Document:

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                                                                   EXHIBIT 10.18

                                    EXHIBIT D

                              EMPLOYMENT AGREEMENT
              PRESIDENT AND CHIEF OPERATING OFFICER-JOSEPH TRUNGALE

As an inducement to accept the position offered on February 4, 2004, an
employment arrangement was reached. Terms of the arrangement are 1 YEAR SALARY
IF TERMINATION IS "NOT FOR CAUSE".

"Cause" is defined as refusing or neglecting to perform the duties or meet the
requirement of the position (as agreed upon by the Chairman and the Chief
Operating Officer), evidence of incompetence for the position; significant
negative impact on the business as a result of action(s) or lack of action(s)
taken; engaging in conduct which violates or shows a disregard for the company's
policies; engaging in unlawful or improper conduct, gross insubordination, or
gross misconduct, during working or nonworking hours, which affects the
President and Chief Operating Officer's relationship with TRC or which may
adversely affect TRC.<PAGE>

                                                                   EXHIBIT 10.19

                             THE RESTAURANT COMPANY
                      2004 CORPORATE ANNUAL INCENTIVE PLAN

1. DEFINITIONS:               The following terms shall have the meanings set
                              forth in this section:

   AIP:                       The Annual Incentive Plan
   Board of Directors:        The Board of Directors of The Restaurant Company
   Bonus Year:                The Bonus Year is the fiscal year 2004.
   Company:                   The Company is The Restaurant Company
   Eligible Employee:         Eligible Employees are Corporate Officers &
                              Directors of the Company as so designated by the
                              Chairman/CEO of the Company and must be in good
                              standing and employed on the bonus payment date.
                              An employee in good standing is that which has a
                              current performance rating of at least "At
                              Target", and has not been on disciplinary action
                              during the current bonus period and up through the
                              bonus payment date.
   Corporate EBITDA Target:   The Earnings Before Interest, Taxes, Depreciation
                              and Amortization Target of the Company as
                              identified in the operating plan approved by the
                              Board of Directors, if so designated, for the
                              Bonus Year.
   Participating Employee:    A Participating Employee is an Eligible Employee
                              who is approved by the Chairman/CEO of the Company
                              to participate in the plan.
   Base Salary:               The Base Salary is the base salary at the time of
                              bonus calculations.
   Officer Group:             The Officer Group consists of the Chairman/CEO,
                              the President/COO and the Officers of the Company.
   "At Plan":                 The corporate EBITDA plan for the year is
                              attained.
   Full Bonus:                The bonus percentage set for each eligible
                              participant by position for reaching "At Plan"
                              performance.
   Individual Performance:    The performance of the individual is a factor in
                              setting a payment.
   Discretionary:             The judgment of the Chairman/CEO and the
                              President/COO is a factor in setting a payment.

2. PURPOSE:                   To provide additional incentive to Eligible
                              Employees that is directly tied to Corporate
                              results.

3. CORPORATE                  The Corporate Financial Performance Factor is a
   PERFORMANCE FACTORS:       function of the Corporate Earnings Before
                              Interest, Taxes, Depreciation and Amortization
                              Target.

                              Bonus payment may be made for less than "At Plan"
                              performance. The lowest payment threshold is
                              usually no less than halfway between the prior
                              year EBITDA and the current year EBITDA plan.
                              Payment may be made up to a maximum payment of
                              150% of the respective participant's full bonus
                              payout.

                              Any payment of bonus is at the discretion of the
                              Chairman/CEO and the President/COO. Performance
                              issues and potential for continued employment are
                              factors considered in making payout decisions.

4. TARGET BONUS               The Chairman/CEO and President/COO with input from
   PERCENTAGE:                the VP, Human Resources and CFO, approves the
                              Individual Target Bonus Percentage competitive
                              with market.

5. BONUS AMOUNT:              The Bonus Amount is determined by multiplying the
                              Bonus Percentage by the base salary of the
                              participant.

6. CONDITIONS PRECEDENT       Approval by the Chairman/CEO and President/COO
   TO ANY BONUS TO ANY        with input from appropriate Officers of the
   PARTICIPATING              Company, in its sole and exclusive discretion, of
                              the actual Bonus Award for each participant and
                              the total pool to be awarded. If approved,

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   EMPLOYEE:                  bonuses will generally be paid on or before March
                              31, 2005.

7. MODIFICATION OR            The AIP does not constitute a contract of
   TERMINATION OF AIP         employment or an unconditional promise of payment.
   AND PARTICIPATION:         Participation by an Eligible Employee in any one
                              Bonus Year does not confer an unqualified right to
                              participate in succeeding Bonus Years regardless
                              of a modification, or absence thereof, in grade,
                              salary, position or responsibility. The AIP is
                              subject to modification, termination and annual
                              renewal by the Chairman/CEO, if so designated, in
                              its sole discretion, without any notice to
                              Participating Employees.

8. DISABILITY, DEATH          Participating Employees who become disabled or die
   AND RETIREMENT:            during any Bonus Year may be considered for a pro
                              rata bonus for the period during which such
                              Participating Employee was actively employed.

9. MISCELLANEOUS:             The Chairman/CEO, the Officers of the Company and
                              the Board of Directors, and its employees shall
                              not be liable for any action taken in good faith
                              in administering and interpreting the AIP.

                              The payments received will be subject to
                              appropriate statutory wage deductions and such
                              other deductions normally made for employees of
                              The Restaurant Company. In addition, any financial
                              obligation you have to The Restaurant Company can
                              be deducted.

                              The Chairman/CEO or Board of Directors, in its
                              sole discretion, may modify, including, but not
                              limited to, increasing or decreasing the Financial
                              Targets at any time during the Bonus Year.<PAGE>

                                                                   EXHIBIT 10.20

                        PERKINS FAMILY RESTAURANTS, L.P.
                           DEFERRED COMPENSATION PLAN

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                        PERKINS FAMILY RESTAURANTS, L.P.
                           DEFERRED COMPENSATION PLAN

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
Section                                                                         Page
<S>                                                                             <C>
ARTICLE 1 Definitions.........................................................    1
    1.1   Account.............................................................    1
    1.2   Administrator.......................................................    1
    1.3   Beneficiary.........................................................    1
    1.4   Board...............................................................    1
    1.5   Bonus...............................................................    1
    1.6   Code................................................................    1
    1.7   Compensation........................................................    2
    1.8   Deferrals...........................................................    2
    1.9   Deferral Election...................................................    2
   1.10   Disability..........................................................    2
   1.11   Discretionary Contribution..........................................    2
   1.12   Effective Date......................................................    2
   1.13   Eligible Employee...................................................    2
   1.14   Employee............................................................    2
   1.15   Employer............................................................    2
   1.16   Enrollment Period...................................................    2
   1.17   Investment Fund or Funds............................................    3
   1.18   Long Term Incentive Bonus...........................................    3
   1.19   Matching Contribution...............................................    3
   1.20   Participant.........................................................    3
   1.21   Plan................................................................    3
   1.22   Plan Year...........................................................    3
   1.23   Retirement..........................................................    3
   1.24   Salary..............................................................    3
   1.25   Trust...............................................................    3
   1.26   Trustee.............................................................    4
   1.27   Years of Service....................................................    4

ARTICLE 2 Participation.......................................................    4
    2.1   Designation as Eligible Employee....................................    4
    2.2   Commencement of Participation.......................................    4
    2.3   Loss of Eligible Employee Status....................................    5

ARTICLE 3 Contributions.......................................................    5
    3.1   Deferrals...........................................................    5
    3.2   Matching Contribution...............................................    6
    3.3   Discretionary Contribution..........................................    6
</TABLE>

                                                                   October, 1998
<PAGE>

<TABLE>
<S>                                                                               <C>
    3.4    Time of Contributions...............................................    7
    3.5    Form of Contributions...............................................    7

ARTICLE 4  Vesting.............................................................    7
    4.1    Vesting of Deferrals................................................    7
    4.2    Vesting of Matching and Discretionary Contributions.................    8
    4.3    Amounts Not Vested..................................................    8
    4.4    Change in Control...................................................    8

ARTICLE 5  Accounts............................................................    9
    5.1    Accounts............................................................    9
    5.2    Investments, Gains and Losses.......................................   10
    5.3    Forfeitures.........................................................   11

ARTICLE 6  Distributions.......................................................   11
    6.1    Distribution Election...............................................   11
    6.2    Payment Options.....................................................   11
    6.3    Commencement of Payment upon Death, Disability or Termination.......   13
    6.4    Minimum  Distribution...............................................   13
    6.5    Early Distribution and Penalty......................................   13

ARTICLE 7  Beneficiaries.......................................................   14
    7.1    Beneficiaries.......................................................   14
    7.2    Lost Beneficiary....................................................   14

ARTICLE 8  Funding.............................................................   15
    8.1    Prohibition Against Funding.........................................   15
    8.2    Deposits in Trust...................................................   15
    8.3    Indemnification of Trustee..........................................   15
    8.4    Withholding of Employee Contributions...............................   16

ARTICLE 9  Claims Administration...............................................   16
    9.1    General.............................................................   16
    9.2    Claim Review........................................................   16
    9.3    Right of Appeal.....................................................   17
    9.4    Review of Appeal....................................................   17
    9.5    Designation.........................................................   17
    9.6    Arbitration.........................................................   17

ARTICLE 10 General Provisions..................................................   17
   10.1    Administrator.......................................................   17
   10.2    No Assignment.......................................................   18
   10.3    No Employment Rights................................................   19
   10.4    Incompetence........................................................   19
   10.5    Identity............................................................   19
   10.6    Other Benefits......................................................   19
</TABLE>

                                                                   October, 1998
<PAGE>

<TABLE>
<S>                                                                          <C>
 10.7 No Liability........................................................   19
 10.8 Expenses............................................................   20
 10.9 Insolvency..........................................................   20
10.10 Amendment and Termination...........................................   20
10.11 Employer Determinations.............................................   20
10.12 Construction........................................................   21
10.13 Governing Law.......................................................   21
10.14 Severability........................................................   21
10.15 Headings............................................................   21
10.16 Terms...............................................................   22
</TABLE>

                                                                   October, 1998
<PAGE>

                        PERKINS FAMILY RESTAURANTS, L.P.
                           DEFERRED COMPENSATION PLAN

      Perkins Family Restaurants, L.P., a Delaware Limited Partnership, or its
successor (the "Employer"), hereby adopts the Perkins Family Restaurants, L.P.
Deferred Compensation Plan (the "Plan") for the benefit of a select group of
management or highly compensated employees. This Plan is an unfunded arrangement
and is intended to be exempt from the participation, vesting, funding, and
fiduciary requirements set forth in Title I of the Employee Retirement Income
Security Act of 1974, as amended. This Plan is effective December 30, 1998.

                                    ARTICLE 1
                                   DEFINITIONS

1.1   ACCOUNT. The bookkeeping account established for each Participant as
      provided in Section 5.1 hereof.

1.2   ADMINISTRATOR. Administrator or Plan Administrator means the individual or
      committee appointed to administer the Plan pursuant to Section 10.1.

1.3   BENEFICIARY. The person, persons, trust or other entity a Participant
      designates by written revocable designation filed with the Administrator
      to receive payments in event of his or her death.

1.4   BOARD. The Board of Directors of the General Partner.

1.5   BONUS. Compensation which is designated as such by the Employer and which
      relates to services performed by an Eligible Employee in addition to his
      or her Salary and Long Term Incentive Bonus, including any pretax elective
      deferrals from said Bonus to any Employer sponsored plan that includes
      amounts deferred under a Deferral Election or a qualified cash or deferred
      arrangement under Code Section 401(k) or cafeteria plan under Code Section
      125.

1.6   CODE. The Internal Revenue Code of 1986, as amended.

                                       1
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1.7   COMPENSATION. The Participant's earned income, including Salary, Bonus,
      Long Term Incentive Bonus and other remuneration from the Employer.

1.8   DEFERRALS. The portion of Compensation that a Participant elects to defer
      in accordance with Section 3.1 hereof.

1.9   DEFERRAL ELECTION. The separate written agreement, submitted to the
      Administrator, by which an Eligible Employee agrees to participate in the
      Plan and make Deferrals thereto. The Deferral Election will specify the
      amount or percentage of Compensation that a Participant chooses to defer.

1.10  DISABILITY. Any medically determinable physical or mental disorder that
      renders a Participant incapable of continuing in the employment of the
      Employer in his or her regular duties of employment, as determined by the
      Administrator in its sole discretion.

1.11  DISCRETIONARY CONTRIBUTION. An Employer Contribution as described in
      Section 3.3 hereof.

1.12  EFFECTIVE DATE. January 1, 1999.

1.13  ELIGIBLE EMPLOYEE. Each Employee designated by the Administrator pursuant
      to Section 2.1 as eligible to participate in the Plan.

1.14  EMPLOYEE. Any person employed by the Employer.

1.15  EMPLOYER. Perkins Family Restaurants, L.P., and its affiliates or
      successors.

1.16  ENROLLMENT PERIOD

      A.    For individuals who are Eligible Employees prior to the commencement
            of a given Plan Year, Enrollment Period means the period set by the
            Administrator which ends prior to the first day of a Plan Year.

      B.    With respect to an Eligible Employee designated as such by the
            Employer effective as of any day after the first day of a Plan Year,
            Enrollment Period means the period beginning with the date of
            his/her designation as an Eligible

                                       2
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            Employee, and ending prior to the first day such Eligible Employee's
            participation in the Plan commences.

1.17  INVESTMENT FUND OR FUNDS. Each investment(s) which serves as a means to
      measure value, increases or decreases with respect to a Participant's
      Accounts.

1.18  LONG TERM INCENTIVE BONUS. Compensation which is designated as such by the
      Employer and which relates to services performed by an Eligible Employee
      during an incentive period defined according to the Employer's Long Term
      Incentive Plan in addition to his or her Salary and Bonus, including any
      pretax elective deferrals from said Bonus to any Employer sponsored plan
      that includes amounts deferred under a Deferral Election or a qualified
      cash or deferred arrangement under Code Section 401(k) or cafeteria plan
      under Code Section 125.

1.19  MATCHING CONTRIBUTION. An Employer contribution as described in Section
      3.2 hereof.

1.20  PARTICIPANT. An Eligible Employee who is a Participant as provided in
      Article 2.

1.21  PLAN. The Perkins Family Restaurants Deferred Compensation Plan.

1.22  PLAN YEAR. January 1 through December 31.

1.23  RETIREMENT. Retirement means the termination of the Participant's
      employment with the Employer for any reason other than death or Disability
      (i) at any time after attaining the age of sixty-five (65), or (ii) if the
      Participant has at least five (5) Years of Service with the Employer, at
      any time after attaining age fifty-five (55).

1.24  SALARY. An Eligible Employee's base salary rate or rates in effect at any
      time during a Plan Year, including any pretax elective deferrals from
      Salary to any Employer sponsored plan that includes amounts deferred under
      a Deferral Election or a qualified cash or deferred arrangement under Code
      Section 401(k) or cafeteria plan under Code Section 125.

1.25  TRUST. The agreement between the Employer and the Trustee under which the
      assets of the Plan are held, administered and managed, which shall conform
      to the terms of Rev. Proc. 92-64.

                                       3
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1.26  TRUSTEE. Union Planter's Trust Department, or such other successor that
      shall become trustee pursuant to the terms of the Plan.

1.27  YEARS OF SERVICE. A Participant's "Years of Service" shall be measured by
      the total number of full twelve (12) month periods that an individual has
      been an Employee.

                                   ARTICLE 2
                                 PARTICIPATION

2.1   DESIGNATION AS ELIGIBLE EMPLOYEE. The Administrator shall from time to
      time specify one or more persons from a select group of management or
      highly compensated employees as Eligible Employees provided, however, the
      Employer shall not discriminate against any Employee becoming eligible
      under this provision on any basis prohibited by law. Such specification
      shall be in writing, with a copy delivered to the Employer and the person
      designated as eligible, and shall set the date as of when the person
      becomes eligible.

      For the initial Plan Year, and for subsequent Plan Years until the
      Administrator otherwise directs, an Eligible Employee shall mean each
      Employee who is designated as such by the Employer and holds a position as
      Officer, Director, Regional Manager, or Franchise Consultant.

      An individual's designation as an Eligible Employee may be revoked at any
      time upon written notice of the Administrator to such individual.

2.2   COMMENCEMENT OF PARTICIPATION. Each Eligible Employee shall become a
      Participant at the earlier of the first day of the Plan Year or the date
      on which his or her Deferral Election first becomes effective.

                                       4
<PAGE>

2.3   LOSS OF ELIGIBLE EMPLOYEE STATUS.

      (a)   A Participant who is no longer an Eligible Employee shall not be
            permitted to submit a Deferral Election and all Deferrals for such
            Participant shall cease as of the end of the Plan Year in which such
            Participant is determined to no longer be an Eligible Employee.

      (b)   Amounts credited to the Account of a Participant described in
            subsection (a) shall continue to be held pursuant to the terms of
            the Plan and shall be distributed as provided in Article 6.

      (c)   A Participant who is no longer an Eligible Employee shall continue
            to receive quarterly statements, and shall retain the right to make
            changes in investment selection according to Section 5.2.

                                    ARTICLE 3
                                  CONTRIBUTIONS

3.1   DEFERRALS.

      (a)   On an annual basis, each Participant may authorize the Employer to
            reduce his/her future Compensation by an amount or percentage not to
            exceed an amount allowed for the Plan Year as established by the
            Employer, and to have a corresponding amount credited to his/her
            Accounts, in accordance with Article 5, by filing a Deferral
            Agreement with the Administrator during his/her initial Enrollment
            Period or any subsequent Enrollment Period preceding the Plan Year
            during which such Compensation will be earned.

      (b)   Each Eligible Employee shall deliver an annual Deferral Election to
            the Employer before any Deferrals can become effective. Such
            Deferral Election shall be void with respect to any Deferral unless
            submitted before the beginning of the Plan Year during which the
            amount to be deferred will be earned; provided, however, that in the
            year in which the Plan is first adopted or an Employee is first
            eligible to participate, such Deferral Election shall be filed
            within thirty (30) days of the date on which the Plan is adopted or
            the

                                       5
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            date on which an Employee is first eligible to participate,
            respectively, with respect to Compensation earned during the
            remainder of the calendar year.

      (c)   The Deferral Election shall, subject to the limitation set forth in
            Section 3.1(a) hereof, designate the amount or percentage of
            Compensation deferred by each Participant, the beneficiary or
            beneficiaries of the Participant and such other items as the
            Administrator may prescribe. Such Deferral Elections shall remain
            effective for the Plan Year.

      (d)   The minimum amount of Compensation that may be deferred each Plan
            Year is one thousand dollars ($1,000).

      (e)   The maximum amount of Compensation that may be deferred each Plan
            Year is fifty percent (50%) of the Participant's Salary,
            seventy-five percent (75%) of the Participant's Bonus, and fifty
            percent (50%) of the Participant's Long Term Incentive Bonus.

3.2   MATCHING CONTRIBUTION. At its sole and absolute discretion, the Employer
      may elect to make a Matching Contribution to the Accounts of some or all
      of the Participants. The amount of the Matching Contribution, if any,
      shall be determined by the Employer annually and communicated to all
      Eligible Employees. For the initial Plan Year and for subsequent Plan
      Years until the administrator otherwise directs, the Matching Contribution
      shall equal $1.00 for every dollar of Compensation that the Participant
      elects to defer under Section 3.1 (a) above up to three percent (3%) of
      the Participant's Compensation deferred under Section 3.1 (a) above.
      Notwithstanding, for the initial year of the plan there shall be a maximum
      Matching Contribution per Participant determined as up to 3% of the limit
      set forth under Internal Revenue Code Section 401(a)(17). Thereafter, the
      Employer shall establish an annual maximum Matching Contribution. Such
      Matching Contribution shall be allocated to the Participant's Accounts at
      such Participant's election made in accordance with Section 5.1.

3.3   DISCRETIONARY CONTRIBUTION. At its sole and absolute discretion, the
      Employer may elect to make a Discretionary Contribution to the Account of
      some or all of the Participants. Nothing in this Plan, however, shall
      obligate the Employer to make Discretionary Contributions for the benefit
      of Plan Participants in any Plan Year, nor to make identical Discretionary
      Contributions for the benefit of Plan Participants in

                                       6
<PAGE>

      any Plan Year. The Employer expressly reserves the right to make
      Discretionary Contributions to such Plan Participants in such amount or
      such proportions as it deems warranted or appropriate; provided, however,
      the Employer shall not discriminate against any Plan Participant in making
      Contributions under this provision on any basis prohibited by law.
      Discretionary Contributions shall be allocated to the Participant's
      Accounts at such Participant's election made in accordance with Section
      5.1. Nothing in this Plan or any other agreement or document shall
      represent or be construed to represent an obligation or promise of the
      Employer to make Discretionary Contributions on behalf of a Participant at
      any time.

3.4   TIME OF CONTRIBUTIONS.

      (a)   Deferrals and Matching Contributions shall be transferred to the
            Trust as soon as administratively feasible following the end of each
            month. The Employer shall also transmit at that time any necessary
            instructions regarding the allocation of such amounts among the
            Accounts of Participants.

      (b)   Discretionary Contributions shall be transferred to the Trust at
            such time as the Employer shall determine. The Employer shall also
            transmit at that time any necessary instructions regarding the
            allocation of such amounts among the Accounts of Participants.

3.5   FORM OF CONTRIBUTIONS. All Deferrals, Matching Contributions and
      Discretionary Contributions to the Trust shall be made in the form of cash
      or cash equivalents of US currency.

                                    ARTICLE 4
                                    VESTING

4.1   VESTING OF DEFERRALS. A Participant shall have a vested right to the
      portion of his or her Account attributable to Deferrals and any earnings
      or losses on the investment of such Deferrals.

                                       7
<PAGE>

4.2   VESTING OF MATCHING AND DISCRETIONARY CONTRIBUTIONS.

      (a)   Prior to the completion of three (3) years of service with the
            Employer, Participants shall have a zero percent (0%) vested right
            to the portions of his or her Account attributable to Matching
            Contributions. Upon completion of three years of service,
            Participants shall have a sixty percent (60%) vested right to the
            portions of his or her Account attributable to Matching
            Contributions. Upon completion of four (4) years of service,
            Participants shall have an eighty percent (80%) vested right to the
            portions of his or her Account attributable to Matching
            Contributions. Participants shall have a one hundred percent (100%)
            vested right to the portions of his or her Account attributable to
            Matching Contributions only after completion of five (5) years of
            service with the Employer.

      (b)   At the time any Discretionary Contributions may be determined by the
            Administrator, the Administrator shall also determine any necessary
            instructions regarding the vesting of such amounts.

4.3   AMOUNTS NOT VESTED. Any amounts credited to a Participant's Account that
      are not vested at the time of his or her termination of employment with
      the Employer shall be forfeited.

4.4   CHANGE IN CONTROL. Upon a Change in Control, non-vested amounts shall
      immediately vest in full and accounts may be paid out in full within one
      (1) year immediately following the date of the Change in Control at the
      Participant's option.

      (a)   "Change in Control" of the Employer shall mean the first to occur of
            any of the following:

            (i)   Any transaction or series of transactions with any person or
                  persons, including, but not limited to, any sale, exchange, or
                  transfer, merger, consolidation, liquidation or other
                  transaction which, upon the consummation thereof, results in
                  the Employer or its shareholders on the date of the adoption
                  of the Plan (taken as a single owner) owning, directly or
                  indirectly, less than 50% of the outstanding voting securities
                  of the Employer; or

                                       8
<PAGE>

            (ii)  Any sale, lease, exchange or other transfer (in one
                  transaction or a series of related transactions) of all, or
                  substantially all (meaning greater than 50%), of the assets of
                  the Employer, other than any sale, lease, exchange or other
                  transfer to any entity where the Employer or its shareholders
                  on the date of the adoption of the Plan (taken as a single
                  owner) owns, directly or indirectly, at least 50% of the
                  outstanding voting securities of such entity after any such
                  transfer, provided however, that a Change in Control shall not
                  include the public offering by the Employer, or its equity
                  owners, of equity interests of the Employer pursuant to a
                  registration statement filed with the Securities and Exchange
                  Commission; or

            (iii) At any point in time that Donald N. Smith is no longer
                  Chairman of the Board and Chief Executive Officer of the
                  Employer;

                                    ARTICLE 5
                                    ACCOUNTS

5.1   ACCOUNTS. The Administrator shall establish and maintain a bookkeeping
      account in the name of each Participant. The Administrator shall also
      establish subaccounts, as provided in subsection (a), (b), and/or (c),
      below, as elected by the Participant pursuant to Article 3.

      (a)   A Retirement Account shall be established for each Participant. His
            or her Retirement Account shall be credited with Deferrals (as
            specified in the Participant's Deferral Election), any Matching and
            Discretionary Contributions allocable thereto and the Participant's
            allocable share of any earnings or losses on the foregoing. Each
            Participant's Account shall be reduced by any distributions made
            plus any federal, state and/or local tax withholding and any social
            security withholding tax as may be required by law.

      (b)   A Participant may elect to establish one or more Education Accounts
            by designating a year in which the Education Account is to commence
            payments at the time the account is initially established. Each
            Participant's Education Account shall be credited with Deferrals (as
            specified in the Participant's

                                       9
<PAGE>

            Deferral Election), any Matching and Discretionary Contributions
            allocable thereto and the Participant's allocable share of any
            earnings or losses on the foregoing. Each Participant's Account
            shall be reduced by any distributions made plus any federal, state
            and/or local tax withholding and any social security withholding tax
            as may be required by law.

      (c)   A Participant may elect to establish one or more Fixed Period
            Accounts by designating a year of payout at the time the account is
            initially established. The minimum initial deferral period for Fixed
            Period subaccounts shall be three (3) years. Each Participant's
            Fixed Period Account shall be credited with Deferrals (as specified
            in the Participant's Deferral Election), any Matching and
            Discretionary Contributions allocable thereto and the Participant's
            allocable share of any earnings or losses on the foregoing. Each
            Participant's Account shall be reduced by any distributions made
            plus any federal, state and/or local tax withholding and any social
            security withholding tax as may be required by law.

      (d)   The maximum combined number of Education and/or Fixed Period
            subaccounts that a Participant may have at one time will be ten
            (10).

5.2   INVESTMENTS, GAINS AND LOSSES.

      (a)   Trust assets shall be invested by the Trustee in accordance with
            written directions from the Employer. Such directions shall provide
            Trustee with the investment discretion to invest the
            above-referenced amounts within broad guidelines established by
            Trustee and Employer as set forth therein.

      (b)   The Administrator shall adjust the amounts credited to each
            Participant's Account to reflect Deferrals, Matching Contributions,
            Discretionary Contributions, investment experience, distributions
            and any other appropriate adjustments. Such adjustments shall be
            made as frequently as is administratively feasible.

      (c)   A Participant may direct that his or her Retirement Account,
            Education Account and or Fixed Period Account established pursuant
            to Section 5.1 may be valued as if they were invested in one or more
            Investment Funds in multiples of one percent (1%) of the balance in
            an Account. A Participant

                                       10
<PAGE>

            may change his or her selection of Investment Funds no more than six
            (6) times each Plan Year. An election shall be effective as soon as
            administratively feasible following the date of the change as
            indicated in writing by the Participant to the Administrator and
            communicated to the Trustee.

5.3   FORFEITURES. Any forfeitures from a Participant's Account shall continue
      to be held in the Trust, and shall be used at the Employer's discretion to
      reduce the Employer's future Matching and Discretionary Contributions and
      /or administrative expenses under the Plan. If no such further
      contributions will be made, then such forfeitures shall be returned to the
      Employer.

                                    ARTICLE 6
                                  DISTRIBUTIONS

6.1   DISTRIBUTION ELECTION. Each Participant shall designate on his or her
      Deferral Election the timing of his or her distribution by indicating the
      type of account as described under Section 5.1. A Participant may not
      modify, alter, amend or revoke such designation for a Plan Year after such
      Plan year begins. Further, amounts in one Account cannot be transferred to
      another Account. Each Participant shall also designate the manner in which
      Retirement Account payments shall be made from the choices available under
      Section 6.2 (a) hereof.

6.2   PAYMENT OPTIONS.

      (a)   Retirement Account payments shall commence as soon as
            administratively feasible immediately after the Participant's
            Retirement. The Participant may elect any one of the following forms
            of payment so long as the election is made in writing, delivered to
            the Administrator at least one year prior to the year in which the
            Participant's benefit becomes payable.

            (i)   The normal form of payment of benefits hereunder, and the form
                  of payments to be used if no other election is made, shall be
                  a single lump-sum distribution of the value of the
                  Participant's Retirement Account.

                                       11
<PAGE>

            (ii)  A Participant entitled to a benefit hereunder may elect to
                  receive his/her Retirement Account in substantially equal
                  annual installments over a period not to exceed five (5)
                  years.

                  The amount of the substantially equal payments described above
                  shall be determined by multiplying the Participant's
                  Retirement Account by a fraction, the denominator of which in
                  the first year of payment equals the number of years over
                  which benefits are to be paid, and the numerator of which is
                  one (1).

                  The amounts of the payments for each succeeding year shall be
                  determined by multiplying the Participant's Retirement
                  Account as of the applicable anniversary of the Participant's
                  Retirement Date by a fraction, the denominator of which equals
                  the number of remaining years over which benefits are to be
                  paid, and the numerator of which is one (1).

            (iii) A Participant entitled to a benefit hereunder may elect to
                  defer commencement of any distribution of his/her Retirement
                  Account for a period not to exceed three (3) years after
                  retirement. Amounts credited to the Retirement Account of a
                  Participant in this subsection shall continue to be held
                  pursuant to the terms and conditions of this Plan.

      (b)   Education Account payouts shall be paid in four annual installments
            commencing June 30 (or as soon as administratively feasible) of the
            calendar year selected by the Participant and the three (3)
            anniversaries thereof in the following amounts:

                   Year 1                25% of the account balance
                   Year 2                33% of the account balance
                   Year 3                50% of the account balance
                   Year 4               100% of the account balance

      (c)   Fixed Period Account payouts shall be paid in one lump sum payment
            on January 31 (or as soon as administratively feasible) of the
            calendar year selected by the Participant on his or her Deferral
            Election.

                                       12
<PAGE>

      (d)   If a Participant's employment is terminated for any reason
            (including Disability) other than Retirement and such Participant
            has a balance in his/her Fixed Account and/or Education Account,
            such balance shall be transferred to his/her Retirement Account and
            distributed as soon as administratively feasible in one lump sum
            payment.

6.3   COMMENCEMENT OF PAYMENT UPON DEATH, DISABILITY OR TERMINATION.

      (a)   Upon the death of a Participant, all vested and non-vested amounts
            credited to his or her Account(s) shall be paid, as soon as
            administratively feasible, to his or her Beneficiary or
            Beneficiaries, as determined under Article 7 hereof, in a lump sum.

      (b)   Upon the Disability, of a Participant, all vested and non-vested
            amounts credited to his or her Account(s) shall be paid to the
            Participant in a lump-sum payment.

      (c)   Upon the termination of employment of a Participant, all vested
            amounts credited to his or her Account(s) shall be paid to the
            Participant in a lump-sum payment, as soon as administratively
            feasible.

6.4   MINIMUM DISTRIBUTION.

      (a)   Notwithstanding any provision to the contrary, if the vested balance
            of a Participant's Account at the time of a termination due to
            Retirement is less than $10,000, then the Participant shall be paid
            his or her benefits as a single lump sum as soon as administratively
            feasible following termination.

      (b)   Notwithstanding any provision to the contrary, if the balance of a
            Participant's Education Account at the time benefit payments are to
            commence is less than $4,000, then the Participant shall be paid
            such Education Account benefits as a single lump sum as soon as
            administratively feasible following commencement date.

6.5   EARLY DISTRIBUTION AND PENALTY. A Participant may elect to receive a
      distribution of up to ninety percent (90%) of the vested amounts in his or
      her Account on a date prior to that established under the Plan. If such an
      early distribution is requested, the Plan

                                       13
<PAGE>

      Administrator shall deduct from the Participant's account an additional
      ten percent (10%) of the vested amount withdrawn. This additional amount
      withdrawn by the Plan Administrator shall be considered an early
      distribution penalty, and shall be treated as forfeited by the
      Participant.

                                    ARTICLE 7
                                  BENEFICIARIES

7.1   BENEFICIARIES. Each Participant may from time to time designate one or
      more persons (who may be any one or more members of such person's family
      or other persons, administrators, trusts, foundations or other entities)
      as his or her Beneficiary under the Plan. Such designation shall be made
      on a form prescribed by the Administrator. Each Participant may at any
      time and from time to time, change any previous Beneficiary designation,
      without notice to or consent of any previously designated Beneficiary, by
      amending his or her previous designation on a form prescribed by the
      Administrator. If no person shall be designated by the Participant as a
      Beneficiary, or if the designated Beneficiary shall not survive the
      Participant, payment of his/her interest shall be made to the
      Participant's estate. If more than one person is the beneficiary of a
      deceased Participant, each such person shall receive a pro rata share of
      any death benefit payable unless otherwise designated on the applicable
      form.

7.2   LOST BENEFICIARY.

      (a)   All Participants and Beneficiaries shall have the obligation to keep
            the Administrator informed of their current address (es) until such
            time as all benefits due have been paid.

      (b)   If a Participant or Beneficiary cannot be located by the
            Administrator exercising due diligence, then, in its sole
            discretion, the Administrator may presume that the Participant or
            beneficiary is deceased for purposes of the Plan and all unpaid
            amounts (net of due diligence expenses, including but not limited to
            the retention of a locator / search firm) owed to the Participant or
            beneficiary shall be paid accordingly or, if a Beneficiary cannot be
            so located, then such amounts may be forfeited. Any such presumption
            of death shall be final, conclusive and binding on all parties.
            Notwithstanding the foregoing, if any such Beneficiary is located
            within five years from the date of any such

                                       14
<PAGE>

            forfeiture, such Beneficiary shall be entitled to receive the amount
            previously forfeited.

                                    ARTICLE 8
                                     FUNDING

8.1   PROHIBITION AGAINST FUNDING. Should any investment be acquired in
      connection with the liabilities assumed under this Plan, it is expressly
      understood and agreed that the Participants and Beneficiaries shall not
      have any right with respect to, or claim against, such assets nor shall
      any such purchase be construed to create a trust of any kind or a
      fiduciary relationship between the Employer and the Participants, their
      Beneficiaries or any other person. Any such assets shall be and remain a
      part of the general, unpledged, unrestricted assets of the Employer,
      subject to the claims of its general creditors. It is the express
      intention of the parties hereto that this arrangement shall be unfunded
      for tax purposes and for purposes of Title I of the Employee Retirement
      Income Security Act of 1974, as amended. Each Participant and beneficiary
      shall be required to look to the provisions of this Plan and to the
      Employer itself for enforcement of any and all benefits due under this
      Plan, and to the extent any such person acquires a right to receive
      payment under this Plan, such right shall be no greater than the right of
      any unsecured general creditor of the Employer. The Employer or the Trust
      shall be designated the owner and beneficiary of any investment acquired
      in connection with its obligation under this Plan.

8.2   DEPOSITS IN TRUST. Notwithstanding paragraph 8.1, or any other provision
      of this Plan to the contrary, the Employer may deposit into the Trust any
      amounts it deems appropriate to pay the benefits under this Plan. The
      amounts so deposited may include all contributions made pursuant to a
      Deferral Election by a Participant along with any Matching and
      Discretionary Contributions.

8.3   INDEMNIFICATION OF TRUSTEE.

      (a)   The Trustee shall not be liable for the making, retention, or sale
            of any investment or reinvestment made by it, as herein provided,
            nor for any loss to, or diminution of, the Trust assets, unless due
            to its own negligence, willful misconduct or lack of good faith.

                                       15
<PAGE>

      (b)   Such Trustee shall be indemnified and saved harmless by the Employer
            from and against all personal liability to which it may be subject
            by reason of any act done or omitted to be done in its official
            capacity as Trustee in good faith in the administration of the Plan
            and Trust, including all expenses reasonably incurred in its defense
            in the event the Employer fails to provide such defense upon the
            request of the Trustee. The Trustee is relieved of all
            responsibility in connection with its duties hereunder to the
            fullest extent permitted by law, short of breach of duty to the
            beneficiaries.

8.4   WITHHOLDING OF EMPLOYEE CONTRIBUTIONS. The Administrator is authorized to
      make any and all necessary arrangements with the Employer in order to
      withhold the Participant's Deferrals under Section 3.1 hereof from his or
      her Compensation. The Administrator shall determine the amount and timing
      of such withholding.

                                    ARTICLE 9
                             CLAIMS ADMINISTRATION

9.1   GENERAL. If a Participant, Beneficiary or his/her representative is denied
      all or a portion of an expected Plan benefit for any reason and the
      Participant, Beneficiary or his/her representative desires to dispute the
      decision of the Administrator, he/she must file a written notification of
      his/her claim with the Administrator.

9.2   CLAIM REVIEW. Upon receipt of any written claim for benefits, the
      Administrator shall be notified and shall give due consideration to the
      claim presented. If the claim is denied to any extent by the
      Administrator, the Administrator shall furnish the claimant with a written
      notice setting forth:

      (a)   the specific reason or reasons for denial of the claim;

      (b)   a specific reference to the Plan provisions on which the denial is
            based;

      (c)   a description of any additional material or information necessary
            for the claimant to perfect the claim and an explanation of why such
            material or information is necessary; and

      (d)   an explanation of the provisions of this Article.

                                       16
<PAGE>

9.3   RIGHT OF APPEAL. A claimant who has a claim denied under Section 9.2 may
      appeal to the Administrator for reconsideration of that claim. A request
      for reconsideration under this section must be filed by written notice
      within sixty (60) days after receipt by the claimant of the notice of
      denial under Section 9.2.

9.4   REVIEW OF APPEAL. Upon receipt of an appeal the Administrator shall
      promptly take action to give due consideration to the appeal. Such
      consideration may include a hearing of the parties involved, if the
      Administrator feels such a hearing is necessary. In preparing for this
      appeal the claimant shall be given the right to review pertinent documents
      and the right to submit in writing a statement of issues and comments.
      After consideration of the merits of the appeal the Administrator shall
      issue a written decision which shall be binding on all parties subject to
      Section 9.6 below. The decision shall specifically state its reasons and
      pertinent Plan provisions on which it relies. The Administrator's decision
      shall be issued within sixty (60) days after the appeal is filed, except
      that if a hearing is held the decision may be issued within one hundred
      twenty (120) days after the appeal is filed.

9.5   DESIGNATION. The Administrator may designate any other person of its
      choosing to make any determination otherwise required under this Article.

9.6   ARBITRATION. A claimant whose appeal has been denied under Section 9.4
      shall have the right to submit said claim to final and binding arbitration
      in the State of Tennessee pursuant to the rules of the American
      Arbitration Association. Any such requests for arbitration must be filed
      by written demand to the American Arbitration Association within sixty
      (60) days after receipt of the decision regarding the appeal. The costs
      and expenses of arbitration, including the fees of the arbitrators, shall
      be borne by the losing party. The prevailing party shall recover as
      expenses all reasonable attorney's fees incurred by it in connection with
      the arbitration proceeding or any appeals therefrom.

                                   ARTICLE 10
                               GENERAL PROVISIONS

10.1  ADMINISTRATOR.

                                       17
<PAGE>

      (a)   Appointment of Administrator. The Company shall appoint an
            individual or a committee to serve as Administrator of the Plan. The
            Administrator may be removed by the Company at any time, and any
            individual may resign as Administrator at any time by submitting
            his/her resignation in writing to the Company. A new Administrator
            shall be appointed by the Company as soon as practicable in the
            event of a removal or resignation. Any person so appointed shall
            signify his/her acceptance by filing a written acceptance with the
            Company.

      (b)   The Administrator is expressly empowered to limit the amount of
            compensation that may be deferred; to deposit amounts into trust in
            accordance with Section 8.2 hereof; to interpret the Plan, and to
            determine all questions arising in the administration,
            interpretation and application of the Plan; to employ actuaries,
            accountants, counsel, and other persons it deems necessary in
            connection with the administration of the Plan; to request any
            information from the Employer it deems necessary to determine
            whether the Employer would be considered insolvent or subject to a
            proceeding in bankruptcy; and to take all other necessary and proper
            actions to fulfill its duties as Administrator.

      (c)   The Administrator shall not be liable for any actions by it
            hereunder, unless due to its own negligence, willful misconduct or
            lack of good faith.

      (d)   The Administrator shall be indemnified and saved harmless by the
            Employer from and against all personal liability to which it may be
            subject by reason of any act done or omitted to be done in its
            official capacity as Administrator in good faith in the
            administration of the Plan and Trust, including all expenses
            reasonably incurred in its defense in the event the Employer fails
            to provide such defense upon the request of the Administrator. The
            Administrator is relieved of all responsibility in connection with
            its duties hereunder to the fullest extent permitted by law, short
            of breach of duty to the beneficiaries.

10.2  NO ASSIGNMENT. No benefit under the Plan shall be subject in any manner to
      anticipation, alienation, sale, transfer, assignment, pledge encumbrance
      or charge, and any such action shall be void for all purposes of the Plan.
      No benefit shall in any manner be subject to the debts, contracts,
      liabilities, engagements or torts of any person,

                                       18
<PAGE>

      nor shall it be subject to attachments or other legal process for or
      against any person, except to such extent as may be required by law.

10.3  NO EMPLOYMENT RIGHTS. Participation in this Plan shall not be construed to
      confer upon any Participant the legal right to be retained in the employ
      of the Employer, or give a Participant or beneficiary, or any other
      person, any right to any payment whatsoever, except to the extent of the
      benefits provided for hereunder. Each Participant shall remain subject to
      discharge to the same extent as if this Plan had never been adopted.

10.4  INCOMPETENCE. If the Administrator determines that any person to whom a
      benefit is payable under this Plan is incompetent by reason of physical or
      mental disability, the Administrator shall have the power to cause the
      payments becoming due to such person to be made to another individual for
      the Participant's benefit without responsibility of the Administrator or
      the Employer to see to the application of such payments. Any payment made
      pursuant to such power shall, as to such payment, operate as a complete
      discharge of the Employer, the Administrator and the Trustee.

10.5  IDENTITY. If, at any time, any doubt exists as to the identity of any
      person entitled to any payment hereunder or the amount or time of such
      payment, the Administrator shall be entitled to hold such sum until such
      identity or amount or time is determined or until an order of a court of
      competent jurisdiction is obtained. The Administrator shall also be
      entitled to pay such sum into court in accordance with the appropriate
      rules of law. Any expenses incurred by the Employer, Administrator, and
      Trust incident to such proceeding or litigation shall be charged against
      the Account of the affected Participant.

10.6  OTHER BENEFITS. The benefits of each Participant or beneficiary hereunder
      shall be in addition to any benefits paid or payable to or on account of
      the Participant or beneficiary under any other pension, disability,
      annuity or retirement plan or policy whatsoever.

10.7  NO LIABILITY. No liability shall attach to or be incurred by any manager
      of the Employer, Trustee or any Administrator under or by reason of the
      terms, conditions and provisions contained in this Plan, or for the acts
      or decisions taken or made thereunder or in connection therewith; and as a
      condition precedent to the establishment of this Plan or the receipt of
      benefits thereunder, or both, such liability,

                                       19
<PAGE>

      if any, is expressly waived and released by each Participant and by any
      and all persons claiming under or through any Participant or any other
      person. Such waiver and release shall be conclusively evidenced by any act
      or participation in or the acceptance of benefits or the making of any
      election under this Plan.

10.8  EXPENSES. All expenses incurred in the administration of the Plan, whether
      incurred by the Employer or the Plan, shall be paid by the Employer.

10.9  INSOLVENCY. Should the Employer be considered insolvent (as defined by the
      Trust), the Employer, through its Board and chief executive officer, shall
      give immediate written notice of such to the Administrator of the Plan and
      the Trustee. Upon receipt of such notice, the Administrator or Trustee
      shall cease to make any payments to Participants who were Employees of the
      Employer or their beneficiaries and shall hold any and all assets
      attributable to the Employer for the benefit of the general creditors of
      the Employer.

10.10 AMENDMENT AND TERMINATION.

      (a)   Except as otherwise provided in this section, the Employer shall
            have the sole authority to modify, amend or terminate this Plan;
            provided, however, that any modification or termination of this Plan
            shall not reduce, without the written consent of a Participant, a
            Participant's right to any amounts already credited to his or her
            Account, or lengthen the time period for a payout from an
            established Account, on the day before the effective date of such
            modification or termination. Following such termination, payment of
            such credited amounts may be made in a single sum payment if the
            Employer so designates. Any such decision to pay in a single sum
            shall apply to all Participants.

      (b)   A Participant shall have a vested right to his or her Account in the
            event of the termination of the Plan pursuant to section (a), above.

      (c)   Any funds remaining in the Trust after termination of the Plan and
            satisfaction of all liabilities to Participants and others, shall be
            returned to the Employer.

10.11 EMPLOYER DETERMINATIONS. Any determinations, actions or decisions of the
      Employer (including but not limited to, Plan amendments and Plan
      termination) shall be made by the Board in accordance with its established
      procedures or by such other

                                       20
<PAGE>

      individuals, groups or organizations that have been properly delegated by
      the Board to make such determination or decision.

10.12 CONSTRUCTION. All questions of interpretation, construction or application
      arising under or concerning the terms of this Plan shall be decided by the
      Administrator, in its sole and final discretion, whose decision shall be
      final, binding and conclusive upon all persons.

10.13 GOVERNING LAW. This Plan shall be governed by, construed and administered
      in accordance with the applicable laws of the State of Tennessee.

10.14 SEVERABILITY. Should any provision of the Plan or any regulations adopted
      thereunder be deemed or held to be unlawful or invalid for any reason,
      such fact shall not adversely affect the other provisions or regulations
      unless such invalidity shall render impossible or impractical the
      functioning of the Plan and, in such case, the appropriate parties shall
      immediately adopt a new provision or regulation to take the place of the
      one held illegal or invalid.

10.15 HEADINGS. The Article headings contained herein are inserted only as a
      matter of convenience and for reference and in no way define, limit,
      enlarge or describe the scope or intent of this Plan nor in any way shall
      they affect this Plan or the construction of any provision thereof.

                                       21
<PAGE>

10.16 TERMS. Capitalized terms shall have meanings as defined herein. Singular
      nouns shall be read as plural, masculine pronouns shall be read as
      feminine, and vice versa, as appropriate.

      IN WITNESS WHEREOF, PERKINS FAMILY RESTAURANTS, L.P., has caused this
instrument to be executed by its duly authorized officer, effective as of this
30th day of December, 1998.

                                          PERKINS FAMILY RESTAURANTS, L.P.
                                          By: Perkins Management Company, Inc.,
                                          General Partner

                                          By: /s/ [ILLEGIBLE]
                                              ----------------------------------
                                          Title: Vice President, Human Resources

ATTEST:

By: /s/ Donald F. Wiseman
    ---------------------------
       Donald F. Wiseman
Title: Vice President, General
       Counsel & Secretary

                                       22
<PAGE>

                        PERKINS FAMILY RESTAURANTS, L.P.
                           DEFERRED COMPENSATION PLAN

                                 AMENDMENT NO. 1

Perkins Family Restaurants, L.P. ("Company") established the Perkins Family
Restaurants, L.P. Deferred Compensation Plan ("Plan") for a select group of
management or highly compensated employees ("eligible Employees") effective as
of January 1, 1999.

Section 10.10 of the Plan provides that the Company has the power to amend the
Plan. Therefore, the Company hereby amends the Plan as hereinafter set forth
effective as of the 1st day of January 2000.

Section 3.1(e) is hereby deleted in its entirety and replaced with the
following:

"The maximum amount of compensation that may be deferred each Plan Year is fifty
percent (50%) of the Participant's Salary, seventy-five percent (75%) of the
Participant's Bonus, and ninety percent (90%) of the Participant's Long Term
Incentive Bonus."

Executed this 14th day of September, 1999.

Attest:

                                         Perkins Family Restaurants, L.P.
                                         By: Perkins Management Company, Inc.,
                                             General Partner

By: /s/ Donald F. Wiseman                  By: /s/ [ILLEGIBLE]
    ----------------------------------         ---------------------------------
Title: VP, General Counsel & Secretary     Title: VP, Human Resources

Witness:

By: /s/ [ILLEGIBLE]
    ---------------------------------
Title: Director, Benefits & Systems

<PAGE>

                                SECOND AMENDMENT
                                     TO THE
                        PERKINS FAMILY RESTAURANTS, L.P.
                           DEFERRED COMPENSATION PLAN

      The Restaurant Company (the "Company") hereby adopts this Second Amendment
to the Perkins Family Restaurants, L.P. Deferred Compensation Plan (the "Plan")
on this, the 1st day of August, 2002.

                                   WITNESSETH

      WHEREAS, effective January 1, 1999, the Company created the Plan as a
non-qualified deferred compensation plan for the benefit of a select group of
management or highly compensated employees; and

      WHEREAS, pursuant to Section 10.10 of the Plan, the Company has the
authority to amend the Plan; and

      WHEREAS, effective February 22, 1999, Perkins Family Restaurants, L.P.
changed its corporate formation and name to reflect the new equity structure of
the company, such that The Restaurant Company hereinafter maintains the Plan;
and

      WHEREAS, the Company desires to amend the Company and Plan Name to
correctly reflect the legal name of the Company and its Affiliates; and

      WHEREAS, the Company reserved the right to appoint and remove Trustees;
and

      WHEREAS, effective August 1, 2002, the Company appointed a new Trustee for
the Plan; and

      WHEREAS, the Company desires to amend the Plan to correctly reflect the
name of the current Trustee; and

      WHEREAS, the Company desires to amend the vesting schedule for Matching
Contributions under the Plan;

      WHEREAS, the Company desires to amend the Plan to provide for the prompt
payout of accounts in the event of a Change of Control; and

      WHEREAS, the Company desires to amend the Plan to reduce and clarify the
number of accounts and the payouts of those accounts that may be established
under the plan;

      NOW, THEREFORE, BE IT RESOLVED, that the Plan is amended as follows,
notwithstanding any other provisions of the Plan to the contrary, except as
otherwise indicated herein:

                                       I.

Effective January 1, 2000, Section 1.15 of the Plan is deleted and replaced with
the following:

      1.15  COMPANY. The Restaurant Company.

Further. The Restaurant Company is inserted in place of Perkins Family
Restaurants. L.P. in each place where the Perkins Family Restaurants, L.P.
appears in the Plan document.

<PAGE>

                                       II.

Effective January 1, 2000, Section 1.21 of the Plan is deleted and replaced with
the following:

      1.21  PLAN. The Restaurant Company Deferred Compensation Plan.

Further, The Restaurant Company Deferred Compensation Plan is inserted in place
of Perkins Family Restaurants, L.P. Deferred Compensation Plan in each place
where the Perkins Family Restaurants, L.P. Deferred Compensation Plan appears in
the Plan document.

                                      III.

Effective August 1, 2002, Section 1.26 of the Plan is deleted and replaced with
the following:

      1.26 TRUSTEE. Nationwide Trust Company, FSB, or such other successor that
      shall become trustee pursuant to the terms of the Plan.

                                       IV.

Effective August 1, 2002, Section 4.2 of the Plan is amended by the addition of
Section 4.2(c) as follows:

      4.2(c) Effective for Plan Years beginning after December 31, 2001, a
      Participant's Vested Balance in all Matching Contributions under the Plan,
      including contributions for Plan Years beginning before January 1, 2002,
      shall be determined on the basis of the following vesting schedule:

<TABLE>
<CAPTION>
Years of Service                            Vested Percentage
<S>                                         <C>
Less than 1                                       0%
    1                                             0%
    2                                             0%
    3                                           100%
</TABLE>

                                       V.

Effective August 1, 2002, the first paragraph in Section 4.4 of the Plan is
deleted in its entirety and is replaced as follows below.

      4.4 CHANGE IN CONTROL. Upon a Change in Control, non-vested amounts shall
      immediately vest in full and accounts may be paid out in full as soon as
      administratively feasible, but in any event no longer than 30 days
      following the date of the Change in Control.

<PAGE>

                                      VI.

Effective August 1, 2002, Section 5.1 of the Plan is deleted in its entirety and
is replaced as follows:

5.1 ACCOUNTS. The Administrator shall establish and maintain a bookkeeping
account in the name of each Participant. The Administrator shall also establish
subaccounts, as provided in subsection (a), (b), (c) and/or (d), below, as
elected by the Participant pursuant to Article 3.

      (a)   A Retirement Account shall be established for each Participant. His
            or her Retirement Account shall be credited with Deferrals (as
            specified in the Participant's Deferral Election), any Matching and
            Discretionary Contributions and the Participant's allocable share of
            any earnings or losses on the foregoing. Each Participant's Account
            shall be reduced by any distributions made plus any federal, state
            and/or local tax withholding, and any social security withholding
            tax as may be required by law.

      (b)   A Participant may elect to establish one or more Education Accounts,
            up to a maximum number to be determined by the Administrator. Each
            Participant's Education Account shall be credited with Deferrals (as
            specified in the Participant's Deferral Election) and the
            Participant's allocable share of any earnings or losses on the
            foregoing. Each Participant's Account shall be reduced by any
            distributions made plus any federal, state and/or local tax
            withholding, and any social security withholding tax as may be
            required by law. Prior to August 1, 2002, the Education Account may
            have been credited with Matching and Discretionary Contributions
            along with earnings or losses on the foregoing and the Participant
            may have designated the year the account was to commence payments
            when it was established.

      (c)   A Participant may elect to establish one Fixed Period Account by
            designating a year of payout at the time the account is initially
            established. The minimum initial deferral period for Fixed Period
            subaccounts shall be three (3) years. Each Participant's Fixed
            Period Account shall be credited with Deferrals (as specified in the
            Participant's Deferral Election) and the Participant's allocable
            share of any earnings or losses on the foregoing. Each Participant's
            Account shall be reduced by any distributions made plus any federal,
            state and/or local tax withholding, and any social security
            withholding tax as may be required by law. Prior to August 1, 2002,
            the Fixed Period Account may have been credited with Matching and
            Discretionary Contributions along with earnings or losses on the
            foregoing.

      (d)   Prior to August 1, 2002, the maximum combined number of Education
            and/or Fixed Period subaccount, that a Participant could have at one
            time was ten (10). Any existing accounts will be grandfathered.

                                      VII.

Effective August 1, 2002, Section 5.2(c) of the Plan is deleted in its entirety
and is replaced as follows:

            5.2(c) A Participant may direct that his or her Retirement Account,
            Education Account and or Fixed Period Account established pursuant
            to Section 5.1 may be valued as if they were invested in one of more
            Investment Funds in multiples of one percent (1%) of the balance in
            any account. A Participant may change his or her selection of
            Investment Funds as of each business day. An election shall be
            effective as soon as administratively feasible following the date of
            the change as indicated in writing by the Participant to the
            Administrator and communicated to the Trustee.

<PAGE>

                                      VIII.

Effective August 1, 2002, Section 6.2(b) of the Plan is deleted in its entirety
and is replaced as follows:

      6.2(b) Education Account payouts shall be paid in four annual installments
      commencing June 30 (or as soon as administratively feasible) of the
      calendar year in which the student reaches age 18 (or otherwise begins a
      program of secondary education at an appropriately accredited college or
      other similar institution), and each anniversary thereafter for the next 3
      years in the following amounts:

            Year 1    25% of the account balance
            Year 2    33% of the account balance
            Year 3    50% of the account balance
            Year 4    100% of the account balance

                                       IX.

Effective August 1, 2002, Section 6.4(b) of the Plan is deleted in its entirety.

                                       X.

In all other respects the Plan is ratified and affirmed.

      IN WITNESS WHEREOF, this Second Amendment to the Plan has been executed on
this 1st day of August, 2002

                              THE COMPANY:

                              The Restaurant Company

                              By: /s/ Donald F. Wiseman
                                  ----------------------------------------------
                                     Donald F. Wiseman
                              Title: Vice President, General Counsel & Secretary

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