(c) Provision by the Company of supplemental disability insurance sufficient to providetwo-thirds of the Employee’s pre-disability minimum base annual salary for a two-year period; and          (d) For the fiscal years ending in January 2005, 2006 and 2007, Employee shall be entitled toa bonus in the amount determined by the Company’s Chief Executive Officer, in his sole discretion.     The Company shall deduct from all compensation payable under this Agreement to the Employeeany taxes or withholdings the Company is required to deduct pursuant to state and federal laws orby mutual agreement between the parties.     5. Vacation. For and during each year of the Term and any extensions thereof, theEmployee shall be entitled to reasonable paid vacation periods consistent with his positions withthe Company and in accordance with the Company’s standard policies, or as the Company’s Board ofDirectors may approve. In addition, the Employee shall be entitled to such holidays consistentwith the Company’s standard policies or as the Company’s Board of Directors may approve.     6. Expense Reimbursement. In addition to the compensation and benefits providedherein, the Company shall, upon receipt of appropriate documentation, reimburse the Employee eachmonth for his reasonable travel, lodging, entertainment, promotion and other ordinary and necessarybusiness expenses in accordance with the Company’s policies then in effect.     7. Termination.          (a) For Cause. The Company may terminate this Agreement immediately for cause uponwritten notice to the Employee, in which event the Company shall be obligated only to pay theEmployee that portion of the minimum base annual salary due him through the date of termination.Cause shall be limited to (i) the persistent failure to perform duties consistent with acommercially reasonable standard of care; (ii) the willful neglect of duties; (iii) criminal orother illegal activities involving dishonesty; or, (iv) a material breach of this Agreement.          (b) Without Cause. Either party may terminate this Agreement immediately withoutcause by giving written notice to the other. If the Company terminates under this Section 7(b) ,then it shall pay to the Employee the sum of (i) all amounts owed through the date of termination,plus (ii) an amount equal to the product of the Employee’s minimum base annual salary in effect asof the date of termination times the number of years (including partial years) remaining in theTerm. Such payment to be made in a lump sum on or before the fifth day following the date oftermination, and shall be in lieu of all further salary and bonus obligations under this Agreement.In addition, if the Company terminates under this Section 7(b), (i) all options granted to theEmployee which had not vested as of the date of such termination shall vest concurrently with suchtermination, and, notwithstanding the terms of any option agreements, Employee may exercise anyvested options, including by reason of acceleration, for a period after such termination which isthe greater of what is provided in the respective option agreement or 30 days, and (ii) the Companyshall maintain in full force and effect for the continued benefit of the Employee for the remainderof the Term, all employee benefit plans (except for the Company’s stock option plans) and programsin which the Employee was entitled to participate immediately prior to the date of termination,provided that the Employee’s continued participation is possible under the general terms andprovisions of such plans and programs. In the event that the Employee’s participation in any suchplan or program
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is prohibited, the Company shall, at its expense, arrange to provide the Employee with benefitssubstantially similar to those which the Employee would otherwise have been entitled to receiveunder such plans and programs from which his continued participation is prohibited. If theEmployee terminates under this Section 7(b), then the Company shall only be obligated to pay theEmployee the minimum annual base salary due him through the date of termination.          (c) Disability. If the Employee fails to perform his duties hereunder on account ofillness or other incapacity for a period of six consecutive months, then the Company shall have theright upon written notice to the Employee to terminate this Agreement without further obligation bypaying the Employee the minimum base annual salary, without offset, for the remainder of the Termin a lump sum or as otherwise directed by the Employee.          (d) Death. If the Employee dies during the Term, then this Agreement shall terminateimmediately and the Employee’s legal representatives shall be entitled to receive the minimumannual base salary for the remainder of the Term in a lump sum or as otherwise directed by theEmployee’s legal representative. Executive’s outstanding Company options will immediately vest infull and be exercisable for a period of 90 days from Employee’s death.          (e) Effect of Termination. Termination for any reason or for no reason shall notconstitute a waiver of the Company’s rights under this Agreement nor a release of the Employee fromany obligation hereunder except his obligation to perform his day-to-day duties as an employee.          (f) Mitigation. Employee shall not be required to mitigate the amount of any paymentprovided for in this Section 7 by seeking other employment or otherwise, nor shall any compensationor other payments received by the Employee after the date of termination reduce any payments dueunder this Section 7.     8. Non-Delegation of Employee’s Rights. The obligations, rights and benefits of theEmployee hereunder are personal and may not be delegated, assigned or transferred in any mannerwhatsoever, nor are such obligations, rights or benefits subject to involuntary alienation,assignment or transfer.     9. Confidential Information. The Employee acknowledges that in his capacity as anemployee of the Company he will occupy a position of trust and confidence and he furtheracknowledges that he will have access to and learn substantial information about the Company andits operations that is confidential or not generally known in the industry, including, withoutlimitation, information that relates to purchasing, sales, customers, marketing, and the Company’sfinancial position and financing arrangements. The Employee agrees that all such information isproprietary or confidential, or constitutes trade secrets and is the sole property of the Company.The Employee will keep confidential, and will not reproduce, copy or disclose to any other personor firm, any such information or any documents or information relating to the Company’s methods,processes, customers, accounts, analyses, systems, charts, programs, procedures, correspondence orrecords, or any other documents used or owned by the Company, nor will the Employee advise, discusswith or in any way assist any other person, firm or entity in obtaining or learning about any ofthe items described in this Section 9. Accordingly, the Employee agrees that during the Term andat all times thereafter he will not disclose, or permit or encourage anyone else to disclose, anysuch information, nor will he utilize any such information, either alone or with others, outsidethe scope of his duties and responsibilities with the Company.
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     10. Non-Competition During Employment Term. The Employee agrees that, during the Termand any extensions thereof, he will devote substantially all his business time and effort, and giveundivided loyalty, to the Company, and that he will not engage in any way whatsoever, directly orindirectly, in any business that is competitive with the Company or its affiliates, nor solicit, orin any other manner work for or assist any business which is competitive with the Company or itsaffiliates. In addition, during the Term and any extensions thereof, the Employee will undertakeno planning for or organization of any business activity competitive with the work he performs asan employee of the Company, and the Employee will not combine or conspire with any other employeeof the Company or any other person for the purpose of organizing any such competitive businessactivity.     11. Non-Competition After Employment Term. The parties acknowledge that the Employeewill acquire substantial knowledge and information concerning the business of the Company and itsaffiliates as a result of his employment. The parties further acknowledge that the scope ofbusiness in which the Company is engaged as of the Effective Date is national and very competitiveand one in which few companies can successfully compete. Competition by the Employee in thatbusiness after this Agreement is terminated would severely injure the Company. Accordingly, for aperiod of two years after this Agreement is terminated or the Employee leaves the employment of theCompany for any reason whatsoever, except as otherwise stated hereinbelow, the Employee agrees (i)not to become an employee, consultant, advisor, principal, partner or substantial shareholder ofany firm or business that in any way competes with the Company or its affiliates in any of theirpresently-existing or then-existing products and markets; and (ii) not to solicit any person orbusiness that was at the time of such termination and remains an executive employee of the Companyor any of its affiliates. Notwithstanding any of the foregoing provisions to the contrary, theEmployee shall not be subject to the restrictions set forth in this Section 11 under the followingcircumstances:          (a) If the Employee’s employment with the Company is terminated by the Company without cause;or          (b) If the Employee’s employment with the Company is terminated as a result of the Company’sunwillingness to extend the Term of this Agreement.     12. Return of Company Documents. Upon termination of this Agreement, Employee shallreturn immediately to the Company all records and documents of or pertaining to the Company andshall not make or retain any copy or extract of any such record or document.     13. Improvements and Inventions. Any and all improvements or inventions which theEmployee may conceive, make or participate in during the period of his employment shall be the soleand exclusive property of the Company. The Employee will, whenever requested by the Company,execute and deliver any and all documents which the Company shall deem appropriate in order toapply for and obtain patents for improvements or inventions or in order to assign and convey to theCompany the sole and exclusive right, title and interest in and to such improvements, inventions,patents or applications.     14. Actions. The parties agree and acknowledge that the rights conveyed by thisAgreement are of a unique and special nature and that the Company will not have an adequate remedyat law in the event of a failure by the Employee to abide by its terms and conditions nor willmoney damages adequately compensate for such injury. It is therefore agreed between the parties
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that, in the event of a breach by the Employee of any of his obligations contained in thisAgreement, the Company shall have the right, among other rights, to damages sustained thereby andto obtain an injunction or decree of specific performance from any court of competent jurisdictionto restrain or compel the Employee to perform as agreed herein. The Employee agrees that thisSection 14 shall survive the termination of his employment and he shall be bound by its terms atall times subsequent to the termination of his employment for so long a period as Company continuesto conduct the same business or businesses as conducted during the Term or any extensions thereof.Nothing herein contained shall in any way limit or exclude any other right granted by law or equityto the Company.     15. Amendment; Integration. This Agreement contains, and its terms constitute, theentire agreement of the parties, and it may be amended only by a written document signed by bothparties to this Agreement.     16. Governing Law. California law shall govern the construction and enforcement ofthis Agreement and the parties agree that any litigation pertaining to this Agreement shall beadjudicated in courts located in California.     17. Attorneys’ Fees. If any party finds it necessary to employ legal counsel or tobring an action at law or other proceedings against the other party to enforce any of the termshereof, the party prevailing in any such action or other proceeding shall be paid by the otherparty its reasonable attorneys’ fees as well as court costs, all as determined by the court and nota jury.     18. Severability. If any section, subsection or provision hereof is found for anyreason whatsoever, to be invalid or inoperative, that section, subsection or provision shall bedeemed severable and shall not affect the force and validity of any other provision of thisAgreement. If any covenant herein is determined by a court to be overly broad thereby making thecovenant unenforceable, the parties agree and it is their desire that such court shall substitute areasonable judicially enforceable limitation in place of the offensive part of the covenant andthat as so modified the covenant shall be as fully enforceable as if set forth herein by theparties themselves in the modified form. The covenants of the Employee in this Agreement shalleach be construed as an agreement independent of any other provision in this Agreement, and theexistence of any claim or cause of action of the Employee against the Company, whether predicatedon this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company ofthe covenants in this Agreement.     19. Notices. Any notice, request, or instruction to be given hereunder shall be inwriting and shall be deemed given when personally delivered or three days after being sent byUnited States certified mail, postage prepaid, with return receipt requested, to the parties attheir respective addresses set for the below:To the Company:CKE Restaurants, Inc.