SEPARATION AGREEMENT (AND RELEASE OF CLAIMS)
(AND
RELEASE OF CLAIMS)
This
Agreement is made the 8th day of August, 2007, by and between Denny’s, Inc. (the
“Company”) and you, Xxxxxxxx X. Xxxxxxx, 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 Xxxx Xxx Xxxx at (000)000-0000 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
Xxxxx’x 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 (000)000-0000 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 (000)000-0000 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 Xxxxxxx 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 basis of race, color, religion, sex, national origin,
age, disability or other protected status. You are also not
aware of any reason to believe Denny’s, Inc.’s offer is
unfair. For and in consideration of the benefits payable under
this Agreement, you hereby irrevocably and unconditionally release,
acquit
and forever discharge Denny’s, Inc. and each of its stockholders,
predecessors, successors, assigns, agents, directors, officers, employees,
representatives, divisions, subsidiaries, affiliates (and agents,
directors, officers, employees, representatives and attorneys of
such
divisions, subsidiaries and affiliates), and all persons acting by,
through, under or in concert with any of them (collectively “Releasees”),
from any and all charges, complaints, claims, liabilities, obligations,
promises, agreements, controversies, damages, actions, causes of
action,
suits, rights, demands, costs, losses, debts, and expenses of any
nature
whatsoever, known or unknown, suspected or unsuspected, including,
but not
limited to, rights arising out of alleged violations or breaches
of any
contracts, express or implied, or any tort, or any legal restrictions
on
Denny’s, Inc.’s right to terminate employees, or any federal, state or
other governmental statute, regulation, or ordinance, including,
without
limitation: (1) Title VII of the Civil Rights Act of 1964, as amended
by the Civil Rights Act of 1991, (race, color, religion, sex, and
national
origin discrimination); (2) the Americans with Disabilities Act
(disability discrimination); (3) 42 U.S.C. § 1981 (discrimination);
(4) the Age Discrimination in Employment Act (age discrimination);
(5) the Older Workers Benefit Protection Act (age discrimination);
(6) the Equal Pay Act (wage discrimination); (7) the Employee
Retirement Income Security Act (“ERISA”); (8) Section 503 of the
Rehabilitation Act of 1973; (9) the False Claims Act (including the
qui
tam provision thereof); (10) the Occupational Safety and Health Act;
(11)
the Consolidated Omnibus Budget Reconciliation Act of 1986; (12)
intentional or negligent infliction of emotional distress or “outrage”;
(13) defamation; (14) interference with employment and/or
contractual relations; (15) wrongful discharge; (16) invasion of
privacy; and (17) breach of contract, express or implied (including
breach
of employment contract), (collectively “Claim” or “Claims”), which I now
have, own or hold, or claim to have, own or hold, or which I at any
time
heretofore had, owned or held, or claimed to have, owned or held,
against
each or any of the Releasees at any time up to and including the
later of
your Separation Date or the date on which you sign this
Agreement. Without waiving any prospective or retrospective
rights under the Family and Medical Leave Act (“FMLA”), you admit that you
have received from Denny’s, Inc. all rights and benefits, if any,
potentially due you pursuant to the FMLA. It is your intent to
release all claims which you can legally release but no more than
that.
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b.
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Waiver
of Rights Under State Law. You further acknowledge and
agree that your release of claims pursuant to this Agreement covers
any
and all rights and benefits that you have or may have in the future,
whether known or unknown, and you waive any and all rights under
the laws
of any State (expressly including, but not limited to, Section 1542
if the
California Civil Code) which provides as follows (or which is
substantially similar in wording or
effect):
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A
general
release does not extend to claims which the creditor does not know or suspect
to
exist in his favor at the time of executing this Agreement, which if known
by
him must have materially affected his settlement with the Debtor.
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c.
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Covenant
Not to Xxx and Indemnification. Except as prohibited by
law, in consideration for the pay and benefits agreed to herein,
you agree
not to xxx any of the Releasees on any of the released Claims or
join as a
party with others who may xxx on any such Claims. You hereby agree
to indemnify and hold each and all of the Releasees harmless from
and
against any and all loss, costs, damages, or expenses, including,
without
limitation, attorneys’ fees incurred by Releasees, or any of them, arising
out of any breach of this Agreement by you or the fact that any
representation made herein by you was false when
made.
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d.
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No
Claims. You represent that you have not filed, or assigned
to others the right to file, any complaints, charges or lawsuits
against
any of the Releasees with any governmental agency or any court, and
that
you will not file, assign to others the right to file, or make any
further
claims against the Releasees at any time hereafter for actions taken
up to
and including the later of your Separation Date or the date you sign
this
Agreement. You further agree that neither you nor any person or
organization on your behalf has filed, or assigned others the right
to
file, nor are there pending, any complaints, charges, or lawsuits
against
the Releasees with any federal, state or local governmental agency
or
court. If you file, maintain or participate in any claim or
action, in any court or agency, based wholly or partially upon Claims
you
have released or waived as part of this Agreement, you agree to pay
all
expenses and costs (including reasonable attorneys’ fees) incurred by
Denny’s, Inc. and those associated with Denny’s, Inc. in defense of such
Claims.
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e.
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Age
Discrimination in Employment Act. You hereby acknowledge
and agree that this Agreement and the termination of your employment
and
all actions taken in connection therewith are in compliance with
the Age
Discrimination in Employment Act (“ADEA”) and the Older Workers Benefit
Protection Act (“OWBPA”). By executing this Agreement, you
acknowledge and agree that: (a) you understand the
terms of this Agreement; (b) you are waiving your right to assert
claims
against Denny’s, Inc. and the Releasees under the ADEA; (c) you are
waiving claims you now have or may have against Denny’s, Inc. and the
Releasees through the later of your Separation Date or the date of
the
execution of this Agreement, but are not waiving rights or claims
that may
arise after the later of your Separation Date or the date this Agreement
is executed; (d) you are receiving money and/or other valuable
consideration to which you are not otherwise entitled to receive;
(e) you
have been advised to consult with an attorney prior to executing
this
Agreement; (f) you have had up to twenty-one (21) days to consider
this
Agreement before executing it; and, (g) you have seven (7) days after
executing this Agreement to revoke its
acceptance.
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f.
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No
Knowledge of Illegal Activity. You acknowledge that you
have no knowledge of any actions or inactions by any of the Releasees
or
by you that you believe could possibly constitute a basis for a claimed
violation of any federal, state, or local law, any common law or
any rule
promulgated by an administrative
body.
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g.
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No
Other Representations. You represent and acknowledge that
in executing this Agreement, you do not rely, and have not relied,
upon
any representation or statement not set forth herein made by any
of the
Releasees or by any of the Releasees’ agents, representatives, or
attorneys with regard to the subject matter, basis or effect of this
Agreement or otherwise.
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12.
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Confidentiality. You
agree not to discuss, disclose or publicize the nature or reason
for your
separation or the contents of this Agreement, including the amount
of
monetary payments, except where reasonable business needs warrant
disclosure. You further agree to preserve the confidentiality
of any and all trade secrets and other confidential information of
the
Company and its affiliates. Furthermore, you acknowledge and
understand that the Company has disclosed Confidential Information
which,
for purposes of this Agreement, is defined as information which is
not
generally known in the business or community in which the Company
is
engaged or may become engaged or which would logically be considered
confidential or proprietary or which would do the Company harm if
divulged. Such Confidential Information includes, but is not
limited to, knowledge concerning the Company’s trade secrets, business
methods and procedures or employee pay and human resource
data. You will treat all such Confidential Information as
having been entrusted to you solely for use in your capacity as an
employee of the Company and will not divulge such information in
any way
to persons inside or outside the Company before or after your Separation
Date. Likewise, the Company agrees, to the best of our ability
and unless required otherwise by law, not to discuss the nature or
reason
for your separation and to provide dates of your employment and position
title only in response to any inquiries for
references.
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13.
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Claims
or Litigation. You agree, without additional compensation,
to cooperate with the Company and/or its attorneys in connection
with any
claim or litigated matter where your assistance is reasonably required
or
desired.
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14.
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Non-Compete
and No Solicitation. The parties agree that in your
position as Senior Vice-President and Chief Marketing Officer of
the
Company and as a member of the Management Committee, you had broad
supervisory and management responsibility for the Company’s marketing
function and knowledge of its strategic
direction. Consequently, in consideration for the sums being
paid to you hereunder, you agree not to--whether as director, employee,
or
consultant--work or consult with or for any business in the United
States
that competes directly with the Company, (a “Company Competitor”) for a
period equal to the number of months you are receiving severance
benefits
(24 months following your Separation Date). A Company
Competitor shall include restaurants or restaurant chains within
the
family dining segment and shall specifically include, without limitation,
IHOP, Shoney’s, Cracker Barrel, Xxx Xxxxx and any and all other similar
local, regional, and national chain restaurants.
For
a
period of twenty-four (24) months following your Separation Date,
you
further agree that you will not solicit any employee of the Company
in
order to induce, entice or influence the employee to terminate his
or her
employment with the Company or any of its subsidiaries in order to
work
for you, your new employer or any company in which you or your family
members have an economic interest.
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15.
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No
Admission of Liability. Neither this Agreement nor the
furnishing of any consideration hereunder shall be deemed for any
purpose
to be an admission by any person or entity of liability or responsibility
for any wrongdoing.
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16.
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Compliance
with Agreement. You acknowledge that the various promises
and payments made by the Company to you under this Agreement are
expressly
conditioned upon your own compliance with the Agreement, and that
your
failure to comply discharges the Company from any further obligations
under the Agreement (in addition to all other remedies available
to the
Company).
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17.
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Understanding;
Complete Agreement; Governing Law. You acknowledge that you
have been given an opportunity and encouraged by the Company to have
whomever you see fit review this Agreement, that you understand it,
and
that you have signed it voluntarily. This Agreement supersedes
all prior verbal and written communications between the Company and
you
concerning your separation from employment, may not be modified except
in
writing signed by you and the Company, and is binding upon you and
the
Company and our respective heirs, successors and assigns. Any
legal action regarding this Agreement must be filed in South Carolina
and
South Carolina law shall apply.
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18.
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Expiration
of Terms. The terms contained in this Agreement will expire
on August 24, 2007, twenty-one (21) days following your Notification
Date,
unless it is signed and returned to the Company prior to that expiration
date.
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19.
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Right
to Revoke. This Agreement may be revoked by you for a
period of seven (7) business days after you sign it. (If the
seventh day is a Saturday or Sunday, or national holiday, you will
have
until the next business day.) The Agreement will not become
effective or enforceable until the seven (7)-day revocation period
has
expired, and you acknowledge that notwithstanding anything to the
contrary
in this Agreement, the Company shall not be required to make severance
payments to you under this Agreement unless and until this seven
(7)-day
period has passed without your revocation. If you decide to
revoke your signature within the seven (7) days, you must do so in
writing
delivered to me by personal delivery or certified mail, return receipt
requested, postmarked within the seven (7)-day period, expressly
stating
that you are revoking your
signature.
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IN
WITNESS WHEREOF, the parties have executed this Agreement on the date and year
first written above.
| DENNY'S INC. | |||
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Date:
August 8,
2007
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By:
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/s/ Xxxxxx X. Xxxxxx | |
| By: | /s/ Xxxxxxxx X. Xxxxxxx | ||
