Exhibit 10.1
EMPLOYMENT
AGREEMENT
This EMPLOYMENT AGREEMENT (the
“ Agreement ”) is entered into as of
June 30, 2009 (“ Date of this Agreement ”),
between THE CHEESECAKE FACTORY INCORPORATED (the “
Company ”) and DAVID M. OVERTON (the “
Employee ”).
WHEREAS, the Compensation Committee
of the Board of Directors (“ Board ”), of the
Company (the “ Compensation Committee ”) has
approved and authorized the entry into this Agreement with the
Employee; and
WHEREAS, the parties desire to enter
into this Agreement setting forth the terms and conditions for the
employment relationship of the Employee with the
Company.
NOW, THEREFORE, in consideration of
the promises and mutual covenants and agreements herein contained
and intending to be legally bound hereby, the Company and the
Employee hereby agree as follows:
1.
Employment
. During the Term of this
Agreement, Employee is employed as Chief Executive Officer (“
CEO ”) of the Company and, so long as Employee remains
CEO and a member of the Board shall be the Chairman of the
Board. As Chairman of the Board, Employee shall have all
rights and duties set forth in the Company’s Articles of
Incorporation and By-laws and will work in collaboration with the
Lead Director of the Board to establish the agendas for the Board
meetings. As CEO, Employee shall have all rights and duties
set forth in the Company’s Articles of Incorporation and
By-Laws and, subject to the oversight of the Board, shall have
general supervision, direction and control of the business and the
officers, employees and agents of the Company, including
development and implementation of the Company’s strategic
plans and policies, short-and long-term growth, operations,
financial and capital expenditure decisions, reporting structure
and organization, budgeting and financial performance, and
communications and relations with investors, other Board members,
customers, and other outside Company business interests. The
Employee shall devote substantially all his time, attention and
energies to the business and affairs of the Company and the
subsidiaries. The Company acknowledges that the Employee is a
member of the Board and that such membership constitutes an
integral part of the Employee’s duties hereunder.
2.
Term . The “ Term of this
Agreement ” or “ Term ” shall be for
the period beginning the Date of this Agreement and ending on
May 7, 2012.
3.
Salary . Subject to the further provisions of
this Agreement, the Company shall pay the Employee a salary at an
initial annualized rate equal to $850,000 effective as of
June 30, 2009. The Employee’s salary may be
increased at such times, if any, and in such amounts as determined
by the Compensation Committee in its discretion. The
Compensation Committee will review the salary on an annual
basis. Any increase in salary shall not serve to limit or
reduce any other obligation of the Company hereunder. Such
salary shall be payable by the Company to the Employee not less
frequently than monthly. Participation in deferred
compensation, discretionary or performance bonus, retirement, stock
option and other employee benefit plans and in fringe benefits
shall not reduce the annual rate.
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4.
Bonus . While employed by the Company pursuant
to this Agreement, the Employee shall be eligible to be a
participant in the Company’s Performance Incentive Plan (or
any modified or replacement plan providing for bonus incentives to
executive officers) (“ Incentive Plan ”) subject
to the terms, conditions and limitations of such Incentive
Plan. During the Term of this Agreement Employee also shall
be eligible for other discretionary bonus awards, as determined in
the sole discretion of the Compensation Committee.
5.
Participation in Employee Benefit
Plans . While
employed by the Company pursuant to this Agreement, the Employee
shall be entitled to participate equitably with other executive
officers commensurate with Employee’s position with the
Company, in any plan of the Company relating to pension, thrift,
profit sharing, life insurance, disability income insurance,
medical coverage, education, or other retirement or employee
benefits that the Company has adopted or may adopt for the benefit
of its executive officers, subject to the terms, conditions and
limitations of any such plan.
6.
Equity Compensation
.
(a)
Grants . On May 7, 2009 (“ Date of
Grant ”), the Company granted the Employee
(x) 50,000 restricted shares of the Company’s common
stock (“ Restricted Shares ”) and
(y) 100,000 non qualified stock options (“
Options ”) to purchase shares of the Company’s
common stock pursuant to a Notice and Agreement of Grant of Stock
Option and/or Restricted Share Award (“ Equity
Agreement ”). The Restricted Shares and the Options
are subject to the terms and conditions of the Company’s 2001
Omnibus Stock Incentive Plan as restated April 5, 2004, as
further amended July 23, 2008 (“ Plan ”),
the Equity Agreement and the Company’s stock retention
requirements applicable to executive officers.
(b)
Consideration for Future
Grants . The
Employee during the Term of this Agreement shall be eligible for
future grants of options to purchase the Company’s common
stock, restricted shares, or other equity incentives under the
Company’s equity incentive plans at levels commensurate with
Employee’s position with the Company. All such grants
and the terms and conditions shall be in the discretion of the
Compensation Committee.
(c)
Prior Grants
. If, on the Date of
Termination (as hereinafter defined in Section 13(d)), any
installment of non qualified stock options to purchase shares of
the Company’s common stock granted to the Employee pursuant
to the Plan on or subsequent to December 29, 2004 and prior to
the grant of the Options are not then exercisable and the
Employee’s employment is not terminated for Cause (as
hereinafter described in Section 12(c)), such installment
shall become immediately exercisable subject to expiration as set
forth in the Plan or any option agreement.
7.
Fringe Benefits
. While employed by the
Company pursuant to this Agreement, the Employee shall be entitled
to receive all other fringe benefits, which are now or may be
provided to the Company’s executive officers. To the
extent that the level of any such benefits is based upon seniority,
level of services or compensation levels, the Company shall make an
appropriate and proportionate adjustment to the Employee’s
benefits.
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8.
Vacation . While employed by the Company pursuant to this
Agreement, the Employee shall be entitled to an annual paid
vacation in accordance with the Company’s general
administrative policy.
9.
Business Expenses
. While employed by the
Company pursuant to this Agreement, the Employee shall be entitled
to incur and be reimbursed for all reasonable business
expenses. The Company agrees that it will reimburse the
Employee for all such expenses upon the presentation by the
Employee, from time to time, of an itemized account of such
expenditures setting forth the date, the purposes for which
incurred, and the amounts thereof, together with such receipts
showing payments in conformity with the Company’s established
policies. Reimbursement shall be made within a reasonable
period after the Employee’s submission of an itemized account
in accordance with the Company’s established policies;
provided, however, to the extent that any reimbursement of any
business expense under this Section 9 or in-kind benefits
provided under this Agreement are deemed to constitute taxable
compensation to the Employee, (a) such amounts shall be
reimbursed or provided no later than December 31 of the year
following the year in which the expense was incurred; (b) such
amounts reimbursed or provided in one year shall not affect the
expenses or in-kind benefits eligible for reimbursement or payment
in any subsequent year, and (c) the Employee’s right to
such reimbursement or payment of any such amounts shall not be
subject to liquidation or exchange for any other benefit (“
409A Reimbursement Conditions ”).
10.
Code Section 280G
.
(a)
Notwithstanding any other provision
of this Agreement, in the event that Employee becomes entitled to
receive or receives any payments, options, awards or benefits
(including, without limitation, the monetary value of any non-cash
benefits and the accelerated vesting of stock options or restricted
stock) under this Agreement or under any other plan, agreement or
arrangement with the Company, from any person whose actions result
in any change described in Code
Section 280G(b)(2)(A)(i) (a “ Section 280G
Transaction ”) or from any person affiliated with the
Company or such person (collectively, the “ Payments
”) that may separately or in the aggregate constitute
“parachute payments” within the meaning of Code
Section 280G and it is determined that, but for this
Section 10(a), any of the Payments will be subject to any
excise tax pursuant to Code Section 4999 or any similar or
successor provision (the “ Excise Tax ”), the
Company shall pay to Employee either (i) the full amount of
the Company Payments (as defined below) or (ii) an amount
equal to the Company Payments (as defined below), reduced by the
minimum amount necessary to prevent any portion of the Payments
from being an “excess parachute payment” (within the
meaning of Code Section 280G) (the “ Capped
Payments ”), whichever of the foregoing amounts results
in the receipt by Employee, on an after-tax basis, of the greatest
amount of Payments notwithstanding that all or some portion of the
Payments may be subject to the Excise Tax. For purposes of
determining whether Employee would receive a greater after-tax
benefit from receipt of the Capped Payments than from receipt of
the full amount of the Payments, (i) there shall be taken into
account any Excise Tax and all applicable federal, state and local
taxes required to be paid by Employee in respect of the receipt of
such payments and (ii) such payments shall be deemed to be
subject to federal income taxes at the highest rate of federal
income taxation applicable to individuals that is in effect for the
calendar year in which the benefits are to be paid, and state and
local income taxes at the highest rate of taxation applicable to
individuals in the state and locality of
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Employee’s residence on the effective date
of the Section 280G Transaction, net of the maximum reduction
in federal income taxes which could be obtained from deduction of
such state and local taxes (as determined by assuming that such
deduction is subject to the maximum limitation applicable to
itemized deductions under Code Section 68 and any other
limitations applicable to the deduction of state and local income
taxes under the Code).
(b)
In the event that
Section 10(a) applies and a reduction is required to be
applied to the Company Payments thereunder, the Company Payments
shall be reduced by the Company in its reasonable discretion in the
following order and in a manner that complies with Code
Section 409A (as determined by the Company):
(i) reduction of any cash payments otherwise payable to
Employee that are exempt from Code Section 409A;
(ii) reduction of any cash payments otherwise payable to
Employee that are subject Code Section 409A on a pro-rata
basis or such other manner that complies with Code
Section 409A, as determined by the Company,
(iii) cancellation of accelerated vesting of equity awards
(other than stock options) that are exempt from Code Section 409A;
(iv) cancellation of accelerated vesting of stock options that
are exempt from Code Section 409A; and (v) reduction of
any other payments and benefits otherwise payable to the Employee
by the Company on a pro-rata basis or such other manner that
complies with Code Section 409A, as determined by the
Company. If acceleration of vesting of Employee’s stock
options or other equity awards is to be reduced pursuant to clauses
(iii) or (iv) of the immediately preceding sentence, such
acceleration of vesting shall be accomplished by first canceling
such acceleration for the vesting installment that will vest last
and continuing to the extent necessary by canceling such
acceleration for the next vesting installment with the latest
vesting. For purposes of this Section 10, the term
“ Company Payments ” means any payments,
options, awards or benefits (including, without limitation, the
monetary value of any non-cash benefits and the accelerated vesting
of stock options or restricted stock) under this Agreement or under
any other plan, agreement or arrangement with the
Company.
(c)
All calculations and determinations
under this Section 10, including application and
interpretation of the Code and related regulatory, administrative
and judicial authorities, shall be made by an accounting firm
selected by the Company and reasonably acceptable to Employee which
is designated as one of the four largest accounting firms in the
United States (the “ Accounting Firm ”).
All determinations made by the Accounting Firm under this
Section 10 shall be conclusive and binding on both the Company
and Employee, and the Company shall cause the Accounting Firm to
provide its determinations and any supporting calculations with
respect to Employee to the Company and Employee. The Company
shall bear all fees and expenses charged by the Accounting Firm in
connection with its services. For purposes of making the
calculations and determinations under this Section 10, after
taking into account the information provided by the Company and
Employee, the Accounting Firm may make reasonable, good faith
assumptions and approximations concerning the application of Code
Sections 280G and 4999. The Company and Employee shall
furnish the Accounting Firm with such information and documents as
the Accounting Firm may reasonably request to assist the Accounting
Firm in making calculations and determinations under this
Section 10.
11.
Indemnity . The Company shall indemnify and hold the
Employee harmless from any cost, expense or liability arising out
of or relating to any acts or decisions made by the Employee on
behalf of or in the course of performing services for the Company
to the same
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extent the Company indemnifies and holds
harmless other executive officers and directors of the Company and
in accordance with the Company’s certificate of
incorporation, bylaws and established policies. While
employed by the Company pursuant to this Agreement, the Company
agrees to seek to maintain director and officer liability
insurance. The Company agrees to seek to maintain such
insurance for a period of at least 36 months following the Date of
Termination (as hereinafter defined). In the event that the
Company does not maintain a director and officer liability policy
covering former directors and officers during such 36-month period,
the Company agrees to seek to obtain and maintain
“tail” coverage for director and officer liability with
respect to former directors and officers for a period of up to 36
months after the Date of Termination. This indemnification
provision is in addition to, and does not supersede any other
agreement of indemnification provided by the Company to
Employee.
12.
Certain Terms Defined
. For purposes of this
Agreement:
(a)
The Employee shall be deemed to
incur a “ Permanent Disability ” if a physical
or mental condition occurs and persists which, in the written
opinion of a licensed physician selected by the Compensation
Committee in good faith, has rendered the Employee unable to
perform the Employee’s duties hereunder for a period of 90
days or more and, in the written opinion of such physician, the
condition will continue for an indefinite period of not less than
an additional 90-day period, rendering the Employee unable to
return to the Employee’s duties. To the extent the
Employee’s Permanent Disability results in any payment
hereunder subject to the requirements of
Section 409A(a) of the Code, such payment shall be
further conditioned on the Employee’s Permanent Disability
also constituting a “disability” within the meaning of
Regulations Section 1.409A-3(i)(4).
(b)
“ Beneficial Owner
” shall have the meaning given to such term in the Exchange
Act and the rules and regulations thereunder.
(c)
“ Cause ” means
termination upon: (1) the willful failure by the
Employee to substantially perform his duties with the Company
(other than any such failure resulting from his incapacity due to
physical or mental illness), after a written demand for substantial
performance is delivered to him by the Board, which demand
specifically identifies the manner in which the Board believes that
he has not substantially performed his duties; (2) the
Employee’s willful misconduct that is demonstrably and
materially injurious to the Company, monetarily or otherwise; or
(3) the Employee’s commission of such acts of
dishonesty, fraud, misrepresentation or other acts of moral
turpitude as would prevent the effective performance of his
duties. No act, or failure to act, on the Employee’s
part shall be deemed “willful” unless done, or omitted
to be done, by him in bad faith and done or omitted to be done
without the reasonable belief that his action or omission was in
the best interest of the Company. Notwithstanding the
foregoing, the Employee shall not be deemed to have been terminated
for Cause unless and until there shall have been delivered to him a
copy of a resolution duly adopted by the affirmative vote of a
majority of the members of the Board at a meeting of such members
(after reasonable notice to him and an opportunity for him,
together with his counsel, to be heard before such members of the
Board), finding that he has engaged in the conduct set forth above
in this subsection (c) and specifying the particulars
thereof in detail.
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