Ex-10.1



 




    EXHIBIT 10.1



     SEVERANCE COMPENSATION AGREEMENT dated as of July 9, 2007, between O’Charley’s Inc., a
Tennessee corporation (the “Company”), and John R. Grady (the “Executive”).



     The Company’s Board of Directors has determined that it is appropriate to reinforce and
encourage the continued attention and dedication of certain members of the Company’s senior
management, including the Executive, to their assigned duties without distraction in potentially
disturbing circumstances arising from the possibility of a change in control of the Company.



     This Agreement sets forth the severance compensation which the Company agrees it will pay to
the Executive if the Executive’s employment with the Company terminates under one of the
circumstances described herein following a Change In Control of the Company (as defined herein).



     1. Term. This Agreement shall become effective upon the commencement of Executive’s
employment with the Company. This Agreement shall terminate, except to the extent that any
obligation of the Company hereunder remains unpaid as of such time, upon the earliest of (i) one
year from the date hereof if a Change in Control of the Company has not occurred prior to such
date; (ii) the termination of the Executive’s employment with the Company based on death,
Disability (as defined in Section 3(b)), Retirement (as defined in Section 3(c)) or Cause (as
defined in Section 3(d)) or by the Executive other than for Good Reason (as defined in Section
3(e)); and (iii) eighteen months from the date of a Change in Control of the Company.



     2. Change in Control. No compensation shall be payable under this Agreement unless and until
(a) there shall have been a Change in Control of the Company while the Executive is still an
employee of the Company and (b) the Executive’s employment by the Company thereafter shall have
been terminated in accordance with Section 3. For purposes of this Agreement, a Change in Control
means the happening of any of the following:




     (i) any person or entity, including a “group” as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, other than the Company, a wholly-owned subsidiary thereof,
any employee benefit plan of the Company or any of its Subsidiaries becomes the beneficial
owner of the Company’s securities having 30% or more of the combined voting power of the
then outstanding securities of the Company that may be cast for the election of directors of
the Company (other than as a result of an issuance of securities initiated by the Company in
the ordinary course of business); or




     (ii) as the result of, or in connection with, any cash tender or exchange offer, merger
or other business combination, sale of assets or contested election, or any combination of
the foregoing transactions, less than a majority of the combined voting power of the then
outstanding securities of the Company or any successor corporation or entity entitled to
vote generally in the election of the directors of the Company or such other corporation or
entity after such transaction are held in the aggregate by the holders



 









 





of the Company’s securities entitled to vote generally in the election of directors of
the Company immediately prior to such transaction; or




     (iii) during any period of two consecutive years, individuals who at the beginning of
any such period constitute the Board cease for any reason to constitute at least a majority
thereof, unless the election, or the nomination for election by the Company’s shareholders,
of each director of the Company first elected during such period was approved by a vote of
at least two-thirds of the directors of the Company then still in office who were directors
of the Company at the beginning of any such period.



     3. Termination Following Change in Control. (a) If a Change in Control of the Company shall
have occurred while the Executive is still an employee of the Company, the Executive shall be
entitled to the compensation provided in Section 4 upon the subsequent termination of the
Executive’s employment with the Company by the Executive or by the Company within eighteen months
of the Change in Control of the Company unless such termination is as a result of (i) the
Executive’s death; (ii) the Executive’s Disability (as defined in Section (3)(b) below); (iii) the
Executive’s Retirement (as defined in Section 3(c) below); (iv) the Executive’s termination by the
Company for Cause (as defined in Section 3(d) below); or (v) the Executive’s decision to terminate
employment other than for Good Reason (as defined in Section 3(e) below).



          (b) Disability. If, as a result of the Executive’s incapacity due to physical or mental
illness, the Executive shall have been absent from his duties with the Company on a full-time basis
for six months and within 30 days after written notice of termination is thereafter given by the
Company the Executive shall not have returned to the full-time performance of the Executive’s
duties, the Company may terminate this Agreement for “Disability.”



          (c) Retirement. The term “Retirement” as used in this Agreement shall mean termination by the
Company or the Executive of the Executive’s employment based on the Executive’s having reached age
65 or such other age as shall have been fixed in any arrangement established with the Executive’s
consent with respect to the Executive.



          (d) Cause. The Company may terminate the Executive’s employment for Cause. For purposes of
this Agreement only, the Company shall have “Cause” to terminate the Executive’s employment
hereunder only on the basis of fraud, misappropriation or embezzlement on the part of the
Executive. Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters of the membership
of the Company’s Board of Directors (excluding the Executive if the Executive is then a member of
the Board of Directors) at a meeting of the Board called and held for the purpose (after reasonable
notice to the Executive and an opportunity for the Executive, together with the Executive’s
counsel, to be heard before the Board), finding that in the good faith opinion of the Board the
Executive was guilty of conduct set forth in the second sentence of this Section 3(d) and
specifying the particulars thereof in detail.



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          (e) Good Reason. The Executive may terminate the Executive’s employment for Good Reason at
any time during the term of this Agreement. For purposes of this Agreement “Good Reason” shall
mean any of the following (without the Executive’s express written consent):




     (i) the assignment to the Executive by the Company of duties inconsistent with the
Executive’s position, duties, responsibilities and status with the Company immediately prior
to a Change in Control of the Company, or a change in the Executive’s titles or offices as
in effect immediately prior to a Change in Control of the Company, or any removal of the
Executive from or any failure to reelect the Executive to any of such positions, except in
connection with the termination of his employment for Disability, Retirement or Cause or as
a result of the Executive’s death or by the Executive other than for Good Reason;




     (ii) a reduction by the Company in the Executive’s base salary as in effect on the date
hereof or as the same may be increased from time to time during the term of this Agreement;




     (iii) a relocation of the Company’s principal executive offices to a location outside
of Nashville, Tennessee, or the Executive’s relocation to any place other than the location
at which the Executive performed the Executive’s duties prior to a Change in Control of the
Company, except for required travel by the Executive on the Company’s business to an extent
substantially consistent with the Executive’s business travel obligations at the time of a
Change in Control of the Company;




     (iv) any material breach by the Company of any provision of this Agreement;




     (v) any failure by the Company to obtain the assumption of this Agreement by any
successor or assign of the Company; or




     (vi) any purported termination of the Executive’s employment by the Company which is
not effected pursuant to a Notice of Termination satisfying the requirements of Section
3(f), and for purposes of this Agreement, no such purported termination shall be effective.



          (f) Notice of Termination. Any termination by the Company pursuant to Section 3(b), 3(c) or
3(d) or by the Executive pursuant to Section 3(e) shall be communicated by a Notice of Termination.
For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which
indicates those specific termination provisions in this Agreement relied upon and which sets forth
in reasonable detail the facts and circumstances claimed to provide a basis for termination of the
Executive’s employment under the provisions so indicated. For purposes of this Agreement, no such
purported termination by the Company or by the Executive shall be effective without such Notice of
Termination.



          (g) Date of Termination. “Date of Termination” shall mean (a) if this Agreement is terminated
by the Company for Disability, 30 days after Notice of Termination is given to the Executive
(provided that the Executive shall not have returned to the performance of



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the Executive’s duties on a full-time basis during such 30-day period), (b) if the Executive’s
employment is terminated by the Company for any other reason, the date on which a Notice of
Termination is given, or (c) if the Executive terminates his employment pursuant to Section 3(e),
the date on which a Notice of Termination is given.




     4. Severance Compensation upon Termination of Employment. (a) If the Company shall terminate
the Executive’s employment within eighteen months following a Change in Control other than pursuant
to Section 3(b), 3(c) or 3(d) or if the Executive shall terminate his employment within eighteen
months following a Change in Control for Good Reason, then the Company shall pay to the Executive
as severance pay in a lump sum, in cash, on the fifth day following the Date of Termination, an
amount equal to the sum of (i) 150% of the average of the aggregate annual base salary paid to the
Executive by the Company during the three calendar years preceding the Change in Control of the
Company and (ii) 150% of the highest bonus compensation paid to the Executive for any of the three
calendar years preceding the Change in Control of the Company; provided, however, that if the lump
sum severance payment under this Section 4, either alone or together with other payments which the
Executive has the right to receive from the Company, would constitute a “parachute payment” (as
defined in Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”)), such lump
sum severance payment shall be reduced to the largest amount as will result in no portion of the
lump sum severance payment under this Section 4 being subject to the excise tax imposed by Section
4999 of the Code. For avoidance of doubt, for purposes of subsection (ii) of the preceding
sentence, the bonus compensation total shall not include any payments made by the Company to
Executive pursuant to the Company’s agreement with the former owners of Ninety Nine Restaurant &
Pub to pay a total of $1.0 million per year, plus accrued interest, through 2007 to certain key
employees of Ninety Nine who continue to be employed with the Company.



          (b) In addition to the lump sum payment provided in Section 4(a), if the Company shall
terminate the Executive’s employment within eighteen months following a Change in Control other
than pursuant to Section 3(b), 3(c) or 3(d) or if the Executive shall terminate his employment
within eighteen months following a Change in Control for Good Reason, then the Company shall
provide to the Executive health insurance equivalent to that provided to the Executive immediately
prior to termination until the earlier of: (i) eighteen months following the Date of Termination or
(ii) such time as Executive is employed by another employer and is covered or permitted to be
covered by benefit plans of another employer providing substantially similar coverage.



     5. No Obligation To Mitigate Damages; No Effect on Other Contractual Rights. (a) The
Executive shall not be required to mitigate damages or the amount of any payment provided for under
this Agreement by seeking other employment or otherwise, nor shall the amount of any payment
provided for under this Agreement be reduced by any compensation earned by the Executive as the
result of employment by another employer after the Date of Termination, or otherwise.



          (b) The provisions of this Agreement, and any payment provided for hereunder, shall not reduce
any amounts otherwise payable, or in any way diminish the Executive’s existing rights, or rights
which would accrue solely as a result of the passage of time,



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under any benefit plan, incentive plan or stock option plan, employment agreement or other
contract, plan or arrangement.




     6. Successor to the Company. (a) The Company will require any successor or assign (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company, by agreement in form and substance satisfactory to the
Executive, expressly, absolutely and unconditionally to assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to perform it if no
such succession or assignment had taken place. Any failure of the Company to obtain such agreement
prior to the effectiveness of any such succession or assignment shall be a material breach of this
Agreement and shall entitle the Executive to terminate the Executive’s employment for Good Reason.
As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any
successor or assign to its business and/or assets as aforesaid which executes and delivers the
agreement provided for in this Section 6 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law. If at any time during the term of this Agreement
the Executive is employed by any corporation, a majority of the voting securities of which is then
owned by the Company, “Company” as used in Sections 3, 4, 11 and 12 hereof shall in addition
include such employer. In such event, the Company agrees that it shall pay or shall cause such
employer to pay any amounts owed to the Executive pursuant to Section 4 hereof.



          (b) This Agreement shall inure to the benefit of and be enforceable by the Executive’s
personal and legal representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts are still payable to him
hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive’s devisee, legatee, or other designee or, if there be no
such designee, to the Executive’s estate.



     7. Notice. For purposes of this Agreement, notices and all other communications provided for
in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or
mailed by United States registered mail, return receipt requested, postage prepaid, as follows:



          If to the Company:


O’Charley’s Inc.

3038 Sidco Drive

Nashville, Tennessee 37204

Attention: President




          If to the Executive:


John R. Grady

4 Mockingbird Lane

Walpole, Massachusetts 02081





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or such other address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon receipt.




     8. Miscellaneous. No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in a writing signed by the Executive and
the Company. No waiver by either party hereto at any time of any breach by the other party hereto
of, or compliance with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either party which are not set
forth expressly in this Agreement. This Agreement shall be governed by and construed in accordance
with the laws of the State of Tennessee.



     9. Validity. The invalidity or unenforceability of any provisions of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement, which shall remain
in full force and effect.



     10. Counterparts. This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will constitute one and the same
instrument.



     11. Legal Fees and Expenses. In the event either party hereto shall institute litigation
against the other party hereto relating to the interpretation or enforcement of this Agreement, the
prevailing party in such litigation shall be entitled to recover from the other party any and all
attorneys’ and related fees and expenses incurred by the prevailing party in such litigation.



     12. Confidentiality. The Executive shall retain in confidence any and all confidential
information known to the Executive concerning the Company and its business so long as such
information is not otherwise publicly disclosed. The provisions of this Section 12 are not
intended to restrict the ability of the Executive following termination of employment for any
reason to engage in any business which is, directly or indirectly, competitive with the business
conducted by the Company.



     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.



	 	 	 	 	 
	 	O’CHARLEY’S INC.

 	 
	 	By:  	/s/ Randall C. Harris
 	 
	 	 	Name:  	Randall C. Harris 	 
	 	 	Title:  	Chief Human Resources Officer 	 
	 



	 	 	 	 	 
	 	 	 
	 	     /s/ John R. Grady
 	 
	 	John R. Grady 	 
	 	 	 
	 




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