Exhibit 10.1
SETTLEMENT AGREEMENT
     SETTLEMENT AGREEMENT, dated the 12th day of March, 2008 (this “Agreement”),
by and among O’Charley’s Inc., a Tennessee corporation (the “Company”), and Eric
S. Rosenfeld, Crescendo Partners II, L.P., Series Z (“Crescendo Partners II”),
Crescendo Partners III, L.P., Crescendo Investments II, LLC, Crescendo
Investments III, LLC (collectively, “Crescendo” and each a “Crescendo Party”).
     WHEREAS, Crescendo Partners II duly submitted a nomination letter to the
Company on December 20, 2007 nominating a slate of four candidates for election
to the Company’s Board of Directors (the “Board”) at the Company’s 2008 Annual
Meeting of Shareholders (the “2008 Annual Meeting”);
     WHEREAS, the Nominating and Corporate Governance Committee of the Board
(the “Nominating Committee”) has reviewed the qualifications of Arnaud Ajdler,
Gregory Monahan and Douglas Benham (each, individually, a “Crescendo Director”
and collectively, the “Crescendo Directors”);
     WHEREAS, upon the Nominating Committee’s recommendation, the Board (i) has
resolved to appoint the Crescendo Directors to the Board effective upon the
execution of this Agreement and (ii) determined that the Crescendo Directors are
independent directors under the listing standards of The NASDAQ Stock Market
(“NASDAQ”); and
     WHEREAS, the Company and Crescendo have determined to come to an agreement
with respect to certain matters related to the 2008 Annual Meeting and certain
other matters, as provided in this Agreement.
     NOW, THEREFORE, in consideration of the foregoing premises and the
respective representations, warranties, covenants and agreements hereinafter set
forth, and, intending to be legally bound hereby, the parties hereby agree as
follows:
     1. Crescendo Board Appointments.
          (a) Board Expansion and Crescendo Board Appointments. The Company
hereby confirms that John E. Stokely has resigned as a member of the Board and
that the Board has appointed Arnaud Ajdler, Gregory Monahan and Douglas Benham
(each, individually, a “Crescendo Director” and collectively, the “Crescendo
Directors”) to serve as directors of the Board, effective as of the execution of
this Agreement. Effective as of the execution of this Agreement, the Board’s
size will be increased from nine (9) to eleven (11) directors with Mr. Ajdler
and Mr. Monahan appointed to the class of directors whose terms expire in 2009
and Mr. Benham appointed to the class of directors whose terms expire in 2010.
Effective as of the execution of this Agreement, Crescendo hereby withdraws its
director nominations in connection with the 2008 Annual Meeting and each
Crescendo Party will hereafter take all steps necessary to cease, and to cause
all of its respective Affiliates and Associates (as such terms are defined in
Section 12) to cease, all efforts to nominate or elect Crescendo’s nominees to
the Board.
          (b) Board Reduction. The size of the Board will not be increased to
more than eleven (11) directors at any time before the Company’s 2009 Annual
Meeting of Directors held in conjunction with the Company’s 2009 Annual Meeting
of Shareholders (the latter, the “2009 Annual Meeting”).
          (c) Board Representation Upon Reduction in Crescendo Ownership.
Notwithstanding anything to the contrary herein, at any time during the term
hereof, (i) if Crescendo owns

 

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less than the lesser of 5% of the Company’s outstanding Voting Securities (as
defined in Section 12) and 1,108,967 shares of common the Company’s stock
(“Common Stock”), but more than the lesser of 1% of the Company’s outstanding
Voting Securities and 221,973 shares of Common Stock, it will be entitled to
representation on the Board of no more than two Crescendo Directors and (ii) if
Crescendo owns less than the lesser of 1% of the Company’s outstanding Voting
Securities and 221,973 shares of common stock, it will not be entitled to any
representation on the Board. Immediately after Crescendo’s beneficial ownership
of the Company’s Voting Securities falls below the aforementioned requisite
thresholds, Crescendo will so notify the Company and will cause the appropriate
number of Crescendo Directors to immediately resign. If a Crescendo Director is
required to resign from the Board pursuant to subpart (i) of the preceding
sentence, Crescendo will cause a Crescendo Director appointed to the class of
directors whose terms expire at the 2009 Annual Meeting to resign.
          (d) Crescendo Director Vacancies. If any Crescendo Director leaves the
Board (whether by resignation or otherwise) before the 2009 Annual Meeting
(other than pursuant to Section 1(c) hereof), Crescendo will be entitled to
recommend to the Nominating Committee replacement director(s) (each of whom will
be deemed a Crescendo Director for purposes of this Agreement) who will qualify
as “independent” pursuant to NASDAQ listing standards; provided, that any such
successor nominee to Douglas Benham will have relevant restaurant, hospitality
or retail industry experience. The Nominating Committee will not unreasonably
withhold acceptance of any replacement director(s) recommended by Crescendo. In
the event the Nominating Committee does not accept a replacement director(s)
recommended by Crescendo, Crescendo will have the right to recommend additional
replacement director(s) for consideration by the Nominating Committee. The Board
will appoint such replacement director(s) to the Board no later than five (5)
business days after the Nominating Committee’s recommendation of such
replacement director(s).
          (e) Committee Appointments of Crescendo Directors. Upon the execution
of this Agreement, the Company will take all action necessary in furtherance of
the appointment of Douglas Benham to the Audit Committee of the Board, Gregory
Monahan to the Nominating Committee of the Board and Executive Committee of the
Board and Arnaud Ajdler to the Compensation and Human Resources Committee of the
Board. Crescendo represents and warrants that each Crescendo Director meets, and
agrees that each Crescendo Director will continue to meet, the membership
eligibility requirements, established by (i) the Company’s publicly disclosed
corporate governance documents, (ii) the SEC and (iii) the NASDAQ for each
committee of the Board to which each such Crescendo Director has been appointed.
     2. Matters Related to 2008 Annual Meeting.
          (a) Board Declassification. In accordance with the Company’s Restated
Charter, Amended and Restated Bylaws and applicable state law, the Company will
submit, recommend and solicit proxies in favor of a resolution for consideration
by its shareholders at the 2008 Annual Meeting to declassify the Company’s Board
to provide for the annual election of all directors (the “Declassification
Proposal”). Under such proposal, if approved by the Company’s shareholders, the
first of such annual elections would take place at the Company’s 2008 Annual
Meeting, with (i) each of the Company’s incumbent directors whose term expires
at the 2008 Annual Meeting and who is re-nominated by the Company to be elected
to one-year terms ending at the 2009 Annual Meeting, (ii) Messrs. Adjler and
Monahan to be nominated for election to one-year terms ending at the 2009 Annual
Meeting and (iii) and Mr. Benham to be nominated for election to a term ending
at the Company’s 2010 Annual Meeting of Shareholders (the “2010 Annual
Meeting”). At the 2009 Annual Meeting, each directorship, other than those held
by incumbent directors whose term expires at the 2010 Annual Meeting, would be
subject to election for one-year terms. At the Company’s 2010 Annual Meeting of
Shareholders, all of the Company’s directors would be elected to one-year terms.
The Company will hire a proxy solicitor and

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solicit proxies for the Declassification Proposal and for the election of the
Crescendo Directors in the same manner as it does with respect to other
directors and other proposals contained in the Company’s proxy statement for the
2008 Annual Meeting. The Company will use its reasonable best efforts to cause
all Voting Securities (as defined in Section 12) that members of the Board are
entitled to vote at the 2008 Annual Meeting to be voted in favor of the election
of Crescendo Directors and the Declassification Proposal.
          (b) Company Nomination. In addition to nominating the Crescendo
Directors for election at the 2008 Annual Meeting, the Board will nominate no
more than four incumbent directors for re-election to the Board at the 2008
Annual Meeting (together with the Crescendo Directors, the “2008 Nominees”).
          (c) Crescendo Vote. Each Crescendo Party will vote, and will cause its
respective Affiliates and Associates (as such terms are defined in Section 12)
to vote, all Voting Securities (as such term is defined in Section 12) that it
is entitled to vote at the 2008 Annual Meeting (i) in favor of the election of
each of the 2008 Nominees, (ii) in favor of the Declassification Proposal, and
(iii) in its discretion with regard to any other items of business that are
brought before such meeting. Unless the Crescendo Parties are not subject to the
standstill obligations pursuant to Section 4(b), each Crescendo Party will vote,
and will cause its respective Affiliates and Associates to vote, all Voting
Securities that it is entitled to vote at the 2009 Annual Meeting in favor of
the election of all nominees recommended by the Board.
          (d) 2008 Annual Meeting Date and Items of Business. The Company will
hold its 2008 Annual Meeting at such time as is determined by the Board;
provided, that the Company will use all reasonable efforts to cause the 2008
Annual Meeting to be held on or before May 30, 2008, and in no event will such
meeting be held later than June 30, 2008. The only items to be put to a
shareholder vote at the 2008 Annual Meeting will be (i) the Declassification
Proposal, (ii) the election of directors as contemplated herein, (iii) the
approval of a stock incentive plan if recommended by the Board (the “Stock
Incentive Plan”); and (iv) ratification of the Company’s auditors; provided,
that the Company may submit to a shareholder vote a proposal to adjourn the 2008
Annual Meeting to a later date for the purposes of soliciting additional proxies
in favor of the Declassification Proposal or the Stock Incentive Plan.
     3. Termination. This Agreement will remain in full force and effect and
will be fully binding on the parties hereto in accordance with the provisions
hereof until the earlier of (i) the date on which the 2009 Annual Meeting
concludes without adjournment to a later date or (ii) June 30, 2009 (the
“Termination Date”). Section 16 and Section 17 will survive any termination of
this Agreement.
     4. Standstill.
          (a) Subject to Section 4(b), each Crescendo Party agrees that during
the period commencing on the date hereof and ending on the Termination Date,
without the prior written consent of the Board specifically expressed in a
written resolution adopted by a majority vote of the entire Board, it will not,
and will cause each of its Affiliates, Associates, officers, agents and other
Persons acting on its behalf not to:
               (i) acquire, offer or propose to acquire, or agree to acquire
(except by way of stock dividends or other distributions or offerings made
available to holders of Voting Securities (as such term is defined in
Section 12) generally on a pro rata basis, provided that any such securities so
received will be subject to the provisions hereof), directly or indirectly,
whether by purchase, tender or exchange offer, through the acquisition of
control of another Person (as such term is defined in Section 12), by joining a
partnership, limited partnership, syndicate or other “group” (within the meaning

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of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) or otherwise, any Voting Securities (as such term is defined in
Section 12), or otherwise become the economic owner (as such term is defined in
Section 12) of any such securities, if after giving effect to such acquisition
it (by itself or together with any other Crescendo Party, its respective
Affiliates and Associates and any other Person with whom it, such other
Crescendo Party or any such Affiliate or Associate has any agreement,
understanding or arrangement with respect to Voting Securities) would be the
beneficial owner or economic owner of more than 13% of the Company’s outstanding
Voting Securities. For the purposes of computing the beneficial ownership at the
time of any purchase, the number of outstanding Voting Securities will be
determined by the latest available Company filing with the Securities and
Exchange Commission (the “SEC”);
               (ii) engage, or in any way participate, directly or indirectly,
in any “solicitation” (as such term is defined in Rule 14a-1(l) promulgated by
the SEC under the Exchange Act) of proxies or consents (whether or not relating
to the election or removal of directors), seek to advise, encourage or influence
any Person with respect to the voting of any Voting Securities; initiate,
propose or otherwise “solicit” (as such term is defined in Rule 14a-1(l)
promulgated by the SEC under the Exchange Act) shareholders of the Company for
the approval of shareholder proposals whether made pursuant to Rule 14a-8 or
Rule 14a-4 under the Exchange Act or otherwise; induce or attempt to induce any
other Person to initiate any such shareholder proposal; or otherwise communicate
or seek to communicate with the Company’s shareholders or others pursuant to
Rule 14a-1(l)(2)(iv) under the Exchange Act; provided, however, that nothing
herein will limit the ability of any Crescendo Party, or its respective
Affiliates and Associates, except as otherwise provided in Section 2(c), to vote
its Voting Securities on any matter submitted to a vote of the stockholders of
the Company or announce its opposition to any Board-approved proposals not
supported by Messrs. Ajdler or Monahan or limit the ability of the Crescendo
Directors to exercise their rights as members of the Board while serving as
members of the Board;
               (iii) form, join or in any way participate in any “group” (within
the meaning of Rule 13d-5 of Regulation 13D-G under the Exchange Act) with
respect to any Voting Securities, other than a “group” that includes all or some
lesser number of the Crescendo Parties, but does not include any other members
who are not currently identified as a Crescendo Party;
               (iv) deposit any Voting Securities in any voting trust or subject
any Voting Securities to any arrangement or agreement with respect to the voting
of any Voting Securities, except as expressly set forth in this Agreement;
               (v) seek to have called, or cause to be called, any meeting of
shareholders of the Company;
               (vi) make any public demand to inspect the books and records of
the Company, including pursuant to any statutory right that Crescendo may have;
               (vii) have any discussions or communications, or enter into any
arrangements, understanding or agreements (whether written or oral) with, or
advise, finance, assist or encourage, any other Person in connection with any of
the foregoing, or make any investment in or enter into any arrangement with, any
other Person that engages, or offers or proposes to engage, in any of the
foregoing;
               (viii) make any proposal (including publicly disclose or discuss
any proposal) or enter into any discussion regarding any of the foregoing, or
make any proposal, statement or inquiry, or disclose any intention, plan or
arrangement (whether written or oral) inconsistent with the foregoing, or make
or publicly disclose any request to amend, waive or terminate any provision of
this Agreement; provided, however, that nothing herein will limit the ability of
any Crescendo Party, or its respective

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Affiliates and Associates, except as otherwise provided in Section 2(c), to vote
its Voting Securities on any matter submitted to a vote of the stockholders of
the Company or announce its opposition to any Board-approved proposals not
supported by Messrs. Ajdler or Monahan or limit the ability of the Crescendo
Directors to exercise their rights as members of the Board while serving as
members of the Board; or
               (ix) take or cause or induce others to take any action
inconsistent with any of the foregoing.
          (b) Each Crescendo Party will be released from its standstill
obligations set forth in Section 4(a) and its obligations under Section 9 on the
date that is thirty (30) days before the last date on which a shareholder of the
Company may submit nominations for the Board in connection with the 2009 Annual
Meeting (the “2009 Nomination Deadline”), if (i) the Company has not agreed to
re-nominate, recommend and solicit proxies in favor of each Crescendo Director
whose term expires at the 2009 Annual Meeting for re-election at such meeting
(provided, however, that the Company may withdraw such agreement to nominate,
recommend and solicit proxies in favor of the Crescendo Directors if the Share
Price Test described in clause (ii) is not satisfied, unless the Crescendo
Parties have, no later than the 2009 Nomination Deadline, delivered a written
notice to the Company irrevocably waiving the release of their standstill
obligations set forth in Section 4(a) and their obligations under Section 9 and
agreeing to remain subject to such obligations through the Termination Date) or
(ii) if the following test (the “Share Price Test”) has not been satisfied as of
the last day of the Ending Trading Period:
               (i) the Company’s Ending Share Price is equal to or greater than
the product of the Company’s Beginning Share Price and 1.25; or
               (ii) the Company’s Ending Share Price divided by the Company’s
Beginning Share Price is greater than the Average Peer Company Performance; and
either:

  (a)   the Company’s Ending Share Price is at least 10% higher than the
Company’s Beginning Share Price, provided, however, that that if the Average
Peer Company Performance is less than 0.9, this clause (a) will be deemed
satisfied if the Company’s Ending Share Price is greater than the Company’s
Beginning Share Price; or     (b)   the NASDAQ Composite Performance is less
than 0.8.

               (iii) For purposes of this Agreement, “Beginning Share Price”
means the volume-weighted average trading price during the twenty day trading
period beginning the fifth trading day following the public announcement of the
execution of the Settlement Agreement (such period, the “Beginning Trading
Period”); “Company Recapitalization Proposal” means a public announcement by the
Company (excluding the $40 million authorized share repurchase announced by the
Company on February 7, 2008) of a proposed self-tender offer, share repurchase
or other extraordinary corporate transaction which, if consummated, would
reasonably be expected to result in the repurchase or exchange of 10% or more of
the outstanding voting shares of the Company. “Change of Control Proposal” means
a bona fide proposal for a tender offer, acquisition, leveraged buyout, merger
or other business combination of a Peer Company which, if consummated, would
result in the holders of the outstanding voting power of the Peer Company
immediately prior to such consummation owning less than 50% of the outstanding
voting power of the entity resulting from such transaction; “Ending Share Price”
means the volume-weighted average trading price during the twenty day trading
period beginning November 17, 2008 and ending December 15, 2008 (such period,
the “Ending Trading Period”); “Extraordinary Recapitalization

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Proposal” means a public announcement by a Peer Company of a proposed
self-tender offer, share repurchase or other extraordinary corporate transaction
which, if consummated, would reasonably be expected to result in the repurchase
or exchange of shares having more than 20% of the outstanding voting power of
the Peer Company; “Peer Company” means each of Brinker International, Inc., The
Cheesecake Factory Incorporated, CBRL Group, Inc., Darden Restaurants, Inc.,
IHOP Corp., McCormick & Schmick’s Seafood Restaurants, Inc., P.F. Chang’s China
Bistro, Inc., Red Robin Gourmet Burgers, Inc., Ruby Tuesday, Inc., and Texas
Roadhouse, Inc. (collectively, “Peer Companies”), provided, that any such
company will not be deemed to be a Peer Company if its stock is no longer
publicly traded or if there has been a public announcement, at any time on or
prior to the last day of the Ending Trading Period of a Change of Control
Proposal or Extraordinary Recapitalization Proposal relating to such company;
“Average Peer Company Performance” means (1) the sum of each quotient derived by
dividing each Peer Company Ending Share Price by such company’s Beginning Share
Price, divided by (2) the number of Peer Companies; and “NASDAQ Composite
Performance” means the average daily closing value of the NASDAQ Composite Index
during the Ending Trading Period divided by the average daily closing value of
the NASDAQ Composite Index during the Beginning Trading Period.
               (iv) In calculating any trading prices of the Company or any Peer
Company, appropriate adjustment will be made for stock splits, reverse stock
splits, stock dividends, and spin-offs for which a record date occurs at any
time prior to the end of the Ending Trading Period.
               (v) If (1) the 2009 Nomination Deadline occurs on a date that is
earlier than three (3) business days after the last day of the Ending Trading
Period (the “Final Trading Date”) and (2) Section 4(a) terminates in accordance
with the terms hereof on or before the Final Trading Date, then the Company will
extend the 2009 Nomination Deadline with respect to Crescendo until the 5 p.m.
Eastern Standard Time on the day that is five (5) business days after the Final
Trading Date.
     5. Certain Restrictions on Trading Activity.
          (a) The Company will not repurchase shares of its common stock during
the Ending Trading Period in an aggregate amount that exceeds the number of
shares of its common stock that the Company repurchases during the Beginning
Trading Period without the unanimous approval of the Board. The Company will not
publicly disclose plans for an Extraordinary Recapitalization Proposal during
the Ending Trading Period without the unanimous approval of the Board.
          (b) The Company will not publicly disclose plans for a Company
Recapitalization Proposal at any time during the period beginning on October 20,
2008 and ending on December 15, 2008.
          (c) The Company will use its reasonable best efforts to adopt and
enforce trading guidelines pursuant to which officers and directors who file
reports of ownership and changes in ownership of its Common Stock with the SEC
pursuant to Section 16(a) of the Exchange Act (“Section 16 Persons”) will not
sell, or publicly disclose plans to sell, shares of Common Stock during the
Beginning Trading Period, and will not purchase, or publicly disclose plans to
purchase, Company Common Stock during the Ending Trading Period.
          (d) Crescendo and its affiliates will not sell, or publicly disclose
plans to sell, or otherwise reduce its economic ownership of, shares of Common
Stock during the Ending Trading Period, and will not purchase, announce plans to
purchase, or otherwise increase its economic ownership of, shares of the Common
Stock during the Beginning Trading Period.
     6. Representations and Warranties of Crescendo. Each Crescendo Party
represents and warrants as follows:

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          (a) Each Crescendo Party has the power and authority to execute,
deliver and carry out the terms and provisions of this Agreement and to
consummate the transactions contemplated hereby.
          (b) This Agreement has been duly and validly authorized, executed, and
delivered by each Crescendo Party, constitutes a valid and binding obligation
and agreement of each Crescendo Party, and is enforceable against each Crescendo
Party in accordance with its terms.
          (c) Crescendo, together with its Affiliates and Associates, are
beneficial owners and/or economic owners, directly or indirectly, of an
aggregate of shares of Common Stock as set forth by beneficial owner and amount
on Schedule A hereto and such shares of Common Stock constitute all of the
Voting Securities of the Company owned by each Crescendo Party and its
respective Affiliates and Associates.
          (d) To the best of Crescendo’s knowledge, each of the Crescendo
Directors qualifies as “independent” pursuant to NASDAQ listing standards.
     7. Representations and Warranties of the Company. The Company hereby
represents and warrants as follows:
          (a) The Company has the corporate power and authority to execute,
deliver and carry out the terms and provisions of this Agreement and to
consummate the transactions contemplated hereby.
          (b) This Agreement has been duly and validly authorized, executed and
delivered by the Company, constitutes a valid and binding obligation and
agreement of the Company, and is enforceable against the Company in accordance
with its terms.
     8. Specific Performance. Each of Crescendo, on the one hand, and the
Company, on the other hand, acknowledges and agrees that irreparable injury to
the other party hereto would occur in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached and that such injury would not be adequately compensable in
damages. It is accordingly agreed that Crescendo, on the one hand, and the
Company, on the other hand (the “Moving Party”), will each be entitled to
specific enforcement of, and injunctive relief to prevent any violation of, the
terms hereof and the other party hereto will not take action, directly or
indirectly, in opposition to the Moving Party seeking such relief on the grounds
that any other remedy or relief is available at law or in equity.
     9. Press Release. Immediately following the execution and delivery of this
Agreement, the Company will issue the press release attached hereto as Exhibit A
(the “Press Release”). None of the parties hereto will before the Termination
Date make any public statements (including in any filing with the SEC or any
other regulatory or governmental agency, including any stock exchange) that are
inconsistent with, or otherwise contrary to, the statements in the Press Release
issued pursuant to this Section 9. Following the date hereof, no Crescendo
Party, nor any of their respective Affiliates or Associates, will before the
Termination Date issue or cause the publication of any press release or other
public announcement with respect to this Agreement, the Company, its management
or the Board or the Company’s business without prior written consent of the
Company, provided, however, that Crescendo may make such filings as are required
by law or as may be required by law per advice from its outside counsel;
provided further, that nothing herein will limit the ability of any Crescendo
Party, its respective Affiliates and Associates to publicly announce its
opposition to any Board-approved proposals not supported by Messrs. Ajdler or
Monahan.

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     10. Expenses. Within ten (10) business days following receipt of reasonably
satisfactory documentation thereof, the Company will reimburse Crescendo for its
reasonable out-of-pocket fees and expenses incurred on or before the date hereof
in connection with its planned proxy solicitation and the negotiation and
execution of this Agreement and all related activities and matters; provided,
such reimbursement will not exceed $125,000 in the aggregate.
     11. No Waiver. Any waiver by either the Representative (as defined in
Section 19) or the Company of a breach of any provision of this Agreement will
not operate as or be construed to be a waiver of any other breach of such
provision or of any breach of any other provision of this Agreement. The failure
of either the Representative or the Company to insist upon strict adherence to
any term of this Agreement on one or more occasions will not be considered a
waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement.
     12. Certain Definitions. As used in this Agreement, (a) the term “Person”
will mean any individual, partnership, corporation, group, syndicate, trust,
government or agency, or any other organization, entity or enterprise; (b) the
terms “Affiliates” and “Associates” will have the meanings set forth in
Rule 12b-2 under the Exchange Act and will include Persons who become Affiliates
or Associates of any Person subsequent to the date hereof; (c) the term “Voting
Securities” will mean any securities of the Company entitled, or which may be
entitled, to vote in the election of directors, or securities convertible into
or exercisable or exchangeable for such securities, whether or not subject to
passage of time or other contingencies; (d) the terms “beneficial owner” and
“beneficially own” have the same meanings as set forth in Rule 13d-3 promulgated
by the SEC under the Exchange Act; and (e) the terms “economic owner” and
“economically own” will have the same meanings as “beneficial owner” and
“beneficially own,” except that a Person will also be deemed to economically own
and to be the economic owner of (i) all shares of the Common Stock that such
Person has the right to acquire pursuant to the exercise of any rights in
connection with any securities or any agreement, regardless of when such rights
may be exercised and whether they are conditional and (ii) all shares of Common
Stock in which the Person has any economic interest, including, without
limitation, pursuant to a cash-settled call option or other derivative security,
contract or instruction in any way related to the price of shares of Common
Stock.
     13. Successors and Assigns. Neither this Agreement nor any right, interest
or obligation hereunder may be assigned by any party hereto without the prior
written consent of the other parties hereto and any attempt to do so will be
void. Subject to the preceding sentence, this Agreement is binding upon, inures
to the benefit of and is enforceable by the parties hereto and their respective
successors and assigns.
     14. Entire Agreement; Amendments. This Agreement contains the entire
understanding of the parties hereto with respect to the subject matter hereof.
There are no restrictions, agreements, promises, representations, warranties,
covenants or undertakings other than those expressly set forth herein. This
Agreement may be amended only by a written instrument duly executed by the
parties hereto or their respective successors or assigns.
     15. Headings. The section headings contained in this Agreement are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
     16. Notices. All notices, demands and other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given (a) when delivered by hand (with
written confirmation of receipt), (b) upon sending if sent facsimile, with
electronic confirmation of sending; provided, however, that a copy is sent on
the same day by registered mail, return receipt requested, in each case to the
appropriate mailing address set forth below (or to such

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other mailing address as a party may designate by notice to the other parties in
accordance with this Section 16), (c) one (1) day after being sent by nationally
recognized overnight carrier to the addresses set forth below (or to such other
mailing addresses as a party may designate by notice to the other parties in
accordance with this Section 16) or (d) when actually delivered if sent by any
other method that results in delivery (with written confirmation of receipt):

     
If to the Company:
  O’Charley’s Inc.
 
  3038 Sidco Drive
 
  Nashville, TN 37204
 
  Attn: Gregory L. Burns, Chief Executive Officer; Lawrence E.
 
  Hyatt, Chief Financial Officer
 
  Facsimile: (615) 782-5043
 
   
with a copy to:
  Bass, Berry & Sims PLC
 
  315 Deaderick Street, Suite 2700
 
  Nashville, TN 37238-3001
 
  Attn: J. Page Davidson
 
  Facsimile: (615) 742-2753
 
   
If to Crescendo  
   
        or the Representative:
  Eric S. Rosenfeld
 
  c/o Crescendo Partners II, L.P., Series Z
 
  825 Third Avenue, 40th Floor
 
  New York, New York 10022
 
  Facsimile: (212) 319-0760
 
   
with a copy to:
  Olshan Grundman Frome Rosenzweig & Wolosky LLP
 
  65 East 55th Street
 
  New York, New York 10022
 
  Attention: Steven Wolosky
 
  Facsimile: (212) 451-2222

or to such other address as the Person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
     17. Jurisdiction; Applicable Law. Each of the parties hereto (a) consents
to submit itself to the personal jurisdiction of the Court of Chancery or other
federal or state courts in Davidson County in the State of Tennessee in the
event any dispute arises out of this Agreement, (b) agrees that it will not
bring any action relating to this Agreement in any court other than the Court of
Chancery or other federal or state courts of the State of Tennessee, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave form any such court, and (c) agrees that service of
process in any proceeding in any such court may be made by registered mail,
return receipt requested, in the case of the Company, to the address set forth
in Section 16 and in the case of any Crescendo Party, to the address of
Crescendo and the Representative set forth in Section 16. This Agreement will be
governed in all respects, including validity, interpretation and effect, by the
laws of the State of Tennessee applicable to contracts executed and to be
performed wholly within such state without giving effect to the choice of law
principles of such state.
     18. Counterparts. This Agreement may be executed in counterparts, each of
which will be an original, but all of which together will constitute one and the
same Agreement.

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     19. Crescendo Representative. Crescendo hereby irrevocably appoints Eric S.
Rosenfeld as its attorney-in-fact and representative (the “Representative”), in
its place and stead, to do any and all things and to execute any and all
documents and give and receive any and all notices or instructions in connection
with this Agreement. The Company will be entitled to rely, as being binding on
Crescendo, upon any action taken by the Representative or upon any document,
notice, instruction or other writing given or executed by the Representative.
[The remainder of this page intentionally left blank]

10

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     IN WITNESS WHEREOF, each of the undersigned parties has executed or caused
this Agreement to be executed or caused to be executed on its behalf on the date
first above written.

                      O’CHARLEY’S INC.    
 
               
 
  By:   /s/ Gregory L. Burns                        Name:        Gregory L.
Burns         Title:        Chief Executive Officer    
 
                    CRESCENDO PARTNERS II, L.P., SERIES Z    
 
               
 
  By:                                        Crescendo Investments II, LLC,
General Partner    
 
               
 
      By:   /s/ Eric S. Rosenfeld    
 
               
 
      Name:        Eric S. Rosenfeld    
 
      Title:        Managing Member    
 
                    CRESCENDO PARTNERS III, L.P.    
 
               
 
  By:                                        Crescendo Investments III, LLC,
General Partner    
 
               
 
      By:   /s/ Eric S. Rosenfeld    
 
               
 
      Name:        Eric S. Rosenfeld    
 
      Title:        Managing Member    
 
                    CRESCENDO INVESTMENTS II, LLC    
 
               
 
  By:   /s/ Eric S. Rosenfeld                   Name:        Eric S. Rosenfeld  
  Title:        Managing Member
 
                    CRESCENDO INVESTMENTS III, LLC    
 
               
 
  By:   /s/ Eric S. Rosenfeld                   Name:        Eric S. Rosenfeld  
  Title:        Managing Member
 
                 
 
    /s/ Eric S. Rosenfeld                            ERIC S. ROSENFELD

Signature Page to O’Charley’s Inc. — Crescendo Settlement Agreement

 

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Schedule A
Summary of Beneficial and Economic Ownership of Shares of Common Stock of
O’Charley’s Inc.

                              Beneficially     Economically     Percent of  
Owner   Owned1     Owned     Class  
Crescendo Investments II, LLC
    2,534,891     0 shares       11.4 %
 
                       
Crescendo Investments III, LLC
    136,474     0 shares     Less than 1%
 
                       
Crescendo Partners II, L.P., Series Z
    2,534,891       2,534,891       11.4 %
 
                       
Crescendo Partners III, L.P.
    136,474       136,474     Less than 1%
 
                       
Eric S. Rosenfeld
    2,671,365     0 shares       12.0 %
 
                       
Arnaud Ajdler
    2,400       2,400     Less than 1%
 
                       
Douglas Benham
    10,000       10,000     Less than 1%
 
                       
Gregory R. Monahan
    1,150 2     1,150     Less than 1%

 

1   As a member of a “group” for purposes of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended, each of the Persons and Entities in the table
above may be deemed to beneficially own the 2,684,915 shares of Common Stock
owned collectively by all members of the Section 13(d) group. Each of the
persons and entities above disclaims beneficial ownership of such shares of
Common Stock owned by the other members of the Section 13(d) group except to the
extent of his or its pecuniary interest therein.   2   Includes 400 shares of
Common Stock held in Mr. Monahan’s IRA account.

 

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EXHIBIT A
Press Release
See Exhibit 99.1 hereto.