Exhibit 10.52

 



 

FIXED $$ DISCOUNTED SHARE BUYBACK (“DSB”) COLLARED WITH INITIAL DELIVERY

 

	
To:
    	
The   Cheesecake Factory Incorporated (“Counterparty”)
    
	
 
    	
26901   Malibu Hills Road
    
	
 
    	
Calabasas   Hills, California  91301
    
	
 
    	
 
    
	
From:
    	
Wells   Fargo Bank, National Association (“Wells Fargo”)
    


 

The purpose of this communication (this “Confirmation”) is to confirm the terms and conditions of the transaction entered into between Wells Fargo Bank, National Association (“Wells Fargo”) and The Cheesecake Factory Incorporated (“Counterparty”) on the Trade Date specified below (the “Transaction”).  This Confirmation constitutes a “Confirmation” as referred to in the Agreement specified below.

 

This Confirmation is subject to, and incorporates, the definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc. (“ISDA”).  In the event of any inconsistency between the Equity Definitions and this Confirmation, this Confirmation will prevail.

 

1.             This Confirmation evidences a complete and binding agreement between Wells Fargo and Counterparty as to the terms of the Transaction to which this Confirmation relates.  This Confirmation shall supplement, form a part of, and be subject to an agreement in the form of the 2002 ISDA Master Agreement (the “Agreement”) as if Wells Fargo and Counterparty had executed an agreement in such form (but without any Schedule except for the election of (i) the law (and not the law of conflicts) of the State of New York as the governing law and (ii) United States dollars as the Termination Currency) on the Trade Date.  In the event of any inconsistency between provisions of the Agreement and this Confirmation, this Confirmation will prevail for the purpose of the Transaction to which this Confirmation relates.  The parties hereby agree that no Transaction other than the Transaction to which this Confirmation relates shall be governed by the Agreement.  This Transaction is a Share Forward Transaction within the meaning set forth in the Equity Definitions.

 

2.             The terms of the particular Transaction to which this Confirmation relates are as follows:

 

General Terms:

 

	
Trade Date: 
    	
February 27, 2015
    
	
 
    	
 
    
	
Seller:
    	
Wells   Fargo
    
	
 
    	
 
    
	
Buyer:
    	
Counterparty
    
	
 
    	
 
    
	
Shares:
    	
The common stock of Counterparty (the “Issuer”), par value USD 0.01 per share (ticker symbol: “CAKE”)
    
	
 
    	
 
    
	
Variable Obligation:
    	
Applicable
    
	
 
    	
 
    
	
Forward Floor Price:
    	
As   specified in Appendix A. 
    
	
 
    	
 
    
	
Forward Cap Price:
    	
As   specified in Appendix A. 
    


 











 

	
Initial Price:
    	
As   specified in Appendix A. 
    
	
 
    	
 
    
	
VWAP Price:
    	
For any Averaging Date, the 10b-18   volume-weighted average price per Share at which the Shares trade for the   regular trading session (including any extensions thereof) of the Exchange on   such Averaging Date (without regard to pre-open or after hours trading   outside of such regular trading session), as reported by Bloomberg at 4:15 p.m.   New York City time (or 15 minutes following the end of any extension of the   regular trading session) on such Averaging Date, on Bloomberg Page “CAKE<Equity>   AQR_SEC” (or any successor thereto).    If such price is not reported on such Averaging Date for any reason or   is, in the Calculation Agent’s good faith and commercially reasonable   discretion, erroneous, such VWAP Price shall be determined by the Calculation   Agent in good faith and in a commercially reasonable manner.
    
	
 
    	
 
    
	
Exchange:
    	
Nasdaq   Global Select Market
    
	
 
    	
 
    
	
Related Exchange(s):
    	
All Exchanges
    
	
 
    	
 
    
	
Prepayment:
    	
Applicable
    
	
 
    	
 
    
	
Prepayment Date:
    	
One Currency Business Day after the Trade   Date.
    
	
 
    	
 
    
	
Prepayment Amount:
    	
As   specified in Appendix A.
    
	
 
    	
 
    
	
Initial Shares:
    	
As specified in Appendix A.
    
	
 
    	
 
    
	
Initial Share Delivery   Date:
    	
The Prepayment Date. On the   Initial Share Delivery Date, Seller shall deliver a number of Shares equal to   the Initial Shares to Buyer in accordance with Section 9.4 of the Equity   Definitions, with the Initial Share Delivery Date deemed to be a “Settlement   Date” for purposes of such Section 9.4.
    
	
 
    	
 
    
	
Minimum Share Delivery:
    	
Seller   shall deliver a number of Shares equal to the excess, if any, of the Minimum   Shares over the Initial Shares on the Minimum Share Delivery Date in   accordance with Section 9.4 of the Equity Definitions, with the Minimum   Share Delivery Date deemed to be a “Settlement Date” for purposes of such Section 9.4.
    
	
 
    	
 
    
	
Minimum Share Delivery Date:
    	
The   date one Currency Business Day immediately following the Initial Period End   Date.
    
	
 
    	
 
    
	
Minimum Shares:
    	
As   specified in Appendix A.
    
	
 
    	
 
    
	
Maximum Shares:
    	
As   specified in Appendix A.
    


 

Valuation Terms:

 

	
Initial Period Averaging   Dates:
    	
Each of the consecutive Exchange Business   Days commencing on March 4, 2015 and ending on, and including, the   Initial Period End Date. If, at any time during the Initial Period   Averaging Dates, the arithmetic average of the VWAP Prices for each Initial   Period Averaging Date equals or exceeds the Hedging Threshold Price,   (i) Wells Fargo shall have the right to accelerate the Initial Period   End Date as of such time and (ii) the Calculation Agent may make adjustments   to the Forward Cap Price, the Forward Floor Price and any other variable or   term relevant to the terms of the Transaction and, for the purposes of   calculating the Number of Shares to be Delivered, shall adjust the Prepayment   Amount to preserve the fair value of the Transaction to Wells Fargo and   ensure that Wells Fargo’s, or its affiliate’s, initial theoretical delta for   the Transaction is equal to the number of Shares purchased by Wells Fargo or   such affiliate during the Initial Period Averaging Dates for the Transaction   at the time of such termination.
    


 

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Hedging   Threshold Price:  The price per Share   equal to the quotient of (A) the Prepayment Amount divided by (B) the product of the   percentage contained in the definition of the Forward Cap Price and the   Initial Shares.
    
	
 
    	
 
    
	
Initial Period End Date:
    	
The Exchange Business Day on which Seller   completes its initial hedge for the transaction.  On the Initial Period End Date, Seller   shall deliver to Buyer the Hedge Completion Notice.
    
	
 
    	
 
    
	
Valuation Date:
    	
As specified in Appendix A.
    
	
 
    	
 
    
	
Averaging:
    	
Applicable
    
	
 
    	
 
    
	
Averaging Dates:
    	
As specified in Appendix A.
    
	
 
    	
 
    
	
Averaging Period:
    	
All Averaging Dates.
    
	
 
    	
 
    
	
Settlement Price:
    	
For the Valuation Date, the arithmetic average   of the VWAP Price on each Averaging Date for such Valuation Date minus Price Adjustment.
    
	
 
    	
 
    
	
Price Adjustment:
    	
As specified in Appendix A.
    
	
 
    	
 
    
	
Valuation Disruption:  
    	
The definition of “Market Disruption Event”   in Section 6.3(a) of the Equity Definitions is hereby amended by   replacing the words “at any time during the one-hour period that ends at the   relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or   Knock-out Valuation Time, as the case may be” with “at any time on any   Scheduled Trading Day during the Averaging Period” in the third line thereof.

 

Section 6.3(d) of the Equity   Definitions is hereby amended by deleting the remainder of the provision   following the term “Scheduled Closing Time” in the fourth line thereof.

 

Notwithstanding anything to the contrary in   the Equity Definitions, if any Averaging Date in the Averaging Period is a   Disrupted Day, the Calculation Agent shall have the option in its   commercially reasonable discretion either (i) to elect to extend the   Averaging Period by a number of Scheduled Trading Days equal to the number of   Disrupted Days during the Averaging Period and/or (ii) determine that   such Averaging Date is a Disrupted Day only in part, in which case the   Calculation Agent shall (x) determine the VWAP Price for such Disrupted   Day based on Rule 10b-18 eligible transactions in the Shares on such   Disrupted Day taking into account the nature and duration of such Market   Disruption Event and (y) determine the Settlement Price based on an   appropriately weighted average instead of the arithmetic average described   under “Settlement Price” below, with such adjustments based on, among other   factors, the duration of any Market Disruption Event and the volume,   historical trading patterns and price of the Shares and/or (iii) to   suspend the Averaging Period, as appropriate, until the circumstances giving   rise to such suspension have ceased. Any day on which the Exchange is   scheduled to close prior to its normal closing time shall be considered a   Disrupted Day in whole.  
    


 

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Additional Market   Disruption Events:
    	
If Seller determines, in its good faith and   commercially reasonable discretion, on any Scheduled Trading Day during any   Averaging Period or on any Initial Period Averaging Dates that (i) its   or its affiliates’ market activities in connection with the Transaction may   raise legal, regulatory or self-regulatory risks for Seller (whether or not   under related policies or procedures and whether or not such legal, regulatory   or self-regulatory requirements, policies or procedures are imposed by law or   have been voluntarily adopted by Seller) or (ii) a Hedging Disruption   (as defined in Section 12.9(a)(v) of the Equity Definitions) has   occurred, in each case, Seller shall notify Buyer and a Market Disruption   Event shall be deemed to have occurred.    In the event of a Hedging Disruption,   Section 12.9(b)(iii) of the Equity Definitions shall not apply.

 

If on any Averaging Date or Initial Period   Averaging Date (i) the trading volume or liquidity of trading in the   Shares is materially reduced from levels prevailing on the Trade Date,   (ii) the Calculation Agent determines in its commercially reasonable   discretion that such reduction has had a materially adverse effect on   Seller’s ability to effect a commercially reasonable hedge of  its obligations under this Transaction and   (iii) the Calculation Agent determines in its commercially reasonable   discretion that as a result it would be appropriate to treat such Averaging   Date as a Disrupted Day, then Seller shall notify Buyer and a Market   Disruption Event shall be deemed to have occurred.
    
	
 
    	
 
    
	
Settlement   Terms:
    	
 
    
	
 
    	
 
    
	
Settlement Currency:
    	
USD
    
	
 
    	
 
    
	
Settlement Method:
    	
Physical Settlement; provided that   Seller shall not make the representations set forth in Section 9.11 of   the Equity Definitions related to restrictions imposed by applicable   securities laws.
    
	
 
    	
 
    
	
Settlement Method   Election:
    	
Not   Applicable.
    
	
 
    	
 
    
	
Settlement Date:
    	
One Clearance System Business Day following   the Valuation Date.
    
	
 
    	
 
    
	
Number of Shares to be   Delivered:
    	
(i) if the Settlement Price is less than   the Forward Floor Price, a number of Shares equal to the Prepayment Amount divided   by the Forward Floor Price;
    


 

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(ii) if the Settlement Price is greater   than or equal to the Forward Floor Price but less than the Forward Cap Price,   a number of Shares equal to the Prepayment Amount divided by the   Settlement Price;

 

(iii) if the Settlement Price is greater   than or equal to the Forward Cap Price, a number of Shares equal to the   Prepayment Amount divided by the Forward Cap Price.
    
	
 
    	
 
    
	
Delivery on Settlement   Date:
    	
Seller’s obligation to deliver Shares   pursuant to Section 9.2(a)(iii) of the Equity Definitions shall be   reduced by a number of Shares equal to the Initial Shares and any Shares   delivered pursuant to the Minimum Share Delivery described above.
    
	
 
    	
 
    
	
Share   Adjustments:
    	
 
    
	
 
    	
 
    
	
Potential Adjustment   Event:
    	
It   shall constitute an additional Potential Adjustment Event if a Market   Disruption Event has been deemed to have occurred or if Seller otherwise   suspends trading in the Shares for all or any portion of a Scheduled Trading   Day within the Averaging Period or on any Initial Period Averaging Date, in   which case the Calculation Agent may, in its commercially reasonable   discretion, adjust any relevant terms of the Transaction as appropriate to   account for the economic effect on the Transaction of such Market Disruption   Event.
    
	
 
    	
 
    
	
Method of Adjustment:
    	
Calculation Agent Adjustment
    
	
 
    	
 
    
	
Excess Dividends:
    	
For any fiscal quarter, any dividend or   distribution on the Shares with an ex-dividend date occurring during such   fiscal quarter (other than any dividend or distribution of the type described   in Section 11.2(e)(i) or Section 11.2(e)(ii)(A) of the   Equity Definitions) (a “Dividend”)   the amount or value of which (as determined by the Calculation Agent), when   aggregated with the amount or value of any and all previous Dividends with   ex-dividend dates occurring in the same fiscal quarter, exceeds the Ordinary Dividend Amount. For the avoidance of   doubt, the Calculation Agent shall not make any adjustment for an Ordinary   Dividend Amount. “Extraordinary Dividend” means the per Share cash   dividend or distribution, or a portion thereof, declared by Counterparty on   the Shares that is classified by the board of directors of Counterparty as an   “extraordinary” dividend.  For the avoidance of doubt, an Extraordinary   Dividend shall not be deemed to be an Excess Dividend.
    
	
 
    	
 
    
	
Ordinary Dividend Amount:
    	
As specified in Appendix A
    
	
 
    	
 
    
	
Early Ordinary Dividend Payment:    
    	
If   an ex-dividend date for any Dividend that is not (x) an Excess Dividend,   (y) a dividend or distribution of the type described in   Section 11.2(e)(i) or Section 11.2(e)(ii)(A) of the   Equity Definitions and (z) an Extraordinary Dividend, occurs during any   fiscal quarter (in whole or in part) during the Relevant Dividend Period and   is prior to the Expected Ex-Dividend Date for the relevant fiscal quarter (as   determined by the Calculation Agent), the Calculation Agent shall make such   adjustment to the exercise, settlement, payment or any other terms of the   Transaction as the Calculation Agent determines appropriate to account for   the economic effect on the Transaction of such event.
    


 

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Expected Ex-Dividend   Dates: 
    	
As specified in Appendix A
    
	
 
    	
 
    
	
Relevant Dividend Period:
    	
The   period from and including the Trade Date to and including the Relevant   Dividend Period End Date.
    
	
 
    	
 
    
	
Relevant Dividend Period End Date:
    	
The   Termination Date.
    
	
 
    	
 
    
	
Extraordinary Events:
    	
Upon (x) the occurrence or effective   designation of an Early Termination Date in respect of the Transaction or   (y) the occurrence of an Extraordinary Event that results in the cancellation   or termination of the Transaction pursuant to Section 12.2, 12.3, 12.6   or 12.9 of the Equity Definitions (any such event as described in clause   (x) or (y) above, an “Early   Termination Event”) (except, in the case of clause (y), an   Extraordinary Event that is a Nationalization, Insolvency, a Merger   Event or a Tender Offer, in each case, in which the consideration or proceeds   to be paid to holders of Shares consists solely of cash), if one party would   owe any amount to the other party pursuant to Section 6(d)(ii) of   the Agreement or any Cancellation Amount pursuant to Section 12.2, 12.3,   12.6, 12.7, 12.8 or 12.9 of the Equity Definitions (any such amount, a “Payment Amount”), then on the date on   which any Payment Amount is due, in lieu of any payment or delivery of such   Payment Amount, Counterparty may elect, by prior written notice to Wells   Fargo as provided in the succeeding paragraph, that the party owing such   amount shall deliver to the other party a number of Shares (or, in the case   of a Merger Event, Tender Offer, Nationalization or Insolvency, a number of   units, each comprising the number or amount of the securities or property   that a hypothetical holder of one Share would receive in such Extraordinary   Event (each such unit, an “Alternative Termination   Delivery Unit” and, the securities or property comprising such   unit, “Alternative Termination Property”))   with a value equal to the Payment Amount, as determined in a commercially   reasonable manner by the Calculation Agent (and the parties agree that, in   making such determination of value, the Calculation Agent may take into   account a number of factors, including the market price of the Shares or   Alternative Termination Property as of the Early Termination Date or the date   as of which the Cancellation Amount is determined and, if such delivery is   made by Wells Fargo, the prices at which Wells Fargo purchases Shares or   Alternative Termination Property to fulfil its delivery obligations, to the   extent doing so provides a commercially reasonable result) over a number of   Scheduled Trading Days selected by Calculation Agent in good faith and in its   commercially reasonable discretion based on the number of Scheduled Trading   Days that would be appropriate to unwind a commercially reasonable hedge   position;  provided that in determining the composition of any   Alternative Termination Delivery Unit, if the relevant Extraordinary Event   involves a choice of consideration to be received by holders, such holder   shall be deemed to have elected to receive the maximum possible amount of   cash.
    


 

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If Counterparty elects for Wells Fargo to   settle any Payment Amount owed by Wells Fargo to it in Shares or Alternative   Termination Property, then on the date such Payment Amount is due, a   settlement balance (the “Settlement Balance”)   shall be established with an initial balance equal to the Payment Amount. On   such date, Wells Fargo shall commence purchasing Shares or Alternative   Termination Property over a commercially reasonable period for delivery to   Counterparty and in a commercially reasonable manner to unwind a commercially   reasonable hedge position.  At the end   of each Scheduled Trading Day on which Wells Fargo purchases Shares or Alternative   Termination Property pursuant to this paragraph, Wells Fargo shall reduce the   Settlement Balance by the amount paid by Wells Fargo to purchase the   Shares  or Alternative Termination   Property purchased on such Scheduled Trading Day. Wells Fargo shall deliver   any Shares or Alternative Termination Property purchased on a Scheduled   Trading Day to Counterparty on the third Clearance System Business Day   following the relevant Scheduled Trading Day.    Wells Fargo shall continue purchasing Shares or Alternative   Termination Property over a commercially reasonable period until the   Settlement Balance has been reduced to zero. If delivery of Shares or   Alternative Termination Property is to be made by Wells Fargo pursuant to   this paragraph, the period during which Wells Fargo purchases Shares or Alternative   Termination Property to fulfill its delivery obligations under this paragraph   shall be referred to as the “Seller   Termination Purchase Period.”

 

If Counterparty elects to settle any Payment   Amount owed to Wells Fargo in Shares or Alternative Termination Property it   must do so in adherence to Section 12 of this Confirmation and in a   manner such that the value received by Wells Fargo (net of all commercially   reasonable fees, expenses or discounts to compensate for any discount from   the public market price of the Shares incurred on the sale of such Shares in   a private placement) is not less than the Payment Amount. For the avoidance   of doubt, notwithstanding anything to the contrary in the Definitions or this   Confirmation, the Payment Amount will not reflect the value associated with   any Excess Dividend or Extraordinary Dividend declared or paid by   Counterparty to holders of record of any Shares as of any date occurring on   or after the Trade Date and prior to the date on which the Payment Amount is   received.
    


 

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Announcement Date:
    	
The   definition of “Announcement Date” in Section 12.1(l) of the Equity   Definitions shall be amended by (i) replacing the   words “a firm” with the word “any” in the second and fourth lines thereof, (ii) replacing the word “leads to the” in the   third and the fifth lines thereof with the words “, if completed, would lead   to a”, (iii) replacing the words “voting shares” in the fifth line   thereof with the word “Shares”, (iv) inserting the words “by any entity”   after the word “announcement” in the second and the fourth lines thereof,   (v) inserting the words “or to explore the possibility of engaging in”   after the words “engage in” in the second line thereof, (vi) inserting   the words “or to explore the possibility of purchasing or otherwise   obtaining” after the word “obtain” in the fourth line thereto,   (vii) deleting the parenthetical in the fifth line thereof and   (viii) adding immediately after the words “Tender Offer” in the fifth   line thereof “, and any publicly announced change or amendment to such an   announcement (including the announcement of an abandonment of such   intention)”. Sections 12.3(a) and 12.3(d) of the Equity Definitions   shall each be amended by replacing each occurrence of the words “Tender Offer   Date” with “Announcement Date.”

 

For purposes of this Transaction, the   definition of “Merger Date” in Section 12.1(c) of the Equity   Definitions shall be amended to read, “Merger Date shall mean the   Announcement Date.” For purposes of this Transaction, the definition of   “Tender Offer Date” in Section 12.1(e) Equity Definitions shall be   amended to read, “Tender Offer Date shall mean the Announcement Date.”
    
	
 
    	
 
    
	
Consequences of Merger Events:
    	
 
    
	
 
    	
 
    
	
Share-for-Share:
    	
Modified   Calculation Agent Adjustment
    
	
 
    	
 
    
	
Share-for-Other:
    	
Cancellation and Payment (Calculation Agent   Determination)
    
	
 
    	
 
    
	
Share-for Combined:
    	
Component Adjustment 
    
	
 
    	
 
    
	
New Shares:
    	
In the definition of “New Shares” in   Section 12.1(i) of the Equity Definitions, the text in clause (i) thereof   shall be deleted in its entirety and replaced with “publicly quoted, traded   or listed on any of the New York Stock Exchange, The NASDAQ Global Select   Market or The NASDAQ Global Market (or their respective successors).”
    
	
 
    	
 
    
	
Tender Offer:
    	
Applicable
    
	
 
    	
 
    
	
Consequences of Tender Offers:
    	
 
    
	
 
    	
 
    
	
Share-for-Share:
    	
Modified Calculation Agent Adjustment or   Cancellation and Payment Calculation Agent Determination, at the commercially reasonable election of Wells   Fargo.
    
	
 
    	
 
    
	
Share-for-Other:
    	
Modified Calculation Agent Adjustment or   Cancellation and Payment Calculation Agent Determination, at the commercially reasonable election of Wells   Fargo.
    


 

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Share-for-Combined:
    	
Modified Calculation Agent Adjustment or   Cancellation and Payment Calculation Agent Determination, at the commercially reasonable election of Wells   Fargo.
    
	
 
    	
 
    
	
Determining Party:
    	
Wells Fargo
    
	
 
    	
 
    
	
Composition of Combined   Consideration:
    	
Not Applicable; provided that   notwithstanding Sections 12.1(f) and 12.5(b) of the Equity   Definitions, to the extent that the composition of the consideration for the   relevant Shares in connection with a Merger Event or Tender Offer could be   determined by a holder of the Shares, the Calculation Agent shall, in its   sole discretion, determine the composition of such consideration for purposes   of determining the consequences of such Merger Event or Tender Offer under   the Transaction. 
    
	
 
    	
 
    
	
Nationalization, Insolvency   or Delisting:
    	
Cancellation and Payment (Calculation Agent   Determination)

 

In addition to the provisions of   Section 12.6(a)(iii) of the Equity Definitions, it shall also   constitute a Delisting if the Exchange is located in the United States and   the Shares are not immediately re-listed, re-traded or re-quoted on any of the   New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global   Market (or their respective successors); if the Shares are immediately   re-listed, re-traded or re-quoted on any such exchange or quotation system,   such exchange or quotation system shall thereafter be the Exchange.
    
	
 
    	
 
    
	
Additional   Disruption Events:
    	
 
    
	
 
    	
 
    
	
Change   in Law:
    	
Applicable;   provided that   Section 12.9(a)(ii) of the Equity Definitions is hereby amended by   (i) replacing the phrase “the interpretation” in the third line thereof   with the phrase “, or public announcement of, the formal or informal   interpretation”, (ii) by replacing the word “Shares” where it appears in   clause (X) thereof with the words “Shares or Hedge Positions” and (iii) by immediately following the word   “Transaction” in clause (X) thereof, adding the phrase “in the manner   contemplated by the Hedging Party on the Trade Date”; provided further that   Section 12.9(a)(ii) of the Equity Definitions is hereby amended by   replacing the parenthetical beginning after the word “regulation” in the   second line thereof the words “(including, for the avoidance of doubt and   without limitation, (x) any tax law or (y) adoption or promulgation   of new regulations authorized or mandated by existing statute)”.
    
	
 
    	
 
    
	
Failure   to Deliver:
    	
Applicable
    
	
 
    	
 
    
	
Insolvency   Filing:
    	
Applicable
    


 

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Hedging Disruption:

 

Hedging Party:

 

Increased Cost of Hedging:

 

Hedging Party:

 

Loss of Stock Borrow:

 

Maximum Stock Loan Rate:

 

Hedging Party:

 

Increased Cost of Stock Borrow:

 

Initial Stock Loan Rate:

 

Hedging Party:
    	
Applicable

 

Wells   Fargo

 

Applicable

 

Wells   Fargo

 

Applicable

 

200   basis points per annum

 

Wells   Fargo

 

Applicable

 

25   basis points per annum

 

Wells   Fargo
    
	
 
    	
 
    
	
Determining Party for all Extraordinary Events:
    	
Wells   Fargo
    
	
 
    	
 
    
	
Miscellaneous:
    	
 
    
	
 
    	
 
    
	
Non-Reliance:
    	
Applicable
    
	
 
    	
 
    
	
Agreements and Acknowledgments Regarding Hedging Activities:
    	
Applicable
    
	
 
    	
 
    
	
Additional Acknowledgments:
    	
Applicable
    
	
 
    	
 
    
	
3.     Calculation Agent:
    	
Wells   Fargo
    
	
 
    	
 
    
	
4.     Account Details:
    	
 
    
	
 
    	
 
    
	
Wells Fargo’s USD payment instructions:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Wells Fargo’s delivery instructions:
    	
 
    	
 
    
	
 
    	
 
    
	
Counterparty’s payment and delivery instructions:
    	
To   be advised.
    


 

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5.                                      Offices:

 

(a)         The Office of Wells Fargo for the Transaction is:

 

Wells Fargo Bank, National Association

375 Park Avenue

New York, NY 10152

 

For notices with respect to the Transaction:

 

Notwithstanding anything to the contrary in the Agreement, all notices to Wells Fargo in connection with the Transaction are effective only upon receipt of email message to CorporateDerivativeNotifications@wellsfargo.com

 

(b)         The Office of Counterparty for the Transaction is:  None

 

For notices with respect to the Transaction:

 

The Cheesecake Factory Incorporated

26901 Malibu Hills Road

Calabasas Hills, California  91301

Attention: Matt Clark, Senior Vice President, Strategy & Finance

Facsimile: (866) 788-8849

 

With a copy to:

 

The Cheesecake Factory Incorporated

26901 Malibu Hills Road

Calabasas Hills, California  91301

Attention: Debby Zurzolo, General Counsel

Facsimile: (818) 871-3110

 

6.                                      Additional Provisions.

 

(a)                                 Buyer Representations and Agreements.  Buyer represents and warrants to, and agrees with, Seller as follows:

 

(i)                                     Public Reports.  As of the Trade Date, Buyer is in compliance with its reporting obligations under the Exchange Act of 1934, as amended (the “Exchange Act”), and all reports and other documents filed by Buyer with the Securities and Exchange Commission (“SEC”) pursuant to the Exchange Act, when considered as a whole (with the most recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.  Without limiting the generality of the foregoing, as of the Trade Date, Buyer and its officers and directors are not aware of any material non-public information regarding Buyer or the Shares.

 

(ii)                                  Regulation M.  Buyer is not on the Trade Date engaged in a “distribution,” as such term is used in Regulation M, that would preclude purchases by Buyer of Shares.  In the event that Buyer reasonably concludes that it or any of its affiliates or agents will take any action that would cause Regulation M to be applicable to any purchases of Shares, or any security for which the Shares is a “reference security” (as defined in Regulation M), by Buyer or any of its “affiliated purchasers” (as defined in Regulation M) on any day prior to the second Scheduled Trading Day immediately following the later of the Valuation Date and the last day of the Seller Termination Purchase Period, as applicable, Buyer shall provide Seller at least five Scheduled Trading Days’ written notice of such fact prior to the beginning of the restricted period applicable to such distribution under Regulation M.  Buyer acknowledges that any such action could cause the occurrence of an Additional Market Disruption Event (and, accordingly, a Potential Adjustment Event).  Accordingly, Buyer acknowledges that its actions in relation to any such notice must comply with the standards set forth in Section 6(b)(iii) below.

 

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(iii)                               No Manipulation.  Buyer is not entering into the Transaction to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for the Shares) or otherwise in violation of the Exchange Act and will not engage in any other securities or derivative transaction to such ends.

 

(iv)                              No Distribution.  Buyer is not entering into the Transaction to facilitate a distribution of the Shares (or any security that may be converted into or exercised or exchanged for Shares, or whose value under its terms may in whole or in significant part be determined by the value of the Shares) or in connection with any future issuance of securities.

 

(v)                                 Solvency.  As of the Trade Date, the Initial  Share Delivery Date, the Prepayment Date, the Minimum Share Delivery Date and each Settlement Date, (a) the aggregate fair market value of Buyer’s assets will exceed its liabilities (including contingent, subordinated, unmatured and unliquidated liabilities), (b) it has not engaged in and will not engage in any business or transaction after which the property remaining with it will be unreasonably small in relation to its business, (c) it has not incurred and does not intend to incur debts beyond its ability to pay as they mature, and (d) as a result of entering into and performing its obligations under the Transaction, (x) it has not violated and will not violate any relevant state law provision applicable to the acquisition or redemption by an issuer of its own securities and (y) it would not be nor would it be rendered “insolvent” (as such term is defined under Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”)).

 

(vi)                              Eligible Contract Participant.  It is an “eligible contract participant,” as defined under the Commodity Exchange Act (7 U.S.C. § 1a(18)) and CFTC regulations (17 CFR § 1.3) because it is a corporation, partnership, organization, trust, or other entity (other than a commodity pool or a proprietorship) that has total assets exceeding $10,000,000.

 

(vii)                           Tender Offers.  The purchase or writing of the Transaction by Buyer will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.

 

(viii)                        Investment Company.  Buyer is not, and after giving effect to the transactions contemplated hereby will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

 

(ix)                              Accounting Treatment.  Without limiting the generality of Section 13.1 of the Equity Definitions, Buyer acknowledges that Seller is not making any representations or warranties with respect to the treatment of the Transaction under any accounting standards including FASB Statements 128, 133, 149 (each as amended), or 150, EITF Issue No. 00-19, 01-6, 03-6 or 07-5 (or any successor issue statements) or under FASB’s Liabilities & Equity Project.

 

(x)                                 Authorization and Disclosure.  Upon Seller’s request, Buyer shall deliver to Seller a resolution of Buyer’s board of directors authorizing the Transaction and such other certificate or certificates as Seller shall reasonably request.  Buyer has publicly disclosed on Agreement execution date its intention to institute a program for the acquisition of Shares.

 

(xi)                              Buyer’s Actions.  Buyer will not take any action or refrain from taking any action that would limit or in any way adversely affect Seller’s rights under the Agreement or this Confirmation.

 

(xii)                           Rule 10b-18 purchases.  Buyer represents and warrants to Seller that neither it nor any “affiliated purchaser” (as defined in Rule 10b-18 under the Exchange Act) has made any purchases of blocks pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange Act during either (i) the four full calendar weeks immediately preceding the Trade Date or (ii) during the calendar week in which the Trade Date occurs.

 

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(b)                                Rule 10b5-1.

 

(i)                                     Buyer intends the Transaction to comply with the requirements of Rule 10b5-1(c) under the Exchange Act.  Buyer represents that it is entering into the Transaction in good faith and not as part of a plan or scheme to evade the antifraud or anti-manipulation provisions of the federal or applicable state securities laws and that it has not entered into or altered any hedging transaction relating to the Shares corresponding to or offsetting the Transaction.  Buyer represents and warrants that it has consulted with its own advisors as to the legal aspects of its adoption and implementation of the Transaction under Rule 10b5-1 under the Exchange Act.

 

(ii)                                 Buyer shall not, at any time during the Averaging Period, the Seller Termination Purchase Period or on any Initial Period Averaging Dates  communicate, directly or indirectly, any material nonpublic information concerning itself or the Shares or purchases or sales of Shares by Seller (or its agent or affiliate) to any Relevant Bank Personnel.  “Relevant Bank Personnel” means any employees or agents of Seller or any affiliate of Seller that Seller has notified Buyer in writing are “Relevant Bank Personnel” ; provided that Wells Fargo may amend the list of Relevant Bank Personnel at any time by delivering a revised list to Counterparty.  “Relevant Bank Personnel” shall initially mean any personnel of the equity derivatives trading group of Seller or its affiliates who are responsible for, or have the ability to influence, the execution of this Transaction and of Wells Fargo’s hedge in relation thereto.

 

(iii)                              Buyer agrees that Buyer shall not enter into or alter any hedging transaction relating to the Shares corresponding to or offsetting the Transaction.  Buyer also acknowledges and agrees that any amendment, modification, waiver or termination of this Confirmation must be effected in accordance with the requirements for the amendment or termination of a “plan” as defined in Rule 10b5-1(c) under the Exchange Act.  Without limiting the generality of the foregoing, any such amendment, modification, waiver or termination shall be made in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5, and no such amendment, modification, waiver or termination shall be made at any time at which Buyer or any officer, director, manager or similar person of Buyer is aware of any material non-public information regarding Buyer or the Shares.

 

(iv)                               Buyer acknowledges and agrees that it does not have, and shall not attempt to exercise, any influence over how, when or whether Seller effects any purchases of Shares in connection with the Transaction.

 

(c)                                  U.S. Private Placement and Other Representations.

 

Each party acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). Accordingly, each party hereby represents and warrants to the other party as of the date hereof that:

 

(i)                                     It is an “accredited investor” (as defined in Regulation D under the Securities Act) and has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the Transaction, and it is able to bear the economic risk of the Transaction.

 

(ii)                                   It is entering into the Transaction for its own account and not with a view to the distribution or resale of the Transaction or its rights thereunder except pursuant to a registration statement declared effective under, or an exemption from the registration requirements of, the Securities Act.

 

(iii)                                It is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and, if relevant under such laws, in good standing.

 

(iv)                               It has the power to execute this Confirmation and any other documentation relating to this Confirmation to which it is a party, to deliver this Confirmation and any other documentation relating to this Confirmation that it is required by this Confirmation to deliver and to perform its obligations under this Confirmation and has taken all necessary action to authorize such execution, delivery and performance.

 

(v)                                  Such execution, delivery and performance do not violate or conflict with any law applicable to it, any provision of its constitutional documents, any order or judgment of any court or other agency of government applicable to it or any of its assets or any contractual restriction binding on or affecting it or any of its assets.

 

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(d)                                Securities Contract; Swap Agreement.   The parties hereto agree and acknowledge that Seller is a “financial participant” within the meaning of Sections 101(22), 101(53C) and 101(22A) of the Bankruptcy Code. The parties hereto further agree and acknowledge that this Transaction is (i) a “securities contract” as such term is defined in Section 741(7) of the Bankruptcy Code, in which case each payment and delivery made pursuant to this Transaction is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment,” within the meaning of Section 546 of the Bankruptcy Code and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code and a “payment or other transfer of property” within the meaning of Sections 362 and 546 of the Bankruptcy Code, and that Seller is entitled to the protections afforded by, among other sections, Sections 362(b)(6), 362(b)(17), 362(o), 546(e), 546(g), 548(d)(2), 555, 560 and 561 of the Bankruptcy Code.

 

(e)                                Bankruptcy Status.  Wells Fargo acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the transactions contemplated hereby that are senior to the claims of Counterparty’s common stockholders in the event of Counterparty’s bankruptcy; provided, however, that nothing herein shall be deemed to limit Wells Fargo’s right to pursue remedies in the event of a breach by Counterparty of its obligations and agreements with respect to this Confirmation and the Agreement; and provided, further, that nothing herein shall limit or shall be deemed to limit Wells Fargo’s rights in respect of any transaction other than this Transaction.

 

(f)                                 No Collateral or Setoff.  Notwithstanding any provision of this Confirmation, the Agreement, or any other agreement between the parties to the contrary, the obligations of Counterparty under this Transaction are not secured by any collateral.  Wells Fargo agrees not to set off or net amounts due from Counterparty with respect to this Transaction against amounts due from Wells Fargo to Counterparty under obligations other than Equity Contracts.  “Equity Contract” means any transaction relating to Shares between the parties (or any of their affiliates) that qualifies as ‘equity’ under applicable accounting rules.

 

(g)                                 Additional Termination Event.  Notwithstanding any other provision hereof, an “Additional Termination Event” shall occur and Counterparty shall be the sole Affected Party pursuant to such Additional Termination Event if: [(i) at any time on or prior to the Valuation Date, the price per Share on the Exchange, as determined by the Calculation Agent, is at or below the Threshold Price as specified in Appendix A; or (ii)] (1)  Counterparty declares an Excess Dividend with an ex-dividend date which occurs or is scheduled to occur during the Relevant Dividend Period.  For the avoidance of doubt, such Excess Dividend shall not constitute a Potential Adjustment Event.

 

(h)                                Maximum Number of Shares.  Notwithstanding any provisions of this Confirmation, the Agreement or the Equity Definitions to the contrary, in no event shall the aggregate number of Shares that Counterparty shall be obligated to deliver in connection with this Transaction exceed [insert 2X the number of shares underlying the transaction] Shares, as such number may be proportionately adjusted by the Calculation Agent to reflect stock splits or similar events.

 




(1) Include for capped structures, delete for collared structures

 

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(i)                                     Agreements to Deliver Documents.  Each of Buyer and Seller will deliver to the other party, upon execution of this Confirmation, evidence reasonably satisfactory to the other party as to the names, true signatures and authority of the officers or officials signing this Confirmation on its behalf.  Such documents shall be covered by the representation set forth in Section 3(d) of the Agreement.  In addition, Buyer agrees to complete (accurately and in a manner reasonably satisfactory to the other party), execute, and deliver to Seller, United States Internal Revenue Service Form W-8 or Form W-9, as applicable, or any successor of such form, (i) upon execution of this Confirmation, (ii) promptly upon reasonable demand by Seller, and (iii) promptly upon learning that any such form previously provided by it has become obsolete or incorrect.

 

(j)                                    [Reserved.]

 

(k)                                 Counterparty Purchases. Without the prior written consent of Wells Fargo, Counterparty shall not, and shall cause its “affiliates” and “affiliated purchasers” (each as defined in Rule 10b-18) not to, directly or indirectly (including, without limitation, by means of a derivative) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable for Shares during the Averaging Period, Seller Termination Purchase Period or on any Initial Period Averaging Date.  During such time, any purchases of Shares (or any security convertible into or exchangeable for Shares) by Counterparty shall be made through Wells Fargo Securities, LLC, which is an affiliate of Wells Fargo. Nothing in this section 6(k) shall (i) limit the Buyer’s ability, pursuant to its employee equity incentive plans, to re-acquire shares in connection with the related equity transactions, (ii) limit Buyer’s ability to withhold shares to cover tax liabilities associated with such equity transactions or (iii) limit Buyer’s ability to grant stock and options to “affiliated purchasers” (as defined in Rule 10b-18) or the ability of such affiliated purchasers to acquire such stock or options, in connection with the Buyer’s compensation policies for directors, officers and employees or any agreements with respect to the compensation of directors, officers or employees of any entities that are acquisition targets of Buyer.

 

(l)                                     Merger-related Transactions.  During the Averaging Period, Seller Termination Purchase Period or on any Initial Period Averaging Date, Counterparty shall (i) notify Wells Fargo prior to the opening of trading in the Shares on any day on which Counterparty makes, or expects to be made, any public announcement (as defined in Rule 165(f) under the Securities Act) of any merger, acquisition, or similar transaction involving a recapitalization relating to Counterparty (other than any such transaction in which the consideration consists solely of cash and there is no valuation period), (ii) promptly notify Wells Fargo following any such announcement that such announcement has been made, and (iii) promptly deliver to Wells Fargo following the making of any such announcement a certificate indicating (A) Counterparty’s average daily Rule 10b-18 purchases (as defined in Rule 10b-18) during the three full calendar months preceding the date of the announcement of such transaction and (B) Counterparty’s block purchases (as defined in Rule 10b-18) effected pursuant to paragraph (b)(4) of Rule 10b-18 during the three full calendar months preceding the date of the announcement of such transaction.  In addition, Counterparty shall promptly notify Wells Fargo of the earlier to occur of the completion of such transaction and the completion of the vote by target shareholders.  Counterparty acknowledges that any such public announcement may cause the terms of the Transaction to be adjusted or terminated. Accordingly, Counterparty acknowledges that its actions in relation to any such announcement or transaction must comply with the standards set forth in Section 6(b) above.  Wells Fargo in a commercially reasonable manner  may (i) make adjustments to the terms of the Transaction, including, without limitation, the Price Adjustment and/or suspend the Averaging  Period to preserve the economics of the transaction or (ii) treat the occurrence of such public announcement as an Additional Termination Event with Counterparty as the sole Affected Party and the Transaction hereunder as the Affected Transaction and with the amount under Section 6(e) of the Agreement determined taking into account the fact that the Averaging Period, as the case may be, had fewer Scheduled Trading Days than originally anticipated.

 

(m)                             Acknowledgments and Agreements Regarding Hedging.  Counterparty acknowledges and agrees that (i) during the Averaging Period and on any Initial Period Averaging Date, Wells Fargo and its affiliates may (x) buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its hedge position with respect to the Transaction and (y) be active in the market for Shares other than in connection with hedging activities in relation to the Transaction, (ii) Wells Fargo shall make its own determination as to whether, when or in what manner any hedging or market activities in Counterparty’s securities shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Settlement Price and/or the VWAP Price and (iii) any market activities of Wells Fargo and its affiliates with respect to Shares may affect the market price and volatility of Shares, as well as the Settlement Price and/or the VWAP Price, each in a manner that may be adverse to Counterparty.

 

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7.                                      Seller Adjustments.

 

In the event that Seller reasonably determines, in good faith and based on the advice of counsel,   that it is appropriate with regard to any legal, regulatory or self-regulatory requirements or related policies and procedures (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Seller, and including, without limitation, Rule 10b-18, Rule 10b-5, Regulation 13D-G and Regulation 14E, “Requirements”), to refrain from purchasing Shares or to purchase fewer than the number of Shares than would otherwise be expected to be purchased in a commercially reasonable manner on any Trading Day during the duration of this Transaction, then Seller may, in its commercially reasonable discretion, elect that Averaging Period be suspended and, if appropriate, extended with regard to any Requirements. Seller shall notify the Issuer upon the exercise of Seller’s rights pursuant to this Section 7 and shall subsequently notify the Issuer on the day Seller believes that the circumstances giving rise to such exercise have changed.  If the Averaging Period is suspended pursuant to this Section 7, at the end of such suspension Seller shall determine the number of Scheduled Trading Days remaining in the Averaging Period, as appropriate, and the terms of this Transaction shall be adjusted by the Calculation Agent.  All determinations by Seller shall be made in good faith and a commercially reasonable manner and assuming the Seller maintains a commercially reasonable hedge position.

 

8.                                      Special Provisions regarding Acquisition Transaction Announcements.

 

(a)                                 If an Acquisition Transaction Announcement occurs on or prior to the Settlement Date, then the Calculation Agent shall make such adjustments to the exercise, settlement, payment or any other terms of the Transaction (including, without limitation, the Minimum Number of Shares,  the Number of Shares to be Delivered and the Price Adjustment) as the Calculation Agent determines appropriate, at such time or at multiple times as the Calculation Agent determines appropriate, to account for the economic effect on such Transaction of such Acquisition Transaction Announcement (provided that adjustments will be made to account solely for changes in price, volatility, stock loan rate and liquidity relevant to the Shares, to the Transaction or to commercially reasonable hedge positions in respect of the Transaction).  If an Acquisition Transaction Announcement occurs after the Trade Date, but prior to the Scheduled Earliest Acceleration Date, the Scheduled Earliest Acceleration Date shall be the date of such Acquisition Transaction Announcement.

 

(b)                                 “Acquisition Transaction Announcement” means (i) the announcement of an Acquisition Transaction or an event that, if consummated, would result in an Acquisition Transaction, (ii) an announcement that Buyer or any of its subsidiaries has entered into an agreement, a letter of intent or an understanding designed to result in an Acquisition Transaction, (iii) the announcement of the intention to solicit or enter into, or to explore strategic alternatives or other similar undertaking that may include, an Acquisition Transaction, (iv) any other announcement that in the reasonable judgment of the Calculation Agent may result in an Acquisition Transaction or (v) any announcement of any change or amendment to any previous Acquisition Transaction Announcement (including any announcement of the abandonment of any such previously announced Acquisition Transaction, agreement, letter of intent, understanding or intention). For the avoidance of doubt, announcements as used in the definition of Acquisition Transaction Announcement refer to any public announcement whether made by the Buyer or a third party.

 

(c)                                  “Acquisition Transaction” means (i) any Merger Event (for purposes of this definition the definition of Merger Event shall be read with the references therein to “100%” being replaced by “15%” and to “50%” by “75%” and without reference to the clause beginning immediately following the definition of Reverse Merger therein to the end of such definition), Tender Offer or Merger Transaction or any other transaction involving the merger of Buyer with or into any third party, (ii) the sale or transfer of all or substantially all of the assets of Buyer, (iii) a recapitalization, reclassification, binding share exchange or other similar transaction with respect to Buyer, (iv) any acquisition by Counterparty or any of its subsidiaries where the aggregate consideration transferable by Counterparty or its subsidiaries exceeds 50% of the market capitalization of Counterparty, (v) any acquisition, lease, exchange, transfer, disposition (including by way of spin-off or distribution) of assets (including any capital stock or other ownership interests in subsidiaries) or other similar event by Buyer or any of its subsidiaries where the aggregate consideration transferable or receivable by or to Buyer or its subsidiaries exceeds 15% of the market capitalization of Buyer and (vi) any transaction in which Buyer or its board of directors has a legal obligation to make a recommendation to its shareholders in respect of such transaction (whether pursuant to Rule 14e-2 under the Exchange Act or otherwise).

 

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9.                                      Staggered Settlement.

 

Notwithstanding anything to the contrary herein, Wells Fargo may, by prior notice to Counterparty, satisfy its obligation to deliver any Shares or other securities on any date due (an “Original Delivery Date”) by making separate deliveries of Shares or such securities, as the case may be, at more than one time on or prior to such Original Delivery Date, so long as the aggregate number of Shares and other securities so delivered on or prior to such Original Delivery Date is equal to the number required to be delivered on such Original Delivery Date.

 

10.                               Transfer and Assignment.

 

Notwithstanding anything to the contrary in the Agreement, Wells Fargo may assign, transfer and set over all its rights, title and interest, powers, privileges and remedies under any Transaction, in whole or in part, to an affiliate of Wells Fargo, without the consent of Counterparty.

 

At any time at which the Equity Percentage exceeds [7.5]% (an “Excess Ownership Position”) or a Hedging Disruption has occurred and is continuing, if Wells Fargo, in its discretion, is unable to effect a transfer or assignment to a third party after using its commercially reasonable efforts on pricing terms and within a time period reasonably acceptable to Wells Fargo such that an Excess Ownership Position or a Hedging Disruption, as the case may be, no longer exists, Wells Fargo may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “Terminated Portion”) of the Transaction, such that such Excess Ownership Position or Hedging Disruption, as the case may be, no longer exists. In the event that Wells Fargo so designates an Early Termination Date with respect to a portion of the Transaction, a payment or delivery shall be made pursuant to Section 6 of the Agreement and Section 2 of this Confirmation as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Terminated Portion of the Transaction, (ii) Counterparty shall be the sole Affected Party with respect to such partial termination and (iii) such portion of the Transaction shall be the only Terminated Transaction. The “Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Wells Fargo and any of its affiliates or any other person subject to aggregation with Wells Fargo, for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act or any “group” (within the meaning of Section 13 of the Exchange Act) of which Wells Fargo is or may be deemed to be a part, beneficially owns (within the meaning of Section 13 of the Exchange Act) on such day and (B) the denominator of which is the number of Shares outstanding on such day.

 

11.                               Registration Provisions.

 

Counterparty hereby agrees that if, in the good faith and commercially reasonable judgment of Wells Fargo, any Shares acquired by Wells Fargo for the purpose of hedging its obligations pursuant to the Transaction or otherwise delivered by the Counterparty to Wells Fargo for any reason hereunder cannot be sold in the public market by Wells Fargo without registration under the Securities Act, Counterparty shall, at its election: (i) in order to allow Wells Fargo to sell such Shares in a registered offering, make available to Wells Fargo an effective registration statement under the Securities Act to cover the resale of such Shares and (A) enter into an agreement, in form and substance satisfactory to Wells Fargo, substantially in the form of an underwriting agreement for a registered offering of similar size, (B) provide accountant’s “comfort” letters in customary form for registered offerings of equity securities of similar size, (C) provide disclosure opinions of nationally recognized outside counsel to Counterparty reasonably acceptable to Wells Fargo, (D) provide other customary opinions, certificates and closing documents customary in form for registered offerings of equity securities of similar size and (E) afford Wells Fargo a reasonable opportunity to conduct a “due diligence” investigation with respect to Counterparty customary in scope for underwritten offerings of equity securities of similar size; provided that if Wells Fargo, in its commercially reasonable discretion, is not satisfied with access to due diligence materials, the results of its due diligence investigation, or the procedures and documentation for the registered offering referred to above, then clause (ii) or clause (iii) of this Section 12 shall apply at the election of Counterparty; (ii) in order to allow Wells Fargo to sell such Shares in a private placement, enter into a private placement agreement substantially similar to private placement purchase agreements customary for private placements of equity securities of similar size, in form and substance satisfactory to Wells Fargo, including customary representations, covenants, blue sky and other governmental filings and/or registrations, indemnities to Wells Fargo, due diligence rights (for Wells Fargo or any designated buyer or buyers of the Shares from Wells Fargo), opinions and certificates and such other documentation as is customary for private placements agreements, all commercially reasonably acceptable to Wells Fargo (in which case, the Calculation Agent shall make any adjustments to the terms of the Transaction that are necessary, using commercially reasonable judgment, to compensate Wells Fargo for any discount from the public market price of the Shares incurred on the sale of such Shares in a private placement); or (iii) purchase the Shares from Wells Fargo at the Volume Weighted Average Price on such Exchange Business Days, and in the amounts, requested by Wells Fargo.  “Volume Weighted Average Price” means, on any Exchange Business Day, the per Share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page CAKE <equity> VAP (or any successor thereto) in respect of the period from 9:30 a.m. to 4:00 p.m. (New York City time) on such Exchange Business Day (or if such volume-weighted average price is unavailable, the market value of one Share on such Exchange Business Day, as determined by the Calculation Agent using a volume-weighted method).

 

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12.                               Calculations and Payment Date upon Early Termination.

 

The parties acknowledge and agree that in calculating (a) the Close-Out Amount pursuant to Section 6 of the Agreement and (b) the amount due upon cancellation or termination of the Transaction (whether in whole or in part) pursuant to Article 12 of the Equity Definitions as a result of an Extraordinary Event, Wells Fargo may (but need not) determine such amount based on (i) expected losses assuming a commercially reasonable (including, without limitation, with regard to reasonable legal and regulatory guidelines) risk bid were used to determine loss or (ii) the price at which one or more market participants would offer to sell to the Seller a block of Shares equal in number to the Seller’s hedge position in relation to the Transaction.  Notwithstanding anything to the contrary in Section 6(d)(ii) of the Agreement or Article 12 of the Equity Definitions, all amounts calculated as being due in respect of an Early Termination Date under Section 6(e) of the Agreement or upon cancellation or termination of the Transaction under Article 12 of the Equity Definitions will be payable on the day that notice of the amount payable is effective.

 

13.                               Counterparts.

 

This Confirmation may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Confirmation by signing and delivering one or more counterparts.

 

14.                               Waiver of Trial by Jury.

 

EACH PARTY HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF WELLS FARGO, THE AGENT OR THEIR AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.

 

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15.                               Adjustments.

 

For the avoidance of doubt, whenever the Seller, Calculation Agent, Wells Fargo or Determining Party are called upon to make an adjustment or determination pursuant to the terms of this Confirmation or the Definitions to take into account the effect of an event, the Seller, Calculation Agent and Determining shall make such adjustment or determination by reference to the effect of such event on the Hedging Party, assuming that the Hedging Party maintains a commercially reasonable Hedge Position at the time of the event.

 

16.                               Amendments to the Equity Definitions.

 

(a)                                 Section 11.2(a) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative” and replacing them with the words “an”; and adding the phrase “or such Transaction” at the end of the sentence.

 

(b)                                 Section 11.2(c) of the Equity Definitions is hereby amended by (i) replacing the words “a diluting or concentrative” with “an” in the fifth line thereof, (ii) adding the phrase “or such Transaction” after the words “the relevant Shares” in the same sentence, (iii) deleting the words “dilutive or concentrative” in the sixth to last line thereof, and (iv) deleting the phrase “(provided that no adjustments will be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)” and replacing it with the phrase “(and, for the avoidance of doubt, adjustments may be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares).”

 

(c)                                  Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative” and replacing them with the word “a material”; and adding the phrase “or the relevant Transaction” at the end of the sentence.

 

(d)                                 Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (i) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (ii) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Wells Fargo’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA Master Agreement with respect to that Issuer.”

 

(e)                                  Section 12.9(b)(iv) of the Equity Definitions is hereby amended by:

 

(i)                                     deleting (1) subsection (A) in its entirety, (2) the phrase “or (B)” following subsection (A) and (3) the phrase “in each case” in subsection (B); and

 

(ii)                                  replacing the phrase “neither the Non-Hedging Party nor the Lending Party lends Shares” with the phrase “such Lending Party does not lend Shares” in the penultimate sentence.

 

(f)                                   Section 12.9(b)(v) of the Equity Definitions is hereby amended by:

 

(i)                                     adding the word “or” immediately before subsection “(B)” and deleting the comma at the end of subsection (A); and

 

(ii)                                  (1) deleting subsection (C) in its entirety, (2) deleting the word “or” immediately preceding subsection (C), (3) deleting the penultimate sentence in its entirety and replacing it with the sentence “The Hedging Party will determine the Cancellation Amount payable by one party to the other” and (4) deleting clause (X) in the final sentence.

 

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Please confirm that the foregoing correctly sets forth the terms of our agreement by executing a copy of this Confirmation and returning it to CorporateDerivativeNotifications@wellsfargo.com.

 

 

	
WELLS FARGO BANK, NATIONAL ASSOCIATION
    	
 
    	
THE CHEESECAKE FACTORY INCORPORATED
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    	
 
    	
By:
    	
 
    
	
 
    	
Title:
    	
 
    	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
Title:
    	
 
    


 

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Appendix A

 

	
Forward   Floor Price:
    	
 
    	
As   specified in the Hedge Completion Notice, to be equal to []% of the Initial   Price.
    
	
 
    	
 
    	
 
    
	
Forward   Cap Price:
    	
 
    	
As   specified in the Hedge Completion Notice, to be equal to []% of the Initial   Price.
    
	
 
    	
 
    	
 
    
	
Initial   Price:
    	
 
    	
As   specified in the Hedge Completion Notice, to be equal to the volume weighted   average price of the Seller’s purchases to establish its initial hedge to the   Transaction on the Initial Period Averaging Dates.
    
	
 
    	
 
    	
 
    
	
Initial   Shares:
    	
 
    	
[   ] Shares; provided that if   Wells Fargo is unable to borrow or otherwise acquire a number of Shares equal   to the Initial Shares for delivery to Counterparty on the Initial Share   Delivery Date, the Initial Shares delivered on the Initial Share Delivery   Date shall be reduced to such number of Shares that Seller is able to so   borrow or otherwise acquire.
    
	
 
    	
 
    	
 
    
	
Minimum   Shares:
    	
 
    	
As specified in the Hedge Completion Notice,   to be an amount equal to the Prepayment Amount divided by the Forward Cap   Price multiplied by [       ]%; provided that if Wells Fargo is   unable to borrow or otherwise acquire a number of Shares equal to Minimum   Shares for delivery to Counterparty on the Minimum Share Delivery Date, the   Minimum Shares delivered on the Minimum Share Delivery Date shall be reduced   to such number of Shares that Seller is able to so borrow or otherwise   acquire.
    
	
 
    	
 
    	
 
    
	
Maximum   Shares:
    	
 
    	
As   specified in the Hedge Completion Notice, to be an amount equal to the   Prepayment Amount divided by the Forward Floor Price multiplied by [   ]%.
    
	
 
    	
 
    	
 
    
	
Prepayment Amount:
    	
 
    	
USD   $75,000,000
    
	
 
    	
 
    	
 
    
	
Valuation Date:
    	
 
    	
As   specified in the Hedge Completion Notice, to be the date that is [] Exchange   Business Days following the Initial Period End Date (or if such date is not   an Exchange Business Day, the next following Exchange Business Day), provided   that Seller shall have the right in its absolute discretion, to accelerate   the Valuation Date to any date that is on or after [] Exchange Business Days   following the Initial Period End Date (or if such date is not an Exchange   Business Day, the next following Exchange Business Day) (such date, the   “Scheduled Earliest Acceleration Date”), by giving notice prior to 8:00 p.m.   New York City time on the Scheduled Trading Day following such date.
    


 

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Averaging Dates:
    	
 
    	
For   the Valuation Date, each Scheduled Trading Day starting on the first   Scheduled Trading Day following the Initial Period End Date and ending on,   and including, such Valuation Date.
    
	
 
    	
 
    	
 
    
	
Price Adjustment:
    	
 
    	
As specified in the Hedge   Completion Notice, to be equal to [ ]% of the Initial Price.
    
	
 
    	
 
    	
 
    
	
Ordinary Dividend Amount:
    	
 
    	
[]
    
	
 
    	
 
    	
 
    
	
Expected   Ex-Dividend Dates:
    	
 
    	
[]
    


 

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HEDGE COMPLETION NOTICE

 

	
To:
    	
The Cheesecake Factory   Incorporated
 26901 Malibu Hills   Road
 Calabasas Hills,   California  91301
    
	
 
    	
 
    
	
From:
    	
Wells   Fargo Bank, National Association
    
	
 
    	
 
    
	
Subject:
    	
 
    
	
 
    	
 
    
	
Date:
    	
 
    


 

The purpose of this Hedge Completion Notice is to notify you of certain terms in the Transaction entered into between Wells Fargo Bank, National Association (“Wells Fargo”) and The Cheesecake Factory Incorporated  (“Counterparty”) bearing the trade reference number set forth above.

 

	
Initial   Price
    	
[        ]
    
	
Forward   Floor Price:
    	
[        ]
    
	
Forward   Cap Price:
    	
[        ]
    
	
Initial   Shares:
    	
[        ]
    
	
Minimum   Shares:
    	
[        ]
    
	
Maximum   Shares:
    	
[        ]
    
	
Initial   Period End Date: 
    	
[        ] 
    
	
Valuation   Date:
    	
[        ]
    
	
Scheduled   Earliest Acceleration Date:
    	
[        ]
    
	
Price   Adjustment:
    	
[        ]
    


 

 

	
 
    	
Yours   sincerely,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WELLS FARGO BANK, NATIONAL ASSOCIATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    


 

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