<PAGE>
EXHIBIT 10.24
[O'CHARLEY'S INC. LOGO]
O'CHARLEY'S INC.
DEVELOPMENT AGREEMENT
<PAGE>
.
.
.
TABLE OF CONTENTS
<TABLE>
<S>
<C>
ARTICLE I
GRANT.......................................................
2
ARTICLE II
FEES........................................................
4
ARTICLE III SCHEDULE AND MANNER
FOR EXERCISING DEVELOPMENT RIGHTS.......
5
ARTICLE IV PREREQUISITES TO
OBTAINING LICENSES.........................
12
ARTICLE V
TERM........................................................
14
ARTICLE VI DUTIES OF
DEVELOPER.........................................
14
ARTICLE VII DEFAULT AND
TERMINATION.....................................
19
ARTICLE VIII TRANSFER OF
INTEREST........................................
23
ARTICLE IX
COVENANTS...................................................
29
ARTICLE X
INDEPENDENT CONTRACTOR AND INDEMNIFICATION..................
32
ARTICLE XI
APPROVALS...................................................
33
ARTICLE XII NON-WAIVER AND
REMEDIES.....................................
33
ARTICLE XIII
NOTICES.....................................................
34
ARTICLE XIV SEVERABILITY AND
CONSTRUCTION...............................
34
ARTICLE XV ENTIRE
AGREEMENT; APPLICABLE LAW............................
35
ARTICLE XVI
ACKNOWLEDGMENTS.............................................
37
</TABLE>
<TABLE>
<S>
<C>
Attachment A Operating
Agreement.........................................
A-1
Attachment B Lease
Rider.................................................
B-1
Attachment C Confidentiality And
Non-Compete Agreement...................
C-1
Attachment D Statement Of Ownership
Interests and Principals.............
D-1
Attachment E
Guaranty....................................................
E-1
</TABLE>
i
<PAGE>
O'CHARLEY'S INC.
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (the "Agreement") is made and entered
into
this _____ day of December, 2003, by and
among O'Charley's Inc., a Tennessee
corporation ("Licensor"), OCM Development
Company, LLC, a Michigan limited
liability company d/b/a O'Charley's
Development Company of Michigan
("Developer"), and Meritage Hospitality
Group Inc., a Michigan corporation
("Controlling Principal").
WITNESSETH:
WHEREAS, Licensor, as a result of the expenditure of time,
skill,
effort and money, has developed and owns
the rights to develop and operate a
unique system of full service varied menu
casual dining restaurants which
feature freshly prepared items such as
hand-cut and aged steaks, fresh chicken,
seafood, homemade yeast rolls and fresh-cut
salads with special recipe dressings
and which serve alcoholic beverages through
a full-service bar all under the
trademark O'Charley's(R) (the
"System");
WHEREAS, the distinguishing characteristics of the System
include,
without limitation, distinctive exterior
and interior design, decor, color
schemes, awnings, neons and furnishings,
special recipes and menu items, uniform
standards, specifications and procedures
for operations, quality and uniformity
of products and services offered,
procedures for inventory management and
financial control, training and assistance,
and advertising and promotional
programs, all of which may be changed,
improved and further developed by
Licensor from time to time;
WHEREAS, Licensor identifies the System by means of certain
trade
names, service marks, trademarks, emblems
and indicia of origin, including, but
not limited to, the mark O'Charley's(R) and
such other trade names, service
marks and trademarks as are now designated
(and may hereafter be designated by
Licensor in writing) for use in connection
with the System (the "Proprietary
Marks");
WHEREAS, Licensor continues to develop, use and control the use of
such
Proprietary Marks in order to identify for
the public the source of services and
products marketed thereunder and under the
System, and to represent the System's
high standards of quality, appearance and
service;
WHEREAS, the value of Licensor's Proprietary Marks is based upon:
(a)
the maintenance of uniform high quality
standards in connection with the
preparation and sale of Licensor-approved
food and beverage products; (b) the
uniform high standards of appearance of the
individual restaurant units in the
System; (c) the use of distinctive
Proprietary Marks, building designs and
advertising signs representing a uniformly
high quality of products and
services; and (d) the assumption by its
franchisees of the obligation to
maintain and enhance the goodwill and
public acceptance of the System and of the
Proprietary Marks by strict adherence to
the high standards required by
Licensor; and
<PAGE>
WHEREAS, Developer wishes to obtain certain development rights
to
operate one (1) or more full-service
O'Charley's restaurants (each, a
"Restaurant" or "Licensed Business," and
together, the "Restaurants" or
"Licensed Businesses") under the System in
the territory described in this
Development Agreement.
NOW, THEREFORE, the parties, in consideration of the mutual
representations, warranties, covenants and
agreements set forth herein, and
intending to be legally bound, hereby agree
as follows:
ARTICLE I
GRANT
A. In reliance on the representations, warranties, covenants
and
agreements of Developer and its Controlling
Principals hereunder, Licensor
hereby grants to Developer and Developer
hereby accepts, pursuant to the terms
and conditions of this Agreement, the right
and obligation to develop the number
of Restaurants described in the Development
Schedule (as defined below) solely
within the geographic area(s) described
below (collectively the "Territory").
State of Michigan, except Lenawee County in Southeast Michigan
_______________________________________________________________________
_______________________________________________________________________
Developer may be granted rights to develop
additional Restaurants in Licensor's
sole discretion. Any and all such rights to
develop Restaurants are subject to
Developer's full compliance with all
conditions precedent to the grant of such
rights outlined in this Agreement, and any
such rights shall be exercised in
accordance with Article III.
B. Developer acknowledges and understands that the rights
granted
hereunder are for the development of
full-service O'Charley's restaurants.
Except as provided in this Agreement, and
subject to Developer's full compliance
with this Agreement and any other
agreements among Developer, or any of its
Affiliates and Licensor or any of its
Affiliates, neither Licensor nor its
Affiliates shall establish or authorize any
other person or any other
corporation, limited liability company,
partnership, limited partnership, joint
venture, association, trust, unincorporated
association or any other business
entity (each, an "Entity"), other than
Developer, to establish a Restaurant in
the Territory during the term of this
Agreement. Notwithstanding the above,
Developer acknowledges and agrees that
Licensor and its Affiliates operate
restaurants under the trademark
O'Charley's(R) and further agrees and
acknowledges that the rights granted hereby
are only for the development and
operation of one (1) or more full-service
O'Charley's restaurants, and,
therefore, Licensor and its Affiliates may
conduct (or authorize one or more
third parties to conduct) the following
activities:
(1) Licensor, its Affiliates, any O'Charley's developer or
operator and any other authorized person or
Entity shall have the right, at any
time, to advertise and promote the System,
and fill customer orders by providing
catering and/or delivery services in the
Territory.
2
<PAGE>
(2) Licensor and its Affiliates may offer and sell (or may
authorize others to offer and sell)
collateral and ancillary products and
services under the Proprietary Marks which
may be similar to those offered by
the Restaurants in the Territory if offered
and sold other than through a
full-service O'Charley's restaurant, such
as pre-packaged food products,
t-shirts and O'Charley's memorabilia.
(3) Licensor and its Affiliates may offer and sell in the
Territory (or may authorize others to offer
and sell) such products and services
under the Proprietary Marks through any
permanent, temporary or seasonal food
service facility (e.g., a kiosk, concession
or multi-brand facility) that will
provide a limited number or representative
sample of the products and services
normally offered by, and be located in a
smaller facility than, a full-service
O'Charley's restaurant ("Alternative
Distribution Facilities").
(4) Licensor and its Affiliates may operate (or may authorize
others to operate) a full-service
O'Charley's restaurant or other similar food
service facilities offering the same
products and services offered by a
full-service O'Charley's restaurant or an
Alternative Distribution Facility in
any area of retail sales establishments,
food courts, transportation facilities
(e.g., airports, train stations, bus
terminals or port authorities), hospitals
and other healthcare facilities,
cafeterias, commissaries, schools, hotels,
sports and entertainment facilities (e.g.,
stadiums, arenas, ball parks or
convention centers) and other mass
gathering locations or events designated by
Licensor (each, an "Excluded Area").
Licensor may first offer to Developer the
right to offer and sell the O'Charley's
restaurant products in the Excluded Area
within the Territory. Developer must meet
each of the conditions outlined in
Section IV(B), and any other criteria and
qualifications deemed necessary by
Licensor, or any other third party involved
in the arrangement such as an
airport or stadium authority, educational
institution or other facilities
operator ("Facilities Operator"), to offer
and sell the O'Charley's restaurant
products and services in the Excluded Area.
If Developer does not meet all of
the criteria and qualifications required by
Licensor and the Facilities
Operator, then Developer shall not be
granted the right to offer and sell such
products and services within the Excluded
Area and Licensor may conduct such
business, or authorize any other person or
Entity to do so. If Developer meets
all the conditions, criteria and
qualifications, Licensor shall offer to
Developer the right to offer and sell such
products and services on such terms
and conditions as such arrangements may be
offered to third parties as
determined by Licensor or such Facilities
Operator, as applicable. Once such
offer has been made to Developer by
Licensor in writing, Developer shall have
the right to accept such offer within
thirty (30) days after receipt of such
written notification. If Developer fails to
notify Licensor in writing of
Developer's intent to accept the offer
within such thirty (30) day time period
or Developer fails to meet any criteria or
qualifications imposed by Licensor or
the Facilities Operator, Licensor may
conduct such business itself, or authorize
any other person or Entity to do so.
(5) Licensor and its Affiliates may offer and sell (or may
authorize others to offer and sell)
products and services under any other names
and marks.
(6) Licensor, its Affiliates, any O'Charley's restaurant
developer or operator and any other
authorized person or Entity may establish
and operate a full-service O'Charley's
restaurant anywhere outside of the
Territory regardless of proximity to the
Territory or the Location (as defined
in the Operating Agreement) of any
O'Charley's Restaurant operated by Developer.
3
<PAGE>
C. This Agreement is not a franchise or license agreement and does
not
grant to Developer any right or license to
operate a Restaurant, distribute
goods or services, or any right to use or
interest in the Proprietary Marks
(such right and license being granted only
pursuant to the Operating Agreement
applicable to individual Restaurants as
such Operating Agreement may be entered
into and become effective pursuant to this
Agreement and such Operating
Agreement).
D. After this Agreement expires or is terminated, Licensor shall
have
the complete and unrestricted right to
operate or license other persons to
operate one or more restaurants utilizing
the System in the Territory (except at
Locations for which Developer has a then
outstanding and effective Operating
Agreement).
ARTICLE II
FEES
A. Developer shall pay Licensor an initial license fee of Fifty
Thousand Dollars ($50,000) for each of the
first two (2) Restaurants developed
pursuant to this Agreement and Twenty-Five
Thousand Dollars ($25,000) for each
additional Restaurant developed pursuant to
this Agreement. Simultaneously with
the execution of this Agreement, Developer
shall pay to Licensor one half (1/2)
of the license fees for all Restaurants to
be developed pursuant to this
Agreement as a fee for such development.
The remaining one half (1/2) of the
license fee for each of the Restaurants to
be developed during the Development
Periods shall be paid by Developer upon the
signing of an Operating Agreement
for each Restaurant.
B. Developer acknowledges that the portion of the license fees
being
paid to Licensor simultaneously with the
execution of this Agreement is being
paid in partial consideration of the
administrative and other expenses incurred
by Licensor in connection with the
development rights granted hereunder and for
its lost or deferred opportunity to grant
such rights to any other party.
Developer acknowledges that no part of such
fees shall be refunded to Developer
under any circumstances, even if no
Restaurants are opened by Developer under
this Agreement, and that Developer shall
have no right to recover from Licensor,
directly or indirectly, any of such portion
of the license fees.
C. Pursuant to its obligations hereunder and under the
applicable
Operating Agreements, Licensor will make
various expenditures in connection with
the development of prospective Restaurant
sites by Developer, including
expenditures for travel, lodging and meals.
Developer shall promptly notify
Licensor of a decision to cease development
of a prospective Restaurant site. In
the event that Developer fails to open a
Restaurant at any such site, Developer
shall reimburse Licensor for Licensor's
expenditures with respect to that site.
In such event, Licensor shall provide
Developer with an itemized list of
Licensor's expenditures with respect to
that site within sixty (60) days after
Licensor receives notice that Developer no
longer intends to develop a
Restaurant at that site, and Developer
shall reimburse Licensor for such costs
within thirty (30) days after receiving
such list.
D. Developer shall not be entitled to withhold payments due
Licensor
under this Agreement on grounds of alleged
nonperformance by Licensor hereunder.
Any payment not actually received by
Licensor on or before the date due shall be
deemed overdue. Time is of the essence with
respect to all payments to be made
by Developer to Licensor. All unpaid
obligations under this Agreement shall bear
interest from the date due until paid at
the lesser of
4
<PAGE>
(1) the prime commercial rate of interest
as reported in the Wall Street Journal
(Southeastern edition) from time to time or
by any bank or financial institution
designated from time to time by Licensor
for short term unsecured loans to
substantial and responsible commercial
borrowers, plus three percent (3%), or
(2) the maximum rate allowed by applicable
law. Notwithstanding anything to the
contrary contained herein, no provision of
this Agreement shall require the
payment or permit the collection of
interest in excess of the maximum rate
allowed by applicable law. If any excess of
interest is provided for herein, or
shall be adjudicated to be so provided in
this Agreement, the provisions of this
paragraph shall govern and prevail, and
neither Developer nor its Principals
shall be obligated to pay the excess amount
of such interest. If for any reason
interest in excess of the maximum rate
allowed by applicable law shall be deemed
charged, required or permitted, any such
excess shall be applied as a payment
and reduction of any other amounts which
may be due and owing hereunder, and if
no such amounts are due and owing hereunder
then such excess shall be repaid to
the party that paid such interest.
E. Developer acknowledges that the Development Period extension
fees in
Article III and the transfer fee in Section
VIII(B)(2)(j) may, in Licensor's
sole discretion, be increased annually
effective January 1 of each year
beginning on January 1 of the year
following the date of this Agreement, by an
amount equal to the annual percentage
increase during the preceding calendar
year in the Consumer Price Index---All
Consumers (All Items)---United States
City Average, as compiled and published by
the United States Department of
Labor, or such comparable successor index
as may be designated by Licensor from
time to time.
ARTICLE III
SCHEDULE AND MANNER FOR EXERCISING DEVELOPMENT RIGHTS
A. Developer shall enter into a separate Operating Agreement
with
Licensor for each Restaurant for which a
development right is granted. The
Operating Agreement to be executed for each
Restaurant to be developed under
this Agreement shall be in the form of the
Operating Agreement attached hereto
as Attachment A.
B. (1) Acknowledging that time is of the essence, and subject to
the
requirements of Article IV, Developer
agrees to exercise its development rights
according to the development schedule below
(the "Development Schedule"), which
schedule designates the number of
Restaurants in the Territory to be established
and in operation by Developer upon the
expiration of each of the designated
development periods (the "Development
Periods").
<TABLE>
<CAPTION>
CUMULATIVE TOTAL NUMBER
OF RESTAURANTS LOCATED IN
THE TERRITORY WHICH
EXPIRATION DATE OF
DEVELOPER SHALL HAVE OPEN
DEVELOPMENT PERIOD
DEVELOPMENT PERIOD
AND IN OPERATION*
------------------
------------------
-------------------------
<S>
<C>
<C>
One
September 30, 2004
1
Two
December 31, 2004
2
Three
August 31, 2005
3
</TABLE>
5
<PAGE>
<TABLE>
<S>
<C>
<C>
Four
December 31, 2005
4
Five
June 30, 2006
5
Six
December 31, 2006
6
Seven
June 30, 2007
7
Eight
December 31, 2007
8
Nine
June 30, 2008
9
Ten
September 30, 2008
10
Eleven
December 31, 2008
11
Twelve
June 30, 2009
12
Thirteen
September 30, 2009
13
Fourteen
December 31, 2009
14
Fifteen
June 30, 2010
15
</TABLE>
*includes existing Restaurants, if any,
purchased or acquired by Developer from
Licensor.
(a) Developer shall have the obligation to develop
each Restaurant within the Territory during
the Development Periods. If
Developer has developed the Restaurant(s)
required in the applicable Development
Period in accordance with the Development
Schedule and continues to meet the
conditions set forth in Article IV,
Developer shall have the right and
obligation to develop the Restaurant(s)
required during the next applicable
Development Period. Developer acknowledges
that compliance with its development
obligations in each Development Period
described above and continued compliance
with Article IV is a condition precedent to
the receipt of such additional
development rights. If Developer fails to
meet its development obligations or
fails to comply with the Operational
Approval, Financial Approval, Legal
Approval and Ownership Approval
requirements in Article IV, the conditions to
the receipt of those further development
rights shall not have been met, and
Developer shall have no further rights to
develop Restaurants hereunder.
(b) During any of the Development Periods set forth
above, subject to the terms and conditions
of this Agreement, Developer, with
Licensor's prior written consent (which
consent may be withheld in Licensor's
sole discretion), may develop more than the
total minimum number of Restaurants
which Developer is required to develop
during that Development Period.
Notwithstanding the above, Developer shall
not open or operate more than the
cumulative total number of Restaurants
Developer is obligated to develop under
this Agreement as set forth above in the
Development Schedule without Licensor's
consent, which may be withheld in
Licensor's sole discretion. Any Restaurants
developed during a Development Period in
excess of the minimum number of
Restaurants required to be developed upon
expiration of that Development Period,
shall be applied to satisfy Developer's
development obligation during the next
succeeding Development Period, if any.
(2) If during the term of this Agreement, Developer ceases to
operate any Restaurant developed under this
Agreement for any reason, Developer
shall develop a
6
<PAGE>
replacement Restaurant to fulfill
Developer's obligation to have open and in
operation the required number of
Restaurants upon the expiration of each
Development Period. The replacement
Restaurant shall be developed within the
Territory and within a reasonable time to
be determined by Licensor after
Developer ceases to operate the Restaurant
to be replaced. If during the term of
this Agreement, Developer, in accordance
with the terms of any Operating
Agreement for a Restaurant developed under
this Agreement, transfers its
interest in such Restaurant, the
transferred Restaurant shall continue to be
counted in determining whether Developer
has complied with the Development
Schedule so long as it continues to be
operated as an O'Charley's restaurant and
the transfer of the Restaurant is made in
accordance with Article VIII of this
Agreement. If the transferred Restaurant
ceases to be operated as an O'Charley's
restaurant during the term of this
Agreement, Developer shall develop a
replacement Restaurant within the Territory
and within a reasonable time to be
determined by Licensor after the
transferred Restaurant ceases to be operated as
an O'Charley's restaurant. In either case,
the reasonable time period shall
apply to the development of the replacement
Restaurant only. In Licensor's sole
discretion, however, Licensor may extend
the term of the applicable Development
Period to the end of the mutually agreed
upon time period for an extension fee
of Five Thousand Dollars ($5,000) to be
paid by Operator to Licensor; provided,
however, that in no event shall such time
period exceed three (3) months; and,
provided, further, that such agreed time
period shall not extend the term of
this Agreement. In addition, Developer
shall be required to pay to Licensor a
lost revenue fee for any Restaurant that
ceases to be operated as an O'Charley's
restaurant. The lost revenue fee shall be
an amount equal to the amount of
revenue that Licensor would have received
from Developer during the period
between the closing of the Restaurant and
the opening of the replacement
Restaurant had the original Restaurant
never closed. The lost revenue fee shall
be determined by multiplying (x) by (y)
where (x) equals the number of
Accounting Periods (both complete and
partial) between the closing of the
Restaurant and the opening of the
replacement Restaurant and (y) equals the
greater of: (i) the closed Restaurant's
Gross Sales (as that term is defined in
the Operating Agreement) for its last full
Accounting Period of operation, or
(ii) the average of the Restaurant's last
twelve (12) Accounting Periods (or
such shorter period the Restaurant has been
operating) of Gross Sales. For
purposes of this Agreement, the term
"Accounting Period" shall mean the
accounting periods for the Restaurant as
established by Licensor from time to
time and described in the Manuals.
(3) Developer shall open each Restaurant developed hereunder
and shall commence business in accordance
with the Development Schedule
described in this Article III.
(a) Developer may request in writing that Licensor
extend the Development Period of any one
Restaurant to permit Developer to
complete construction and begin operation
of such Restaurant. If Licensor
determines, in its sole discretion, to
grant any such request, the applicable
Development Period shall be extended for a
period of thirty (30) days (each such
30-day period being referred to as an
"Extension Period"). Developer's written
request for extension must be received by
Licensor no later than sixty (60) days
prior to the end of the Development Period
for that Restaurant, and such written
request must include a description of the
reasons for Developer's failure to
develop in a timely manner and the date
that Developer expects to complete
construction and opening of the
Restaurant.
(b) If Developer has agreed to develop five (5) or
more Restaurants hereunder, unless
otherwise agreed to by Licensor, in
Licensor's sole and absolute discretion,
Developer shall not be entitled to more
than three (3) Extension Periods for any
one Restaurant,
7
<PAGE>
nor more than six (6) Extension Periods
during the term of this Agreement. If
Licensor permits a fourth (4th) Extension
Period for any one Restaurant,
Developer must pay Licensor an extension
fee of Ten Thousand Dollars ($10,000)
at the beginning of such Extension Period,
plus another Ten Thousand Dollar
($10,000) extension fee at the beginning of
each Extension Period Licensor
approves thereafter until such Restaurant
has begun operation. If Licensor
permits a seventh (7th) Development Period,
Developer must pay Licensor an
extension fee of Ten Thousand Dollars
($10,000) at the beginning of such
Extension Period, plus another Ten Thousand
Dollar ($10,000) extension fee at
the beginning of Extension Period Licensor
approves thereafter until such
Restaurant has begun operation. No
extension of any Development Period will
affect the duration of any Development
Period for any other Restaurant or any of
Developer's other development obligations
hereunder.
(c) If Developer has agreed to develop four (4) or
fewer Restaurants hereunder, unless
otherwise agreed to by Licensor, in
Licensor's sole and absolute discretion,
Developer will be permitted no more
than three (3) Extension Periods during the
term of this Agreement. If Licensor
permits a fourth (4th) Extension Period,
Developer must pay Licensor an
extension fee of Ten Thousand Dollars
($10,000) at the beginning of such
Extension Period, plus another Ten Thousand
Dollar ($10,000) extension fee at
the beginning of each Extension Period
Licensor approves thereafter until such
Restaurant has begun operation. No
extension of any Development Period will
affect the duration of any Development
Period for any other Restaurant or any of
Developer's other development obligations
hereunder.
C. Developer acknowledges that the projected opening dates
("Projected
Opening Dates") for each Restaurant set
forth below are reasonable and
consistent with the requirements of the
Development Schedule. Subject to
Developer's compliance with Article IV
hereof, Developer shall execute an
Operating Agreement for each Restaurant no
later than six (6) months prior to
the Projected Opening Date for the
applicable Restaurant.
<TABLE>
<CAPTION>
RESTAURANT
PROJECTED OPENING DATE
----------
----------------------
<S>
<C>
One
September 30, 2004
Two
December 31, 2004
Three
August 31, 2005
Four
December 31, 2005
Five
June 30, 2006
Six
December 31, 2006
Seven
June 30, 2007
Eight
December 31, 2007
Nine
June 30, 2008
Ten
September 30, 2008
Eleven
December 31, 2008
Twelve
June 30, 2009
</TABLE>
8
<PAGE>
<TABLE>
<S>
<C>
Thirteen
September 30, 2009
Fourteen
December 31, 2009
Fifteen
June 30, 2010
</TABLE>
D. Developer assumes all cost, liability, expense and
responsibility
for locating, obtaining and developing
sites for each Restaurant, and for
constructing and equipping each Restaurant
at each such site. Developer shall
not make any binding commitment to a
prospective vendor or lessor of real estate
with respect to a site for a Restaurant
unless the site is accepted as set forth
below. Developer acknowledges that the
location, selection, procurement and
development of a site for each Restaurant
is Developer's responsibility; that in
discharging such responsibility Operator
may consult with real estate and other
professionals of Developer's choosing; and
that Licensor's acceptance of a
prospective site and the rendering of
assistance in the selection of a site does
not constitute a representation, promise,
warranty or guarantee, express or
implied, by Licensor that the Restaurant
operated at that site will be
profitable or otherwise successful.
(1) In connection with the development of each Restaurant
hereunder, Licensor shall do the
following:
(a) Licensor shall provide Developer with written
site selection guidelines, which may be
found within the Manuals or may
otherwise be communicated to Developer, and
such site selection assistance as
Licensor may deem advisable.
(b) Licensor shall provide such on-site evaluation as
Licensor may deem necessary on its own
initiative or in response to Developer's
reasonable request for site acceptance;
provided, however, that Licensor shall
not provide an on-site evaluation for any
proposed site prior to the receipt of
all required information and materials
concerning such site prepared pursuant to
Section (III)(D)(2)(a). Licensor (or its
designee) will provide at no additional
charge to Developer one (1) on-site
evaluation. Thereafter, if additional
on-site evaluations are deemed appropriate
by Licensor, or upon Developer's
reasonable request, Licensor reserves the
right to charge a fee for each such
evaluation representing the reasonable
expenses incurred by Licensor (or its
designee) in connection with such on-site
evaluation, including, without
limitation, the cost of travel, lodging and
meals.
(c) Licensor shall loan to Developer a set of
prototypical architectural and design plans
and specifications for an
O'Charley's Restaurant.
(2) (a)
Developer shall locate a site for the Restaurant
that satisfies the Licensor's written site
selection guidelines. Developer shall
submit to Licensor, in the form specified
by Licensor in the Manuals, a fully
completed site selection acceptance request
package which shall include a
description of the site, evidence
satisfactory to Licensor demonstrating that
the site satisfies Licensor's current site
selection guidelines and criteria, a
letter of intent or other evidence
satisfactory to Licensor which confirms
Developer's favorable prospects for
obtaining the site, together with such other
information and materials as required in
the Manuals or as Licensor may
otherwise reasonably require. Recognizing
that time is of the essence, Developer
agrees that it will submit each such fully
completed site selection acceptance
request package and materials for the
proposed site to Licensor for its
acceptance at such time and in accordance
with such procedures as are set forth
in the Manuals, or which are otherwise
9
<PAGE>
communicated to Developer by Licensor.
Licensor shall have thirty (30) days
after receipt of this information and
materials to accept or reject, in its sole
discretion, the proposed site as the
location for the Restaurant. In the event
Licensor rejects the proposed site,
Licensor may submit to Operator a document
outlining the reasons why Licensor rejected
the proposed site. No site may be
used for the location of the Restaurant
unless it is first accepted in writing
by Licensor.
(a) After a location for the Restaurant is accepted
by Licensor and acquired by Developer, the
Location shall be described in
Attachment A to the Operating Agreement
that will be executed by Developer in
connection with such Restaurant, which
description shall be the legal
description and/or street address of the
site at which the Restaurant is to be
located.
(3) At least six (6) months prior to the Projected Opening
Date for such Restaurant, Developer shall
acquire by purchase or lease, at
Developer's expense, the site for the
Restaurant as set forth below.
(a) If Developer intends to purchase the premises for
the Restaurant, Developer shall submit a
copy of the proposed contract of sale
to Licensor for its written acceptance
prior to Developer's execution of such
contract and shall furnish to Licensor a
copy of the executed contract of sale
within ten (10) days after execution. If
Developer intends to occupy the
premises of the Restaurant under a lease,
Developer shall submit a copy of the
proposed lease to Licensor for Licensor's
written acceptance prior to
Developer's execution of such lease and
shall furnish to Licensor a copy of the
executed lease within ten (10) days after
execution. No lease for the Restaurant
premises shall be accepted by Licensor
unless a rider to the lease, prepared by
Licensor and executed by Licensor,
Developer and the lessor, in substantially
the form attached as Attachment B, is
attached to the lease and incorporated
therein. Licensor shall have thirty (30)
days after receipt of the proposed
lease or the proposed contract of sale to
either accept, reject or propose
amendments to such documentation prior to
its execution. If Licensor fails to
notify Developer of an objection to the
proposed lease or the proposed contract
of sale within this time period, Developer
may use such lease or contract of
sale; provided, however, the proposed
contract or lease satisfies Licensor's
then current criteria and requirements for
contracts or leases outlined in the
Manuals or as otherwise communicated to
Developer by Licensor. These criteria
and requirements may include financial
requirements, specific lease requirements
or other requirements that Licensor deems
necessary. Licensor retains the right
to vary from any requirement, add new
requirements or make exceptions to any
requirements in Licensor's sole
discretion.
(b) Developer shall be responsible for obtaining all
zoning classifications and clearances which
may be required by state or local
laws, ordinances or regulations or which
may be necessary as a result of any
restrictive covenants relating to the
Restaurant premises. Prior to beginning
the construction of the Restaurant,
Developer shall (i) obtain all permits,
licenses and certifications (including
licenses and permits to sell alcoholic
beverages at the Restaurant) required for
the lawful construction or remodeling
and operation of the Restaurant, and (ii)
certify in writing to Licensor that
the insurance coverage specified in Article
XIII of the Operating Agreement is
in full force and effect and that all
required approvals, clearances, permits
and certifications (including alcoholic
beverage licenses and permits) have been
obtained. Upon request, Developer shall
provide to Licensor additional copies of
Developer's insurance policies or
certificates of insurance and copies of all
such approvals, clearances, permits and
certifications.
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(c) Developer must independently obtain any
architectural, engineering and design
services it deems necessary for the
construction of the Restaurant at its own
expense from an architectural design
firm, which Licensor reserves the right to
approve. Developer shall adapt the
prototypical architectural and design plans
and specifications for construction
of the Restaurant provided to Developer by
Licensor as necessary for the
construction of the Restaurant and shall
submit such adapted plans to Licensor
for review. If Licensor determines, in its
sole discretion, that any such plans
do not satisfy Licensor's architectural or
design standards and specifications
for a full-service O'Charley's restaurant
or are not consistent with the best
interests of the System, Licensor may
prohibit the implementation of such plans,
and in this event will notify Developer of
any objection(s) within thirty (30)
days of receiving such plans or such other
time period as may be specified in
the Manuals. If Licensor fails to notify
Developer of an objection to the plans
within this time period, Developer may use
such plans, provided such plans
satisfy Licensor's then current
architectural and design standards and
specifications for a full-service
O'Charley's restaurant. If Licensor objects to
any such plans, it shall provide Developer
with a reasonably detailed list of
changes necessary to make the plans
acceptable. Licensor shall, upon a
resubmission of the plans with such
changes, notify Developer within thirty (30)
days of receiving the resubmitted plans
whether the plans are acceptable. If
such changes are not acceptable, Licensor
shall notify Developer of such
objections as described above, and
Developer shall resubmit such plans in
accordance with the procedures described
above until such plans are accepted by
Licensor. If Licensor fails to notify
Developer of any objection within such
time period, Developer may use the
resubmitted plans. Developer acknowledges
that acceptance by Licensor of such plans
does not constitute a representation,
warranty or guarantee, express or implied,
by Licensor that such plans are free
of architectural or any design errors and
thus, Licensor shall have no liability
to Developer or any other party with
respect thereto.
(d) Prior to commencement of construction, Developer
must submit all requested information,
including, but not limited to,
architectural and design plans,
construction schedules and current budgets in
accordance with Licensor's request. As time
is of the essence, Developer shall
timely commence and diligently pursue
construction of the Restaurant.
Commencement of construction shall be
defined as the time at which any site work
is initiated by or on behalf of Developer
at the Location accepted for the
Restaurant. Site work includes, without
limitation, paving of parking areas,
installing outdoor lighting and sidewalks,
extending utilities and demolishing
of any existing premises, depending on
whether the accepted Location for the
Restaurant is freestanding. During the time
of construction or remodeling,
Developer shall provide Licensor with such
periodic reports regarding the
progress of the construction or remodeling
as may be reasonably requested by
Licensor or as required in the Manuals. In
addition, Licensor shall make such
on-site inspections as it may deem
reasonably necessary to evaluate such
progress. If during such inspections
Licensor identifies instances where
Developer's construction is inconsistent
with, or does not meet, Licensor's
standards, Licensor shall notify Developer
in writing of such deficiencies, and
Developer shall correct such deficiencies
prior to opening the Restaurant.
Developer shall notify Licensor of the
scheduled date for completion of
construction no later than sixty (60) days
prior to such date. Within a
reasonable time after the date of
completion of construction, Licensor shall, at
its option, conduct an inspection of the
completed Restaurant. Developer
acknowledges and agrees that Developer will
not open the Restaurant for business
without written authorization of Licensor
and that
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authorization to open shall be conditioned
upon Developer's strict compliance
with this Agreement.
ARTICLE IV
PREREQUISITES TO OBTAINING LICENSES
A. Developer and the Controlling Principals understand and
acknowledge
that the rights and duties set forth in
this Agreement are personal to Developer
and its Controlling Principals (as
applicable), are non-delegable and
non-assignable, and that Licensor has
granted such rights in reliance on the
business skill, financial capacity and
personal character of and expectations of
performance of the duties hereunder by
Developer and the Controlling Principals.
Developer and the Controlling Principals
have represented to Licensor that they
have entered this Agreement for the purpose
of fully complying and with the
intention to fully comply with the
Restaurant development obligations hereunder
and not for the purpose of reselling the
development rights granted herein.
Developer and the Controlling Principals
understand and agree that this
Agreement does not confer upon Developer a
right to develop or license to
operate any Restaurant, but is intended by
the parties to set forth the terms
and conditions which, if fully satisfied by
Developer, shall entitle Developer
to obtain the right to develop and operate
each Restaurant under an Operating
Agreement within the Territory.
B. In the event that Developer shall have obtained Licensor's
acceptance of a particular proposed site
for a Restaurant and shall have paid to
Licensor all of the license fees due under
this Agreement and the applicable
Operating Agreement, and if Licensor, in
the exercise of its sole and absolute
discretion, has granted Developer, in
writing, "Operational Approval,"
"Financial Approval," "Legal Approval" and
"Ownership Approval" (collectively
the "Conditions"), then Licensor will grant
Developer a license to operate a
Restaurant at the site in question. As used
herein, Licensor will give Developer
Operational Approval, Financial Approval,
Legal Approval and Ownership Approval
under the following circumstances:
(1) Operational Approval will be granted if Licensor has
determined, in the exercise of its sole
discretion, that:
(a) Developer is in compliance with the Development
Schedule (including any extensions approved
by Licensor in writing) and this
Agreement and has opened each Restaurant as
required under the Development
Schedule (including any extensions approved
by Licensor in writing);
(b) Developer and its Affiliates are in compliance
with any other agreement between Developer
and its Affiliates and Licensor and
its Affiliates;
(c) Developer is conducting the operation of its
existing Restaurants, if any, and is
capable of conducting the operation of each
proposed Restaurant required under the
Development Schedule:
(i) in accordance with the terms and
conditions of the Agreement and any amendments thereto;
(ii) in accordance with the provisions of
the respective Operating Agreements and any amendments
thereto; and
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<PAGE>
(iii) in accordance with the standards,
specifications and procedures:
(A) set forth and described in the
Manuals (as defined in the Operating Agreement), as
such Manuals may be amended from time to time;
(B) as evaluated by Licensor, in
its sole discretion, in accordance with the
evaluation programs outlined in the Manuals; or
(C) as otherwise set forth by
Licensor in writing.
(2) Developer acknowledges and agrees that it is vital to
Licensor's interest that each of its
operators be financially sound to avoid
failure of an O'Charley's restaurant and
that such failure would adversely
affect the reputation and good name of
Licensor and the System. In accordance
with the foregoing criteria, Financial
Approval will be granted if:
(a) Developer and the Controlling Principals satisfy
Licensor's then-current financial criteria
for developers and controlling
principals of O'Charley's restaurants with
respect to Developer's operation of
its existing Restaurants, if any, and the
proposed Restaurant;
(b) Developer and the Controlling Principals have
been and are faithfully performing all
terms and conditions under each of the
existing Operating Agreements with
Licensor, if any;
(c) Developer is not in default, and has not been in
default during the twelve (12) months
preceding Developer's request for
financial approval, of any monetary
obligations owed to Licensor or its
Affiliates under any Operating Agreement or
other agreement between Developer or
any of its Affiliates and Licensor or any
of its Affiliates; and
(d) Developer is not in default, and has not been in
default during the twelve (12) months
preceding the date of this Agreement, of
any financial covenant or monetary
obligation with any of its lenders or
financing sources.
(3) Legal Approval will be granted if Developer has executed
and delivered to Licensor, in a timely
manner, all information and documents
requested by Licensor prior to and as a
basis for the issuance of individual
licenses or pursuant to any right granted
to Developer by this Agreement or by
any Operating Agreement between Developer
and Licensor, has taken such
additional actions in connection therewith
as may be requested by Licensor from
time to time.
(4) Ownership Approval will be granted if:
(a) neither Developer nor any of its Controlling
Principals (as applicable) shall have
transferred a Controlling Interest in
Developer; and
(b) Developer and the Controlling Principals upon
whom Licensor has relied to perform the
duties under this Agreement shall
continue to own and exercise control over a
Controlling Interest in Developer.
C. (1) If Licensor determines, in its sole discretion, that
Developer
and the Controlling Principals:
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<PAGE>
(a) have met all of the Conditions prior to the grant
of the right to establish each additional
Restaurant, then Licensor shall grant
to Developer the right to develop such
additional Restaurants pursuant to the
Development Schedule; or
(b) have not met one (1) or more of the Conditions,
Licensor may, (in addition to any other
rights or remedies Licensor may have)
suspend, without extending the term of this
Agreement, Developer's right to
develop Restaurants until the Conditions
are satisfied in Licensor's sole
discretion, and re-state the Development
Schedule (which may include a reduction
in the number of Restaurants and the number
of Development Periods).
(2) The Conditions described above shall survive the
termination or expiration of this Agreement
and shall apply with respect to any
Operating Agreement executed pursuant to
this Development Agreement.
D. It is understood and agreed that the foregoing criteria apply to
the
operational, financial, legal and ownership
aspects of any Restaurant franchised
by Licensor in which Developer or any
Controlling Principal has any legal or
equitable interest. It is further
understood and agreed that Developer and the
Controlling Principals have an ongoing
responsibility to operate each Restaurant
in which Developer or any Controlling
Principal has any legal or equitable
interest in a manner which satisfies the
foregoing requirements for Operational
Approval, Financial Approval, Legal
Approval and Ownership Approval.
ARTICLE V
TERM
A. Unless sooner terminated in accordance with this Agreement, the
term
of this Agreement and all rights granted by
Licensor under this Agreement shall
expire on the date on which Developer
successfully and in a timely manner has
exercised all of the development rights and
completed the development
obligations under this Agreement in
accordance with the Development Schedule
(including, if applicable, any extension
thereof under Section III(B)(3)).
B. As set forth in Section VII(E)(3), upon such expiration,
Licensor
shall, subject to the terms of the
Operating Agreements executed pursuant
hereto, have the right to develop, or
authorize any other person or Entity to
develop, O'Charley's restaurants in the
Territory and Developer shall have no
further rights with respect to the
development of O'Charley's restaurants in the
Territory; provided, however, if an
Operating Agreement is fully executed in
accordance with Article III, prior to the
expiration of the Development
Schedule, Developer shall complete the
development of such Restaurant subject to
the Operating Agreement and shall open and
operate such Restaurant as provided
in the Operating Agreement.
ARTICLE VI
DUTIES OF DEVELOPER
A. Developer and the Controlling Principals, as applicable, make
the
following representations, warranties and
covenants and accept the following
obligations:
(1) If Developer is a corporation, limited liability company,
partnership or other Entity, Developer make
the following representations,
warranties and covenants to Licensor:
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<PAGE>
(a) Developer is duly organized and validly existing
under the state law of its formation.
(b)
Developer is duly qualified and is authorized to
do business in each jurisdiction in which
its business activities or the nature
of the properties owned by it require such
qualification.
(c) Developer's corporate charter, written operating
agreement or written partnership agreement
shall at all times provide that the
activities of Developer are confined
exclusively to the development and
operation of O'Charley's restaurants.
Unless otherwise consented to by Licensor
in writing, Developer shall not use the
Proprietary Marks as part of its
corporate or other legal name, and, in any
event, shall obtain Licensor's
approval of such corporate or other legal
name prior to applying for or filing
it with the applicable government
authority.
(d) The execution of this Agreement and the
consummation of the transactions
contemplated hereby are within Developer's
corporate power, if Developer is a
corporation, are permitted under Developer's
articles of organization and written
operating agreement and have been duly
authorized by Developer, if Developer is a
limited liability company, are
permitted under Developer's written
partnership agreement and have been duly
authorized by Developer, if Developer is a
partnership.
(e) If Developer is a corporation, copies of
Developer's Articles of Incorporation,
Bylaws, other governing documents, any
amendments thereto, resolutions of the
Board of Directors authorizing entry into
and performance of this Agreement and any
certificates, buy-sell agreements or
other documents restricting the sale or
transfer of stock of the corporation,
and any other documents as may be
reasonably required by Licensor, shall have
been furnished to Licensor prior to the
execution of this Agreement; if
Developer is a limited liability company,
copies of Developer's articles of
organization, operating agreement, any
buy-sell agreements or other documents
restricting the sale or transfer of
interests in the limited liability company,
and any other governing documents and any
amendments thereto shall have been
furnished to Licensor prior to the
execution of this Agreement; or, if Developer
is a partnership, copies of Developer's
written partnership agreement, any
buy-sell agreements or other documents
restricting the sale or transfer of
interests in the partnership, and any other
governing documents and any
amendments thereto shall be furnished to
Licensor prior to the execution of this
Agreement. Developer shall also provide to
Licensor evidence of consent or
approval of the entry into and performance
of this Agreement by the requisite
number or percentage of shareholders,
members or partners, if such approval or
consent is required by statute or by
Developer's Articles of Incorporation,
Bylaws, articles of organization, operating
agreement, written partnership
agreement or other governing documents, as
applicable.
(f) If Developer is a corporation, limited liability
company or partnership, the ownership
interests in Developer are accurately and
completely described in Attachment D.
Further, if Developer is a corporation,
Developer shall maintain at all times a
current list of all owners of record and
all beneficial owners of any class of
voting securities in Developer, if
Developer is a limited liability company,
Developer shall maintain at all times
a current list of all owners of an interest
in the limited liability company,
or, if Developer is a partnership,
Developer shall maintain at all times a
current list of all owners of an interest
in the partnership. Developer shall
immediately provide a copy of the updated
list to Licensor upon the
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<PAGE>
occurrence of any change of ownership and
otherwise shall make its list of
owners available to Licensor upon
request.
(g) If, after the execution of this Agreement, any
person ceases to qualify as a Principal, or
if any individual succeeds to or
otherwise comes to occupy a position which
would, upon designation by Licensor,
qualify him as a Principal, Developer shall
notify Licensor within five (5) days
after any such change and, upon designation
of such person by Licensor as a
Principal, or as a Controlling Principal,
as the case may be, such person shall
execute such documents and instruments
(including, as applicable, this
Agreement) as may be required by Licensor
to be executed by others in such
positions.
(h) If Developer is a corporation, Developer shall
maintain stop-transfer instructions against
the transfer on its records of any
of its equity and voting securities and
each certificate representing an equity
or voting security of the corporation shall
have conspicuously endorsed upon it
a statement, in a form satisfactory to
Licensor, that it is held subject to all
restrictions imposed upon assignments by
this Agreement; provided, however, that
the requirements of this Section
VI(A)(1)(h) shall not apply to the transfer of
equity securities of a Publicly-Held Entity
that is otherwise approved to be the
Operator. If Developer is a limited
liability company, its operating agreement
shall provide that ownership of an interest
in the limited liability company is
held subject to all restrictions imposed
upon assignments by this Agreement. If
Developer is a partnership, its written
partnership agreement shall provide that
ownership of an interest in the partnership
is held subject to all restrictions
imposed upon assignments by this
Agreement.
(i) Developer and each of the Controlling Principals
have provided Licensor with the most recent
financial statements of Developer
and each of the Controlling Principals.
Developer shall provide an annual
balance sheet, income statement, statement
of shareholders' equity and statement
of cash flows in the form prescribed by
Licensor (which may be unaudited, unless
otherwise requested or required by
Licensor) within one hundred twenty (120)
days after Developer's fiscal year end.
Such financial statements present fairly
the financial position of Developer and
each of the Controlling Principals, as
applicable, at the dates indicated therein
and with respect to Developer, the
results of its operations, cash flow and
owners' equity for the years then
ended. Developer agrees that it shall
maintain at all times during the term of
this Agreement, sufficient working capital
to fulfill its obligations under this
Agreement. Each of the financial statements
mentioned above shall be certified
as true, complete and correct by
Developer's treasurer or chief financial
officer (or by the applicable Controlling
Principal, as appropriate) and shall
have been prepared in conformity with
generally accepted accounting principles
consistently applied to all applicable
periods involved. Developer's treasurer
or chief financial officer shall deliver to
Licensor, simultaneously with the
financial statements mentioned above, a
certificate certifying that Developer is
not in default of any of Developer's
financial covenants or monetary obligations
with any of Developer's lenders or
financing sources. No material liabilities,
adverse claims, commitments or obligations
of any nature exist as of the date of
this Agreement, whether accrued,
unliquidated, absolute, contingent or
otherwise, which are not reflected as
liabilities on the financial statements of
Developer or such Controlling Principals or
otherwise appropriately disclosed in
the notes thereto.
(j) Each of the Principals, except the Controlling
Principals, shall execute and bind
themselves to the confidentiality and
non-competition covenants set forth in the
Confidentiality and Non-Compete
Agreement attached hereto as Attachment C
to this
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<PAGE>
Agreement (see Sections IX(B)(2) and
IX(I)). The Controlling Principals shall
jointly and severally guarantee Developer's
performance of all of Developer's
obligations (including, but not limited to,
the payment of fees), covenants and
agreements described in this Agreement
pursuant to the terms and conditions of
the guaranty attached hereto as Attachment
E, and do otherwise bind themselves
to the terms of this Agreement as stated
herein.
(k) Developer and the Controlling Principals
acknowledge and agree, jointly and
severally, that the representations,
warranties, covenants and agreements set
forth above in Section VI(A)(l)(a)-(j)
are continuing obligations of Developer and
the Controlling Principals, as
applicable. Developer and each Controlling
Principal will cooperate with
Licensor in any efforts made by Licensor to
verify compliance with such
representations, warranties, covenants and
agreements.
(2) Upon the execution of this Agreement, Developer shall
designate and retain an individual to serve
as Operating Principal of Developer
("Operating Principal"). If Developer is an
individual, Developer shall perform
all obligations of Operating Principal.
Operating Principal shall, during the
entire period he serves as such, meet the
following qualifications:
(a) Operating Principal may, at Operating Principal's
option, and, subject to the approval of
Licensor, designate an individual to
perform the duties and obligations of
Operating Principal described herein;
provided, however that Operating Principal
shall ensure that such designee meets
all the requirements for an Operating
Principal outlined below, conducts and
fulfills all of the Operating Principal's
obligations in accordance with the
terms of this Agreement; provided, further,
Operating Principal shall remain
fully responsible for any such
performance.
(b) Operating Principal must maintain a direct
ownership interest in the Developer
satisfactory to Licensor. Except as may
otherwise be provided in this Agreement,
Operating Principal's interest in
Developer shall be and shall remain free of
any pledge, mortgage, hypothecation,
lien, charge, encumbrance, voting
agreement, proxy, security interest or
purchase right or options.
(c) Developer and Operating Principal (or his
designee, as applicable) shall devote their
full time and best efforts to the
supervision and conduct of the business
contemplated by this Agreement.
Operating Principal shall execute this
Agreement as one of the Controlling
Principals, and shall be individually,
jointly and severally with the Developer
and the other Controlling Principals, bound
by all obligations of Developer, the
Operating Principal and the Controlling
Principals hereunder.
(d) Operating Principal (or his designee, as
applicable) shall meet Licensor's standards
and criteria for such individual
(including, but not limited to,
educational, financial and operational
experience criteria prescribed by
Licensor), as set forth in the Manuals (as
defined in the Operating Agreement) or as
otherwise communicated by Licensor to
Operator from time to time.
(e) If during the term of this Agreement Operating
Principal (or any designee) is not able to
continue to serve in the capacity of
Operating Principal or no longer qualifies
to act as such in accordance with
this Section, Developer shall notify
Licensor within ten (10) days and shall
designate a replacement within sixty (60)
days after Operating Principal
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<PAGE>
(or any designee) ceases to serve or be so
qualified, such replacement being
subject to the same qualifications and
restrictions listed above. Developer
shall provide for interim management of the
activities contemplated under this
Agreement until such replacement is so
designated, such interim management is to
be conducted in accordance with this
Agreement.
(3) Developer and the Controlling Principals understand that
compliance by all developers and operators
operating under the System with
Licensor's training, development and
operational requirements is an essential
and material element of the System and that
Licensor and developers and
operators operating under the System
consequently expend substantial time,
effort and expense in training management
personnel for the development and
operation of their respective O'Charley's
restaurants. Accordingly, Developer
and the Controlling Principals agree that
if during the term of this Agreement,
Developer or any Controlling Principal
shall designate or employ any individual
who is at the time or was within the
preceding three (3) months employed in a
restaurant managerial position, a
multi-restaurant supervisory position or home
office staff position (e.g., officer or
director level personnel, management
information systems personnel or human
resources and training personnel), by
Licensor or any of its Affiliates,
including, but not limited to, individuals
employed by Licensor to work in its
O'Charley's restaurants, or at Licensor's
home office, or employed in a restaurant
managerial position by any other
developer or operator operating under the
System (a "Covered Individual"), then
such former employer of such Covered
Individual shall be entitled to
compensation for the reasonable costs and
expenses, of whatever nature or kind,
incurred by such employer in connection
with the training of such Covered
Individual. The parties hereto agree that
such expenditures may be uncertain and
difficult to ascertain and, therefore,
agree that the compensation specified
herein reasonably represents such
expenditures and is not a penalty. The
employing Developer or Controlling
Principal shall pay to the former employer an
amount equal to the salary of such Covered
Individual for the six (6) month
period prior to the termination of his
employment with such former employer (or
if the Covered Individual was employed less
than six (6) months, that Covered
Individual's projected salary had the
Covered Individual been employed for the
full six (6) months) for any restaurant
level managerial personnel. For any
Covered Individual employed in a
multi-restaurant supervisory or home office
staff position, the employing Developer or
Controlling Principal shall pay to
the former employer an amount equal to the
salary of such Covered Individual for
the twelve (12) month period immediately
prior to the termination of his
employment with such former employer (or if
the Covered Individual was employed
less than twelve (12) months, that Covered
Individual's projected salary had the
Covered Individual been employed for the
full twelve (12) months). Such amount
shall be paid by Developer, or the
applicable Controlling Principal, as the case
may be, within thirty (30) days after
written notice, unless otherwise agreed
with such former employer. The parties
hereto expressly acknowledge and agree
that no current or former employee of
Licensor, its Affiliates, Developer, or of
any other Entity operating under the System
shall be a third party beneficiary
of this Agreement or any provision hereof.
Notwithstanding the above, solely for
purposes of bringing an action to collect
any payment due under this Section,
such former employer shall be a third-party
beneficiary of this Section
VI(A)(3). Licensor hereby expressly
disclaims any representations and warranties
regarding the performance of any employee
or former employee of Licensor or its
Affiliates, or any developer or operator
operating under the System, who is
designated or employed by Developer or any
Controlling Principal in any
capacity, and Licensor shall not be liable
for any losses, of any nature or
kind, incurred by Developer or any
Controlling Principal in connection
therewith.
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(4) Developer shall comply with all requirements of federal,
state and local laws, rules, regulations
and orders.
(5) Developer shall obtain and maintain all appropriate
licenses, permits and certificates for the
operation of the Restaurant,
including licenses and permits to sell
alcoholic beverages in the Restaurant.
(6) Developer and the Controlling Principals shall allow
Licensor and its representatives to review
any and all of Developer's and the
Controlling Principals' documents and other
materials relating to their
financing arrangements or capital
structure.
B. Developer and the Controlling Principals represent, warrant,
covenant and agree that they shall comply
with all other requirem
