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SEPARATION AGREEMENT
(AND RELEASE OF CLAIMS)
This
Agreement is made the 8th day of August, 2007, by and between
Denny’s, Inc. (the “Company”) and you,
Margaret L. Jenkins, regarding your separation of employment
with the Company under the following terms and
conditions.
For
valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, including the mutual promises and
representations of the Company and you as set forth in this
Agreement, the parties agree as follows:
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1.
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Separation of Employment . As of Friday, August 3,
2007 (the “Notification Date”), you are hereby notified
that you will stop performing services on August 31, 2007 (the
“Separation Date”), and that your employment therefore
will terminate on that date and that
you will cease to be an employee of the Company for all
purposes.
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2.
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Payment by Company . You will be paid through August
31, 2007 in accordance with the normal biweekly payroll
schedule. In addition, the Company will pay you a single
lump sum severance payment in the amount of $ 1,338,150, which
represents 200% of your current base pay; 200% of your annual
target bonus (65% of your base salary); and 200% of your car
allowance. This payment will be made to you as soon as
administratively feasible upon the expiration of your Separation
Date and the expiration of the seven (7)-day revocation period, but
in no event later than March 15, 2008.
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3.
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Vacation Pay . You will be paid for any vacation
hours which you have earned but not used. This payment
will occur as soon as administratively possible after your
Separation Date.
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4.
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Career Continuation Assistance . To help you
transition to a new career, you will be provided with outplacement
services for a period of eighteen (18) months by a transition
services firm mutually agreed to by you and the
Company. To begin these services, you will need to
contact Jill Van Pelt at (864)597-8879 within thirty (30) days of
your Separation Date. This benefit is available in this
form only and is not transferable to any other benefit or
cash.
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5.
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Stock Options . Subject to approval by the Board of
Directors of Denny’s Corporation, as of the later of your
Separation Date or the date of approval by the Board of Directors,
you shall immediately become one hundred percent (100%) vested in,
and eligible to exercise, all stock options that have been granted
to you by the Company. You will have the right to
exercise any or all of such vested options (except for the stock
options awarded to you on November 10, 2004 at an exercise price of
$2.42, the “$2.42 Stock Options”) for the lesser of
thirty-six (36) months or the remaining term of such option
grant. The $2.42 Stock Options will be exercisable by
you pursuant to the terms of the applicable underlying stock option
agreement, as amended by the written elections with respect to such
options’ exercise dates that were made by you to ensure that
such options complied with Section 409A of the Internal Revenue
Code (“Section 409A”), which are set forth below (as
further updated to comply with the final regulations under Section
409A):
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a. The
$2.42 Stock Options that vested before
2005 (for which
no 19(c) election was required) : Exercise in
conformance with the original term for post-termination exercise
that is stated in your stock option agreement, which is within 60
days after termination;
b.
The $2.42 Stock Options that vested in 2005
: Per your 19(c) election form filed in 2005, the
elected year of exercise (2009) would be accelerated by your
termination; because you are a “specified
employee” of the Company (as defined in Code section
409A(a)(2)(B)(i)), we are required to delay your first
permitted day of option exercise until March 1, 2008 (6 months
after your termination); you will be allowed to exercise this
option on any day between March 1, 2008 and December 31, 2008;
and
c.
The $2.42 Stock Options that vested in 2006
: Per your 19(c) election, you had elected to
exercise options on 90,000 shares, divided among three
different years of exercise, 2007, 2008 and
2009. No change is made in your election with
respect to the 30,000 shares that you elected to exercise in
2007, because by the terms of your election, your service
termination does not change that elected year of
exercise. However, in the case of the options you
elected to exercise in 2008 and 2009, your permitted exercise
period, which is changed because of your termination of
service, is now any day between March 1, 2008 and December 31,
2008.
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6.
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Medical, Dental & Vision Benefits . The COBRA
provision of the federal law allows you to remain in the
Company’s group plan for medical, dental, and vision benefits
for up to eighteen (18) months with coverage retroactive to your
Separation Date. After your Separation Date, you will
receive information about the COBRA continuation of coverage
option, including the necessary election forms, at your home
address. You must complete and return the election forms
within sixty (60) days of your Separation Date to elect COBRA
benefits. COBRA premiums are generally 102% of the full
benefit cost (employee and employer portions). In an
effort to offset this expense and to enhance this benefit, the
Company will extend the eighteen (18) months of continued coverage
to twenty-four (24) months and make a one-time payment to you equal
to the difference of the full COBRA premiums and the amount you
would pay for these benefits as an active employee. This
payment will be made at the time of your lump sum severance payment
and will be taxed accordingly. This payment will be
calculated as follows:
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(Full
COBRA premium – current active employee premiums) x 24
months = one-time payment
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7.
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Other Health and Welfare Benefits . Your basic group
life insurance, basic accidental death and dismemberment insurance,
and any supplemental life insurance coverage that you have elected
for 2007 will end thirty (30) days following your Separation
Date. If you wish to convert your coverage to a term
life policy, you will need to contact the Company’s Group
Benefits department at (864)597-8433 as soon as possible, and in
any event, within the thirty (30) day period following your
Separation Date. All other benefits, including your
long-term disability coverage, will end at 12:00 midnight on your
Separation Date.
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8.
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Denny’s Deferred Compensation Plan
. Contributions to your Denny’s Deferred
Compensation Plan account will cease as of your Separation
Date. As a key employee of the Company, and as required
by Section 409A, the payout of your Deferred Compensation Plan
account balance must be delayed until six (6) months after your
Separation Date. Generally, after this six (6)-month
period, you will receive your account balance in accordance with
your payment schedule election. For federal income tax
purposes, Plan distributions are taxed as ordinary income in the
year received, and they are subject to income tax withholding at
the tax rate applicable in the year of
receipt. Distributions from the Plan may also be subject
to state income taxes. Please call the Plan’s
administrator, The Newport Group, at (407)333-2905 for additional
information or to discuss your options for
distribution.
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9.
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Company Property . All Company property, such as
credit cards, building access cards, files, computer disks,
manuals, laptop computers, etc. must be returned before payment of
any severance pay.
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10.
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Parking Garage Access Card . Your Company-provided
Access Card for the Kennedy Street Parking Garage must be returned
before payment of any severance pay.
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11.
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Complete Release . You understand that the benefits
described in this Agreement are not automatically payable to every
employee. You have had a reasonable opportunity to
carefully review and consider the benefits available to you as part
of this Agreement and acknowledge that this reasonable opportunity
for consideration is twenty-one (21) days from your Notification
Date. You acknowledge that you have been encouraged to
consult with an attorney of your own choosing before signing this
Agreement. You understand the consequences of agreeing
to the terms of this Agreement and accepting enhanced severance
benefits. You enter into this Agreement knowingly and
voluntarily. No person has pressured you or used duress
to affect your decision. You do not need more time to
deliberate.
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a.
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Release of Claims . After careful deliberation and
an opportunity to consult with an attorney, you certify that you
are not aware of any facts or circumstances that would support a
claim of discrimination against Denny’s, Inc. on
the
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