SECOND LIEN AMENDMENT NO. 1


    
      Exhibit
        10.2

    

    EXECUTION
      COPY

     

    
      SECOND
        LIEN AMENDMENT NO. 1 (this “Amendment”)
        dated
        as of July 14, 2006, to the Credit Agreement dated as of September 21, 2004
        (as
        amended, supplemented or otherwise modified from time to time, the “Second
        Lien Credit Agreement”),
        among
        DENNY’S, INC., a California corporation, DENNY’S REALTY, LLC (f/k/a Denny’s
        Realty, Inc.), a Delaware limited liability company (each of the foregoing,
        individually, a “Borrower”
and,
        jointly and severally, and collectively, the “Borrowers”),
        DENNY’S CORPORATION, a Delaware corporation (“Parent”),
        DENNY’S HOLDINGS, INC., a New York corporation (“Denny’s
        Holdings”),
        DFO,
        LLC (f/k/a DFO, Inc.), a Delaware limited liability company (“DFO”),
        the
        Lenders (as defined in the Second Lien Credit Agreement), BANK OF AMERICA,
        N.A.,
        as administrative agent (in such capacity, the “Administrative
        Agent”)
        and as
        collateral agent (in such capacity, the “Collateral
        Agent”)
        for
        the Lenders, and UBS SECURITIES LLC, as syndication agent (in such capacity,
        the
“Syndication
        Agent”)
        for
        the Lenders.
        Capitalized terms used herein and not otherwise defined shall have the meanings
        assigned to such terms in the Second Lien Credit Agreement, as amended
        hereby.

       

      WHEREAS,
        pursuant to the Second Lien Credit Agreement, the Lenders have extended credit
        to the Borrowers;

       

      WHEREAS
        the Borrowers, Parent, Denny’s Holdings and DFO have requested that certain
        provisions of the Second Lien Credit Agreement be amended as set forth herein;
        and

       

      WHEREAS
        the Required Lenders are willing to amend such provisions of the Second Lien
        Credit Agreement on the terms and subject to the conditions set forth
        herein;

       

      NOW,
        THEREFORE, in consideration of the mutual agreements herein contained and
        other
        good and valuable consideration, the sufficiency and receipt of which are
        hereby
        acknowledged, and subject to the conditions set forth herein, the parties
        hereto
        hereby agree as follows:

       

      SECTION
        1. As used in this Amendment:

       

      “First
        Lien Amendment No. 1”
means
        the First Lien Amendment
        No. 1 dated as of July 14, 2006, among the Borrowers, Parent,
        Denny’s Holdings, DFO, the Lenders party thereto, the Administrative
        Agent and the other Agents party thereto.

       

      SECTION
        2. Amendments
        to Section 1.01.
        (a)
        Section 1.01 of the Second Lien Credit Agreement is hereby amended by adding
        the
        following definitions in the appropriate alphabetical order:

       

      “Second
        Lien Amendment No. 1”
means
        the Second Lien Amendment No. 1 dated as of July 14, 2006, among the Borrowers,
        Parent, Denny’s Holdings, DFO, the Lenders party thereto, the Administrative
        Agent and the other Agents party thereto.

       

      “Restaurant
        Businesses”
shall
        have the meaning assigned to such term in Section 6.05(e).

       

      “Specified
        Properties”
shall
        mean the properties listed on Schedule 1 to Second Lien Amendment No.
        1.

       

      (b)
        The
        definition of the term “Act” in Section 1.01 of the Second Lien Credit Agreement
        is hereby amended by replacing the text “9.17” with the text “9.18”

       

      (c)
        The
        definition of the term “Consolidated Total Debt” in Section 1.01 of the Second
        Lien Credit Agreement is hereby amended as follows:

       

      (i)
        by
        replacing, in clause (c) of such definition, the text “aggregate
        amount not to exceed $45,000,000” with the text “aggregate amount
        not to exceed $55,000,000”

       

      (ii)
        by
        replacing, in clause (c) of such definition, the text “of
        which up
        to (i)
        $45,000,000” with the text “of which up to (i) $55,000,000”

       

      (d)
        The
        definition of the term “Reduction Event” in Section 1.01 of the Second Lien
        Credit Agreement is hereby amended by inserting, immediately after the text
        “Sale” in clause (a) of such definition, the text “, provided
        that,
        other than for purposes of clause (a) of the definition of “Excess Cash Flow”,
        no sale of any of the Specified Properties shall constitute a Reduction
        Event”

       

      SECTION
        3. Amendments
        to Section 6.05.
        Section
        6.05 of the Second Lien Credit Agreement is hereby amended as
        follows:

       

      (a)
        by
        deleting clause (e) of such Section in its entirety and replacing
        it with the following text:

       

      “(e)
        Parent, any Borrower or any Subsidiary Loan Party may sell, transfer,
        sell a franchise in or otherwise dispose of restaurants or property
        (including real property, improvements, fixtures and equipment)
        relating to current or former restaurants of such person (such
        restaurants and property are collectively referred to as “Restaurant
        Businesses”) for consideration determined by the board
        of
        directors of the person that owns such Restaurant Businesses
        to be equal to the Fair Market Value of the Restaurant
        Businesses sold, transferred or otherwise disposed of, provided
        that the
        aggregate Fair Market Value of all assets disposed
        of pursuant to this clause (e) shall not exceed $15,000,000
        in any fiscal year;”

       

      (b)
        by
        deleting the text “and” at the end of clause (i) of such Section
        and inserting the following new text immediately after the semicolon
        at the end of clause (j) of such Section:

       

      “and

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      
        (k)
          Parent, any Borrower or any Subsidiary Loan Party may sell the Specified
          Properties; provided
          that
          100% of the Net Cash Proceeds of each sale of any of the Specified Properties
          shall be used to prepay Term Loans as if such sale was a Reduction Event
          described in clause (a) of the definition of the term “Reduction Event”, except
          that any such prepayment shall occur on the fifth
          Business Day of the month following the month in which such sale
          occurs;
          provided
          further
          that,
          notwithstanding anything in this Agreement to the contrary, (i) none of
          the Net
          Cash Proceeds of any sale of any of the Specified Properties shall be used
          to
          acquire Reinvestment Assets and (ii) Parent shall deliver to the Administrative
          Agent a certificate of a Financial Officer promptly following receipt of
          any Net
          Cash Proceeds (and
          in
          any event no later than the fifth Business Day of the month following the
          month
          in which such Net Cash Proceeds were received) of
          a sale
          of any of the Specified Properties setting forth a reasonably detailed
          calculation of the amount of such Net Cash Proceeds;”

         

        (c)
          by
          replacing, in the proviso at the end of such Section, the text “(b)
          or
          (c)” with the text “(b), (c) or (k)”

         

        (d)
          by
          replacing, just before clause (B) of the proviso at the end of such
          Section, the text “ and” with the text “,”

         

        (e)
          by
          replacing the text “.” at the end of the proviso at the end of such
          Section with the text “ and (C) $500,000 for all such sales, transfers,
          exchanges or other dispositions permitted by clause (k) shall
          not be
          permitted unless such disposition is for at least 90% cash consideration.”

         

      

      
        SECTION
          4. Amendments
          to Article IX.
          Article
          IX of the Second Lien Credit Agreement is hereby amended as
          follows:

         

        (a)
          by
          deleting the text “and” at the end of clause (b)(ii)(C) of Section
          9.04 and replacing the text “.” at the end of clause (b)(ii)(D)
          of Section
          9.04 with the following new text:

         

        “;

         

        (E)
          no
          assignment shall be made to either Borrower or any of either
          Borrower’s Affiliates or subsidiaries; and

         

        (F)
          no
          assignment shall be made to a natural person.”

         

        (b)
          by
          renumbering Section 9.17 as Section 9.18 and inserting the following
          Section immediately after Section 9.16:

         

        “SECTION
          9.17. No
          Advisory or Fiduciary Responsibility. In
          connection with all aspects of each transaction contemplated hereby,
          each Borrower and each other Loan Party acknowledges and
          agrees, and acknowledges its Affiliates’ understanding, that: (i)
          the
          credit facilities provided for hereunder and any related arranging
          or other services in connection therewith (including in connection
          with any amendment, waiver or other modification hereof
          or
          of any other Loan Document) are an arm’s-length commercial
          transaction between each Borrower, each other Loan  Party
          and
          their respective Affiliates, on the one hand, and the Administrative
          Agent and the Arrangers, on the other hand, and each
          Borrower and each other Loan Party is capable of evaluating and
          understanding and understands and accepts the terms, risks
          and conditions
          of the transactions contemplated
          hereby and by the other
          Loan Documents (including any amendment, waiver or other modification
          hereof or thereof); (ii) in connection with the process leading
          to such transaction, each of the Administrative Agent and the
          Arrangers is and has been acting solely
          as
          a principal and is not
          the
          financial advisor, agent or fiduciary, for any Borrower, any other
          Loan Party or any of their respective Affiliates,
          stockholders, creditors
          or employees or any other person; (iii) neither the Administrative
          Agent nor any Arranger has assumed or will assume
          an
          advisory, agency or fiduciary responsibility in favor of any
          Borrower or any other Loan Party with respect to any of the transactions
          contemplated hereby or the process leading thereto, including
          with respect to any amendment, waiver or other modification
          hereof or of any other Loan Document (irrespective of
          whether the Administrative Agent or any Arranger has advised or
          is
          currently advising any Borrower, any other Loan Party or any of
          their
          respective Affiliates on other matters) and neither the Administrative
          Agent nor any Arranger has any obligation to any Borrower,
          any other Loan Party or any of their respective Affiliates
          with respect to the transactions contemplated hereby except
          those obligations expressly set forth herein and in the other Loan
          Documents; (iv) the Administrative Agent, the Arrangers and their
          respective Affiliates may be engaged in a broad range of transactions
          that involve interests that differ from those of the Borrowers,
          the other Loan Parties and their respective Affiliates, and
          neither the Administrative Agent nor any Arranger has any obligation
          to disclose any of such interests by virtue of any advisory,
          agency or fiduciary relationship; and (v) the Administrative
          Agent and the Arrangers have not provided and will
          not
          provide any legal accounting, regulatory or tax advice with respect
          to any of the transactions contemplated hereby (including any
          amendment, waiver or other modification hereof or of any other
          Loan Document) and each of the Borrowers and the other
          Loan Parties has consulted its own legal, accounting, regulatory
          and tax advisors to the extent it has deemed appropriate. Each
          of
          the Borrowers and the other Loan Parties hereby waives
          and releases to the fullest extent permitted by law, any claims
          that it may have against the Administrative Agent and the Arrangers
          with respect to any breach or alleged breach of agency or
          fiduciary duty with respect to the transactions contemplated hereby.”

         

        SECTION
          5. Amendment
          to Exhibit B.
          Exhibit
          B of the Second Lien Credit Agreement is hereby amended and restated in
          its
          entirety by Exhibit B attached hereto.

         

        SECTION
          6. Representations
          and Warranties.
          Each of
          Parent, Denny’s Holdings, DFO and the Borrowers represents and warrants to the
          Administrative Agent, the Collateral Agent and each of the Lenders
          that:

         

        (a)
          This
          Amendment has been duly authorized, executed and delivered by it and constitutes
          a legal, valid and binding obligation of Parent, Denny’s Holdings, DFO and each
          Borrower, enforceable against each of them in accordance with its
          terms.

         

        (b)
          The
          representations and warranties of each Loan Party set forth in the Loan
          Documents are true and correct in all material respects on and as of the
          Effective Date (as defined below), except to the extent such representations
          and
          warranties expressly relate to an earlier date (in which case such
          representations and warranties were true and correct in all material respects
          as
          of such earlier date).

         

        (c)
          Immediately before and after giving effect to this Amendment, no Default
          shall
          have occurred and be continuing.

         

        
          
            
            

          

          
            2

            
              

            

          

          
            
            

          

        

        SECTION
          7. Conditions.
          This
          Amendment shall become effective as of the date first above written (the
          “Effective
          Date”)
          when
          (a) the Administrative Agent shall have received counterparts of this Amendment
          that, when taken together, bear the signatures of the Borrowers, Parent,
          Denny’s
          Holdings, DFO and the Required Lenders, (b) First Lien Amendment No.1 shall
          have
          become or shall simultaneously become effective in accordance with its
          terms and
          (c) all fees and, to the extent invoiced prior to the date hereof, expenses
          required to be paid or reimbursed by the Borrowers under or in connection
          with
          this Amendment or the Second Lien Credit Agreement (including all reasonable
          invoiced fees, charges and disbursements of Cravath, Swaine & Moore LLP,
          counsel to the Administrative Agent) shall have been paid or
          reimbursed.

         

        SECTION
          8. Second
          Lien Credit Agreement.
          Except
          as expressly set forth herein, this Amendment (a) shall not by implication
          or otherwise limit, impair, constitute a waiver of or otherwise affect
          the
          rights and remedies of the Lenders, the Administrative Agent, the Borrowers,
          Parent, Denny’s Holdings or DFO under the Second Lien Credit Agreement or any
          other Loan Document and (b) shall not alter, modify, amend or in any way
          affect any of the terms, conditions, obligations, covenants or agreements
          contained in the Second Lien Credit Agreement or any other Loan Document,
          all of
          which are ratified and affirmed in all respects and shall continue in full
          force
          and effect. Nothing herein shall be deemed to entitle either Borrower,
          Parent,
          Denny’s Holdings or DFO to a consent to, or a waiver, amendment, modification
          or
          other change of, any of the terms, conditions, obligations, covenants or
          agreements contained in the Second Lien Credit Agreement or any other Loan
          Document in similar or different circumstances. From and after the date
          hereof,
          any reference in the Loan Documents to the Second Lien Credit Agreement
          shall
          mean the Second Lien Credit Agreement as modified hereby.

         

        SECTION
          9. Applicable
          Law; Waiver of Jury Trial. (a)
          THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
          LAWS OF
          THE STATE OF NEW YORK.

         

        (b)
          EACH PARTY HERETO HEREBY AGREES AS SET FORTH IN SECTION 9.10 OF THE SECOND
          LIEN
          CREDIT AGREEMENT AS IF SUCH SECTION WERE SET FORTH IN FULL
          HEREIN.

         

        SECTION
          10. Counterparts;
          Amendments.
          This
          Amendment may be executed in two or more counterparts, each of which shall
          constitute an original but all of which when taken together shall constitute
          a
          single contract. Delivery of an executed counterpart of a signature page
          of this
          Amendment by telecopy shall be effective as delivery of a manually executed
          counterpart of this Amendment. Except as otherwise permitted by Section
          9.02 of
          the Second Lien Credit Agreement, this Amendment may not be amended nor
          may any
          provision hereof be waived except pursuant to a writing signed by the Borrowers,
          Parent, Denny’s Holdings, DFO and the Required Lenders.

         

        SECTION
          11. Headings.
          The
          Section headings used herein are for convenience of reference only, are
          not part
          of this Amendment and are not to affect the construction of, or to be taken
          into
          consideration in interpreting, this Amendment.

      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          
IN
          WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
          executed by their respective authorized officers as of the day and year
          first
          written above.

      

       

      


      
        	
                DENNY’S,
                  INC.,

                 

              
	
                By

              
	 	
                /s/
                  F. Mark Wolfinger

              
	 	
                Name: F.
                  Mark Wolfinger

              
	 	
                Title: SVP
                  & CFO

              


      

      


      


      
        	
                DENNY’S
                  REALTY, LLC,
                  f/k/a Denny’s Realty, Inc.,

                 

              
	
                By

              
	 	
                /s/
                  F. Mark Wolfinger

              
	 	
                Name: F.
                  Mark Wolfinger

              
	 	
                Title: SVP
                  & CFO

              


      

      


      


      
        	
                DENNY’S
                  CORPORATION,

                 

              
	
                By

              
	 	
                /s/
                  F. Mark Wolfinger

              
	 	
                Name: F.
                  Mark Wolfinger

              
	 	
                Title: SVP
                  & CFO

              


      

      


      


      
        	
                DENNY’S
                  HOLDINGS, INC.,

                 

              
	
                By

              
	 	
                /s/
                  Nicholas Fortuna

              
	 	
                Name: Nicholas
                  Fortuna

              
	 	
                Title: Vice
                  President

              


      

      


      


      
        	
                DFO,
                  LLC, f/k/a
                  DFO, Inc.,

                 

              
	
                By

              
	 	
                /s/
                  F. Mark Wolfinger

              
	 	
                Name: F.
                  Mark Wolfinger

              
	 	
                Title: SVP
                  & CFO

              


      

      


      


      



      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      


      


      
        	
                BANK
                  OF AMERICA, N.A., individually
                  and as Administrative Agent, as Collateral Agent and a Lender,

                 

              
	
                By

              
	 	
                /s/
                  John Schmidt

              
	 	
                Name: John
                  Schmidt

              
	 	
                Title: Vice
                  President

              


      

       

       

       

       

      
 

      
        
           

        

        
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