Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”) is entered into and effective as of
the 11th day of February, 2010 (the “Effective Date”), between THE CHEESECAKE
FACTORY INCORPORATED, a Delaware corporation (the “Company”) and MICHAEL E.
JANNINI (the “Executive”).

 

WHEREAS, on February 11, 2010, the Board of Directors (the “Board”) of the
Company appointed Mike Jannini as the President of the Company;

 

WHEREAS, on February 11, 2010, the Compensation Committee (the “Compensation
Committee”) of the Board approved and authorized the entry into this Agreement
with the Executive; and

 

WHEREAS, the parties desire to enter into this Agreement setting forth the terms
and conditions for the employment relationship between the Executive and the
Company;

 

WHEREAS, all capitalized terms used herein shall have the meaning set forth in
Section 8 of this Agreement unless otherwise expressly defined herein.

 

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 Executive hereby agree as follows:

 

1.             Employment.  The Executive is employed as the President of the
Company.  In such capacity, the Executive shall have such duties and
responsibilities to the Company and its Affiliates as may be designated to the
Executive by the Board from time to time and as are not inconsistent with the
Executive’s position.  The Executive shall devote substantially all the
Executive’s working time, attention and energies to the business and affairs of
the Company and the Company’s Affiliates.  The Executive shall report directly
to the Chief Executive Officer of the Company.  While employed by the Company
during the Term of this Agreement, without the prior written approval of the
Chief Executive Officer, the Executive shall not serve as the member of the
board of directors of any other for-profit corporation or as the manager of any
limited liability company or as a member of the board of directors or trustees
of any non-profit or charitable organization; provided, however, such
restriction shall not apply to The Cheesecake Factory Oscar and Evelyn Overton
Foundation, provided that the time and attention Executive provides to such
organization does not interfere with Executive’s working time, attention and
energies that he is required to devote to the business and affairs of the
Company and Affiliates. 

 

--------------------------------------------------------------------------------

 

2.             Term.  The initial “Term of this Agreement” shall mean the
two-year period commencing on February 16, 2010 and ending on February 15,
2012.  On such date and on each subsequent February 15th thereafter, the Term of
this Agreement shall be automatically extended for one additional calendar year
unless, at least ninety (90) days prior to February 15th of each year during the
Term of this Agreement, either the Company or the Executive shall give notice
not to extend this Agreement.  Unless otherwise terminated earlier in accordance
with Section 9, “The Term of this Agreement” shall mean, for purposes of this
Agreement, such initial two-year term and subsequent extensions, if any.

 

3.             Benefits.  During the Term of this Agreement, Executive shall be
eligible for the following compensation and benefits:

 

(a)           Annual Salary.  Subject to the further provisions of this
Agreement, the Company shall pay the Executive during the Term of this Agreement
a base salary at an annual rate during the Term equal to Five Hundred Fifty
Thousand Dollars ($550,000), with such salary to be adjusted at such times, if
any, and in such amounts as determined by the Compensation Committee (“Annual
Salary”), provided, however, the Executive’s Annual Salary shall not be
decreased without the Executive’s prior written consent unless the annual
salaries of all other Executive Officers are proportionately decreased, but in
no event shall Executive’s Annual Salary be decreased during the one
(1) calendar year period commencing with the Effective Date.  Any increase in
salary shall not serve to limit or reduce any other benefit or obligation of the
Company hereunder.  The Company shall pay such salary to the Executive, in equal
installments, not less frequently than monthly in accordance with the Company’s
standard payroll practices for employees who are Executive Officers of the
Company.  The Executive’s participation in any deferred compensation,
discretionary and/or performance bonus, retirement, stock option and/or other
employee benefit plans and in fringe benefits shall not reduce the Executive’s
Annual Salary.

 

(b)           Equity Grant.  Subject to the approval by the Compensation
Committee of the Company’s Board of Directors (“Compensation Committee”), the
Executive shall be granted an initial grant of One Hundred  Thousand (100,000)
non-qualified stock options, which stock options shall vest twenty percent (20%)
each year over a five-year period on the first (1st), second (2nd), third (3rd),
fourth (4th), and fifth (5th) anniversary dates of the grant date, respectively,
subject to the Company meeting certain performance criteria, if any, as
described in Executive’s Notice of Grant and Agreement, at an exercise price
equal to fair market value of the Company’s stock on the date of grant, plus
Fifty Thousand (50,000) restricted shares of the Company’s stock, which
restrictions lapse at the rate of sixty percent (60%) on the 3rd anniversary of
the grant date, and twenty (20%) each on the fourth and fifth (5th) anniversary
date of the grant date, respectively, all in accordance with the terms and
conditions of The Cheesecake Factory Incorporated 2001 Omnibus Stock Incentive
Plan (“2001 Stock Plan”), stock retention requirements applicable to certain
other Executive Officers of the Company, and the Notice of Grant and Agreement
granting such equity awards to Executive.

 

Executive also shall be eligible for consideration for future equity awards, in
accordance with the terms and conditions of The Cheesecake Factory Incorporated
2001 Stock Plan, as such plan may be modified or amended from time to time, or
such other or additional equity programs as may be established by the Company
from time to time for its Executive Officers.  The Compensation Committee shall
determine the number of awards, vesting schedule, and other requirements
applicable to such awards, if any are granted, under the Company’s equity
compensation plans.

 

--------------------------------------------------------------------------------

 

(c)           Automobile.  The option to participate in the Company’s leased car
program (currently a BMW-7 series automobile with insurance coverage) or, in
lieu of participating in the leased car program, the right to receive an
automobile allowance in the amount of One Thousand Two Hundred dollars
($1200.00) per month, in accordance with the Company’s policies and procedures
for the leased car program and subject to all applicable taxes and withholdings.

 

(d)           Participation in Bonus, Retirement and Employee Benefit Plans. 
While employed by the Company during the Term of this Agreement, the Executive
shall be entitled to participate equitably with and upon terms no less favorable
than those applicable to other Executive Officers in any plan of the Company
relating to pension, profit sharing, life insurance, disability income
insurance, education, or other retirement or employee benefits that the Company
has adopted or may adopt for the benefit of its Executive Officers, if any, to
the extent eligible thereunder by virtue of the Executive’s position, tenure and
salary. While employed by the Company during the Term of this Agreement,
Executive shall be eligible to participate in any bonus award program, in
accordance with the terms of any such program, established for Executive
Officers. The Compensation Committee shall determine the amount and timing of
awards, if any, under the Company’s bonus plans.

 

(e)           Paid Vacation.  While employed by the Company during the Term of
this Agreement, the Executive shall be entitled to an annual paid vacation in
accordance with the Company’s general administrative policy but in no event less
than the greater of the amount of paid vacation time provided to other Executive
Officers who have been at the Company for a commensurate period of time as the
Executive, or three weeks per year.

 

4.             Relocation.  Executive’s offices shall be at the corporate
headquarters of the Company, currently located in Calabasas Hills, California,
and Executive shall, when not traveling on Company business, work at such
corporate offices.  The Company shall pay for reasonable temporary
accommodations in the Calabasas Hills, California area, not to exceed a period
of three months in total, while Executive seeks permanent housing arrangements.
The Company also shall reimburse Executive for his relocation expenses by making
the following payments to Executive to assist in his relocation from the
Washington D.C. area to the greater Los Angeles Metropolitan area, which amounts
shall be Executive’s sole reimbursement from the Company for relocation: (i) 
reimburse up to two visits from the Washington DC area to the Los Angeles
Metropolitan Area, including meals, rental car or mileage and gas for
Executive’s personal car, and accommodations, in accordance with the Company’s
policies for travel reimbursement, for Executive and his spouse to search for
housing in the greater Los Angeles Metropolitan Area;  (ii) reimburse customary
moving expenses incurred for the packing, shipping and unpacking of household
goods from Washington D.C. to Los Angeles County; and (iii)  make a one time
payment to Executive of Sixty Five Thousand dollars ($65,000), subject to all
applicable taxes and withholdings, payable within two weeks of the Effective
Date.  If Executive voluntarily terminates his employment with the Company
within two years from the Effective Date of this Agreement, Executive agrees to
reimburse the Company in the gross amount equal to the sum of Sixty Five
Thousand Dollars ($65,000), less the amount derived by multiplying Sixty Five
Thousand dollars ($65,000) by a fraction, the numerator of which is the number
of full or partial calendar months of employment completed with the Company as
of the Date of Termination and the denominator of which is 24 provided, however,
such reimbursement payment shall not be required if Executive terminates
employment as a result of a termination Without Cause by the Company or a
termination by Executive that constitutes a Constructive Termination (both as
defined below).

 

5.             Health Insurance Premiums; Fringe Benefits.  While employed by
the Company during the Term of this Agreement, Executive and his dependants
shall be entitled to participate and the

 

--------------------------------------------------------------------------------

 

Company shall pay a portion of Executive’s premium for medical, dental and
vision care insurance with respect to the Executive and the Executive’s
dependants under the Company’s employee medical insurance policies to the extent
provided to other Executive Officers of the Company and based upon the most
comprehensive medical, dental and vision care insurance plan then offered to the
Company’s Executive Officers.  In addition and while employed by the Company
during the Term of this Agreement, the Executive shall be entitled to receive
all other fringe benefits that are now or may be hereafter provided to the
Company’s other Executive Officers.  The Company shall appropriately adjust such
fringe benefits to the extent that the level or amount of any fringe benefit is
based upon seniority, compensation levels, or geographic location.

 

6.             Business Expenses.  While employed by the Company during the Term
of this Agreement, the Executive shall be entitled to incur and be reimbursed
for all reasonable business expenses.  The Company shall reimburse the Executive
for all these expenses provided the Executive provides, from time to time,  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 and procedures.

 

7.             Indemnity.  To the fullest extent permitted by the General
Corporation Law of the State of Delaware as the same exists or may hereafter be
amended, the Company shall indemnify and hold the Executive harmless from any
cost, expense or liability arising out of or relating to any acts or decisions
made by the Executive on behalf of or in the course of performing services for
the Company to the same extent and upon terms no less favorable than those upon
which the Company indemnifies and holds harmless other Executive Officers and in
accordance with the Company’s established policies.  The indemnification
provided by this Section 7 shall not be deemed exclusive of any other rights to
which the Executive may be entitled under the Company’s certificate of
incorporation, any Company maintained liability insurance (in accordance with
the coverage, if any, provided by such insurance), any bylaw, agreement,
contract, vote of the stockholders or disinterested directors or pursuant to the
direction (howsoever embodied) of any court of competent jurisdiction or
otherwise.

 

8.             Certain Terms Defined.  For purposes of this Agreement:

 

(a)           “Affiliate” shall mean a person that directly or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with the person specified.

 

(b)           “Base Salary” means, as of any date of termination of employment,
the highest Annual Salary of the Executive in any of the last three fiscal years
preceding such date of termination of employment.

 

(c)           “Beneficial Owner” shall have the meaning given to such term in
the Exchange Act and the rules and regulations thereunder.

 

(d)           “Cause” means the occurrence of any of the following events:
(i) the failure by the Executive to perform the Executive’s duties with the
Company (other than any such failure resulting from the Executive’s incapacity
due to physical or mental illness), after there has been delivered to the
Executive a written notice of failure to perform from the Company, which notice
specifically identifies the basis for the Company’s belief that the Executive
has not substantially performed the Executive’s duties, provided however, with
respect to only nonmaterial breaches of Executive’s duties, the Executive’s
failure to perform such duties shall not be deemed to be an event of “Cause”
unless such failure continues uncured for thirty (30) days after delivery to
Executive of written notice thereof from the Company, which notice specifically
identifies the basis for the Company’s belief that such failure to perform has
occurred, and Executive’s failure to cure within thirty (30) days thereafter;
(ii) incompetence

 

--------------------------------------------------------------------------------

 

or gross negligence committed by Executive in the discharge of the Executive’s
duties; (iii) Executive’s commission of any dishonesty, act of theft,
embezzlement, or fraud; (iv) Executive’s breach of confidentiality in violation
of law or of the Company’s policies and procedures applicable to Executive
Officers; (v)  Executive’s unauthorized disclosure or use of inside or
proprietary information, recipes, processes, customer or employee lists, or
trade secrets of the Company in violation of law or of the Company’s policies
and procedures applicable to Executive Officers; (vi) Executive’s willful or
material violation of any law, rule or regulation of any governing authority; or
(vii) Executive’s willful or material violation of the Company’s policies and
procedures applicable to Executive Officers, including, without limitation, the
Company’s Code of Ethics and Code of Conduct applicable to Executive Officers
(viii) Executive’s intentional conduct that is injurious to the reputation,
business or assets of the Company; or (ix) except as may be permitted under
Section 15 below, Executive’s solicitation of the Company’s consultants
or-employees to work for any business other than for the Company or its
Affiliates during the Term of this Agreement without the knowledge and consent
of the Chief Executive Officer of the Company.

 

(e)            A “Change of Control” occurs if:

 

(i)            any Person (other than the Executive) or that Person’s Affiliate
is or becomes the Beneficial Owner, directly or indirectly, of securities of the
Company representing 50% (or 33 1/3% if acquired during a 12 month period) or
more of the combined voting power of the Company’s then outstanding voting
securities (“Voting Securities”); or

 

(ii)           the stockholders of the Company approve a merger, consolidation,
combination, recapitalization or other reorganization of the Company with any
other corporation (or other entity) (a “Transaction”), other than:

 

(1)           a Transaction which would result in the Voting Securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the Voting
Securities of the Company and/or such surviving entity outstanding immediately
after such merger or consolidation;

 

(2)           a Transaction effected to implement a recapitalization of the
Company (or similar transaction) in which no Person acquires more than 50% of
the combined voting power of the Company’s then outstanding Voting Securities;
or

 

(3)           a Transaction that would result in the directors of the Company
(who were directors immediately prior thereto) continuing to constitute at least
50% of all directors of the surviving entity after such merger or consolidation.

 

In this subparagraph (ii), “surviving entity” shall mean only an entity in which
all the Company’s stockholders immediately before such Transaction (determined
without taking into account any stockholders properly exercising appraisal or
similar rights) become stockholders by the terms of such Transaction, and the
phrase “directors of the Company (who were directors immediately prior thereto)”
shall include only individuals who were directors of the Company at the
beginning of the 24 consecutive month period preceding the date of such
Transaction.

 

(iii)          the stockholders of the Company approve a plan of complete
liquidation or an agreement for the sale, lease, transfer or the disposition of
all or substantially all of the Company’s assets in a single transaction or a
series of related transactions during any twelve (12) consecutive month period;
or

 

--------------------------------------------------------------------------------

 

(iv)          during any period of twelve (12) consecutive months, individuals,
who at the beginning of such period constitute the Board of Directors of the
Company, and any new director whose election by the Board of Directors, or whose
nomination for election by the Company’s stockholders, was approved by a vote of
at least one-half (1/2) of the directors then in office (other than in
connection with a contested election), cease for any reason to constitute at
least a majority of the Board of Directors.

 

(f)            “Code” means the Internal Revenue Code of 1986, as amended.

 

(g)           “Constructive Termination” means, subject to Executive providing
the notice described below and the Company’s failure to cure within the cure
period provided below after receipt of such notice, the occurrence of one or
more of the following events without the Executive’s written consent: (i) a
material relocation of the Executive’s principal business office to a location
which is in excess of a forty-five (45) mile-radius from the Executive’s
principal business office in the Company’s corporate headquarters in Calabasas
Hills, California; or (ii) material diminution in Executive’s title, authority,
duties or responsibilities relative to the Executive’s title, authority duties
or responsibilities in effect immediately prior to such reduction; or (iii) a
material diminution in Executive’s Annual Salary or base compensation including
without limit a material diminution and/or discontinuation of any benefit plan
or program, or level of participation in any such plan or program, from the
current plans, programs or levels currently applicable to Executive Officers,
which decrease or discontinuation does not apply to all Executive Officers, or a
failure to include the Executive in any new benefit plan or program offered to
other Executive Officers.  Notwithstanding the foregoing, no Constructive
Termination shall be deemed to have occurred or exist hereunder unless
(a) Executive provides the Company with written notice of the occurrence of the
event or initial existence of the condition constituting same within sixty (60)
days of such occurrence or initial existence of such condition, (b) the Company
fails to remedy such occurrence or existence of such condition within thirty
(30) days after receipt of the foregoing notice from Executive, and
(c) Executive invokes such occurrence or initial existence of such condition and
separates from the Company’s service by reason thereof within one hundred (100) 
days following such occurrence or initial existence of such condition.

 

(h)           “Date of Termination” means the date of actual receipt of a Notice
of Termination given under Section 16 below or any later date specified therein
(but not more than fifteen (15) days after the giving of the Notice of
Termination), as the case may be; provided that (i) if the Executive’s
employment is terminated by the Company for any reason other than because of the
Executive’s death or as a result of the Executive becoming Permanently Disabled,
the Date of Termination is the date on which the Company gives notice to the
Executive of such termination or the Executive gives notice to the Company that
a Constructive Termination has occurred; (ii) if the Executive’s employment is
terminated due to Permanent Disability, the Date of Termination is the date of
actual receipt of a Notice of Termination; and (iii) if the Executive’s
employment is terminated due to the Executive’s death, the Date of Termination
shall be the date of death.  The Company’s receipt of a notification by
Executive of a Constructive Termination shall not be deemed to constitute the
Company’s acknowledgement, agreement or admission that a Constructive
Termination has occurred.

 

(i)            “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

 

(j)            “Executive Officer” means a person who is an executive vice
president, general counsel, chief financial officer, president, or chief
operating officer of the Company, or a President of The Cheesecake Factory
Restaurants, Inc or The Cheesecake Factory Bakery Incorporated.

 

(k)           “Involuntary Separation” means an involuntary separation as that
term is defined in Regulation Section 1.409A-1(b)(9)(iii).

 

--------------------------------------------------------------------------------

 

(l)            “Notice of Termination” means a written notice that (i) indicates
the specific termination provision in this Agreement relied upon; (ii) sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the provision so
indicated; and (iii) specifies the Date of Termination.

 

(m)          “Person” is given the meaning as such term is used in Sections
13(d) and 14(d) of the Exchange Act; provided, however, that unless this
Agreement provides to the contrary, the term shall not include the Company, any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company, or any corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.

 

(n)           “Permanent Disability” shall mean a physical or mental condition
that occurs and persists and which, in the written opinion of a licensed
physician specializing in the applicable condition and selected by the Board in
good faith, has rendered the Executive unable to perform the Executive’s duties
hereunder for a period of ninety (90) consecutive days or more, or a period of
ninety (90) non-consecutive days in any one year period commencing on the first
day that Executive is unable to perform his duties hereunder, and, in the
written opinion of such physician, the condition will continue for an indefinite
period of not less than an additional ninety (90) day period, rendering the
Executive unable to return to the Executive’s duties on a full time basis.

 

(o)           “Regulations” means the official Treasury Department
interpretation of the Internal Revenue Code.

 

(p)           “Section 409A” means Section 409A of the Code, and the Regulations
promulgated thereunder.

 

(q)           “Separation from Service” means a separation from service as that
term is used in Code Section 409A(a)(2)(i) and the Regulations thereunder.

 

(r)            “Specified Employee” means a specified employee as that term is
used in Code Section 409A(a)(2)(B)(i) and the Regulations thereunder.

 

(s)           “Voluntary Separation with Good Reason” means a voluntary
separation as that term is defined in Regulation Section 1.409A-1(h)(2).

 

9.             Termination of Agreement.

 

(a)           Death or Disability.  This Agreement shall terminate automatically
upon the Executive’s death or upon receipt of a Notice of Termination in the
event that Executive suffers a Permanent Disability.

 

(b)           Cause.  The Company may terminate this Agreement at any time
concurrently with or after the occurrence of any event constituting Cause.

 

(c)           Constructive Termination.  The Executive may terminate this
Agreement concurrently with a Constructive Termination.

 

(d)           Without Cause.  A termination of Executive’s employment without 
the occurrence of any of the factors constituting a termination for Cause. The
Company may terminate Executive’s employment Without Cause at any time and the
Executive may resign from Executive’s employment without reason. (e) Notice of
Termination.  Any termination of the Executive’s

 

--------------------------------------------------------------------------------

 

employment by the Company for Cause or Without Cause, or any termination of the
Executive’s employment by the Executive for a Constructive Termination or by
resignation, shall be communicated by Notice of Termination to the other party,
given in accordance with Section 16.  A Notice of Termination by the Company
shall be signed by the Company’s Chief Executive Officer or any other officer of
the Company designated by the Board of Directors of the Company.  Any
termination due to Permanent Disability shall be by written notice given in
accordance with Section 16.

 

10.           Certain Benefits Upon Termination.

 

(a)           If (i) during the Term of this Agreement, the Company terminates
the Executive’s employment for any reason other than for Cause (including by
reason of death or Permanent Disability) or (ii) within eighteen (18) months
after a Change of Control that occurs during the Term of this Agreement, the
Company terminates the Executive’s employment (whether or not the Term of this
Agreement has ended without renewal) for any reason other than for Cause, or
(iii) the Executive terminates his employment with the Company because of a
Constructive Termination pursuant to Section 8(g) above (and provided that the
Company has failed to cure the event or existence of the condition giving rise
to a Constructive Termination within the thirty (30) day cure period provided
under Section 8(g)), then the following shall apply: (I) the Company shall pay
the Executive a “Severance Payment” in cash equal to one (1) times the
Executive’s Base Salary (1/2 the Executive’s Base Salary if termination is by
reason of death); (II) the Company shall pay or provide to the Executive all
other benefits, as specified in Section 10(b) below; (III) all installments of
options to purchase shares of the Company’s Common Stock under the 2001 Stock
Plan that are held by Executive and scheduled to vest within thirty-six (36)
months of the Date of Termination shall vest as of the Date of Termination
subject to expiration or termination as set forth in the 2001 Stock Plan or the
Notice and Grant Agreement granting such options to Executive; and (IV) 
provided that the Compensation Committee certifies in writing that the
performance incentive target(s) for the fiscal year in which the Date of
Termination occurs has been achieved, and all conditions to Executive Officers’
receipt of bonus awards under such plan (other than the condition of continuing
employment) have been satisfied, including any conditions related to limitations
of payment under such plan due to non-deductibility to the Company under
Section 162(m) of the Code, the Company shall pay the Executive a performance
achievement bonus award under the Company’s Annual Performance Incentive Plan
(or any restated or new bonus award plan that is then in effect for Executive
Officers) that is proportionately adjusted to take into account the period of
actual service by the Executive during the Company’s fiscal year in which the
Date of Termination occurs, if and when such bonus is paid to other Executive
Officers of the Company.

 

(b)           If Section 10(a) above applies, then the Company shall provide the
following additional benefits to Executive: (i) for a twelve (12) month period
after the Date of Termination (the “Continuation Period”), the Company shall, at
its expense, continue on behalf of the Executive and the Executive’s dependents
(and in the event of termination by reason of death, on behalf of  Executive’s
beneficiaries who were previously dependents), medical, dental, vision care, and
hospitalization benefits (or such comparable alternative benefits determined by
the Company, in its discretion) that (I) were provided to Executive at any time
during the 90-day period prior to the Date of Termination, or (II) if
termination is within eighteen (18) months of a Change of Control, were provided
to Executive prior to such Change of Control (provided the level of such
benefits shall in no event be lower than the Executive’s level of benefits on
the Date of Termination).  The Company’s obligation hereunder with respect to
benefits under this Section 10(b) shall be limited to the extent that the
Executive obtains any such benefits pursuant to the Executive’s subsequent
employer’s benefit plans, if any, in which case the Company may reduce the
coverage of any benefits it is required to provide the Executive under this
Section 10(b) so long as the aggregate coverages and benefits of the combined
benefit plans are no less favorable to the Executive than the coverages and
benefits required to be provided hereunder. This Section 10(b) shall not be
interpreted so as to limit any benefits to which the Executive, the Executive’s

 

--------------------------------------------------------------------------------

 

dependents or beneficiaries may be entitled under any of the Company’s other
employee benefit plans, programs or practices following a termination of
employment, including without limitation, retiree medical and life insurance
benefits, except as provided in this Section.  Retiree medical and life
insurance benefits shall be limited by and be designed to either (A) be exempt
from Section 409A by reason of qualification under Regulation
Section 1.409A-1(a)(9)(v)(B) and/or (D) (which shall be aggregated with all
other benefits which would qualify thereunder) or (B) be compliant with the
requirements of Regulation Section 1.409A-3(i).

 

(c)           In the event that the Executive’s employment is terminated for any
reason (including without limit by the Company for Cause or by Executive’s
voluntary resignation), the Company shall pay to the Executive:  (i) all accrued
but unpaid salary and amounts due to the Executive as of the Date of
Termination, and (ii) all accrued but unpaid or unused vacation, sick pay or
expense reimbursement benefit, up to the Date of Termination. No other payments
or benefits shall be due to Executive upon a termination for Cause or by
Executive’s voluntary resignation (other than any resignation occurring by
reason of a Constructive Termination).

 

(d)           In the event that the Executive’s employment is terminated by
reason of the Executive’s death or if the Executive is not a Specified Employee,
the Company shall make all cash payments to which the Executive is entitled
pursuant to Section 10(a)(I) within thirty (30) days following the Executive’s
Separation from Service, provided that the Company may delay payment in the case
of the Executive’s death until the Executive’s executor or personal
representative has been appointed and qualified pursuant to the laws in effect
in the Executive’s jurisdiction of residence at the time of the Executive’s
death.  If the Executive, as of the date of Separation from Service, is a
Specified Employee under Section 409A, then the Company shall, unless as
otherwise provided in this paragraph, pay to the Executive all amounts due and
owing under section 10(a)(I), five (5) business days following the date that is
six (6) months after the date of Executive’s Separation from Service, provided
that the Executive’s employment is not terminated for Cause.  If the Executive
is a Specified Employee and it is determined that Section 10(a)(I) provides
payment only in the event of Involuntary Separation or Voluntary Separation with
Good Reason, then the Company shall pay to the Executive within thirty (30) days
of the date of Executive’s Separation from Service such amounts of the
separation pay not to exceed the maximum limit permitted under Regulation
Section 1.409-1(b)(9)(iii)A(2).  Any amounts which remain unpaid after paying
all amounts permitted by the dollar limitation under Regulation
Section 1.409-1(b)(9)(iii)A(2), shall be paid five (5) days following the date
that is six (6) months after the Employee’s Separation from Service. 
Notwithstanding the foregoing, but subject to permitted payments under
Regulation Section 1.409-1(b)(9)(iii)A(2), the Company shall pay such cash
payments over a one year period, on a bi-weekly basis commencing when such
payments shall first become payable.

 

The timing and payment of any performance achievement bonus to which the
Executive is entitled pursuant to Section 10(a)(IV) shall be determined as set
forth in the Company’s Annual Performance Incentive Plan provided further, that
in all event such payment shall be made no later than March 1 of the calendar
year following the calendar year in which such Separation from Service occurs.

 

In each case, any amounts or benefits paid or provided to Executive under this
Section 10 shall be treated as a series of separate payments under Treasury
Regulations Section 1.409A-2(b)(2)(iii).

 

(e)           In the event that the Executive’s employment terminates by reason
of the Executive’s death, the applicable Severance Payment and other benefits
provided in this Section 10 shall be paid to the Executive’s estate or as the
Executive’s executor shall direct.

 

--------------------------------------------------------------------------------

 

(f)            Notwithstanding any provision of this Agreement to the contrary,
if Executive is a Specified Employee, Executive shall not be entitled to any
payments or benefits the right to which provides for a “deferral of
compensation” within the meaning of Section 409A, taking into account all
applicable exemptions or exceptions, and whose payment or provision is triggered
by Executive’s termination of employment with the Company (whether such payments
or benefits are provided to Executive under this Agreement or under any other
plan, program or arrangement of the Company), including as a result of
Executive’s Permanent Disability (other than Executive being “disabled” within
the meaning of Section 409A(a)(2)(c) of the Code), until the earlier of (i) the
date which is five (5)business days following the six-month anniversary of
Executive’s Separation from Service for any reason other than death or
(ii) Executive’s date of death, and such payments or benefits that, if not for
the six-month delay described herein, would be due and payable prior to such
date shall be made or provided to Executive on such date.  The Company shall
make the determination as to whether Executive is a Specified Employee in good
faith in accordance with its general procedures adopted in accordance with
Section 409A of the Code and, at the time of Executive’s Separation from
Service, will notify Executive whether or not he is a Specified Employee.

 

(g)           In the event the Executive is entitled hereunder to any payments
or benefits set forth in this Section 10, then (i) the Executive shall have no
obligation or duty to seek other or alternate employment or otherwise mitigate
the Company’s damages including its obligation to make any payments or provide
any benefits to Executive as required hereunder and (ii) the Company shall have
no right to reduce or set-off against any amount or benefit payable by the
Company to Executive hereunder including for or by reason of Executive’s receipt
or generation of earnings from any alternate or subsequent employment or other
arrangement or undertaking except as provided under Section 10(b).  The
provisions for Severance Payment and other benefits contained in this Section 10
may be triggered only once during the term of this Agreement, so that, for
example, should the Executive be terminated because of a Permanent Disability,
and should there be a Change of Control and Constructive Termination thereafter,
then the Executive would be entitled to be paid under this Section 10 only
once.  In addition, the Executive shall not be entitled to receive severance
benefits of any kind from any wholly owned subsidiary or other affiliated entity
of the Company if, in connection with the same event or series of events, the
Severance Payment and other benefits provided for in this Section 10 previously
have been paid to Executive.

 

(h)           In the event that the Executive’s employment is terminated for any
reason, the Company shall reimburse the Executive promptly for all business
expenses incurred prior to the Date of Termination upon the presentation by the
Executive 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.

 

(i)            The rights of the Executive under this Section 10 shall not be
exclusive of any other rights to which the Executive may be entitled under any
bonus, retirement or employee benefit plan of the Company.

 

11.           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 entity
succeeding to all or substantially all of the business and assets of the Company
(a “Successor Buyer”).

 

(b)           The Company shall require any Successor Buyer (whether direct or
indirect, by purchase, merger, consolidation or otherwise) 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 it if no such succession had taken place.  No such assumption shall
release the Company of its obligations hereunder; it being intended that the
Company shall remain liable for all its obligations hereunder after the
assumption by such Successor Buyer.  As used in this Agreement, “Company” shall
mean the Company as herein before defined and any Successor Buyer which assumes
this Agreement by contract, operation of law, or otherwise.

 

(c)           This Agreement shall inure to the benefit of and be enforceable by
the Executive and his or her personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.

 

12.           Confidential Information.  During the Term of this Agreement and
thereafter, the Executive shall not, except as may be required to perform the
Executive’s 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 Executive in the course of the Executive’s 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
Executive 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 the Executive’s
employment, the Executive will promptly deliver to the Company all documents
(and all copies thereof) containing any Confidential Information.

 

13.           Non-competition.  Executive agrees that during his employment with
the Company,  Executive will not, directly or indirectly, without the prior
written consent of the Company, provide consultative 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 Executive, either individually or as a member of a “group,” as
such terms are used in Rule 13d of the Exchange Act, of not more than one (1%)
of the voting stock of any publicly held corporation shall not constitute a
violation by Executive of this Section 13 of this Agreement.  It is further
expressly agreed that the Company will or would suffer irreparable injury if the
Executive 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 Executive further consents and stipulates to the entry of
such injunctive relief in such a court prohibiting the Executive from competing
with the Company or any subsidiary or Affiliate of the Company in violation of
this Agreement.  For purposes of clarification, the provisions and restrictions
contained in this Section 13 shall not apply to Executive from and after the
termination of Executive’s employment with the Company for any reason.

 

14.           Right to Company Materials.  The Executive 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 Executive, shall be and shall remain the property of the
Company.  Upon the termination of the Executive’s employment or the expiration
of this Agreement, all Company Materials shall be returned immediately to the
Company, and Executive shall not make or retain any copies thereof.

 

15.           Anti-solicitation.  The Executive promises and agrees that during
the Term of this Agreement, and for a period of twenty-four (24) months
thereafter, he will not solicit  or attempt to solicit

 

--------------------------------------------------------------------------------

 

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 business away from the Company to 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;
provided, that Executive’s use of any form of public advertisements or marketing
media or utilization of any professional personnel or placement services after
termination of his employment with the Company shall not constitute Executive’s
violation of this Section 15 of this Agreement so long as such advertisements,
marketing media or utilization of any professional personnel or placement
services do not request, target or specify that the Company’s or any of its
present or future subsidiaries’ or Affiliates’ employees, customers,
franchisees, landlords or suppliers are being sought.

 

16.           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

 

 

26901 Malibu Hills Road

 

 

Calabasas Hills, California 91301

 

 

Attention: Chief Executive Officer

 

 

 

with a copy to:

 

Same address as above.

 

 

Attn: General Counsel

 

 

 

Executive:

 

Michael E. Jannini

 

 

c/o The Cheesecake Factory Incorporated

 

 

26901 Malibu Hills Road

Calabasas Hills, California 91301

 

17.           Amendments or Additions.  No amendment or additions to this
Agreement shall be binding unless in writing and signed by both parties hereto.

 

18.           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.

 

19.           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.

 

20.           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.

 

21.           Alternative Dispute Resolution.  The Company and Executive agree
that any dispute that arises out of or relates to Executive’s employment with
the Company, including any dispute that he may have with any present or former
officer, director, employee, agent, attorney or insurer of the Company, shall be
submitted exclusively to binding arbitration for a final decision.  The
arbitration shall be conducted by one arbitrator in Los Angeles, California. 
The parties shall meet and confer in good faith to select an arbitrator, who
shall be a retired judge of the Superior Court of the state of California or any

 

--------------------------------------------------------------------------------

 

federal district court located within the state of California, and shall have at
least ten (10) years of experience as a judge of said court(s).  The arbitrator
shall determine in his or her discretion which arbitration rules and procedures
shall apply throughout the arbitration, provided that such rules comply with
applicable law.  The Company shall pay the fees and costs of arbitration to the
extent required under California law.  Judgment may be entered on the
arbitrator’s award in any court having jurisdiction.  Notwithstanding the
foregoing, such arbitration shall be conducted in accordance with the following
procedures:

 

(a)           Procedures:  The arbitrator shall allow such discovery as
authorized by the California Code of Civil Procedure or Federal Rules of Civil
Procedure, as determined by the arbitrator.  The arbitrator shall resolve the
dispute as expeditiously as practicable, and shall give the parties written
notice of the decision, with the reasons therefore set out, and shall have
thirty (30) days thereafter to reconsider and modify such decision if any party
so requests within thirty (30) days after the decision.

 

(b)           Authority:  The arbitrator shall have authority to award relief
under legal or equitable principals, including interim or preliminary relief. 
The prevailing party shall be awarded its reasonable attorneys fees and costs.

 

(c)           Entry of Judgment:  Judgment upon the award rendered by the
arbitrator may be entered in any court having in person and subject matter
jurisdiction.  Company and Executive hereby submit of the federal and state
courts in Los Angeles, California, for the purpose of confirming any such award
and entering judgment thereon.

 

22.           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 Executive and such other Company officer as may be
specifically designated by the Board or the Compensation Committee.  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 is 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 or the Code shall be deemed also to refer to any
successor provisions to such sections.  Any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law.  In the event that the Company shall not pay when due any amounts
required to be paid to the Executive, such unpaid amounts shall accrue interest
from the due date at the lesser of the prime commercial lending rate announced
by Bank of America N.A. in effect from time to time during the period of
nonpayment or the maximum rate allowed by law.

 

23.           Deferred Compensation.  The parties agree that all provisions of
this Agreement are intended to meet, and to operate in accordance with, in all
material respects, the requirements of Section 409A(a) of the Code, and any
guidance from the Department of Treasury or Internal Revenue Service thereunder,
including any and all specifically referenced Regulation Sections contained in
the Agreement.  Where ambiguity or uncertainty exists, this Agreement shall be
interpreted in a manner which would qualify any compensation payable hereunder
to satisfy the requirements for exception to or exclusion from Section 409A and
the taxes imposed thereunder.

 

Notwithstanding the other provisions of this Agreement, with respect to any
right to a payment or benefit hereunder (or portion thereof) that does not
otherwise provide for a “deferral of compensation” as defined in Section 409A,
it is the intent of the parties that such payment or benefit will

 

--------------------------------------------------------------------------------

 

not so provide.  In the event either party reasonably determines, based upon the
advice of counsel, that any item payable by the Company to the Executive
pursuant to this Agreement that is not subject to a substantial risk of
forfeiture would not meet, or is reasonably likely not to meet, the requirements
of Section 409A, or to qualify as exempt from Section 409A or to cause any
amount to be subject to interest or penalties under Section 409A, such party
shall notify the other in writing.  Any such notice shall specify in reasonable
detail the basis and reasons for such party’s determination.  The parties agree
to promptly and reasonably consult with each other (and their legal counsel) and
shall negotiate in good faith the terms and conditions of an amendment to this
Agreement to (i) avoid the inclusion of such item in a tax year before the
Executive’s actual receipt of such item of income, (ii) maintain the original
intent of the applicable provisions without violating the provisions of
Section 409A or increasing the costs to the Company of providing the applicable
benefit or payment, and (iii) to avoid the imposition of any tax, interest or
other penalties under Section 409A of the Code upon Executive or the Company. 
Provided, however, nothing in this Section 23 shall be construed or interpreted
to require the Company to increase any amounts payable to the Executive pursuant
to this Agreement or to consent to any amendment that would materially and
adversely change the Company’s financial accounting or tax treatment of the
payments to the Executive under this Agreement. Any item payable under this
Agreement that the Company reasonably determines is subject to
Section 409A(a)(2)(B)(i) of the Code shall not be paid or commence payment
before the later of (a) six months after the date of the Executive’s Separation
from Service and (b) the payment date or commencement date specified in this
Agreement for such item.

 

24.           Survival.  The provisions of this Agreement that may be reasonably
interpreted as surviving expiration or termination of this Agreement, including
Sections 7, 10, 12, 14, 15 and 21 shall continue in effect after expiration or
termination of this Agreement.  No termination of this Agreement by either party
shall result in a termination of any vested stock options, except in accordance
with the terms and conditions of the applicable stock option agreement.

 

25.           Construction.  The Company and the Executive agree that the terms
and conditions of this Agreement are the result of lengthy, intensive arms’
length negotiations between them and that this Agreement shall not be construed
or resolved, whether under any rule of construction or otherwise, in favor of or
against either of them by reason of the extent to which either of them or his or
its counsel participated in the drafting of this Agreement.

 

IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement on
the date first indicated above.

 

 

COMPANY:

 

 

 

THE CHEESECAKE FACTORY INCORPORATED,

 

a Delaware corporation

 

 

 

 

 

By:

/s/ David Overton

 

 

David Overton, President and Chief Executive Officer

 

 

 

EXECUTIVE:

 

 

 

By:

[g39571kii001.gif]

 

 

Name: Michael E. Jannini

 

 

Title: President, The Cheesecake Factory Incorporated

 

 

 

--------------------------------------------------------------------------------