ex10_1amendedagreement.htm


    


    AMENDED
AND RESTATED

    EMPLOYMENT
AGREEMENT

    


    Between
Denny’s Corporation and Nelson J. Marchioli

    


    This
Amended and Restated Employment Agreement ("Agreement"), amends and restates in
its entirety as of May 1, 2009, the Employment Agreement originally made and
entered into on the 11th day of May, 2005, between Denny’s Corporation, a
Delaware corporation (“the Company”), together with its wholly-owned subsidiary,
Denny’s, Inc., a California corporation (“Denny’s”) and Nelson J. Marchioli (the
"Executive"), residing at 2110 Cleveland Street Ext., Greenville,
SC  29607.

     

    WITNESSETH:

     

    WHEREAS,
The Board of Directors (the "Board") of the Company wishes to continue to employ
the Executive as President and Chief Executive Officer of the Company and of its
wholly-owned subsidiary, Denny’s, Inc., on the terms and subject to the
conditions set forth herein; and

     

    WHEREAS,
the Executive wishes to continue employment with the Company in the position of
President and Chief Executive Officer, on the terms and subject to the
conditions set forth herein.

     

    NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
obligations hereinafter set forth, the parties agree as follows:

     

    1.           Employment

     

    The
Executive shall be deemed an employee of Denny’s.  His employment
under the terms of this Agreement commenced on the date of its original
execution as indicated above, and shall continue until Noon on May 20, 2010,
unless terminated earlier pursuant to Section 5 (such period of employment under
this Agreement is hereinafter referred to as the “Employment
Term”).  Beginning on May 20, 2010 and on each May 20 thereafter (each
such May 20, a “Renewal Date”), the Employment Term shall, without further
action by Executive or the Company, be extended by an additional one-year
period; provided,
however, that either party may cause the Employment Term to cease to
extend automatically, by giving written notice to the other between 90 and 120
days prior to any Renewal Date.  Following such notice, the Employment
Term and the Executive’s employment with the Company shall terminate upon the
expiration of the then-current term, including any prior
extensions.  The Executive shall provide services to the Company
hereunder as President and Chief Executive Officer of the
Company.  The Executive will serve the Company subject to the general
supervision, advice and direction of the Chairman of the Board and members of
the Board and upon the terms and conditions set forth in this
Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    2.           Duties

     

    (a)           During
the Employment Term, and while serving as President and Chief Executive Officer
of the Company, the Executive shall have such authority and duties as are
customary in such positions, and shall perform such other services and duties as
the Board of Directors may from time to time designate consistent with such
positions.

     

    (b)           The
Executive shall report solely to the Board.  All senior officers of
the Company shall report, directly or indirectly through other senior officers,
to the Executive.  The Executive shall be responsible for hiring,
terminating and reviewing the performance of the other senior officers of the
Company, and shall from time to time present to the Board his recommendations
for any adjustments to the salaries of and bonus payments to such
officers.  The Executive shall be responsible for, and, subject to
discussion with and ratification by the Chairman of the Compensation and
Incentives Committee of the Board (with subsequent ratification by the Board),
shall have the authority to enter into employment agreements on behalf of the
Company with other executives of the Company.

     

    (c)           The
Executive shall devote his full business time and best efforts to the business
affairs of the Company; however, the Executive may devote reasonable time and
attention to:

     

    (i)           serving
as a director or member of a committee of any not-for-profit organization or
engaging in other charitable or community activities; and

     

    (ii)           serving
as a director of another business or service, but only with the advance approval
of the Board.

     

    3.           Compensation
and Benefits

     

    (a)           Base
Compensation.  During the term of this Agreement, the Company
shall pay the Executive an annual base salary (the "Base Salary"), as
compensation for his employment under this Agreement.  During the
Employment Term such Base Salary shall be paid in equal installments on at least
a bi-weekly basis, or on such other basis as is applicable to employees of the
Company's Support Center.  Executive’s Base Salary for fiscal year
2009 shall be equal to $780,000.  It is expressly agreed and
understood that the Compensation and Incentives Committee (the “Compensation
Committee”) of the Board shall have the right to review the Executive’s Base
Salary on an annual basis and to increase the Base Salary, if such an increase
is deemed warranted based upon the performance of the Executive during each such
annual period being reviewed.

     

    (b)           Annual
Bonus.  For each calendar year ending during the Employment
Term, the Executive's bonus compensation ("Annual Bonus") shall be at an annual
rate equal to at least 100% of Base Salary (the "Targeted Bonus") payable if the
Company, Denny’s and the Executive achieve budgeted financial and other
performance targets which shall be established by the Compensation Committee and
communicated to the Executive.  It is expressly agreed that to the
extent the Compensation Committee provides additional over performance incentive
targets in the Company's annual incentive bonus plan for employees, the
Executive shall be entitled to fully participate in and receive the full
benefits for achieving such over-performance incentive targets.  The
Executive's Annual Bonus earned with respect to each year shall be paid at the
same time as annual incentive bonuses with respect to that year are paid to
other senior executives of the Company.

     

    
      
         

      

      
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    (c)           Benefits.  In
addition, during the Employment Term, the Executive shall be entitled to receive
an annual car allowance and to participate in all pension, profit sharing and
other retirement plans, all incentive compensation plans and all group health,
hospitalization and disability insurance plans and other employee welfare
benefit plans in which other senior executives of the Company may participate on
terms and conditions no less favorable than those which apply to such other
senior executives of the Company.

     

    4.           Reimbursement
of Expenses

     

    (a)           Expenses Incurred in
Performance of Employment. In addition to the compensation provided for
under Section 3 hereof, upon submission of proper vouchers, the Company will pay
or reimburse the Executive for all normal and reasonable expenses incurred by
the Executive during the Employment Term in connection with the Executive's
responsibilities to the Company, including the Executive's travel
expenses.  With respect to Executive’s rights under this Section 4(a),
(i) the reimbursements provided in any one calendar year shall not affect the
amount of reimbursements provided in any other calendar year; (ii) the
reimbursement of an eligible expense shall be made no later than December 31 of
the year following the year in which the expense was incurred; and (iii) such
rights shall not be subject to liquidation or exchange for another
benefit.

     

    5.           Termination

     

    (a)           Events of
Termination.  The Employment Term and Executive’s employment
with the Company shall terminate upon the first to occur of the following
events:

     

    (i)           Noon
on May 20 of any year following the Executive’s or the Company’s written notice
to the other of non-renewal (which notice must not be less than 90 days or more
than 120 days prior to such May 20 Renewal Date);

     

    (ii)           the
death of the Executive;

     

    (iii)           the
close of business on the 180th day following the date on which the Company gives
the Executive written notice of the termination of his employment as a result of
his "Permanent Disability" (as defined in subsection 5(c)(i));

     

    (iv)           the
close of business on the date on which the Company gives the Executive written
notice of the Company's termination of his employment as a "Termination without
Cause" (as defined in subsection 5(c)(iv)) or the close of business on the
effective date of a termination of the Executive's employment with the Company
pursuant to subsection 5(c)(iii);

     

    
      
         

      

      
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    (v)           the
close of business on the date on which the Company gives the Executive written
notice of the Company's termination of his employment for "Cause" (as defined in
subsection 5(c)(ii)); and

     

    (vi)           the
close of business on the effective date of a "Voluntary Termination" (as defined
in subsection 5(c)(v)(A)) by the Executive of his employment with the
Company.

     

    (b)             Termination
Benefits.  Upon the termination of the Executive's employment
with the Company for any reason set forth in subsection 5(a) the Company shall
provide the Executive (or, in the case of his death, his estate or other legal
representative) benefits due him under the Company's benefits plans and policies
for his services rendered to the Company prior to the date of such termination
(according to the terms of such plans and policies), and the Company shall pay
the Executive not later than five (5) business days after such termination, in a
lump sum, all Base Salary earned through the date of such
termination.  The Executive shall be entitled to the payments and
benefits described below only as each is applicable to such termination of
employment.

     

    (i)           In
the event of a termination as a result of the Executive's death, and in addition
to any other death benefits payable under the Company's benefit plans or
policies, (A) for so long as the Executive's surviving spouse is receiving any
Base Salary payment under clause (B) below, the Executive's eligible family
dependents (collectively, "Family") shall be entitled to receive and participate
in the disability, health, medical and other welfare benefit plans which the
Executive and/or his Family would otherwise have been entitled to hereunder if
the Executive had not terminated employment (the "Welfare Benefits") in addition
to any continuation coverage which the Executive's Family is entitled to elect
under Section 4980B of the Internal Revenue Code of 1986, as amended (the
“Code”); provided,
however, that (x) the benefits provided in any one calendar year shall
not affect the amount of benefits provided in any other calendar year (other
than the effect of any overall coverage benefits under the applicable plans);
(y) the reimbursement of an eligible taxable expense shall be made on or before
December 31 of the year following the year in which the expense was incurred;
and (z) Executive’s rights pursuant to this Section 5(b)(i) shall not be subject
to liquidation or exchange for another benefit; and (B) for a period of one year
following the date of the Executive's death, the Executive's surviving spouse
shall be paid (x) the Base Salary in effect at the date of the Executive's
death, payable in monthly installments, and (y) the Annual Bonus that would have
been paid under Section 3(b) to the Executive during such period, payable as and
when annual incentive bonuses with respect to such period are paid by the
Company to other senior executives of the Company.

     

    (ii)           In
the event of a termination as a result of the Executive’s Permanent Disability,
for each year of the two year period that immediately follows the date of such
termination of the Executive’s employment, (A) the Executive and/or his Family
shall be entitled to receive and participate in the Welfare Benefits in addition
to any continuation coverage which the Executive and/or his Family is entitled
to elect under 4980B of the Code; provided, however, that (x)
the benefits provided in any one calendar year shall not affect the amount of
benefits provided in any other calendar year (other than the effect of any
overall coverage benefits under the applicable plans); (y) the reimbursement of
an eligible taxable expense shall be made on or before December 31 of the year
following the year in which the expense was incurred; and (z) Executive’s rights
pursuant to this Section 5(b)(ii) shall not be subject to liquidation or
exchange for another benefit; and (B) the Executive shall be paid (x) one-half
of the Base Salary in effect at such date of termination, payable in monthly
installments, and (y) one-half of the Annual Bonus that would be payable under
Section 3(b) for such period, payable as and when annual incentive bonuses with
respect to such period are paid by the Company to other senior executives of the
Company.

     

    
      
         

      

      
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    (iii)           In
the event of a "Termination without Cause" under subsection 5(a)(iv), (A) the
Executive and/or his Family shall be entitled until the earlier of (x) the first
anniversary of the date of such termination of employment or (y) the
commencement of coverage of the Executive and/or his Family by another group
medical benefits plan providing substantially comparable benefits to the Welfare
Benefits and which does not contain any preexisting condition exclusions or
limitations, to receive and participate in the Welfare Benefits in addition to
any continuation coverage which the Executive and/or his Family is entitled to
elect under Section 4980B of the Code; provided, however, that (x)
the benefits provided in any one calendar year shall not affect the amount of
benefits provided in any other calendar year (other than the effect of any
overall coverage benefits under the applicable plans); (y) the reimbursement of
an eligible taxable expense shall be made on or before December 31 of the year
following the year in which the expense was incurred; and (z) Executive’s rights
pursuant to this Section 5(b)(iii) shall not be subject to liquidation or
exchange for another benefit;  (B) not later than five (5) business
days after such termination, the Company shall pay to the Executive as severance
(and not in lieu of any bonus for the year in which the termination of
employment occurs) a payment in a lump sum amount equal to two times his then
current Base Salary and Targeted Bonus; and (C) the Company shall pay to the
Executive a pro rata annual bonus for the fiscal year in which the termination
of employment occurs, equal to (1) the Annual Bonus, if any, that would have
been earned by Executive under Section 3(b) for such fiscal year if he had
remained employed for the entire year, based on actual performance under
applicable Company financial metrics for the entire year, multiplied by (2) a
fraction, the numerator of which is the number of days worked by Executive
during such fiscal year and the denominator of which is the number of days in
such fiscal year, payable at the regular time when annual incentive bonuses are
paid to other senior executives of the Company (the “Pro Rata Final Year
Bonus”).  Provided, however, in
the event of a Termination without Cause within one (1) year following the
consummation of a Change of Control as defined in subsection 5(c)(iii) hereof,
the Company shall  pay the Executive within five (5) business days of
such termination a lump sum payment equal to 299% of the sum of (1) the
Executive’s then current Base Salary and (2) the Executive’s then current
Targeted Bonus which shall be no less than one hundred percent (100%) of the
Executive’s then current Base Salary.  

     

    
      
         

      

      
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      A Change
of Control payment, as described above, may be reduced to avoid the Executive’s
payment of excise taxes under Code Section 4999.  This limited payment
cap is to be computed as follows:  The acceleration of any outstanding
stock option (Option) shall be prevented by the Company in the event that all of
the following conditions apply and the Executive (or, in the absence of an
election by the Executive, the Company) elects to reduce the aggregate parachute
payments by eliminating the acceleration of Options under this
Agreement:  (1) the Executive whose Options are otherwise eligible for
acceleration is also eligible to receive payments under this Agreement and/or
under any other plan, agreement, program or policy that is sponsored by the
Company, which are triggered directly or indirectly by a Change of Control
(“parachute payments”); (2) the aggregate amount of such parachute payments is
determined by the Company to be potentially subject to excise tax under Code
Section 4999 (imposed upon the “excess parachute payments”); and (3) it is
determined that such excise tax would cause the net after-tax parachute payments
to be paid to or on behalf of the Executive to be less than what he would have
netted, after federal, state and local income taxes, had the present value of
his total parachute payments equaled $1.00 less than three times his base
amount, as defined under Code Section 280G(b)(3)(A).  In the event the
above three conditions apply, then such Executive’s total payments described in
Code Section 280G(b)(2)(A) shall be reduced (but by the minimum possible
amount), so that their aggregate present value equals $100.00 less than three
times the Executive’s Base Amount.  If it is determined that any
payment to or on behalf of the Executive will be an excess parachute payment,
the Company shall promptly give the Executive notice to that effect, a copy of
the detailed calculation thereof, and an explanation of the calculation of the
reduction (if any) required hereunder.  In the event the Executive
disagrees with such determination, he shall set forth the basis for his
disagreement in a written document which shall be delivered to the
Company.  The Executive and his representative and representatives of
the Company shall thereafter, within five (5) business days after receipt of
such written objection, meet in an attempt to understand and resolve any
competing understandings and interpretations.  Subsequent to such
meeting, the Executive may elect to (a) accept the parachute payments
recognizing any personal tax consequences, (b) submit the dispute, if any, to
arbitration pursuant to Section 13 of this Agreement or (c) determine which of
the parachute payments under this Agreement or any other agreements that make
payments on account of the Change of Control shall be eliminated or reduced (as
long as after such election the aggregate present value of the parachute
payments is $100.00 less than three times Executive’s Base
Amount).  The Executive shall advise the Company in writing of his
election within twenty (20) days of his receipt of this notice.  If no
such election is made by Executive, the Company may elect which and how much of
such parachute payments under this Agreement or other agreements should be
eliminated or reduced to accomplish this required reduction, and shall promptly
thereafter provide for the acceleration of any options under the Agreement, and
pay or distribute for the Executive’s benefit such amounts as become due to the
Executive under any other agreements.  It shall be assumed for
purposes of these calculations described above that Executive’s income tax rate
will be computed based upon the maximum effective marginal federal, state and
local income tax rates on earned income, with such maximum effective federal
rate to be computed with regard to Code Section 68, and applying any available
deduction of state and local income taxes for federal income tax
purposes.

       

    

    
      
         

      

      
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    (iv)           In
the event of a termination for Cause under subsection 5(a)(v) and in the event
of a Voluntary Termination under subsection 5(a)(vi), the Executive shall not be
entitled to any benefits or payments from the Company except as provided in the
first sentence of subsection (b) above.

     

    (v)           In
the event of a termination of employment as a result of non-renewal as described
under Section 5(a)(i) hereof and assuming the Executive continues his employment
with the Company through the expiration of the then-current Employment Term
(including any prior extensions), the Executive shall be paid a Pro Rata Final
Year Bonus.

     

    (vi)           In
addition to the termination benefits set forth in Sections 5(b)(iii) and 5(b)(v)
above, in the event of (1) a "Termination without Cause" under subsection
5(a)(iv) or (2) a termination of employment as a result of non-renewal as
described under Section 5(a)(i) hereof and assuming the Executive continues his
employment with the Company through the expiration of the then-current
Employment Term (including any prior extensions), the Executive’s outstanding
stock options and performance-based incentive awards shall be subject to the
following terms and conditions (notwithstanding any provisions to the contrary
contained in any individual award agreement or plan document):

     

    (A)           Stock Options.  All
of the Executive’s outstanding stock options shall remain outstanding and will
continue to vest for a period ending on the earlier of the one year anniversary
of the Executive’s termination of employment or the original term of the stock
option.

     

    (B)           2004 Total Shareholder Return (TSR)
Program.  All unpaid awards under the 2004 Total Shareholder
Return Program will be forfeited in accordance with the terms of the
program.

     

    (C)           2007 Long-Term Growth Incentive
Program.  A pro rata portion (based on the number of days
elapsed in the final vesting period prior to the date of termination) of the
remaining 50% of the earned but unvested award under the 2007 Long-Term Growth
Incentive Program will be paid out in accordance with the regular payment
schedule under the program.

     

    (D)           2008 Performance Restricted Stock
Unit (RSU) Program.  A pro rata portion of the RSUs (based on
the number of days elapsed from the grant date to the date of termination, and
applied separately with respect to each of the scheduled vesting dates) will
vest on the termination date and will convert to shares of common stock, on a
one-for-one basis, as soon as practicable following the “Double Up/Double Down”
adjustment described in the program description, applied based on the price of
the common stock as of the end of the Company’s fiscal quarter immediately
following the termination of employment.

     

    (E)           2009 Long-Term Performance Incentive
(LTPI) Program.   A pro rata portion of the Performance
Units and the Target Cash Opportunity (as such terms are defined in the LTPI
award certificate) will vest on the termination date and will convert to shares
of common stock or be paid in cash, as applicable, as soon as practicable
following the TSR Comparison.  The pro rata portion shall be
determined by multiplying each of the number of Performance Units and the amount
of the Target Cash Opportunity by a fraction, the numerator of which is the
number of days elapsed from January 1, 2009 to the termination date, and the
denominator of which is 1,092. The TSR Comparison shall then be applied, and the
pro rata number of Performance Units and the pro rata amount of Target Cash
Opportunity shall be adjusted, based on the Company’s TSR ranking relative to
the Peer Group as of the end of the Company’s fiscal quarter immediately
following the termination of employment.

     

    
      
         

      

      
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    (F)           Additional Long-Term Performance
Incentives.  The Executive shall generally be entitled to pro
rata vesting of all long-term performance incentives received during the
Employment Term, based on the number of days elapsed in the applicable vesting
period prior to the date of termination.  Applicable performance
metrics shall be applied based on actual year-end results (in the case of an
annual award based on a fiscal metric, such as EBITDA or sales) or actual
results as of as of the end of the Company’s fiscal quarter immediately
following the termination of employment (in the case of an award based on the
Company’s stock price or TSR).

     

    (c)           For
purposes of this Agreement:

     

    (i)           "Permanent Disability" shall
mean (A) the Executive is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment that can
be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, or (B) the Executive is receiving income
replacement benefits for a period of not less than three months under an
accident and health plan covering employees of Denny’s because the Executive has
a medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months. The Executive agrees to submit such medical evidence regarding
such disability or infirmity as is reasonably requested by the Company,
including, but not limited to, an examination by a physician selected by the
Company in its sole discretion.

     

    (ii)           "Cause" shall mean (A) the
Executive's habitual neglect of his material duties, (B) an act or acts by the
Executive, or any omission by him, constituting a felony, and the Executive has
entered a guilty plea or confession to, or has been convicted of, such felony,
(C) the Executive's failure to follow any lawful directive of the Board
consistent with the Executive's position and duties; (D) an act or acts of fraud
or dishonesty by the Executive which results or is intended to result in
financial or economic harm to the Company, or (E) breach of a material provision
of this Agreement by the Executive; provided, that the Company shall provide the
Executive (x) written notice specifying the nature of the alleged Cause, and,
with respect to clauses (A), (C) and (E),  (y) a reasonable
opportunity to appear before the Board to discuss the matter, and (z) a
reasonable opportunity for a period of thirty (30) days to cure any such alleged
Cause.

     

    
      
         

      

      
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    (iii)
“Change of Control”
shall mean the occurrence of any of the following:

     

    (A)           An
acquisition of any voting securities of the Company (the “ Voting Securities”)
by any “Person” (as the term is used for purposes of Section 13(d) or 14(d) of
the Exchange Act) immediately after which such Person has “Beneficial Ownership”
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
fifty-one percent (51%) or more of the combined voting of the Company’s then
outstanding Voting Securities; provided, however, in determining whether a
Change of Control has occurred, the acquisition of Voting Securities in a
“Non-Control Acquisition” (as hereinafter defined) shall not constitute an
acquisition which would cause a Change of Control.  A “Non-Control
Acquisition” shall mean an acquisition by (a) an employee benefits plan (or a
trust forming a part thereof) maintained by the Company, or (2) any corporation
or other Person of which a majority of its voting power or its voting equity
securities or equity interest is owned, directly or indirectly, by (a) the
Company; (b) any subsidiary of the Company, (c) any Person in connection with a
“non-Control Transaction” (as hereinafter defined, or (d) any Person who,
immediately prior to such acquisition, owned fifty-one percent (51%) or more of
the combined voting power of the Company‘s then outstanding Voting
Securities.

     

    (B)           The
individuals who, as of the date hereof, are members of the Board (the “Incumbent
Board”), cease for any reason to constitute at least a majority of the members
of the Board; provided, however, that if the election, or nomination for
election by the Company’s common stockholders of any new director was approved
by a majority of the Incumbent Board, such new director shall, for purposes of
this Agreement, be considered as a member of the Incumbent Board; provided
further, however, that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened “Election Contest” (as described in Rule 14a-11
promulgated under the Exchange Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Incumbent
Board (a “Proxy Contest”), including by reason of any agreement intended to
avoid or settle any Election Contest; or

     

    (C)           The
consummation of: (1) a merger, consolidation or reorganization with or into the
Company or in which securities of the Company are issued (a “Merger”), unless
such Merger is a “Non-Control Transaction.”  A “Non-Control
Transaction” shall mean a Merger if:  (a) the shareholders of the
Company, immediately before such Merger, own directly or indirectly immediately
following such Merger at least fifty-one percent(51%) of the combined voting
power of the outstanding voting securities of the corporation resulting from
such Merger (the “Surviving Corporation”) in substantially the same proportion
as their ownership of the Voting Securities immediately before such Merger, (b)
the individuals who were members of the Incumbent Board immediately prior to the
execution of the agreement providing for such Merger constitute at least a
majority of the members of the board of directors of the Surviving Corporation,
and (c) no Person other than (i) the Company, (ii) any Subsidiary of the
Company, (iii) an employee benefit plan (or any trust forming apart thereof)
that, immediately prior to such Merger was maintained by the Company or any
Subsidiary, or (iv) any Person who, immediately prior to such Merger had
Beneficial Ownership of fifty-one percent (51%) or more of the combined voting
power of the Surviving Corporation’s then outstanding voting securities or its
common stock;

     

    
      
         

      

      
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    (D)           A
complete liquidation or dissolution of the Company (not including a “Non-Control
Transaction”); or

     

    (E)           The
sale or other disposition of all or substantially all of the assets of the
Company to any Person (other than a transfer to a Subsidiary or the distribution
to the Company’s shareholders of the stock of a Subsidiary or any other
assets).  Notwithstanding the foregoing, a Change of Control shall not
be deemed to occur solely because any Person (the “Subject Person”) acquired
Beneficial Ownership of more than the permitted amount of the then outstanding
Voting Securities as a result of the acquisition of Voting Securities by the
Company which, by reducing the number of shares Beneficially Owned by the
Subject Person; provided that if a Change of Control would occur (but for the
operation of this sentence) as a result of the acquisition of Voting Securities
by the Company, and after such share acquisition by the Company, the Subject
Person becomes the Beneficial Owner of any additional Voting Securities which
increases the percentage of the then outstanding Voting Securities Beneficially
Owned by the Subject Person, then a Change of Control shall occur.

     

    (iv)"Termination without Cause"
shall mean a termination by the Company of the Executive's employment
without Cause (as defined above), and shall be deemed to include any termination
under the circumstances described in subsection 5(c)(v)(B).  In the
event of any termination of the Executive's employment by the Company or by the
Executive under circumstances described in subsection 5(c)(v)(B), the Executive
shall not be required to seek other employment to mitigate damages, and any
income earned by the Executive from other employment or self-employment shall
not be offset against any obligations of the Company to the Executive under this
Agreement.

     

    (v)(A)                      "Voluntary Termination" shall
mean any voluntary termination by the Executive of his employment with the
Company provided that the Executive shall give the Company at least thirty (30)
days prior written notice of the effective date of such
termination.  (B) For purposes of this Agreement, the Executive shall
not be deemed to have incurred a "Voluntary Termination" if upon 10 days' prior
written notice from the Executive, the Executive notifies the Company that his
termination of employment with the Company is a result of  (x) a
breach by the Company of a material provision of this Agreement or (y) a change
by the Company of the Executive's title, duties or responsibilities as Chief
Executive Officer and President of the Company without his consent which results
in a material diminution of his authority, duties or responsibilities (which
notice must be given no later than 90 days after the occurrence of such event),
and such breach or change is not corrected by the Company within 30 days after
the Executive notifies the Board in writing of the action or omission which the
Executive believes constitutes such a breach or change.  In such
event, the Executive shall be deemed to have been terminated without Cause, the
benefits described under subsection 5(b)(iii) shall apply and the obligations of
the Executive set forth in Section 7(c) shall be deemed null and
void.

     

    
      
         

      

      
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    (d)           Compliance with Code Section
409A.

     

    (i)           This
Agreement shall be interpreted and administered in a manner so that any amount
or benefit payable hereunder shall be paid or provided in a manner that is
either exempt from or compliant with the requirements of Code Section 409A and
applicable advice and regulations issued thereunder.

     

    (ii)           Notwithstanding
anything in this Agreement to the contrary, to the extent that any amount or
benefit that would constitute non-exempt “deferred compensation” for purposes of
Section 409A of the Code would otherwise be payable or distributable
hereunder by reason of Executive’s termination of employment, such amount or
benefit will not be payable or distributable to Executive by reason of such
circumstance unless (i) the circumstances giving rise to such termination
of employment meet any description or definition of “separation from service” in
Section 409A of the Code and applicable regulations (without giving effect
to any elective provisions that may be available under such definition), or
(ii) the payment or distribution of such amount or benefit would be exempt
from the application of Section 409A of the Code by reason of the
short-term deferral exemption or otherwise.  This provision does not
prohibit the vesting of
any amount upon a termination of employment, however defined.  If this
provision prevents the payment or distribution of any amount or benefit, such
payment or distribution shall be made on the date, if any, on which an event
occurs that constitutes a Section 409A-compliant “separation from service” or
such later date as may be required by subsection (iii) below.

     

    (iii)           Notwithstanding
anything in this Agreement to the contrary, if any amount or benefit that would
constitute non-exempt “deferred compensation” for purposes of Section 409A of
the Code would otherwise be payable or distributable under this Agreement by
reason of Executive’s separation from service during a period in which he is a
Specified Employee (as defined in Code Section 409A and the final regulations
issued thereunder), then, subject to any permissible acceleration of payment by
the Company under Treas. Reg. Section 1.409A-3(j)(4)(ii) (domestic relations
order), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi) (payment of
employment taxes):

     

    
      
         

      

      
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    (A)           if
the payment or distribution is payable in a lump sum, Executive’s right to
receive payment or distribution of such non-exempt deferred compensation will be
delayed until the earlier of Executive’s death or the first day of the seventh
month following Executive’s separation from service; and

     

    (B)           if
the payment or distribution is payable over time, the amount of such non-exempt
deferred compensation that would otherwise be payable during the six-month
period immediately following Executive’s separation from service will be
accumulated and Executive’s right to receive payment or distribution of such
accumulated amount will be delayed until the earlier of Executive’s death or the
first day of the seventh month following Executive’s separation from service,
whereupon the accumulated amount will be paid or distributed to Executive on
such date and the normal payment or distribution schedule for any remaining
payments or distributions will resume.

     

    6.           Denny’s
Indemnification

     

    Denny’s
hereby undertakes to guarantee, pay and perform each and every obligation, duty
and responsibility of Company under this Agreement, and, in the event of any
failure of Company to pay or perform any obligation, duty or responsibility
under this Agreement, Denny’s agrees that it will pay, perform or otherwise
fully complete such obligation, duty or responsibility.

     

    7.           Protected
Information; Prohibited Solicitation and Competition

     

    (a)           The
Executive hereby recognizes and acknowledges that during the course of his
employment by the Company, the Company will furnish, disclose or make available
to the Executive confidential or proprietary information related to the
Company's business, including, without limitation, customer lists, ideas,
processes, inventions and devices, that such confidential or proprietary
information has been developed and will be developed through the Company's
expenditure of substantial time and money, and that all such confidential
information could be used by the Executive and others to compete with the
Company.  The Executive hereby agrees that all such confidential or
proprietary information shall constitute trade secrets, and further agrees to
use such confidential or proprietary information only for the purpose of
carrying out his duties with the Company and not otherwise to disclose such
information unless otherwise required to do so by subpoena or other legal
process.  No information otherwise in the public domain (i.e.,
information that has been disclosed to the general public, the marketplace or to
governmental regulatory agencies) shall be considered confidential.

     

    (b)           The
Executive hereby agrees, in consideration of his employment hereunder and in
view of the confidential position to be held by the Executive hereunder, that
during the Employment Term and for the period ending on the date which is one
year after the termination of the Employment Term, the Executive shall not,
without the written consent of the Company, knowingly solicit, entice or
persuade any other employees of the Company or any affiliate of the Company to
leave the services of the Company or such affiliate for any reason.

     

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

     

    (c)           The
Executive further agrees that, he shall not (except as to the activities
described in Section 2(c)) during the Employment Term and for the period ending
on the date which is one year after the termination of the Employment Term,
enter into any relationship whatsoever, either directly or indirectly, alone or
in partnership, or as an officer, director, employee or stockholder
(beneficially owning stock or options to acquire stock totaling more than five
percent of the outstanding shares) of any corporation (other than the Company),
or otherwise acquire or agree to acquire a significant present or future equity
or other proprietorship interest, whether as a stockholder, partner, proprietor
or otherwise, with any enterprise, business or division thereof (other than the
Company), which is engaged in the Family Dining restaurant business in those
states within the United States in which the Company or any of its subsidiaries
is at the time of such termination of employment conducting its
business.  For purposes of this Agreement, Family Dining shall be
defined as regional or national restaurant chains identified in the CREST data
as being part of the family dining segment of the restaurant industry,
specifically including, but not be limited to the following:  IHOP,
Friendly’s, Perkins, Bob Evans, Cracker Barrel, Shoney’s, Marie Callendars,
Baker’s Square, Big Boy, Country Kitchen, Shari’s, Mimi’s and Eat and
Park.

     

    (d)           The
restrictions in this Section 7 shall survive the termination of this Agreement
and shall be in addition to any restrictions imposed upon the Executive by
statute or at common law.

     

    (e)           The
parties hereby acknowledge that the restrictions in this Section 7 have been
specifically negotiated and agreed to by the parties hereto and are limited to
only those restrictions necessary to protect the Company from unfair
competition.  The parties hereby agree that if the scope or
enforceability of any provision, paragraph or subparagraph of this Section 7 is
in any way disputed at any time, and should a court find that such restrictions
are overly broad, the court may modify and enforce the covenant to the extent
that it believes to be reasonable under the circumstances.  Each
provision, paragraph and subparagraph of this Section 7 is separable from every
other provision, paragraph, and subparagraph and constitutes a separate and
distinct covenant.

     

    8.           Injunctive
Relief

     

    The Executive hereby expressly
acknowledges that any breach or threatened breach by the Executive of any of the
terms set forth in Section 7 of this Agreement may result in significant and
continuing injury to the Company, the monetary value of which would be
impossible to establish. Therefore, the Executive agrees that the Company shall
be entitled to apply for injunctive relief in a court of appropriate
jurisdiction. The provisions of this Section shall survive the Employment
Term.

     

    
      
         

      

      
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    9.           Parties
Benefited; Assignments

     

    This Agreement shall be binding upon
the Executive, his heirs and his personal representative or representatives, and
upon the Company, Denny’s and their respective successors and
assigns.  Neither this Agreement nor any rights or obligations
hereunder may be assigned by the Executive, other than by will or by the laws of
descent and distribution.

     

    10.           Notices

     

    Any notice required or permitted by
this Agreement shall be in writing, sent by registered or certified mail, return
receipt requested, addressed to the Board and the Company and Denny’s at the
then respective principal office of each, or to the Executive at the address set
forth in the preamble, as the case may be, or to such other address or addresses
as any party hereto may from time to time specify in writing for the purpose in
a notice given to the other parties in compliance with this Section. Notices
shall be deemed given when received.

     

    11.           Governing
Law

     

    This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of South
Carolina, without regard to conflict of law principles.

     

    12.           Indemnification
and Insurance; Legal Expenses

     

    The
Company and Denny’s shall indemnify the Executive to the fullest extent
permitted by the laws of the State of Delaware and the State of California,
respectively, as in effect at the time of the subject act or omission, and shall
advance to the Executive reasonable attorney's fees and expenses as such fees
and expenses are incurred (subject to an undertaking from the Executive to repay
such advances if it shall be finally determined that by a judicial decision
which is not subject to appeal that the Executive was not entitled to the
reimbursement of such fees and expenses) and he will be entitled to the
protection of any insurance policies the Company may elect to maintain generally
for the benefit of its directors and officers against all costs, charges and
expenses incurred or sustained by him in connection with any action, suit or
proceeding to which he may be made a party by reason of his being or having been
a director, officer or employee of the Company, Denny’s or any of the Company’s
other subsidiaries or his serving or having served any other enterprise as a
director, officer or employee at the request of the Company (other than any
dispute, claim or controversy arising under or relating to this Agreement).  The amount of
fees and expenses advanced or reimbursed by the Company under this Section 12 in
any one calendar year shall not affect the amount advanced or reimbursable in
any other calendar year, and the advancement or reimbursement of an eligible
expense shall be made within 30 days after delivery of Executive’s respective
written requests for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require, but in any event no later than
December 31 of the year after the year in which the expense was
incurred.  Executive’s rights pursuant to this Section 12 shall expire
at the end of ten years after the date of Executive’s termination of employment
and shall not be subject to liquidation or exchange for another
benefit.

    


    
      
         

      

      
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    13.           Disputes

     

    Any dispute or controversy arising
under, out of, in connection with or in relation to this Agreement shall, at the
election and upon written demand of either the Executive or the Company, be
finally determined and settled by arbitration in Charlotte, North Carolina in
accordance with the rules and procedures of the American Arbitration
Association, and judgment upon the award may be entered in any court having
jurisdiction thereof.  The arbitration shall be conducted by a single
arbitrator, shall be completed within sixty (60) days after the filing of the
demand, and the arbitrator shall be instructed to allocate all costs and
expenses of such arbitration (including legal and accounting fees and expenses
of the respective parties) to the parties in the proportions that reflect their
success on the merits (including the successful assertion of any
defenses).

     

    14.           Miscellaneous

     

    This Agreement contains the entire
agreement of the parties relating to the subject matter hereof.  This
Agreement supersedes any prior written or oral agreements or understandings
between the parties relating to the subject matter hereof.  No
modification or amendment of this Agreement shall be valid unless in writing and
signed by or on behalf of the parties hereto.  A waiver of the breach
of any term or condition of this Agreement shall not be deemed to constitute a
waiver of any subsequent breach of the same or any other term or
condition.  This Agreement is intended to be performed in accordance
with, and only to the extent permitted by, all applicable laws, ordinances,
rules and regulations.  If any provision of this Agreement, or the
application thereof to any person or circumstance, shall, for any reason and to
any extent, be held invalid or unenforceable, such invalidity and
unenforceability shall not affect the remaining provisions hereof and the
application of such provisions to other persons or circumstances, all of which
shall be enforced to the greatest extent permitted by law.  The
compensation provided to the Executive pursuant to this Agreement shall be
subject to any withholdings and deductions required by any applicable tax
laws.  The headings in this Agreement are inserted for convenience of
reference only and shall not be a part of or control or affect the meaning of
any provision hereof.

     

    [signature
page follows]

     

    
      
         

      

      
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    IN WITNESS WHEREOF, the
parties have duly executed and delivered this Agreement as of the date first
written above.

    


    Denny’s
Corporation

    


    By: /s/
 Vera K.
Farris                                            

    Name:  Vera
K. Farris

    Title:    Chairperson
of Compensation and 

      Incentives
Committee of Denny’s

                
Corporation Board of Directors

    


    


    Denny’s,
Inc.

    


    


    By: /s/  Jill Van
Pelt                                               

    Name:  Jill
Van Pelt

    Title:   Vice
President, Human Resources

    


    


    


    


    


    By:
/s/  Nelson J.
Marchioli                                 

                
Nelson J. Marchioli

     

     

    
      
         

      

      
        -16-