AMENDED AND
RESTATED
EMPLOYMENT
AGREEMENT
Between Denny’s Corporation
and Nelson J. Marchioli
This Amended and Restated Employment Agreement
("Agreement"), amends and restates in its entirety as of May 1,
2009, the Employment Agreement originally made and entered into on
the 11th day of May, 2005, between Denny’s Corporation, a
Delaware corporation (“the Company”), together with its
wholly-owned subsidiary, Denny’s, Inc., a California
corporation (“Denny’s”) and Nelson J. Marchioli
(the "Executive"), residing at 2110 Cleveland Street Ext.,
Greenville, SC 29607.
WITNESSETH:
WHEREAS, The Board of Directors (the "Board") of
the Company wishes to continue to employ the Executive as President
and Chief Executive Officer of the Company and of its wholly-owned
subsidiary, Denny’s, Inc., on the terms and subject to the
conditions set forth herein; and
WHEREAS, the Executive wishes to continue
employment with the Company in the position of President and Chief
Executive Officer, on the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, in consideration of the premises
and the mutual covenants and obligations hereinafter set forth, the
parties agree as follows:
The Executive shall be deemed an employee of
Denny’s. His employment under the terms of this
Agreement commenced on the date of its original execution as
indicated above, and shall continue until Noon on May 20, 2010,
unless terminated earlier pursuant to Section 5 (such period of
employment under this Agreement is hereinafter referred to as the
“Employment Term”). Beginning on May 20,
2010 and on each May 20 thereafter (each such May 20, a
“Renewal Date”), the Employment Term shall, without
further action by Executive or the Company, be extended by an
additional one-year period; provided, however , that either
party may cause the Employment Term to cease to extend
automatically, by giving written notice to the other between 90 and
120 days prior to any Renewal Date. Following such
notice, the Employment Term and the Executive’s employment
with the Company shall terminate upon the expiration of the
then-current term, including any prior extensions. The
Executive shall provide services to the Company hereunder as
President and Chief Executive Officer of the
Company. The Executive will serve the Company subject to
the general supervision, advice and direction of the Chairman of
the Board and members of the Board and upon the terms and
conditions set forth in this Agreement.
2.
Duties
(a) During
the Employment Term, and while serving as President and Chief
Executive Officer of the Company, the Executive shall have such
authority and duties as are customary in such positions, and shall
perform such other services and duties as the Board of Directors
may from time to time designate consistent with such
positions.
(b) The
Executive shall report solely to the Board. All senior
officers of the Company shall report, directly or indirectly
through other senior officers, to the Executive. The
Executive shall be responsible for hiring, terminating and
reviewing the performance of the other senior officers of the
Company, and shall from time to time present to the Board his
recommendations for any adjustments to the salaries of and bonus
payments to such officers. The Executive shall be
responsible for, and, subject to discussion with and ratification
by the Chairman of the Compensation and Incentives Committee of the
Board (with subsequent ratification by the Board), shall have the
authority to enter into employment agreements on behalf of the
Company with other executives of the Company.
(c) The
Executive shall devote his full business time and best efforts to
the business affairs of the Company; however, the Executive may
devote reasonable time and attention to:
(i) serving
as a director or member of a committee of any not-for-profit
organization or engaging in other charitable or community
activities; and
(ii) serving
as a director of another business or service, but only with the
advance approval of the Board.
3.
Compensation and Benefits
(a)
Base Compensation . During the term of this
Agreement, the Company shall pay the Executive an annual base
salary (the "Base Salary"), as compensation for his employment
under this Agreement. During the Employment Term such
Base Salary shall be paid in equal installments on at least a
bi-weekly basis, or on such other basis as is applicable to
employees of the Company's Support
Center. Executive’s Base Salary for fiscal year
2009 shall be equal to $780,000. It is expressly agreed
and understood that the Compensation and Incentives Committee (the
“Compensation Committee”) of the Board shall have the
right to review the Executive’s Base Salary on an annual
basis and to increase the Base Salary, if such an increase is
deemed warranted based upon the performance of the Executive during
each such annual period being reviewed.
(b)
Annual Bonus . For each calendar year ending
during the Employment Term, the Executive's bonus compensation
("Annual Bonus") shall be at an annual rate equal to at least 100%
of Base Salary (the "Targeted Bonus") payable if the Company,
Denny’s and the Executive achieve budgeted financial and
other performance targets which shall be established by the
Compensation Committee and communicated to the
Executive. It is expressly agreed that to the extent the
Compensation Committee provides additional over performance
incentive targets in the Company's annual incentive bonus plan for
employees, the Executive shall be entitled to fully participate in
and receive the full benefits for achieving such over-performance
incentive targets. The Executive's Annual Bonus earned
with respect to each year shall be paid at the same time as annual
incentive bonuses with respect to that year are paid to other
senior executives of the Company.
(c)
Benefits . In addition, during the Employment
Term, the Executive shall be entitled to receive an annual car
allowance and to participate in all pension, profit sharing and
other retirement plans, all incentive compensation plans and all
group health, hospitalization and disability insurance plans and
other employee welfare benefit plans in which other senior
executives of the Company may participate on terms and conditions
no less favorable than those which apply to such other senior
executives of the Company.
4.
Reimbursement of Expenses
(a)
Expenses Incurred in Performance of Employment . In addition
to the compensation provided for under Section 3 hereof, upon
submission of proper vouchers, the Company will pay or reimburse
the Executive for all normal and reasonable expenses incurred by
the Executive during the Employment Term in connection with the
Executive's responsibilities to the Company, including the
Executive's travel expenses. With respect to
Executive’s rights under this Section 4(a), (i) the
reimbursements provided in any one calendar year shall not affect
the amount of reimbursements provided in any other calendar year;
(ii) the reimbursement of an eligible expense shall be made no
later than December 31 of the year following the year in which the
expense was incurred; and (iii) such rights shall not be subject to
liquidation or exchange for another benefit.
5.
Termination
(a)
Events of Termination . The Employment Term and
Executive’s employment with the Company shall terminate upon
the first to occur of the following events:
(i) Noon
on May 20 of any year following the Executive’s or the
Company’s written notice to the other of non-renewal (which
notice must not be less than 90 days or more than 120 days prior to
such May 20 Renewal Date);
(ii) the
death of the Executive;
(iii) the
close of business on the 180th day following the date on which the
Company gives the Executive written notice of the termination of
his employment as a result of his "Permanent Disability" (as
defined in subsection 5(c)(i));
(iv) the
close of business on the date on which the Company gives the
Executive written notice of the Company's termination of his
employment as a "Termination without Cause" (as defined in
subsection 5(c)(iv)) or the close of business on the effective date
of a termination of the Executive's employment with the Company
pursuant to subsection 5(c)(iii);
(v) the
close of business on the date on which the Company gives the
Executive written notice of the Company's termination of his
employment for "Cause" (as defined in subsection 5(c)(ii));
and
(vi) the
close of business on the effective date of a "Voluntary
Termination" (as defined in subsection 5(c)(v)(A)) by the Executive
of his employment with the Company.
(b)
Termination Benefits . Upon the termination of
the Executive's employment with the Company for any reason set
forth in subsection 5(a) the Company shall provide the Executive
(or, in the case of his death, his estate or other legal
representative) benefits due him under the Company's benefits plans
and policies for his services rendered to the Company prior to the
date of such termination (according to the terms of such plans and
policies), and the Company shall pay the Executive not later than
five (5) business days after such termination, in a lump sum, all
Base Salary earned through the date of such
termination. The Executive shall be entitled to the
payments and benefits described below only as each is applicable to
such termination of employment.
(i) In
the event of a termination as a result of the Executive's death,
and in addition to any other death benefits payable under the
Company's benefit plans or policies, (A) for so long as the
Executive's surviving spouse is receiving any Base Salary payment
under clause (B) below, the Executive's eligible family dependents
(collectively, "Family") shall be entitled to receive and
participate in the disability, health, medical and other welfare
benefit plans which the Executive and/or his Family would otherwise
have been entitled to hereunder if the Executive had not terminated
employment (the "Welfare Benefits") in addition to any continuation
coverage which the Executive's Family is entitled to elect under
Section 4980B of the Internal Revenue Code of 1986, as amended (the
“Code”); provided, however, that (x) the
benefits provided in any one calendar year shall not affect the
amount of benefits provided in any other calendar year (other than
the effect of any overall coverage benefits under the applicable
plans); (y) the reimbursement of an eligible taxable expense shall
be made on or before December 31 of the year following the year in
which the expense was incurred; and (z) Executive’s rights
pursuant to this Section 5(b)(i) shall not be subject to
liquidation or exchange for another benefit; and (B) for a period
of one year following the date of the Executive's death, the
Executive's surviving spouse shall be paid (x) the Base Salary in
effect at the date of the Executive's death, payable in monthly
installments, and (y) the Annual Bonus that would have been paid
under Section 3(b) to the Executive during such period, payable as
and when annual incentive bonuses with respect to such period are
paid by the Company to other senior executives of the
Company.
(ii) In
the event of a termination as a result of the Executive’s
Permanent Disability, for each year of the two year period that
immediately follows the date of such termination of the
Executive’s employment, (A) the Executive and/or his Family
shall be entitled to receive and participate in the Welfare
Benefits in addition to any continuation coverage which the
Executive and/or his Family is entitled to elect under 4980B of the
Code; provided, however, that (x) the benefits provided in
any one calendar year shall not affect the amount of benefits
provided in any other calendar year (other than the effect of any
overall coverage benefits under the applicable plans); (y) the
reimbursement of an eligible taxable expense shall be made on or
before December 31 of the year following the year in which the
expense was incurred; and (z) Executive’s rights pursuant to
this Section 5(b)(ii) shall not be subject to liquidation or
exchange for another benefit; and (B) the Executive shall be paid
(x) one-half of the Base Salary in effect at such date of
termination, payable in monthly installments, and (y) one-half of
the Annual Bonus that would be payable under Section 3(b) for such
period, payable as and when annual incentive bonuses with respect
to such period are paid by the Company to other senior executives
of the Company.
(iii) In
the event of a "Termination without Cause" under subsection
5(a)(iv), (A) the Executive and/or his Family shall be entitled
until the earlier of (x) the first anniversary of the date of such
termination of employment or (y) the commencement of coverage of
the Executive and/or his Family by another group medical benefits
plan providing substantially comparable benefits to the Welfare
Benefits and which does not contain any preexisting condition
exclusions or limitations, to receive and participate in the
Welfare Benefits in addition to any continuation coverage which the
Executive and/or his Family is entitled to elect under Section
4980B of the Code; provided, however, that (x) the benefits
provided in any one calendar year shall not affect the amount of
benefits provided in any other calendar year (other than the effect
of any overall coverage benefits under the applicable plans); (y)
the reimbursement of an eligible taxable expense shall be made on
or before December 31 of the year following the year in which the
expense was incurred; and (z) Executive’s rights pursuant to
this Section 5(b)(iii) shall not be subject to liquidation or
exchange for another benefit; (B) not later than five
(5) business days after such termination, the Company shall pay to
the Executive as severance (and not in lieu of any bonus for the
year in which the termination of employment occurs) a payment in a
lump sum amount equal to two times his then current Base Salary and
Targeted Bonus; and (C) the Company shall pay to the Executive a
pro rata annual bonus for the fiscal year in which the termination
of employment occurs, equal to (1) the Annual Bonus, if any, that
would have been earned by Executive under Section 3(b) for such
fiscal year if he had remained employed for the entire year, based
on actual performance under applicable Company financial metrics
for the entire year, multiplied by (2) a fraction, the numerator of
which is the number of days worked by Executive during such fiscal
year and the denominator of which is the number of days in such
fiscal year, payable at the regular time when annual incentive
bonuses are paid to other senior executives of the Company (the
“Pro Rata Final Year Bonus”). Provided,
however , in the event of a Termination without Cause within
one (1) year following the consummation of a Change of Control as
defined in subsection 5(c)(iii) hereof, the Company
shall pay the Executive within five (5) business days of
such termination a lump sum payment equal to 299% of the sum of (1)
the Executive’s then current Base Salary and (2) the
Executive’s then current Targeted Bonus which shall be no
less than one hundred percent (100%) of the Executive’s then
current Base Salary.
A Change of
Control payment, as described above, may be reduced to avoid the
Executive’s payment of excise taxes under Code Section
4999. This limited payment cap is to be computed as
follows: The acceleration of any outstanding stock
option (Option) shall be prevented by the Company in the event that
all of the following conditions apply and the Executive (or, in the
absence of an election by the Executive, the Company) elects to
reduce the aggregate parachute payments by eliminating the
acceleration of Options under this Agreement: (1) the
Executive whose Options are otherwise eligible for acceleration is
also eligible to receive payments under this Agreement and/or under
any other plan, agreement, program or policy that is sponsored by
the Company, which are triggered directly or indirectly by a Change
of Control (“parachute payments”); (2) the aggregate
amount of such parachute payments is determined by the Company to
be potentially subject to excise tax under Code Section 4999
(imposed upon the “excess parachute payments”); and (3)
it is determined that such excise tax would cause the net after-tax
parachute payments to be paid to or on behalf of the Executive to
be less than what he would have netted, after federal, state and
local income taxes, had the present value of his total parachute
payments equaled $1.00 less than three times his base amount, as
defined under Code Section 280G(b)(3)(A). In the event
the above three conditions apply, then such Executive’s total
payments described in Code Section 280G(b)(2)(A) shall be reduced
(but by the minimum possible amount), so that their aggregate
present value equals $100.00 less than three times the
Executive’s Base Amount. If it is determined that
any payment to or on behalf of the Executive will be an excess
parachute payment, the Company shall promptly give the Executive
notice to that effect, a copy of the detailed calculation thereof,
and an explanation of the calculation of the reduction (if any)
required hereunder. In the event the Executive disagrees
with such determination, he shall set forth the basis for his
disagreement in a written document which shall be delivered to the
Company. The Executive and his representative and
representatives of the Company shall thereafter, within five (5)
business days after receipt of such written objection, meet in an
attempt to understand and resolve any competing understandings and
interpretations. Subsequent to such meeting, the
Executive may elect to (a) accept the parachute payments
recognizing any personal tax consequences, (b) submit the dispute,
if any, to arbitration pursuant to Section 13 of this Agreement or
(c) determine which of the parachute payments under this Agreement
or any other agreements that make payments on account of the Change
of Control shall be eliminated or reduced (as long as after such
election the aggregate present value of the parachute payments is
$100.00 less than three times Executive’s Base
Amount). The Executive shall advise the Company in
writing of his election within twenty (20) days of his receipt of
this notice. If no such election is made by Executive,
the Company may elect which and how much of such parachute payments
under this Agreement or other agreements should be eliminated or
reduced to accomplish this required reduction, and shall promptly
thereafte
