EXHIBIT 10.10
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is entered into this 12th
day of April, 1999, between THE CHEESECAKE FACTORY INCORPORATED (the
"Company") and XXXXX X. XXXXXXX (the "Employee").
WHEREAS, the Board of Directors of the Company (the "Board") 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 to 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. The Employee is employed as Senior Vice President and
General Counsel of the Company from the date of this Agreement until
termination in accordance with Section 8. The Employee shall have such duties
and responsibilities as may be designated to her by the Board from time to
time. Employee shall report directly to the Chief Executive Officer of the
Company. Employee shall devote substantially all her time, attention and
energies to the business and affairs of the Company and its subsidiaries.
2. SALARY. The Company shall pay the Employee a salary at an annual
rate of $230,000, with such salary to be increased at such times, if any, and
in such amounts as determined by the Board ("Base Salary"). Such salary shall
be payable by the Company to the Employee in substantially equal
installments not less frequently than bi-weekly. Participation in deferred
compensation, discretionary bonus, retirement, stock option and other
employee benefit plans and in fringe benefits shall not reduce the salary
payable to the Employee under this Section 2.
3. PARTICIPATION IN BONUS, RETIREMENT AND EMPLOYEE BENEFIT PLANS.
3.1 The Employee shall be entitled to participate equitably with
other officers to the extent of her position, tenure and salary in any plan
of the Company relating to options, bonuses, stock purchases, pension,
thrift, profit sharing, life insurance, disability insurance, medical
coverage, education, severance or so called "golden parachute" payments, or
other retirement or employee benefits that the Company has adopted or may
adopt for the benefit of its officers.
-1-
3.2 Employee shall receive on the date hereof options under the
Company's 1992 Employee Performance Stock Option Plan ("1992 Plan") to
purchase 100,000 shares of the Company's Common Stock ("Initial Options")
which options shall vest 20% per year on the first anniversary of the date of
grant and each anniversary thereafter, provided the Company's earnings
performance for the year ended immediately prior to the year in which the
vesting date occurs, meets or exceeds the average earnings performance of all
full-menu table service restaurants reported in the Wertheim Index or an
equivalent index selected by the Board's Compensation Committee. The exercise
price shall be equal to $19.906 which is the "Fair Market Value" as defined
in the 1992 Plan as of the date Employee accepted employment with the Company.
3.3 Employee and her dependents shall be entitled to participate
in either the Company-paid indemnity/IPO health insurance program through
N.L. Care, or the Company-paid HMO health insurance program through Care
America. Participation shall be effective 30 days from the date hereof. The
Company shall provide COBRA reimbursement to Employee for the 30 days prior
to Employee's and his dependent's participation in a Company-paid health
insurance program. In addition, Employee shall have the right to participate
in any other plan or benefit offered by the Company for similar situated
employees.
3.4 The Employee shall be eligible for participation in the
Company's Performance Incentive Plan (the "Incentive Plan"). Participation in
the Incentive Plan for the 1999 fiscal year shall be prorated to 75% of any
award earned.
4. AUTOMOBILE. The Company shall provide the Employee, at her
option, a non-accountable car allowance of $900 per month, or participation
in the Company's car leasing plan.
5. VACATION. The Employee shall be entitled to three (3) weeks
annual paid vacation in accordance with the Company's general administrative
policy, in addition to holidays and other paid time off provided generally
to officers of the Company.
6. BUSINESS EXPENSES. During such time as the Employee is
rendering services hereunder, the Employee shall be entitled to incur and
be reimbursed for all reasonable business expenses, including but not
limited to mobile telephone charges. 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 not to exceed thirty days after the Employee's submission
of an itemized account.
7. 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
-2-
Employee on behalf of or in the course of performing services for the
Company to the same extent the Company indemnifies and holds harmless other
officers and directors of the Company and in accordance with the Company's
established policies. The Company agrees to maintain Directors and
Officers Liability Insurance if such insurance shall be available at rates
and on terms reasonably acceptable to the Board.
8. TERMINATION.
(a) DEATH. This Agreement shall terminate upon the Employee's
death. Employee's estate shall be entitled to any unpaid pro rata salary
earned prior to such death, and payment of the pro rata portion of Employee's
Incentive Plan award for the fiscal year, if any, when paid to all other
participants, to the extent not already vested in at least 40% of the Initial
Options, the immediate vesting of 40% of the Initial Options and all benefits
and rights provided under any applicable stock option plan.
(b) DISABILITY. If, as a result of the Employee's incapacity due
to physical or mental illness, he shall have been absent from the full-time
performance of substantially all of her material duties with the Company for
90 consecutive days or 180 days within any 12-month period, her employment
may be terminated by the Company for "Disability." Termination shall occur
30 days after a notice of a written termination is delivered to Employee by
the Company. Employee shall be entitled to any unpaid pro rata salary earned
prior to such "Disability" and a lump sum payment of the pro rata portion of
Employee's Incentive Plan award for the fiscal year, if any, when paid to all
other participants, to the extent not already vested in at least 40% of the
Initial Options, the immediate vesting of 40% of the Initial Options and all
benefits and rights provided under any applicable stock option plan and
disability plan.
(c) CAUSE. Subject to the notice provisions set forth below, the
Company may terminate the Employee's employment for "Cause" at any time.
"Cause" shall mean termination upon: (1) the willful failure by the Employee
to substantially perform her duties with the Company for a reasonable period
of time after notice (other than any such failure resulting from her
incapacity due to physical or mental illness), or (2) the Employee's
commission of such acts of dishonesty, fraud, misrepresentation or other acts
of moral turpitude as would prevent the effective performance of her duties.
For purposes of this subsection (c), no act, or failure to act, on the
Employee's part shall be deemed "willful" unless done, or omitted to be done,
by her not in good faith without the reasonable belief that her action or
omission was in the best interest of the Company. Employee shall be entitled
to any unpaid pro rata salary earned prior to the date of termination under
this paragraph (c).
(d) WITHOUT CAUSE. This Agreement and the Employee may be
terminated for any reason without cause by the Company at any time. In such
case, the Employee shall be entitled to (i) any unpaid pro rata salary earned
prior to the date of termination, (ii) a lump-sum payment in an amount equal
to two year's Base Salary then in effect, (iii) a lump-sum payment of the pro
rata portion of Employee's Incentive Plan award for the fiscal year, if any,
when
-3-
awards are paid to all other plan participants, (iv) any amounts accrued and
unpaid under any plan or benefit of which Employee is a participant, and (v)
to the extent not already vested, the immediate vesting of forty percent
(40%) of the Options granted to Employee pursuant to Section 3.2.
(e) BY EMPLOYEE. Employee may terminate this Agreement upon 90
days written notice after a Change in Control (as defined below). In such
case, the Employee shall be entitled to (i) any unpaid pro rata salary earned
prior to the date of termination, (ii) a lump-sum payment in an amount equal
to two year's Base Salary then in effect, (iii) a lump-sum payment of the pro
rata portion of Employee's Incentive Plan award for the fiscal year, if any,
when awards are paid to all other plan participants, (iv) any amounts accrued
and unpaid under any plan or benefit of which Employee is a participant, and
(v) to the extent not already vested in at least 40% of the Initial Options,
the immediate vesting of forty percent (40%) of the Options granted to
Employee pursuant to Section 3.2. "Change of Control" shall mean (i) any
reorganization, merger or consolidation of the Company with one or more
corporations where the Company is the surviving corporation and the
stockholders of the Company immediately prior to such transaction do not own
at least 80% of the Company's Common Stock immediately after such
transaction, (ii) any reorganization, merger or consolidation of the Company
with one or more corporations where the Company is not the surviving
corporation, (iii) a sale of substantially all of the Company's assets, or
(iv) a sale of 80% or more of the then outstanding shares of Common Stock of
the Company.
(f) NOTICE AND DATE OF TERMINATION. Any termination of the
Employee's employment by the Company or by the Employee shall be communicated
by written Notice of Termination to the other party hereto in accordance with
Section 11. "Notice of Termination" shall mean a notice that indicates the
specific termination provision in this Agreement relied upon and sets forth
in reasonable detail the facts and circumstances claimed to provide a basis
for the termination of the Employee's employment under the provision so
indicated. Unless otherwise specifically provided herein, Employee's
employment shall be terminated upon the later of the date notice is given
pursuant to Paragraph 11 or the date set forth in the Notice of Termination.
For purposes of this Agreement, the term of this Agreement shall end on the
effective date of Employee's termination as provided in the foregoing notice
or, if no effective date is provided, the date such notice is received by
Employee.
9. ASSIGNMENT.
(a) This Agreement is personal to each of the parties hereto. No
party may assign or delegate any rights or obligations hereunder without
first obtaining the written consent of the other party hereto, except that
this Agreement shall be binding upon and inure to the benefit of any
successor corporation to the Company.
(b) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or
-4-
assets of the Company to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required
to perform as if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes this
Agreement by operation of law, or otherwise.
(c) This Agreement shall inure to the benefit of and be
enforceable by the Employee and her personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Employee should die while any amount would still be payable
to her hereunder had she continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to his devisee, legatee or other designee or, if there is no such
designee, to her estate.
10. CONFIDENTIAL INFORMATION.
(a) During the term of this Agreement and thereafter, the Employee
shall not, except as may be required to perform her duties hereunder or as
required by applicable law, disclose to others for use, whether directly or
indirectly, any Confidential Information regarding the Company. "Confidential
Information" shall mean information about the Company, its subsidiaries and
affiliates, and their respective clients and customers that is not available
to the general public and that was learned by the Employee in the course of
her employment by the Company, including (without limitation) any data,
formulae, information, proprietary knowledge, trade secrets and client and
customer lists and all papers, resumes, records and the documents containing
such Confidential Information. The Employee acknowledges that such
Confidential Information is specialized, unique in nature and of great value
to the Company, and that such information gives the Company a competitive
advantage. Upon the termination of her employment, the Employee will promptly
deliver to the Company all documents (and all copies thereof) containing any
Confidential Information.
(b) NONCOMPETITION. Except as otherwise provided herein, the
Employee agrees that during the term of this Agreement she will not, directly
or indirectly, without the prior written consent of the Company, provide
consulting service with or without pay, own, manage, operate, join, control,
participate in, or be connected as a stockholder, partner, or otherwise with
any business, individual, partner, firm, corporation, or other entity which
is then in competition with the Company or any present affiliate of the
Company; provided, however, that the "beneficial ownership" by the Employee,
either individually or as a member of a "group," as such terms are used in
Rule 13d of the General Rules and Regulations under the Securities Exchange
Act of 1934 ("Exchange Act"), of not more than 1% of the voting stock of any
corporation shall not be a violation of this Agreement. It is further
expressly agreed that the Company will or would suffer irreparable injury if
the Employee were to compete with the Company or any subsidiary or affiliate
of the Company in violation of this Agreement and that the Company would by
reason of such competition be entitled to injunctive relief in a court of
appropriate jurisdiction, and the Employee further consents and stipulates to
the entry of such
-5-
injunctive relief in such a court prohibiting the Employee from competing
with the Company or any subsidiary or affiliate of the Company in violation
of this Agreement.
(c) RIGHT TO COMPANY MATERIALS. The Employee agrees that all
styles, designs, recipes, lists, materials, books, files, reports,
correspondence, records, and other documents ("Company Material") used,
prepared, or made available to the Employee, shall be and shall remain the
property of the Company. Upon the termination of her employment or the
expiration of this Agreement, all Company Materials shall be returned
immediately to the Company, and Employee shall not make or retain any copies
thereof.
(d) ANTISOLICITATION. The Employee promises and agrees that during
the term of this Agreement, and for a period of two years thereafter, she
will not influence or attempt to influence employees, customers, franchisees,
landlords, or suppliers of the Company or any of its present or future
subsidiaries or affiliates, either directly or indirectly, to divert their
employment or business to or with any individual, partnership, firm,
corporation or other entity then in competition with the business of the
Company, or any subsidiary or affiliate of the Company.
11. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth below, or to such other
addresses as either party may have furnished to the other in writing in
accordance herewith, except that notice of a change of address shall be
effective only upon actual receipt:
Company: The Cheesecake Factory Incorporated
00000 Xxxxxx Xxxx
Xxxxxxxxx Xxxxx, Xxxxxxxxxx 00000
with a copy to: the Secretary of the Company;
Employee: Xxxxx X. Xxxxxxx
c/o The Cheesecake Factory Incorporated
00000 Xxxxxx Xxxx
Xxxxxxxxx Xxxxx, XX 00000
12. AMENDMENTS OR ADDITIONS. No amendment or additions to this
Agreement shall be binding unless in writing and signed by both parties
hereto.
13. SECTION HEADINGS. The section headings used in this Agreement
are included solely for convenience and shall not affect, or be used in
connection with, the interpretation of this Agreement.
-6-
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but both of which together will
constitute one and the same instrument.
16. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators in Los Angeles, California, in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Employee shall be entitled to seek
specific performance of her right to be paid until the Date of Termination
during the pendency of any dispute or controversy arising under or in
connection with this Agreement.
17. ATTORNEYS FEES. In the event of any action or proceeding to
interpret or enforce this Agreement, the prevailing party in such action or
proceeding shall be entitled to receive reimbursement of its reasonable
attorneys= fees and costs incurred from the other party.
18. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed
to in writing and signed by the Employee and such officer as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly
set forth in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California without regard to its conflicts of law principles. All references
to sections of the Exchange Act shall be deemed also to refer to any
successor provisions to such sections.
-7-
Any payments provided for hereunder shall be paid after deduction of
any applicable withholding required under federal, state or local law.
Sections 10 and 16 shall survive the expiration or earlier termination of
this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement on the date first indicated above.
THE CHEESECAKE FACTORY INCORPORATED
By:
---------------------------------
XXXXX XXXXXXX
Chief Executive Officer
EMPLOYEE:
--------------------------------------
XXXXX X. XXXXXXX
-8-
