Document:

EXHIBIT 10.3

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement
(the “Agreement”) is entered into on November
      , 1996, and shall become effective on
February 23, 1997 (the “Effective Date”), between IHOP CORP., A DELAWARE
CORPORATION (THE “COMPANY”), AND MARK D. WEISBERGER (THE “EMPLOYEE”).

 

WHEREAS, Company and
Employee are parties to an Employment Agreement dated February 23, 1994, which
terminates on February 22, 1997;

 

WHEREAS, the parties desire
to enter into a new Employment Agreement setting forth the terms and conditions
for the continuing employment relationship of the Employee with the Company;
and

 

WHEREAS, the Board of
Directors of the Company (the “Board”) has approved and authorized the Company
to enter into this Agreement with the Employee.

 

NOW, THEREFORE, in
consideration of the promises and mutual covenants and agreements herein
contained and intending to be legally bound hereby, the Company and the
Employee hereby agree as follows:

 

1. Employment. The Employee
is employed as Vice President–Legal, Secretary and General Counsel of the
Company from the Effective Date through the Term of this Agreement (as defined
in Section 2 hereof). In this capacity, the Employee shall have such duties and
responsibilities as may be designated to him by the Board from time to time and
as are not inconsistent with the Employee’s position with the Company,
including the performance of duties with respect to any subsidiaries of the
Company, as may be designated by the Board. During the Employee’s period of employment
hereunder, the Employee shall be based in the principal offices of the Company
in Southern California, and shall not be required to relocate outside of
Southern California to perform services hereunder, except for travel as
reasonably required in the performance of his duties hereunder.

 

2. Term. The “initial term”
of this Agreement shall be for the period commencing on the Effective Date and
ending on the first anniversary of the Effective Date; provided, however, that
on the first anniversary of the Effective Date, and on each subsequent
anniversary date thereafter, the term of this Agreement shall automatically be
extended for one additional year unless, not later than 90 days prior to such
applicable anniversary date, the Company or the Employee shall give notice not
to extend this Agreement; and provided further, however, that, if a Change in
Control (as defined in Section 10(g)) occurs prior to the expiration of the
Term of this

 

 

Agreement, this Agreement
shall remain in full force and effect and shall not expire prior to the last
day of the 24th month following the date of such Change in Control. The “Term
of this Agreement” or “Term” shall mean, for purposes of this Agreement, both
the “initial term” (as hereinbefore described) and any additional term (created
by extension, as described above), and the Term of this Agreement shall not be
affected by the Employee’s termination of employment.

 

3. Salary. Subject to the
further provisions of this Agreement, the Company shall pay the Employee during
the Term of this Agreement a salary at an annual rate equal to $178,000.00,
with such salary to be increased at such times, if any, and in such amounts as
determined by the Board, which increases shall be consistent with the
historical business practices of the Company and the salary adjustments for
other senior executives of the Company. Such salary shall be payable by the
Company to the Employee not less frequently than monthly and shall not be
decreased at any time during the Term of this Agreement. Participation in
deferred compensation, discretionary bonus, retirement, and other employee
benefit plans and in fringe benefits shall not reduce the salary payable to the
Employee under this Section 3.

 

4. Participation in Bonus,
Retirement and Employee Benefit Plans. The Employee shall be entitled to
participate equitably with other senior executives in any plan of the Company
relating to bonuses, stock options, stock purchases, pension, thrift, profit
sharing, life insurance, medical coverage, education, or other retirement or
employee benefits that the Company has adopted or may adopt for the benefit of
its senior executives.

 

5. Fringe Benefits;
Automobile. The Employee shall be entitled to receive all other fringe benefits
which are now or may be provided to the Company’s senior executives. In
addition, the Company shall provide the Employee during the Term of this
Agreement with his choice of a car or a car allowance in accordance with the
Company’s general policy on providing cars to senior executives.
Notwithstanding the foregoing, the benefits provided under this Section 5 shall
cease upon the Employee’s Date of Termination (as defined in Section 10(d)).

 

6. Vacations. The Employee
shall be entitled to an annual paid vacation as determined in accordance with
the Company’s general policy for senior executives.

 

7. Business Expenses. During
such time as the Employee is rendering services hereunder, the Employee shall
be entitled to incur and be reimbursed for all reasonable business expenses and
be provided allowances as are furnished to the Company’s most senior executives
under the Company’s then current policies. The Company agrees that it will
reimburse the Employee for all such expenses upon the presentation by the
Employee, from time to time, of an itemized account of such expenditures,
setting forth the date, the purposes for which incurred, and the amounts

 

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thereof, together with such
receipts showing payments in conformity with the Company’s established
policies. Reimbursement shall be made within a reasonable period after the
Employee’s submission of an itemized account.

 

8. Insurance and Indemnity.
The Employee shall be added as an additional named insured under all
appropriate insurance policies now in force or hereafter obtained covering any
officers or directors of the Company. The Company shall indemnify and hold the
Employee harmless from any cost, expense or liability arising out of or
relating to any acts or decisions made by the Employee on behalf of or in the
course of performing services for the Company to the same extent the Company
indemnifies and holds harmless other senior executive officers and directors of
the Company and in accordance with the Company’s established policies.

 

9. Legal and Accounting
Advice. The Employee shall be entitled to reimbursement by the Company for
expenses incurred by him for personal legal, accounting, investment or estate
planning services in an amount to be determined by the Board, but in no event greater
than $5,000 annually (or a pro rata portion of such amount for any period of
employment less than a full year); provided, however, that no reimbursement
shall be made for any such expenses incurred by the Employee after such
Employee’s Date of Termination.

 

10. Termination.

 

(a) Disability. If, as a
result of the Employee’s incapacity due to physical or mental illness, he shall
have been absent from the full-time performance of his duties with the Company
for 90 consecutive days or 180 days within any 12-month period, his employment
may be terminated by the Company for “Disability.”

 

(b) Cause. Subject to the
notice provisions set forth below, the Company may terminate the Employee’s
employment for “Cause” at any time. “Cause” shall mean termination upon: (1)
the willful failure by the Employee to substantially perform his duties with
the Company (other than any such failure resulting from his incapacity due to
physical or mental illness), after a written demand for substantial performance
is delivered to him by the Board, which demand specifically identifies the
manner in which the Board believes that he has not substantially performed his
duties; (2) the Employee’s willful misconduct that is demonstrably and
materially injurious to the Company, monetarily or otherwise; or (3) the
Employee’s commission of such acts of dishonesty, fraud, misrepresentation or
other acts of moral turpitude as would prevent the effective performance of his
duties. For purposes of this subsection (b), no act, or failure to act, on the
Employee’s part shall be deemed “willful” unless done, or omitted to be done,
by him not in good faith and without the reasonable belief that his action or
omission was in the best interest of the Company. Notwithstanding the
foregoing, the Employee shall not be deemed to have been

 

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terminated for Cause unless
and until there shall have been delivered to him a copy of a resolution duly
adopted by the affirmative vote of a majority of the non-employee members of
the Board at a meeting of such members (after reasonable notice to him and an
opportunity for him, together with his counsel, to be heard before such members
of the Board), finding that he has engaged in the conduct set forth above in this
subsection (b) and specifying the particulars thereof in detail.

 

(c) Notice of Termination.
Any termination of the Employee’s employment by the Company or by the Employee
shall be communicated by written Notice of Termination to the other party
hereto in accordance with Section 14. “Notice of Termination” shall mean a
notice that indicates the specific termination provision in this Agreement
relied upon and sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for the termination of the Employee’s employment
under the provision so indicated.

 

(d) Date of Termination.
“Date of Termination” shall mean: (1) if the Employee’s employment is
terminated by his death, the date of his death; (2) if the Employee’s
employment is terminated for Disability, 30 days after Notice of Termination is
given; and (3) if the Employee’s employment is terminated for any other reason,
the date specified in the Notice of Termination.

 

(e) Dispute Concerning
Termination. If within the later of (i) 15 days after Notice of Termination is
given, or (ii) 15 days prior to the Date of Termination (as determined without
regard to this Section 10(e), the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning a termination by the
Employee for Good Reason (as defined in

Section 10(h)) following a
Change in Control (as defined in Section 10(g)), the Date of Termination shall
be the earlier of the expiration date of the Agreement, or the date on which
the dispute is finally resolved, either by mutual written agreement of the
parties or by a final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to which the time for
appeal therefrom has expired and no appeal has been perfected); provided,
however, that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.

 

(f) Compensation During
Dispute. If a purported termination by the Employee for Good Reason occurs
following a Change in Control and during the Term of this Agreement, and such
termination is disputed in accordance with Section 10(e) hereof, the Company
shall continue to pay the Employee the full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to,
salary) and continue the Employee as a participant in all compensation, benefit
and insurance plans in which the Employee was participating when the notice
giving rise to the dispute was given, until the dispute is finally resolved in
accordance with

 

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Section 10(e) hereof or, if
earlier, the expiration date of the Agreement. Amounts paid under this Section
10(f) are in addition to all other amounts due under this Agreement (other than
those due under Section 11(b) hereof) and shall not be offset against or reduce
any other amounts payable under this Agreement.

 

(g) Change in Control. A
“Change in Control” shall be deemed to have occurred if the conditions set
forth in any one of the following paragraphs shall have been satisfied:

 

(i) any “person” (as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)) (other than the Company; any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company; or any company owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their ownership of the
stock of the Company) is or becomes after the Effective Date the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such person any securities acquired directly from the
Company or its affiliates) representing 25% or more of the combined voting
power of the Company’s then outstanding securities; or

 

(ii) during any period of
two consecutive years (not including any period prior to the Effective Date),
individuals who at the beginning of such period constitute the Board and any
new director (other than a director designated by a person who has entered into
an agreement with the Company to effect a transaction described in subsection
(i), (iii) or (iv) of this Section 10(g)) whose election by the Board or
nomination for election by the Company’s stockholders was approved by a vote of
at least 2/3 of the directors then still in office who either were directors at
the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof;
or

 

(iii) the stockholders of
the Company approve a merger or consolidation of the Company with any other
corporation, other than (A) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity), in combination with the
ownership of any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, at least 75% of the combined voting power
of the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no person acquires more than 50% of the combined
voting power of the Company’s then outstanding securities; or

 

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(iv) the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or substantially all the
Company’s assets.

 

(h) Good Reason. At any time
following a Change in Control, the Employee may terminate his employment
hereunder for “Good Reason.” “Good Reason” shall mean the occurrence (without
the Employee’s express written consent) of any material breach of this
Agreement, including, without limitation, any one of the following acts by the
Company, or failures by the Company to act, unless, in the case of any act or
failure to act described in subsections (i), (iv), (v), (vi) or (vii) below,
such act or failure to act is corrected prior to the Date of Termination
specified in the Notice of Termination given in respect thereof:

 

(i) the assignment to the
Employee of any duties inconsistent with the Employee’s status as a senior
executive of the Company or a substantially adverse alteration in the nature or
status of the Employee’s responsibilities from those in effect immediately
prior to the Change in Control;

 

(ii) a reduction by the Company
in the Employee’s annual base salary as in effect on the date hereof or as the
same may be increased from time to time;

 

(iii) the relocation of the
Company’s principal offices to a location outside Southern California (or, if
different, the metropolitan area in which such offices are located immediately
prior to the Change in Control) or the Company’s requiring the Employee to be
based anywhere other than the Company’s principal executive offices, except for
required travel on the Company’s business to an extent substantially consistent
with the Employee’s present business travel obligations;

 

(iv) the failure by the
Company to pay to the Employee any portion of the Employee’s current
compensation, or to pay to the Employee any portion of an installment of
deferred compensation under any deferred compensation program of the Company,
within seven days of the date such compensation is due;

 

(v) the failure by the
Company to continue in effect any compensation plan in which the Employee
participates immediately prior to the Change in Control which is material to
the Employee’s total compensation, unless an equitable arrangement (embodied in
an ongoing substitute or alternative plan) has been made with respect to such
plan, or the failure by the Company to continue the Employee’s participation
therein (or in such substitute or alternative plan) on a basis not materially
less favorable, both in terms of the amount of benefits provided and the

 

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level of the Employee’s
participation relative to other participants, as existed immediately prior to
the Change in Control;

 

(vi) the failure by the
Company to continue to provide the Employee with benefits substantially similar
to those enjoyed by the Employee under any of the Company’s pension, life
insurance, medical, health and accident, or disability plans in which the
Employee was participating immediately prior to the Change in Control; the
taking of any action by the Company which would directly or indirectly materially
reduce any of such benefits or deprive the Employee of any material fringe
benefit enjoyed by the Employee immediately prior to the Change in Control; or
the failure by the Company to provide the Employee with the number of paid
vacation days to which the Employee is entitled on the basis of years of
service with the Company in accordance with the Company’s general vacation
policy in effect immediately prior to the Change in Control;

 

(vii) any purported
termination of the Employee’s employment which is not effected pursuant to a
Notice of Termination satisfying the requirements of this Agreement; for
purposes of this Agreement, no such purported termination shall be effective;
or

 

(viii) any failure by the
Company to comply with and satisfy Section 12(b) of this Agreement.

 

The Employee’s right to
terminate the Employee’s employment for Good Reason shall not be affected by
the Employee’s incapacity due to physical or mental illness. The Employee’s
continued employment shall not constitute consent to, or a waiver of rights
with respect to, any act or failure to act constituting Good Reason hereunder.

 

(i) Voluntary Termination.
The Employee may terminate his employment hereunder (“Voluntary Termination”)
upon a material breach of this Agreement by the Company, unless the Company
shall fully correct such breach within 30 days of the Employee’s Notice of
Termination given in respect thereof.

 

11. Compensation Upon
Termination or During Disability. The Employee shall be entitled to the
following benefits during a period of disability, or upon termination of his
employment, as the case may be, provided that such period or termination occurs
during the Term of this Agreement:

 

(a) During any period that
the Employee fails to perform his full-time duties with the Company as a result
of incapacity due to physical or mental illness, he shall continue to receive
his base salary at the rate in effect at the commencement of any such period,
together with all compensation payable to him under the Company’s disability
plan or program or other similar plan during such period, until his

 

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employment is terminated
pursuant to Section 10(a) hereof. Thereafter, or in the event the Employee’s
employment shall be terminated by reason of his death, his benefits shall be
determined under the Company’s retirement, insurance and other compensation
programs then in effect in accordance with the terms of such programs.

 

(b) If at any time the
Employee’s employment shall be terminated: (i) by the Company for Cause or
Disability or (ii) by him for any reason (other than in a Voluntary Termination
or for Good Reason following the occurrence of a Change in Control), the
Company shall pay him his full base salary through the Date of Termination at
the rate in effect at the time Notice of Termination is given, plus all other
amounts to which he is entitled through the Date of Termination under any
compensation plan of the Company at the time such payments are due, and the
Company shall have no further obligations to him under this Agreement.

 

(c) If the Employee’s
employment should be terminated: (1) by reason of his death, (2) by the Company
other than for Cause or Disability or (3) by the Employee in a Voluntary
Termination, he shall be entitled to the benefits provided below:

 

(i) the Company shall pay to
the Employee or the appropriate payee (as determined in accordance with Section
12(c)) (A) his full base salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given; plus (B)(x) in the case of
death or a Voluntary Termination all salary and bonus payments that would have
been payable to the Employee pursuant to this Agreement for the remaining Term
of this Agreement, or (y) in all other cases, all salary and bonus payments
that would have been payable to the Employee had the Employee continued to be
employed for a period of 12 months, assuming for the purpose of such payments
that his salary for such remaining period is equal to his salary at the Date of
Termination and that his annual bonus for such remaining Term is equal to the
average of the annual bonuses paid to him by the Company with respect to the
three fiscal years ended immediately prior to the fiscal year in which the Date
of termination occurs; plus (C) all other amounts to which he is entitled under
any compensation plan of the Company, in cash in a lump sum no later than the
15th day following the Date of Termination;

 

(ii) for a 12-month period
after the Date of Termination, the Company shall arrange to provide the
Employee with life, disability, accident and health insurance benefits
substantially similar to those which the Employee and his covered family
members are receiving immediately prior to the Notice of Termination (without
giving effect to any reduction in such benefits subsequent to a Change in
Control); provided, however, that such continued benefits shall be reduced to
the extent comparable benefits are actually received by or made available to
the Employee without cost during the 12-month period following the Employee’s
termination of

 

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employment (and the Employee
agrees that he shall promptly report any such benefits actually received to the
Company); and

 

(iii) the Company shall
continue in effect for the benefit of the Employee all insurance or other
provisions for indemnification and defense of officers or directors of the
Company which are in effect on the date the Notice of Termination is sent to
the Employee with respect to all of his acts and omissions while an officer or
director as fully and completely as if such termination had not occurred, and
until the final expiration or running of all periods of limitation against
actions which may be applicable to such acts or omissions.

 

(d) If the Employee’s
employment should be terminated by the Employee for Good Reason following a
Change in Control, he shall be entitled to the benefits provided below:

 

(i) the Company shall pay to
the Employee or the appropriate payee (as determined in accordance with Section
12(c)) (A) his full base salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given; plus (B) all salary and
bonus payments that would have been payable to the Employee had the Employee
continued to be employed for a period of 24 months, assuming for the purpose of
such payments that his salary for such remaining period is equal to his salary
at the Date of Termination and that his annual bonus for such remaining Term is
equal to the average of the annual bonuses paid to him by the Company with
respect to the three fiscal years ended immediately prior to the fiscal year in
which the Date of termination occurs; plus (C) all other amounts to which he is
entitled under any compensation plan of the Company, in cash in a lump sum no
later than the 15th day following the Date of Termination;

 

(ii) for a 24-month period
after the Date of Termination, the Company shall arrange to provide the
Employee with life, disability, accident and health insurance benefits
substantially similar to those which the Employee and his covered family
members are receiving immediately prior to the Notice of Termination (without
giving effect to any reduction in such benefits subsequent to a Change in
Control); provided, however, that such continued benefits shall be reduced to
the extent comparable benefits are actually received by or made available to
the Employee without cost during the 24-month period following the Employee’s
termination of employment (and the Employee agrees that he shall promptly
report any such benefits actually received to the Company); and

 

(iii) the Company shall
continue in effect for the benefit of the Employee all insurance or other
provisions for indemnification and defense of officers or directors of the
Company which are in effect on the date the Notice of Termination is sent to
the Employee with respect to all of his acts and omissions while an officer or

 

9

 

director as fully and
completely as if such termination had not occurred, and until the final
expiration or running of all periods of limitation against actions which may be
applicable to such acts or omissions.

 

(e) Notwithstanding any
other provisions of this Agreement, in the event that any payment or benefit
received or to be received by the Employee in connection with the termination
of the Employee’s employment (whether such benefit is pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with the Company,
and all such payments and benefits being hereinafter called “Total Payments”)
would not be deductible (in whole or part), by the Company as a result of the
application of Section 280G of the Internal Revenue Code of 1986, as amended (“Code”),
then, to the extent necessary to make the nondeductible portion of the Total
Payments deductible, (i) the cash payments under this Agreement shall first be
reduced (if necessary, to zero), and (ii) all other non-cash payments under
this Agreement shall next be reduced (if necessary, to zero).

 

(f) If it is established as
described in the preceding subsection (e) that the aggregate benefits paid to
or for the Employee’s benefit are in an amount that would result in any portion
of such “parachute payments” not being deductible by reason of Section 280G of
the Code, then the Employee shall have an obligation to pay the Company upon
demand an amount equal to the sum of: (i) the excess of the aggregate
“parachute payments” paid to or for the Employee’s benefit over the aggregate
“parachute payments” that could have been paid to or for the Employee’s benefit
without any portion of such “parachute payments” not being deductible by reason
of Section 280G of the Code; and (ii) interest on the amount set forth in
clause (i) of this sentence at the rate provided in Section 1274(b)(2)(B) of
the Code from the date of the Employee’s receipt of such excess until the date
of such payment.

 

(g) The Employee shall not
be required to mitigate the amount of any payment provided for in this
Agreement by seeking other employment or otherwise.

 

(h) If the employment of the
Employee is terminated by the Company without Cause or the Employee’s
employment is terminated by the Employee under conditions entitling him to
payment hereunder and the Company fails to make timely payment of the amounts
then owed to the Employee under this Agreement, the Employee shall be entitled
to interest on such amounts at the rate of 3% above the prime rate (defined as
the base rate on corporate loans at large U.S. money center commercial banks as
published by the Wall Street Journal), compounded monthly, for the period from
the date such amounts were otherwise due until payment is made to the Employee
(which interest shall be in addition to all rights which the Employee is
otherwise entitled to under this Agreement).

 

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12. Assignment.

 

(a) This Agreement is
personal to each of the parties hereto. No party may assign or delegate any
rights or obligations hereunder without first obtaining the written consent of
the other party hereto, except that this Agreement shall be binding upon and
inure to the benefit of any successor corporation to the Company.

 

(b) The Company shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. As used in this Agreement,
“Company” shall mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes this Agreement by operation
of law, or otherwise.

 

(c) This Agreement shall
inure to the benefit of and be enforceable by the Employee and his personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Employee should die while any
amount would still be payable to him hereunder had he continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to his devisee, legatee or other designee or, if
there is no such designee, to his estate.

 

13. (a) Confidential
Information. During the Term of this Agreement and thereafter, the Employee
shall not, except as may be required to perform his duties hereunder or as
required by applicable law, disclose to others for use, whether directly or
indirectly, any Confidential Information regarding the Company. “Confidential
Information” shall mean information about the Company, its subsidiaries and
affiliates, and their respective clients and customers that is not available to
the general public and that was learned by the Employee in the course of his
employment by the Company, including (without limitation) any data, formulae,
information, proprietary knowledge, trade secrets and client and customer lists
and all papers, resumes, records and the documents containing such Confidential
Information. The Employee acknowledges that such Confidential Information is
specialized, unique in nature and of great value to the Company, and that such
information gives the Company a competitive advantage. Upon the termination of
his employment, the Employee will promptly deliver to the Company all documents
(and all copies thereof) containing any Confidential Information.

 

(b) Noncompetition. The
Employee agrees that during the Term of this Agreement, and for a period of one
year thereafter, he will not, directly or indirectly, without the prior written
consent of the Company, provide consultative service

 

11

 

with or without pay, own,
manage, operate, join, control, participate in, or be connected as a
stockholder, partner, or otherwise with any business, individual, partner,
firm, corporation, or other entity which is then in competition with the
Company or any present affiliate of the Company; provided, however, that the
“beneficial ownership” by the Employee, either individually or as a member of a
“group,” as such terms are used in Rule 13d of the General Rules and
Regulations under the Exchange Act, of not more than 1% of the voting stock of
any publicly held corporation shall not be a violation of this Agreement. It is
further expressly agreed that the Company will or would suffer irreparable
injury if the Employee were to compete with the Company or any subsidiary or
affiliate of the Company in violation of this Agreement and that the Company
would by reason of such competition be entitled to injunctive relief in a court
of appropriate jurisdiction, and the Employee further consents and stipulates
to the entry of such injunctive relief in such a court prohibiting the Employee
from competing with the Company or any subsidiary or affiliate of the Company
in violation of this Agreement.

 

(c) Right to Company
Materials. The Employee agrees that all styles, designs, recipes, lists, materials,
books, files, reports, correspondence, records, and other documents (“Company
Material”) used, prepared, or made available to the Employee, shall be and
shall remain the property of the Company. Upon the termination of his
employment or the expiration of this Agreement, all Company Materials shall be
returned immediately to the Company, and Employee shall not make or retain any
copies thereof.

 

(d) Antisolicitation. The
Employee promises and agrees that during the Term of this Agreement, and for a period
of one year thereafter, he will not influence or attempt to influence
customers, franchisees, landlords, or suppliers of the Company or any of its
present or future subsidiaries or affiliates, either directly or indirectly, to
divert their business to any individual, partnership, firm, corporation or
other entity then in competition with the business of the Company, or any
subsidiary or affiliate of the Company.

 

14. Notice. For the purpose
of this Agreement, notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed to the respective addresses set
forth below, or to such other addresses as either party may have furnished to
the other in writing in accordance herewith, except that notice of a change of
address shall be effective only upon actual receipt:

 

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Company: IHOP Corp.

525
North Brand Blvd.

Glendale,
California 91203-1903

to
the attention of the Board;

 

with a

copy to: the Secretary of
the Company

 

Employee: Mark D. Weisberger

12232 Addison Street North
Hollywood, California 91607

 

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

 

16. Section Headings. The
section headings used in this Agreement are included solely for convenience and
shall not affect, or be used in connection with, the interpretation of this
Agreement.

 

17. Severability. The
provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.

 

18. Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed to be
an original, but both of which together will constitute one and the same
instrument.

 

19. Arbitration. Any dispute
or controversy arising under or in connection with this Agreement shall be
settled exclusively by arbitration, conducted before a panel of three
arbitrators in Los Angeles, California, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitrator’s award in any court having jurisdiction; provided, however, that
the Employee shall be entitled to seek specific performance of his right to be
paid until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.

 

20. Attorneys’ Fees. The
Company shall pay to the Employee all out-of- pocket expenses, including
attorneys’ fees, incurred by the Employee in connection with any claim, legal
action or proceeding involving this Agreement in which the Employee prevails in
whole or in part, whether brought by the Employee or by or on behalf of the
Company or by another party. The Company shall pay prejudgment interest on any
money judgment obtained by the Employee calculated at 3% above the

 

13

 

prime rate (defined as the
base rate on corporate loans at large U.S. money center commercial banks as
published by the Wall Street Journal), from the date that payment(s) to the
Employee should have been made under this Agreement.

 

21. Miscellaneous. No
provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and signed by the
Employee and such officer as may be specifically designated by the Board. No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement and this agreement shall
supersede any prior understanding or agreement either written or oral, with
respect to the subject matter hereto. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of California without regard to its conflicts of law principles. All
references to sections of the Exchange Act or the Code shall be deemed also to
refer to any successor provisions to such sections.

 

Any payments provided for
hereunder shall be paid net of any applicable withholding required under
federal, state or local law. The obligations of the Company under Section 12
and Section 21 and the obligations of the Employee under Section 13 and Section
21 shall survive the expiration of the Term of this Agreement.

 

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

 

IHOP CORP.

 

	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Elayne Berg-Wilion

  	
   

  	
  By: 

  	
  /s/ Richard K. Herzer

  	
   

  
	
  Elayne Berg-Wilion

  	
   

  	
  Richard K. Herzer

  	
   

  
	
  Assistant Secretary  President

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EMPLOYEE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Mark D. Weisberger

  	
   

  
	
   

  	
  Mark D. Weisberger

  	
   

  
					

 

14EXHIBIT 10.4

 

EMPLOYMENT AGREEMENT 

 

This Employment Agreement
(the “Agreement”) is entered into as of the 17th day of March, 1997 (the
“Effective Date”), between IHOP CORP., a Delaware corporation (the “Company”),
and Richard C. Celio (the “Employee”).

 

Whereas, the Board of
Directors of the Company (the “Board”) has approved and authorized the entry
into this Agreement with the Employee; and

 

Whereas, the parties desire
to enter into this Agreement setting forth the terms and conditions for the
employment relationship of the Employee with the Company.

 

Now, therefore, in
consideration of the promises and mutual covenants and agreements herein
contained and intending to be legally bound hereby, the Company and the
Employee hereby agree as follows:

 

1. Employment. The Employee
is employed as Vice President - Development of the Company from the Effective
Date through the Term of this Agreement (as defined in Section 2 hereof). In
this capacity, the Employee shall have such duties and responsibilities as may be
designated to him by the Board from time to time and as are not inconsistent
with the Employee’s position with the Company, including the performance of
duties with respect to any subsidiaries of the Company, as may be designated by
the Board. During the Employee’s period of employment hereunder, the Employee
shall be based in the principal offices of the Company in Southern California,
and shall not be required to relocate outside of Southern California to perform
services hereunder, except for travel as reasonably required in the performance
of his duties hereunder.

 

2. Term. The “initial term”
of this Agreement shall be for the period commencing on the Effective Date and
ending on the second anniversary of the Effective Date; provided, however, that
on the second anniversary of the Effective Date, and on each subsequent
anniversary date thereafter, the term of this Agreement shall automatically be
extended for one additional year unless, not later than 90 days prior to such
applicable anniversary date, the Company or the Employee shall give notice not
to extend this Agreement; and provided further, however, that, if a Change in
Control (as defined in Section 11(g)) occurs prior to the expiration of the
Term of this Agreement, this Agreement shall remain in full force and effect
and shall not expire prior to the last day of the 24th month following the date
of such Change in Control. The “Term of this Agreement” or “Term” shall mean,
for purposes of this Agreement, both the “initial term” (as hereinbefore described)
and any additional term (created by 

 

 

extension, as described
above), and the Term of this Agreement shall not be affected by the Employee’s
termination of employment.

 

3. Salary. Subject to the
further provisions of this Agreement, the Company shall pay the Employee during
the Term of this Agreement a salary at an annual rate equal to $190,000, with
such salary to be increased at such times, if any, and in such amounts as
determined by the Board, which increases shall be consistent with the historical
business practices of the Company and the salary adjustments for other senior
executives of the Company. Such salary shall be payable by the Company to the
Employee not less frequently than monthly and shall not be decreased at any
time during the Term of this Agreement. Participation in deferred compensation,
discretionary bonus, retirement, and other employee benefit plans and in fringe
benefits shall not reduce the salary payable to the Employee under this
Section.

 

4. Participation in Bonus,
Retirement and Employee Benefit Plans. The Employee shall be entitled to
participate equitably with other senior executives in any plan of the Company
relating to bonuses, stock options, stock purchases, pension, thrift, profit
sharing, life insurance, medical coverage, education, or other retirement or
employee benefits that the Company has adopted or may adopt for the benefit of
its senior executives. For purposes of the Company’s Executive Incentive Plan,
Employee’s target bonus will be 50% of his base pay.

 

5. Hiring Incentives.

 

(a). Upon the Effective
Date, or as soon as practicable thereafter, Employee shall receive a restricted
stock award in the amount of 9456 shares of IHOP Corp. common stock. Such
restricted stock award shall be subject to the terms of the IHOP Corp. 1991
Stock Incentive Plan, as amended, and a Restricted Stock Award Agreement
setting forth, among other things, the conditions for release of the
restrictions on the shares.

 

(b). Upon the Effective
Date, or as soon as practicable thereafter, Employee shall receive an option to
purchase a total of 20,000 shares of IHOP Corp. common stock. Such stock option
shall be subject to the terms of the IHOP Corp. 1991 Stock Incentive Plan, as
amended, and a Stock Option Agreement setting forth, among other things, the
option exercise vesting schedule and option exercise price.

 

2

 

6. Fringe Benefits;
Automobile. The Employee shall be entitled to receive all other fringe benefits
which are now or may be provided to the Company’s senior executives. In
addition, the Company shall provide the Employee during the Term of this
Agreement with a car allowance of $700 per month, plus reimbursement of all
automobile expenses such as gasoline, maintenance, insurance and vehicle
registration, in accordance with the Company’s general policy on providing cars
to senior executives. Notwithstanding the foregoing, the benefits provided
under this Section 6 shall cease upon the Employee’s Date of Termination (as defined
in Section 11(d)).

 

7. Vacations. The Employee
shall be entitled to an annual paid vacation as determined in accordance with
the Company’s general policy for senior executives.

 

8. Business Expenses. During
such time as the Employee is rendering services hereunder, the Employee shall
be entitled to incur and be reimbursed for all reasonable business expenses and
be provided allowances as are furnished to the Company’s most senior executives
under the Company’s then current policies. The Company agrees that it will
reimburse the Employee for all such expenses upon the presentation by the
Employee, from time to time, of an itemized account of such expenditures,
setting forth the date, the purposes for which incurred, and the amounts
thereof, together with such receipts showing payments in conformity with the
Company’s established policies. Reimbursement shall be made within a reasonable
period after the Employee’s submission of an itemized account.

 

9. Insurance and Indemnity.
The Employee shall be added as an additional named insured under all
appropriate insurance policies now in force or hereafter obtained covering any
officers or directors of the Company. The Company shall indemnify and hold the
Employee harmless from any cost, expense or liability arising out of or
relating to any acts or decisions made by the Employee on behalf of or in the
course of performing services for the Company to the same extent the Company
indemnifies and holds harmless other senior executive officers and directors of
the Company and in accordance with the Company’s established policies.

 

10. Legal and Accounting
Advice. The Employee shall be entitled to reimbursement by the Company for
expenses incurred by him for personal legal, accounting, investment or estate
planning services in an amount to be determined by the Board, but in no event
greater than $5,000 annually (or a pro rata portion of such amount for any
period of employment less than a full year);

 

3

 

provided, however, that no
reimbursement shall be made for any such expenses incurred by the Employee
after such Employee’s Date of Termination.

 

11. Termination.

 

(a) Disability. If, as a
result of the Employee’s incapacity due to physical or mental illness, he shall
have been absent from the full-time performance of his duties with the Company
for 90 consecutive days or 180 days within any 12-month period, his employment
may be terminated by the Company for “Disability.”

 

(b) Cause. Subject to the
notice provisions set forth below, the Company may terminate the Employee’s
employment for “Cause” at any time. “Cause” shall mean termination upon: (1)
the willful failure by the Employee to substantially perform his duties with
the Company (other than any such failure resulting from his incapacity due to
physical or mental illness), after a written demand for substantial performance
is delivered to him by the Board, which demand specifically identifies the
manner in which the Board believes that he has not substantially performed his
duties; (2) the Employee’s willful misconduct that is demonstrably and
materially injurious to the Company, monetarily or otherwise; or (3) the
Employee’s commission of such acts of dishonesty, fraud, misrepresentation or
other acts of moral turpitude as would prevent the effective performance of his
duties. For purposes of this subsection (b), no act, or failure to act, on the
Employee’s part shall be deemed “willful” unless done, or omitted to be done,
by him not in good faith and without the reasonable belief that his action or
omission was in the best interest of the Company. Notwithstanding the
foregoing, the Employee shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to him a copy of a resolution
duly adopted by the affirmative vote of a majority of the non-employee members
of the Board at a meeting of such members (after reasonable notice to him and
an opportunity for him, together with his counsel, to be heard before such
members of the Board), finding that he has engaged in the conduct set forth
above in this subsection (b) and specifying the particulars thereof in detail.

 

4

 

(c) Notice of Termination.
Any termination of the Employee’s employment by the Company or by the Employee
shall be communicated by written Notice of Termination to the other party
hereto in accordance with Section 15. “Notice of Termination” shall mean a
notice that indicates the specific termination provision in this Agreement
relied upon and sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for the termination of the Employee’s employment
under the provision so indicated.

 

(d) Date of Termination.
“Date of Termination” shall mean: (1) if the Employee’s employment is
terminated by his death, the date of his death; (2) if the Employee’s
employment is terminated for Disability, 30 days after Notice of Termination is
given; and (3) if the Employee’s employment is terminated for any other reason,
the date specified in the Notice of Termination.

 

(e) Dispute Concerning
Termination. If within the later of (i) fifteen (15) days after Notice of
Termination is given, or (ii) fifteen (15) days prior to the Date of
Termination (as determined without regard to this Section 11(e), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning a termination by the Employee for Good Reason (as defined in
Section 11(h)) following a Change in Control (as defined in Section 11(g)), the
Date of Termination shall be the earlier of the expiration date of the
Agreement, or the date on which the dispute is finally resolved, either by
mutual written agreement of the parties or by a final judgment, order or decree
of a court of competent jurisdiction (which is not appealable or with respect
to which the time for appeal therefrom has expired and no appeal has been
perfected); provided, however, that the Date of Termination shall be extended
by a notice of dispute only if such notice is given in good faith and the party
giving such notice pursues the resolution of such dispute with reasonable
diligence.

 

(f) Compensation During
Dispute. If a purported termination by the Employee for Good Reason occurs
following a Change in Control and during the Term of this Agreement, and such
termination is disputed in accordance with Section 11(e) hereof, the Company
shall continue to pay the Employee the full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to,
salary) and continue the Employee as a participant in all compensation, benefit
and insurance plans in which the Employee was participating when the notice
giving rise

 

5

 

to the dispute was given,
until the dispute is finally resolved in accordance with Section 11(e) hereof
or, if earlier, the expiration date of the Agreement. Amounts paid under this
Section 11(f) are in addition to all other amounts due under this Agreement
(other than those due under Section 12(b) hereof) and shall not be offset
against or reduce any other amounts payable under this Agreement.

 

(g) Change in Control. A
“Change in Control” shall be deemed to have occurred if the conditions set
forth in any one of the following paragraphs shall have been satisfied:

 

(i) any “person” (as such
term is used in Sections 14(d) and 15(d) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)) (other than the Company; any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company; or any Company owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their ownership of the
stock of the Company) is or becomes after the Effective Date the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such person any securities acquired directly from the
Company or its affiliates) representing 25% or more of the combined voting
power of the Company’s then outstanding securities; or

 

(ii) during any period of
two consecutive years (not including any period prior to the Effective Date),
individuals who at the beginning of such period constitute the Board and any
new director (other than a director designated by a person who has entered into
an agreement with the Company to effect a transaction described in subparagraph
(i), (iii) or (iv) of this Section 11(g)) whose election by the Board or
nomination for election by the Company’s stockholders was approved by a vote of
at least 2/3 of the directors then still in office who either were directors at
the beginning of the period or whose election or nomination for election was previously
so approved, cease for any reason to constitute a majority thereof; or

 

(iii) the stockholders of
the Company approve a merger or consolidation of the Company with any other
corporation, other than (A) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by

 

6

 

being converted into voting
securities of the surviving entity), in combination with the ownership of any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company, at least 75% of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately after such
merger or consolidation, or (B) a merger or consolidation effected to implement
a recapitalization of the Company (or similar transaction) in which no person
acquires more than 50% of the combined voting power of the Company’s then outstanding
securities; or

 

(iv) the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or substantially all the
Company’s assets.

 

(h) Good Reason. At any time
following a Change in Control, the Employee may terminate his employment
hereunder for “Good Reason.” “Good Reason” shall mean the occurrence (without
the Employee’s express written consent) of any material breach of this
Agreement, including, without limitation, any one of the following acts by the
Company, or failures by the Company to act, unless, in the case of any act or
failure to act described in subsections (i), (iv), (v), (vi) or (vii) below,
such act or failure to act is corrected prior to the Date of Termination
specified in the Notice of Termination given in respect thereof:

 

(i) the assignment to the
Employee of any duties inconsistent with the Employee’s status as a senior
executive of the Company or a substantially adverse alteration in the nature or
status of the Employee’s responsibilities from those in effect immediately
prior to the Change in Control;

 

(ii) a reduction by the
Company in the Employee’s annual base salary as in effect on the date hereof or
as the same may be increased from time to time ;

 

(iii) the relocation of the
Company’s principal offices to a location outside Southern California (or, if
different, the metropolitan area in which such offices are located immediately
prior to the Change in Control) or the Company’s requiring the Employee to be
based anywhere other than the Company’s principal executive offices, except for
required travel on the Company’s business to an extent

 

7

 

substantially consistent
with the Employee’s present business travel obligations;

 

(iv) the failure by the
Company to pay to the Employee any portion of the Employee’s current
compensation, or to pay to the Employee any portion of an installment of
deferred compensation under any deferred compensation program of the Company,
within seven days of the date such compensation is due;

 

(v) the failure by the
Company to continue in effect any compensation plan in which the Employee
participates immediately prior to the Change in Control which is material to
the Employee’s total compensation, unless an equitable arrangement (embodied in
an ongoing substitute or alternative plan) has been made with respect to such
plan, or the failure by the Company to continue the Employee’s participation
therein (or in such substitute or alternative plan) on a basis not materially
less favorable, both in terms of the amount of benefits provided and the level
of the Employee’s participation relative to other participants, as existed
immediately prior to the Change in Control;

 

(vi) the failure by the
Company to continue to provide the Employee with benefits substantially similar
to those enjoyed by the Employee under any of the Company’s pension, life
insurance, medical, health and accident, or disability plans in which the Employee
was participating immediately prior to the Change in Control; or the taking of
any action by the Company which would directly or indirectly materially reduce
any of such benefits or deprive the Employee of any material fringe benefit
enjoyed by the Employee immediately prior to the Change in Control;

 

(vii) any purported
termination of the Employee’s employment which is not effected pursuant to a
Notice of Termination satisfying the requirements of this Agreement; for
purposes of this Agreement, no such purported termination shall be effective;
or

 

(viii) any failure by the
Company to comply with and satisfy Section 13(b) of this Agreement.

 

The Employee’s right to
terminate the Employee’s employment for Good Reason shall not be affected by
the Employee’s incapacity due to physical or mental illness. The Employee’s
continued employment shall

 

8

 

not constitute consent to,
or a waiver of rights with respect to, any act or failure to act constituting
Good Reason hereunder.

 

(i) Voluntary Termination.
The Employee may terminate his employment hereunder (“Voluntary Termination”)
upon a material breach of this Agreement by the Company, unless the Company
shall fully correct such breach within 30 days of the Employee’s Notice of
Termination given in respect thereof.

 

12. Compensation Upon
Termination or During Disability. The Employee shall be entitled to the
following benefits during a period of disability, or upon termination of his
employment, as the case may be, provided that such period or termination occurs
during the Term of this Agreement:

 

(a) During any period that
the Employee fails to perform his full-time duties with the Company as a result
of incapacity due to physical or mental illness, he shall continue to receive
his base salary at the rate in effect at the commencement of any such period,
together with all compensation payable to him under the Company’s disability
plan or program or other similar plan during such period, until his employment
is terminated pursuant to Section 11 hereof. Thereafter, or in the event the
Employee’s employment shall be terminated by reason of his death, his benefits
shall be determined under the Company’s retirement, insurance and other
compensation programs then in effect in accordance with the terms of such
programs.

 

(b) If at any time the
Employee’s employment shall be terminated: (i) by the Company for Cause or
Disability or (ii) by him for any reason (other than in a Voluntary Termination
or for Good Reason following the occurrence of a Change in Control), the
Company shall pay him his full base salary through the Date of Termination at
the rate in effect at the time Notice of Termination is given, plus all other
amounts to which he is entitled through the Date of Termination under any
compensation plan of the Company at the time such payments are due, and the
Company shall have no further obligations to him under this Agreement.

 

(c) If the Employee’s
employment should be terminated: (1) by reason of his death, (2) by the Company
other than for Cause or Disability or (3) by the Employee in a Voluntary
Termination, he shall be entitled to the benefits provided below:

 

9

 

(i) the Company shall pay to
the Employee or the appropriate payee (as determined in accordance with Section
13(c)) (A) his full base salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given; plus (B)(x) in the case of
death or a Voluntary Termination all salary and bonus payments that would have
been payable to the Employee pursuant to this Agreement for the remaining Term
of this Agreement, or (y) in all other cases, all salary and bonus payments
that would have been payable to the Employee had the Employee continued to be
employed for a period of 12 months, assuming for the purpose of such payments
that his salary for such remaining period is equal to his salary at the Date of
Termination and that his annual bonus for such remaining Term is equal to the average
of the annual bonuses paid to him by the Company with respect to the three
fiscal years ended immediately prior to the fiscal year in which the Date of
termination occurs; plus (C) all other amounts to which he is entitled under
any compensation plan of the Company, in cash in a lump sum no later than the
15th day following the Date of Termination;

 

(ii) for a 12-month period
after the Date of Termination, the Company shall arrange to provide the
Employee with life, disability, accident and health insurance benefits
substantially similar to those which the Employee and his covered family
members are receiving immediately prior to the Notice of Termination (without
giving effect to any reduction in such benefits subsequent to a Change in
Control); provided, however, that such continued benefits shall be reduced to
the extent comparable benefits are actually received by or made available to
the Employee without cost during the 12-month period following the Employee’s
termination of employment (and the Employee agrees that he shall promptly
report any such benefits actually received to the Company); and

 

(iii) the Company shall
continue in effect for the benefit of the Employee all insurance or other
provisions for indemnification and defense of officers or directors of the
Company which are in effect on the date the Notice of Termination is sent to
the Employee with respect to all of his acts and omissions while an officer or
director as fully and completely as if such termination had not occurred, and
until the final expiration or running of all periods of limitation against
actions which may be applicable to such acts or omissions.

 

10

 

(d) If the Employee’s
employment should be terminated by the Employee for Good Reason following a
Change in Control, he shall be entitled to the benefits provided below:

 

(i) the Company shall pay to
the Employee or the appropriate payee (as determined in accordance with Section
13(c)) (A) his full base salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given; plus (B)(x) in the case of
death or a Voluntary Termination all salary and bonus payments that would have
been payable to the Employee pursuant to this Agreement for the remaining Term
of this Agreement, or (y) in all other cases, all salary and bonus payments
that would have been payable to the Employee had the Employee continued to be
employed for a period of 24 months, assuming for the purpose of such payments
that his salary for such remaining period is equal to his salary at the Date of
Termination and that his annual bonus for such remaining Term is equal to the
average of the annual bonuses paid to him by the Company with respect to the
three fiscal years ended immediately prior to the fiscal year in which the Date
of termination occurs; plus (C) all other amounts to which he is entitled under
any compensation plan of the Company, in cash in a lump sum no later than the
15th day following the Date of Termination;

 

(ii) for a 24-month period
after the Date of Termination, the Company shall arrange to provide the
Employee with life, disability, accident and health insurance benefits
substantially similar to those which the Employee and his covered family
members are receiving immediately prior to the Notice of Termination (without
giving effect to any reduction in such benefits subsequent to a Change in
Control); provided, however, that such continued benefits shall be reduced to
the extent comparable benefits are actually received by or made available to
the Employee without cost during the 24-month period following the Employee’s
termination of employment (and the Employee agrees that he shall promptly
report any such benefits actually received to the Company); and

 

(iii) the Company shall
continue in effect for the benefit of the Employee all insurance or other
provisions for indemnification and defense of officers or directors of the
Company which are in effect on the date the Notice of Termination is sent to
the Employee with respect to all of his acts and omissions while an officer or
director as

 

11

 

fully and completely as if
such termination had not occurred, and until the final expiration or running of
all periods of limitation against actions which may be applicable to such acts
or omissions.

 

(e) Notwithstanding any
other provisions of this Agreement, in the event that any payment or benefit
received or to be received by the Employee in connection with the termination
of the Employee’s employment (whether such benefit is pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with the Company,
and all such payments and benefits being hereinafter called “Total Payments”)
would not be deductible (in whole or part), by the Company as a result of the
application of Section 280G of the Internal Revenue Code of 1986, as amended
(“Code”), then, to the extent necessary to make the nondeductible portion of
the Total Payments deductible, (i) the cash payments under this Agreement shall
first be reduced (if necessary, to zero), and (ii) all other non-cash payments
under this Agreement shall next be reduced (if necessary, to zero).

 

(f) If it is established as
described in the preceding subsection (d) that the aggregate benefits paid to
or for the Employee’s benefit are in an amount that would result in any portion
of such “parachute payments” not being deductible by reason of Section 280G of
the Code, then the Employee shall have an obligation to pay the Company upon
demand an amount equal to the sum of: (i) the excess of the aggregate
“parachute payments” paid to or for the Employee’s benefit over the aggregate
“parachute payments” that could have been paid to or for the Employee’s benefit
without any portion of such “parachute payments” not being deductible by reason
of Section 280G of the Code; and (ii) interest on the amount set forth in
clause (i) of this sentence at the rate provided in Section 1274(b)(2)(B) of
the Code from the date of the Employee’s receipt of such excess until the date
of such payment.

 

(g) The Employee shall not
be required to mitigate the amount of any payment provided for in this
Agreement by seeking other employment or otherwise.

 

(h) If the employment of the
Employee is terminated by the Company without Cause or the Employee’s
employment is terminated by the Employee under conditions entitling him to
payment hereunder and the Company fails to make timely payment of the amounts
then owed to the Employee under this Agreement, the Employee shall be entitled
to interest on such amounts at the rate of 1% above the prime rate (defined

 

12

 

as the base rate on
corporate loans at large U.S. money center commercial banks as published by the
Wall Street Journal), compounded monthly, for the period from the date such
amounts were otherwise due until payment is made to the Employee (which
interest shall be in addition to all rights which the Employee is otherwise
entitled to under this Agreement).

 

13. Assignment.

 

(a) This Agreement is
personal to each of the parties hereto. No party may assign or delegate any
rights or obligations hereunder without first obtaining the written consent of
the other party hereto, except that this Agreement shall be binding upon and
inure to the benefit of any successor corporation to the Company.

 

(b) The Company shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. As used in this Agreement,
“Company” shall mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes this Agreement by
operation of law, or otherwise.

 

(c) This Agreement shall
inure to the benefit of and be enforceable by the Employee and his personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Employee should die while any
amount would still be payable to him hereunder had he continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to his devisee, legatee or other designee or,
if there is no such designee, to his estate.

 

14. (a) Confidential
Information. During the Term of this Agreement and thereafter, the Employee
shall not, except as may be required to perform his duties hereunder or as
required by applicable law, disclose to others for use, whether directly or
indirectly, any Confidential Information regarding the Company. “Confidential
Information” shall mean information about the Company, its subsidiaries and
affiliates, and their respective clients and customers that is not available to
the general public and that was learned by the Employee in the course of his
employment by the Company, including (without limitation) any data,

 

13

 

formulae, information,
proprietary knowledge, trade secrets and client and customer lists and all
papers, resumes, records and the documents containing such Confidential
Information. The Employee acknowledges that such Confidential Information is
specialized, unique in nature and of great value to the Company, and that such
information gives the Company a competitive advantage. Upon the termination of
his employment, the Employee will promptly deliver to the Company all documents
(and all copies thereof) containing any Confidential Information.

 

(b) Noncompetition. The
Employee agrees that during the Term of this Agreement, and for a period of one
year thereafter, he will not, directly or indirectly, without the prior written
consent of the Company, provide consultative service with or without pay, own,
manage, operate, join, control, participate in, or be connected as a
stockholder, partner, or otherwise with any business, individual, partner,
firm, corporation, or other entity which is then in competition with the
Company or any present affiliate of the Company; provided, however, that the
“beneficial ownership” by the Employee, either individually or as a member of a
“group,” as such terms are used in Rule 13d of the General Rules and
Regulations under the Exchange Act, of not more than 1% of the voting stock of
any publicly held corporation shall not be a violation of this Agreement. It is
further expressly agreed that the Company will or would suffer irreparable
injury if the Employee were to compete with the Company or any subsidiary or
affiliate of the Company in violation of this Agreement and that the Company
would by reason of such competition be entitled to injunctive relief in a court
of appropriate jurisdiction, and the Employee further consents and stipulates
to the entry of such injunctive relief in such a court prohibiting the Employee
from competing with the Company or any subsidiary or affiliate of the Company
in violation of this Agreement.

 

(c) Right to Company
Materials. The Employee agrees that all styles, designs, recipes, lists,
materials, books, files, reports, correspondence, records, and other documents
(“Company Material”) used, prepared, or made available to the Employee, shall
be and shall remain the property of the Company. Upon the termination of his
employment or the expiration of this Agreement, all Company Materials shall be
returned immediately to the Company, and Employee shall not make or retain any
copies thereof.

 

(d) Antisolicitation. The
Employee promises and agrees that during the Term of this Agreement, and for a
period of one year thereafter,

 

14

 

he will not influence or
attempt to influence customers, franchisees, landlords, or suppliers of the
Company or any of its present or future subsidiaries or affiliates, either
directly or indirectly, to divert their business to any individual,
partnership, firm, corporation or other entity then in competition with the
business of the Company, or any subsidiary or affiliate of the Company.

 

15. Notice. For the purpose
of this Agreement, notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed to the respective addresses set
forth below, or to such other addresses as either party may have furnished to the
other in writing in accordance herewith, except that notice of a change of
address shall be effective only upon actual receipt:

 

	
   

  	
  Company:

  	
  IHOP
  Corp.

  
	
   

  	
   

  	
  525
  North Brand Blvd.  

  
	
   

  	
   

  	
  Glendale,
  California  91203-1903  

  
	
   

  	
   

  	
  to
  the attention of the Board;  

  
	
   

  	
  with
  a copy to:

  	
  the
  Secretary of the Company  

  
	
   

  	
   

  	
   

  
	
   

  	
  Employee:

  	
  Richard
  C. Celio

  
	
   

  	
   

  	
  525
  North Brand Boulevard  

  
	
   

  	
   

  	
  Glendale,
  California  91203.

  

 

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

 

17. Section Headings. The
section headings used in this Agreement are included solely for convenience and
shall not affect, or be used in connection with, the interpretation of this
Agreement.

 

18. Severability. The
provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.

 

19. Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed to be
an original, but both of which together will constitute one and the same
instrument.

 

20. Arbitration. Any dispute
or controversy arising under or in connection with this Agreement shall be
settled exclusively by arbitration,

 

15

 

conducted before a panel of
three arbitrators in Los Angeles, California, in accordance with the rules of
the American Arbitration Association then in effect. Judgment may be entered on
the arbitrator’s award in any court having jurisdiction; provided, however,
that the Employee shall be entitled to seek specific performance of his right
to be paid until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.

 

21. Attorneys’ Fees. The
Company shall pay to the Employee all out-of- pocket expenses, including
attorneys’ fees, incurred by the Employee in connection with any claim, legal
action or proceeding involving this Agreement in which the Employee prevails in
whole or in part, whether brought by the Employee or by or on behalf of the
Company or by another party. The Company shall pay prejudgment interest on any
money judgment obtained by the Employee calculated at 3% above the prime rate
(defined as the base rate on corporate loans at large U.S. money center
commercial banks as published by the Wall Street Journal), from the date that
payment(s) to the Employee should have been made under this Agreement.

 

22. Miscellaneous. No
provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and signed by the
Employee and such officer as may be specifically designated by the Board. No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement and this agreement shall
supersede any prior understanding or agreement either written or oral, will
respect to the subject matter hereto. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of California without regard to its conflicts of law principles. All
references to sections of the Exchange Act or the Code shall be deemed also to
refer to any successor provisions to such sections.

 

Any payments provided for
hereunder shall be paid net of any applicable withholding required under
federal, state or local law. The obligations of the

 

16

 

Company under Section 12 and
Section 20 and the obligations of the Employee under Section 14 and Section 20
shall survive the expiration of the Term of this Agreement.

 

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

 

	
   

  	
  ATTEST:

  	
   

  	
  IHOP CORP.  

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  /s/ Mark D. Weisberger

  	
   

  	
  By:

  	
  /s/ Richard K. Herzer  

  	
   

  
	
   

  	
  Mark D. Weisberger

  	
   

  	
  Richard K. Herzer  

  
	
   

  	
  Secretary

  	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  

 

EMPLOYEE:

 

	
   

  	
  /s/ Richard C. Celio

  	
   

  
	
   

  	
  Richard C. Celio

  	
   

  

 

17

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