clauses (b) or (c) with respect to the property covered
thereby shall be permitted; PROVIDED, FURTHER, that the foregoing shall not
apply to restrictions in effect on the Closing Date contained in agreements
governing Surviving Debt


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

(other than Indebtedness arising under 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 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 Administrative Agent is provided with fully
          executed documentation of each Sale and Leaseback Transaction on or
          prior to the closing date of such transaction;

                         (3) no Default or Event of Default exists on the
          closing date of any Sale and Leaseback Transaction or would result
          therefrom and the Borrower shall deliver to the Administrative Agent
          prior to the closing date of such transaction an officer's certificate
          of the chief financial officer of the Borrower certifying thereto;


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

                         (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; and

                         (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.

               (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, if any, with one or more of the
Lenders, their respective Affiliates, or another counterparty acceptable to the
Administrative Agent pursuant to which the Borrower and its Subsidiaries have
hedged their reasonably estimated interest rate exposure, (b) Hedging Agreements
relating to commodities pursuant to which the Borrower and its Subsidiaries have
hedged their reasonably estimated commodity price exposure and (c) any
Convertible Bond Hedge Transactions.

          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.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

          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 Designated Senior Indebtedness (as
defined in the Convertible Subordinated Note Indenture) 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 [Reserved].

SECTION 8. EVENTS OF DEFAULT

          Section 8.1 Events of Default. Each of the following events, acts,
occurrences or conditions shall constitute an Event of Default (each an "EVENT
OF DEFAULT") under this Agreement, regardless of whether such event, act,
occurrence or condition is voluntary or involuntary or results from the
operation of law or pursuant to or as a result of compliance by any Person with
any judgment, decree, order, rule or regulation of any court or administrative
or governmental body:

               (a) Failure to Make Payments. The Borrower shall (i) default in
the payment when due of any principal of the Loans or (ii) default, and such
default shall continue unremedied for two (2) or more Business Days, in the
payment when due of any interest on the Loans or in the payment when due of any
Fees or any other amounts owing hereunder.

               (b) Breach of Representation or Warranty. Any representation or
warranty made by any Loan Party herein or in any other Loan Document or in any
certificate or statement delivered pursuant hereto or thereto shall prove to be
false or misleading in any material respect on the date as of which made or
deemed made.

               (c) Breach of Covenants.

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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

                    (ii) The Borrower shall fail to perform or observe any
     agreement, covenant or obligation arising under this Agreement (except
     those described in subsections (a), (b) and (c)(i) above), and such failure
     shall continue for thirty (30) days.

                    (iii) Any Loan Party shall fail to perform or observe any
     agreement, covenant or obligation arising under any provision of the Loan
     Documents other than this Agreement, which failure shall continue after the
     end of the applicable grace period, if any, provided therein.

               (d) Default Under Other Agreements. Any Loan Party or any of its
Subsidiaries shall default in the payment when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) of any amount
owing in respect of 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, or any such Indebtedness
shall become or be declared to be due and payable prior to its stated maturity
other than as a result of a regularly scheduled payment; or any such
Indebtedness shall be declared to be due and payable, or shall be required to be
prepaid, redeemed, purchased or defeased, or an offer to prepay, redeem,
purchase or defease such Indebtedness shall be required to be made, in each case
prior to its stated maturity other than as a result of a regularly scheduled
payment.

               (e) Bankruptcy, etc. (i) Any Loan Party or any of its
Subsidiaries shall commence a voluntary case concerning itself under the
Bankruptcy Code; or (ii) an involuntary case is commenced against any Loan Party
or any of its Subsidiaries and the petition is not controverted within 10 days,
or is not dismissed within 60 days, after commencement of the case; or (iii) a
custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge
of, all or substantially all of the property of any Loan Party or any of its
Subsidiaries or any Loan Party or any of its Subsidiaries commences any other
proceedings under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to any Loan Party or
any of its Subsidiaries or there is commenced against any Loan Party or any of
its Subsidiaries any such proceeding which remains undismissed for a period of
60 days; or (iv) any order of relief or other order approving any such case or
proceeding is entered; or (v) any Loan Party or any of its Subsidiaries is
adjudicated insolvent or bankrupt; or (vi) any Loan Party or any of its
Subsidiaries suffers any appointment of any custodian or the like for it or any
substantial part of its property to continue undischarged or unstayed for a
period of 60 days; or (vii) any Loan Party


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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 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
Administrative 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.

                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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

               (j) Judgments. One or more judgments or decrees or awards in an
aggregate amount of $5,000,000 or more shall be entered by a court or courts of
competent jurisdiction or in any arbitration proceeding against any Loan Party
or any of its Subsidiaries and (i) any such judgments or decrees or awards shall
not be stayed, discharged, paid, bonded or vacated within 30 days or (ii)
enforcement proceedings shall be commenced by any creditor on any such judgment
or decree or award.

               (k) Environmental Matters. (i) Any Environmental Claim shall have
been asserted against any Loan Party or any Environmental Affiliate thereof
which, if determined adversely, could have a Material Adverse Effect, (ii) any
release, emission, discharge or disposal of any Material of Environmental
Concern shall have occurred, and such event could form the basis of an
Environmental Claim against any Loan Party or any Environmental Affiliate
thereof which, if determined adversely, could have a Material Adverse Effect, or
(iii) any Loan Party or its Environmental Affiliate shall have failed to obtain
any Environmental Approval necessary for the management, use, control,
ownership, or operation of its business, property or assets or any such
Environmental Approval shall be revoked, terminated, or otherwise cease to be in
full force and effect, in each case, if the existence of such condition could
have a Material Adverse Effect.

               (l) Ownership of Certain Assets. The Borrower and/or its
Subsidiaries shall sell, convey or otherwise transfer or dispose of any material
intellectual property or license agreement owned by or licensed to the Borrower
or any of its Subsidiaries or any material license agreement to which the
Borrower or any of its Subsidiaries is a party other than (A) a


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

sale, conveyance or other transfer (other than a Lien) to a Domestic Subsidiary,
(B) licenses pursuant to Franchise Agreements pledged to the Administrative
Agent pursuant to the Security Documents and (C) any Asset Disposition permitted
by the terms of any of the Loan Documents.

          Section 8.2 Rights and Remedies. Upon the occurrence of any Event of
Default described in Section 8.1(e), the Commitments shall automatically and
immediately terminate and the unpaid principal amount of and any and all accrued
interest on the Loans and any and all accrued Fees and other Obligations shall
automatically become immediately due and payable, with all additional interest
from time to time accrued thereon and without presentation, demand, or protest
or other requirements of any kind (including, without limitation, valuation and
appraisement, diligence, presentment, notice of intent to demand or accelerate
and notice of acceleration), all of which are hereby expressly waived by
Borrower, and the obligation of each Lender to make any Loan hereunder shall
thereupon terminate; and upon the occurrence and during the continuance of any
other Event of Default, the Administrative 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. THE AGENTS

          Section 9.1 Appointment. Each Lender hereby irrevocably designates and
appoints BNP Paribas as the Administrative Agent of such Lender under this
Agreement and each other Loan Document, and each such Lender irrevocably
authorizes BNP Paribas as the Administrative 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 Administrative 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 Administrative 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
Administrative Agent shall be read into this Agreement or otherwise exist
against the Administrative Agent. The provisions of this Section 9


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

are solely for the benefit of the Agents 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 Administrative Agent shall act solely as the agent
of the Lenders and does not assume nor shall be deemed to have assumed any
obligation or relationship of trust or agency with or for any Loan Party or any
of their respective successors and assigns.

          Section 9.2 Delegation of Duties. The Administrative 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 Administrative 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. No Agent shall 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. No Agent shall 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 Agents, on the one hand, and the Lenders, on the
other.

          Section 9.4 Reliance by an Agent. Each 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 such Agent. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless the Administrative Agent shall have received an
executed Assignment Agreement in respect thereof. The Administrative Agent shall
be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

take any such action. The Administrative 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 Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default unless the Administrative 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 Administrative Agent receives such a notice, the Administrative Agent shall
promptly give notice thereof to the Lenders. Subject to the provisions of
Section 10.5, the Administrative 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 Administrative Agent shall have received such
directions, the Administrative 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 Administrative Agent shall deem advisable and in the
best interests of the Lenders.

          Section 9.6 Non-Reliance on Agents and Other Lenders. Each Lender
expressly acknowledges that no Agent, nor any of the Agents' officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by an 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 such Agent. Each
Lender represents and warrants to each Agent that it has, independently and
without reliance upon any 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 any Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, prospects, financial and other condition and
creditworthiness of the Loan Parties. Except for notices, reports and other
documents expressly required under the Loan Documents to be furnished to the
Lenders by an Agent, such 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 such
Agent or any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.

          Section 9.7 Indemnification. The Lenders agree to indemnify each Agent
and its officers, directors, employees, representatives and agents (to the
extent not reimbursed by the


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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 any Agent or such
Person in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such 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 such 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 such
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 by an Agent from
or for the account of the Borrower, such Agent shall promptly refund such
previously paid indemnification payments to the Lenders.

          Section 9.8 An Agent in its Individual Capacity. Each 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 such Agent were not an Agent
hereunder. With respect to Loans made or renewed by it and any Note issued to
it, each Agent shall have the same rights and powers under this Agreement as any
Lender and may exercise the same as though it were not an Agent, and the terms
"Lender" and "Lenders" shall include each Agent in its individual capacity.

          Section 9.9 Successor Administrative Agent. The Administrative Agent
may resign as the Administrative Agent upon 30 days' notice to the Borrower and
the Lenders. If the Administrative Agent shall resign as the Administrative
Agent under this Agreement, then the Required Lenders during such 30-day period
shall appoint from among the Lenders a successor administrative agent, whereupon
such successor administrative agent shall succeed to the rights, powers and
duties of the Administrative Agent and the term "Administrative Agent" shall
mean such successor administrative agent, effective upon its appointment, and
the former Administrative Agent's rights, powers and duties as Administrative
Agent shall be terminated, without any other or further act or deed on the part
of such former Administrative 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
administrative agent shall be subject to approval by the Borrower, which
approval shall not be unreasonably withheld or delayed. After any retiring
Administrative Agent's resignation hereunder as Administrative 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 Administrative Agent
under this Agreement.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

          Section 9.10 Additional Agents. Except for rights and powers, if any,
expressly reserved under this Agreement to any arranger, bookrunner,
co-syndication agent, or other titled agent named on the cover page of this
Agreement, other than the Administrative Agent (collectively, the "ADDITIONAL
AGENTS"), and except for obligations, liabilities, duties and responsibilities,
if any, expressly assumed under this Agreement by any Additional Agent, no
additional Agent, in such capacity, has any right, power, obligation, liability,
duty or responsibility under this Agreement or under any of the other Loan
Documents. Without limiting the foregoing, no Additional Agent shall have or be
deemed to have a fiduciary relationship with any Lender.

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 Agents
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 Administrative 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 LLP, special counsel
to the Administrative Agent and any other attorneys and legal assistants
retained by the Administrative Agent and allocated costs of internal counsel and
legal assistants) and of the Administrative 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 Administrative Agent
and for each of the Lenders);

               (b) pay, and hold the Administrative 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
Administrative 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 each Agent, the Financial Advisor and each Lender,
and each of their Affiliates and their officers, directors, employees,
representatives, trustees,


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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 Administrative 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 Administrative
Agent and the Lenders of their rights and remedies (including, without
limitation, foreclosure) under any agreements creating any such Lien (but
excluding, as to any Indemnitee, any such losses, liabilities, claims, damages,
expenses, obligations, penalties, actions, judgments, suits, costs or
disbursements incurred solely by reason of the gross negligence or willful
misconduct of such Indemnitee as finally determined by a court of competent
jurisdiction). The Borrower's obligations under this Section shall survive the
termination of this Agreement and the payment of the Obligations.

          Section 10.2 Right of Setoff. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance of
any Event of Default, each Lender and each of such Lender's Affiliates is hereby
authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to any Loan Party or to any other Person,
any such notice being hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special, time or demand, provisional or
final) and any other indebtedness at any time held or owing by such Lender or
such Affiliate (including, without limitation, by branches and agencies of 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.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

          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 Administrative Agent shall not be effective until received
by the Administrative 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 Agents, all future
holders of the Notes and their respective successors and assigns, except that
the Borrower may not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of each Lender. No Lender may
participate, assign or sell any of its Credit Exposure (as defined in clause (b)
below) except as required by operation of law, in connection with the merger,
consolidation or dissolution of any Lender or as provided in this Section 10.4.

               (b) Participation. Any Lender may at any time sell to one or more
Persons (each a "PARTICIPANT") participating interests in any Loan owing to such
Lender, any Note held by such Lender, any Commitment of such Lender and or any
other interest of such Lender hereunder (in respect of any such Lender, its
"CREDIT EXPOSURE"). Notwithstanding any such sale by a Lender of participating
interests to a Participant, such Lender's rights and obligations under this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Note for all purposes under this Agreement (except as expressly provided below),
and the Borrower and the Administrative 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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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).

               (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
Administrative 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 Administrative 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 Administrative
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 Administrative Agent), (ii) to an Assignee
approved in writing by the Administrative 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 Administrative 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 Administrative 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 Administrative Agent of any consent
required pursuant to Section 10.4(c) above and a copy of the Assignment
Agreement and


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

(iii) payment of a $3,500 fee to the Administrative 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 Administrative 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 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 Administrative
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 Administrative 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 Administrative Agent, acting solely for this
purpose as an agent of the Borrower, shall maintain at its address referred to
on its signature page hereto


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

a copy of each Assignment Agreement delivered to it and a register (the
"REGISTER") for the recordation of the names and addresses of the Lenders and
the Commitments of, and the principal amount of the Loans and the making of
payments with respect to any Letter of Credit owing to, each Lender pursuant to
the terms hereof from time to time. The entries in the Register shall be, to the
extent permitted by law, prima facie evidence of the existence and amounts of
the obligations of the Borrower therein recorded, and the Borrower, the
Administrative 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 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 Section
10.4(d), the Administrative 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
(other than any Interest Rate Agreement) 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
Administrative Agent (with the consent of 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, extend the time for payment of any installment, fee or
     required prepayment of any Obligations, reduce the rate or extend the time
     of payment of interest on any Obligations, reduce the principal amount of
     any Obligations, reduce the amount of any scheduled payment, reduce any fee
     payable to the Lenders hereunder, change the amount of any Commitment of
     any Lender, consent to or permit the assignment or transfer by the Borrower
     of any of its rights and obligations under this Agreement or any other Loan
     Document, modify any provision hereof providing for the pro rata sharing of
     payments, or in each case without the written consent of all the Lenders
     directly affected (whose consent shall be required for any such amendment,
     modification, termination or waiver in addition to that of the Required
     Lenders);


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

                    (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 Administrative Agent or the Issuing Bank,
     without the written consent of the Administrative Agent or the Issuing
     Bank, as the case may be.

                    (iv) 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.

                    (v) (a) change in any manner the definition of "Pro Rata
     Share" or the definition of "Required Lenders" (except for any changes
     resulting solely from an increase in the aggregate amount of the
     Commitments approved by the Required Lenders), (b) change in any manner any
     provision of this Agreement that, by its terms, expressly requires the
     approval or concurrence of all Lenders, (c) increase the maximum duration
     of Interest Periods permitted hereunder, (d) 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 or (e) change in any manner or waive the
     provisions contained in Section 8.1(a), this Section 10.5 or Section 10.7,
     in each case without the written consent of all of the Lenders.

                    (vi) release or subordinate any Lien granted in favor of the
     Administrative Agent with respect to all or substantially all of the
     Collateral or release all or substantially all of the Guarantors from their
     obligations under the Guaranty, in each case other than in accordance with
     Section 10.5(a)(ii) or the other terms of the Loan Documents, without the
     written consent of all of the Lenders, PROVIDED 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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

     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 Administrative Agent is hereby authorized by the
     Lenders to execute and deliver to the Borrower all such documents
     evidencing any such release).

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
Administrative Agent and all future holders of the Notes. In the case of any
waiver, the Borrower, the Lenders and the Administrative 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).

          Any waiver or consent shall be effective only in the specific instance
and for the specific purpose for which it was given. No failure or delay by the
Administrative Agent, any Lender or the Issuing Bank in exercising any right or
power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No notice to or demand on the Borrower in any case shall entitle
the Borrower to any other or further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this Section 10.5 shall be binding upon each Lender
at the time outstanding, each future Lender and, if signed by the Borrower, the
Borrower. Without limiting the generality of the foregoing, the making of a Loan
or the issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, any Lender or the
Issuing Bank may have had notice or knowledge of such Default at such time.

               (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,
the Required Lenders, the affected Lenders or any other identified group of
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
Administrative Agent,


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

within three Business Days of such request to assign all of its interests,
rights and obligations hereunder and under the other Loan Documents to (i)
another Lender or (ii) another qualified financial institution nominated by the
Administrative 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 Administrative
Agent is irrevocably appointed as attorney-in-fact to execute any such
Assignment Agreement if the Affected Lender fails to execute same. The
Administrative Agent shall give written notice to the Borrower of any assignment
pursuant to this Section 10.5(b).

          Section 10.6 No Waiver; Remedies Cumulative. No failure or delay on
the part of an 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 an 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 an 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 Administrative
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 Administrative
Agent shall, unless otherwise specified at the direction of the Required Lenders
which direction shall be


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

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 Administrative Agent;

                         (B) second, to pay Obligations in respect of any fees,
     expenses, reimbursements or indemnities then due to the Co-Syndication
     Agents, 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 Administrative 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 Agents 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 Administrative 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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW TO THE EXTENT SUCH PRINCIPLES
WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN THE STATE
OF ILLINOIS).

               (b) Any legal action or proceeding with respect to this Agreement
or any other Loan Document and any action for enforcement of any judgment in
respect thereof may be brought in the courts of the State of Illinois or of the
United States of America for the Northern District of Illinois, and, by
execution and delivery of this Agreement, the Borrower hereby accepts for itself
and in respect of its property, generally and unconditionally, the non-exclusive
jurisdiction 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
Administrative 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 Administrative Agent may, in its sole discretion, from
time to time retain a financial advisor (the "FINANCIAL ADVISOR") for the
purpose of advising the Administrative 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 Administrative Agent and
the Lenders may desire. The Borrower agrees to pay all reasonable fees, costs
and out-of-pocket expenses of the Financial Advisor in connection with the
performance of its duties under this Section 10.11 and to indemnify the
Financial Advisor in accordance with Section 10.1(c) hereof.

          Section 10.12 Amendment and Restatement. This Agreement amends and
restates in its entirety the Original Credit Agreement. Upon the effectiveness
of this Agreement, the terms and provisions of the Original Credit Agreement
shall, subject to this Section 10.12, be superseded hereby. Notwithstanding the
amendment and restatement of the Original Credit Agreement by this Agreement,
the Borrower shall continue to be liable to the Lenders party to


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

the Original Credit Agreement and the Administrative Agent with respect to
agreements on the part of the Borrower under the Original Credit Agreement to
indemnify any of such Lenders or the Administrative 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 Administrative 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 Administrative Agent
nor any Lender shall be under any obligation to marshall any assets in favor of
any Loan Party or any other party or against or in payment of any or all of the
Obligations. To the extent any Lender receives any payment by or on behalf of
any Loan Party, which payment or any part thereof is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
such Loan Party or its estate, trustee, receiver, custodian or any other party
under any bankruptcy law, state or federal law, common law or equitable cause,
then to the extent of such payment or repayment, the obligation or part thereof
which has been paid, reduced or satisfied by the amount so repaid shall be
reinstated by the amount so repaid and shall be included within the liabilities
of such Loan Party to such Lender as of the date such initial payment, reduction
or satisfaction occurred.

          Section 10.15 Severability. In case any provision in or obligation
under this Agreement or the Notes or the other Loan Documents shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

          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 any Agent or any Lender or the
Affiliates, directors, officers, employees, attorneys or agent of any of them
for any special, indirect, consequential or punitive damages in respect of any
claim for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this Agreement or any other
Transactions, or any act, omission or event occurring in connection therewith;
and each Loan Party hereby waives, releases and agrees not to sue upon any claim
for any such damages, whether or not accrued and whether or not known or
suspected to exist in its favor.

          Section 10.20 Calculations; Computations. The financial statements to
be furnished to the Administrative 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 AGENTS 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.


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

          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.

         Section 10.24 Waiver and Acknowledgment. Subject to the terms and
conditions set forth herein, the Administrative Agent and each Lender hereby
waive the following:

                  (a) Any Event of Default pursuant to Section 8.1(b) of the
Credit Agreement resulting from any failure by the Borrower to prepare the
financial statements of the Borrower for the fiscal year ended January 30, 2006
("2006 FINANCIAL STATEMENTS") in accordance with GAAP consistently applied and
any failure of such financial statements to fairly present the financial
condition of the Borrower as of the respective dates thereof as required by
Section 5.5 of the Credit Agreement solely to the extent that such failure
relates to or otherwise is the subject of adjustments, amendments and/or
restatements of the 2006 Financial Statements in respect of an overstatement of
net income resulting from an overstatement of "income tax benefit" by
approximately $16,000,000 (the "RESTATEMENT");

                  (b) Any Event of Default pursuant to Section 8.1(b) of the
Credit Agreement resulting from any non-compliance with Sections 5.5 and 5.17 of
the Credit Agreement with respect to or in connection with the 2006 Financial
Statements and certain other reports and certificates as to or in connection
with the financial information and/or computations delivered by the Borrower
during or otherwise with respect to the fiscal year ended January 30, 2006
solely to the extent related to or resulting from the Restatement;

                  (c) Any Event of Default pursuant to Section 8.1(c)(i) of the
Credit Agreement resulting from any failure of the Borrower to furnish to the
Administrative Agent within one Business Day after a Loan Party obtained
knowledge thereof notice 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, as required by Section 6.1(f) of the Credit Agreement, solely to the
extent related to or resulting from the Restatement;

                  (d) Any Event of Default pursuant to Section 8.1(c)(ii) of the
Credit Agreement resulting from any failure of the Borrower to deliver to the
Administrative Agent audited financial statements of the Borrower in accordance
with GAAP as required by Section 4.1(z) of the Credit Agreement solely to the
extent related to or resulting from the Restatement; and

                  (e) Any Event of Default pursuant to Section 8.1(c)(ii) of the
Credit Agreement resulting from any failure of the Borrower to keep proper books
of record and account with full, true and correct entries and in conformity with
GAAP as required by Section 6.2 of the Credit Agreement solely to the extent
relating to or resulting from the Restatement.



                            (Signature Pages Follow)

                               CKE SEVENTH 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: /s/ Theodore Abajian
                                            ------------------------------------
                                        Print Name: Theodore Abajian
                                        Title: Executive Vice President and
                                               Chief Financial Officer

                                        Address: 6307 Carpinteria Avenue
                                                 Suite A
                                                 Carpinteria, CA 93013

                                                 Attn: General Counsel
                                                 Telephone: (714) 774-5796
                                                 Telecopy: (714) 520-4485


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

                                        BNP PARIBAS,
                                        as Administrative Agent


                                        By: /s/ CLARK C. KING III
                                            ------------------------------------
                                        Print Name: CLARK C. KING III
                                        Title: MANAGING DIRECTOR


                                        By: /s/ MICHAEL C. COLIAS
                                            ------------------------------------
                                        Print Name: MICHAEL C. COLIAS
                                        Title: DIRECTOR

                                        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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

                                        BNP PARIBAS,
                                        as an Issuing Bank and as a Lender


                                        By: /s/ CLARK C. KING III
                                            ------------------------------------
                                        Print Name: CLARK C. KING III
                                        Title: MANAGING DIRECTOR


                                        By: /s/ MICHAEL C. COLIAS
                                            ------------------------------------
                                        Print Name: MICHAEL C. COLIAS
                                        Title: DIRECTOR

                                        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


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

                                        CITIGROUP GLOBAL MARKETS, INC.,
                                        as Co-Syndication Agent


                                        By: /s/ Mark Floyd
                                            ------------------------------------
                                        Print Name: Mark Floyd
                                        Title: Vice President

                                        Address: 388 Greenwich Street
                                                 New York, NY 10013

                                                 Attn:
                                                       -------------------------
                                                 Telephone: (212) 816-2111
                                                 Telecopy: (646) 688-2020


                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

                                        BANK OF AMERICA, N.A.,
                                        as Co-Syndication Agent and as a Lender


                                        By: /s/ Angelo G. Maragos
                                            ------------------------------------
                                        Print Name: Angelo G. Maragos
                                        Title: Vice President

                                        Address: 100 Federal Street
                                                 Boston MA 02110

                                                 Attn: Angelo G. Maragos
                                                 Telephone: 617-434-0181
                                                 Telecopy: 617-434-0637





                               CKE SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

                                        [NAME OF LENDER]


                                        By:
                                            ------------------------------------
                                        Print Name:
                                                    ----------------------------
                                        Title:
                                               ---------------------------------

                                        Address:
                                                 -------------------------------

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

                                                 Attn:
                                                       -------------------------
                                                 Telephone:
                                                            --------------------
                                                 Telecopy:
                                                           ---------------------

EX-10.80

                                                                   EXHIBIT 10.80


                              CKE RESTAURANTS, INC.

                                 AMENDMENT NO. 2
                                       TO
                              EMPLOYMENT AGREEMENT


         This Amendment No. 2 (the "Amendment") to Employment Agreement is made
effective as of March 20, 2007, by and between CKE Restaurants, Inc. (the
"Company") and Brad R. Haley (the "Employee").


                                    RECITALS:

         A. The Company and the Employee entered into an Employment Agreement
dated as of January 2004, and amended on December 6, 2005 (the "Agreement").


         B. The Company and Employee now desire to amend the Agreement as set
forth below.



                                    AGREEMENT

         1. Other Compensation and Fringe Benefits. Section 4(d) of the
Agreement is hereby amended to extend the bonus provided for therein to fiscal
years 2008, 2009 and 2010.

         2. Definitions. Terms used but not defined in this Amendment shall have
the respective meanings assigned to them in the Agreement.

         3. Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which shall
constitute one Amendment.

         4. Terms and Conditions of Agreement. Except as specifically amended by
this Amendment, all terms and conditions of the Agreement shall remain in full
force and effect.



                            [SIGNATURE PAGE FOLLOWS]






                                       1




         IN WITNESS WHEREOF, this Amendment is executed by the undersigned as of
the date first written above.



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



                                   CKE Restaurants, Inc.



                                   By: /s/ Peter Churm
                                      ------------------------------------------
                                       Peter Churm
                                       Director and Chairman of the Compensation
                                       Committee of the Board of Directors







                                       2

EX-12.1

Exhibit 12.1

CKE RESTAURANTS, INC. AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES

	Fiscal years ended January 31,
	2007		2006		2005		2004			2003
Earnings before fixed charges:
Income (loss) before taxes, discontinued operations and cumulative effect of accounting change for goodwill	$	82,071	$	57,251	$	17,070	$	(48,013	)	$	12,121
Fixed charges		52,019		55,380		71,329		72,224			71,211
	$	134,090	$	112,631	$	88,399	$	24,211		$	83,332
Fixed charges:
Interest expense	$	19,751	$	23,016	$	36,748	$	39,962		$	39,924
Interest component of rent expense		32,268		32,364		34,581		32,262			31,287
	$	52,019	$	55,380	$	71,329	$	72,224		$	71,211
Ratio of earnings to fixed charges		2.6		2.0		1.2		—			1.2
Deficiency (if any)	$	—	$	—	$	—	$	(48,013	)	$	—
Rent expense		96,803		97,092		103,743		96,787			93,862
Interest component (1/3 of rent expense)		32,268		32,364		34,581		32,262			31,287

EX-21.1

Exhibit 21.1

CKE RESTAURANTS, INC. AND SUBSIDIARIES
LIST OF SUBSIDIARIES

Set forth below is a list of the Registrant’s subsidiaries as of January 31, 2007:

		CONTROL BY
	JURISDICTION OF
NAME OF SUBSIDIARY	ORGANIZATION	REGISTRANT	SUBSIDIARY
Carl Karcher Enterprises, Inc.	California	100%
Hardee’s Food Systems, Inc.	North Carolina	100%
Flagstar Enterprises, Inc.	Alabama		100%
Spardee’s Realty, Inc.	Alabama		100%
HED, Inc.	North Carolina		100%
Burger Chef Systems, Inc.	North Carolina		100%
Hardee’s LTD, Fribourg	Switzerland		98%
Hardee’s REIT I, Inc.	Delaware		100%
Hardee’s REIT II, Inc.	Delaware		100%
CKE REIT I, Inc	Delaware	100%
CKE REIT II, Inc.	Delaware	100%
Carl’s Jr. Region VIII, Inc.	Delaware		100%
Carl’s Jr. Media Fund	California	100%
Carl’s Jr. National Production Fund	California	100%
CKE Distribution, LLC	California	100%
Aeroways, LLC	California	100%
Santa Barbara Restaurant Group, Inc.	Delaware	100%
La Salsa, Inc.	Delaware		100%
GB Franchise Corporation	California		100%
La Salsa of Nevada, Inc.	Nevada		100%
Channel Islands Roasting Company	California	100%

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors
CKE Restaurants, Inc.:

We consent to the incorporation by reference in the registration statements (No. 333-111284) on Form S-3, (No. 333-75880) on Form S-4, and (Nos. 333-126681, 333-104957, 333-83666, 333-76884, 333-41266, 333-83601, 333-12399, 2-86142-01, 33-31190-01, 33-53089-01, 33-56313 and 33-55337) on Form S-8 of CKE Restaurants, Inc., of our reports dated March 28, 2007, with respect to the consolidated balance sheets of CKE Restaurants, Inc. and subsidiaries as of January 31, 2007 and 2006, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the years in the three-year period ended January 31, 2007, management’s assessment of the effectiveness of internal control over financial reporting as of January 31, 2007, and the effectiveness of internal control over financial reporting as of January 31, 2007, which reports appear in the January 31, 2007, annual report on Form 10-K of CKE Restaurants, Inc.

Our report on the consolidated financial statements refers to CKE Restaurants, Inc.’s adoption of Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment, a change in the method of quantifying errors in fiscal 2007 and the restatement of the consolidated financial statements for fiscal 2006.

/s/ KPMG LLP

Costa Mesa, California
March 28, 2007

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, certify that:

1. I have reviewed this Annual Report on Form 10-K of CKE Restaurants, Inc.;

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

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

4. The registrant’s other certifying officer 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles;

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

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

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

Date: March 30, 2007

/s/ Andrew F. Puzder

Andrew F. Puzder

President and 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, certify that:

1. I have reviewed this Annual Report on Form 10-K of CKE Restaurants, Inc.;

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

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

4. The registrant’s other certifying officer 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles;

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

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

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

Date: March 30, 2007

/s/ Theodore Abajian

Theodore Abajian

Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of 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 Annual Report on Form 10-K for the period ended January 29, 2007, of CKE Restaurants, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Andrew F. Puzder, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78m(a) or Section 78o(d)); and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

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

Date: March 30, 2007	/s/ Andrew F. Puzder
	Andrew F. Puzder
	Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification of 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 Annual Report on Form 10-K for the period ended January 29, 2007, of CKE Restaurants, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Theodore Abajian, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78m(a) or Section 78o(d)); and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

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

Date: March 30, 2007	/s/ Theodore Abajian
	Theodore Abajian
	Chief Financial Officer