EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is entered into this 14th day
of August, 1997, between CHEESECAKE CORPORATION OF AMERICA (the "Company") and
XXXXXXX X. XXXXXXXX (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 an Executive Vice President
and Chief Operating Officer of the Company from the Date of this Agreement
until such employment is terminated in accordance with Section 9. The Employee
shall have such duties and responsibilities as may be designated to him by the
Board from time to time. Employee shall report directly to the Chief Executive
Officer of the Company. Employee shall devote substantially all his time,
attention and energies to the business and affairs of the Company and its
subsidiaries. The Company acknowledges that Employee may continue his current
activities with the entities listed on Schedule A.
2. SALARY. Subject to the further provisions of this Agreement, the
Company shall pay the Employee a salary at an annual rate of $250,000, 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. The Employee shall receive a signing bonus on the date hereof in
the net amount of $25,000 after all federal and state income tax and FICA.
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 his 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.
3.2 In addition to the foregoing, the 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
("Performance Standards"). The exercise price shall be equal to $24.12 which
is the "Fair Market Value" as defined in the 1992 Plan as of the date of this
Agreement.
3.3 For each of next three fiscal years beginning after the end of
the 1997 fiscal year, the Employee will be granted on the first business day of
each applicable fiscal year a minimum of 15,000 options under the 1992 Plan to
purchase the Company's Common Stock subject to a five year vesting schedule and
other terms of the 1992 Plan.
3.4 At such time that the Company's stockholders approve an increase
in the number of shares available under the 1992 Plan or approve the
implementation of a comparable stock option plan for employees, Employee will
receive a minimum of an additional 55,000 options to purchase the Company's
Common Stock subject to a three year vesting schedule and the other terms of
the 1992 Plan, (or other like similar plan that may be approved). In such
event that the 1992 Plan or similar plan is not approved by stockholders on or
before November 1, 2000, the Company agrees on such date to issue separately to
Employee 55,000 options to purchase the Company's Common Stock, subject to a
three year vesting schedule with an exercise price equal to the "Fair Market
Value" as such term is defined in the 1992 Plan.
3.5 Employee and his dependents shall be entitled to participate in
either the Company-paid indemnity/IPPO health insurance program through NYL
Care, or the Company-paid HMO health insurance program through CareAmerica.
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.
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3.6 The Employee shall be eligible for participation in the
Company's Performance Incentive Plan (the "Incentive Plan"). At the end of the
1998 fiscal year the Employee shall be entitled to the greater of (i) the award
under the Incentive Plan for such fiscal year, or (ii) $50,000.
4. AUTOMOBILE. The Company shall provide the Employee, at his option, a
non-accountable car allowance of $1000 per month, or participation in the
Company's car leasing plan.
5. RELOCATION BENEFITS.
(a) The Company shall reimburse the Employee for documented expenses
incurred in connection with the full-pack and transportation of Employee's and
his families' personal effects from the Employee's current residence in Texas.
(b) The Company shall provide the Employee an allowance sufficient
for up to three months rent from the date hereof for furnished temporary living
quarters.
(c) The Company shall reimburse the Employee for reasonable usual
and customary closing costs incurred in connection with the purchase of a new
principal residence in Southern California.
(d) The Company shall reimburse Employee for the costs of roundtrip
airline tickets for two (2) trips from Texas to Southern California for
Employee's spouse.
6. 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.
7. 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.
8. 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 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
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rates and on terms reasonably acceptable to the Board.
9. 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, any amounts due Employee pursuant to the second
sentence of Section 3.6, or 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, and all benefits and rights provided under any applicable
stock option plan. Upon the Employee's death, 40% of the Initial Options shall
immediately vest if death occurs within two years from the date of this
Agreement and 100% of the Initial Options shall immediately vest if death
occurs more than two years from the date of this Agreement.
(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 his material duties with the Company for 90
consecutive days or 180 days within any 12-month period, his 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, and all benefits and rights provided under any applicable
stock option plan and disability plan. The Company will pay Employee's COBRA
payments for the maximum term for Employee and his dependents. Upon
termination for Disability, 40% of the Initial Options shall immediately vest
if termination occurs within two years of the date of this Agreement and 100%
of the Initial Options shall immediately vest if termination occurs more than
two years from the date of this Agreement.
(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 his duties with the Company for a reasonable period of
time (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.
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 him not in good faith and 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
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of the Board at a meeting of such members finding that he has engaged in the
conduct set forth above in this subsection (c) and specifying the particulars
thereof in detail. Employee shall be entitled to any unpaid pro rata salary
earned prior to 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
up to the date of termination, (ii) a lump-sum payment in an amount equal to
one-half of one year's Base Salary then in effect (but in no event less than
$125,000), (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, (v) the immediate vesting of forty
percent (40%) of any options granted to Employee pursuant to Sections 3.2, 3.3
and 3.4 if termination occurs within two (2) years from the date hereof and
(vi) the vesting of one hundred percent (100%) of any options granted to
Employee pursuant to Sections 3.2, 3.3 and 3.4 if termination occurs after two
(2) years from the date hereof.
(e) BY EMPLOYEE. Employee may terminate this Agreement upon 90 days
written notice to the Company and shall be entitled to any unpaid pro rata
salary earned up to the date of termination.
(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 12. "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 provided Employee's employment is terminated upon 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.
10. 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 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
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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 his 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 him hereunder
had he 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 his estate.
11. CONFIDENTIAL INFORMATION.
(a) During the term of this Agreement and thereafter, the Employee
shall not, except as may be required to perform his 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 his
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
his 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 he 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 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. Employee shall be permitted to own the greater of 1% of the
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voting shares or 140,000 shares of Common Stock of Total Entertainment and
maintain his positions and current duties with the entities listed on
Schedule A.
(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 his 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, he 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.
12. 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: Xxxxxxx X. Xxxxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
13. AMENDMENTS OR ADDITIONS. No amendment or additions to this Agreement
shall be binding unless in writing and signed by both parties hereto.
14. 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.
15. SEVERABILITY. The provisions of this Agreement shall be deemed
severable
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and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.
16. 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.
17. 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 his 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.
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.
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Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law. Sections 11 and 17
shall survive the expiration of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
on the date first indicated above.
CHEESECAKE CORPORATION OF AMERICA
By:
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XXXXX XXXXXXX
Chief Executive Officer
EMPLOYEE:
---------------------------------
XXXXXXX X. XXXXXXXX
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