Document:

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                                                                   EXHIBIT 10.44

                               [O'CHARLEY'S LOGO]

                                O'CHARLEY'S INC.

                              DEVELOPMENT AGREEMENT

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                                TABLE OF CONTENTS

<TABLE>
<S>           <C>                                                               <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

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

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                                O'CHARLEY'S INC.

                              DEVELOPMENT AGREEMENT

         THIS DEVELOPMENT AGREEMENT (the "Agreement") is made and entered into
this 22nd 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

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         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
  ----------------------------------------------------------------------------

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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.

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                  (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.

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         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

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(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").

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<TABLE>
<CAPTION>
                                                                            CUMULATIVE TOTAL NUMBER OF
                                                                       RESTAURANTS LOCATED IN THE TERRITORY
                                                                        WHICH DEVELOPER SHALL HAVE OPEN AND
DEVELOPMENT PERIOD             EXPIRATION DATE OF DEVELOPMENT PERIOD              IN OPERATION*
------------------             -------------------------------------   -------------------------------------
<S>                            <C>                                     <C>
         One                             September 30, 2004                              1
         Two                              December 31, 2004                              2
        Three                              August 31, 2005                               3
        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

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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,

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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
               Thirteen                           September 30, 2009
               Fourteen                            December 31, 2009
                Fifteen                              June 30, 2010
</TABLE>

                                       8
<PAGE>

         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.

                           (b)      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.

                                       10
<PAGE>

                           (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

                                       11
<PAGE>

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

                                       12
<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:

                                       13
<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:

                                       14
<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

                                       15
<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

                                       16
<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

                                       17
<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.

                                       18
<PAGE>

                  (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 requirements and
perform such other obligations as provided in this Agreement and the Manuals.

                                  ARTICLE VII
                             DEFAULT AND TERMINATION

         A.       Developer shall be deemed to be materially in default under
this Agreement and all rights granted herein shall automatically terminate
without notice to Developer if:

                  (1)      Developer becomes insolvent or makes a general
assignment for the benefit of creditors or files a voluntary petition under any
section or chapter of federal bankruptcy laws or under any similar law or
statute of the United States or any state thereof ("Bankruptcy Laws") or admits
in writing its inability to pay its debts when due;

                  (2)      Developer is adjudicated bankrupt or insolvent in
proceedings filed against Developer under any section or chapter of any
Bankruptcy Law;

                  (3)      a bill in equity or other proceeding for the
appointment of a receiver of Developer or other custodian for Developer's
business or assets is filed and consented to by Developer, or if a receiver or
other custodian (permanent or temporary) of Developer's assets or property, or
any part thereof, is appointed by any court of competent jurisdiction;

                  (4)      proceedings for a composition with creditors under
any state or federal law are instituted by or against Developer;

                  (5)      a final judgment against Developer remains
unsatisfied or of record for thirty (30) days or longer (unless supersedeas bond
is filed);

                  (6)      Developer is dissolved;

                  (7)      execution is levied against Developer's business or
property;

                  (8)      suit to foreclose any lien or mortgage against the
premises or equipment of any business operated hereunder or under any Operating
Agreement is instituted and not dismissed within thirty (30) days; or

                  (9)      the real or personal property of any business
operated hereunder or under any Operating Agreement shall be sold after levy
thereupon by any sheriff, marshal or other government official.

         B.       Developer shall be deemed to be in material default and
Licensor may, at its option, terminate this Agreement and all rights granted
hereunder, without affording Developer

                                       19
<PAGE>

any opportunity to cure the default except as specifically provided below,
effective immediately upon notice to Developer, upon the occurrence of any of
the following events of default:

                  (1)      Developer fails to comply with the Development
Schedule (or any extension, if any, thereof approved by Licensor in writing), or
Developer fails to develop a replacement Restaurant within any time period
agreed upon by the parties under Section III(B)(2);

                  (2)      Developer fails to execute each Operating Agreement
in accordance with Section III(C) (or any extension thereof approved by Licensor
in writing);

                  (3)      Developer or any of the Controlling Principals is
convicted of, or shall have entered a plea of nolo contendere to, a felony, a
crime involving moral turpitude or any other crime or offense that Licensor
believes is reasonably likely to have an adverse effect on the System, the
Proprietary Marks, the goodwill associated therewith or Licensor's interest
therein;

                  (4)      a threat or danger to public health or safety results
from the construction, maintenance or operation of any Restaurant developed
under this Agreement;

                  (5)      Developer fails to designate a qualified replacement
Operating Principal or designee appointed by Operating Principal within sixty
(60) days after any initial or successor Operating Principal or designee ceases
to serve as such, all as required under Section VI(A)(2)(e);

                  (6)      Developer or any of the Controlling Principals breach
any of the representations warranties and covenants in Article VI;

                  (7)      Developer or any of the Controlling Principals
transfers or attempts to transfer any rights or obligations under this
Agreement, any interest in Developer or the assets of Developer, without first
obtaining Licensor's written consent pursuant to Section VIII(B) or offering
Licensor a right of first refusal with respect to such transfer pursuant to
Section VIII(D);

                  (8)      Developer or any of the Controlling Principals fails
to comply with the covenants in Article IX or fails to obtain execution of the
covenants and related agreements required under Article IX hereof within thirty
(30) days after being requested to do so by Licensor;

                  (9)      an approved transfer upon death or Permanent
Disability is not effected within the time period and in the manner prescribed
by Section VIII(E);

                  (10)     Developer or any of the Controlling Principals
misuses or makes any unauthorized use of the Proprietary Marks or otherwise
materially impairs the goodwill associated therewith or with the System or
Licensor's rights therein;

                  (11)     Developer, the Controlling Principals or any of their
Affiliates fails, refuses or neglects promptly to pay when due any monetary
obligation owing to Licensor or any of its Affiliates under this Agreement, any
Operating Agreement or any other agreement (which shall include payments to
lenders where Licensor has guaranteed the underlying indebtedness) and does not
cure such default within five (5) days following notice from Licensor (or such
other applicable cure period contained in such other agreement, unless no cure
period is stated or such period is less than five (5) days, in which case the
five (5) day cure period shall apply);

                                       20
<PAGE>

                  (12)     Developer, the Controlling Principals or any of their
Affiliates fails or refuses to comply with any term or condition of any sublease
or related agreement, between Licensor or its Affiliates and Developer or its
Affiliates, and does not cure such default within any notice and cure period
provided for in such sublease or related agreement following notice from
Licensor of such default (unless no cure period is specified in the sublease or
other agreement), in which case the notice and cure period in Section VII(C)
shall apply; or

                  (13)     Developer or any of the Controlling Principals
repeatedly commits a material event of default under this Agreement, whether or
not such defaults are of the same or different nature and whether or not such
defaults have been cured by Developer after notice by Licensor.

         C.       Except as provided above in Sections VII(A) and VII(B), if
Developer fails to comply with any other term or condition imposed by this
Agreement, any Operating Agreement or any other development or operating
agreement between Developer and Licensor, as such may from time to time be
amended, Licensor may terminate this Agreement only by giving written notice of
termination stating the nature of such default to Developer at least thirty (30)
days prior to the effective date of termination; provided, however, that
Developer may avoid termination by immediately initiating a remedy to cure such
default and curing it to Licensor's satisfaction within the thirty (30) day
period and by promptly providing proof thereof to Licensor. Subject to Section
VII(D), if any such default is not cured within the specified time, or such
longer period as applicable law may require, Developer's rights under this
Agreement shall terminate without further notice to Developer effective
immediately upon the expiration of the thirty (30) day period or such longer
period as applicable law may require, unless Licensor gives Developer notice of
Licensor's intent to continue this Agreement.

         D.       Upon default by Developer under Sections VII(B) or VII(C),
Licensor has the option, in its sole discretion, in addition to exercising its
option to terminate this Agreement as provided in Sections VII(B) and (C), to do
any one or more of the following:

                  (1)      terminate or modify any territorial rights granted to
Developer in Article I;

                  (2)      reduce the area of such territorial rights;

                  (3)      reduce the number of Restaurants which Developer may
establish pursuant to Section III(B)(l);

                  (4)      accelerate the Development Schedule;

                  (5)      with respect to Section VII(B)(l), permit Developer
to obtain an extension of the Development Schedule under Section III(B);

                  (6)      terminate or modify any right granted to Developer in
Section I(B); or

                  (7)      pursue any other remedy Licensor may have at law or
in equity; provided, however, that Licensor shall not be entitled to recover
money damages for lost revenues or profits solely because of a failure of
Developer to meet the Development Schedule set out herein so long as Developer
shall demonstrate that such failure has occurred despite the exercise of all
commercially reasonable efforts on Developer's part to meet such Development
Schedule.

         E.       (1)      Upon the termination or expiration of this Agreement,
Developer shall have no right to establish or operate any Restaurant:

                                       21
<PAGE>

                           (a)      for which an Operating Agreement has not
been executed by Licensor and delivered to Developer at the time of termination
or expiration, or

                           (b)      with respect to which Developer has not
satisfied the prerequisites for obtaining licenses as described in Article IV
whether or not an Operating Agreement has been executed.

                  (2)      If Licensor elects to terminate the territorial
rights granted to Developer in Article I or modify such territorial rights or
reduce the area of territorial rights as provided in Section VII(D) above,
Developer shall continue to develop Restaurants in accordance with the
Development Schedule or Supplementary Development Schedule, to the extent that
the number of Restaurants Developer is required to develop is reduced and/or the
area in which such Restaurants are required to be developed is reduced by
Licensor pursuant to Sections VII(D)(2) and (3).

                  (3)      If Licensor exercises any of its rights in Section
VII(D) or if this Agreement otherwise expires or terminates, Licensor shall be
entitled to establish, and to license others to establish, Restaurants in the
Territory or in the portion thereof no longer part of the Territory or pursuant
to any other modification of Developer's territorial rights, except as may be
otherwise provided under any Operating Agreement which is then in effect between
Licensor and Developer.

         F.       Licensors exercise of any of its options under Section VII(D)
shall not, in the event of a default, constitute a waiver by Licensor to
exercise its option to terminate this Agreement at any time with respect to a
subsequent event of default of a similar or different nature.

         G.       No default under this Agreement shall constitute a default
under any Operating Agreement between the parties hereto, unless the default is
also a default under the terms of such Operating Agreement.

         H.       Upon default of Developer and the early termination of this
Agreement, Licensor shall have the right to purchase the assets of all of the
Restaurants opened pursuant to Operating Agreements executed under the terms of
this Agreement. The terms and conditions of the purchase transaction, including,
but not limited to, the purchase price for the assets of such Restaurants, shall
be determined in accordance with the provisions contained in the applicable
Operating Agreement permitting the Licensor to purchase, at its option, such
assets upon termination or expiration of the Operating Agreement.

         I.       No right or remedy herein conferred upon or reserved to
Licensor is exclusive of any other right or remedy provided or permitted by law
or in equity.

         J.       Upon termination or expiration of this Agreement, Developer
and the Controlling Principals shall comply with the restrictions on
confidential information and the covenants against competition contained in
Article IX. Any other person required to execute similar covenants pursuant to
Article IX shall also comply with such covenants.

         K.       Developer acknowledges and agrees that each of the obligations
of Developer and the Controlling Principals described in this Agreement is a
material and essential obligation of Developer, that non-performance of such
obligations will adversely and substantially effect the Licensor and the System,
and that the exercise by Licensor of the rights and remedies set forth herein is
appropriate and reasonable.

                                       22
<PAGE>

         L.       Any alleged default by Licensor of this Agreement shall be
deemed waived unless: (1) Developer gives Licensor written notice of such
alleged default within thirty (30) days of its occurrence; and (2) Licensor
fails to initiate a remedy to such alleged default within sixty (60) days of
having received written notice thereof.

                                  ARTICLE VIII
                              TRANSFER OF INTEREST

         A.       Licensor shall have the right to transfer or assign this
Agreement and all or any part of its rights or obligations herein to any person
or Entity without Developer's consent. Specifically, and without limitation to
the foregoing, Developer and the Controlling Principals expressly affirm and
agree that Licensor may sell its assets, the Proprietary Marks or the System to
a third party; may offer its securities privately or publicly; may merge,
spin-off, acquire other Entities, or be acquired by another Entity; may
undertake a refinancing, recapitalization, leveraged buyout or other economic or
financial restructuring; and, with regard to any or all of the above sales,
assignments and dispositions, Developer and the Controlling Principals expressly
and specifically waive any claims, demands or damages against Licensor arising
from or related to the transfer of the Proprietary Marks (or any variation
thereof) or its assets or the System (or any portion thereof) from Licensor to
any other party. Upon such sale, assignment or disposition, Developer further
agrees that Licensor shall have no further obligations arising out of or related
to this Agreement so long as such obligations are assumed by the transferee.
Nothing contained in this Agreement shall require Licensor to remain in the
business of operating or licensing the operation of O'Charley's restaurants or
other restaurant businesses or to offer any services or products, whether or not
bearing the Proprietary Marks, to Developer, if Licensor exercises its rights
hereunder to assign its rights in this Agreement.

         B.       (1)   Developer and the Controlling Principals understand and
acknowledge that the rights and duties set forth in this Agreement are personal
to Developer and the Controlling Principals and that Licensor has granted such
rights in reliance on the business skill, financial capacity and personal
character of Developer and the Controlling Principals and with the expectation
that the duties and obligations contained in this Agreement will be performed by
Developer and the Controlling Principals signing this Agreement. Accordingly,
neither Developer nor any Controlling Principal, nor any successor or assign of
Developer or any Controlling Principal, shall sell, assign, transfer, convey,
give away, pledge, mortgage or otherwise dispose of or encumber any direct or
indirect interest in this Agreement, in Developer or the assets of Developer,
without the prior written consent of Licensor; provided, however, that
Licensor's prior written consent shall not be required for a transfer of less
than a five percent (5%) interest in a Publicly-Held Entity. Any purported
assignment or transfer, by operation of law or otherwise, made in violation of
this Agreement shall be null and void.

                  (2)      If Developer wishes to transfer all or part of its
interest in this Agreement or if Developer or a Controlling Principal wishes to
transfer any ownership interest in, or assets of, Developer, transferor and the
proposed transferee shall apply to Licensor in writing for Licensor's consent,
which may be withheld in Licensor's sole discretion. Without limiting the
generality of the foregoing, Licensor may require that any or all of the
following conditions be met prior to its approval of the transfer:

                                       23
<PAGE>

                           (a)      All of the accrued monetary obligations of
Developer and its Affiliates and all other outstanding obligations to Licensor
and its Affiliates arising under this Agreement or any Operating Agreement or
any other agreement shall have been satisfied in a timely manner and Developer
shall have satisfied all trade accounts and other debts, of any nature or kind,
in a timely manner.

                           (b)      Developer and its Affiliates are not in
default of any provision of this Agreement, any amendment hereof or successor
hereto, or any Operating Agreement or any other agreement between Developer or
its Affiliates and Licensor or its Affiliates; and Developer shall have
substantially and timely complied with all the terms and conditions of such
agreements during the terms thereof.

                           (c)      The transferor and its principals, as
applicable, shall have executed a general release, in a form satisfactory to
Licensor, of any and all claims against Licensor, and its Affiliates, and each
of such Entity's respective officers, directors, shareholders, partners, agents,
representatives, independent contractors and employees, in their corporate and
individual capacities, including, without limitation, claims arising under this
Agreement, any Operating Agreement and any other agreement between Developer and
Licensor or any of their Affiliates or under federal, state or local laws,
rules, and regulations or orders.

                           (d)      The transferee shall enter into a written
agreement, in a form satisfactory to Licensor, assuming full, unconditional,
joint and several liability for and agreeing to perform from the date of the
transfer, all obligations, covenants and agreements of Developer in this
Agreement, and, if transferee is a corporation, limited liability company,
partnership or other Entity, transferee's shareholders, members, partners or
other investors, as applicable, shall also execute such agreement as
transferee's principals, and guarantee the performance of all such obligations,
covenants and agreements.

                           (e)      The transferee shall demonstrate to
Licensor's satisfaction that transferee meets the criteria considered by
Licensor when reviewing a prospective developer's application for development
rights, including, but not limited to, Licensor's educational, managerial and
business standards, transferee's good moral character, business reputation and
credit rating, transferee's aptitude and ability to conduct the business
contemplated hereunder (as may be evidenced by prior related business experience
or otherwise), transferee's financial resources and capital for operation of the
business and the geographic proximity of other territories with respect to which
transferee has been granted development rights or of other O'Charley's
restaurants operated by transferee, if any.

                           (f)      The transferee shall execute the standard
form development agreement then being offered to new System developers or a
revised form of this Agreement, as Licensor deems appropriate, and such other
ancillary agreements as Licensor may require, which agreements shall supersede
this Agreement and its ancillary documents in all respects and the terms of
which agreements may differ from the terms of this Agreement, and if the
transferee is a corporation, limited liability company, partnership or other
Entity, transferee's shareholders, members, partners or other investors, as
applicable, shall also execute such agreements as transferee's principals, and
guarantee the performance of all such obligations, covenants and agreements.

                           (g)      The transferee, at its expense, shall
renovate, modernize and otherwise upgrade the Restaurant and, if applicable, any
Restaurant delivery vehicles to conform

                                       24
<PAGE>

to the then-current standards and specifications of the System, and shall
complete the upgrading and other requirements within the time period reasonably
specified by Licensor.

                           (h)      The transferor shall remain liable for all
of the obligations to Licensor in connection with this Agreement incurred prior
to the effective date of the transfer and shall execute any and all instruments
reasonably requested by Licensor to evidence such liability.

                           (i)      At the transferee's expense, the transferee,
the transferee's Operating Principal (or his authorized designee), and any other
applicable Restaurant personnel shall complete any training programs then in
effect for operators of O'Charley's restaurants upon such terms and conditions
as Licensor may reasonably require.

                           (j)      Developer shall pay a transfer fee of Five
Thousand Dollars ($5,000), or such greater amount as is necessary, to reimburse
Licensor for its reasonable costs and expenses associated with reviewing the
application to transfer, including, without limitation, legal and accounting
fees.

                           (k)      If transferee is a corporation, limited
liability company, partnership or other Entity, transferee shall make and will
be bound by any or all of the representations, warranties and covenants in
Article VI as Licensor requests. Transferee shall provide to Licensor evidence
satisfactory to Licensor that the terms of Article VI have been satisfied and
are true and correct on the date of transfer.

                           (l)      Developer shall have completed development
of the Restaurants required to be developed during the first three (3)
Development Periods of the Development Schedule.

                  (3)      Developer acknowledges and agrees that each condition
which must be met by the transferee is reasonable and necessary to ensure such
transferee's full performance of the obligations hereunder.

         C.       In the event the proposed transfer is to a corporation formed
solely for the convenience of ownership, Licensor's consent may be conditioned
upon any of the requirements in Section VIII(B)(2)(a), (b), (d), (h), (i) and
(k). With respect to a transfer to a corporation formed for the convenience of
ownership, Developer shall be the owner of all the voting stock or interest of
the corporation, and if Developer is owned by more than one individual, each
such individual shall have the same proportionate ownership interest in the
corporation as he had in Developer prior to the transfer.

         D.       (1)       If Developer wishes to transfer all or part of its
interest in the assets of a Restaurant or this Agreement, or if Developer or a
Controlling Principal wishes to transfer any ownership interest in Developer
pursuant to an offer received from a third party to purchase such interest, then
such proposed seller shall promptly notify Licensor in writing of each such
offer, shall certify that such offer is bona fide and shall provide and shall
certify in writing as to the accuracy of such information and documentation
relating to the offer as Licensor may require. Licensor shall have the right and
option, exercisable within thirty (30) days after receipt of such written
notification and copies of all documentation requested by Licensor describing
the terms of such offer, to send written notice to the proposed seller that
Licensor intends to purchase the proposed seller's interest on the same terms
and conditions offered by the third party. In the event that Licensor elects to
purchase the proposed seller's interest, closing on such purchase

                                       25
<PAGE>

must occur within the later of sixty (60) days from the date of notice to the
proposed seller of the election to purchase by Licensor, sixty (60) days after
the date Licensor receives and obtains all necessary permits and approvals to
complete such purchase or such other date the parties mutually agree upon in
writing. Any material change in the terms of any offer prior to closing shall
constitute a new offer subject to the same right of first refusal by Licensor as
in the case of an initial offer. Failure of Licensor to exercise the option
afforded by this Section VIII(D) shall not constitute a waiver of any other
provision of this Agreement, including the consent provisions of Section VIII(B)
and all of the other requirements of this Article VIII relating to a proposed
transfer.

                  (2)      If the offer from a third party provides for payment
of consideration other than cash or involves certain non-cash items or
intangible benefits, Licensor may elect to purchase the interest proposed to be
sold for the reasonable equivalent in cash of such non-cash item or intangible
benefit (the "Cash Equivalent"). If the parties cannot agree within thirty (30)
days on the reasonable equivalent in cash of the non-cash part of the offer,
then the Cash Equivalent will be determined by one (1) or more professional
appraisers or independent certified public accountants who are qualified by
experience and ability to appraise (each, a "Qualified Appraiser"), selected
under the procedures in this Section. If the Cash Equivalent is to be determined
by Qualified Appraisers, Licensor and Developer will each have the opportunity
to appoint, at their own expense, a Qualified Appraiser, within five (5) days
following the expiration of the thirty (30) day period within which Licensor and
Developer could not mutually agree on the Cash Equivalent. If either party shall
fail to appoint a Qualified Appraiser within this five (5) day period, the other
Qualified Appraiser shall unilaterally establish the Cash Equivalent by a
written opinion and the cost of such Qualified Appraiser shall be split between
the two parties equally. If both parties appoint Qualified Appraisers within
this five (5) day period, the two (2) Qualified Appraisers shall establish the
Cash Equivalent in a single written opinion agreed to by both of them. If the
two (2) Qualified Appraisers cannot agree on the Cash Equivalent within ten (10)
days of the appointment of the latter of them, the two (2) Qualified Appraisers
shall together appoint a third Qualified Appraiser whose written opinion shall
establish a Cash Equivalent between the Cash Equivalents established by the
first two (2) Qualified Appraisers. In the event of such appraisal, each party
shall bear its own legal and other costs. In the event that Licensor exercises
its right of first refusal herein provided, it shall have the right to set off
(i) all amounts due from Developer for the Qualified Appraisers' fees and
appraisal costs, and (ii) all amounts due from Developer or any of its
Affiliates, against any payment therefor.

         E.       (1)     Upon the death of Developer (if Developer is a natural
person) or any Controlling Principal who is a natural person (the "Deceased"),
the executor, administrator or other personal representative of the Deceased
shall transfer such interest to a third party in accordance with the conditions
described in this Section VIII(E) within twelve (12) months after the death. If
no personal representative is designated or appointed or no probate proceedings
are instituted with respect to the estate of the Deceased, then the distributee
of such interest must be approved by Licensor. If the distributee is not
approved by Licensor, then the distributee shall transfer such interest to a
third party approved by Licensor within twelve (12) months after the death of
the Deceased.

                  (2)      Upon the Permanent Disability of Developer (if
Developer is a natural person) or any Controlling Principal who is a natural
person, Licensor may, in its sole discretion,

                                       26
<PAGE>

require such interest to be transferred to a third party approved by Licensor
within six (6) months after notice to Developer of such Permanent Disability.
"Permanent Disability" shall mean any physical, emotional or mental injury,
illness or incapacity which would prevent a person from performing the
obligations set forth in this Agreement or in the guaranty made part of this
Agreement for at least ninety (90) consecutive days. Permanent Disability shall
be determined upon examination of the person by a licensed practicing physician
selected by Licensor; or, if the person refuses to submit to an examination,
then such person shall be automatically deemed permanently disabled as of the
date of such refusal for the purpose of this Section VIII(E). The costs of any
examination required by this Section shall be paid by Licensor.

                  (3)      Upon the death or claim of Permanent Disability of
Developer or any Controlling Principal, Developer or a representative of
Developer, must promptly notify Licensor of such death or claim of Permanent
Disability within fifteen (15) days of its occurrence. Any transfer upon death
or Permanent Disability shall be subject to the same terms and conditions as
described in this Article VIII for any inter vivos transfer. Developer and each
Controlling Principal shall have the right to seek approval of a transfer of
their respective interest to a proposed successor prior to the death or claim of
Permanent Disability by Developer or the Controlling Principal, as applicable.
If Developer or any Controlling Principal, as applicable, desires to obtain
approval of any proposed successor in interest prior to the death or claim of
Permanent Disability, Developer or the Controlling Principal, as applicable,
shall submit to Licensor such information and documentation concerning such
proposed successor required by Licensor in the Manuals or other written
directives. Further, as a condition to approval, Licensor may, in its sole
discretion, require compliance with any of the terms and conditions described in
this Section for any inter vivos transfer.

         F.       Licensor's consent to a transfer of any interest in Developer
or in this Agreement described herein shall not constitute a waiver of any
claims it may have against the transferring party, nor shall it be deemed a
waiver of Licensor's right to demand exact compliance with any of the terms of
this Agreement by the transferee.

         G.       Securities of, or other Entity ownership interests in,
Developer may be offered to prospective investors, including existing investors,
by private offering or otherwise, only with the prior written consent of
Licensor. All materials required for such offering by federal or state law shall
be submitted to Licensor for a limited review, as discussed below prior to being
filed with any governmental agency; and any materials to be used in any exempt
offering shall be submitted to Licensor for such review prior to their use. No
offering by Developer shall imply (by use of the Proprietary Marks or otherwise)
that Licensor is participating in an underwriting, issuance or offering of
Developer's securities or other Entity ownership interests or the securities or
other Entity ownership interests of any subsidiary or Affiliate of Licensor; and
Licensor's review of any offering materials shall be limited solely to the
subject of the relationship between Developer and Licensor and their Affiliates.
Licensor may, at its option, require Developer's offering materials to contain a
written statement prescribed by Licensor concerning the limitations described in
the preceding sentence. Developer, its Principals and the other participants in
the offering must prior to the commencement of such offering, agree in writing
to fully indemnify Licensor, Licensor's Affiliates and each of such Entity's
respective officers, directors, shareholders, members, partners, agents,
representatives, independent contractors and employees in connection with the
offering. For each proposed offering, Developer shall reimburse Licensor for its
reasonable costs and expenses associated with reviewing the proposed

                                       27
<PAGE>

offering materials, including, without limitation, legal and accounting fees.
Developer shall give Licensor written notice at least ninety (90) days prior to
the date of commencement of any offering or other transaction covered by this
Section.

         H.       Developer and each of its Controlling Principals, as
applicable, may transfer, sell or assign their respective interests in
Developer, by and among themselves only with Licensor's prior written consent;
provided, however, such transfer, sale or assignment shall not result in a
change in the Controlling Interest in Developer. Licensor's consent may be
conditioned on compliance with Section VIII(B)(2)(a), (b), (d), (h), (i), (k)
and (l). For the purpose of this Agreement, "Controlling Interest" shall mean:

                           (a)      if Developer is a corporation, that the
Controlling Principals, either individually or cumulatively, (i) directly or
indirectly own at least fifty-one percent (51%) of the shares of each class of
Developer's issued and outstanding capital stock and (ii) are entitled, under
its governing documents and under any agreements among the shareholders, to cast
a sufficient number of votes to elect a majority of the members of the board of
directors or to require such corporation to take or omit to take any action
which such corporation is required to take or omit to take under this Agreement;

                           (b)      if Developer is a limited liability company,
that the Controlling Principals (i) own at least fifty-one percent (51%) of the
outstanding units of membership interest in the limited liability company, and
(ii) are entitled under its operating agreement to act on behalf of the limited
liability company without the approval or consent of any other member or be able
to cast a sufficient number of votes to require the limited liability company to
take or omit to take any action which the limited liability company is required
to take or omit to take under this Agreement; or

                           (c)      if Developer is a partnership, that the
Controlling Principals (i) own at least a fifty-one percent (51 %) interest in
the operating profits and operating losses of the partnership as well as at
least a fifty-one percent (51%) ownership interest in the partnership (and at
least a fifty-one percent (51%) interest in the shares of each class of capital
stock or other ownership interest of any direct or indirect corporate or other
Entity general partner) and (ii) are entitled under its partnership agreement or
other Entity organizational documents or applicable law to act on behalf of the
partnership without the approval or consent of any other partner or owner or be
able to cast a sufficient number of votes to require the partnership or other
Entity to take or omit to take any action which the partnership or other Entity
is required to take or omit to take under this Agreement.

         I.       If any person holding an interest in Developer (other than
Developer or a Controlling Principal, which parties shall be subject to the
provisions set forth in Section VIII(B) above) transfers such interest, then
Developer shall promptly notify Licensor of such proposed transfer in writing
and shall provide such information relative thereto as Licensor may reasonably
request prior to such transfer. Such transferee must have good moral character a
good business reputation, an acceptable credit rating and may not be one of
Licensor's competitors. Such transferee will be a Developer's Principal and as
such shall execute a confidentiality and non-compete agreement in the form then
required by Licensor, which form shall be in substantially the same form
attached hereto as Attachment C (see Sections IX(B)(2) and IX(I)). Licensor also
reserves the right to designate the transferee as one of the Controlling
Principals.

                                       28
<PAGE>
                                   ARTICLE IX
                                   COVENANTS

         A. Developer and Operating Principal covenant that during the term of
this Agreement (except as otherwise approved in writing by Licensor) Developer
and Operating Principal (and any approved designee for Operating Principal)
shall devote their full time, energy and best efforts to the management and
operation of the development activities contemplated under this Agreement.

         B. (1) Neither Developer nor any of the Controlling Principals shall,
during the term of this Agreement and thereafter, communicate or divulge to, or
use for the benefit of, any other person, persons or Entity and following the
termination or expiration of this Agreement, shall not use for their own
benefit, any confidential information, knowledge or know-how concerning the
methods of development and operation of the Restaurants which may be
communicated to Developer or any of the Controlling Principals or of which they
may be apprised under this Agreement. Developer and each of the Controlling
Principals shall disclose such confidential information only to the Controlling
Principals and Developer's personnel who must have access to it in connection
with their employment with Developer. Any and all information, knowledge,
know-how, techniques and any materials used in or related to the System which
Licensor provides to Developer in connection with this Agreement shall be deemed
confidential for the purposes of this Agreement. Neither Developer nor the
Controlling Principals shall at any time, without Licensor's prior written
consent, copy, duplicate, record or otherwise reproduce such materials or
information, in whole or in part, nor otherwise make the same available to any
unauthorized person. The covenants in this Section shall survive the expiration,
termination or transfer of this Agreement or any interest herein and shall be
perpetually binding upon Developer and each of the Controlling Principals;
provided, however, if the jurisdiction in which this covenant is sought to be
enforced does not allow perpetual binding, then the maximum amount of time
allowed under the applicable law.

                  (2) Developer shall require and obtain execution of covenants
similar to those set forth in Section IX(B)(1) from each of its Principals who
are not required to sign this Agreement as a Controlling Principal or as
Operating Principal. Such covenants shall be substantially in the form contained
in Attachment C. Developer shall provide Licensor with executed copies of all
such agreements ten (10) days after they are executed.

         C. Developer and the Controlling Principals specifically acknowledge
that, pursuant to this Agreement, Developer and the Controlling Principals will
receive valuable training, trade secrets and confidential information which are
beyond the present skills and experience of Developer and the Controlling
Principals and Developer's managers and employees and that Developer has the
right and the obligation, arising from this Agreement, to develop the Territory
for the benefit of the System. Developer and the Controlling Principals
acknowledge that such specialized training, trade secrets and confidential
information provide a competitive advantage and will be valuable to them in the
development and operation of the Restaurants and that gaining access to such
specialized training, trade secrets and confidential information is, therefore,
a primary reason for entering into this Agreement. In consideration of such
specialized training, trade secrets, confidential information and rights,
Developer and the Controlling Principals covenant that, during the term of this
Agreement, except as otherwise approved in writing by Licensor, neither
Developer nor any of the Controlling Principals shall,

                                       29

<PAGE>

either directly or indirectly, for themselves, through, on behalf of or in
conjunction with any person, persons or Entity:

                (1) divert, or attempt to divert, any business or customer of
the business described hereunder to any competitor, by direct or indirect
inducement or otherwise, or do or perform, directly or indirectly, any other act
injurious or prejudicial to the goodwill associated with the Proprietary Marks
and the System; or

                (2) own, maintain, operate, engage in or have any financial or
beneficial interest in (including through any interest in an Entity that
conducts such activities), advise, assist or make loans to, any business that
operates a full service, varied menu, casual dining restaurant that features
freshly prepared items such as steaks, seafood, homemade baked goods and fresh
cut salads, and that serves alcoholic beverages through a full-service bar, and
which business is located within the United States, its territories or
commonwealths, or any other country, province, state or geographic area in which
Licensor has used, sought registration of or registered the same or similar
Proprietary Marks or operates or licenses others to operate a business under the
same or similar Proprietary Marks.

         D. With respect to Developer, and for a continuous uninterrupted period
commencing upon the expiration or termination of (regardless of the cause for
termination), or transfer of all of the Controlling Interest in, this Agreement
(or with respect to each of the Controlling Principals, commencing upon the
earlier of: (i) the expiration, termination of, or transfer of all of the
Controlling Interest in this Agreement or (ii) the time such individual or
Entity ceases to satisfy the definition of Principal as described in this
Agreement), and continuing for two (2) years thereafter, except as otherwise
approved in writing by Licensor, neither Developer nor any of the Controlling
Principals shall, either directly or indirectly, for themselves or through, on
behalf of, or in conjunction with any person, persons or Entity:

                (1) divert, or attempt to divert, any business or customer of
the business described hereunder to any competitor, by direct or indirect
inducement or otherwise, or do or perform, directly or indirectly, any other act
injurious or prejudicial to the goodwill associated with Licensor's Proprietary
Marks and the System;

                (2) employ, or seek to employ, any person who is at that time,
or has been within the preceding six (6) months, employed by Licensor or any of
its Affiliates or by any other developer or operator of Licensor, or otherwise
directly or indirectly induce such person to leave that person's employment;
provided, however, that Developer may employ such person in a managerial
position with respect to Developer's operation of an O'Charley's restaurant
pursuant to the terms of the Operating Agreement applicable to such O'Charley's
restaurant; or

                (3) own, maintain, operate, engage in or have any financial or
beneficial interest in (including through any interest in an Entity that
conducts such activities), advise, assist or make loans or provide guarantees
with respect to loans to, any business that operates a full service, varied
menu, casual dining restaurant that features freshly prepared items such as
steaks, seafood, homemade baked goods and fresh cut salads, and that serves
alcoholic beverages through a full-service bar, which business is, or is
intended to be, located within the Territory or within a fifteen (15) mile
radius of the location of any O'Charley's restaurant or food service facility in
existence or under construction (or where land has been purchased or a lease has
been executed for the construction of an O'Charley's restaurant or other food
service facility) as of the earlier of: (a) the expiration or termination of, or
the transfer of all of Developer's interest in, this

                                       30

<PAGE>

Agreement; or (b) the time the Controlling Principal ceases to satisfy the
definition of Developer's Principal, as applicable.

         E. Sections IX(C)(2) and (D)(3) shall not apply to ownership of less
than a five percent (5%) beneficial interest in the outstanding equity
securities of any Publicly-Held Entity.

         F. The parties acknowledge and agree that each of the covenants
contained herein are reasonable limitations as to time, geographical area and
scope of activity to be restrained and do not impose a greater restraint than is
necessary to protect the goodwill or other business interests of Licensor. The
parties agree that each of the above covenants shall be construed as independent
of any other covenant or provision of this Agreement. If all or any portion of a
covenant in this Article IX is held unreasonable or unenforceable by a court or
agency having valid jurisdiction in an unappealed or unappealable final decision
to which Licensor is a party, Developer and the Controlling Principals expressly
agree to be bound by any lesser covenant subsumed within the terms of such
covenant that imposes the maximum duty permitted by law as if the resulting
covenant were separately stated in and made a part of this Section.

         G. Developer and the Controlling Principals understand and acknowledge
that Licensor shall have the right, in its sole discretion, to reduce the scope
of any covenant set forth in Section IX(B), or any portion thereof, without
their consent, effective immediately upon notice to Developer. Developer and the
Controlling Principals agree that they shall immediately comply with any
covenant as so modified, which shall be fully enforceable notwithstanding the
provisions of Section XV(A).

         H. Developer and the Controlling Principals expressly agree that the
existence of any claims they may have against Licensor whether or not arising
from this Agreement, shall not constitute a defense to the enforcement by
Licensor of the covenants in this Article IX. Developer and the Controlling
Principals agree to pay all costs and expenses (including reasonable attorneys'
fees) incurred by Licensor in connection with the enforcement of this Section.

         I. Developer shall require and obtain the execution of covenants
similar to those set forth in Sections IX(C) and (D) (including covenants
applicable upon the termination of a person's employment with Developer) from
each of Principal who is not required to sign this Agreement as a Controlling
Principal. Such covenants shall be substantially in the form set forth in
Attachment C. Licensor reserves the right, in its sole discretion, to decrease
the period of time or geographic scope of the non-competition covenant set forth
in Attachment C or eliminate such non-competition covenant altogether for any
party that is required to execute such agreement under this Article IX.

         J. Developer and the Controlling Principals acknowledge that a
violation of this Section would result in irreparable injury to Licensor for
which no adequate remedy at law may be available, and Developer and the
Controlling Principals accordingly consent to the issuance of an injunction
prohibiting any conduct by Developer or the Controlling Principals in violation
of the terms of this Section. Developer and the Controlling Principals agree to
pay all court costs and reasonable legal fees incurred by Licensor in obtaining
specific performance, injunctive relief or any other remedy available to
Licensor for any violation of the requirements of this Section.

                                       31

<PAGE>

         K. Notwithstanding anything else in this Article IX to the contrary, if
there is a state specific non-competition and/or non-solicitation addendum
attached to this Agreement, the terms of such addendum shall supersede the terms
of this Article IX to the extent they are inconsistent with one another.

                                   ARTICLE X
                   INDEPENDENT CONTRACTOR AND INDEMNIFICATION

         A. The parties acknowledge and agree that this Agreement does not
create a fiduciary relationship between them, that Developer shall be an
independent contractor and that nothing in this Agreement is intended to
constitute either party an agent, legal representative, subsidiary, Affiliate,
joint venturer, partner, employee, joint employer or servant of the other for
any purpose.

         B. During the term of this Agreement, Developer shall hold itself out
to the public as an independent contractor conducting its development operations
pursuant to development rights granted by Licensor. Developer agrees to take
such action as shall be necessary to that end, including, without limitation,
exhibiting a notice of that fact in a conspicuous place in any Restaurant
established under any Operating Agreement for the purposes hereunder, the
content and form of which Licensor reserves the right to specify in writing.

         C. Developer understands and agrees that nothing in this Agreement
authorizes Developer or any of the Controlling Principals to make any contract,
agreement, warranty or representation on Licensor's behalf, or to incur any debt
or other obligation in Licensor's name and that Licensor shall in no event
assume liability for, or be deemed liable under this Agreement as a result of
any such action or for any act or omission of Developer or any of the
Controlling Principals, or any claim or judgment arising therefrom.

         D. (1) Developer and each of the Controlling Principals shall indemnify
and hold harmless Licensor and its Affiliates and their officers, directors,
shareholders, employees, managers, members, agents and representatives from any
and all claims, demands, suits, proceedings, fines, losses, liabilities damages,
costs and expenses (including reasonable attorneys' fees) suffered or incurred,
directly or indirectly, by any one or more of them (collectively, "Damages") as
a result of (a) any breach or other failure by Developer, Operating Principal or
any Controlling Principal to perform its or his obligations hereunder or under
any other instrument or agreement executed in connection herewith, or (b) any
other action or inaction by Developer, Operating Principal, any Controlling
Principal or any other person resulting from or in connection with the operation
of any Restaurant; provided, however, that neither Developer, Operating
Principal nor any Controlling Principal shall be liable for Damages resulting
from Licensor's or its Affiliates' gross negligence or willful misconduct.

                 (2) Developer and each of the Controlling Principals agree to
give Licensor immediate notice of any such action, suit, proceeding, claim,
demand, inquiry or investigation. Licensor shall have the option, in its sole
discretion, to defend any action seeking Damages as a result of any action or
inaction by Developer or any other person resulting from or in connection with
the operation of the Restaurant or to allow Developer to defend such action with
counsel satisfactory to Licensor.

                                       32

<PAGE>

                (3) Developer and the Controlling Principals expressly agree
that the terms of this Section X(D) shall survive the termination, expiration or
transfer of this Agreement or any interest herein.

                                   ARTICLE XI
                                    APPROVALS

         A. Whenever this Agreement requires the prior approval or consent of
Licensor, Developer shall make a timely written request to Licensor and such
approval or consent shall be obtained in writing.

         B. Licensor makes no warranties or guarantees upon which Developer may
rely and assumes no liability or obligation to Developer or any third party to
which it would not otherwise be subject, by providing any waiver, approval,
advice, consent or suggestion to Developer in connection with this Agreement or
the construction of restaurants, or by reason of any neglect, delay or denial of
any request therefor.

                                  ARTICLE XII
                            NON-WAIVER AND REMEDIES

         A. No delay, waiver, omission or forbearance on the part of Licensor to
exercise any right, option, duty or power arising out of any breach or default
by Developer or the Controlling Principals under this Agreement shall constitute
a waiver by Licensor to enforce any such right, option, duty or power against
Developer or the Controlling Principals, or as to a subsequent breach or default
by Developer or the Controlling Principals. Acceptance by Licensor of any
payments due to it hereunder subsequent to the time at which such payments are
due shall not be deemed to be a waiver by Licensor of any preceding breach by
Developer or the Controlling Principals of any terms, provisions, covenants or
conditions of this Agreement.

         B. All rights and remedies of the parties to this Agreement shall be
cumulative and not alternative, in addition to and not exclusive of any other
rights or remedies which are provided for herein or which may be available at
law or in equity in case of any breach, failure or default or threatened breach,
failure or default of any term, provision or condition of this Agreement or any
other agreement between Developer, or its Affiliates, and Licensor or its
Affiliates. The rights and remedies of the parties to this Agreement shall be
continuing and shall not be exhausted by any one or more uses thereof and may be
exercised at any time or from time to time as often as may be expedient. Any
option or election to enforce any such right or remedy may be exercised or taken
at any time and from time to time. The expiration, earlier termination or
exercise of Licensor's rights pursuant to Article VII of this Agreement shall
not discharge or release Developer or any of the Controlling Principals from any
liability or obligation then accrued, or any liability or obligation continuing
beyond, or arising out of, the expiration, the earlier termination or the
exercise of such rights under this Agreement. Additionally, Developer and the
Controlling Principals shall pay all court costs and attorneys' fees incurred by
Licensor in obtaining any remedy available to Licensor for any violation of this
Agreement.

                                       33

<PAGE>

                                  ARTICLE XIII
                                    NOTICES

         All notices and other communications required or permitted to be given
hereunder shall be deemed given when delivered in person, by overnight courier
service, facsimile transmission or mailed by registered or certified mail
addressed to the recipient at the address set forth below, unless that party
shall have given written notice of change of address to the sending party, in
which event the new address so specified shall be used.

Notices to Licensor:               O'Charley's Inc.
                                   3038 Sidco Drive
                                   Nashville, Tennessee 37204
                                   Attention:  Director of Franchising
                                   Facsimile: (615) 782-5043

Notices to Developer and
the Controlling Principals:        c/o Meritage Hospitality Group Inc.
                                   1971 E. Beltline, NE Suite 200
                                   Grand Rapids, Michigan 49525
                                   Attention:  Robert E. Schermer, Jr.
                                   Facsimile: (616) 776-2776

                                  ARTICLE XIV
                         SEVERABILITY AND CONSTRUCTION

         A. Except as expressly provided to the contrary herein, each portion,
section, part, term and provision of this Agreement shall be considered
severable. If for any reason any portion, section, part, term or provision is
determined to be invalid and contrary to, or in conflict with, any existing or
future law or regulation by a court or agency having valid jurisdiction, this
shall not impair the operation of, or have any other effect upon, the other
portions, sections, parts, terms or provisions of this Agreement that may remain
otherwise intelligible, and the latter shall continue to be given full force and
effect and bind the parties. The invalid portions, sections, parts, terms or
provisions shall be deemed not to be part of this Agreement and there shall be
automatically added such portion, section, part, term or provision as similar as
possible to that which was severed which shall be valid and not contrary to or
in conflict with any law or regulation.

         B. Except as expressly provided to the contrary herein, nothing in this
Agreement is intended, nor shall be deemed to, confer upon any person or legal
Entity other than Developer and Licensor, Licensor's officers, directors and
personnel and such of Developers and Licensors respective successors and assigns
as may be contemplated (and, as to Developer, authorized by Article VIII), any
rights or remedies under or as a result of this Agreement.

         C. All captions in this Agreement are intended solely for the
convenience of the parties and shall not affect the meaning or construction of
any provision of this Agreement.

         D. All references to the masculine, neuter or singular shall be
construed to include the masculine, feminine, neuter or plural, where
applicable. Without limiting the obligations individually undertaken by the
Controlling Principals under this Agreement, all

                                       34

<PAGE>

acknowledgments, promises, covenants, agreements and obligations made or
undertaken by Developer in this Agreement shall be deemed, jointly and
severally, undertaken by all of the Controlling Principals.

         E. The term "Principals" shall mean, collectively and individually,
Developer's spouse, if Developer is an individual; all officers and directors of
Developer (including the officers and directors of any general partner of
Developer) whom Licensor designates as Principals and all holders of an
ownership interest in Developer and of any Entity directly or indirectly
controlling Developer, and any other person or Entity controlling, controlled by
or under common control with Developer. Each Principal as of the date of this
Agreement is listed on Attachment D.

         F. For purposes of this Agreement, the term "Publicly-Held Entity"
means any Entity with a class of securities registered pursuant to Section 12 of
the Securities Exchange Act of 1934, as amended, or an Entity subject to the
requirements of Section 15(d) of such Act. Further, for purposes of this
Agreement, an "Affiliate" of a person or Entity is any person or Entity that is
controlled by, controlling or under common control with such person or Entity.

         G. This Agreement may be executed in counterparts and each copy so
executed shall be deemed an original.

         H. This Agreement shall not become effective until signed by an
authorized officer of Licensor.

         I. The word "including" when used herein shall mean "including without
limitation."

                                   ARTICLE XV
                        ENTIRE AGREEMENT; APPLICABLE LAW

         A. This Agreement, the documents referred to herein and the Attachments
hereto, constitute the entire, full and complete agreement between Licensor,
Developer and the Controlling Principals concerning the subject matter hereof
and shall supersede all prior related agreements between Licensor, Developer and
the Controlling Principals. Except for those permitted to be made unilaterally
by Licensor hereunder, no amendment, change or variance from this Agreement
shall be binding on either party unless mutually agreed to by the parties and
executed by' their authorized officers or agents in writing.

         B. Developer and the Controlling Principals hereby irrevocably submit
themselves to the jurisdiction of the state and the federal district courts
located in the state, county or judicial district in which the Licensor's
principal place of business is located at the time such proceeding is commenced.
Developer and the Controlling Principals hereby waive all questions of personal
jurisdiction at the time such proceeding is commenced for the purpose of
carrying out this provision. Developer and the Controlling Principals hereby
agree that service of process may be made upon any of them in any proceeding
relating to or arising out of this Agreement or the relationship created by this
Agreement by any means allowed by applicable state or federal law. Developer and
the Controlling Principals further agree that venue for any proceeding relating
to or arising out of this Agreement shall be the county or judicial district in
which Licensor's principal place of business is located at the time such
proceeding is commenced; provided, however, with respect to any action (1) for
monies owed, (2) for injunctive or other extraordinary

                                       35

<PAGE>

relief or (3) involving possession or disposition of, or other relief relating
to, the Restaurant premises, Licensor may bring such action in any state or
federal district court which has jurisdiction. With respect to all claims,
controversies, disputes or actions related to this Agreement or the relationship
created thereby. This Agreement and any such related claims, controversies,
disputes or actions, shall be governed, enforced and interpreted under the law
of the state where Licensor's principal place of business is located at the time
any claim, controversy, dispute, or action (without regard to choice of law
rules) arose.

         C. Developer, the Controlling Principals and Licensor acknowledge that
each party's agreement regarding applicable state law and forum set forth in
Section XV(B) above provides each of the parties with the mutual benefit of
uniform interpretation of this Agreement and any dispute arising out of this
Agreement or the parties' relationship created by this Agreement. Each of
Developer, the Controlling Principals and Licensor further acknowledges the
receipt and sufficiency of mutual consideration for such benefit, and that each
party's agreement regarding applicable state law and choice of forum have been
negotiated in good faith and are part of the benefit of the bargain reflected by
this Agreement.

         D. Developer, the Controlling Principals and Licensor acknowledge that
the execution of this Agreement and acceptance of the terms by the parties
occurred at Licensor's principal place of business, and further acknowledge that
the performance of certain obligations of Developer arising under this
Agreement, including, but not limited to, the payment of monies due hereunder,
shall occur where Licensor's principal place of business is located at the time
such obligation is due.

         E. Without limiting any of the foregoing, Developer and each of the
Controlling Principals acknowledge and agree that Licensor has the right, at any
time, to create a dispute resolution program and related specifications,
standards, procedures and rules for the implementation thereof to be
administered by Licensor or its designees for the benefit of all developers and
developers conducting business under the System. The standards, specifications,
procedures and rules for such dispute resolution program shall be made part of
the Manuals, and Developer and the Controlling Principals shall comply with all
such standards, specifications, procedures and rules in seeking resolution of
any claims, controversies or disputes with or involving Licensor or other
developers or operators, if applicable under the program. If Licensor, in its
sole discretion, makes such dispute resolution program mandatory, then
Developer, the Controlling Principals and Licensor hereby agree to submit any
claims, controversies or disputes arising out of or relating to this Agreement
or the relationship created by this Agreement for resolution in accordance with
such dispute resolution program, or if such claim, controversy or dispute
relates to another developer or operator, Developer and the Controlling
Principals agree to participate in the program and submit any such claims,
controversies or disputes in accordance with the program's standards,
specifications, procedures and rules, prior to seeking resolution of such claim
by any other judicial or legally available means.

         F. Developer and the Controlling Principals hereby waive, to the
fullest extent permitted by law, any right to or claim of any punitive,
exemplary, incidental, indirect, special, consequential or other damages
(including, without limitation, loss of profits) against Licensor, its
Affiliates, and their respective officers, directors, shareholders, members,
partners, agents, representatives, independent contractors, servants and
employees, in their corporate and individual capacities, arising out of any
cause whatsoever (whether such cause be based in

                                       36

<PAGE>

contract, negligence, strict liability, other tort or otherwise) and agree that
in the event of a dispute, Developer and the Controlling Principals shall be
limited to the recovery of any actual damages sustained by them. If any other
term of this Agreement is found or determined to be unconscionable or
unenforceable for any reason, the foregoing provisions of waiver by agreement of
punitive, exemplary, incidental, indirect, special, consequential or other
damages (including, without limitation, loss of profits) shall continue in full
force and effect.

         G. Licensor, Developer and the Controlling Principals hereby agree that
no form of proceeding permitted hereby will be maintained by any party to
enforce any liability or obligation of the other party, whether arising from
this Agreement or otherwise, unless brought before the expiration of the later
of: (i) one (1) year after the date of discovery of the facts resulting in such
liability or obligation; or (ii) two (2) years after the date of the first act
or omission giving rise to the alleged liability or obligation, except that
where state or federal law mandate or make possible by notice or otherwise a
shorter period, such shorter period shall apply.

         H. Any obligation of Developer or the Controlling Principals that
contemplates performance of such obligation after termination or expiration of
this Agreement or the transfer of any interest of Developer or the Controlling
Principals therein, shall be deemed to survive such termination, expiration or
transfer, including the provisions of this Article XV.

         I. Developer, the Controlling Principals and Licensor acknowledge that
various provisions of this Agreement specify certain matters that are within the
discretion or judgment of Licensor or are otherwise to be determined
unilaterally by Licensor. If the exercise of Licensor's discretion or judgment
as to any such matter is subsequently challenged, the parties to this Agreement
expressly direct the trier of fact that Licensor's reliance on a business reason
in the exercise of its discretion or judgment is to be viewed as a reasonable
and proper exercise of such discretion or judgment, without regard to whether
other reasons for its decision may exist and without regard to whether the trier
of fact would independently accord the same weight to the business reason.

                                  ARTICLE XVI
                                ACKNOWLEDGMENTS

         A. Developer acknowledges that it has conducted an independent
investigation of the business venture contemplated by this Agreement and
recognizes that the success of this business venture involves substantial
business risks and will largely depend upon the ability of Developer. Licensor
expressly disclaims making, and Developer acknowledges that it has not received
or relied on, any warranty or guarantee, express or implied, as to the potential
volume, profits or success of the business venture contemplated by this
Agreement.

         B. Developer acknowledges that Developer has received, read and
understands this Agreement and the related Attachments and Agreements and that
Licensor has afforded Developer sufficient time and opportunity to consult with
advisors selected by Developer about the potential benefits and risks of
entering into this Agreement.

         C. Developer acknowledges that it received a complete copy of this
Agreement and all related Attachments and Agreements at least five (5) business
days prior to the date on which this Agreement was executed. Developer further
acknowledges that it has received the disclosure document required by the Trade
Regulation Rule of the Federal Trade Commission

                                       37

<PAGE>

entitled "Disclosure Requirements and Prohibitions Concerning Franchising and
Business Opportunity Ventures" at least ten (10) business days prior to the date
on which this Agreement was executed.

                  (remainder of page intentionally left blank)

                                       38

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the day and year first above written.

                                    LICENSOR:

                                    O'CHARLEY'S INC.,
                                    a Tennessee corporation

                                    By:  /s/ Edward C. Hastings
                                       -----------------------------------------
                                         Edward C. Hastings
                                         Director of Franchising

                                    DEVELOPER:

                                         OCM DEVELOPMENT, LLC,
                                         a Michigan limited liability company

                                    By:  /s/ Robert E. Schermer, Jr.
                                       -----------------------------------------
                                         Robert E. Schermer, Jr.*
                                         Chief Executive Officer

                                    CONTROLLING PRINCIPAL:

                                    MERITAGE HOSPITALITY GROUP, INC.,
                                    a Michigan corporation

                                    By:  /s/ Robert E. Schermer, Jr.
                                       -----------------------------------------
                                         Robert E. Schermer, Jr.
                                         Chief Executive Officer

* Denotes individual who is Developer's Operating Principal

                                       39

<PAGE>

                                  ATTACHMENT A
                            TO DEVELOPMENT AGREEMENT

                                O'CHARLEY'S INC.
                               OPERATING AGREEMENT

                                       A-1

<PAGE>
[O'CHARLEY'S LOGO]

                                O'CHARLEY'S INC.

                               OPERATING AGREEMENT

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                 <C>                                                                                        <C>
ARTICLE I           Grant.........................................................................................2
ARTICLE II          Construction; Opening.........................................................................4
ARTICLE III         Prerequisites To License Effectiveness........................................................4
ARTICLE IV          Term And Renewal..............................................................................6
ARTICLE V           Fees..........................................................................................8
ARTICLE VI          Licensor's Obligations.......................................................................11
ARTICLE VII         Operator's Agreements, Representations, Warranties And Covenants.............................13
ARTICLE VIII        Restaurant Operations........................................................................20
ARTICLE IX          Advertising And Related Fees.................................................................25
ARTICLE X           Proprietary Marks............................................................................30
ARTICLE XI          Confidentiality And Non-competition Covenants................................................32
ARTICLE XII         Books And Records............................................................................37
ARTICLE XIII        Insurance....................................................................................38
ARTICLE XIV         Debts and Taxes..............................................................................40
ARTICLE XV          Transfer of Interest.........................................................................41
ARTICLE XVI         Indemnification..............................................................................47
ARTICLE XVII        Relationship Of The Parties..................................................................48
ARTICLE XVIII       Termination..................................................................................48
ARTICLE XIX         Post-Termination.............................................................................52
ARTICLE XX          Miscellaneous................................................................................56
ARTICLE XXI         Acknowledgments..............................................................................60

Attachment A          Location and Opening Date.................................................................A-1
Attachment B          Statement of Ownership Interests and Principals...........................................B-1
Attachment C          Confidentiality and Non-Compete Agreement.................................................C-1
Attachment D          Software License Agreement................................................................D-1
Attachment E          Electronic Fund Transfer Authorization....................................................E-1
Attachment F          Guaranty..................................................................................F-1
</TABLE>

                                       2

<PAGE>

                                O'CHARLEY'S INC.

                               OPERATING AGREEMENT

         THIS OPERATING AGREEMENT (the "Agreement") is made and entered into
this _____ day of ________________, 20___, by and among O'Charley's Inc., a
Tennessee corporation ("Licensor"), _________________________ ("Operator"),
____________________, ___________________________ and _______________________
(each a "Controlling Principal;" collectively the "Controlling Principals").

                                   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;

<PAGE>

         WHEREAS, Licensor, Operator and the Controlling Principals have entered
into a Development Agreement dated as of __________ _____, 20__ (the
"Development Agreement"), relating to the development by Operator of O'Charley's
restaurants;

         WHEREAS, Operator desires to use the System in connection with the
operation of a full-service O'Charley's restaurant at the location specified in
Attachment A hereto, as well as to receive the training and other assistance
provided by Licensor in connection therewith; and

         WHEREAS, the license granted pursuant to this Agreement is for the
__________ Restaurant developed under the 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 Operator and its Controlling Principals hereunder, Licensor hereby
grants to Operator, upon the terms and conditions in this Agreement, the right,
license and obligation, and Operator hereby accepts the right, license and
obligation, to operate, during the term of this Agreement, a full-service
O'Charley's restaurant under the Proprietary Marks and the System in accordance
with this Agreement (the "Restaurant" or "Licensed Business").

         B.       The specific street address of the Restaurant location
accepted by Licensor shall be set forth in Attachment A (the "Location").
Operator shall not relocate the Restaurant without the express prior written
consent of Licensor. This Agreement does not grant to Operator the right or
license to operate the Restaurant or to offer or sell any products or services
described in this Agreement at or from any other location.

         C.       If Operator is unable to continue the operation of the
Restaurant at the accepted Location because of the occurrence of a Force Majeure
event, then Operator may request approval of Licensor to relocate the Restaurant
to another location. Any other request to relocate the Restaurant shall also be
subject to the same procedures. If Licensor elects to grant Operator the right
to relocate the Restaurant, then Operator shall comply with the site selection
and construction procedures set forth in the Development Agreement.

         D.       Except as provided in this Agreement, and subject to
Operator's full compliance with this Agreement and any other agreement among
Operator and any of its Affiliates and Licensor or any of its Affiliates,
neither Licensor nor any Affiliate shall establish or authorize any other person
or any other corporation, limited liability company, partnership, limited
partnership, joint venture, association, trust, unincorporated association or
other business organization (each, an "Entity"), other than Operator, to
establish a full-service Restaurant within the radius of the Location set forth
on Attachment A hereto. Notwithstanding the foregoing, Operator acknowledges and
agrees that Licensor and its Affiliates may (or may authorize a third party to)
conduct any of the following activities, regardless of proximity to the Location
or the Restaurant:

                                       2

<PAGE>

                  (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.

                  (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 Restaurant 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 (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, port authorities),
hospitals and other health care facilities, cafeterias, commissaries, schools,
hotels, sports and entertainment facilities (e.g., stadiums, arenas, ballparks,
convention centers) and other mass gathering locations or events designated by
Licensor (each, an "Excluded Area"). Licensor may first offer to Operator the
right to offer and sell the O'Charley's restaurant products in the Excluded Area
within the Territory. Operator must meet each of the conditions outlined in
Section III(A), 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 for sale and sell the O'Charley's
restaurant products and services in the Excluded Area. If Operator does not meet
all of the criteria and qualifications required by Licensor and the Facilities
Operator, then Operator shall not be granted the right to offer for sale and
sell such products and services within the Excluded Area and Licensor may
conduct such business itself, or authorize any other person or Entity to do so.
If Operator meets all the conditions, criteria and qualifications, Licensor
shall offer to Operator the right to offer for sale 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 Operator by Licensor in writing,
Operator shall have the right to accept such offer within thirty (30) days after
receipt of such written notification. If Operator fails to notify Licensor in
writing of Operator's intent to accept the offer within such thirty (30) day
time period or Operator 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.

                                       3

<PAGE>

         E.       After Operator's selection of an accepted Location for the
Restaurant, Operator shall make all commercially reasonable efforts to advertise
and promote the Licensed Business in accordance with Article IX.

         F.       After this Agreement expires or is terminated, Licensor shall
have the complete and unrestricted right to operate or license other persons to
operate a restaurant utilizing the System at the Location.

                                   ARTICLE II
                              CONSTRUCTION; OPENING

         A.       Operator assumes all cost, liability, expense and
responsibility for locating, obtaining and developing a site for the Restaurant
within the Location and for constructing and equipping the Restaurant at such
site in accordance with the terms of the Development Agreement and this
Agreement. Operator acknowledges that the location, selection, procurement and
development of a site for the Restaurant is Operator's responsibility; that in
discharging such responsibility Operator may consult with real estate and other
professionals of Operator'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.

         B.       The Location of the Restaurant shall be described in
Attachment A, which description shall be the legal description and/or street
address of the site owned or leased by Operator at which the Restaurant is to be
located.

         C.       Operator acknowledges that time is of the essence. Subject to
Operator's compliance with the conditions stated below, Operator shall open the
Restaurant and commence business on or before __________ _____, 20__, as such
date may be extended or amended under the Development Agreement. The date the
Restaurant opens for business to the public as provided herein ("Opening Date")
shall be set forth in Attachment A, as such date may be extended or amended
under the Development Agreement. Prior to opening, Operator shall complete all
exterior and interior preparations for the Restaurant, including installation of
equipment, fixtures, awnings, furnishings, neons and signs, pursuant to the
plans and specifications approved by Licensor, and shall comply with all other
pre-opening obligations of Operator, including, but not limited to, those
obligations described in Article VII and in the Manuals, to Licensor's
satisfaction. If Operator fails to comply with any of such obligations, Licensor
shall have the right to prohibit Operator from opening the Restaurant and
commencing business.

                                  ARTICLE III
                     PREREQUISITES TO LICENSE EFFECTIVENESS

         A.       In the event that Operator shall have obtained Licensor's
acceptance of a particular proposed site for the Restaurant pursuant to the
provisions of the Development Agreement and shall have paid to Licensor all of
the license fees due under this Agreement and the Development Agreement, and if
Licensor, in the exercise of its sole and absolute discretion,

                                       4

<PAGE>

has granted Operator, in writing, "Operational Approval," "Financial Approval,"
"Legal Approval" and "Ownership Approval" approval, then the license granted to
Operator to operate the Restaurant under Article I shall become effective.
Licensor will give Operator Operational Approval, Financial Approval, Legal
Approval and Ownership Approval if the conditions under the following
subsections are met.

                  (1)      Operational Approval will be granted if Licensor has
determined, in the exercise of its sole discretion, that:

                           (a)      Operator is in compliance with the
Development Schedule (as that term is defined in the Development Agreement, and
including any extensions approved by Licensor in writing) and this Agreement and
has opened the Restaurant as required under the Development Schedule (including
any extensions approved by Licensor in writing);

                           (b)      Operator and its Affiliates are in
compliance with any other agreement between Operator and its Affiliates and
Licensor and its Affiliates;

                           (c)      Operator is conducting the operation of its
existing Restaurants, if any, and is capable of conducting the operation of the
Restaurant to be opened under this Agreement and required under the Development
Schedule:

                                    (i)      in accordance with the terms and
                  conditions of the Development Agreement and any amendments
                  thereto;

                                    (ii)     in accordance with the provisions
                  of the respective Operating Agreement(s) and any amendments
                  thereto; and

                                    (iii)    in accordance with the standards,
                  specifications and procedures:

                                             (A)      set forth and described in
                                    the Manuals, 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; and

                                             (C)      as otherwise set forth by
                                    the Licensor in writing.

                  (2)      Operator 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)      Operator and the Controlling Principals
satisfy Licensor's current financial criteria for operators and controlling
principals of O'Charley's restaurants with respect to Operator's operation of
its existing Restaurants, if any, and the proposed Restaurant;

                                       5

<PAGE>

                           (b)      Operator 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)      Operator is not in default, and has not been
in default during the twelve (12) months preceding Operator's request for
financial approval, of any monetary obligations owed to Licensor or its
Affiliates under any Operating Agreement or any other agreement between Operator
or any of its Affiliates and Licensor or any of its Affiliates; and

                           (d)      Operator 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 Operator 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 the
individual license for the proposed Restaurant or pursuant to any right granted
to Operator by the Development Agreement or by the Operating Agreement between
Operator and Licensor, and 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 Operator nor any of its Controlling
Principals (as applicable) shall have transferred a Controlling Interest in
Operator; and

                           (b)      Operator 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 Operator.

         B.       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 Operator or any Controlling Principal has any
legal or equitable interest. It is further understood and agreed that Operator
and the Controlling Principals have an ongoing responsibility to operate the
Restaurant in a manner which satisfies the foregoing requirements for
Operational Approval, Financial Approval, Legal Approval and Ownership Approval.

                                   ARTICLE IV
                                TERM AND RENEWAL

         A.       Unless sooner terminated as provided in Article XVIII hereof,
the term of this Agreement shall continue from the date stated on the first page
hereof until the earlier of (1) fifteen (15) years from Opening Date or (2) the
expiration or termination of Operator's right to possess the Restaurant
premises.

         B.       Operator may, at its option, renew the rights under this
Agreement for one additional term of fifteen (15) years, and thereafter for
additional terms of five (5) years (in each case, provided that the applicable
renewal term shall automatically terminate upon the expiration or termination of
Operator's right to possess the Restaurant premises), subject to any or all of
the

                                       6

<PAGE>

following conditions which must, as determined in Licensor's sole discretion, be
met prior to and at the time of renewal:

                  (1)      Operator shall give Licensor written notice of
Operator's election to renew not less than twelve (12) months nor more than
eighteen (18) months prior to the end of the initial term, or the first renewal
term, as applicable;

                  (2)      Operator shall repair or replace, at Operator's cost
and expense, equipment (including electronic cash register or computer hardware,
or software systems, updates or upgrades, including any software licensed to
Operator pursuant to the Software License Agreement required to be executed
under Section VIII(F)), signs, awnings, neons, interior and exterior decor
items, fixtures, furnishings, delivery vehicles, if applicable, supplies and
other products and materials required for the operation of the Restaurant as
Licensor may reasonably require and shall obtain, at Operator's cost and
expense, any new or additional equipment, fixtures, supplies and other products
and materials which may be reasonably required by Licensor for Operator to offer
and sell new menu items from the Restaurant and shall otherwise modernize the
Restaurant premises, equipment (including electronic cash register or computer
hardware and software systems, including updates or upgrades), signs, awnings,
neons, interior and exterior decor items, fixtures, furnishings, delivery
vehicles, if applicable, supplies and other products and materials required for
the operation of the Restaurant, as reasonably required by Licensor to reflect
the then-current standards and image of the System as contained in the Manuals
or otherwise provided in writing by Licensor;

                  (3)      Operator and its Affiliates shall not be in default
of any provision of this Agreement, any amendment hereof or successor hereto,
any other agreement between Operator, or any of its Affiliates and Licensor or
any of its Affiliates or the Manuals; and Operator and its Affiliates shall have
substantially and timely complied with all the terms and conditions of such
agreements and Manuals during the terms thereof;

                  (4)      Operator and its Affiliates shall have satisfied all
monetary obligations owed by Operator and its Affiliates to Licensor and its
Affiliates under this Agreement and any other agreement between Operator, and
any of its Affiliates and Licensor or its Affiliates and shall have
substantially and timely met those obligations throughout the terms thereof;

                  (5)      Operator shall present satisfactory evidence that
Operator has the right to remain in possession of the Restaurant premises or
obtains Licensor's acceptance of a new site for the operation of the Restaurant
for the duration of the renewal term of this Agreement;

                  (6)      Operator shall execute Licensor's then-current form
of renewal operating agreement, which agreement shall supersede this Agreement
in all respects and the terms of which may differ from the terms of this
Agreement, including, without limitation, a higher percentage royalty fee,
marketing fee, advertising contribution or expenditure requirement; and any and
all other documents Licensor may then require for renewal; provided, however,
that Operator shall pay to Licensor, in lieu of an initial license fee, a
renewal fee representing one half (1/2) of Licensor's then-current initial
license fee for operators who have opened more than two (2) restaurants;

                                       7

<PAGE>

                  (7)      Operator and the Controlling Principals shall execute
a general release of any and all claims against Licensor and its Affiliates, and
each such Entity's respective officers, directors, shareholders, partners,
agents, representatives, independent contractors, servants and employees, in
their corporate and individual capacities, including, without limitation, claims
arising under this Agreement or under federal, state or local laws, rules,
regulations or orders; and

                  (8)      Operator shall meet Licensor's then-current
financial, organizational, training, certification, staffing and other
qualification requirements.

                                   ARTICLE V
                                      FEES

         A.       (1)      If Operator is licensing the first or second
Restaurant developed under a Development Agreement, Operator shall pay to
Licensor a license fee of Fifty Thousand Dollars ($50,000), one half (1/2) of
which was paid as a fee for development upon execution of the Development
Agreement, and the remaining one half (1/2) of which will be paid upon execution
of this Agreement.

                  (2)      If Operator is licensing the third or any subsequent
Restaurant developed under a Development Agreement, Operator shall pay to
Licensor a license fee of Twenty-Five Thousand Dollars ($25,000), one half (1/2)
of which was paid as a fee for development upon execution of the Development
Agreement, and the remaining one half (1/2) of which will be paid upon execution
of this Agreement.

                  (3)      The portion of the license fee paid in connection
with this Agreement shall be deemed fully earned and non-refundable in partial
consideration of the administrative and other expenses incurred by Licensor in
granting the license hereunder and for its lost or deferred opportunity to grant
such license to any other party.

         B.       (1)      During the term of this Agreement, Operator shall pay
to Licensor, in partial consideration for the rights herein granted, a
continuing royalty fee of four percent (4%) of Gross Sales as defined under
Section V(C). Such royalty fee and any other fee required by this Agreement
shall be due and payable on the tenth (10th) day of each Accounting Period based
on the Gross Sales for the preceding Accounting Period (the first such
Accounting Period beginning on the date established by Licensor). Such payment
shall be delivered by Operator to Licensor by electronic funds transfer ("EFT")
to the account designated by Licensor, in writing, so that it is received by
Licensor on the tenth (10th) day of the applicable Accounting Period, provided
that such day is a Business Day. A "Business Day" for the purpose of this
Agreement means any day other than Saturday, Sunday or the following national
holidays: New Year's Day, Martin Luther King Day, Presidents' Day, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving and
Christmas. If the date on which such payment would otherwise be due is not a
Business Day, then payment shall be due on the next Business Day. For purposes
of this Agreement, the term "Accounting Periods" shall mean the accounting
periods for the Restaurant as established by Licensor and described in the
Manuals from time to time.

                                       8

<PAGE>

                  (2)      Each such royalty fee payment shall be preceded or
accompanied by a report ("Royalty Report"), in the form prescribed in the
Manuals, itemizing the Gross Sales for the preceding Accounting Period as well
as any other reports as may be required by Licensor. Notwithstanding the
foregoing, Operator shall provide Licensor with such Gross Sales information on
the tenth (10th) day of each Accounting Period by electronic data communication,
facsimile transmission or, if either of the foregoing means is not available, by
telephone, or such other method Licensor may reasonably direct. Operator also
shall provide Licensor with a weekly Gross Sales report (covering the period
from Monday through Sunday), in the form prescribed in the Manuals, by Tuesday
of each week for the preceding week's Gross Sales by facsimile transmission,
telephone, data communication or such other method of delivery as Licensor may
reasonably direct.

                  (3)      By executing this Agreement, Operator agrees that
Licensor has the right to withdraw funds from Operator's designated bank account
each Accounting Period by EFT in the amount of the royalty fee plus any other
amounts due to Licensor. With respect to royalty fees, provided such day is a
Business Day (and if not a Business Day, on the next succeeding Business Day),
such withdrawals shall be made on the tenth (10th) day after the end of each
Accounting Period for the amount of the royalty fee due based on Operator's
Gross Sales for the preceding Accounting Period, as evidenced by the Royalty
Report. If the Royalty Report has not been received and the royalty fee has not
been paid within the time period required by this Agreement, then Licensor may
process, in its sole discretion, an EFT for the royalty fee for the Accounting
Period in which the Royalty Report is not received or royalty fee paid. If the
Royalty Report is not received, the amount of the Accounting Period royalty fee
shall be based on, at Licensor's option, (a) information regarding Operator's
Gross Sales for the preceding Accounting Period obtained by Licensor in the
manner contemplated by Section VIII(E)(10) of this Agreement, (b) the weekly and
Accounting Period Gross Sales reports transmitted to Licensor by Operator
pursuant to Section V(B)(2), or (c) the most recent Royalty Report provided to
Licensor by Operator; provided that if a Royalty Report for the subject
Accounting Period is subsequently received and reflects (i) that the actual
amount of the royalty fee due was more than the amount of the EFT by Licensor,
then Licensor shall be entitled to withdraw additional funds representing the
amount of the difference from Operator's designated bank account by EFT; or (ii)
that the actual amount of the royalty due was less than the amount of the EFT by
Licensor, then Licensor shall credit the excess amount to the payment of
Operator's future royalty fee obligations. For any other monetary obligation not
paid when due, Licensor shall have the right to withdraw such amounts due five
(5) days after such amount becomes past due, provided such day is a Business Day
(and if not a Business Day, on the next succeeding Business Day). Operator
shall, upon execution of this Agreement or at any time thereafter at Licensor's
request, execute such documents or forms as Licensor determines are necessary
for Licensor to process EFTs from Operator's designated bank account for the
payments due hereunder, including Attachment E to this Agreement. Operator
agrees that it shall be responsible for (x) any EFT transfer fee or similar
charge imposed by the bank, and (y) should any EFT not be honored by Operator's
bank for any reason, for that payment plus any service charge applied by
Licensor and/or the bank. If royalty fees and other payments are not received
when due, interest may be charged by Licensor in accordance with Section V(B)(4)
below. Upon written notice by Licensor to Operator, Operator shall execute such
other documents that Licensor or Operator's bank may require to implement the
foregoing procedure.

                                       9

<PAGE>

                  (4)      Operator shall not be entitled to withhold payments
due Licensor under this Agreement on grounds of alleged nonperformance by
Licensor hereunder. Any payment or report not actually received by Licensor on
or before the applicable due date shall be deemed overdue. Time is of the
essence with respect to all payments to be made by Operator to Licensor. All
unpaid obligations under this Agreement shall bear interest from the date due
until paid at the lesser of (a) 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, substantial and responsible commercial borrowers, plus
three percent (3%), or (b) 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
in such respect is herein provided for, or shall be adjudicated to be so
provided in this Agreement, the provisions of this paragraph shall govern and
prevail, and neither Operator nor its Controlling 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.

         C.       For the purposes of determining the royalties to be paid
hereunder, "Gross Sales" shall mean all receipts (cash, cash equivalents or
credit) or revenues from sales from all business conducted upon or from the
Restaurant premises, whether evidenced by check, cash, credit, charge account,
exchange or otherwise, including, but not limited to, amounts received from the
sale of goods, wares and merchandise (including sales of food, beverages and
tangible property of every kind and nature, promotional or otherwise), from all
services performed from or at the Restaurant premises, and from all orders taken
or received at the Restaurant premises, regardless of where such orders are
filled. All proceeds from the sale by Operator of O'Charley's Gift Cards issued
by Licensor shall not be included in Gross Sales, however, the full value of any
O'Charley's Gift Card issued by Licensor once redeemed by Operator shall be
included within Gross Sales during the Accounting Period in which such
O'Charley's Gift Card is submitted to Licensor for redemption. Gross Sales shall
not be reduced by any deductions for cash shortages incurred in connection with
the transaction of business with customers, credit card company charges or
theft. Each charge or sale upon installment or credit shall be treated as a sale
for the full price in the Accounting Period during which such charge or sale
shall be first made, irrespective of the time when Operator shall receive
payment (whether full or partial) therefor.

                  (1)      Gross Sales shall, however, expressly exclude the
following:

                           (a)      receipts from the operation of any public
telephone installed in the Restaurant, and sales from vending or gaming machines
located at the Restaurant from which Operator derives no revenue;

                           (b)      sums representing sales taxes, based upon
present or future laws of federal, state or local governments, collected
directly from customers by Operator in the operation of the Restaurant, and any
other tax, excise or duty charged to customers which is levied or assessed
against Operator by any federal, state, municipal or local authority, based on

                                       10

<PAGE>

sales of specific merchandise sold at or from the Restaurant, provided that such
taxes are actually transmitted to the appropriate taxing authority;

                           (c)      tips or gratuities paid directly by
Restaurant customers to employees of Operator or paid to Operator and then
turned over to such employees by Operator in lieu of direct tips or gratuities;

                           (d)      the sale of previously refunded or returned
merchandise if the sales of such merchandise shall have been previously included
in Gross Sales;

                           (e)      proceeds from isolated sales of trade
fixtures not constituting any part of Operator's products and services offered
at the Restaurant nor having any material effect upon the ongoing operation of
the Restaurant;

                           (f)      the full value of discounts generally
provided to employees for meals furnished as an incident to their employment;
and

                           (g)      the full value of any complimentary and
promotional food dispensed from the Restaurant to the extent such are dispensed
in accordance with Licensor's standards for such programs, as set forth in the
Manuals.

                  (2)      In addition, Licensor may, from time to time,
authorize certain other items to be included or excluded from Gross Sales. Any
such permission may be revoked or withdraw at any time in writing by Licensor in
its discretion.

                  (3)      Operator acknowledges that the listing of items or
transactions in this Section V(C) as constituting or giving rise to Gross Sales
does not constitute the grant of a license or other authorization for Operator
to provide or deliver any product or service not explicitly authorized elsewhere
under this Agreement.

         D.       Operator shall pay such other fees or amounts described in
this Agreement.

         E.       Operator acknowledges that the General Manager replacement fee
in Section VII(D) and the transfer fee in Section XV(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 VI
                             LICENSOR'S OBLIGATIONS

         Licensor agrees to provide the services described below with regard to
the Restaurant.

         A.       Licensor shall loan to Operator one (1) set of confidential
operations manuals (which currently include the Real Estate Manual, the
Marketing and Recipe Manual, the Training and Operations Manual, the Human
Resources Manual, the New Store Opening Manual and the

                                       11

<PAGE>

Financial Manual) and such other manuals and written materials as Licensor shall
have developed for use in the Licensed Business (as the same may be revised by
Licensor from time to time) (collectively, the "Manuals"). Licensor may provide
the Manuals to Operator in electronic format.

         B.       Licensor shall license to Operator certain computer software
to be used in the operation of the Restaurant pursuant to Article VIII. Licensor
shall also make available to Operator at a reasonable cost (as determined by
Licensor) any upgrades, enhancements or replacements to the software that are
developed from time to time by or on behalf of Licensor.

         C.       Licensor shall visit the Restaurant and evaluate of the
products sold and services rendered therein from time to time as reasonably
determined by Licensor, as more fully described in Section VIII(E)(6).

         D.       Licensor shall provide Operator with certain advertising and
promotional materials and information developed by Licensor from time to time
for use by Operator in marketing and conducting local advertising for the
Restaurant. Licensor shall have the right to review and approve or disapprove
all advertising and promotional materials that Operator proposes to use,
pursuant to Article IX.

         E.       Licensor shall provide Operator with advice and written
materials concerning techniques of managing and operating the Restaurant from
time to time developed by Licensor and deemed by Licensor, in its sole
discretion, to be appropriate for use by Operator at the Restaurant, including
new developments and improvements in restaurant equipment and food products,
source specifications and the packaging and preparation thereof.

         F.       From time to time at Licensor's discretion, Licensor may, at a
reasonable cost determined by Licensor, make available for resale to Operator's
customers certain merchandise identifying the System, such as T-shirts,
sweatshirts and caps.

         G.       Licensor shall provide to Operator lists of approved suppliers
as described in Section VIII(D) from time to time as Licensor deems appropriate.

         H.       Licensor shall conduct an initial training program for
Operator's Operating Principal (or designee), General Manager, Kitchen Manager
and three (3) selected Restaurant management personnel (or such other number of
managers specified in the Manuals) as well as other training programs in
accordance with the provisions of Section VII(E).

         I.       Licensor shall provide on-site pre-opening and post-opening
assistance at the Restaurant in accordance with the provisions of Section
VII(E)(3) and the Manuals.

         J.       Licensor shall establish and administer advertising funds
and/or advertising cooperatives and approval of Yellow Pages(TM) and/or other
business listing advertising at Licensor's discretion in accordance with Article
IX.

                                       12

<PAGE>

                                  ARTICLE VII
        OPERATOR'S AGREEMENTS, REPRESENTATIONS, WARRANTIES AND COVENANTS

         A.       Operator and each of the Controlling Principals covenant and
agree that each shall make all commercially reasonable efforts to operate the
Restaurant so as to achieve optimum sales.

         B.       If Operator is a corporation, limited liability company,
partnership or other Entity, Operator and the Controlling Principals, as
applicable, make the following representations and warranties to Licensor:

                  (1)      Operator is duly organized and validly existing under
the state law of its formation.

                  (2)      Operator 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.

                  (3)      Operator's corporate charter, articles of
organization and operating agreement, or written partnership agreement shall at
all times provide that the activities of Operator are confined exclusively to
the operation of the Restaurant or other Restaurants under license from
Licensor. Unless otherwise consented to in writing by Licensor, Operator shall
not use the Proprietary Marks as part of its corporate or other legal name, and
shall, in any event, obtain Licensor's approval of such corporate or other legal
name prior to applying for or filing it with the applicable government
authority.

                  (4)      The execution of this Agreement and the consummation
of the transactions contemplated hereby are within Operator's corporate power,
if Operator is a corporation, are permitted under Operator's articles of
organization and operating agreement, if Operator is a limited liability
company, and are permitted under Operator's written partnership agreement, if
Operator is a partnership, and have been duly authorized by Operator.

                  (5)      If Operator is a corporation, copies of Operator'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 Operator is a
limited liability company, copies of Operator'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 Operator is a
partnership, copies of Operator'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.
Operator 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,

                                       13

<PAGE>

members or partners, if such approval or consent is required by statute or by
Operator's Articles of Incorporation, Bylaws, articles of organization,
operating agreement, written partnership agreement or other governing documents,
as applicable.

                  (6)      If Operator is a corporation, limited liability
company or partnership, the ownership interests in Operator are accurately and
completely described in Attachment B. Further, if Operator is a corporation,
Operator shall maintain at all times a current list of all owners of record and
all beneficial owners of any class of voting securities in Operator, if Operator
is a limited liability company, Operator shall maintain at all times a current
list of all owners of an interest in the limited liability company, or, if
Operator is a partnership, Operator shall maintain at all times a current list
of all owners of an interest in the partnership. Operator shall immediately
provide a copy of the updated list to Licensor upon the occurrence of any change
of ownership and otherwise shall make its list of owners available to Licensor
upon request.

                  (7)      If Operator is a corporation, Operator 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 VII(B)(7) shall not apply to the transfer of
equity securities of a Publicly-Held Entity that is otherwise approved to be the
Operator. If Operator 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
Operator 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.

                  (8)      Operator and each of the Controlling Principals have
provided Licensor with the most recent audited financial statements of Operator
and each of the Controlling Principals. Such financial statements present fairly
the financial position of Operator and each of the Controlling Principals, as
applicable, at the dates indicated therein and with respect to Operator, the
results of its operations, its cash flow and owners' equity for the years then
ended. Operator 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 Operator's treasurer or chief financial officer
(or by the applicable Controlling Principal), and shall have been prepared in
conformity with generally accepted accounting principles ("GAAP") consistently
applied to all applicable periods involved. 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 Operator
or the Controlling Principals or otherwise appropriately disclosed in the notes
thereto.

                  (9)      No Principal may pledge, transfer or hypothecate its
interest in Operator except in accordance to this Agreement. 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, Operator shall

                                       14

<PAGE>

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.

                  (10)     Each Principal, 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 (see Sections XI(B)(2) and XI(C)(4)). The Controlling
Principals shall jointly and severally guarantee Operator's performance of all
of Operator'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 F, and do otherwise
bind themselves to the terms of this Agreement as stated herein.

                  (11)     Operator and the Controlling Principals acknowledge
and agree, jointly and severally, that the representations, warranties,
covenants and agreements set forth above in Sections VII(B)(l)-(10) are
continuing obligations of Operator and the Controlling Principals, as
applicable. Operator and each Controlling Principal will cooperate with Licensor
in any efforts made by Licensor to verify compliance with such representations,
warranties, covenants and agreements.

         C.       Upon the execution of this Agreement, Operator shall designate
and retain an individual to serve as the Operating Principal of the Restaurant
(the "Operating Principal"). If Operator is an individual, Operator shall
perform all obligations of the Operating Principal. The Operating Principal
shall, during the entire period he serves as such, meet the following
qualifications:

                  (1)      The Operating Principal must at Operating Principal's
option, either serve as the General Manager or, subject to the approval of
Licensor, designate another individual to serve as the General Manager of the
Restaurant. Any individual designated by the Operating Principal to serve as the
General Manager also may, subject to Licensor's consent, perform the duties and
obligations of the Operating Principal, provided, that the Operating Principal
shall take all necessary action to ensure that such designee conducts and
fulfills all of such obligations in accordance with the terms of this Agreement
and that the Operating Principal shall remain fully responsible for such
performance.

                  (2)      The Operating Principal must maintain a direct
ownership interest in Operator satisfactory to Licensor. Except as may otherwise
be provided in this Agreement, the Operating Principal's interest in Operator
shall be and shall remain free of any pledge, mortgage, hypothecation, lien,
charge, encumbrance, voting agreement, proxy, security interest or purchase
right or options. The Operating Principal shall execute this Agreement as one of
the Controlling Principals, and shall be individually, jointly and severally
with the Operator and the other Controlling Principals, bound by all obligations
of Operator, the Operating Principal and the Controlling Principals hereunder.

                  (3)      Operator and the Operating Principal (or his
designee, as applicable) shall devote their full time and best efforts to the
supervision and conduct of the Licensed Business.

                                       15

<PAGE>

                  (4)      The Operating Principal (or his designee, as
applicable) shall meet Licensor's standards and criteria for such individual, as
set forth in the Manuals, as set forth herein or as otherwise communicated by
Licensor from time to time.

                  (5)      If during the term of this Agreement the Operating
Principal (or any designee) is not able to continue to serve in the capacity of
the Operating Principal or no longer qualifies to act as such in accordance with
this Section, Operator shall notify Licensor within ten (10) days and shall
designate a replacement within sixty (60) days after the Operating Principal (or
any designee) ceases to serve or be so qualified, such replacement being subject
to the same qualifications and restrictions listed above. Operator shall provide
for interim management of the activities contemplated under this Agreement until
such replacement is so designated, such interim management to be conducted in
accordance with this Agreement.

         D.       Operator shall designate and retain at all times a general
manager (the "General Manager") and a kitchen manager (the "Kitchen Manager")
and such other personnel as Licensor, in its sole discretion, deems necessary
for the operation and management of the Restaurant. Operator shall designate its
General Manager and Kitchen Manager at least ninety (90) days prior to the
Opening Date, or by such later date as Licensor may determine. The General
Manager shall be responsible for the daily operation of the Restaurant. The
Kitchen Manager shall be responsible for the daily operation of the Restaurant's
kitchen. The General Manager and Kitchen Manager may, but need not, each be one
of the Controlling Principals (including the Operating Principal). The General
Manager and Kitchen Manager shall, during the entire period they serve as the
General Manager and Kitchen Manager, respectively, meet the following
qualifications, as applicable:

                  (1)      The General Manager and the Kitchen Manager shall
each satisfy Licensor's educational and business experience criteria as set
forth in the Manuals, as set forth herein or as otherwise communicated by
Licensor from time to time.

                  (2)      The General Manager shall devote his full time and
best efforts to the supervision and management of the Restaurant and the Kitchen
Manager shall devote his full time and best efforts to the supervision and
management of the Restaurant's kitchen.

                  (3)      The General Manager and Kitchen Manager shall be
individuals acceptable to and approved by Licensor.

                  (4)      The General Manager and Kitchen Manager shall satisfy
the training requirements set forth in Section VII(E). If during the term of
this Agreement the General Manager or the Kitchen Manager is not able to
continue to serve in such capacity or no longer qualifies to act as such in
accordance with this Section, Operator shall promptly notify Licensor and shall
designate a replacement within sixty (60) days after the General Manager or the
Kitchen Manager ceases to serve, such replacement being subject to the same
qualifications and approvals as listed above. Operator shall provide for interim
management of the Restaurant until such replacement is so designated, such
interim management to be conducted in accordance with the terms of this
Agreement. In the event that Operator fails to designate a replacement General
Manager within such sixty (60) day time period Licensor may, in its sole
discretion, designate an individual to serve as General Manager of the
Restaurant. If Licensor designates such a

                                       16

<PAGE>

replacement General Manager, Operator shall pay to Licensor a fee of Six
Thousand Five Hundred Dollars ($6,500) plus any expenses incurred by Licensor as
a result of having designated a replacement General Manager (including, but not
limited to, such replacement General Manager's per diem, travel, lodging and
meals) for each month such replacement General Manager operates the Restaurant.

         E.       Operator agrees that it is necessary to the continued
operation of the System and the Restaurant that Operator, the Operating
Principal, the General Manager, the Kitchen Manager and other personnel receive
such training as Licensor may require, and accordingly agrees as follows:

                  (1)      (a)      Licensor shall provide to Operator, at no
additional cost for the first three (3) Restaurants that Operator or an
Affiliate of Operator (it being the intention that the 3-Restaurant maximum on
free training be used up by the first 3 Restaurants developed within an
Affiliated group) develops, the initial training for Operator's Operating
Principal (or his designee), General Manager, the Kitchen Manager and three (3)
additional managers selected by Operator (the "Secondary Managers"), or such
other number of managers as specified in the Manuals. The Operating Principal
(or his designee), the General Manager, the Kitchen Manager and the Secondary
Managers shall attend, and complete to Licensor's satisfaction, Licensor's
initial training program. Such persons must complete the initial training not
less than two (2) but no more than five (5) weeks prior to the date the
Restaurant commences operations as an O'Charley's restaurant. Exactly when
during this time period an individual has to complete the initial training is
outlined in the Manuals and will vary depending on whether the individual is an
Operating Principal, a General Manager, a Kitchen Manager or a Secondary
Manager. A portion of the initial training must be conducted in Licensor's home
office, which is currently in Nashville, Tennessee and the remaining portion
must be conducted on-site at an O'Charley's restaurant. All on-site training
must be conducted in an O'Charley's restaurant approved by Licensor. If Licensor
has not approved any restaurant operated by Operator for training, then the
training of the Operating Principal (or his designee), the General Manager, the
Kitchen Manager and the Secondary Managers must be conducted in an approved
restaurant that is operated by Licensor or by another licensee of Licensor.
Licensor shall determine, in its sole discretion, whether the Operating
Principal (or his designee), the General Manager, the Kitchen Manager and the
Secondary Managers have satisfactorily completed the initial training. Licensor
shall provide instructors and training materials for the initial training of
such persons at no additional charge to Operator.

                           (b)      If the initial training program is not
satisfactorily completed by the Operating Principal (or his designee), the
General Manager, the Kitchen Manager or any Secondary Manager or if Licensor in
its reasonable business judgment based upon the performance of the Operating
Principal (or his designee), the General Manager, the Kitchen Manager or any
Secondary Manager determines that the training program cannot be satisfactorily
completed by such person(s), Operator shall designate a replacement(s) to
satisfactorily complete such training. Operator shall be responsible for any and
all expenses incurred by Operator, the Operating Principal (or his designee),
the General Manager, the Kitchen Manager and the Secondary Managers in
connection with any initial training program, including, without limitation,
costs of travel, lodging, meals, wages and benefits.

                                       17

<PAGE>

                  (2)      The Operating Principal, the General Manager, the
Kitchen Manager and the Secondary Managers and such other Restaurant personnel
as Licensor shall designate shall attend such additional training programs and
seminars as Licensor may offer from time to time. For all such programs and
seminars, Licensor will provide the instructors and training materials. However,
Licensor reserves the right to impose a reasonable fee determined by Licensor
for such additional training programs and seminars. Operator shall be
responsible for any and all expenses incurred by Operator, the Operating
Principal, the General Manager, the Kitchen Manager, the Secondary Managers and
any other Restaurant personnel in connection with such additional training,
including, without limitation, costs of travel, lodging, meals, wages and
benefits.

                  (3)      (a)      If Operator is developing a single
Restaurant or if Operator is developing the first or second Restaurant under a
Development Agreement, Licensor shall provide Operator with an opening team
composed of two (2) store opening coordinators and up to sixteen (16) trainers,
as determined by Licensor.

                           (b)      If Operator is developing the third
Restaurant under a Development Agreement, Licensor shall provide Operator with
an opening team composed of two (2) store opening coordinators and up to eight
(8) trainers; provided, however, if Licensor determines, in Licensor's sole
discretion, that Operator requires additional trainers, Operator shall supply
such additional certified trainers (at Operator's expense) up to an additional
eight (8) trainers.

                           (c)      If Operator is developing the fourth or any
subsequent Restaurant under a Development Agreement, Licensor shall provide
Operator with an opening team composed of up to two (2) store opening
coordinators, unless Licensor determines, in its sole discretion, that Operator
does not require Opening Team assistance.

                           (d)      Any store opening coordinators or trainers
provided by Licensor to Operator shall be collectively referred to as the
("Opening Team"). The Opening Team will provide on-site pre-opening, opening and
post-opening training supervision assistance to Operator for a period of time
ranging from three (3) to six (6) weeks. Licensor reserves the right to require
such Opening Team to remain on-site longer than six (6) weeks, in its sole
discretion. The number of Opening Team members and the time period in which the
Opening Team will provide assistance shall be determined by Licensor, in its
sole discretion, based upon Licensor's assessment of Operator's operational
requirements. With respect to the Opening Team assistance described above and
any such assistance provided to a replacement O'Charley's Restaurant established
by Operator, Operator shall pay to Licensor the per diem fee then being charged
to operators generally for opening team assistance, including payment of any
expenses incurred by such Opening Team, such as costs of travel and lodging.

                  (4)      Upon the reasonable request of Operator, and as
Licensor shall deem appropriate, Licensor shall, during the term hereof, subject
to the availability of personnel, provide Operator with additional trained
representatives who shall provide on-site remedial training to Operator's
Restaurant personnel. Operator shall pay the per diem fee then being charged to
operators under the System for the services of such trained representatives,
plus their costs of travel, lodging and meals.

                                       18

<PAGE>

         F.       Operator and the Controlling Principals understand that
compliance by all operators and developers 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 operators and
developers 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, Operator and
the Controlling Principals agree that if during the term of this Agreement,
Operator 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 Operator 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 Operator 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 Operator, 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, Operator, 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 VII(F).
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 Operator or any Controlling Principal in any capacity,
and Licensor shall not be liable for any losses, of any nature or kind, incurred
by Operator or any Controlling Principal in connection therewith.

         G.       Operator shall comply with all requirements of federal, state
and local laws, rules, regulations and orders. Licensor's Manuals may encompass
some of Licensor's human relations and employment policies and procedures.
Operator is free to adopt Licensor's employment policies if Operator so chooses.
However, Operator is not required to adopt Licensor's

                                       19

<PAGE>

employment policies and Operator may develop and implement its own employment
policies so long as such policies comply with all federal, state and local laws,
regulations and orders.

         H.       Operator shall obtain and maintain all appropriate licenses,
permits and certifications for the operation of the Restaurant, including
licenses and permits to sell alcoholic beverages in the Restaurant.

         I.       Operator and the Controlling Principals shall allow Licensor
and its representatives to review any and all of Operator's and the Controlling
Principals' documents and other materials relating to their financing
arrangements or capital structure.

         J.       Operator and the Controlling Principals represent, warrant,
covenant and agree that they shall comply with all other requirements and
perform such other obligations as provided in this Agreement and the Manuals.

                                  ARTICLE VIII
                              RESTAURANT OPERATIONS

         A.       Operator understands the importance of maintaining uniformity
among all of the O'Charley's restaurants and the importance of complying with
all of Licensor's standards and specifications relating to the operation of the
Restaurant.

         B.       Operator shall maintain the Restaurant in a high degree of
sanitation, repair and condition, and in connection therewith shall make such
additions, alterations, repairs and replacements thereto (but no others without
Licensor's prior written consent) as may be required for that purpose or as may
be reasonably requested by Licensor, including, without limitation, such
periodic repainting or replacement of obsolete signs, neons, furnishings,
awnings, equipment (including, but not limited to, electronic cash register or
computer hardware and software systems, including updates or upgrades), and
decor as Licensor may reasonably direct, at Operator's cost and expense.
Operator shall also obtain, at its expense, any new or additional equipment
(including electronic cash register or computer hardware and software systems,
including updates and upgrades), fixtures, supplies and other products and
materials which may be reasonably required by Licensor for Operator to offer and
sell new menu items from the Restaurant or to provide the Restaurant's services
by alternative means, such as through carry-out or such other manner specified
by Licensor. Except as may be expressly provided in the Manuals, no alterations
or improvements or changes of any kind in design, equipment, signs, neons,
interior or exterior decor items, fixtures, awnings or furnishings shall be made
in or about the Restaurant or its premises without the prior written approval of
Licensor.

         C.       To assure the continued success of the Restaurant, Operator
shall, upon the request of Licensor, make other improvements to modernize the
Restaurant premises, equipment (including, without limitation, electronic cash
register or computer hardware and software systems, including any updates and
upgrades), signs, neons, interior and exterior decor items, fixtures, awnings,
furnishings, supplies and other products and materials required for the
operation of the Restaurant, to Licensor's then-current standards and
specifications. Operator agrees that it will make such capital improvements or
modifications described in this Section VIII(C) at the earlier of: (i) seven (7)
years after the execution of this Agreement by Licensor; or

                                       20

<PAGE>

(ii) such time that a majority of the O'Charley's restaurants then operated by
Licensor or its Affiliates have made or are utilizing best efforts to make such
improvements or modifications.

         D.       Operator shall comply with all of Licensor's standards and
specifications (including brand specifications) relating to the purchase of all
food and beverage items (including soft drinks), ingredients, supplies,
materials, signs, neons, fixtures, awnings, furnishings, equipment (including
electronic cash register or computer hardware and software systems, including
any updates or upgrades) and other products used or offered for sale at the
Restaurant. Except as provided in Section VIII(F) and Section VIII(G), Operator
shall obtain such items from suppliers (including manufacturers, distributors
and other sources) who continue to demonstrate the ability to meet Licensor's
then-current standards and specifications for food and beverage items,
ingredients, supplies, materials, signs, neons, fixtures, awnings, furnishings,
equipment and other items used or offered for sale at O'Charley's restaurants
and who possess adequate quality controls and capacity to supply Operator's
needs promptly and reliably and who have been approved in writing by Licensor
prior to any purchases by Operator from any such supplier and who have not
thereafter been disapproved by Licensor. If Operator desires to purchase, lease
or use any food and beverage items (including soft drinks), ingredients,
supplies, materials, signs, neons, fixtures, awnings, furnishings, equipment
(including electronic cash register or computer hardware and software systems,
including any updates or upgrades) and other products used or offered for sale
at the Restaurant from an unapproved supplier, Operator shall submit to Licensor
a written request for such approval, or shall request the supplier itself to do
so in accordance with the Manuals. Operator shall not purchase or lease from any
supplier until and unless such supplier has been approved in writing by
Licensor. Licensor shall have the right to require that its representatives be
permitted to inspect the supplier's facilities, and that samples from the
supplier be delivered, either to Licensor or to an independent laboratory
designated by Licensor for testing. Licensor reserves the right to charge a
reasonable fee associated with approving a supplier. In addition, all cost
associated with such inspections and tests (including Licensor's out-of-pocket
expenses) shall be paid by Operator or the proposed supplier. Licensor reserves
the right, at its option, to re-inspect from time to time the facilities and
products of any such approved supplier and to revoke its approval upon the,
supplier's failure to continue to meet any of Licensor's then-current criteria.
Nothing in the foregoing shall be construed to require Licensor to approve any
particular supplier.

         E.       To ensure that the highest degree of quality and service is
maintained, Operator shall operate the Restaurant in strict conformity with such
methods, standards and specifications of Licensor set forth in the Manuals and
as may from time to time otherwise be prescribed by Licensor in writing. In
particular, Operator also agrees to:

                  (1)      sell or offer for sale all menu items, products and
services required by Licensor and in the manner and style prescribed by
Licensor, including, but not limited to, dining-in and carry-out, as expressly
authorized by Licensor in the Manuals or otherwise in writing, to operate the
Restaurant only during the hours and on the days Licensor specifies in the
Manuals or otherwise in writing, to comply with Licensor's policies and
procedures for selling and redeeming O'Charley's Gift Cards as set forth in the
Manuals and to execute such documents or instruments that Licensor may deem
necessary to facilitate the providing of such services;

                                       21

<PAGE>

                  (2)      sell and offer for sale only the menu items, products
and services that have been expressly approved for sale in writing by Licensor,
to refrain from deviating from Licensor's standards and specifications without
Licensor's prior written consent; and to discontinue selling and offering for
sale any menu items, products or services, or providing such menu items,
products or services in any manner or through any method of distribution, which
Licensor may, in its sole discretion, disapprove in writing at any time;

                  (3)      maintain in sufficient supply and to use and sell at
all times only such food and beverage items (including soft drinks),
ingredients, products, materials, supplies and paper goods that conform to
Licensor's standards and specifications (including products specified by name,
brand or other approved source); to prepare all menu items in accordance with
Licensor's recipes and procedures for preparation contained in the Manuals or
other written directives, including, but not limited to, the prescribed
measurements of ingredients; and to refrain from deviating from Licensor's
standards and specifications by the use or offer of non-conforming items or
differing amounts of any items, without Licensor's prior written consent;

                  (4)      permit Licensor or its agents, at any reasonable
time, to remove a reasonable number of samples of food or non-food items from
Operator's inventory, or from the Restaurant premises, without payment therefor
in amounts reasonably necessary for testing by Licensor or an independent
laboratory to determine whether such samples meet Licensor's then-current
standards and specifications, and to bear the cost of such testing if the
supplier of the item has not previously been approved by Licensor or if the
sample fails to conform with Licensor's specifications;

                  (5)      purchase or lease and install, and maintain at
Operator's expense all fixtures, awnings, furnishings, equipment (including
electronic cash register or computer hardware and software systems, including
updates and upgrades), decor items, signs, neons, delivery vehicles (if
applicable), and related items as Licensor may reasonably direct from time to
time in the Manuals or otherwise in writing; refrain from installing or
permitting to be installed on or about the Restaurant premises, without
Licensor's prior written consent, any fixtures, awnings, furnishings, equipment,
delivery vehicles (if applicable), decor items, signs, neons, games, vending
machines or other items not previously approved as meeting Licensor's standards
and specifications; and refrain from leasing any of the property described above
from a third party without first obtaining Licensor's written approval, which
shall be conditioned upon, among other things, such lease containing a provision
which permits any interest of Operator in the lease to be assigned to Licensor
upon the termination or expiration of this Agreement and which prohibits the
lessor from imposing an assignment or related fee upon Licensor in connection
with such assignment;

                  (6)      grant Licensor and its agents the right to enter upon
the Restaurant premises and any Restaurant delivery motor vehicles (if
applicable) at any time for the purpose of conducting inspections; to cooperate
with Licensor's representatives in such inspections by rendering such assistance
as they may reasonably request; take such steps, upon notice from Licensor or
its agents and without limiting Licensor's other rights under this Agreement, as
may be necessary to correct immediately any deficiencies detected during any
such inspection; and permit Licensor to correct such deficiencies and charge a
reasonable fee, as determined by

                                       22

<PAGE>

Licensor, for Licensor's expenses in so acting, should Operator for any reason
fail to correct such deficiencies within a reasonable time as determined by
Licensor;

                  (7)      execute and maintain a high level of customer
service, to maintain a competent, conscientious and well trained staff
(including hiring at least the minimum number of hourly staff outlined in the
Manuals) and take such steps as are necessary to ensure that its employees
preserve good customer relations and comply with such dress code, all as
Licensor may prescribe in the Manuals or otherwise in writing, as well as comply
with all federal, state and local laws, regulations and orders;

                  (8)      maintain in sufficient supply and prominently display
and make available such customer satisfaction forms as Licensor may require and
to forward all completed customer satisfaction forms to Licensor or to
Licensor's designee at such times as Licensor may direct;

                  (9)      play in the Restaurant such recorded or programmed
music as Licensor may from time to time require in the Manuals or otherwise in
writing and to obtain such copyright licenses as may be necessary to authorize
the playing of such recorded music;

                  (10)     install and maintain such equipment, make such
arrangements and follow such procedures as Licensor may require in the Manuals
or otherwise in writing (including, without limitation, the establishment and
maintenance of Internet, intranet or extranet access or such other means of
electronic communication, as specified by Licensor from time to time) to permit
Licensor to access, download and retrieve electronically, by telecommunication
or other designated method, any information stored in Operator's electronic cash
registers or on Operator's computer systems, including, without limitation,
information concerning the Gross Sales of the Restaurant; permit Licensor to
upload and for Operator to receive and download information from Licensor;
afford Licensor access to such information at the times and in the manner that
Licensor may specify from time to time; permit Licensor to assess Operator a
reasonable monetary charge for failure to make such information accessible,
unless such failure is not the fault of Operator; and refrain from establishing
any website or listing on the Internet or World Wide Web without the express
written consent of Licensor.

                  (11)     pay to Licensor by EFT its then-current fee for
providing support (including the cost of any help desk support, if such is
provided by Licensor and any system maintenance fee) for any electronic cash
register or computer system on the tenth (10th) day of each Accounting Period
during the term of this Agreement, which fee shall be prorated for any partial
period; provided, however, that Licensor reserves the right to change the amount
of such fees, the billing cycle for such fees and/or the time period for which
these fees are charged in January of each calendar year, and will provide to
Operator thirty (30) day's prior written notice of any such change;

                  (12)     from time to time, at Operator's option, request
Licensor to make individual changes or alterations (as provided in the Manuals)
in the suggested retail pricing information and other information stored and
provided through the electronic cash register or computer system for the
Restaurant, in which case Operator shall pay Licensor's reasonable then-current
fees and charges for making such changes or alterations to the electronic cash
register or computer system; and

                                       23

<PAGE>

                  (13)     permit, at least three (3) times during each
Accounting Period and at such other times as Operator may request, Licensor or
Licensor's agents to enter the Restaurant's premises and conduct, at Operator's
expense, an evaluation report evaluating the atmosphere, cleanliness, service,
hospitality and food of the Restaurant.

         F.       Operator shall enter into a software license agreement with
Licensor in substantially the form attached hereto as Attachment D for the
license of certain proprietary computer software provided by Licensor for the
operation of the Restaurant. Licensor retains the right to require Operator to
enter into a separate license agreement for the Operator's use of the
Proprietary Marks in any website or Internet postings or marketing.

         G.       Operator acknowledges and agrees that Licensor has and may
continue to develop for use in the System certain products, including products
which are prepared from highly confidential secret recipes and which are trade
secrets of Licensor. Because of the importance of quality and uniformity of
production and the significance of such products in the System, it is to the
mutual benefit of the parties that Licensor closely control the production and
distribution of such products. Accordingly, Operator agrees that Operator shall
sell any such products using only Licensor's secret recipe and other,
proprietary products, and shall purchase solely from Licensor or from a source
designated by Licensor all of Operator's requirements for such products.
Operator further agrees to purchase from Licensor for resale to Operator's
customers certain promotional merchandise identifying the System as Licensor
shall require such as T-shirts, sweatshirts and caps, in amounts sufficient to
satisfy Operator's customer demand.

         H.       Operator shall require all advertising and promotional
materials, signs, decorations, paper goods (including menus and all forms and
stationery used in the Licensed Business), and other items which may be
designated by Licensor to bear the Proprietary Marks in the form, color,
location and manner prescribed by Licensor. Licensor must approve in writing and
in advance the content and design of Operator's website advertising or Internet
postings or marketing and such use must be in accordance with Licensor's then
current policies.

         I.       Operator shall process and handle all consumer complaints
connected with or relating to the Restaurant, and shall notify Licensor by
telephone and in writing within forty-eight (48) hours of all of the following
complaints: (1) food related illnesses; (2) safety or health violations; (3)
claims exceeding One Thousand Dollars ($1,000.00); (4) dram shop violations; (5)
liquor license violations; and (6) any other material claims against or losses
suffered by Operator. Operator shall maintain for Licensor's inspection any
inspection reports affecting the Restaurant or equipment located in the
Restaurant during the term of this Agreement and for six (6) months after the
expiration or earlier termination hereof.

         J.       Upon the execution of this Agreement or at any time
thereafter, Operator shall, at the option of Licensor, execute such forms and
documents as Licensor deems necessary to appoint Licensor its true and lawful
attorney-in-fact with full power and authority for the sole purpose of assigning
to Licensor all rights to: (1) the telephone numbers of the Restaurant and any
related and other business listings; and (2) all e-mail addresses, URLs, domain
names, Internet listings and Internet accounts related to the Restaurant upon
the termination or expiration of this Agreement as required under Section
XIX(M).

                                       24

<PAGE>

         K.       Operator may submit a written request to Licensor requesting
authorization to provide delivery services from the Restaurant. Such written
request shall be in the form and manner specified in Manuals and shall include
Operator's name, the Restaurant location, a description of the proposed delivery
area and a description of the proposed delivery vehicle(s). Licensor, in its
sole discretion, may authorize Operator to provide Restaurant delivery services.
If Licensor so authorizes Operator, any vehicle used by Operator to deliver
Restaurant products and services to customers shall meet Licensor's standards
with respect to appearance and ability to satisfy the requirements imposed on
Operator hereunder and in the Manuals. Operator shall place such signs and decor
items on the vehicle as Licensor requires and shall at all times keep such
vehicle clean and in good working order. Operator shall not engage or utilize
any individual in the operation of a motor vehicle in connection with providing
services hereunder who is under the age of eighteen (18) years and who does not
possess a valid driver's license under the laws of the state in which Operator
provides such services. Operator shall require each such individual to comply
with all laws, regulations and rules of the road and to use due care and caution
in the operation and maintenance of motor vehicles. Except as noted above and in
the Manuals, Licensor does not set forth any standards or exercise control over
any motor vehicle utilized by Operator.

                                   ARTICLE IX
                          ADVERTISING AND RELATED FEES

         Recognizing the value of advertising and the importance of the
standardization of advertising programs to the furtherance of the goodwill and
public image of the System, the parties agree as follows:

         A.       Licensor may from time to time develop and administer
advertising and sales promotion programs designed to promote and enhance the
collective success of all restaurants operating under the System. Operator shall
participate in all such advertising and sales promotion programs in accordance
with the terms and conditions established by Licensor for each program. In all
aspects of these programs, including, without limitation, the type, quantity,
timing, placement and choice of media, market areas and advertising agencies,
the standards and specifications established by Licensor shall be final and
binding upon Operator.

         B.       (1)      Licensor shall establish and administer an
advertising production fund for the purpose of producing and creating
advertising materials for the System (the "Production Fund"). Operator agrees to
contribute one percent (1%) of each Accounting Period's Gross Sales to the
Production Fund (the "Production Fund Fee"), such Production Fund Fee to be paid
by EFT in the manner set forth in Section V(B). Operator agrees and acknowledges
that Licensor shall maintain and administer the Production Fund in Licensor's
sole and absolute discretion, including using the Production Fund Fee to
purchase and pay for any and all costs of maintaining, administering, directing
and preparing advertising (including, without limitation, the cost of preparing
television, radio, magazine, newspaper, direct mail and outdoor billboard
advertising campaigns, menus, public relations activities, employing advertising
agencies to assist therein, and all of Licensor's departmental costs for
advertising that is internally administered or prepared by Licensor).

                                       25

<PAGE>

                  (2)      Operator agrees and acknowledges that the Production
Fund is established to create advertising materials which are intended to
maximize the general public recognition and acceptance of the Proprietary Marks
and enhance the collective success of all restaurants operating under the
System. The Production Fund Fees will be used for the development and creation
of advertising, but will not be used to pay for the actual placement of
advertising materials. Licensor shall, with respect to O'Charley's restaurants
operated by Licensor, contribute to the Production Fund generally on the same
basis as Operator contributes to the Production Fund. In administering the
Production Fund, Licensor and its designee undertake no obligation to make
expenditures for Operator which are equivalent or proportionate to Operator's
contribution or to ensure that any particular operator benefits directly or pro
rata from the creation of advertising. The Production Fund and its earnings
shall not inure to the benefit of Operator. The Production Fund is operated
solely as a conduit for collecting and expending the Production Fund Fees.
Licensor shall prepare an annual statement of the Production Fund's expenditures
within one hundred twenty (120) days of Licensor's fiscal year end. Such annual
statement shall be made available to Operator upon written request. Operator and
the Controlling Principals agree and acknowledge that Licensor has no fiduciary
duty whatsoever to Operator, or any other operators, or their respective
controlling principals with regard to the operation or administration of the
Production Fund.

         C.       In addition to the ongoing advertising contributions set forth
herein, Operator shall spend during each year throughout the term of this
Agreement, two percent (2%) of the Gross Sales of the Restaurant (the "Local
Advertising Expenditure") on local advertising for the Restaurant ("Local
Advertising"). Although the Local Advertising Expenditure is a yearly
requirement, each Accounting Period Operator is required to submit to Licensor
an advertising expenditure report accurately reflecting that Accounting Period's
Local Advertising expenditures at the same time as the report itemizing Gross
Sales described in Section V(B)(2). In addition to the restrictions set forth in
Section IX(I) below, costs and expenditures incurred by Operator in connection
with any of the following shall not be included in Operator's expenditures on
Local Advertising for purposes of this Section, unless approved in advance by
Licensor in writing:

                  (1)      incentive programs for employees or agents of
Operator, including the cost of honoring any coupons distributed in connection
with such programs;

                  (2)      research expenditures;

                  (3)      food costs incurred in any promotion;

                  (4)      salaries and expenses of any employees of Operator,
including salaries or expenses for attendance at advertising meeting or
activities;

                  (5)      charitable, political or other contributions or
donations;

                  (6)      press parties or other expenses of publicity;

                  (7)      in-store materials consisting of menus, fixtures or
equipment;

                  (8)      seminar and educational costs and expenses of
employees of Operator;

                                       26

<PAGE>

                  (9)      pre-opening procedures and grand opening promotions;
and

                  (10)     specialty items such as T-shirts, premiums, pins and
awards, unless such items are part of a market-wide advertising program and then
only to the extent that the cost of such items is not recovered by the
promotion.

         D.       Operator agrees that Licensor shall have the right, in its
sole discretion, to designate any geographic area in which two (2) or more
O'Charley's restaurants are located as a region for purposes of establishing an
advertising cooperative (a "Cooperative"). If such a Cooperative is established,
the members of the Cooperative for any area shall, at a minimum, consist of all
full-service O'Charley's restaurants within that area. Each Cooperative shall be
organized and governed in a form and manner, and shall commence operation on a
date determined in advance by Licensor in its sole discretion. Each Cooperative
shall be organized for the exclusive purposes of administering advertising
programs and developing, subject to Licensor's approval pursuant to Section
IX(I), promotional materials for use by the members of the Cooperative in Local
Advertising. The approved advertising media for Cooperative advertising is
limited to television and radio. If at the time of the execution of this
Agreement a Cooperative has been established for a geographic area that
encompasses the Restaurant, or if any such Cooperative is established during the
term of this Agreement, Operator shall execute such documents as are required by
Licensor immediately upon the request of Licensor and shall become a member of
the Cooperative pursuant to the terms of those documents. Operator shall
participate in the Cooperative as follows:

                  (1)      Operator shall contribute to the Cooperative such
amounts required by the documents governing the Cooperative; provided, however,
Operator will not be required to contribute more than two percent (2%) of each
Accounting Period's Gross Sales to the Cooperative unless, subject to Licensor's
approval, the members of the Cooperative agree to the payment of a larger fee
(the "Cooperative Fee").

                  (2)      Operator shall submit to the Cooperative and to
Licensor such statements and reports as may be required by Licensor or by the
Cooperative. All contributions to the Cooperative shall be maintained and
administered in accordance with the documents governing the Cooperative. The
Cooperative shall be operated solely as a conduit for the collection and
expenditure of the Cooperative Fee for the purposes outlined above.

                  (3)      No advertising or promotional plans or materials may
be used by the Cooperative or furnished to its members without the prior written
approval of Licensor. All such plans and materials shall be submitted to
Licensor in accordance with the procedure set forth in Section IX(I).

         E.       Operator agrees that Licensor shall have the right, in its
sole discretion, to establish and administer a national and/or regional
advertising fund (the "National Fund"). If such a National Fund is established
by Licensor, Operator agrees to contribute up to two percent (2%) of each
Accounting Period's Gross Sales to the National Fund (the "National Fund Fee"),
such National Fund Fee to be paid by EFT in the manner set forth in Section
V(B).

                                       27

<PAGE>

         F.       If Licensor establishes a Cooperative under Section IX(D)
applicable to the Restaurant and/or a National Fund under Section IX(E), the
total required contribution by Operator to the Local Advertising Expenditure,
the Cooperative Fee (if applicable) and the National Fund Fee (if applicable)
shall not exceed three percent (3%) of the Restaurant's Gross Sales. However, if
the sum of the Local Advertising Expenditure, the Cooperative Fee (if
applicable) and the National Fund Fee (if applicable) when added together would
exceed three percent (3%) of the Restaurant's Gross Sales, then such advertising
fees shall be allocated and, where applicable, reduced as follows:

                  (1)      the Local Advertising Expenditure shall be reduced to
one percent (1%) of the Restaurant's Gross Sales; and

                  (2)      the remaining two percent (2%) of such advertising
fees shall be allocated among the Local Advertising Expenditure, the Cooperative
Fee (if applicable) and the National Fund Fee (if applicable) in such amounts
and in such proportions as Licensor, in Licensor's sole discretion, deems
appropriate.

         G.       Operator shall plan and carry out the pre-opening procedures
in accordance with the standards and specifications outlined in the Manuals. In
addition to the pre-opening procedures outlined in the Manuals, Licensor may
require Operator to plan and carry out a grand opening promotion relating to the
opening of the Restaurant in accordance with the Manuals. Any advertising items
and methods used by Operator in connection with such pre-opening procedures and
any required grand opening promotions must be approved by Licensor in accordance
with Section IX(I). Any such amount paid by Operator for the initial pre-opening
procedures and any required grand opening promotions shall not be credited
toward any other obligation of Operator in this Article IX.

         H.       Operator shall also pay its pro rata share of the cost of
Yellow Pages(TM) and/or other business listing advertising placed by Licensor on
behalf of all O'Charley's restaurants in the Restaurant's local market area. If
Operator operates the only O'Charley's restaurant under the System in the local
market area, Operator shall be responsible for full payment of the Yellow
Pages(TM) advertising and/or other business listing costs, unless Licensor
determines, in its sole discretion, that placement of Yellow Pages(TM) and/or
other business listing advertising for such local market area is not
economically justified. Any amount paid by Operator for such Yellow Pages(TM)
and/or other business listing advertising may be applied by Operator toward
satisfaction of its Local Advertising requirement.

         I.       (1)      Nothing in the foregoing sections shall be deemed to
prohibit Operator from making additional expenditures for local advertising. All
of Operator's advertising and promotional activities shall utilize Approved
Advertising Media. "Approved Advertising Media" are limited to the following:

                           (a)      newspapers, magazines and other such
periodicals;

                           (b)      radio and television;

                           (c)      outdoor advertising by signs displayed on
billboards or buildings;

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<PAGE>

                           (d)      handbills, flyers, door-hangers and direct
mail;

                           (e)      Internet advertising;

                           (f)      Yellow Pages(TM) advertising; and

                           (g)      such other media which Licensor approves in
writing.

In the event Operator wants to use a form of advertising medium not set forth
above, Operator shall submit a description of such medium and advertising to
Licensor. Licensor shall notify Operator whether it approves the use of such
medium within thirty (30) days of Operator's request. Failure by Licensor to so
notify Operator within that period shall be deemed to constitute Licensor's
approval of such request unless such advertising medium is in violation of this
Section IX(I). Guidelines for advertising are contained in the Manuals.

                  (2)      All advertising copy and other materials employed by
Operator in advertising shall be in strict accordance and conformity with the
standards, formats and specimens contained in the Manuals and shall receive the
prior written approval of Licensor. In the event Operator wishes to deviate from
the materials contained in the Manuals, Operator shall submit, in each instance,
the proposed advertising copy and materials to Licensor for approval in advance
of publication. Licensor shall notify Operator in writing, within thirty (30)
days of such submission, whether Licensor disapproves of such advertising copy
and materials. Failure by Licensor to so notify Operator within that period
shall be deemed to constitute Licensor's approval of such advertising copy and
materials unless, such advertising copy or materials is in violation of this
Section IX(I). In no event shall Operator's advertising contain any statement or
material which may be considered:

                           (a)      in bad taste or offensive to the public or
to any group of persons;

                           (b)      defamatory of any person or an attack on any
competitor;

                           (c)      to infringe upon the use, without
permission, of any other person's trade name, trademark, trade dress, service
mark or identification; or

                           (d)      inconsistent with the public image of
Licensor or the System.

         J.       In reviewing whether or not to establish a Cooperative and/or
a National Fund and any fees applicable thereto, Licensor shall endeavor to, but
shall not be liable for any omission to, consider such factors as media costs,
available marketing resources, population changes, changes in market conditions,
the degree of market penetration of the System, the level of advertising
expenditures by O'Charley's restaurants operated by Licensor or its Affiliates,
advertising expenditures by competitors of the System, as well as such other
factors as Licensor deems relevant.

         K.       With respect to the offer and sale of all menu and beverage
items and other products and services, Licensor may from time to time offer
guidance concerning what it believes to be the optimum selling price for such
goods, products and services. In addition, Licensor may from time to time
establish maximum prices for such goods, products and services.

                                       29

<PAGE>

Such maximum prices, or the methods for determining such maximum prices, shall
be outlined in the Manuals from time to time. Except for maximum prices Licensor
establishes, Operator shall have the right to offer and sell its goods, products
and services at any prices Operator may determine, and shall in no way be bound
by any price which may be recommended or suggested by Licensor. Operator may not
sell the goods, products and services above any maximum prices for such goods,
products or services as may be outlined, from time to time, in the Manuals.
Operator shall not exceed the maximum price established by Licensor, but
Operator at all times shall remain free to charge any price below the maximum
price established by Licensor. Operator shall execute any instruments or other
writings required by Licensor to facilitate the provision of such goods,
products and services. If Operator elects to sell any or all of its goods,
products or services at any price recommended by Licensor, Operator acknowledges
that Licensor has made no guarantee or warranty that offering such goods,
products or services at the recommended price will enhance Operator's sales or
profits.

                                   ARTICLE X
                                PROPRIETARY MARKS

         A.       Licensor grants Operator the right to use the Proprietary
Marks during the term of this Agreement in accordance with the System and its
related standards and specifications.

         B.       Operator expressly understands and acknowledges the following:

                  (1)      O'Charley's Management Company, Inc., a Tennessee
corporation and wholly owned subsidiary of Licensor ("OMC"), is the owner of all
right, title and interest in and to the Proprietary Marks and the goodwill
associated with and symbolized by them. OMC has granted to Licensor an exclusive
license to use and sublicense the Proprietary Marks.

                  (2)      Neither Operator nor the Controlling Principals shall
take any action that would prejudice or interfere with the validity of OMC's or
Licensor's rights with respect to the Proprietary Marks. Nothing in this
Agreement shall give the Operator any right, title or interest in or to any of
the Proprietary Marks or to any of OMC's or Licensor's service marks,
trademarks, trade names, trade dress, logos, copyrights or proprietary
materials, except the right to use the Proprietary Marks and the System in
accordance with the terms and conditions of this Agreement for the operation of
the Restaurant and only at or from its accepted Location or in approved
advertising related to the Restaurant. Operator shall have no right to use the
Proprietary Marks in any manner that has not been expressly authorized by
Licensor in writing (including, any use of, or association with, the Proprietary
Marks and any website, URL or other listing or use on the Internet).

                  (3)      Operator understands and agrees that any and all
goodwill arising from Operator's use of the Proprietary Marks and the System
shall inure solely and exclusively to the benefit of OMC and Licensor, and upon
expiration or termination of this Agreement and the license herein granted, no
monetary amount shall be assigned as attributable to any goodwill associated
with Operator's use of the Proprietary Marks.

                                       30

<PAGE>

                  (4)      Operator shall not contest the validity of OMC's or
Licensor's interest in the Proprietary Marks or assist others to contest the
validity of OMC's or Licensor's interest in the Proprietary Marks.

                  (5)      Operator acknowledges that any unauthorized use of
the Proprietary Marks shall constitute an infringement of OMC's and Licensor's
rights in the Proprietary Marks. Operator agrees that it shall provide Licensor
with all assignments, affidavits, documents, information and assistance Licensor
reasonably requests to fully vest in OMC and Licensor all such rights, title and
interest in and to the Proprietary Marks, including all such items as are
reasonably requested by OMC or Licensor to register, maintain and enforce such
rights in the Proprietary Marks.

                  (6)      OMC and Licensor reserve the right to substitute
different Proprietary Marks for use in identifying the System and the Restaurant
if the current Proprietary Marks no longer can be used, or if OMC or Licensor,
in their sole discretion, determine that substitution of different Proprietary
Marks will be beneficial to the System. In such event OMC or Licensor may
require Operator, at Operator's expense, to discontinue or modify Operator's use
of any of the Proprietary Marks or to use one or more additional or substitute
Proprietary Marks.

         C.       With respect to Operator's licensed use of the Proprietary
Marks pursuant to this Agreement, Operator further agrees as follows:

                  (1)      Unless otherwise authorized or required by Licensor,
Operator shall operate and advertise the Restaurant only under the name
"O'Charley's" without prefix or suffix. Operator shall not use the Proprietary
Marks as part of its corporate or other legal name, and shall obtain Licensor's
approval of such corporate or other legal name prior to applying for or filing
it with the applicable government authority.

                  (2)      During the term of this Agreement and any renewal
hereof, Operator shall identify itself as the owner of the Restaurant and an
operator of Licensor in conjunction with any use of the Proprietary Marks,
including, but not limited to, uses on invoices, order forms, receipts and
contracts, as well as the display of a notice in such content and form and at
such conspicuous locations on the premises of the Restaurant or any Restaurant
delivery vehicle (if applicable) as Licensor may designate in writing.

                  (3)      Operator shall not use the Proprietary Marks to incur
any obligation or indebtedness on behalf of OMC, Licensor or any of their
Affiliates.

                  (4)      Operator shall comply with OMC's or Licensor's
instructions in filing and maintaining the requisite trade name or fictitious
name registrations, and shall execute any documents deemed necessary by OMC or
Licensor or their counsel to obtain protection of the Proprietary Marks or to
maintain their continued validity and enforceability.

         D.       Operator shall notify Licensor immediately by telephone, and
thereafter in writing, of any alleged infringement of or challenge to Operator's
use of any Proprietary Mark, of any claim by any person of any rights in any
Proprietary Mark, and Operator and the Controlling Principals shall not
communicate with any person other than Licensor or any designated affiliate
thereof, their counsel and Operator's counsel in connection with any such

                                       31

<PAGE>

alleged infringement, challenge or claim. OMC and Licensor shall have complete
discretion to take such action as they deem appropriate in connection with the
foregoing, and the right to control exclusively, or to delegate control to any
of their Affiliates of, any settlement, litigation or Patent and Trademark
Office proceeding or any other proceeding arising out of any such alleged
infringement, challenge or claim or otherwise relating to any Proprietary Mark.
Operator agrees to execute any and all instruments and documents, render such
assistance, and do such acts or things as may, in the opinion of OMC or
Licensor, reasonably be necessary or advisable to protect and maintain the
interests of OMC and Licensor or any affiliate or any other franchisee in any
litigation or other proceeding or to otherwise protect and maintain the
interests of OMC or Licensor or any other interested parties in the Proprietary
Marks. Licensor will indemnify Operator against and reimburse Operator for all
costs (including court costs and attorneys' fees) and damages for which Operator
is held liable in any proceeding arising out of any claim that the Proprietary
Marks violate or infringe upon the intellectual property of any third party,
provided that the conduct of Operator and the Controlling Principals with
respect to such proceeding and use of the Proprietary Marks is in full
compliance with the terms of this Agreement.

         E.       The right and license of the Proprietary Marks granted
hereunder to Operator is nonexclusive and Licensor thus has and retains certain
rights in the Proprietary Marks including, but not limited to, the following:

                  (1)      to grant other licenses for use of the Proprietary
Marks, in addition to those licenses already granted to existing operators;

                  (2)      to develop and establish other systems using the
Proprietary Marks or other names or marks and to grant licenses thereto without
providing any rights to Operator; and

                  (3)      to engage, directly or indirectly, through its
employees, representatives, licensees, assigns, agents and others, at wholesale,
retail or otherwise, in (a) the production, distribution, license and sale of
products and services, and (b) the use in connection with such production,
distribution and sale, of the Proprietary Marks and any and all trademarks,
trade names, service marks, logos, insignia, slogans, emblems, symbols, designs
and other identifying characteristics as may be developed or used from time to
time by Licensor.

                                   ARTICLE XI
                  CONFIDENTIALITY AND NON-COMPETITION COVENANTS

         A.       (1)      To protect the reputation and goodwill of Licensor
and to maintain high standards of operation under Licensor's Proprietary Marks,
Operator shall conduct its business in accordance with the Manuals, other
written directives which Licensor may issue to Operator from time to time
whether or not such directives are included in the Manuals, and any other
manuals and materials created or approved for use in the operation of the
Licensed Business.

                  (2)      Operator and the Controlling Principals shall at all
times treat the Manuals, any written directives of Licensor, and any other
manuals and materials, and the information contained therein, as confidential
and shall maintain such information as trade secrets and confidential in
accordance with this Article XI. Operator and the Controlling Principals shall
use all reasonable efforts to maintain this information as secret and
confidential,

                                       32

<PAGE>

and Operator and the Controlling Principals shall divulge and make such
materials available only to such of Operator's employees as must have access to
it in order to operate the Restaurant, or to such other persons authorized by
Licensor in writing. Operator and the Controlling Principals shall not at any
time copy, duplicate, record or otherwise reproduce these materials, in whole or
in part, or otherwise make the same available to any person other than those
authorized above.

                  (3)      The Manuals, written directives, other manuals and
materials and any other confidential communications provided or approved by
Licensor shall at all times remain the sole property of Licensor, shall at all
times be kept in a secure place on the Restaurant premises, and shall be
returned to Licensor immediately upon request or upon termination or expiration
of this Agreement.

                  (4)      The Manuals, any written directives, and any other
manuals and materials issued by Licensor and any modifications to such materials
shall supplement this Agreement.

                  (5)      Licensor may from time to time revise the contents of
the Manuals and the contents of any other manuals and materials created or
approved for use in the operation of the Licensed Business. Operator expressly
agrees to comply with each new or changed standard.

                  (6)      Operator shall at all times ensure that the Manuals
are kept current and up-to-date. In the event of any dispute as to the contents
of the Manuals, the terms of the master copy of the Manuals maintained by
Licensor at Licensor's home office shall control.

                  (7)      Operator shall promptly reimburse Licensor for
Licensor's cost of producing any replacement Manual requested by Operator.

         B.       (1)      Neither Operator nor any of the Controlling
Principals shall, during the term of this Agreement or thereafter, communicate,
divulge or use for the benefit of any other person, persons or Entity and,
following the expiration or termination of this Agreement, they shall not use
for their own benefit, any confidential information, knowledge or know-how
concerning the methods of operation of the Licensed Business which may be
communicated to Operator or the Controlling Principals or of which they may be
apprised in connection with the operation of the Restaurant under the terms of
this Agreement. Operator and the Controlling Principals shall divulge such
confidential information only to such of Operator's employees as must have
access to it in order to operate the Restaurant. Any and all information,
knowledge, know-how, techniques and any materials used in or related to the
System which Licensor provides to Operator in connection with this Agreement
including, but not limited to, the Manuals, plans and specifications, marketing
information and strategies and site evaluation and selection guidelines and
techniques, recipes, and other information communicated in writing and through
other means, including electronic media (e.g., CD ROM, DVD, computer disk or
video and audio tape) shall be deemed confidential for purposes of this
Agreement. Neither Operator nor the Controlling Principals shall at any time,
without Licensor's prior written consent, copy, duplicate, record or otherwise
reproduce such materials or information, in whole or in part, nor otherwise make
the same available to any unauthorized person. The covenants in this Section
shall survive the expiration, termination or transfer of this Agreement or any
interest herein and shall be perpetually binding upon Operator and each of the
Controlling Principals; provided,

                                       33

<PAGE>

however, if the jurisdiction in which this covenant is sought to be enforced
does not allow perpetual binding, then the maximum amount of time allowed under
the applicable law.

                  (2)      Operator shall require and obtain the execution of
covenants similar to those set forth in Section XI(B)(l) from its General
Manager and Kitchen Manager. Such covenants shall be set forth in an agreement
substantially in the form of Attachment C attached hereto. Each Principal not
required to sign this Agreement as a Controlling Principal also must execute
such covenants. Operator shall provide Licensor executed copies of all such
agreements ten (10) days after they are executed.

                  (3)      If Operator or the Controlling Principals develop any
new concept, product, recipe, process or improvement in the operation or
promotion of the Restaurant, Operator is required to promptly notify and assign
to Licensor all of Operator's rights therein and to provide Licensor all
information necessary to effectuate the assignment to Licensor, without
compensation. Operator and the Controlling Principals acknowledge that any such
concept pertaining thereto, process or improvement will become the property of
Licensor, and Licensor may itself use or disclose such information to other
operators or developers for their use as Licensor determines to be appropriate.

         C.       (1)      Operator and the Controlling Principals specifically
acknowledge that, pursuant to this Agreement, Operator and the Controlling
Principals will receive valuable training, trade secrets and confidential
information, including, without limitation, information regarding the
operational, sales, promotional and marketing methods and techniques of Licensor
and the System which are beyond the present skills and experience of Operator
and the Controlling Principal's and Operator's managers and employees. Operator
and the Controlling Principals acknowledge that such specialized training, trade
secrets and confidential information provide a competitive advantage and will be
valuable to them in the development and operation of the Restaurant, and that
gaining access to such specialized training, trade secrets and confidential
information is, therefore, a primary reason why they are entering into this
Agreement. In consideration of such specialized training, trade secrets and
confidential information and rights, Operator and the Controlling Principals
covenant that, during the term of this Agreement, except as otherwise approved
in writing by Licensor, neither Operator nor any of the Controlling Principals
shall, either directly or indirectly, for themselves or through, on behalf of or
in conjunction with any person, persons or Entity:

                           (a)      divert, or attempt to divert, any business
or customer of the Licensed Business to any competitor, by direct or indirect
inducement or otherwise, or do or perform, directly or indirectly, any other act
injurious or prejudicial to the goodwill associated with the Proprietary Marks
and the System; or

                           (b)      own, maintain, operate, engage in, or have
any financial or beneficial interest in (including through any interest in an
Entity that conducts such activities), advise, assist or make loans to, any
business that operates a full service, varied menu, casual dining restaurant
that features freshly prepared items such as steaks, seafood, homemade baked
goods and fresh cut salads, and that serves alcoholic beverages through a
full-service bar, and which business is located within the United States, its
territories or commonwealths, or any other country, province, state or
geographic area in which Licensor has used, sought registration of or

                                       34

<PAGE>

registered the same or similar Proprietary Marks or operates or licenses others
to operate a business under the same or similar Proprietary Marks.

                  (2)      With respect to Operator, and for a continuous
uninterrupted period commencing upon the expiration, termination of (regardless
of the cause for termination), or transfer of all of Operator's interest in,
this Agreement (or, with respect to each of the Controlling Principals,
commencing upon the earlier of: (a) the expiration, termination of, or transfer
of all of Operator's interest in, this Agreement; or (b) the time such
individual or Entity ceases to satisfy the definition of the "Controlling
Principals") and continuing for two (2) years thereafter, except as otherwise
approved in writing by Licensor, neither Operator, nor any of the Controlling
Principals shall, directly or indirectly, for themselves, or through, on behalf
of or in conjunction with any person, persons or Entity:

                           (a)      divert, or attempt to divert, any business
or customer of the Licensed Business hereunder to any competitor, by direct or
indirect inducement or otherwise, or do or perform, directly or indirectly, any
other act injurious or prejudicial to the goodwill associated with the
Proprietary Marks and the System;

                           (b)      employ, or seek to employ, any person who is
at that time, or has been within the preceding six (6) months, employed by
Licensor or any of its Affiliates or by any other operator or developer of
Licensor, or otherwise directly or indirectly induce such person to leave that
person's employment, except as may be permitted under any existing development
agreement or operating agreement between Licensor and Operator; or

                           (c)      own, maintain, operate, engage in, or have
any financial or beneficial interest in (including through any interest in an
Entity that conducts such activities), advise, assist or make loans to or
provide guarantees with respect to such loans to, any business that is of a
character and concept similar to the Restaurant, including, without limitation,
a full service varied menu casual dining restaurant which serves alcoholic
beverages through a full-service bar, which business is, or is intended to be
located within the Location or within a fifteen (15) mile radius of any
O'Charley's restaurant or other food service facility in existence or under
construction (or where land has been purchased or a lease has been executed for
the construction of an O'Charley's restaurant or other food service facility) as
of the earlier of: (i) the expiration or termination of, or the transfer of all
of Operator's interest in, this Agreement; or (ii) the time the Controlling
Principal ceases to satisfy the definition of Principal, as applicable.

                  (3)      The parties acknowledge and agree that each of the
covenants contained herein are reasonable limitations as to time, geographical
area, and scope of activity to be restrained and do not impose a greater
restraint than is necessary to protect the goodwill or other business interests
of Licensor. The parties agree that each of the covenants herein shall be
construed as independent of any other covenant or provision of this Agreement.
If all or any portion of a covenant in this Section is held unreasonable or
unenforceable by a court or agency having valid jurisdiction in an unappealed or
unappealable final decision to which Licensor is a party, Operator and the
Controlling Principals expressly agree to be bound by any lesser covenant
subsumed within the terms of such covenant that imposes the maximum duty
permitted by law, as if the resulting covenant were separately stated in and
made a part of this Section.

                                       35

<PAGE>

Sections XI(C)(1)(b) and (2)(c) shall not apply to the ownership of less than a
five percent (5%) beneficial interest in the outstanding equity securities of
any Publicly-Held Entity.

                           (a)      Operator and the Controlling Principals
understand and acknowledge that Licensor shall have the right, in its sole
discretion, to reduce the scope of any covenant set forth in this Section XI(C)
in this Agreement, or any portion thereof, without their consent, effective
immediately upon notice to Operator; and Operator and the Controlling Principals
agree that they shall immediately comply forthwith with any covenant as so
modified, which shall be fully enforceable notwithstanding the provisions of
Section XX(B) hereof.

                           (b)      Operator and the Controlling Principals
expressly agree that the existence of any claims they may have against Licensor,
whether or not arising from this Agreement, shall not constitute a defense to
the enforcement by Licensor of the covenants in this Section.

                  (4)      Operator shall require and obtain the execution of
covenants similar to those set forth in this Section XI(C) (including covenants
applicable upon the termination of a person's employment with Operator) from its
General Manager and its Kitchen Manager. At Licensor's request, Operator shall
require and obtain execution of covenants similar to those set forth in this
Section XI(C) (including covenants applicable upon the termination of a person's
employment with Operator) from any personnel of Operator who have received or
will have access to training from Licensor. Any such covenants shall be
substantially in the form set forth in Attachment C.

                  (5)      Each Principal not required to sign this Agreement as
a Controlling Principal also must execute such covenants. Notwithstanding the
foregoing, Licensor reserves the right, in its sole discretion, to decrease the
period of time or geographic scope of the non-competition covenant set forth in
Attachment C or eliminate such non-competition covenant altogether for any party
that is required to execute such agreement under this Section XI(C)(5).

         D.       Operator and the Controlling Principals acknowledge that a
violation of the terms of this Section would result in irreparable injury to
Licensor for which no adequate remedy at law may be available, and Operator and
the Controlling Principals accordingly consent to the issuance of an injunction
prohibiting any conduct by Operator or the Controlling Principals in violation
of the terms of this Section. Operator and the Controlling Principals agree to
pay all court costs and reasonable attorney's fees incurred by Licensor in
connection with the enforcement of this Section, including payment of all costs
and expenses for obtaining specific performance of, or an injunction against
violation of, the requirements of such Section.

         E.       Notwithstanding anything else in this Article XI to the
contrary, if there is a state specific non-competition and/or non-solicitation
addendum attached to this Agreement, the terms of such addendum shall supersede
the terms of this Article XI to the extent they are inconsistent with one
another.

                                       36

<PAGE>

                                  ARTICLE XII
                                BOOKS AND RECORDS

         A.       Operator shall maintain during the term of this Agreement, and
shall preserve for at least five (5) years from the dates of their preparation,
full, complete and accurate books, records and accounts, including, but not
limited to, sales slips, coupons, purchase orders, credit card transmission
records, payroll records, employee meal records, check stubs, bank statements,
deposit slips, sales tax records and returns, cash receipts and disbursements,
journals and ledgers, records of EFT transactions, and backup or archived
records of information maintained on any computer system, all in accordance with
GAAP, as applicable, and in the form and manner prescribed by Licensor from time
to time in the Manuals or otherwise in writing.

         B.       In addition to the remittance reports required by Articles V
and IX hereof, Operator shall comply with the following reporting obligations:

                  (1)      Operator shall, at Operator's expense, submit to
Licensor, in the form prescribed by Licensor, a quarterly profit and loss
statement (which may be unaudited) for Operator within thirty (30) days after
the end of each quarter during the term hereof. Each such statement shall be
certified by Operator's treasurer or chief financial officer attesting that it
is true, complete and correct.

                  (2)      Operator shall, at its expense, provide to Licensor
complete audited annual financial statements for Operator prepared by an
independent certified public accountant satisfactory to Licensor, within one
hundred twenty (120) days after the end of each fiscal year of Operator during
the term hereof, showing the financial position, results of operations, cash
flows and owners' equity of Operator during such fiscal year. Such financial
statements shall be prepared in accordance with GAAP, and shall be certified by
Operator's treasurer or chief financial officer attesting that they are true,
complete and correct.

                  (3)      Operator shall also submit to Licensor, for review or
auditing, such other forms, reports, records, information and data as Licensor
may reasonably designate, in the form and at the times and places reasonably
required by Licensor, upon request and as specified from time to time in
writing.

         C.       Licensor or its designees shall have the right at all
reasonable times to review, audit, examine and copy any or all books and records
of Operator as Licensor may require. Operator shall make such books and records
available to Licensor or its designees immediately upon request. If any required
royalty payments, marketing fees, advertising contributions or any other
payments to Licensor are delinquent, or if any inspection should reveal that
such payments have been understated in any report to Licensor, then Operator
shall immediately pay to Licensor the amount overdue or understated upon demand
with interest determined in accordance with the provisions of Section V(B)(4).
If an inspection discloses an understatement in any report of two percent (2%)
or more, Operator shall, in addition, reimburse Licensor for all costs and
expenses connected with the inspection (including, without limitation,
reasonable accounting and attorney's fees). These remedies shall be in addition
to any other remedies Licensor may have at law or in equity.

                                       37

<PAGE>

         D.       Operator understands and agrees that the receipt or acceptance
by Licensor of any of the statements furnished or fees paid to Licensor (or the
cashing of any royalty checks, or processing of electronic fund transfers) shall
not preclude Licensor from questioning the correctness thereof at any time and,
in the event that any inconsistencies or mistakes are discovered in such
statements or payments, they shall immediately be rectified by the Operator and
the appropriate payment shall be made by the Operator.

         E.       Operator hereby authorizes (and agrees to execute any other
documents deemed necessary to effect such authorization) all banks, financial
institutions, businesses, suppliers, manufacturers, contractors, vendors and
other persons or entities with which Operator does business to disclose to
Licensor any requested financial information in their possession relating to
Operator or the Restaurant. Operator authorizes Licensor to disclose data from
Operator's reports, if Licensor determines, in its sole discretion, that such
disclosure is necessary or advisable, which disclosure may include disclosure to
prospective or existing operators or other third parties.

         F.       Operator hereby appoints Licensor its true and lawful
attorney-in-fact with full power and authority, for the sole purpose of
obtaining any and all returns and reports filed by Operator with any state
and/or federal taxing authority. This power of attorney shall survive the
expiration or termination of this Agreement. Operator shall execute such
additional documents as Licensor shall require in connection with such
appointment

         G.       In addition to the information, books, records and reports
Operator must provide with respect to the Restaurant and Operator described
above, the Controlling Principals shall each provide to Licensor his or her
unaudited annual financial statements within one hundred twenty (120) days after
the end of Operator's fiscal year. Such financial statements shall be prepared
in accordance with GAAP, and shall be certified as true and correct by the
applicable Controlling Principal.

                                  ARTICLE XIII
                                    INSURANCE

         A.       Operator shall procure, upon execution of this Agreement, and
shall maintain in full force and effect at all times during the term of this
Agreement at Operator's expense, an insurance policy or policies protecting
Operator and Licensor and its Affiliates and their respective Affiliates,
successors and assigns and each such Entity's respective officers, directors,
shareholders, partners, agents, representatives, independent contractors and
employees against any demand or claim with respect to personal injury, death or
property damage, or any loss, liability or expense whatsoever arising or
occurring upon or in connection with the Restaurant.

         B.       (1)      Such policy or policies shall be written by a
responsible carrier or carriers reasonably acceptable to Licensor and shall
include, at a minimum (except as additional coverages and higher policy limits
may reasonably be specified by Licensor from time to time in accordance with
standards and specifications set forth in writing), the following:

                           (a)      Comprehensive General Liability Insurance,
including broad form contractual liability, broad form property damage, personal
injury, advertising injury, completed

                                       38

<PAGE>

operations, products liability and fire damage coverage, in the amount of One
Million Dollars ($1,000,000) combined single limit;

                           (b)      Liquor Legal Liability Insurance in the
amount of One Million Dollars ($1,000,000) combined single limit;

                           (c)      "All Risks" coverage (including earthquake
and flood, if the Restaurant is located in a designated earthquake or flood
zone) for the full cost of replacement of the Restaurant premises and all other
property in which Licensor may have an interest with no coinsurance clause;

                           (d)      An "umbrella" policy providing excess
coverage with limits of not less than Ten Million Dollars ($10,000,000);

                           (e)      Automobile liability coverage, including
coverage of owned, non-owned and hired vehicles, with coverage in amounts not
less than One Million Dollars ($1,000,000) combined single limit;

                           (f)      Workers' compensation insurance in amounts
provided or described by applicable laws and statutes; and

                           (g)      Such other insurance as may be required by
the state or locality in which the Restaurant is located and operated.

                  (2)      Operator may, with the prior written consent of
Licensor, elect to have reasonable deductibles in connection with the coverage
required under Sections XIII(B)(1)(a)-(g) hereof. Such policies shall also
include a waiver of subrogation in favor of Licensor and its directors,
officers, shareholders, partners, employees, representatives, independent
contractors and agents.

         C.       In connection with any construction, renovation, refurbishment
or remodeling of the Restaurant, Operator shall maintain Builder's Risks
insurance and performance and completion bonds in forms and amounts, and written
by a carrier or carriers, reasonably satisfactory to Licensor.

         D.       Operator's obligation to obtain and maintain the foregoing
policy or policies in the amounts specified shall not be limited in any way by
reason of any insurance which may be maintained by Licensor, nor shall
Operator's performance of that obligation relieve it of liability under the
indemnity provisions set forth in Article XVI of this Agreement.

         E.       All public liability and property damage policies shall
contain a provision that Licensor and its Affiliates and their respective
directors, officers, shareholders, partners, employees, representatives,
independent contractors and agents, although named as insureds, shall
nevertheless be entitled to recover under such policies on any loss occasioned
to Licensor or its servants, agents or employees by reason of the negligence of
Operator or its servants, agents or employees.

                                       39

<PAGE>

         F.       Upon execution of this Agreement, and thereafter as required
by Licensor and thirty (30) days prior to the expiration of any such policy,
Operator shall deliver to Licensor Certificates of Insurance evidencing the
existence and continuation of proper coverage with limits not less than those
required hereunder. In addition, if requested by Licensor, Operator shall
deliver to Licensor a copy of the insurance policy or policies required
hereunder. All insurance policies required hereunder, with the exception of
workers' compensation, shall name Licensor and any parent or affiliate, and
their respective directors, officers, shareholders, partners, employees,
representatives, independent contractors and agents, as additional insureds, and
shall expressly provide that any interest of same therein shall not be affected
by any breach by Operator of any policy provisions. Further, all insurance
policies required hereunder shall expressly provide that no less than thirty
(30) days prior written notice shall be given to Licensor in the event of a
material alteration to or cancellation of the policies.

         G.       Should Operator, for any reason, fail to procure or maintain
the insurance required by this Agreement, as such requirements may be revised
from time to time by Licensor in writing, Licensor shall have the right and
authority (without, however, any obligation to do so) immediately to procure
such insurance and to charge same to Operator, which charges, together with a
reasonable fee for Licensor's expenses in so acting, shall be payable by
Operator immediately upon notice. The foregoing remedies shall be in addition to
any other remedies Licensor may have at law or in equity.

                                  ARTICLE XIV
                                 DEBTS AND TAXES

         A.       Operator shall promptly pay when due all Taxes levied or
assessed, and all accounts and other indebtedness of every kind incurred by
Operator in the conduct of the Licensed Business under this Agreement. Without
limiting the provisions of Article XVI, Operator shall be solely liable for the
payment of all Taxes and shall indemnify Licensor for the full amount of all
such Taxes imposed on Licensor, and for any liability (including penalties,
interest and expenses) arising from or concerning the payment of Taxes, whether
Taxes were correctly or legally asserted or not.

         B.       Each payment to be made to Licensor hereunder shall be made
free and clear and without deduction for any Taxes. The term "Taxes" means any
present or future taxes, levies, imposts, duties or other charges of whatever
nature, including any interest or penalties thereon, imposed by any government
or political subdivision of such government on or relating to the operation of
the Licensed Business, the payment of monies, or the exercise of rights granted
pursuant to this Agreement.

         C.       If any Taxes (other than income taxes) are directly or
indirectly imposed on Licensor with respect to any payments to Licensor required
under this Agreement, Operator shall pay an amount to Licensor equal to the Tax.

         D.       In the event of any bona fide dispute as to Operator's
liability for taxes assessed or other indebtedness, Operator may contest the
validity or the amount of the tax or indebtedness in accordance with the
procedures of the taxing authority or applicable law. However, in no event shall
Operator permit a tax sale or seizure by levy of execution or similar writ or
warrant or

                                       40

<PAGE>

attachment by a creditor, to occur against the premises of the Licensed Business
or any improvements or other property thereon.

         E.       Operator shall comply with all federal, state and local laws,
rules and regulations and shall timely obtain any and all permits, certificates
or licenses necessary for the full and proper conduct of the Licensed Business,
including, without limitation, licenses to do business, fictitious name
registrations, licenses and permits to sell alcoholic beverages in the
Restaurant, sales tax permits, fire clearances, health and safety permits and
certificates of occupancy, and any permits, certificates or licenses required by
any environmental law, rule, or regulation.

         F.       Operator shall immediately notify Licensor in writing of the
commencement of any action, suit or proceeding and of the issuance of any order,
writ, injunction, award or decree of any court, agency or other governmental
instrumentality, which may adversely affect the operation or financial condition
of the Licensed Business.

                                   ARTICLE XV
                              TRANSFER OF INTEREST

         A.       Licensor shall have the right to transfer or assign this
Agreement and all or any part of its rights or obligations herein to any person
or Entity without Operator's consent. Specifically, and without limitation to
the foregoing, Operator and the Controlling Principals agree that Licensor may
sell its assets, the Proprietary Marks or the System to a third party; may offer
its securities privately or publicly; may merge, spin-off, acquire other
Entities or be acquired by another Entity; may undertake a refinancing,
recapitalization, leveraged buyout or other economic or financial restructuring;
and with regard to any or all of the above sales, assignments and dispositions,
Operator and the Controlling Principals expressly and specifically waive any
claims, demands, or damages against Licensor arising from or related to the
transfer of the Proprietary Marks (or any variation thereof) or its assets or
the System (or any portion thereof) from Licensor to any other party. Upon such
sale, assignment or disposition, Operator further agrees that Licensor shall
have no further obligations arising out of or related to this Agreement so long
as such obligations are assumed by the transferee. Nothing contained in this
Agreement shall require Licensor to remain in the business of operating or
licensing the operation of O'Charley's restaurants or other restaurant
businesses or to offer any services or products, whether or not bearing the
Proprietary Marks, to Operator if Licensor assigns its rights in this Agreement.

         B.       (1)      Operator and the Controlling Principals understand
and acknowledge that the rights and duties set forth in this Agreement are
personal to Operator and the Controlling Principals, and that Licensor has
granted rights under this Agreement in reliance on the business skill, financial
capacity and personal character of Operator and the Controlling Principals and
with the expectation that the duties and obligations contained in this Agreement
will be performed by Operator and the Controlling Principals signing this
Agreement. Accordingly, neither Operator nor any Controlling Principal, nor any
successor or assign of Operator or any Controlling Principal shall sell, assign,
transfer, convey, give away, pledge, mortgage or otherwise dispose of or
encumber any direct or indirect interest in this Agreement, in the assets of the
Restaurant or in Operator without the prior written consent of Licensor;
provided, however, that such prior written consent shall not be required for a
transfer of less than a five

                                       41

<PAGE>

percent (5%) interest in a Publicly-Held Entity. Any purported assignment or
transfer, by operation of law or otherwise, not having the written consent of
Licensor shall be null and void.

                  (2)      If Operator wishes to transfer all or part of its
interest in the assets of the Restaurant or in this Agreement or if Operator or
a Controlling Principal wishes to transfer any ownership interest in Operator,
the transferor and the proposed transferee shall apply to Licensor in writing
for Licensor's consent, which may be withheld in Licensor's sole discretion.
Without limiting the generality of the foregoing, Licensor may require that all
of the following conditions be met prior to its approval of that transfer:

                           (a)      All of the accrued monetary obligations of
Operator and its Affiliates and all other outstanding obligations to Licensor
and its Affiliates arising under this Agreement or any other agreement shall
have been satisfied in a timely manner and Operator shall have satisfied all
trade accounts and other debts of whatever nature or kind, in a timely manner.

                           (b)      Operator, or its Affiliates, are not in
default of any provision of this Agreement, any amendment hereof or successor
hereto, or any other agreement between Operator, or its Affiliates and Licensor,
or its Affiliates, and Operator shall have substantially and timely complied
with all the terms and conditions of such agreements during the terms thereof.

                           (c)      The transferor and its principals (if
applicable) shall have executed a general release, in a form satisfactory to
Licensor, of any and all claims against Licensor, its Affiliates and each such
Entity's respective officers, directors, shareholders, partners, agents,
representatives, independent contractors and employees, in their corporate and
individual capacities, including, without limitation, claims arising under this
Agreement, any other agreement between Licensor and Operator and federal, state
and local laws, rules and regulations.

                           (d)      The transferee shall enter into a written
agreement, in a form satisfactory to Licensor, assuming full, unconditional,
joint and several liability for, and agreeing to perform from the date of the
transfer, all obligations, covenants and agreements contained in this Agreement,
and, if transferee is a corporation, limited liability company, partnership or
other Entity, transferee's shareholders, members, partners or other investors,
as applicable, shall execute such agreement as transferee's principals and
guarantee the performance of all such obligations, covenants and agreements.

                           (e)      The transferee shall demonstrate to
Licensor's satisfaction that transferee meets the criteria considered by
Licensor when reviewing a prospective operator's application for a license,
including, but not limited to, Licensor's educational, managerial and business
standards; transferee's good moral character, business reputation and credit
rating; transferee's aptitude and ability to conduct the business licensed
herein (as may be evidenced by prior related business experience or otherwise);
transferee's financial resources and capital for operation of the business; and
the geographic proximity and number of other O'Charley's restaurants owned or
operated by transferee.

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<PAGE>

                           (f)      The transferee shall execute, for a term
ending on the expiration date of this Agreement and with such renewal terms as
may be provided by this Agreement, the standard form operating agreement then
being offered to new System operators and other ancillary agreements as Licensor
may require for the Restaurant, which agreements shall supersede this Agreement
and its ancillary documents in all respects and the terms of which agreements
may differ from the terms of this Agreement, including, without limitation, a
higher percentage royalty fee, marketing fee, advertising contribution or
expenditure requirement; and, if transferee is a corporation, limited liability
company, partnership or other Entity, transferee's shareholders, members,
partners or other investors, as applicable, shall execute such agreement as
transferee's principals and guarantee the performance of all such obligations,
covenants and agreements.

                           (g)      The transferee, at its expense, shall
renovate, modernize and otherwise upgrade the Restaurant and, if applicable, any
Restaurant delivery vehicles to conform to the then-current standards and
specifications of the System, and shall complete the upgrading and other
requirements within the time period reasonably specified by Licensor.

                           (h)      The transferor shall remain liable for all
of the obligations to Licensor in connection with the Restaurant incurred prior
to the effective date of the transfer and shall execute any and all instruments
reasonably requested by Licensor to evidence such liability.

                           (i)      At the transferee's expense, the transferee,
the transferee's General Manager and the transferee's Operating Principal (or
his authorized designee), and any other applicable Restaurant personnel shall
complete any training programs then in effect for operators of O'Charley's
restaurants upon such terms and conditions as Licensor may reasonably require.

                           (j)      Operator shall pay a transfer fee of Five
Thousand Dollars ($5,000) to Licensor, or such greater amount as is necessary to
reimburse Licensor for its reasonable costs and expenses associated with
reviewing the application to transfer, including, without limitation, legal and
accounting fees prior to the approval of transfer.

                           (k)      If the transferee is a corporation, limited
liability company, partnership or other Entity, the transferee shall make and
will be bound by any or all of the representations, warranties and covenants set
forth at Article VII as Licensor requests. Transferee shall provide to Licensor
evidence satisfactory to Licensor that the terms of such Section have been
satisfied and are true and correct on the date of transfer.

                           (l)      Operator shall have completed its
obligations to construct and open the Restaurant under Article II of this
Agreement and the terms of the Development Agreement.

                  (3)      Operator shall not grant a security interest in the
Restaurant or in any of Operator's assets without Licensor's prior written
consent. In connection therewith, the secured party will be required by Licensor
to agree that in the event of any default by Operator under any documents
related to the security interest, Licensor shall have the right and option to be
substituted as obligor to the secured party and/or to cure any default of
Operator.

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<PAGE>

                  (4)      Operator acknowledges and agrees that each condition
which must be met by the transferee is reasonable and necessary to ensure such
transferee's full performance of the obligations hereunder.

         C.       If the proposed transfer is to a corporation formed solely for
the convenience of ownership, Licensor's consent may be conditioned upon any of
the requirements set forth at Section XV(B)(2)(a), (b), (d), (h), (i) and (k).
With respect to a transfer to a corporation formed for the convenience of
ownership, Operator shall be the owner of all of the voting stock or interest of
the corporation and if Operator is owned by more than one individual, each such
individual shall have the same proportionate ownership interest in the
corporation as he had in Operator prior to the transfer.

         D.       (1)      If Operator wishes to transfer all or part of its
interest in the assets of the Restaurant or this Agreement or if Operator or a
Controlling Principal wishes to transfer any ownership interest in Operator
pursuant to an offer received from a third party to purchase such interest, then
such proposed seller shall promptly notify Licensor in writing of each such
offer, shall certify that such offer is bona fide and shall provide and shall
certify in writing as to the accuracy of such information and documentation
relating to the offer as Licensor may require. Licensor shall have the right and
option, exercisable within thirty (30) days after receipt of such written
notification and copies of all documentation requested by Licensor describing
the terms of such offer, to send written notice to the proposed seller that
Licensor intends to purchase the proposed seller's interest on the same terms
and conditions offered by the third party. In the event that Licensor elects to
purchase the proposed seller's interest, closing on such purchase must occur
within the later of sixty (60) days from the date of notice to the proposed
seller of the election to purchase by Licensor, sixty (60) days after the date
Licensor receives and obtains all necessary permits and approvals, or such other
date as the parties agree upon in writing. Any material change in the terms of
any offer prior to closing shall constitute a new offer subject to the same
right of first refusal by Licensor as in the case of an initial offer. Failure
of Licensor to exercise the option afforded by this Section XV(D) shall not
constitute a waiver of any other provision of this Agreement, including the
consent provisions of Section XV(B) and all of the other requirements of Article
XV, with respect to a proposed transfer.

                  (2)      In the event an offer from a third party provides for
payment of consideration other than cash or involves certain non-cash items or
intangible benefits, Licensor may elect to purchase the interest proposed to be
sold for the reasonable cash equivalent of such items or benefits (the "Cash
Equivalent"). If the parties cannot agree within thirty (30) days on the
reasonable cash equivalent of the non-cash part of the offer, then the Cash
Equivalent will be determined by one (1) or more professional appraisers or
independent certified public accountants who are qualified by experience and
ability to appraise (each, a "Qualified Appraiser"), selected under the
procedures in this Section. If the Cash Equivalent is to be determined by
Qualified Appraisers, Licensor and Operator will each have the opportunity to
appoint, at their own expense, a Qualified Appraiser, within five (5) days
following the expiration of the thirty (30) day period within which Licensor and
Operator could not mutually agree on the Cash Equivalent. If either party shall
fail to appoint a Qualified Appraiser within this five (5) day period, the other
Qualified Appraiser shall unilaterally establish the Cash Equivalent by a
written opinion and the cost of such Qualified Appraiser shall be split between
the two parties equally. If both parties appoint Qualified Appraisers within
this five (5) day

                                       44

<PAGE>

period, the two (2) Qualified Appraisers shall establish the Cash Equivalent in
a single written opinion agreed to by both of them. If the two (2) Qualified
Appraisers cannot agree on the Cash Equivalent within ten (10) days of the
appointment of the latter of them, the two (2) Qualified Appraisers shall
together appoint a third Qualified Appraiser whose sole written opinion shall
establish the Cash Equivalent. In the event of such appraisal, each party shall
bear its own legal and other costs. In the event that Licensor exercises its
right of first refusal herein provided, it shall have the right to set off (a)
all fees for any such Qualified Appraiser due from Operator hereunder, and (b)
all amounts due from Operator or any of its Affiliates against any payment
therefor.

         E.       (1)      Upon the death of Operator (if a natural person) or
any Controlling Principal who is a natural person (the "Deceased"), the
executor, administrator or other personal representative of the Deceased shall
transfer such interest to a third party approved by Licensor within twelve (12)
months after the death of the Deceased. If no personal representative is
designated or appointed or no probate proceedings are instituted with respect to
the estate of the Deceased, then the distributee of such interest must be
approved by Licensor. If the distributee is not approved by Licensor, then the
distributee shall transfer such interest to a third party approved by Licensor
within twelve (12) months after the death of the Deceased.

                  (2)      Upon the Permanent Disability of Operator (if a
natural person) or any Controlling Principal who is a natural person, Licensor
may, in its sole discretion, require such interest to be transferred to a third
party in accordance with the conditions described in this Article XV within six
(6) months after notice to Operator of such Permanent Disability. "Permanent
Disability" shall mean any physical, emotional or mental injury, illness or
incapacity which would prevent a person from performing the obligations set
forth in this Agreement or in the guaranty made part of this Agreement for at
least ninety (90) consecutive days. Permanent Disability shall be determined by
a licensed practicing physician selected by Licensor, upon examination of the
person, or if the person refuses to submit to an examination, then such person
automatically shall be deemed permanently disabled as of the date of such
refusal for the purpose of this Section XV(E). The costs of any examination
required by this Section shall be paid by Licensor.

                  (3)      In the event of the death or Permanent Disability of
Operator (if a natural person), the Operating Principal or any Controlling
Principal who is a natural person and who has a twenty-five percent (25%) or
more interest in this Agreement, the Restaurant or in Operator, Licensor at its
option may elect to operate (or appoint a designee to operate) the Licensed
Business during the interim twelve (12) months following such death or the
interim six (6) months following such Permanent Disability, as applicable, until
the interest of such person is transferred in accordance with this Article XV.
As compensation for managing the Restaurant, Licensor will charge a management
fee of five percent (5%) of Operator's Gross Sales for each Accounting Period.
Operator will execute any agreements or other documents required by Licensor to
effect the foregoing and shall remain responsible for payment of employee
salaries, taxes, rent, utilities, supplies and all other costs and expenses
associated with the operation of the Restaurant. Licensor shall exercise its
commercially reasonable efforts in managing the Licensed Business, but shall not
be liable for any losses incurred by the Licensed Business during the time of
such management and thereafter.

                                       45

<PAGE>

                  (4)      Upon the death or claim of Permanent Disability of
Operator or any Controlling Principal, Operator or a representative of Operator
must promptly notify Licensor of such death or claim of Permanent Disability
within fifteen (15) days of its occurrence. Any transfer upon death or Permanent
Disability shall be subject to the same terms and conditions as described in
this Section for any inter vivos transfer. Operator and each Controlling
Principal shall have the right to seek approval of a transfer of their
respective interest to a proposed successor prior to the death or claim of
Permanent Disability by Operator or the Controlling Principal, as applicable. If
Operator or any Controlling Principal, as applicable, desires to obtain approval
of any proposed successor in interest prior to the death or claim of Permanent
Disability, Operator or the Controlling Principal, as applicable, shall submit
to Licensor such information and documentation concerning such proposed
successor required by Licensor in the Manuals or other written directives.
Further, as a condition to approval, Licensor may, in its sole discretion,
require compliance with any of the terms and conditions described in this
Section for any inter vivos transfer.

         F.       Licensor's consent to a transfer of any interest described
herein shall not constitute a waiver of any claims which Licensor may have
against the transferring party, nor shall it be deemed a waiver of Licensor's
right to demand exact compliance with any of the terms of this Agreement by the
transferee.

         G.       Securities or other Entity ownership interests in Operator may
be offered to prospective investors, including existing investors, by private
offering or otherwise, only with the prior written consent of Licensor. All
materials required for such offering by federal or state law shall be submitted
to Licensor for a limited review as discussed below prior to being filed with
any governmental agency and any materials to be used in any exempt offering
shall be submitted to Licensor for such review prior to their use. No Operator
offering shall imply (by use of the Proprietary Marks or otherwise) that
Licensor is participating in an underwriting, issuance or offering of securities
or other Entity ownership interest of Operator, and Licensor's review of any
offering materials shall be limited solely to the subject of the relationship
between Operator and Licensor and their Affiliates. Licensor may, at its option,
require Operator's offering materials to contain a written statement prescribed
by Licensor concerning the limitations described in the preceding sentence.
Operator, its Principals and the other participants in the offering must prior
to the commencement of such offering, agree in writing to fully indemnify
Licensor and Licensor's Affiliates, and each of such Entity's respective
officers, directors, shareholders, members, partners, agents, representatives,
independent contractors and employees in connection with the offering. For each
proposed offering, Operator shall reimburse Licensor for its reasonable costs
and expenses associated with reviewing the proposed offering, including, without
limitation, legal and accounting fees. Operator shall give Licensor written
notice at least ninety (90) days prior to the date of commencement of any
offering or other transaction covered by this Section XV(G).

         H.       Operator and each of its Controlling Principals, as
applicable, may transfer, sell or assign their respective interests in Operator,
by and among themselves only with Licensor's prior written consent; provided,
however, such transfer, sale or assignment, shall not result in a change in the
Controlling Interest in Operator. Licensor's consent may be conditioned on
compliance with Section XV(B)(2)(a), (b), (d), (f), (h), (i), (k) and (l). For
the purpose of this Agreement, "Controlling Interest" shall mean:

                                       46

<PAGE>

                  (1)      if Operator is a corporation, that the Controlling
Principals, either individually or cumulatively, (a) directly or indirectly own
at least fifty-one percent (51%) of the shares of each class of Operator's
issued and outstanding capital stock and (b) are entitled, under its governing
documents and under any agreements among the shareholders, to cast a sufficient
number of votes to elect a majority of the board if directors or to require such
corporation to take or omit to take any action which such corporation is
required to take or omit to take under this Agreement;

                  (2)      if Operator is a limited liability company, that the
Controlling Principals (a) own at least fifty-one percent (51%) of the
outstanding units of membership interest in the limited liability company, and
(b) are entitled under its operating agreement to act on behalf of the limited
liability company without the approval or consent of any other member or be able
to cast a sufficient number of votes to require the limited liability company to
take or omit to take any action which the limited liability company is required
to take or omit to take under this Agreement; or

                  (3)      if Operator is a partnership or other Entity, that
the Controlling Principals (a) own at least a fifty-one percent (51%) interest
in the operating profits and operating losses of the partnership as well as at
least a fifty-one percent (51%) ownership interest in the partnership (and at
least a fifty-one percent (51%) interest in the shares of each class of capital
stock or other ownership interests of any direct or indirect corporate or other
Entity general partner) and (b) are entitled under its partnership agreement or
other Entity organizational documents or applicable law to act on behalf of the
partnership without the approval or consent of any other partner or owner or be
able to cast a sufficient number of votes to require the partnership or other
Entity to take or omit to take any action which the partnership or other Entity
is required to take or omit to take under this Agreement.

         I.       If any person holding an interest in Operator (other than
Operator or a Controlling Principal, which parties shall be subject to Section
XV(B) above) transfers such interest, then Operator shall promptly notify
Licensor of such proposed transfer in writing and shall provide such information
relative thereto as Licensor may reasonably request prior to such transfer. Such
transferee must have good moral character and business reputation, have an
acceptable credit rating, and may not be one of Licensor's competitors. Such
transferee will be a Principal and as such shall execute a confidentiality and
non-compete agreement in the form then required by Licensor, which form shall be
in substantially the same form attached hereto as Attachment C (see Sections
XI(B)(2) and XI(C)(4)). Licensor also reserves the right to designate the
transferee as one of the Controlling Principals.

                                  ARTICLE XVI
                                 INDEMNIFICATION

         A.       Operator and each of the Controlling Principals shall
indemnify and hold harmless Licensor and its Affiliates and their officers,
directors, shareholders, employees, managers, members, agents and
representatives from any and all claims, demands, suits, proceedings, fines,
losses, liabilities damages, costs and expenses (including reasonable attorneys'
fees) suffered or incurred, directly or indirectly, by any one or more of them
(collectively, "Damages") as a result of (1) any breach or other failure by
Operator, Operating

                                       47

<PAGE>

Principal or any Controlling Principal to perform its or his obligations
hereunder or under any other instrument or agreement executed in connection
herewith, or (2) any other action or inaction by Operator, Operating Principal,
any Controlling Principal or any other person resulting from or in connection
with the operation of the Restaurant; provided, however, that neither Operator,
Operating Principal nor any Controlling Principal shall be liable for Damages
resulting from Licensor's or its Affiliates' gross negligence or willful
misconduct.

         B.       Operator and each of the Controlling Principals agree to give
Licensor immediate notice of any such action, suit, proceeding, claim, demand,
inquiry or investigation. Licensor shall have the option, in its sole
discretion, to defend any action seeking Damages as a result of any action or
inaction by Operator or any other person resulting from or in connection with
the operation of the Restaurant or to allow Operator to defend such action with
counsel satisfactory to Licensor.

         C.       Operator and the Controlling Principals expressly agree that
the terms of this Article XVI shall survive the termination, expiration or
transfer of this Agreement or any interest herein.

                                  ARTICLE XVII
                           RELATIONSHIP OF THE PARTIES

         A.       The parties acknowledge and agree that this Agreement does not
create a fiduciary relationship between them, that Operator shall be an
independent contractor and that nothing in this Agreement is intended to
constitute either party an agent, legal representative, subsidiary, affiliate,
joint venturer, partner, employee, joint employer or servant of the other for
any purpose.

         B.       During the term of this Agreement, Operator shall hold itself
out to the public as an independent contractor conducting its Restaurant
operations pursuant to the rights granted by Licensor. Operator agrees to take
such action as shall be necessary to that end, including, without limitation,
exhibiting a notice of that fact in a conspicuous place on the Restaurant
premises established for the purposes hereunder, on any Restaurant delivery
vehicle, and on all letterhead, business cards, forms, and as further described
in the Manuals, the content and form of which Licensor reserves the right to
specify in writing.

         C.       Operator understands and agrees that nothing in this Agreement
authorizes Operator or any of the Controlling Principals to make any contract,
agreement, warranty or representation on Licensor's behalf, or to incur any debt
or other obligation in Licensor's name, and that Licensor shall in no event
assume liability for, or be deemed liable under, this Agreement as a result of
any such action, or for any act or omission of Operator or any of the
Controlling Principals or any claim or judgment arising therefrom.

                                 ARTICLE XVIII
                                   TERMINATION

         A.       (1)      Operator acknowledges and agrees that each of
Operator's obligations described in this Agreement is a material and essential
obligation of Operator, that nonperformance of such obligations will adversely
and substantially affect the Licensor and the

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<PAGE>

System, and that the exercise by Licensor of the rights and remedies set forth
herein is appropriate and reasonable.

                  (2)      Operator shall be deemed to be in material default
under this Agreement and all rights granted herein shall automatically terminate
without notice to Operator if:

                           (a)      Operator becomes insolvent or makes a
general assignment for the benefit of creditors;

                           (b)      Operator files a voluntary petition under
any section or chapter of federal bankruptcy law or under any similar law or
statute of the United States or any state thereof ("Bankruptcy Laws") or admits
in writing its inability to pay its debts when due;

                           (c)      Operator is adjudicated bankrupt or
insolvent in proceedings filed against Operator under any section or chapter of
any Bankruptcy Laws, or if a bill in equity or other proceeding for the
appointment of a receiver of Operator or other custodian for Operator's business
or assets is filed and consented to by Operator; or if a receiver or other
custodian (permanent or temporary) of Operator's assets or property, or any part
thereof, is appointed by any court of competent jurisdiction;

                           (d)      proceedings for a composition with creditors
under any state or federal law are instituted by or against Operator,

                           (e)      a final judgment remains unsatisfied or of
record for thirty (30) days or longer (unless supersedeas bond is filed);

                           (f)      Operator is dissolved;

                           (g)      execution is levied against Operator's
business or property;

                           (h)      suit to foreclose any lien or mortgage
against the Restaurant premises or equipment is instituted against Operator and
not dismissed within thirty (30) days; or

                           (i)      the real or personal property of Operator's
Restaurant shall be sold after levy thereupon by any sheriff, marshal or other
government official.

                  (3)      Operator shall be deemed to be in material default
and Licensor may, at its option, terminate this Agreement and all rights granted
hereunder, without affording Operator any opportunity to cure the default,
effective immediately upon notice to Operator, upon the occurrence of any of the
following events:

                           (a)      Operator operates the Restaurant or sells
any products or services authorized by Licensor for sale at the Restaurant at a
location which has not been accepted by Licensor;

                           (b)      Operator fails to acquire an accepted
location for the Restaurant within the time and in the manner specified in
Article II;

                                       49

<PAGE>

                           (c)      Operator fails to construct or remodel the
Restaurant in accordance with the plans and specifications provided to Operator
under Section VI(C) as such plans may be adapted with Licensor's approval in
accordance with Section II(F);

                           (d)      Operator fails to open the Restaurant for
business as a full-service O'Charley's restaurant within the period specified in
Section II(H) hereof;

                           (e)      Operator at any time ceases to operate or
otherwise abandons the Restaurant, or loses the right to possession of the
premises, or otherwise forfeits the right to do or transact business in the
jurisdiction where the Restaurant is located; provided, however, that this
provision shall not apply in cases of Force Majeure, if, through no fault of
Operator, the premises are damaged or destroyed by an event as described above,
provided that Operator applies within thirty (30) days after such event for
Licensor's approval to relocate or reconstruct the premises and Operator
diligently pursues such reconstruction or relocation;

                           (f)      Operator or any of the Controlling
Principals is convicted of, or has entered a plea of nolo contendere to, a
felony, a crime involving moral turpitude or any other crime or offense that
Licensor believes is reasonably likely to have an adverse effect on the System,
the Proprietary Marks, the goodwill associated therewith or Licensor's interest
therein;

                           (g)      a threat or danger to public health or
safety results from the construction, maintenance or operation of the
Restaurant;

                           (h)      Operator fails to propose a qualified
replacement or successor Operating Principal (or his designee, as applicable) or
the General Manager within the time required under Sections VII(C)(5) and
VII(D)(4) hereof, respectively;

                           (i)      Operator or any of the Controlling
Principals purports to transfer any rights or obligations under this Agreement
or any interest in Operator or the assets of the Restaurant to any third party
without Licensor's prior written consent or without offering Licensor a right of
first refusal with respect to such transfer, contrary to the terms of Article XV
of this Agreement;

                           (j)      Operator or any of its Affiliates fails,
refuses or neglects promptly to pay any monetary obligation owing to Licensor or
its Affiliates, when due under this Agreement or any other agreement (which
shall include payments to lenders where Licensor has guaranteed the underlying
indebtedness), or to submit the financial or other information required by
Licensor under this Agreement and does not cure such default within five (5)
days following notice from Licensor (or such other cure period specified in such
other agreement, unless no cure period is specified or such period is less than
five (5) days, in which case the five (5) day cure shall apply);

                           (k)      Operator or any of the Controlling
Principals fails to comply with the covenants in Section XI(C) hereof or
Operator fails to obtain execution of the covenants and related agreements
required under Section XI(C)(4) hereof within thirty (30) days after being
requested to do so by Licensor;

                                       50

<PAGE>

                           (l)      contrary to the terms of Section XI(B)(1)
hereof, Operator or any of the Controlling Principals discloses or divulges any
confidential information provided to Operator or the Controlling Principals by
Licensor, or fails to obtain execution of covenants and related agreements
required under Section XI(B)(2) hereof within thirty (30) days after being
requested to do so by Licensor;

                           (m)      a transfer upon death or Permanent
Disability is not transferred in accordance with Article XV within the time
periods therein;

                           (n)      Operator knowingly maintains false books or
records, or submits any false reports to Licensor;

                           (o)      Operator or any of the Controlling
Principals breaches any of the covenants in any material respect set forth in
Article VII or has falsely made any of the representations or warranties set
forth in Article VII;

                           (p)      Operator fails to procure and maintain such
insurance policies as required by Article XIII and Operator fails to cure such
default within five (5) days following notice from Licensor;

                           (q)      Operator misuses or makes any unauthorized
use of the Proprietary Marks or otherwise materially impairs the goodwill
associated therewith or Licensor's rights therein;

                           (r)      Operator fails to comply with the
requirements in the software license agreement executed pursuant to Section
VIII(F) and the software license is terminated by Licensor;

                           (s)      Operator fails to obtain, install and
maintain the hardware, software and communication lines required pursuant to
Section VIII(E)(l0), and Operator fails to cure such default within twenty-four
(24) hours following notice from Licensor;

                           (t)      Operator, or any of the Controlling
Principals repeatedly commits a material event of default under this Agreement,
whether or not such defaults are of the same or different nature and whether or
not such defaults have been cured by Operator after notice by Licensor; or

                           (u)      Operator or any of its Affiliates fails or
refuses to comply with any term or condition of any sublease, or related
agreement, between Licensor or its Affiliates and Operator or its Affiliates,
and does not cure such default within any notice and cure period provided for in
such sublease or related agreement following notice from Licensor of such
default (unless no cure period is specified in the sublease or other agreement,
in which case the notice and cure period provided in Section XVIII(B) shall
apply).

                           (v)      Operator or any Controlling Principal
commits any other act, or any other event occurs or any other condition comes
into existence that is identified in this Agreement as a material event of
default.

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<PAGE>

         B.       Except as provided in Sections XVIII(A)(2) and (3) of this
Agreement, if Operator fails to comply with any other term or condition imposed
by this Agreement, Licensor may terminate this Agreement by giving written
notice stating the nature of such default to Operator at least thirty (30) days
prior to the effective date of termination. However, Operator may avoid
termination by immediately initiating a remedy to cure such default and curing
it to Licensor's satisfaction within the thirty-day period and by promptly
providing proof thereof to Licensor. If any such default is not cured within the
specified time, or such longer period as applicable law may require, this
Agreement shall terminate without further notice to Operator effective
immediately upon the expiration of the thirty (30) day period or such longer
period as applicable law may require unless Licensor gives Operator notice of
Licensor's intent to continue this Agreement. Defaults which are susceptible of
cure hereunder may include, but are not limited to the following illustrative
events:

                  (1)      Operator fails to comply with any of the requirements
imposed by this Agreement, as it may from time to time be amended or reasonably
be supplemented by Licensor, or fails to carry out the terms of this Agreement
in good faith;

                  (2)      Operator fails to maintain or observe any of the
standards, specifications or procedures prescribed by Licensor in this Agreement
or otherwise in writing; or

                  (3)      Operator fails, refuses or neglects to obtain
Licensor's prior written approval or consent as required by this Agreement.

         C.       Any alleged default by Licensor of this Agreement shall be
deemed waived by Operator and the Controlling Principals unless: (i) Operator
gives Licensor written notice of such alleged default within thirty (30) days of
its occurrence; and (ii) Licensor fails to initiate a remedy to such alleged
default within sixty (60) days of having received written notice thereof.

                                  ARTICLE XIX
                                POST-TERMINATION

         Upon termination or expiration of this Agreement all rights granted
hereunder to Operator shall forthwith terminate, and:

         A.       Operator shall immediately cease to operate the Restaurant
under this Agreement and shall not thereafter, directly or indirectly, represent
itself to the public or hold itself out as a present operator of Licensor.

         B.       Operator shall immediately and permanently cease to use, in
any manner whatsoever, any confidential methods, computer software, procedures
and techniques associated with the System, the mark "O'Charley's", and all other
Proprietary Marks and distinctive forms, slogans, signs, symbols and devices
associated with the System. In particular, Operator shall cease to use, without
limitation, all signs, neons, advertising materials, displays, stationery, forms
and any other articles which display the Proprietary Marks.

         C.       Operator shall take such action as may be necessary to cancel
any assumed name or equivalent registration which contains the mark
"O'Charley's" or any other service mark or trademark of Licensor, and Operator
shall furnish Licensor with evidence satisfactory to

                                       52

<PAGE>

Licensor of compliance with this obligation within five (5) days after
termination or expiration of this Agreement.

         D.       Operator agrees, in the event it continues to operate or
subsequently begins to operate any other business, not to use any reproduction,
counterfeit, copy or colorable imitation of the Proprietary Marks, either in
connection with such other business or the promotion thereof, which is likely to
cause confusion, mistake or deception, or which is likely to dilute Licensor's
rights in and to the Proprietary Marks, and further agrees not to utilize any
designation of origin or description or representation which falsely suggests or
represents an association or connection with Licensor constituting unfair
competition.

         E.       Operator and the Controlling Principals shall promptly pay all
sums owing to Licensor and its Affiliates. Such sums shall include all damages,
costs and expenses, including reasonable attorneys' fees, incurred by Licensor
as a result of any default by Operator, which obligation shall give rise to and
remain, until paid in full, a lien in favor of Licensor against any and all of
the personal property, furnishings, equipment, signs, fixtures and inventory
owned by Operator and on the premises operated hereunder at the time of default.

         F.       Operator and the Controlling Principals shall pay to Licensor
all damages, costs and expenses, including reasonable attorneys' fees, incurred
by Licensor in connection with obtaining any remedy available to Licensor for
any violation of this Agreement and subsequent to the termination or expiration
of this Agreement in obtaining injunctive or other relief for the enforcement of
any provisions of this Article XIX.

         G.       Operator shall immediately deliver to Licensor all Manuals,
records, files, instructions, correspondence, any computer software licensed by
Licensor, all materials related to operating the Restaurant, including, without
limitation, agreements, invoices and any and all other materials relating to the
operation of the Restaurant in Operator's possession or control, and all copies
thereof (all of which are acknowledged to be Licensor's property), and shall
retain no copy or record of any of the foregoing, except Operator's copy of this
Agreement and of any correspondence between the parties and any other documents
which Operator reasonably needs for compliance with any provision of law.

         H.       Operator and the Controlling Principals shall comply with the
non-competition covenants and the restrictions on confidential information
contained in Article XI of this Agreement. Any other person required to execute
similar covenants pursuant to Article XI shall also comply with such covenants.

         I.       Operator shall also immediately furnish Licensor an itemized
list of all advertising and sales promotion materials bearing the Proprietary
Marks or any of Licensor's distinctive markings, designs, labels or other marks
thereon, whether located on Operator's premises or under Operator's control at
any other location. Licensor shall have the right to inspect these materials.
Licensor shall have the option, exercisable within thirty (30) days after such
inspection, to purchase any or all of the materials at Operator's cost, or to
require Operator to destroy or properly dispose of such materials. Materials not
purchased by Licensor shall not be utilized by Operator or any other party for
any purpose unless authorized in writing by Licensor.

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<PAGE>

         J.       If Operator operates the Restaurant under a lease for the
Restaurant premises with a third party or, with respect to any lease for
equipment used in the operation of the Licensed Business, Operator shall, at
Licensor's option, assign to Licensor any interest which Operator has in any
lease or sublease for the premises of the Restaurant or any equipment related
thereto. Licensor may exercise such option at or within thirty (30) days after
either termination or (subject to any existing right to renew) expiration of
this Agreement. In the event Licensor does not elect to exercise its option to
acquire the lease or sublease for the Restaurant premises, Operator shall make
such modifications or alterations to the Restaurant premises as are necessary to
distinguish the appearance of the Restaurant from that of other restaurants
operating under the System and shall make such specific additional changes as
Licensor may reasonably request. If Operator fails or refuses to comply with the
requirements of this Section XIX(J), Licensor shall have the right to enter upon
the premises of the Licensed Business, without being guilty of trespass or any
other crime or tort, to make or cause to be made such changes as may be
required, at the expense of Operator, which expense Operator agrees to pay upon
demand.

         K.       (1)      Except as provided in Section XIX(J), Licensor shall
have the option, to be exercised within thirty (30) days after termination or
expiration of this Agreement, to purchase from Operator any or all of the
furnishings, equipment (including any electronic cash register or computer
hardware and software systems not licensed by Licensor), signs, neons, fixtures,
awnings, motor vehicles, supplies, and inventory of Operator related to the
operation of the Restaurant, at Operator's cost or fair market value, whichever
is less. Licensor shall purchase Operator's assets only and shall assume no
liabilities whatsoever, unless otherwise agreed to in writing by the parties. If
the parties cannot agree on the fair market value within thirty (30) days of
Licensor's exercise of its option, the fair market value will be determined by
one (1) or more Qualified Appraisers, selected under the procedures in this
Section. If the fair market value is to be determined by Qualified Appraisers,
Licensor and Operator will each have the opportunity to appoint, at their own
expense, a Qualified Appraiser, within five (5) days following the expiration of
the thirty (30) day period within which Licensor and Operator could not mutually
agree on the fair market value. If either party shall fail to appoint a
Qualified Appraiser within this five (5) day period, the other Qualified
Appraiser shall unilaterally establish the fair market value by a written
opinion and the cost of such Qualified Appraiser shall be split between the two
parties equally. If both parties appoint Qualified Appraisers with this five (5)
day period, the two (2) Qualified Appraisers shall establish the fair market
value in a single written opinion agreed to by both of them. If the two (2)
Qualified Appraisers cannot agree on the fair market value within ten (10) days
of the appointment of the latter of them, the two (2) appointed Qualified
Appraisers shall together appoint a third Qualified Appraiser whose written
opinion shall establish a fair market value between those values established by
the first two (2) Qualified Appraisers. In the event of such appraisal, each
party shall bear its own legal and other costs. If Licensor elects to exercise
any option to purchase herein provided, it shall have the right to set off all
amounts due from Operator or any Controlling Principal to Licensor or any of its
Affiliates (including any costs for the appraisal) and any costs incurred in
connection with any escrow arrangement (including reasonable legal fees) against
any payment therefor and shall pay the remaining amount in cash.

                  (2)      In addition to the options described above and if
Operator owns the Restaurant premises, Licensor shall have the option, to be
exercised at or within thirty (30) days after termination or expiration of this
Agreement, to purchase the Restaurant premises including

                                       54

<PAGE>

any building thereon, if applicable, for the fair market value of the land and
building, and any or all of the furnishings, equipment, signs, neons, fixtures,
awnings, vehicles, supplies and inventory therein at Operator's cost or fair
market value, whichever is less. Licensor shall purchase assets only and shall
assume no liabilities whatsoever, unless otherwise agreed to in writing by the
parties. If Operator does not own the land on which the Restaurant is operated
and Licensor exercises its option for an assignment of the lease, Licensor may
exercise this option for the purpose of purchasing the building if owned by
Operator and related assets as described above. If the parties cannot agree on
fair market value within thirty (30) days of Licensor's exercise of its Option,
fair market value shall be determined in accordance with the appraisal procedure
described above.

                  (3)      With respect to the options described in Sections
XIX(J) and (K)(1) and (2), Operator shall deliver to Licensor, in a form
satisfactory to Licensor, such warranties, deeds, releases of lien, bills of
sale, assignments and such other documents and instruments which Licensor deems
necessary in order to perfect Licensor's title and possession in and to the
properties being purchased or assigned and to meet the requirements of all tax
and government authorities. If, at the time of closing, Operator has not
obtained all of these certificates and other documents, Licensor may, in its
sole discretion, place the purchase price or rent in escrow pending issuance of
and required certificates or documents.

                  (4)      The time for closing of the purchase and sale of the
properties described in Section XIX(K)(l) and (2) shall be a date not later than
sixty (60) days after the purchase price is determined by the parties or the
determination of the appraisers, or such date Licensor receives and obtains all
necessary permits and approvals, whichever is later, unless the parties mutually
agree to designate another date. The time for closing on the assignment of the
lease described in Section XIX(J) shall be a date no later than ten (10) days
after Licensor's exercise of its option thereunder unless Licensor is exercising
its options under either Section XIX(K)(1) or (2), in which case the date of the
closing shall be on the same closing date prescribed for such option. Closing
shall take place at Licensor's home office or at such other location as Licensor
may designate.

         L.       Licensor shall be entitled to assign any and all of its
options in this Section to any other party without the consent of Operator.

         M.       Operator, at the option of Licensor, shall assign to Licensor
all rights to: (i) the telephone numbers of the Restaurant and any related
Yellow Pages(TM) and/or other business listing advertising; and (ii) all e-mail
addresses, URLs, domain names, Internet listings and Internet accounts related
to the Restaurant. Operator shall execute all forms and documents required by
Licensor and any telephone company or any Internet service provider at any time
to transfer such service and numbers to Licensor. Notwithstanding any forms and
documents which may have been executed by Licensor under Section VIII(J),
Operator hereby appoints Licensor its true and lawful agent and attorney-in-fact
with full power and authority for the sole purpose of taking such action as is
necessary to complete such assignment. This power of attorney shall survive the
expiration or termination of this Agreement. Operator shall thereafter use
different telephone numbers, e-mail addresses or listings at or in connection
with any subsequent business conducted by Operator.

                                       55

<PAGE>

                                   ARTICLE XX
                                  MISCELLANEOUS

         A.       All notices and other communications required or permitted to
be given hereunder shall be deemed given when delivered in person, by overnight
courier service, facsimile transmission or mailed by registered or certified
mail addressed to the recipient at the address set forth below, unless that
party shall have given written notice of change of address to the sending party,
in which event the new address so specified shall be used.

Notices to Licensor:                         O'Charley's Inc.
                                             3038 Sidco Drive
                                             Nashville, Tennessee 37204
                                             Attention: Director of Franchising
                                             Facsimile: (615) 782-5043

Notices to Operator and
the Controlling Principals:                  ----------------------------------0

                                             -----------------------------------

                                             -----------------------------------
                                             Attention:
                                                       -------------------------
                                             Facsimile:
                                                       -------------------------

         B.       This Agreement, the documents referred to herein and the
Attachments hereto, constitute the entire, full and complete agreement between
Licensor and Operator, the Controlling Principals concerning the subject matter
hereof and shall supersede all prior related agreements between Licensor,
Operator and the Controlling Principals. Except for those permitted to be made
unilaterally by Licensor hereunder, no amendment, change or variance from this
Agreement shall be binding on either party unless mutually agreed to by the
parties and executed by their authorized officers or agents in writing.

         C.       No delay, waiver, omission or forbearance on the part of
Licensor to exercise any right, option, duty or power arising out of any breach
or default by Operator or the Controlling Principals under this Agreement shall
constitute a waiver by Licensor to enforce any such right, option, duty or power
against Operator or the Controlling Principals, or as to a subsequent breach or
default by Operator or the Controlling Principals. Acceptance by Licensor of any
payments due to it hereunder subsequent to the time at which such payments are
due shall not be deemed to be a waiver by Licensor of any preceding breach by
Operator or the Controlling Principals of any terms, provisions, covenants or
conditions of this Agreement.

         D.       Whenever this Agreement requires the prior approval or consent
of Licensor, Operator shall make a timely written request to Licensor and such
approval or consent shall be obtained in writing.

         E.       Licensor makes no warranties or guarantees upon which Operator
may rely and assumes no liability or obligation to Operator or any third party
to which it would not otherwise be subject, by providing any waiver, approval,
advice, consent or suggestion to Operator in connection with this Agreement or
the operation of the Restaurant, or by reason of any neglect, delay or denial of
any request therefor.

                                       56

<PAGE>

         F.       As used in this Agreement, the term "Force Majeure" shall mean
any act of God, terrorism, strike, lock-out or other industrial disturbance, war
(declared or undeclared), riot, epidemic, fire or other catastrophe, act of any
government and any other similar cause not within the control of the party
affected thereby. If a Force Majeure event shall occur, then Operator shall
continue to be obligated to pay to Licensor any and all amounts that it shall
have duly become obligated to pay in accordance with the terms of this Agreement
prior to the occurrence of any Force Majeure event, and the Indemnitees shall
continue to be indemnified and held harmless by Operator in accordance with
Article XVI. Except as provided in the immediately preceding sentence, none of
the parties hereto shall be held liable for a failure to comply with any terms
and conditions of this Agreement when such failure is caused by an event of
Force Majeure. Upon the occurrence of any event of the type referred to herein,
the party affected thereby shall give prompt notice thereof to the other
parties, together with a description of the event, the duration for which the
party expects its ability to comply with the previsions of the Agreement to be
affected thereby and a plan for resuming operation under the Agreement, which
the party shall promptly undertake and maintain with due diligence. Such
affected party shall be liable for failure to give timely notice only to the
extent of damage actually caused.

         G.       Operator and the Controlling Principals hereby irrevocably
submit themselves to the jurisdiction of the state and the federal district
courts located in the state, county or judicial district in which the Licensor's
principal place of business is located at the time such proceeding is commended.
Operator and the Controlling Principals hereby waive all questions of personal
jurisdiction for the purpose of carrying out this provision. Operator and the
Controlling Principals hereby agree that service of process may be made upon any
of them in any proceeding relating to or arising out of this Agreement or the
relationship created by this Agreement by any means allowed by applicable state
or federal law. Operator and the Controlling Principals further agree that venue
for any proceeding relating to or arising out of this Agreement shall be the
county or judicial district in which the Licensor's principal place of business
is located at the time such proceeding is commenced: provided, however, with
respect to any action (1) for monies owed, (2) for injunctive or other
extraordinary relief or (3) involving possession or disposition of, or other
relief relating to, the Restaurant premises, Licensor may bring such action in
any state or federal district court which has jurisdiction. With respect to all
claims, controversies, disputes or actions related to this Agreement or the
relationship created thereby, this Agreement and any such related claims,
controversies, disputes or actions, shall be governed, enforced and interpreted
under the law of the state where Licensor's principal place of business is
located at the time any claim, controversy, dispute, or action (without regard
to choice of law rules) arose.

         H.       Operator, the Controlling Principals and Licensor acknowledge
that each party's agreement regarding applicable state law and forum set forth
in Section XX(G) above provide each of the parties with the mutual benefit of
uniform interpretation of this Agreement and any dispute arising out of this
Agreement or the parties relationship created by this Agreement. Each of
Operator, the Controlling Principals and Licensor further acknowledges the
receipt and sufficiency of mutual consideration for such benefit, and that each
party's agreement regarding applicable state law and choice of forum have been
negotiated for in good faith and are part of the benefit of the bargain
reflected by this Agreement.

                                       57

<PAGE>

         I.       Operator, the Controlling Principals and Licensor acknowledge
that the execution of this Agreement and acceptance of the terms by the parties
occurred at Licensor's principal place of business, and further acknowledge that
the performance of certain obligations of Operator arising under this Agreement,
including, but not limited to, the payment of monies due hereunder and the
satisfaction of certain training requirements of Licensor, shall occur where
Licensor's principal place of business is located at the time such obligation is
due.

         J.       Without limiting any of the foregoing, Operator and each of
the Controlling Principals acknowledge and agree that Licensor has the right, at
any time, to create a dispute resolution program and related specifications,
standards, procedures and rules for the implementation thereof to be
administered by Licensor or its designees for the benefit of all developers and
operators conducting business under the System. The standards, specifications,
procedures and rules for such dispute resolution program shall be made part of
the Manuals, and Operator and the Controlling Principals shall comply with all
such standards, specifications, procedures and rules in seeking resolution of
any claims, controversies or disputes with or involving Licensor or other
developers or operators, if applicable under the program. If Licensor, in its
sole discretion, makes such dispute resolution program mandatory, then Operator,
the Controlling Principals and Licensor hereby agree to submit any claims,
controversies or disputes arising out of or relating to this Agreement or the
relationship created by this Agreement for resolution in accordance with such
dispute resolution program, or if such claim, controversy or dispute relates to
another developer or operator, Operator and the Controlling Principals agree to
participate in the program and submit any such claims, controversies or disputes
in accordance with the program's standards, specifications, procedures and
rules, prior to seeking resolution of such claim by any other judicial or
legally available means.

         K.       Operator and the Controlling Principals hereby waive, to the
fullest extent permitted by law, any right to or claim of any punitive,
exemplary, incidental, indirect, special, consequential or other damages
(including, without limitation, loss of profits) against Licensor, its
Affiliates, and their respective officers, directors, shareholders, members,
partners, agents, representatives, independent contractors, servants and
employees, in their corporate and individual capacities, arising out of any
cause whatsoever (whether such cause be based in contract, negligence, strict
liability, other tort or otherwise) and agree that in the event of a dispute,
Operator and the Controlling Principals shall be limited to the recovery of any
actual damages sustained by them. If any other term of this Agreement is found
or determined to be unconscionable or unenforceable for any reason, the
foregoing provisions of waiver by agreement of punitive, exemplary, incidental,
indirect, special consequential or other damages (including, without limitation,
loss of profits) shall continue in full force and effect.

         L.       Licensor, Operator and the Controlling Principals hereby agree
that no form of proceeding permitted hereby will be maintained by any party to
enforce any liability or obligation of the other party, whether arising from
this Agreement or otherwise, unless brought before the expiration of the later
of: (i) one (1) year after the date of discovery of the facts resulting in such
liability or obligation, or (ii) two (2) years after the date of the first act
or omission giving rise to the alleged liability or obligation, except that
where state or federal law mandate or make possible by notice or otherwise a
shorter period, such shorter period shall apply.

                                       58

<PAGE>

         M.       This Agreement may be executed in multiple counterparts, each
of which when so executed shall be an original, and all of which shall
constitute one and the same instrument.

         N.       The captions used in connection with the sections and
subsections of this Agreement are inserted only for purpose of reference. Such
captions shall not be deemed to govern, limit, modify or in any other manner
affect the scope, meaning or intent of the provisions of this Agreement or any
part thereof nor shall such captions otherwise be given any legal effect.

         O.       Any obligation of Operator or the Controlling Principals that
contemplates performance of such obligation after termination or expiration of
this Agreement or the transfer of any interest of Operator or the Controlling
Principals therein, shall be deemed to survive such termination, expiration or
transfer, including the provisions of this Article XX.

         P.       Except as expressly provided to the contrary herein, each
portion, section, part, term and provision of this Agreement shall be considered
severable and if, for any reason, any portion, section, part, term or provision
is determined to be invalid and contrary to, or in conflict with, any existing
or future law or regulation by a court or agency having valid jurisdiction, this
shall not impair the operation of, or have any other effect upon, the other
portions, sections, parts, terms or provisions of this Agreement that may remain
otherwise intelligible, and the latter shall continue to be given full force and
effect and bind the parties. The invalid portions, sections, parts, terms or
provisions shall be deemed not to be part of this Agreement; and there shall be
automatically added such portion, section, part, term or provision as similar as
possible to that which was severed which shall be valid and not contrary to or
in conflict with any law or regulation.

         Q.       All references herein to the masculine, neuter or singular
shall be construed to include the masculine, feminine, neuter or plural, where
applicable. Without limiting the obligations individually undertaken by the
Controlling Principals under this Agreement, all acknowledgments, promises,
covenants, agreements and obligations made or undertaken by Operator in this
Agreement shall be deemed, jointly and severally, undertaken by all of the
Controlling Principals.

         R.       All rights and remedies of the parties to this Agreement shall
be cumulative and not alternative, in addition to and not exclusive of, any
other rights or remedies which are provided for herein or which may be available
at law or in equity in case of any breach, failure or default or threatened
breach, failure or default of any term, provision or condition of this Agreement
or any other agreement between Operator, and its Affiliates, and Licensor or its
Affiliates. The rights and remedies of the parties to this Agreement shall be
continuing and shall not be exhausted by any one or more uses thereof, and may
be exercised at any time or from time to time as often as may be expedient, and
any option or election to enforce any such right or remedy may be exercised or
taken at any time and from time to time. The expiration, earlier termination or
exercise of Licensor's rights pursuant to Article XV of this Agreement shall not
discharge or release Operator or any of the Controlling Principals from any
liability or obligation then accrued, or any liability or obligation continuing
beyond, or arising out of, the expiration, the earlier termination or the
exercise of such rights under this Agreement. Additionally, Operator and the
Controlling Principals shall pay all court costs and attorneys fees incurred by
Licensor in obtaining any remedy available to Licensor for any violation of this
Agreement.

                                       59

<PAGE>

         S.       The term "Principals" shall mean, collectively and
individually, Operator's spouse, if Operator is an individual, all officers and
directors of Operator (including the officers and directors of any general
partner of Operator) whom Licensor designates as Principals, all holders of an
ownership interest in Operator and in any Entity directly or indirectly
controlling Operator, and any other person or Entity controlling, controlled by,
or under common control with Operator. Each Principal as of the date of this
Agreement is listed on Attachment B.

         T.       For purposes of this Agreement, the term "Publicly-Held
Entity" means any Entity with a class of securities registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended, or an Entity
subject to the requirements of Section 15(d) of such Act. Further, for purposes
of this Agreement, an "Affiliate" of a person or Entity is any Entity that is
controlled by, controlling or under common control with such person or Entity.

         U.       The word "including" when used herein shall mean "including
without limitation."

         V.       Except as expressly provided to the contrary herein, nothing
in this Agreement is intended, nor shall be deemed, to confer upon any person or
legal Entity other than Operator, Licensor, Licensor's officers, directors and
personnel and such of Operator's and Licensor's respective successors and
assigns as may be contemplated (and, as to Operator, authorized by Article XV),
any rights or remedies under or as a result of this Agreement.

         W.       This Agreement shall not become effective until signed by an
authorized officer of Licensor.

         X.       Operator, the Controlling Principals and Licensor acknowledge
that various provisions of this Agreement specify certain matters that are
within the discretion or judgment of Licensor or are otherwise to be determined
unilaterally by Licensor. If the exercise of Licensor's discretion or judgment
as to any such matter is subsequently challenged, the parties to this Agreement
expressly direct the trier of fact that Licensor's reliance on a business reason
in the exercise of its discretion or judgment is to be viewed as a reasonable
and proper exercise of such discretion or judgment, without regard to whether
other reasons for its decision may exist and without regard to whether the trier
of fact would independently accord the same weight to the business reason.

                                  ARTICLE XXI
                                 ACKNOWLEDGMENTS

         A.       Operator acknowledges that it has conducted an independent
investigation of the business venture contemplated by this Agreement and
recognizes that the success of this business venture involves substantial
business risks and will largely depend upon the ability of Operator. Licensor
expressly disclaims making, and Operator acknowledges that it has not received
or relied on, any warranty or guarantee, express or implied, as to the potential
volume, profits or success of the business venture contemplated by this
Agreement.

         B.       Operator acknowledges that Operator has received, read and
understands this Agreement and the related Attachments and agreements and that
Licensor has afforded Operator

                                       60

<PAGE>

sufficient time and opportunity to consult with advisors selected by Operator
about the potential benefits and risks of entering into this Agreement.

         C.       Operator acknowledges that it received a complete copy of this
Agreement and all related Attachments and agreements at least five (5) business
days prior to the date on which this Agreement was executed. Operator further
acknowledges that it has received the disclosure document required by the Trade
Regulation Rule of the Federal Trade Commission entitled "Disclosure
Requirements and Prohibitions Concerning Franchising and Business Opportunity
Ventures" at least ten (10) business days prior to the date on which this
Agreement was executed.

                   [The following page is the signature page.]

                                       61

<PAGE>

         IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized representative as of the date
first above written.

                                       LICENSOR:

                                       O'CHARLEY'S INC.,
                                       a Tennessee corporation

                                       By:
                                          --------------------------------------
                                          Name:
                                               ---------------------------------
                                          Title:
                                                --------------------------------

                                       OPERATOR:

                                       -----------------------------------------

                                       By:
                                          --------------------------------------
                                          Name:
                                               ---------------------------------
                                          Title:
                                                --------------------------------

                                       CONTROLLING PRINCIPALS:

                                       -----------------------------------------
                                       *Name:
                                             -----------------------------------

                                       -----------------------------------------
                                       Name:
                                            ------------------------------------

                                       -----------------------------------------
                                       Name:
                                            ------------------------------------

*Denotes individual who is Operator's Operating Principal

                                       62

<PAGE>

                                  ATTACHMENT A
                             TO OPERATING AGREEMENT

                            LOCATION AND OPENING DATE

1.       LOCATION

         Pursuant to Section I(B) and II(B)(2) of the Operating Agreement, the
Restaurant shall be located at the following Location:

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

2.       OPENING DATE

         Pursuant to Section II(H) of the Operating Agreement, the Opening Date
of the Restaurant is ______________, 20___.

2.       RADIUS

         Pursuant to Section I(D) of the Operating Agreement, the radius shall
be a distance of _____ miles.

                                      A-1

<PAGE>

                                  ATTACHMENT B
                             TO OPERATING AGREEMENT

                 STATEMENT OF OWNERSHIP INTERESTS AND PRINCIPALS

         A.       The following is a list of stockholders, partners, members or
other investors in Operator, including all investors who own or hold a direct or
indirect interest in Operator, and a description of the nature of their
interest:

<TABLE>
<CAPTION>
         Name                      Percentage of Ownership/Nature of Interest
         ----                      ------------------------------------------
         <S>                       <C>
</TABLE>

         B.       The following is a list of each Principal described in and
designated pursuant to Section XX(U) of the Operating Agreement, except those
who have been designated as Controlling Principals, each of whom shall execute
the Confidentiality and Non-Compete Agreement substantially in the form set
forth in Attachment C (see Sections XI(B)(2) and XI(C)(4) of the Operating
Agreement):

         C.       The following is a list of all of Operator's Controlling
Principals described in and designated pursuant to Section XX(U) of the
Operating Agreement:

<TABLE>
<CAPTION>
         Name
         ----
         <S>      <C>
</TABLE>

                                      B-1

<PAGE>

                                  ATTACHMENT C
                             TO OPERATING AGREEMENT

                    CONFIDENTIALITY AND NON-COMPETE AGREEMENT

         This Agreement is made and entered into this ____ day of ___________,
20__, between O'Charley's Inc., a Tennessee corporation ("Licensor"),
_____________________ ("Operator") and _________________________ ("Employee").

                                    RECITALS

         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 (the "System") of full service varied menu casual dining
restaurants ("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);

         WHEREAS, the System includes, but is not limited to, certain trade
names, service marks, trademarks, symbols, logos, emblems and indicia of origin,
including, but not limited to, the mark O'Charley's(R) and such other trade
names, service marks, trademarks, symbols, logos, emblems and indicia of origin
as Licensor may develop in the future to identify for the public the source of
services and products marketed under such marks ("Marks") and under the System;

         WHEREAS, the Marks represent the System's high standards of quality,
appearance and service; distinctive exterior and interior design, decor, color
scheme 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 and 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 and are used by Licensor in connection with the operation of the System
("Trade Secrets");

         WHEREAS, the Marks and Trade Secrets provide economic advantages to
Licensor and are not generally known to, and are not readily ascertainable by
proper means by, Licensor's competitors who could obtain economic value from
knowledge and use of the Marks and Trade Secrets;

         WHEREAS, Licensor has taken and intends to take all reasonable steps to
maintain the confidentiality and secrecy of the Trade Secrets;

         WHEREAS, Licensor has granted Operator the limited right to operate a
Restaurant using the System, the Marks and the Trade Secrets for the period
defined in the operating agreement made and entered into as of
__________________, 20___ ("Operating Agreement"), by and among Licensor,
Operator and Operator's Controlling Principals;

         WHEREAS, Licensor and Operator have agreed in the Operating Agreement
on the importance to Licensor and to Operator and other licensed users of the
System of restricting the use, access and dissemination of the Trade Secrets;

                                      C-1

<PAGE>

         WHEREAS, it will be necessary for certain employees, agents,
independent contractors, officers, directors and interest holders of Operator,
or any Entity having an interest in Operator ("Covenantor") to have access to
and to use some or all of the Trade Secrets in the management and operation of
Operator's business using the System;

         WHEREAS, Operator has agreed to obtain from those Covenantors prior
written agreements protecting the Trade Secrets and the System against unfair
competition;

         WHEREAS, Covenantor wishes to remain with, to become employed by or
associated with Operator;

         WHEREAS, Covenantor wishes and needs to receive and use the Trade
Secrets in the course of Covenantor's employment or association in order to
effectively perform Covenantor's services for Operator; and

         WHEREAS, Covenantor acknowledges that receipt of and the right to use
the Trade Secrets constitutes independent valuable consideration for the
representations, promises and covenants made by Covenantor herein.

         NOW, THEREFORE, in consideration of the mutual covenants and
obligations contained herein, and other good and valuable consideration, the
receipt and sufficiency are hereby acknowledged, the parties intending to be
legally bound hereby agree as follows:

1.       Confidentiality Agreement

         1.1      Licensor and/or Operator may disclose to Covenantor some or
all of the Trade Secrets relating to the System. All information and materials,
including, without limitation, any manuals, drawings, specifications, techniques
and compilations of data which Licensor provides to Operator and/or Covenantor
shall be deemed confidential Trade Secrets for the purposes of this Agreement.

         1.2      Covenantor shall receive the Trade Secrets in confidence and
shall, at all times, maintain them in confidence, and use them only in the
course of Covenantor's employment by or association with Operator and then only
in connection with the development and/or operation by Operator of a Restaurant
using the System for so long as Operator is licensed by Licensor to use the
System.

         1.3      Covenantor shall not at any time make copies of any documents
or compilations containing some or all of the Trade Secrets without Licensor's
prior written consent.

         1.4      Covenantor shall not at any time disclose or permit the
disclosure of the Trade Secrets except to other employees of Operator and then
only to the limited extent necessary to train or assist other employees of
Operator in the development or operation of a Restaurant using the System.

         1.5      Covenantor shall immediately surrender any material containing
some or all of Licensor's Trade Secrets to Licensor, upon request, or upon
termination of employment by or

                                      C-2

<PAGE>

association with Operator, or upon conclusion of the use for which such
information or material may have been furnished to Covenantor.

         1.6      Covenantor shall not at any time, directly or indirectly, do
any act or omit to do any act that would or would likely be injurious or
prejudicial to the goodwill associated with the Trade Secrets and the System.

         1.7      All manuals are loaned by Licensor to Operator for limited
purposes only and remain the property of Licensor and may not be reproduced, in
whole or in part, without Licensor's prior written consent.

2.       Covenants Not to Compete

         2.1      In order to protect the goodwill and unique qualities of the
System and the confidentiality and value of the Trade Secrets, and in
consideration for the disclosure to Covenantor of the Trade Secrets, Covenantor
further agrees and covenants that while employed by Operator Covenantor will
not:

                  a.       divert, or attempt to divert, directly or indirectly,
any business, business opportunity or customer of the Operator's Restaurant to
any competitor;

                  b.       employ, or seek to employ, any person who is at the
time (or has been within the preceding six (6) months) employed by Licensor, or
any of its Affiliates, or any operator or developer of Licensor, or otherwise
directly or indirectly induce such person to leave that person's employment
except as may occur in connection with Operator's employment of such person if
permitted under the Operating Agreement; or

                  c.       except with respect to the Restaurant described in
the Operating Agreement and other restaurants operated under operating
agreements between Operator and its Affiliates, and Licensor or its Affiliates,
directly or indirectly, for Covenantor or through, on behalf of, or in
conjunction with any person, persons, partnership, limited liability company,
association, corporation, trust, unincorporated association, joint venture or
other Entity, without the prior written consent of Licensor, own, maintain,
operate, engage in or have any financial or beneficial interest in (including
any interest in corporations, partnerships, limited liability companies,
associations, trusts, unincorporated associations, joint ventures or other
entities), advise, assist or make loans to, any restaurant business that is of a
character and concept similar to the Restaurant, including, without limitation,
a full service varied menu casual dining restaurant which serves alcoholic
beverages through a full-service bar, and which business is located within the
United States, its territories or commonwealths, or any other country, province,
state or geographic area in which Licensor has used, sought registration of or
registered the same or similar Marks or operates or licenses others to operate a
business under the same or similar Marks.

         2.2      In further consideration for the disclosure to Covenantor of
the Trade Secrets and to protect the uniqueness of the System, Covenantor agrees
and covenants that for one (1) year following the earlier of the expiration,
termination or transfer of all of Operator's interest in the Operating Agreement
or the termination of Covenantor's employment by or association with Operator,
Covenantor will not without the prior written consent of Licensor:

                                      C-3

<PAGE>

                  a.       divert or attempt to divert, directly or indirectly,
any business, business opportunity or customer of the Restaurant to any
competitor;

                  b.       employ, or seek to employ, any person who is at the
time (or has been within the preceding six (6) months) employed by Licensor or
any of its Affiliates, or any operator or developer of Licensor, or otherwise
directly or indirectly induce such persons to leave that person's employment; or

                  c.       except with respect to other restaurants operated
under operating agreements between Operator and its Affiliates, and Licensor or
its Affiliates, directly or indirectly, for Covenantor or through, on behalf of
or in conjunction with any person, persons, partnership, limited liability
company, association, corporation, trust, unincorporated association, joint
venture or other Entity own, maintain, operate, engage in or have any financial
or beneficial interest in (including any interest in corporations, partnerships,
limited liability companies, associations, trusts, unincorporated associations,
joint ventures or other entities), advise, assist or make loans to, any
restaurant business that is of a character and concept similar to the
Restaurant, including, without limitation, a full service varied menu casual
dining restaurant which serves alcoholic beverages through a full-service bar,
which business is, or is intended to be, located within the Location, as such
term is defined in the Operating Agreement (and as described in an attachment
thereto), or within a fifteen (15)-mile radius of the location of any
O'Charley's restaurant or food service facility in existence or under
construction (or where land has been purchased or a lease executed for the
construction of an O'Charley's restaurant or other food service facility) as of
the earlier of (i) the expiration or termination of, or the transfer of all of
Operator's interest in the Operating Agreement; or (ii) the time Covenantor
ceases to be employed by or associated with Operator, as applicable.

3.       Miscellaneous

         3.1      Operator shall make all commercially reasonable efforts to
ensure that Covenantor acts as required by this Agreement.

         3.2      Covenantor agrees that in the event of a breach of this
Agreement, Licensor would be irreparably injured and be without an adequate
remedy at law. Therefore, in the event of such a breach, or threatened or
attempted breach of any of the provisions hereof, Licensor shall be entitled to
enforce the provisions of this Agreement and shall be entitled, in addition to
any other remedies which are made available to it at law or in equity, including
the right to terminate the Operating Agreement, to a temporary and/or permanent
injunction and a decree for the specific performance of the terms of this
Agreement, without the necessity of showing actual or threatened harm and
without being required to furnish a bond or other security.

         3.3      Covenantor agrees to pay all expenses (including court costs
and reasonable attorneys' fees) incurred by Licensor and Operator in enforcing
this Agreement.

         3.4      Any failure by Licensor or the Operator to object to or take
action with respect to any breach of any provision of this Agreement by
Covenantor shall not operate or be construed as a waiver of or consent to that
breach or any subsequent breach by Covenantor.

                                      C-4

<PAGE>

         3.5      THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE WHERE LICENSOR'S PRINCIPAL PLACE OF
BUSINESS IS LOCATED AT THE TIME SUCH PROCEEDING IS COMMENCED WITHOUT REFERENCE
TO CHOICE OF LAW PRINCIPLES. COVENANTOR HEREBY IRREVOCABLY SUBMITS HIMSELF TO
THE JURISDICTION OF THE STATE AND THE FEDERAL DISTRICT COURTS LOCATED IN THE
STATE, COUNTY OR JUDICIAL DISTRICT IN WHICH THE LICENSOR'S PRINCIPAL PLACE OF
BUSINESS IS LOCATED. COVENANTOR HEREBY WAIVES ALL QUESTIONS OF PERSONAL
JURISDICTION OR VENUE FOR THE PURPOSE OF CARRYING OUT THIS PROVISION. COVENANTOR
HEREBY AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON HIM IN ANY PROCEEDING
RELATING TO OR ARISING UNDER THIS AGREEMENT OR THE RELATIONSHIP CREATED BY THIS
AGREEMENT BY ANY MEANS ALLOWED BY APPLICABLE STATE OR FEDERAL LAW. COVENANTOR
FURTHER AGREES THAT VENUE FOR ANY PROCEEDING RELATING TO OR ARISING OUT OF THIS
AGREEMENT SHALL BE THE COUNTY OR JUDICIAL DISTRICT IN WHICH THE LICENSOR'S
PRINCIPAL PLACE OF BUSINESS IS LOCATED AT THE TIME SUCH PROCEEDING IS COMMENCED;
PROVIDED, HOWEVER, WITH RESPECT TO ANY ACTION WHICH INCLUDES INJUNCTIVE RELIEF
OR OTHER EXTRAORDINARY RELIEF, LICENSOR OR OPERATOR MAY BRING SUCH ACTION IN ANY
COURT IN ANY STATE WHICH HAS JURISDICTION.

         3.6      The parties acknowledge and agree that each of the covenants
contained herein are reasonable limitations as to time, geographical area, and
scope of activity to be restrained and do not impose a greater restraint than is
necessary to protect the goodwill or other business interests of Licensor. The
parties agree that each of the foregoing covenants shall be construed as
independent of any other covenant or provision of this Agreement. If all or any
portion of a covenant in this Agreement is held unreasonable or unenforceable by
a court or agency having valid jurisdiction in any unappealed final decision to
which Licensor is a party, Covenantor expressly agrees to be bound by any lesser
covenant subsumed within the terms of such covenant that imposes the maximum
duty permitted by law, as if the resulting covenant were separately stated in
and made a part of this Agreement.

         3.7      This Agreement contains the entire agreement of the parties
regarding the subject matter hereof. This Agreement may be modified only by a
duly authorized writing executed by all parties.

         3.8      All notices and demands required to be given hereunder shall
be in writing and shall be sent by personal delivery, expedited delivery
service, certified or registered mail, return receipt requested, first-class
postage prepaid, facsimile, telegram or telex (provided that the sender confirms
the facsimile, telegram or telex by sending an original confirmation copy by
certified or registered mail or expedited delivery service within three (3)
business days after transmission), to the respective parties at the following
addresses unless and until a different address has been designated by written
notice to the other parties.

                                      C-5

<PAGE>

         If directed to Licensor, the notice shall be addressed to:

                  O'Charley's Inc.
                  3038 Sidco Drive
                  Nashville, Tennessee 37204
                  Attention: Director of Franchising
                  Facsimile: (615) 782-5043

         If directed to Operator, the notice shall be addressed to:

                  --------------------------------------------

                  --------------------------------------------

                  --------------------------------------------
                  Attention:
                            ----------------------------------
                  Facsimile:
                            ----------------------------------

         If directed to Covenantor, the notice shall be addressed to:

                  --------------------------------------------

                  --------------------------------------------

                  --------------------------------------------
                  Attention:
                            ----------------------------------
                  Facsimile:
                            ----------------------------------

         Any notices sent by personal delivery shall be deemed given upon
receipt. Any notices given by telex or facsimile shall be deemed given upon
transmission, provided confirmation is made as provided above. Any notice sent
by expedited delivery service or registered or certified mail shall be deemed
given three (3) business days after the time of mailing. Any change in the
foregoing addresses shall be effected by giving fifteen (15) days written notice
of such change to the other parties. Business days for the purpose of this
Agreement excludes Saturday, Sunday and the following national holidays: New
Year's Day, Martin Luther King Day, Presidents' Day, Memorial Day, Independence
Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving and Christmas.

         3.9      The rights and remedies of Licensor under this Agreement are
fully assignable and transferable and shall inure to the benefit of its
respective Affiliates, successors and assigns. The respective obligations of
Operator and Covenantor hereunder may not be assigned by Operator or Covenantor,
without the prior written consent of Licensor.

                  (remainder of page intentionally left blank)

                                      C-6

<PAGE>

         IN WITNESS WHEREOF, the undersigned have entered into this Agreement as
witnessed by their signatures below.

                                       LICENSOR:

                                       O'Charley's Inc.,
                                       a Tennessee corporation

                                       By:
                                          --------------------------------------
                                          Name:
                                               ---------------------------------
                                          Title:
                                                --------------------------------

                                       OPERATOR:

                                       ----------------------------------------

                                       By:
                                          --------------------------------------
                                          Name:
                                               ---------------------------------
                                          Title:
                                                --------------------------------

                                       COVENANTOR:

                                       -----------------------------------------
                                       Name:
                                            ------------------------------------

                                      C-7

<PAGE>

                                  ATTACHMENT D
                             TO OPERATING AGREEMENT

                     SOFTWARE LICENSE AND SUPPORT AGREEMENT

         THIS SOFTWARE LICENSE AND SUPPORT AGREEMENT ("License") is entered into
as of the _____ day of __________, 20__ between O'CHARLEY'S INC. ("Licensor")
and __________________________________ ("Operator") (collectively, the
"Parties") pursuant to a Franchise Offering Circular dated ________________,
20___, and Operating Agreement dated ________________, 20___ ("Operating
Agreement") under which Operator will operate a full-service O'Charley's
restaurant (the "Restaurant") located at _______________________________________
________________________________________.

         In consideration of the mutual promises and upon the terms and
conditions set forth in this License and subject to the Operating Agreement, the
parties agree as follows:

1.       Grant of License. Licensor grants to Operator a limited, nonexclusive,
         nontransferable, nonassignable license to use the computer program, in
         object code form, listed in Schedule A to this License (the
         "Software"). Licensor shall have sole and exclusive ownership of all
         right, title, and interest in and to the Software, Modifications (as
         defined below), and all trade secrets and copyrights pertaining
         thereto. No right or license is being conveyed to Operator for use of
         the Software at any other location, and a separate license is required
         for each additional Restaurant at which the Software will be used.
         Schedule A to this License may be updated from time to time by Licensor
         to include enhancements, bug fixes, upgrades or replacements to the
         Software, which Licensor will make available to Operator from time to
         time at a reasonable cost to be determined by Licensor in its sole
         discretion. In no event shall Licensor be obligated to provide Operator
         a copy of any commercial release version of the Software in connection
         with this License. Any copies of the Software that Operator is
         expressly permitted to make under Section 2.1(b), including any
         modifications, suggestions, solutions, improvements, corrections,
         derivatives or otherwise ("Modifications"), developed by Licensor in
         conjunction with Operator, are and shall be the sole and exclusive
         property of Licensor during and after the term of this License.
         Operator shall immediately provide to Licensor a paid-up, nonexclusive,
         irrevocable, worldwide right and license to all Modifications, along
         with a source code copy of all such Modifications, to use, reproduce,
         prepare derivative works and distribute without accounting. Operator
         acknowledges and agrees that Licensor may secure all or any part of the
         Software from third parties. Operator agrees to execute and deliver to
         Licensor any further contracts, agreements or other documents
         reasonably required by Licensor in order to secure its compliance with
         any agreement with such other parties.

2.       License Restrictions

         2.1      Operator agrees that it will not itself, or through any
                  affiliate, agent or other third party:

                                      D-1

<PAGE>

                  (a)      use the Software at any other location other than in
                           the operation of the Restaurant written above;

                  (b)      modify, copy, prepare derivatives of or otherwise
                           reproduce, in any form, all or any part of the
                           Software without the prior written consent of
                           Licensor, and in the event that Licensor grants
                           consent, solely to the extent required for use of the
                           Software in the operation of the Restaurant;

                  (c)      decompile, disassemble, or reverse engineer the
                           Software, in whole or in part;

                  (d)      write or develop any derivative software or any other
                           software program based upon the Software or any
                           Modification thereto;

                  (e)      sell, lease, license or sublicense the Software, or
                           otherwise allow access to the Software by any third
                           party not employed by the Operator;

                  (f)      provide, disclose, divulge or make available to, or
                           permit use of the Software or Modification thereto by
                           any third party without Licensor's prior written
                           consent.

3.       Help Desk Support

         3.1      Help Desk. As part of the Support (as defined in Section 3.2),
                  Licensor will maintain a Help Desk accessible through a
                  toll-free telephone number capable of providing assistance
                  with respect to the Software and use thereof. Such telephone
                  assistance shall be available from 8:00 AM to 5:00 PM CT, on a
                  Monday through Friday basis, subject to national holidays and
                  uncontrolled interruptions. The Help Desk also will be
                  available to receive reports of technical difficulties
                  associated with the Software.

         3.2      Support Fees. For so long as Operator is current in the
                  payment of all Information System Maintenance Charge and Help
                  Desk Support Fees ("Support Fee"), as set forth in Schedule A
                  to this License, Operator will be entitled to support through
                  the Help Desk ("Support"). Support Fees and payment terms set
                  forth in Schedule A to this License may be adjusted or
                  modified by Licensor in January of each calendar year.
                  Licensor shall provide Operator with thirty (30) days' prior
                  written notice of any such adjustment or modification

         3.3      Taxes. Operator agrees to pay or reimburse Licensor for all
                  federal, state, or local sales, use, personal property, VAT,
                  excise, duties, and any other taxes or levies, other than
                  taxes on the net income of Licensor, arising out of this
                  License.

         3.4      Causes Which Are Not Attributable to Licensor. Support will
                  not include services requested as a result of, or with respect
                  to causes which are not attributable to Licensor. These
                  services will be billed to Operator at Licensor's then-current
                  rates. Causes which are not attributable to Licensor include
                  but are not limited to:

                                      D-2

<PAGE>

                  (a)      accident; unusual physical, electrical or
                           electromagnetic stress; neglect; misuse; failure or
                           fluctuation of electric power, air conditioning or
                           humidity control; excessive heating; fire and smoke
                           damage; operation of the Software with other software
                           and hardware; or causes other than ordinary use; or

                  (b)      modification, alteration or addition or attempted
                           modification, alteration or addition of the Software
                           undertaken by persons other than Licensor or
                           Licensor's authorized representatives.

         3.5      Responsibilities of Operator. Licensor's provision of Support
                  to Operator is subject to the prompt documentation and report
                  of all errors or malfunctions of the Software to Licensor.
                  Operator shall take all steps necessary to carry out
                  procedures for the rectification of errors or malfunctions
                  within a reasonable time after such procedures have been
                  received from Licensor. Operator shall maintain a current
                  backup copy of all programs and data. Operator shall properly
                  train its personnel in the use and application of the
                  Software.

4.       Term and Termination. Licensor's provision of Support to Operator will
         commence on the date the Restaurant opens to the public and will
         continue for an initial term of one (1) year. Support will
         automatically renew at the end of the initial term and any subsequent
         term for a renewal term of one (1) year unless either party has
         provided the other party with a written termination notice of its
         intention not to renew the Support at least ninety (90) days prior to
         the expiration of the then-current term. Termination of Support upon
         failure to renew will not affect the license of the Software.

5.       Limitation of Liability

         5.1      Disclaimer. LICENSOR MAKES NO WARRANTIES, WHETHER EXPRESS,
                  IMPLIED, OR STATUTORY REGARDING OR RELATING TO THE SOFTWARE OR
                  ANY UPDATES OR UPGRADES THERETO, OR ANY MATERIALS OR SERVICES
                  FURNISHED OR PROVIDED TO OPERATOR UNDER THIS AGREEMENT,
                  INCLUDING MAINTENANCE AND SUPPORT. LICENSOR EXPRESSLY AND
                  SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES OF
                  MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, RESULTS,
                  WORKMANLIKE EFFORT, COURSE OF DEALING AND TITLE, AND
                  NONINFRINGEMENT WITH RESPECT TO THE SOFTWARE AND SAID OTHER
                  MATERIALS AND SERVICES, AND WITH RESPECT TO THE USE OF ANY OF
                  THE FOREGOING. ALSO, THERE IS NO WARRANTY, DUTY OR CONDITION
                  OF TITLE, QUIET ENJOYMENT, QUIET POSSESSION, CORRESPONDENCE TO
                  DESCRIPTION OR NONINFRINGEMENT. ALL SUCH WARRANTIES ARE
                  EXPRESSLY AND SPECIFICALLY DISCLAIMED.

         5.2      Limitation of Liability. IN NO EVENT WILL LICENSOR BE LIABLE
                  FOR ANY LOSS OF PROFITS, LOSS OF USE, BUSINESS INTERRUPTION,
                  LOSS OF DATA, COST OF COVER OR INDIRECT, SPECIAL, INCIDENTAL
                  OR

                                      D-3

<PAGE>

                  CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING, BUT NOT LIMITED
                  TO, DAMAGES FOR: LOSS OF PROFITS, LOSS OF CONFIDENTIAL OR
                  OTHER INFORMATION, BUSINESS INTERRUPTION, PERSONAL INJURY,
                  LOSS OF PRIVACY, FAILURE TO MEET ANY DUTY (INCLUDING OF GOOD
                  FAITH OR OF REASONABLE CARE), NEGLIGENCE, AND ANY OTHER
                  PECUNIARY OR OTHER LOSS WHATSOEVER), ARISING OUT OR IN ANY WAY
                  RELATED TO THE FURNISHING, PERFORMANCE OR USE OF THE SOFTWARE,
                  SERVICES PERFORMED HEREUNDER, THE PROVISION OF OR FAILURE TO
                  PROVIDE SUPPORT SERVICES, WHETHER ALLEGED AS A BREACH OF
                  CONTRACT OR TORTIOUS CONDUCT, INCLUDING NEGLIGENCE, EVEN IF
                  LICENSOR HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
                  IN ADDITION, LICENSOR WILL NOT BE LIABLE FOR ANY DAMAGES
                  CAUSED BY DELAY IN DELIVERY OR FURNISHING THE SOFTWARE OR SAID
                  SERVICES. LICENSOR'S LIABILITY UNDER THIS AGREEMENT FOR
                  DIRECT, INDIRECT, SPECIAL, INCIDENTAL AND/OR CONSEQUENTIAL
                  DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION,
                  RESTITUTION, WILL NOT, IN ANY EVENT, EXCEED THE SUPPORT FEES
                  PAID BY OPERATOR TO LICENSOR UNDER THIS AGREEMENT. THE
                  FOREGOING LIMITATIONS, EXCLUSIONS AND DISCLAIMERS SHALL APPLY
                  TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EVEN IF ANY
                  REMEDY FAILS ITS ESSENTIAL PURPOSE.

         5.3      Operator Indemnity. Operator shall indemnify and hold Licensor
                  harmless from and against any costs, losses, liabilities and
                  expenses (including reasonable attorneys fees) arising out of
                  third party claims related to Operator's use of the Software
                  under this License.

         5.4      No Other Warranty. No employee, agent, representative or
                  affiliate of Licensor has authority to bind Licensor to any
                  oral representations or warranty concerning the Software. Any
                  written representation or warranty not expressly contained in
                  this License will not be enforceable.

6.       Indemnification for Infringement

         6.1      Indemnity. Licensor shall, at its expense, defend or settle
                  any claim, action or allegation brought against Operator that
                  the Software infringes any United States patent, copyright or
                  trade secret of any third party and shall pay any final
                  judgments awarded or settlements entered into; provided that,
                  Operator gives prompt written notice to Licensor of any such
                  claim, action or allegation of infringement and gives Licensor
                  the authority to proceed as contemplated herein. Licensor will
                  have the exclusive right to defend any such claim, action or
                  allegation and make settlements thereof at its own discretion,
                  and Operator may not settle or compromise such claim, action
                  or allegation, except with prior written consent of Licensor.
                  Operator shall give such assistance and information as
                  Licensor may reasonably require to

                                      D-4

<PAGE>

                  settle or oppose such claims. In the event any such
                  infringement, claim, action or allegation is brought or
                  threatened, Licensor may, at its sole option and expense:

                  (a)      procure for Operator the right to continue use of the
                           Software or infringing part thereof; or

                  (b)      modify or amend the Software or infringing part
                           thereof, or replace the Software or infringing part
                           thereof with other software having substantially the
                           same or better capabilities; or, if neither of the
                           foregoing is commercially practicable,

                  (c)      terminate this License.

         6.2      Exclusions. The foregoing obligations shall not apply to the
                  extent the infringement arises as a result of (a)
                  modifications to the Software made by any party other than
                  Licensor or Licensor's authorized representative, (b) use of
                  other than the latest release of the Software, or (c) the
                  combination or use of the Software with materials not
                  furnished by Licensor.

         6.3      Sole Obligation. The foregoing states the entire liability of
                  Licensor with respect to infringement of any patent,
                  copyright, trade secret or other proprietary right.

7.       Confidential Information

         7.1      Obligations of Confidentiality. Each party acknowledges that
                  the Software and any Modifications constitute valuable trade
                  secrets and confidential information of the Licensor, and
                  Operator agrees that it shall use the Software, Modifications
                  and any related documentation solely in accordance with the
                  provisions of this License and will not disclose, or permit to
                  be disclosed, the same, directly or indirectly, to any third
                  party without Licensor's prior written consent. Operator
                  agrees to exercise due care in protecting the Software,
                  Modifications, and related documentation from unauthorized use
                  and disclosure, including at a minimum, giving instructions to
                  Operator's "need-to-know" employees who may have access to the
                  Software, Modifications or related documentation that the same
                  are proprietary to, and the trade secrets of, Licensor. At
                  Licensor's request, Operator shall require and obtain
                  execution of covenants concerning the confidentiality of the
                  Software from any persons employed by Operator who have access
                  to the Software. These covenants shall be in a form
                  substantially similar to the confidential covenants contained
                  in Attachment D to the Operating Agreement.

         7.2      Injunctive Relief. The parties agree that in the event of
                  actual or threatened breach of the provisions of Section 7.1
                  by Operator, Licensor will have no adequate remedy at law and
                  will be entitled to immediate and injunctive and other
                  equitable relief, without bond and without the necessity of
                  showing actual money damages.

                                      D-5

<PAGE>

8.       Term and Termination

         8.1      Term. The Term of this License shall be co-extensive with the
                  term of the Operating Agreement, including any renewal of the
                  Operating Agreement. Expiration or termination of the
                  Operating Agreement for whatever reason shall automatically
                  terminate this License and the right to use the Software,
                  without notice to Operator. In addition, Licensor may, in its
                  sole discretion, immediately terminate this License upon the
                  failure by Operator to comply with any of the terms and
                  conditions herein.

         8.2      Effect of Termination. Upon expiration or termination of this
                  License or upon the expiration or termination of the Operating
                  Agreement, whichever shall occur earlier, Operator shall
                  immediately deliver to Licensor all copies of the Software,
                  any Modifications thereto, and any related documentation then
                  in Operator's possession or control, erase the software from
                  Operator's computer system, and shall immediately cease to use
                  the Software. Sections 5-10 will survive termination of this
                  License for any reason. Termination of this License will not
                  affect the terms of the Operating Agreement, Operator's duties
                  or obligations under Section 7 of this License, provisions
                  relating to the payment of amounts due, or provisions limiting
                  or disclaiming Licensor's liability, which provisions will
                  survive termination of this License.

9.       Non-assignment/Binding Agreement. Neither this License nor any rights
         under this License may be assigned or otherwise transferred by
         Operator, in whole or in part, whether voluntary or by operation of
         law, without the prior written consent of Licensor, and any purported
         transfer shall be null and void. Subject to the foregoing, this License
         will be binding upon and will inure to the benefit of the parties and
         their respective successors and assigns.

10.      Miscellaneous

         10.1     Force Majeure. Neither party will incur any liability to the
                  other party on account of any loss or damage resulting from
                  any delay or failure to perform all or any part of this
                  License if such delay or failure is caused, in whole or in
                  part, by events, occurrences, or causes beyond the control and
                  without negligence of the parties. Such events, occurrences,
                  or causes will include, without limitation, acts of God,
                  strikes, lockouts, riots, acts of war, terrorism, earthquakes,
                  fire and explosions, but the inability to meet financial
                  obligations is expressly excluded.

         10.2     Waiver. Any waiver of the provisions of this License or of a
                  party's rights or remedies under this License must be in
                  writing to be effective. Failure, neglect, or delay by a party
                  to enforce the provisions of this License or its rights or
                  remedies at any time, will not be construed and will not be
                  deemed to be a waiver of such party's rights under this
                  License and will not in any way affect the validity of the
                  whole or any part of this License or prejudice such party's
                  right to take subsequent action. Except as expressly stated in
                  this License, no exercise or enforcement by either party of
                  any right or remedy under this License will

                                      D-6

<PAGE>

                  preclude the enforcement by such party of any other right or
                  remedy under this License or that such party is entitled by
                  law to enforce.

         10.3     Severability. If any term, condition, or provision in this
                  License is found to be invalid, unlawful or unenforceable to
                  any extent, the parties shall endeavor in good faith to agree
                  to such amendments that will preserve, as far as possible, the
                  intentions expressed in this License. If the parties fail to
                  agree on such an amendment, such invalid term, condition or
                  provision will be severed from the remaining terms, conditions
                  and provisions, which will continue to be valid and
                  enforceable to the fullest extent permitted by law.

         10.4     Counterparts. This License may be executed in counterparts,
                  each of which so executed will be deemed to be an original and
                  such counterparts together will constitute one and the same
                  agreement .

         10.5     Applicable Law; Jurisdiction. This License will be interpreted
                  and construed in accordance with the laws of the State of
                  Tennessee and the United States of America, without regard to
                  conflict of law principles. All disputes arising out of this
                  License shall be subject to the exclusive jurisdiction and
                  venue of the state and federal courts of Davidson County,
                  Nashville, Tennessee, and the parties consent to the exclusive
                  and personal jurisdiction of these courts.

         10.6     Headings. Section and Schedule headings are for ease of
                  reference only and do not form part of this License.

         10.7     Notices. Any notice required or permitted under the terms of
                  this License or required by law must be in writing and
                  properly posted to the appropriate address set forth in the
                  Operating Agreement.

         10.8     Entire Agreement. This License and any Schedule attached
                  hereto contain the entire agreement of the parties with
                  respect to the subject matter of this License and supersede
                  all previous communications, representations, understandings
                  and agreements, either oral or written, between the parties
                  with respect to said subject matter. This License may not be
                  amended, except by a writing signed by both parties.

                  (remainder of page intentionally left blank)

                                      D-7

<PAGE>

         IN WITNESS WHEREOF, the parties have executed this License.

                                       LICENSOR:

                                       O'Charley's Inc.,
                                       a Tennessee corporation

                                       By:
                                          --------------------------------------
                                          Name:
                                               ---------------------------------
                                          Title:
                                                --------------------------------

                                       OPERATOR:

                                       -----------------------------------------

                                       By:
                                          --------------------------------------
                                          Name:
                                               ---------------------------------
                                          Title:
                                                --------------------------------

                                      D-8

<PAGE>

                                   SCHEDULE A

                    TO SOFTWARE LICENSE AND SUPPORT AGREEMENT

                             SUPPORT AND MAINTENANCE

Operator is receiving ____ copy or copies of the Chux Operations Assistant
("COA") software.

The Support Fee for the COA Software shall be included in the $6,300 per year
Information System Maintenance Charge and Help Desk Support Fee, as set forth in
the Franchise Offering Circular. The Support fee will be due and payable on the
tenth (10th) day of each month, said payment to be made in full through
electronic funds transfer.

The Help Desk and Support Fees specified in this Schedule A are subject to
change, at Licensor's sole discretion, in January of each calendar year.
Licensor shall provide Operator with thirty (30) days' prior written notice of
any such change.

                                      D-9

<PAGE>

                                  ATTACHMENT E
                             TO OPERATING AGREEMENT

                     ELECTRONIC FUND TRANSFER AUTHORIZATION

                   Authorization To Honor Charges Drawn By And
                    Payable To O'Charley's Inc. ("Licensor")

         Depositor hereby authorizes and requests _____________________________
(the "Depository") to initiate debit and credit entries to Depositor's checking
account/savings account (select one) indicated below drawn by and payable to the
order of Licensor by Electronic Fund Transfer provided there are sufficient
funds in said account to pay the amount upon presentation.

         Depositor agrees that the Depository's rights with respect to each such
charge shall be the same as if it were a check drawn on the Depository and
signed by Depositor. Depositor further agrees that if any such charge is
dishonored, whether with or without cause and whether intentionally or
inadvertently, the Depository shall be under no liability whatsoever.

Depository Name:

City:                             State:                Zip Code:
     --------------------------         -------------            ---------------

Transit/ABA Number:                        Account Number:
                   ---------------------                  ----------------------

         This authority is to remain in full force and effect until Licensor and
Depository have received at least thirty (30) days written notification from
Depositor of its termination to afford Licensor and Depository a reasonable
opportunity to act on such request.

Depositor:        (Please Print)

-------------------------------------------

-------------------------------------------

-------------------------------------------
Date Signed

-------------------------------------------

-------------------------------------------
Signature(s) of Depositor, as Printed Above

Please attach a voided blank check, for purpose of setting up Bank and Transit
Numbers

                                      E-1

<PAGE>

                                  ATTACHMENT F
                             TO OPERATING AGREEMENT

                                    GUARANTY

         Each of the undersigned acknowledges and agrees as follows:

         (1)      Each has read the terms and conditions of the Operating
Agreement dated as of ____________, 20___, by and among O'Charley's Inc., a
Tennessee corporation, ____________ and each of the undersigned (the "Operating
Agreement") and acknowledges that the execution of this guaranty and the
undertakings of the Controlling Principals in the Operating Agreement are in
partial consideration for, and a condition to, the granting of the license under
the Operating Agreement, and that Licensor would not have granted this license
without the execution of this guaranty and such undertakings by each of the
undersigned;

         (2)      Each is included in the term the "Controlling Principals" as
described in Section XX(U) of the Operating Agreement;

         (3)      Each individually, jointly and severally, makes all of the
representations, warranties, covenants and agreements of the Controlling
Principals set forth in the Operating Agreement and is obligated to perform
thereunder; and

         (4)      Each individually, jointly and severally, unconditionally and
irrevocably guarantees to Licensor and its successors and assigns that all of
Operator's obligations under the Operating Agreement will be punctually paid and
performed. Upon default by Operator or upon notice from Licensor, each will
immediately make each payment and perform each obligation required of Operator
under the Operating Agreement. Without affecting the obligations of any of the
Controlling Principals under this guaranty, Licensor may, without notice to the
Controlling Principals, waive, renew, extend, modify, amend or release any
indebtedness or obligation of Operator or settle, adjust or compromise any
claims that Licensor may have against Operator. Each of the Controlling
Principals waives all demands and notices of every kind with respect to the
enforcement of this guaranty, including, without limitation, notice of
presentment, demand for payment or performance by Operator, any default by
Operator or any guarantor and any release of any guarantor or other security for
this guaranty or the obligations of Operator. Licensor may pursue its rights
against any of the Controlling Principals without first exhausting its remedies
against Operator and without joining any other guarantor hereto and no delay on
the part of Licensor in the exercise of any right or remedy shall operate as a
waiver of such right or remedy, and no single or partial exercise by Licensor of
any right or remedy shall preclude the further exercise of such right or remedy.
Upon receipt by Licensor of notice of the death of any of the Controlling
Principals, the estate of the deceased will be bound by the foregoing guaranty,
but only for defaults and obligations under the Operating Agreement existing at
the time of death, and in such event, the obligations of the remaining
Controlling Principals shall continue in full force and effect.

         Additionally, with respect to the individual designated as the
Operating Principal, the Operating Principal acknowledges that the undertakings
by the Operating Principal under this guaranty are made and given in partial
consideration of, and as a condition to, Licensor's grant of

                                      F-1

<PAGE>

rights to operate the Restaurant as described herein. The Operating Principal
individually jointly and severally, makes all of the covenants, representations
and agreements of Operator and the Operating Principal set forth in the
Operating Agreement and is obligated to perform hereunder.

                                       THE CONTROLLING PRINCIPALS:

                                       -----------------------------------------
                                       *Name:
                                             -----------------------------------

                                       -----------------------------------------
                                       Name:
                                            ------------------------------------

                                       -----------------------------------------
                                       Name:
                                            ------------------------------------

*Denotes individual who is Operator's Operating Principal

                                      F-2
<PAGE>

                                  ATTACHMENT B
                            TO DEVELOPMENT AGREEMENT

                                   LEASE RIDER

         This Lease Rider is made and entered into this ____ day of
____________, 20___ by and between O'CHARLEY'S INC., a Tennessee corporation
("Licensor"), _________________ ("Operator") and
____________________("Landlord").

         WHEREAS, Licensor and Operator are parties to that certain Development
Agreement dated as of _____________, 20___ ("Development Agreement");

         WHEREAS, Operator and Landlord desire to enter into a lease (the
"Lease") pursuant to which Operator will occupy the premises located at
___________________________________ (the "Premises") for a full-service
O'Charley's restaurant (the "Restaurant") licensed under the Development
Agreement and an Operating Agreement to be executed between Licensor and
Operator prior to the opening of the Restaurant (the "Operating Agreement"); and

         WHEREAS, as a condition to entering into the Lease, the Operator is
required under the Operating Agreement to execute this Lease Rider along with
the Landlord and Licensor;

         NOW, THEREFORE, in consideration of the mutual undertakings and
commitments set forth herein, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

         (1) During the term of the Operating Agreement, the Premises shall be
used only for the operation of the Restaurant.

         (2) Landlord consents to Operator's use of such proprietary marks
("Proprietary Marks") and signs, neons, interior and exterior decor items, color
schemes, plans, specifications and related components of the O'Charley's
restaurant system ("System") as Licensor has prescribed, and may in the future
prescribe, for the Restaurant.

         (3) Landlord agrees to send Licensor copies of any and all letters and
notices sent to Operator pertaining to the Lease and the Premises at the same
time that such letters and notices are sent to Operator.

         (4) Licensor shall have the right to enter the Premises to make any
modification or alteration necessary to protect the O'Charley's Restaurant, the
System and Proprietary Marks or to cure any default under the Operating
Agreement or any development agreement entered into between Licensor and
Operator or under the Lease, without being guilty of trespass or any other crime
or tort.

         (5) In the event of Operator's default under the terms of the Lease,
Licensor may, but is not required, to cure the default and may assume the lease
in Licensor's name. Licensor shall make this determination within thirty (30)
days after Licensor receives notice of the default. If Licensor elects to cure
the default, Licensor shall cure the default within thirty (30) days of such

                                       B-1

<PAGE>

election or, if the default cannot be reasonably cured within such thirty (30)
day period, then Licensor shall commence and proceed to cure the default within
such time as is reasonably necessary to cure the default. If Licensor also
elects to assume the Lease, Landlord agrees to recognize Licensor as the Tenant
under the Lease and Operator shall no longer have any rights thereunder.

         (6) Operator shall be permitted to assign the Lease to Licensor or to
Licensor's assignees upon the expiration or earlier termination of the Operating
Agreement and the Landlord hereby consents to such assignment and agrees not to
impose or assess any assignment fee or similar charge or increase or accelerate
rent under the Lease in connection with such assignment, or require Licensor to
pay any past due rent or other financial obligation of Operator to Landlord, it
being understood that Landlord shall look solely to the Operator for any rents
or other financial obligations owed to Landlord prior to such assignment.
Landlord and Operator acknowledge that Licensor is not a party to the Lease and
shall have no liability under the Lease, unless and until the Lease is assigned
to, and assumed by, Licensor.

         (7) Except for the Operator's obligations to Landlord for rents and
other financial obligations accrued prior to the assignment of the Lease, in the
event of such assignment, Licensor or any assignee designated by Licensor will
agree to assume from the date of assignment all obligations of Operator
remaining under the Lease, and in such event Licensor or any affiliate shall
assume Operator's occupancy rights, Operator's rights under any renewal or
purchase options, and the right to sublease the Premises, for the remainder of
the term of the Lease including any applicable renewal periods.

         (8) Notwithstanding anything contained in this Lease Rider and in the
Lease, Licensor is expressly authorized, without the consent of the Landlord, to
sublet the Leased Premises to an authorized franchisee, provided such subletting
is specifically subject to the terms of this Lease and further provided the
franchisee expressly assumes all obligations of the Lease. Licensor agrees to
notify Landlord as to the name of the franchisee within then (10) days after
such subletting.

         (9) Operator shall not assign the Lease or renew or extend the term
thereof without the prior written consent of Licensor.

         (10) Landlord and Operator shall not amend or otherwise modify the
Lease in any manner that could materially affect any of the foregoing
requirements without the prior written consent of Licensor.

         (11) The terms of this Lease Rider will supersede any conflicting terms
of the Lease.

                  [remainder of page intentionally left blank]

                                      B-2
<PAGE>

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

                                    O'CHARLEY'S INC.
                                    a Tennessee corporation

                                    By:
                                       ----------------------------------------
                                         Name:
                                              ---------------------------------
                                         Title:
                                                -------------------------------

                                    OPERATOR:

                                    -------------------------------------------

                                    By:
                                       ----------------------------------------
                                       Name:
                                            -----------------------------------
                                       Title:
                                             ----------------------------------

                                    LANDLORD:

                                    -------------------------------------------

                                    By:
                                       ----------------------------------------
                                       Name:
                                            -----------------------------------
                                       Title:
                                             ----------------------------------

                                      B-3

<PAGE>

                                  ATTACHMENT C
                            TO DEVELOPMENT AGREEMENT

                    CONFIDENTIALITY AND NON-COMPETE AGREEMENT

         This Agreement is made and entered into this 22nd day of December,
2003, between O'Charley's Inc., a Tennessee corporation ("Licensor"), OCM
Development, LLC, a Michigan limited liability company d/b/a O'Charley's
Development Company of Michigan ("Developer"), and Robert E. Schermer, Jr.
("Covenantor").

                                    RECITALS:

         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 (the "System") of full service varied menu casual dining
restaurants ("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);

         WHEREAS, the System includes, but is not limited to, certain trade
names, service marks, trademarks, symbols, logos, emblems and indicia of origin,
including, but not limited to, the mark O'Charley's(R) and such other trade
names, service marks, trademarks, symbols, logos, emblems and indicia of origin
as Licensor may develop in the future to identify for the public the source of
services and products marketed under such marks ("Marks") and under the System;

         WHEREAS, the Marks represent the System's high standards of quality,
appearance and service; distinctive exterior and interior design, decor, color
scheme 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 and 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 and are used by Licensor in connection with the operation of the System
("Trade Secrets");

         WHEREAS, the Marks and Trade Secrets provide economic advantages to
Licensor and are not generally known to, and are not readily ascertainable by
proper means by, Licensor's competitors who could obtain economic value from
knowledge and use of the Marks and Trade Secrets;

         WHEREAS, Licensor has taken and intends to take all reasonable steps to
maintain the confidentiality and secrecy of the Trade Secrets;

         WHEREAS, Licensor has granted Developer the limited right to develop
Restaurants using the System, the Marks and the Trade Secrets for the period
defined in the development agreement made and entered into as of December 22,
2003 ("Development Agreement"), by and among Licensor, Developer and Developer's
Controlling Principals;

                                      C-1

<PAGE>

         WHEREAS, Licensor and Developer have agreed in the Development
Agreement on the importance to Licensor and to Developer and other licensed
users of the System of restricting the use, access and dissemination of the
Trade Secrets;

         WHEREAS, it will be necessary for certain employees, agents,
independent contractors, officers, directors and interest holders of Developer,
or any Entity having an interest in Developer ("Covenantor") to have access to
and to use some or all of the Trade Secrets in the management and operation of
Developer's business using the System;

         WHEREAS, Developer has agreed to obtain from those Covenantors prior
written agreements protecting the Trade Secrets and the System against unfair
competition;

         WHEREAS, Covenantor wishes to remain with, to become employed by or
associated with Developer;

         WHEREAS, Covenantor wishes and needs to receive and use the Trade
Secrets in the course of Covenantor's employment or association in order to
effectively perform Covenantor's services for Developer; and

         WHEREAS, Covenantor acknowledges that receipt of and the right to use
the Trade Secrets constitutes independent valuable consideration for the
representations, promises and covenants made by Covenantor herein.

         NOW, THEREFORE, in consideration of the mutual covenants and
obligations contained herein, and other good and valuable consideration, the
receipt and sufficiency are hereby acknowledged, the parties intending to be
legally bound hereby agree as follows:

1.       Confidentiality Agreement

         1.1 Licensor and/or Developer may disclose to Covenantor some or all of
the Trade Secrets relating to the System. All information and materials,
including, without limitation, any manuals, drawings, specifications, techniques
and compilations of data which Licensor provides to Developer and/or Covenantor
shall be deemed confidential Trade Secrets for the purposes of this Agreement.

         1.2 Covenantor shall receive the Trade Secrets in confidence and shall,
at all times, maintain them in confidence, and use them only in the course of
Covenantor's employment by or association with Developer and then only in
connection with the development and/or operation by Developer of Restaurants
using the System for so long as Developer is licensed by Licensor to use the
System.

         1.3 Covenantor shall not at any time make copies of any documents or
compilations containing some or all of the Trade Secrets without Licensor's
prior written consent.

         1.4 Covenantor shall not at any time disclose or permit the disclosure
of the Trade Secrets except to other employees of Developer and then only to the
limited extent necessary to train or assist other employees of Developer in the
development or operation of a Restaurant using the System.

                                      C-2

<PAGE>

         1.5 Covenantor shall immediately surrender any material containing some
or all of Licensor's Trade Secrets to Licensor, upon request, or upon
termination of employment by or association with Developer, or upon conclusion
of the use for which such information or material may have been furnished to
Covenantor.

         1.6 Covenantor shall not at any time, directly or indirectly, do any
act or omit to do any act that would or would likely be injurious or prejudicial
to the goodwill associated with the Trade Secrets and the System.

         1.7 All manuals are loaned by Licensor to Developer for limited
purposes only and remain the property of Licensor and may not be reproduced, in
whole or in part, without Licensor's prior written consent.

2. Covenants Not to Compete

         2.1 In order to protect the goodwill and unique qualities of the System
and the confidentiality and value of the Trade Secrets, and in consideration for
the disclosure to Covenantor of the Trade Secrets, Covenantor further agrees and
covenants that while employed by Developer Covenantor will not:

                 a. Divert, or attempt to divert, directly or indirectly, any
business, business opportunity or customer of the Restaurants to any competitor.

                 b. Employ, or seek to employ, any person who is at the time
(or has been within the preceding six (6) months) employed by Licensor, or any
of its Affiliates, or any operator or developer of Licensor, or otherwise
directly or indirectly induce such person to leave that person's employment,
except as may occur in connection with Developer's employment of such person if
permitted under the Development Agreement.

                 c. Except with respect to Restaurants described in the
Development Agreement and other restaurants operated under operating agreements
between Developer and its Affiliates, and Licensor or its Affiliates, directly
or indirectly, for Covenantor or through, on behalf of, or in conjunction with
any person, persons, partnership, corporation, limited liability company,
association, trust, unincorporated association, joint venture or other Entity,
without the prior written consent of Licensor, own, maintain, operate, engage in
or have any financial or beneficial interest in (including any interest in
corporations, partnerships, limited liability companies, associations, trusts,
unincorporated associations, joint ventures or other entities), advise, assist
or make loans to, any business that operates a full service, varied menu, casual
dining restaurant that features freshly prepared items such as steaks, seafood,
homemade baked goods and fresh cut salads, and that serves alcoholic beverages
through a full-service bar, and which business is located within the United
States, its territories or commonwealths, or any other country, province, state
or geographic area in which Licensor has used, sought registration of or
registered the same or similar Marks or operates or licenses others to operate a
business under the same or similar Marks.

         2.2 In further consideration for the disclosure to Covenantor of the
Trade Secrets and to protect the uniqueness of the System, Covenantor agrees and
covenants that for one (1) year following the earlier of the expiration,
termination or transfer of all of Developer's interest in the

                                      C-3

<PAGE>

Development Agreement or the termination of Covenantor's employment by or
association with Developer, Covenantor will not without the prior written
consent of Licensor:

                  a. Divert or attempt to divert, directly or indirectly, any
business, business opportunity or customer of the Restaurants to any competitor.

                  b. Employ or seek to employ any person who is at the time (or
has been within the preceding six (6) months) employed by Licensor, or any of
its Affiliates, or any operator or developer of Licensor, or otherwise directly
or indirectly induce such persons to leave that person's employment.

                  c. Except with respect to other restaurants operated under
operating agreements between Developer and its Affiliates, and Licensor or its
Affiliates, directly or indirectly, for Covenantor or through, on behalf of or
in conjunction with any person, persons, partnership, corporation, limited
liability company, association, trust, unincorporated association, joint venture
or other Entity own, maintain, operate, engage in or have any financial or
beneficial interest in (including any interest in corporations, partnerships,
limited liability companies, associations, trusts, unincorporated associations,
joint ventures or other entities), advise, assist or make loans to, any business
that operates a full service, varied menu, casual dining restaurant that
features freshly prepared items such as steaks, seafood, homemade baked goods
and fresh cut salads, and that serves alcoholic beverages through a full-service
bar, which business is, or is intended to be, located within the Territory, as
such term is defined in the Development Agreement (and as described in an
attachment thereto), or within a fifteen (15)-mile radius of the location of any
O'Charley's restaurant or food service facility in existence or under
construction (or where land has been purchased or a lease executed for the
construction of an O'Charley's restaurant or other food service facility) as of
the earlier of (i) the expiration or termination of, or the transfer of all of
Developer's interest in, the Development Agreement; or (ii) the time Covenantor
ceases to be employed by or associated with Developer, as applicable.

3. Miscellaneous

         3.1 Developer shall make all commercially reasonable efforts to ensure
that Covenantor acts as required by this Agreement.

         3.2 Covenantor agrees that in the event of a breach of this Agreement,
Licensor would be irreparably injured and be without an adequate remedy at law.
Therefore, in the event of such a breach, or threatened or attempted breach of
any of the provisions hereof, Licensor shall be entitled to enforce the
provisions of this Agreement and shall be entitled, in addition to any other
remedies which are made available to it at law or in equity (including any right
to terminate the Development Agreement or any operating agreement, as provided
therein), to a temporary and/or permanent injunction and a decree for the
specific performance of the terms of this Agreement, without the necessity of
showing actual or threatened harm and without being required to furnish a bond
or other security.

         3.3 Covenantor agrees to pay all expenses (including court costs and
reasonable attorneys' fees) incurred by Licensor and Developer in enforcing this
Agreement.

                                      C-4

<PAGE>

         3.4 Any failure by Licensor or the Developer to object to or take
action with respect to any breach of any provision of this Agreement by
Covenantor shall not operate or be construed as a waiver of or consent to that
breach or any subsequent breach by Covenantor.

         3.5 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE WHERE LICENSOR'S PRINCIPAL PLACE OF
BUSINESS IS LOCATED AT THE TIME SUCH PROCEEDING IS COMMENCED WITHOUT REFERENCE
TO CHOICE OF LAW PRINCIPLES. COVENANTOR HEREBY IRREVOCABLY SUBMITS HIMSELF TO
THE JURISDICTION OF THE STATE AND THE FEDERAL DISTRICT COURTS LOCATED IN THE
STATE, COUNTY OR JUDICIAL DISTRICT IN WHICH THE LICENSOR'S PRINCIPAL PLACE OF
BUSINESS IS LOCATED. COVENANTOR HEREBY WAIVES ALL QUESTIONS OF PERSONAL
JURISDICTION OR VENUE FOR THE PURPOSE OF CARRYING OUT THIS PROVISION. COVENANTOR
HEREBY AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON HIM IN ANY PROCEEDING
RELATING TO OR ARISING UNDER THIS AGREEMENT OR THE RELATIONSHIP CREATED BY THIS
AGREEMENT BY ANY MEANS ALLOWED BY APPLICABLE STATE OR FEDERAL LAW. COVENANTOR
FURTHER AGREES THAT VENUE FOR ANY PROCEEDING RELATING TO OR ARISING OUT OF THIS
AGREEMENT SHALL BE THE COUNTY OR JUDICIAL DISTRICT IN WHICH LICENSOR'S PRINCIPAL
PLACE OF BUSINESS IS LOCATED AT THE TIME SUCH PROCEEDING IS COMMENCED; PROVIDED,
HOWEVER, WITH RESPECT TO ANY ACTION WHICH INCLUDES INJUNCTIVE RELIEF OR OTHER
EXTRAORDINARY RELIEF, LICENSOR OR DEVELOPER MAY BRING SUCH ACTION IN ANY COURT
IN ANY STATE WHICH HAS JURISDICTION.

         3.6 The parties acknowledge and agree that each of the covenants
contained herein are reasonable limitations as to time, geographical area, and
scope of activity to be restrained and do not impose a greater restraint than is
necessary to protect the goodwill or other business interests of Licensor. The
parties agree that each of the foregoing covenants shall be construed as
independent of any other covenant or provision of this Agreement. If all or any
portion of a covenant in this Agreement is held unreasonable or unenforceable by
a court or agency having valid jurisdiction in any unappealed final decision to
which Licensor is a party, Covenantor expressly agrees to be bound by any lesser
covenant subsumed within the terms of such covenant that imposes the maximum
duty permitted by law, as if the resulting covenant were separately stated in
and made a part of this Agreement.

         3.7 This Agreement contains the entire agreement of the parties
regarding the subject matter hereof. This Agreement may be modified only by a
duly authorized writing executed by all parties.

         3.8 All notices and demands required to be given hereunder shall be in
writing and shall be sent by personal delivery, expedited delivery service,
certified or registered mail, return receipt requested, first-class postage
prepaid, facsimile, telegram or telex (provided that the sender confirms the
facsimile, telegram or telex by sending an original confirmation copy by
certified or registered mail or expedited delivery service within three (3)
business days after transmission), to the respective parties at the following
addresses unless and until a different address has been designated by written
notice to the other parties.

                                      C-5

<PAGE>

         If directed to Licensor, the notice shall be addressed to:

                  O'Charley's Inc.
                  3038 Sidco Drive
                  Nashville, TN 37204
                  Attention:  Director of Franchising
                  Facsimile:  (615) 782-5043

         If directed to Developer, the notice shall be addressed to:

                  OCM Development, LLC
                  c/o Meritage Hospitality Group, Inc.
                  1971 E. Beltline, NE Suite 200
                  Grand Rapids, MI 49525
                  Attention:  Robert E. Schermer, Jr.
                  Facsimile:  (616) 776-2776

         If directed to Covenantor, the notice shall be addressed to:

                  Robert E. Schermer, Jr.
                  c/o Meritage Hospitality Group, Inc.
                  1971 E. Beltline, NE Suite 200
                  Grand Rapids, MI 49525
                  Facsimile:  (616) 776-2776

Any notices sent by personal delivery shall be deemed given upon receipt. Any
notices given by telex or facsimile shall be deemed given upon transmission,
provided confirmation is made as provided above. Any notice sent by expedited
delivery service or registered or certified mail shall be deemed given three (3)
business days after the time of mailing. Any change in the foregoing addresses
shall be effected by giving fifteen (15) days written notice of such change to
the other parties. Business days for the purpose of this Agreement excludes
Saturday, Sunday and the following national holidays: New Year's Day, Martin
Luther King Day, Presidents' Day, Memorial Day, Independence Day, Labor Day,
Columbus Day, Veterans' Day, Thanksgiving and Christmas.

         3.9 The, rights and remedies of Licensor under this Agreement are fully
assignable and transferable and shall inure to the benefit of its respective
Affiliates, successors and assigns. The respective obligations of Developer and
Covenantor hereunder may not be assigned by Developer or Covenantor, without the
prior written consent of Licensor.

                  (remainder of page intentionally left blank)

                                      C-6

<PAGE>

         IN WITNESS WHEREOF, the undersigned have entered into this Agreement as
witnessed by their signatures

                                    LICENSOR:

                                    O'CHARLEY'S INC.,
                                    a Tennessee corporation

                                    By:  /s/ Edward C. Hastings
                                       ----------------------------------------
                                         Edward C. Hastings
                                         Director of Franchising

                                   DEVELOPER:

                                   OCM DEVELOPMENT, LLC,
                                   a Michigan limited liability company

                                   By:  /s/ Robert E. Schermer, Jr.
                                      -----------------------------------------
                                        Robert E. Schermer, Jr.
                                        Chief Executive Officer

                                   COVENANTOR:
                                        /s/ Robert E. Schermer, Jr.
                                   --------------------------------------------
                                        Robert E. Schermer, Jr.

                                      C-7

<PAGE>

                                  ATTACHMENT D
                            TO DEVELOPMENT AGREEMENT

                 STATEMENT OF OWNERSHIP INTERESTS AND PRINCIPALS

A.       The following is a list of stockholders, members, partners or other
         investors in Developer, including, all investors who own or hold a
         direct or indirect interest in Developer, and a description of the
         nature of their interest:

<TABLE>
<CAPTION>
                  Name                                        Percentage of Ownership/Nature of Interest
                  -----                                       ------------------------------------------
<S>                                                           <C>
                  Meritage Hospitality Group Inc.             100% / Parent Company of Developer
</TABLE>

A.       The following is a list of all Principals described in and designated
         pursuant to Section XIV(E) of the Development Agreement, each of whom
         shall execute the Confidentiality and Non-Compete Agreement
         substantially in the form set forth in Attachment C (see Sections
         IX(B)(2) and IX(I) of the Development Agreement):

                  Name

                  Robert E. Schermer, Jr.

B.       The following is a list of all of Developer's Controlling Principals
         described in and designated pursuant to Section XIV(E) of the
         Development Agreement.

                  Name

                  Meritage Hospitality Group Inc.

                                      D-1
<PAGE>

                                  ATTACHMENT E
                            TO DEVELOPMENT AGREEMENT

                                    GUARANTY

         Each of the undersigned acknowledges and agrees as follows:

         (1) Each has read the terms and conditions of the Development Agreement
(the "Development Agreement"), dated as of December 22, 2003, by and among
O'Charley's Inc., a Tennessee corporation ("Licensor"), OCM Development, 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 (the "Controlling Principals") and acknowledges that the execution
of this guaranty and the undertakings of the Controlling Principals in the
Development Agreement are in partial consideration for, and a condition to, the
granting of the development rights in the Development Agreement, and that
Licensor would not have granted such rights without the execution of this
guaranty and such undertakings by each of the undersigned;

         (2) Each is included in the term "Controlling Principals" as described
in Section XIV(E) of the Development Agreement;

         (3) Each individually, jointly and severally, makes all of the
representations, warranties, covenants and agreements of the Controlling
Principals set forth in the Development Agreement and is obligated to perform
thereunder; and

         (4) Each individually, jointly and severally, unconditionally and
irrevocably guarantees to Licensor and its successors and assigns that all of
Developer's obligations under the Development Agreement will be punctually paid
and performed. Upon default by Developer or upon notice from Licensor, each will
immediately make each payment and perform each obligation required of Developer
under the Development Agreement. Without affecting the obligations of any of the
Controlling Principals under this guaranty, Licensor may, without notice to the
Controlling Principals, waive, renew, extend, modify, amend or release any
indebtedness or obligation of Developer, or settle, adjust or compromise any
claims that Licensor may have against Developer. Each of the Controlling
Principals waives all demands and notices of every kind with respect to the
enforcement of this guaranty, including, without limitation, notice of
presentment, demand for payment or performance by Developer, any default by
Developer or any guarantor and any release of any guarantor or other security
for this guaranty or the obligations of Developer. Licensor may pursue its
rights against any of the Controlling Principals without first exhausting its
remedies against Developer and without joining any other guarantor hereto and no
delay on the part of Licensor in the exercise of any right or remedy shall
operate as a waiver of such right or remedy, and no single or partial exercise
by Licensor of any right or remedy shall preclude the further exercise of such
right or remedy. Upon receipt by Licensor of notice of the death of any of the
Controlling Principals, the estate of the deceased will be bound by the
foregoing guaranty, but only for defaults and obligations under the Development
Agreement existing at the time of death, and in such event, the obligations of
the remaining Controlling Principals shall continue in full force and effect.

                                      E-1

<PAGE>

         Additionally, with respect to the individual designated as the
Operating Principal, the Operating Principal acknowledges that the undertakings
by the Operating Principal under this guaranty are made and given in partial
consideration of, and as a condition to, Licensor's grant of rights to develop
Restaurants as described herein. The Operating Principal individually, jointly
and severally, makes all of the covenants, representations and agreements of
Developer and the Operating Principal set forth in the Development Agreement and
is obligated to perform hereunder.

                                  THE CONTROLLING PRINCIPALS:

                                  MERITAGE HOSPITALITY GROUP INC.

                                  By:  /s/ Robert E. Schermer, Jr.
                                     -----------------------------------------
                                       Robert E. Schermer, Jr.*
                                       Chief Executive Officer

*Denotes individual who is Developer's Operating Principal

                                      E-2<PAGE>

                                                                   EXHIBIT 10.15

                              AMENDED AND RESTATED
                       CORRECTIONS CORPORATION OF AMERICA
                       1997 EMPLOYEE SHARE INCENTIVE PLAN

         CCA Prison Realty Trust, a Maryland real estate investment trust and
predecessor by merger to Corrections Corporation of America, a Maryland
corporation formerly known as Prison Realty Trust, Inc. and Prison Realty
Corporation (the "Company"), initially adopted the Corrections Corporation of
America 1997 Employee Share Incentive Plan (formerly known as the CCA Prison
Realty Trust 1997 Employee Share Incentive Plan) (the "Plan") effective April
21, 1997 for the benefit of, among others, its key employees and the key
employees of its Subsidiaries and Affiliates (each as defined herein). The
Company hereby amends and restates the Plan, effective February 18, 2004.

         SECTION 1. PURPOSE; DEFINITIONS.

         The purpose of the Plan is to enable the Company to attract, retain and
reward key employees of the Company and the Chairman of the Company's Board of
Directors (the "Board"), and strengthen the mutuality of interests between such
individuals and the Company's shareholders, by offering such individuals
performance-based share incentives and/or other equity interests or equity-based
incentives in the Company, as well as performance-based incentives payable in
cash.

         For purposes of the Plan, the following terms shall be defined as set
forth below:

         a.       "Affiliate" means any entity other than the Company and its
Subsidiaries that is designated by the Board as a participating employer under
the Plan, provided that the Company directly or indirectly owns at least 20% of
the combined voting power of all classes of stock of such entity or at least 20%
of the ownership interests in such entity.

         b.       "Award" means a Share Option, Share Appreciation Right,
Restricted Share, Deferred Share, Share Purchase Right and/or other Share-Based
Award granted hereunder.

         c.       "Board" means the Board of Directors of the Company.

         d.       "Book Value" means, as of any given date, on a per share basis
(i) the shareholders' equity in the Company as of the end of the immediately
preceding fiscal year as reflected in the Company's consolidated balance sheet,
subject to such adjustments as the Committee shall specify at or after grant,
divided by (ii) the number of then outstanding Shares as of such year-end date
(as adjusted by the Committee for subsequent events).

         e.       "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto.

<PAGE>

         f.       "Committee" means the Committee referred to in Section 2 of
the Plan. If at any time no Committee shall be in office, then the functions of
the Committee specified in the Plan shall be exercised by the Board.

         g.       "Company" means Corrections Corporation of America, a Maryland
corporation formerly known as Prison Realty Trust, Inc. and Prison Realty
Corporation and successor by merger to CCA Prison Realty Trust, a Maryland real
estate investment trust, or any successor corporation or trust.

         h.       "Deferral Period" means the period described in Section 8(a)
below.

         i.       "Deferred Shares" means an award made pursuant to Section 8
below of the right to receive Shares at the end of a specified Deferral Period.

         j.       "Disability" means disability as determined under procedures
established by the Committee for purposes of this Plan.

         k.       "Early Retirement" means retirement, with the express consent
for purposes of this Plan of the Company at or before the time of such
retirement, from active employment with the Company and any Subsidiary or
Affiliate on or after attainment of age sixty-two (62) but before attainment of
age sixty-five (65).

         l.       "Fair Market Value" means, as of any given date, unless
otherwise determined by the Committee in good faith, the reported closing price
of the Shares on the New York Stock Exchange or, if no such sale of Shares is
reported on the New York Stock Exchange on such date, the fair market value of
the Shares as determined by the Committee in good faith.

         m.       "Immediate Family Member" means a person described in Section
5(e) below.

         n.       "Incentive Option" means any Share Option intended to be and
designated as an "Incentive Stock Option" within the meaning of Section 422 of
the Code.

         o.       "Non-Qualified Option" means any Share Option that is not an
Incentive Option.

         p. "Normal Retirement" means retirement from active employment with the
Company and any Subsidiary or Affiliate on or after age 65.

         q. "Other Share-Based Award" means an award under Section 10 below that
is valued in whole or in part by reference to, or is otherwise based on, Shares.

         r. "Plan" means this Corrections Corporation of America 1997 Employee
Share Incentive Plan, as amended and restated to date and as hereinafter amended
and/or restated from time to time.

                                       2

<PAGE>

         s.       "Restricted Shares" means an award of Shares that is subject
to restrictions under Section 7 below.

         t.       "Restriction Period" means the period described in Section
7(c) below.

         u.       "Retirement" means Normal or Early Retirement.

         v.       "Shares" means shares of the Company's common stock, $.01 par
value per share (on a post-May 2001 reverse stock split basis).

         w.       "Share Appreciation Right" means the right pursuant to an
Award granted under Section 6 below to receive upon exercise an amount equal to
the excess of the Fair Market Value of one Share over the price per share
specified in the Award agreement multiplied by the number of Shares in respect
of which a Share Appreciation Right has been exercised.

         x.       "Share Option" or "Option" means any option to purchase Shares
(including Restricted Shares and Deferred Shares, if the Committee so
determines) granted pursuant to Section 5 below.

         y.       "Share Purchase Right" means the right to purchase Shares
pursuant to Section 9 below.

         z.       "Subsidiary" means any corporation (or other entity) in an
unbroken chain of corporations and other entities beginning with the Company if
each of the corporations and other entities (other than the last corporation or
other entity in the unbroken chain) owns equity interests possessing more than
50% of the total combined voting power of all classes of equity interests in one
of the other corporations or entities in the chain.

         In addition, the terms "Change in Control", "Potential Change in
Control" and "Change in Control Price" shall have meanings set forth,
respectively, in Sections 11(b), (c) and (d) below.

         SECTION 2. ADMINISTRATION.

         This Plan shall be administered by a committee (the "Committee")
appointed by the Board. The Committee shall consist of two or more outside,
disinterested members of the Board. The Committee, in the judgment of the Board,
shall be qualified to administer the Plan as contemplated by (a) Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (or any successor rule), (b) Section 162(m) of the Code, as amended, and
the regulations thereunder (and any successor section and regulations), and (c)
any rules and regulations of a stock exchange on which the Company's Common
Stock is listed and traded. In the event the Board does not appoint the
Committee to administer the Plan, the Plan shall be administered by the Board
and any references to the Committee in the Plan shall be deemed to refer to the
Board.

                                       3

<PAGE>

         The Committee shall have full authority to grant, pursuant to the terms
of the Plan, to officers and other key employees eligible under Section 4 below:
(i) Share Options, (ii) Share Appreciation Rights, (iii) Restricted Shares, (iv)
Deferred Shares, (v) Share Purchase Rights and/or (vi) Other Share-Based Awards.

         In particular, the Committee shall have the authority:

                  (i)      to select the officers and other key employees of the
         Company and its Subsidiaries and Affiliates to whom Awards may from
         time to time be granted hereunder;

                  (ii)     to determine whether and to what extent Awards, or
         any combination thereof, are to be granted hereunder to one or more
         eligible employees;

                  (iii)    to determine the number of shares to be covered by
         each such Award granted hereunder;

                  (iv)     to determine the terms and conditions, not
         inconsistent with the terms of the Plan, of any Award granted hereunder
         (including, but not limited to, the share price and any restriction or
         limitation, or any vesting acceleration or waiver of forfeiture
         restrictions regarding any Share Option or other Award and/or the
         Shares relating thereto, based in each case on such factors as the
         Committee shall determine, in its sole discretion);

                  (v)      to determine whether and under what circumstances a
         Share Option may be settled in cash, Restricted Shares and/or Deferred
         Shares under Section 5(k) or (l), as applicable, instead of Shares that
         are neither Restricted Shares nor Deferred Shares;

                  (vi)     to determine whether, to what extent and under what
         circumstances Option grants and/or other Awards under the Plan and/or
         other cash awards made by the Company are to be made, and operate, on a
         tandem basis vis-a-vis other Awards under the Plan and/or cash awards
         made outside of the Plan, or on an additive basis;

                  (vii)    to determine whether, to what extent and under what
         circumstances Shares and other amounts payable with respect to an Award
         under this Plan shall be deferred either automatically or at the
         election of the participant (including providing for and determining
         the amount (if any) of any deemed earnings on any deferred amount
         during any deferral period); and

                  (viii)   to determine the terms and restrictions applicable to
         Share Purchase Rights and the Shares purchased by exercising such
         rights.

         The Committee shall have the authority to adopt, alter and repeal such
rules (subject to the provision of Section 14 below), guidelines and practices
governing the Plan as it shall, from time to time, deem advisable; to interpret
the terms and provisions of the Plan and any Award

                                       4

<PAGE>

issued under the Plan (and any agreements relating thereto); and to otherwise
supervise the administration of the Plan.

         All decisions made by the Committee pursuant to the provisions of the
Plan shall be made in the Committee's sole discretion and shall be final and
binding on all persons, including the Company and Plan participants.

         SECTION 3. SHARES SUBJECT TO PLAN.

         The total number of Shares reserved and available for distribution
under the Plan shall be 1,500,000 shares (on a post-May 2001 reverse stock split
basis). Such Shares may consist, in whole or in part, of authorized and unissued
Shares or treasury Shares.

         Subject to Section 6(b)(iv) below, if any Shares that have been
optioned cease to be subject to a Share Option, or if any such Shares that are
subject to any Restricted Shares or Deferred Shares Award, Share Purchase Right
or Other Share-Based Award granted hereunder are forfeited or any such Award
otherwise terminates without a payment being made to the participant in the form
of Shares, such Shares shall again be available for distribution in connection
with future Awards under the Plan.

         In the event of any merger, reorganization, consolidation,
recapitalization, Share dividend, Share split or other change in corporate
structure affecting the Shares, an adjustment shall be made in the aggregate
number of Shares reserved for issuance under the Plan, in the number and option
price of Shares subject to outstanding Options granted under the Plan, in the
number and purchase price of Shares subject to outstanding Share Purchase Rights
under the Plan, and in the number of Shares subject to other outstanding Awards
granted under the Plan as may be determined to be appropriate by the Committee,
in its sole discretion, provided that the number of Shares subject to any Award
shall always be a whole number. Such adjusted option price shall also be used to
determine the amount payable by the Company upon the exercise of any Share
Appreciation Right associated with any Share Option.

         SECTION 4. ELIGIBILITY.

         The Chairman of the Board, all officers and other key employees of the
Company and its Subsidiaries and Affiliates (but excluding members of the
Committee) who are responsible for or contribute to the management, growth
and/or profitability of the business of the Company and/or its Subsidiaries and
Affiliates are eligible to be granted Awards under the Plan; provided, however,
that the Chairman of the Board shall not be eligible to receive Incentive
Options hereunder. Except as provided in the preceding sentence, any reference
herein to "employees" and their employment by the Company shall be deemed to
include the Chairman of the Board and his service as a director of the Company,
unless otherwise determined by the Committee. Without limiting the generality of
the foregoing, the Committee shall have the full authority to interpret the
provisions of the Plan as they may apply (or may not apply) to the Chairman of
the Board, and any determination by the Committee in this regard shall be final
and conclusive.

                                       5

<PAGE>

         SECTION 5. SHARE OPTIONS.

         Share Options may be granted alone, in addition to or in tandem with
other Awards granted under the Plan and/or cash awards made outside of the Plan.
Any Share Option granted under the Plan shall be in such form as the Committee
may from time to time approve.

         Share Options granted under the Plan may be of two types: (i) Incentive
Options and (ii) Non-Qualified Options.

         The Committee shall have the authority to grant to any optionee
Incentive Options, Non-Qualified Options, or both types of Share Options (in
each case with or without Share Appreciation Rights).

         Options granted under the Plan shall be subject to the following terms
and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:

         (a)      Option Price. The option price per Share purchasable under a
Share Option shall be determined by the Committee at the time of grant, but
shall be not less than 100% of the Fair Market Value of the Shares at the time
of the grant.

         (b)      Option Term. The term of each Share Option shall be fixed by
the Committee, but no Share Option shall be exercisable more than ten years
after the date the Option is granted.

         (c)      Exercisability. Share Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be determined by
the Committee at or after grant; provided, however, that, except as provided in
Section 5(f) and (g) and Section 11 below, unless otherwise determined by the
Committee at or after grant, no Share Option shall be exercisable prior to the
later of (i) the first anniversary date of the granting of the Option, or (ii)
the second anniversary date of employment of the employee by the Company. If the
Committee provides, in its sole discretion, that any Share Option is exercisable
only in installments, the Committee may waive such installment exercise
provisions at any time at or after grant in whole or in part, based on such
factors as the Committee shall determine, in its sole discretion.
Notwithstanding any provision of this Section 5(c), the Board may authorize the
grant of a Share Option, all or a portion of which is immediately exercisable
upon the date of grant of such Share Option.

         (d)      Method of Exercise. Subject to whatever installment exercise
provisions apply under Section 5(c), Share Options may be exercised in whole or
in part at any time during the option period, by giving written notice of
exercise to the Company specifying the number of Shares to be purchased.

         Such notice shall be accompanied by payment in full of the purchase
price, either by check, note or such other instrument as the Committee may
accept. As determined by the Committee, in its sole discretion, at or after
grant, payment in full or in part may also be made in the form of a Share Option
or unrestricted Shares already owned by the optionee or, in the case

                                       6

<PAGE>

of the exercise of a Non-Qualified Option, Restricted Shares or Deferred Shares
subject to an Award hereunder (based, in each case, on the Fair Market Value of
the Share Option or the Shares on the date the option is exercised, as
determined by the Committee).

         If payment of the option exercise price of a Non-Qualified Option is
made in whole or in part in the form of Restricted Shares or Deferred Shares,
such Restricted Shares or Deferred Shares (and any replacement Shares relating
thereto) shall remain (or be) restricted or deferred, as the case may be, in
accordance with the original terms of the Restricted Shares Award or Deferred
Shares Award in question, and any additional Shares received upon the exercise
shall be subject to the same forfeiture restrictions or deferral limitations,
unless otherwise determined by the Committee, in its sole discretion, at or
after grant.

         No Shares shall be issued until full payment therefor has been made. An
optionee shall generally have the rights to dividends or other rights of a
shareholder with respect to Shares subject to the Option when the optionee has
given written notice of exercise, has paid in full for such Shares, and, if
requested, has given the representation described in Section 14(a).

         (e)      Transferability of Options. Incentive Options shall be
transferable by the optionee only by will or by the laws of descent and shall be
exercisable, during the optionee's lifetime, only by the optionee. Non-Qualified
Options shall be transferable by the optionee by will or by the laws of descent
or to (i) the spouse, children or grandchildren of the optionee ("Immediate
Family Members"), (ii) a trust or trusts for the exclusive benefit of such
Immediate Family Members, (iii) a partnership in which such Immediate Family
Members are the only partners, or (iv) one or more entities in which the
optionee has a 10% or greater equity interest, provided that (y) the Share
option agreement pursuant to which such Non-Qualified Options are granted must
be approved by the Committee, and (z) subsequent transfers of transferred
Non-Qualified Options shall be prohibited except those in accordance with this
subparagraph (e). Following transfer, any such Non-Qualified Options shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, provided that for purposes of this Plan or the
option agreement executed pursuant hereto, the term "optionee" shall be deemed
to refer to the transferee.

         (f)      Termination by Death.

                  (i)      With respect to Share Options granted prior to
         December 13, 2001, subject to Section 5(j), if an optionee's employment
         by the Company and any Subsidiary or Affiliate terminates by reason of
         death, any Share Option held by such optionee may thereafter be
         exercised, to the extent such option was exercisable at the time of
         death or on such accelerated basis as the Committee may determine at or
         after grant (or as may be determined in accordance with procedures
         established by the Committee), by the legal representative of the
         estate or by the legatee of the optionee under the will of the
         optionee, for a period of one year (or such other period as the
         Committee may specify at grant) from the date of such death or until
         the expiration of the stated term of such Share Option, whichever
         period is the shorter.

                                       7

<PAGE>

                  (ii)     With respect to Share Options granted on or following
         December 13, 2001, subject to Section 5(j), if an optionee's employment
         by the Company and any Subsidiary or Affiliate terminates by reason of
         death, any Share Option held by such optionee (whether or not then
         exercisable) may thereafter be exercised by the legal representative of
         the estate or by the legatee of the optionee under the will of the
         optionee for the stated term of such Share Option.

         (g)      Termination by Reason of Disability.

                  (i)      With respect to Share Options granted prior to
         December 13, 2001, subject to Section 5(j), if an optionee's employment
         by the Company and any Subsidiary or Affiliate terminates by reason of
         Disability, any Share Option held by such optionee may thereafter be
         exercised by the optionee, to the extent it was exercisable at the time
         of termination or on such accelerated basis as the Committee may
         determine at or after grant (or as may be determined in accordance with
         procedures established by the Committee), for a period of three years
         (or such other period as the Committee may specify at grant) from the
         date of such termination of employment or until the expiration of the
         stated term of such Share Option, whichever period is the shorter;
         provided, however, that, if the optionee dies within such three-year
         period (or such other period as the Committee shall specify at grant),
         any unexercised Share Option held by such optionee shall thereafter be
         exercisable to the extent to which it was exercisable at the time of
         death for a period of one year from the date of such death or until the
         expiration of the stated term of such Share Option, whichever period is
         the shorter. In the event of termination of employment by reason of
         Disability, if an Incentive Option is exercised after the expiration of
         the exercise periods that apply for purposes of Section 422 of the
         Code, such Share Option will thereafter be treated as a Non-Qualified
         Option.

                  (ii)     With respect to Share Options granted on or following
         December 13, 2001, subject to Section 5(j), if an optionee's employment
         by the Company and any Subsidiary or Affiliate terminates by reason of
         Disability, any Share Option held by such optionee (whether or not then
         exercisable) may thereafter be exercised by the optionee (or, in the
         event of the optionee's death prior to the expiration of the stated
         term of such Share Option, by the legal representative of the
         optionee's estate or by the legatee under the will of the optionee) for
         the stated term of such Share Option. In the event of termination of
         employment by reason of Disability, if an Incentive Option is exercised
         after the expiration of the exercise periods that apply for purposes of
         Section 422 of the Code, such Share Option will thereafter be treated
         as a Non-Qualified Option.

         (h)      Termination by Reason of Retirement.

                  (i)      With respect to Share Options granted prior to
         December 13, 2001, subject to Section 5(j), if an optionee's employment
         by the Company and any Subsidiary or Affiliate terminates by reason of
         Normal or early Retirement, any Share Option held by such optionee may
         thereafter be exercised by the optionee, to the extent it was
         exercisable at the time of such Retirement or on such accelerated basis
         as the Committee

                                       8

<PAGE>

         may determine at or after grant (or as may be determined in accordance
         with procedures established by the Committee), for a period of three
         years (or such other period as the Committee may specify at grant) from
         the date of such termination of employment or the expiration of the
         stated term of such Share Option, whichever period is the shorter;
         provided, however, that, if the optionee dies within such three-year
         period (or such other period as the Committee may specify at grant),
         any unexercised Share Option held by such optionee shall thereafter be
         exercisable, to the extent to which it was exercisable at the time of
         death, for a period of one year from the date of such death or until
         the expiration of the stated term of such Share Option, whichever
         period is the shorter. In the event of termination of employment by
         reason of Retirement, if an Incentive Option is exercised after the
         expiration of the exercise periods that apply for purposes of Section
         422 of the Code, the Option will thereafter be treated as a
         Non-Qualified Option.

                  (ii)     With respect to Share Options granted on or following
         December 13, 2001, subject to Section 5(j), if an optionee's employment
         by the Company and any Subsidiary or Affiliate terminates by reason of
         Normal or Early Retirement, any Share Option held by such optionee
         (whether or not then exercisable) may thereafter be exercised by the
         optionee (or, in the event of the optionee's death prior to the
         expiration of the stated term of such Share Option, by the legal
         representative of the optionee's estate or by the legatee under the
         will of the optionee) for the stated term of such Share Option. In the
         event of termination of employment by reason of Retirement, if an
         Incentive Option is exercised after the expiration of the exercise
         periods that apply for purposes of Section 422 of the Code, the Option
         will thereafter be treated as a Non-Qualified Option.

         (i)      Other Termination. Unless otherwise determined by the
Committee (or pursuant to procedures established by the Committee) at or after
grant, if an optionee's employment by the Company and any Subsidiary or
Affiliate terminates for any reason other than death, Disability or Normal or
Early Retirement, the Share Option shall thereupon terminate.

         (j)      Incentive Options. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Options shall be
interpreted, amended or altered, nor shall any discretion or authority granted
under the Plan be so exercised, so as to disqualify the Plan under Section 422
of the Code, or, without the consent of the optionee(s) affected, to disqualify
any Incentive Option under such Section 422.

         If an Incentive Option granted under this Plan is first exercisable in
any calendar year to obtain Shares having a fair market value (determined at the
time of grant) in excess of $100,000, the option is treated as an Incentive
Option for Shares having a fair market value (determined at the time of grant)
equal to $100,000 and as a Non-Qualified Option for the remaining Shares. In
making this determination, the rules specified in Section 422(d) of the Code
shall be determinative, including the aggregate of all Incentive Options which
are first exercisable in that calendar year under any plan of the Company.

                                       9

<PAGE>

         To the extent permitted under Section 422 of the Code or the applicable
regulations thereunder or any applicable Internal Revenue Service pronouncement:

                  (i)      if (x) a participant's employment is terminated by
         reason of death, Disability or Retirement and (y) the portion of any
         Incentive Option that is otherwise exercisable during the
         post-termination period specified under Section 5(f), (g) or (h),
         applied without regard to the $100,000 limitation contained in Section
         422(b)(7) of the Code, is greater than the portion of such option that
         is immediately exercisable as an "Incentive Stock Option" during such
         post-termination period under Section 422, such excess shall be treated
         as a Non-Qualified Option; and

                  (ii)     if the exercise of an Incentive Option is accelerated
         by reason of a Change in Control, any portion of such option that is
         not exercisable as an Incentive Option by reason of the $100,000
         limitation contained in Section 422(b)(7) of the Code shall be treated
         as a Non-Qualified Option.

                  An employee who owns Shares representing more than ten percent
         (10%) of the total combined voting power of all classes of shares of
         the Company shall not be eligible to receive an Incentive Option.

         (k)      Buyout Provisions. The Committee may at any time offer to buy
out for a payment in cash, Shares, Deferred Shares or Restricted Shares an
Option previously granted, based on such terms and conditions as the Committee
shall establish and communicate to the optionee at the time that such offer is
made.

         (l)      Settlement Provisions. If the option agreement so provides at
grant or is amended after grant and prior to exercise to so provide (with the
optionee's consent), the Committee may require that all or part of the Shares to
be issued with respect to the spread value of an exercised Option take the form
of Deferred or Restricted Shares, which shall be valued on the date of exercise
on the basis of the Fair Market Value (as determined by the Committee) of such
Deferred or Restricted Shares determined without regard to the deferral
limitations and/or forfeiture restrictions involved.

         SECTION 6. SHARE APPRECIATION RIGHTS.

         (a)      Grant and Exercise. Share Appreciation Rights may be granted
either alone, in addition to or in conjunction with other Awards granted under
the Plan.

         A Share Appreciation Right may be exercised by a right holder, subject
to Section 6(b), in accordance with the procedures established by the Committee
for such purpose. Upon such exercise, the right holder shall be entitled to
receive an amount determined in the manner prescribed in Section 6(b).

                                       10

<PAGE>

         (b)      Terms and Conditions. Share Appreciation Rights shall be
subject to such terms and conditions, not inconsistent with the provisions of
the Plan, as shall be determined from time to time by the Committee, including
the following:

                  (i)      Share Appreciation Rights shall be exercisable at
         such time or times and subject to such terms and conditions as shall be
         determined by the Committee at or after grant; provided, however, that,
         except as provided in Section 6(b)(iv) and (v) and Section 11 below,
         unless otherwise determined by the Committee at or after grant, no
         Share Appreciation Right shall be exercisable prior to the later of (i)
         the first anniversary date of the granting of the Share Appreciation
         Right, or (ii) the second anniversary date of employment of the
         employee by the Company. The exercise of Share Appreciation Rights held
         by right holders who are subject to Section 16(b) of the Exchange Act
         shall comply with Rule 16b-3 thereunder, to the extent applicable.

                  (ii)     Upon the exercise of a Share Appreciation Right, a
         right holder shall be entitled to receive an amount in cash (or, if
         expressly provided in the Award agreement, an amount in cash and/or
         Shares) equal in value to the excess of the Fair Market Value of one
         Share over the price per Share specified in the Award agreement
         multiplied by the number of Shares in respect of which the Share
         Appreciation Right shall have been exercised. The amount of cash and,
         if applicable, the number of Shares to be paid shall be calculated on
         the basis of the Fair Market Value of the Shares on the date of
         exercise.

                  (iii)    Share Appreciation Rights shall be transferable by
         the right holder by will or by the laws of descent or to (A) the
         Immediate Family Members of the right holder, (B) a trust or trusts for
         the exclusive benefit of such Immediate Family Members, (C) a
         partnership in which such Immediate Family Members are the only
         partners, or (D) one or more entities in which the right holder has a
         10% or greater equity interest, provided that (y) the Award agreement
         pursuant to which such Share Appreciation Rights are granted must be
         approved by the Committee, and (z) subsequent transfers of transferred
         Share Appreciation Rights shall be prohibited except those in
         accordance with this subparagraph (iii). Following transfer, any such
         Share Appreciation Rights shall continue to be subject to the same
         terms and conditions as were applicable immediately prior to transfer,
         provided that for purposes of this Plan or the Award agreement executed
         pursuant hereto, the term "right holder" shall be deemed to refer to
         the transferee.

                  (iv)     Except as otherwise provided in the Award agreement,
         if a right holder's employment by the Company and any Subsidiary or
         Affiliate terminates by reason of death, any Share Appreciation Right
         held by such right holder may thereafter be exercised, to the extent
         such right was exercisable at the time of death or on such accelerated
         basis as the Committee may determine at or after grant (or as may be
         determined in accordance with procedures established by the Committee),
         by the legal representative of the estate or by the legatee of the
         right holder under the will of the right holder, for a period of one
         year (or such other period as the Committee may specify at grant) from
         the date of such death or until the expiration of the stated term of
         such Share Appreciation Right, whichever period is the shorter.

                                       11

<PAGE>

                  (v)      Except as otherwise provided in the Award agreement,
         if a right holder's employment by the Company and any Subsidiary or
         Affiliate terminates by reason of Disability, any Share Appreciation
         Right held by such right holder may thereafter be exercised by the
         right holder, to the extent it was exercisable at the time of
         termination or on such accelerated basis as the Committee may determine
         at or after grant (or as may be determined in accordance with
         procedures established by the Committee), for a period of three years
         (or such other period as the Committee may specify at grant) from the
         date of such termination of employment or until the expiration of the
         stated term of such Share Appreciation Right, whichever period is the
         shorter; provided, however, that, if the right holder dies within such
         three-year period (or such other period as the Committee shall specify
         at grant), any unexercised Share Appreciation Right held by such right
         holder shall thereafter be exercisable to the extent to which it was
         exercisable at the time of death for a period of one year from the date
         of such death or until the expiration of the stated term of such Share
         Appreciation Right, whichever period is the shorter.

                  (vi)     Except as otherwise provided in the Award agreement,
         if a right holder's employment by the Company and any Subsidiary or
         Affiliate terminates by reason of Normal or Early Retirement, any Share
         Appreciation Right held by such right holder may thereafter be
         exercised by the right holder, to the extent it was exercisable at the
         time of such Retirement or on such accelerated basis as the Committee
         may determine at or after grant (or as may be determined in accordance
         with procedures established by the Committee), for a period of three
         years (or such other period as Committee may specify at grant) from the
         date of such termination of employment or the expiration of the stated
         term of such Share Appreciation Right, whichever period is the shorter;
         provided, however, that, if the right holder dies within such
         three-year period (or such other period as the Committee may specify at
         grant), any unexercised Share Appreciation Right held by such right
         holder shall thereafter be exercisable, to the extent to which it was
         exercisable at the time of death, for a period of one year from the
         date of such death or until the expiration of the stated term of such
         Share Appreciation Right, whichever period is the shorter.

                  (vii)    In its sole discretion, the Committee may grant
         "Limited" Share Appreciation Rights under this Section 6, i.e., Share
         Appreciation Rights that become exercisable only in the event of a
         Change in Control and/or a Potential Change in Control, subject to such
         terms and conditions as the Committee may specify at grant. Such
         Limited Share Appreciation Rights shall be settled solely in cash.

                  (viii)   The Committee, in its sole discretion, may also
         provide that, in the event of a Change in Control and/or a Potential
         Change in Control, the amount to be paid upon the exercise of a Share
         Appreciation Right or Limited Share Appreciation Right shall be based
         on the Change in Control Price, subject to such terms and conditions as
         the Committee may specify at grant.

                                       12

<PAGE>

         SECTION 7. RESTRICTED SHARES.

         (a)      Administration. Restricted Shares may be issued either alone,
in addition to or in tandem with other Awards granted under the Plan and/or cash
awards made outside the Plan. The Committee shall determine the eligible persons
to whom, and the time or times at which, grants of Restricted Shares will be
made, the number of Shares to be awarded, the price (if any) to be paid by the
recipient of Restricted Shares (subject to Section 7(b)), the time or times
within which such Awards may be subject to forfeiture, and all other terms and
conditions of the Awards; provided, however, that no grant of Restricted Shares
shall vest in full prior to the third (3rd) anniversary of the date of such
grant.

         The Committee may condition the grant of Restricted Shares upon the
attainment of specified performance goals or such other factors as the Committee
may determine, in its sole discretion.

         The provisions of Restricted Shares Awards need not be the same with
respect to each recipient.

         (b)      Awards and Certificates. The prospective recipient of a
Restricted Shares Award shall not have any rights with respect to such Award,
unless and until such recipient has executed an agreement evidencing the Award
and has delivered a fully executed copy thereof to the Company, and has
otherwise complied with the applicable terms and conditions of such Award.

                  (i)      The purchase price for Restricted Shares shall be
         equal to or less than their par value and may be zero.

                  (ii)     Awards of Restricted Shares must be accepted within a
         period of 60 days (or such shorter period as the Committee may specify
         at grant) after the Award date, by executing a Restricted Shares Award
         agreement and paying whatever price (if any) is required under Section
         7(b)(i).

                  (iii)    Each participant receiving a Restricted Shares Award
         shall be issued a Share certificate in respect of such Restricted
         Shares. Such certificate shall be registered in the name of such
         participant, and shall bear an appropriate legend referring to the
         terms, conditions, and restrictions applicable to such Award.

                  (iv)     The Committee shall require that the share
         certificates evidencing such Shares be held in custody by the Company
         until the restrictions thereon shall have lapsed, and that, as a
         condition of any Restricted Shares Award, the participant shall have
         delivered a share power, endorsed in blank, relating to the Shares
         covered by such Award.

         (c)      Restrictions and Conditions. The Restricted Shares awarded
pursuant to this Section 7 shall be subject to the following restrictions and
conditions:

                                       13

<PAGE>

                  (i)      Subject to the provisions of this Plan and the Award
         agreement, during a period set by the Committee commencing with the
         date of such Award (the "Restriction Period"), the participant shall
         not be permitted to sell, transfer, pledge or assign Restricted Shares
         awarded under the Plan. Within these limits, the Committee, in its sole
         discretion, may provide for the lapse of such restrictions in
         installments and may accelerate or waive such restrictions in whole or
         in part, based on service, performance and/or such other factors or
         criteria as the Committee may determine, in its sole discretion.

                  (ii)     Except as provided in this paragraph (ii) and Section
         7(c)(i), the participant shall have, with respect to the Restricted
         Shares, all of the rights of a shareholder of the Company, including
         the right to vote the Restricted Shares, and the right to receive any
         cash dividends. The Committee, in its sole discretion, as determined at
         the time of Award, may permit or require the payment of cash dividends
         to be deferred and, if the Committee so determines, reinvested, subject
         to Section 16(e) below, in additional Restricted Shares to the extent
         Shares are available under Section 3, or otherwise reinvested. Pursuant
         to Section 3 above, Share dividends issued with respect to Restricted
         Shares shall be treated as additional Restricted Shares that are
         subject to the same restrictions and other terms and conditions that
         apply to the Shares with respect to which such dividends are issued.

                  (iii)    Subject to the applicable provisions of the Award
         agreement and this Section 7, upon termination of a participant's
         employment with the Company and any Subsidiary or Affiliate for any
         reason during the Restriction Period, all Restricted Shares still
         subject to restriction will vest, or be forfeited, in accordance with
         the terms and conditions established by the Committee at or after
         grant.

                  (iv)     If and when the Restriction Period expires without a
         prior forfeiture of the Restricted Shares, certificates for an
         appropriate number of unrestricted Shares shall be delivered to the
         participant promptly.

         (d)      Minimum Value Provisions. In order to better ensure that Award
payments actually reflect the performance of the Company and service of the
participant, the Committee may provide, in its sole discretion, for a tandem
performance-based or other Award designed to guarantee a minimum value, payable
in cash or Shares to the recipient of a Restricted Shares Award, subject to such
performance, future service, deferral and other terms and conditions as may be
specified by the Committee.

         SECTION 8. DEFERRED SHARES.

         (a)      Administration. Deferred Shares may be awarded either alone,
in addition to or in tandem with other Awards granted under the Plan and/or cash
awards made outside of the Plan. The Committee shall determine the eligible
persons to whom and the time or times at which Deferred Shares shall be awarded,
the number of Deferred Shares to be awarded to any person, the duration of the
period (the "Deferral Period") during which, and the conditions under which,

                                       14

<PAGE>

receipt of the Shares will be deferred, and the other terms and conditions of
the Award in addition to those set forth in Section 8(b).

         The Committee may condition the grant of Deferred Shares upon the
attainment of specified performance goals or such other factors or criteria as
the Committee shall determine, in its sole discretion.

         The provisions of Deferred Shares Awards need not be the same with
respect to each recipient.

         (b)      Terms and Conditions. The Deferred Shares awarded pursuant to
this Section 8 shall be subject to the following terms and conditions:

                  (i)      Subject to the provisions of this Plan and the Award
         agreement referred to in Section 8(b)(vi) below, Deferred Shares Awards
         may not be sold, assigned, transferred, pledged or otherwise encumbered
         during the Deferral Period. At the expiration of the Deferral Period
         (or the Elective Deferral Period referred to in Section 8(b)(v), where
         applicable), share certificates shall be delivered to the participant,
         or his legal representative, in a number equal to the Shares covered by
         the Deferred Shares Award.

                  (ii)     Unless otherwise determined by the Committee at
         grant, amounts equal to any dividends declared during the Deferral
         Period with respect to the number of Shares covered by a Deferred
         Shares Award will be paid to the participant currently, or deferred and
         deemed to be reinvested in additional Deferred Shares, or otherwise
         reinvested, all as determined at or after the time of the Award by the
         Committee, in its sole discretion.

                  (iii)    Subject to the provisions of the Award agreement and
         this Section 8, upon termination of a participant's employment with the
         Company and any Subsidiary or Affiliate for any reason during the
         Deferral Period for a given Award, the Deferred Shares in question will
         vest, or be forfeited, in accordance with the terms and conditions
         established by the Committee at or after grant.

                  (iv)     Based on service, performance and/or such other
         factors or criteria as the Committee may determine, the Committee may,
         at or after grant, accelerate the vesting of all or any part of any
         Deferred Shares Award and/or waive the deferral limitations for all or
         any part of such Award.

                  (v)      A participant may elect to further defer receipt of
         an Award (or an installment of an Award) for a specified period or
         until a specified event (the "Elective Deferral Period"), subject in
         each case to the Committee's approval and to such terms as are
         determined by the Committee, all in its sole discretion. Subject to any
         exceptions adopted by the Committee, such election must generally be
         made at least 12 months prior to completion of the Deferral Period for
         such Deferred Shares Award (or such installment).

                                       15

<PAGE>

                  (vi)     Each Award shall be confirmed by, and subject to the
         terms of, a Deferred Shares agreement executed by the Company and the
         participant.

         (c)      Minimum Value Provisions. In order to better ensure that Award
payments actually reflect the performance of the Company and the service of the
participant, the Committee may provide, in its sole discretion, for a tandem
performance-based or other Award designed to guarantee a minimum value, payable
in cash or Shares to the recipient of a Deferred Shares Award, subject to such
performance, future service, deferral and other terms and conditions as may be
specified by the Committee.

         SECTION 9. SHARE PURCHASE RIGHTS.

         (a)      Awards and Administration. Subject to Section 3 above, the
Committee may grant eligible participants Share Purchase Rights which shall
enable such participants to purchase Shares (including Deferred Shares and
Restricted Shares) at its Fair Market Value on the date of grant.

         The Committee shall also impose such deferral, forfeiture and/or other
terms and conditions as it shall determine, in its sole discretion, on such
Share Purchase Rights or the exercise thereof.

         The terms of Share Purchase Rights Awards need not be the same with
respect to each participant.

         Each Share Purchase Right Award shall be confirmed by, and be subject
to the terms of, a Share Purchase rights agreement.

         (b)      Exercisability. Share Purchase Rights shall generally be
exercisable for such period after grant as is determined by the Committee not to
exceed 30 days. However, the Committee may provide, in its sole discretion, that
the Share Purchase Rights of persons potentially subject to Section 16(b) of the
Exchange Act shall not become exercisable until six months and one day after the
grant date, and shall then be exercisable for 10 trading days at the purchase
price specified by the Committee in accordance with Section 9(a).

         SECTION 10. OTHER SHARE-BASED AWARDS.

         (a)      Administration. Other Awards of Shares and other Awards that
are valued in whole or in part by reference to, or are otherwise based on,
Shares ("Other Share-Based Awards"), including, without limitation, performance
shares, convertible preferred stock, convertible debentures, exchangeable
securities and Share Awards or options may be granted either alone or in
addition to or in tandem with Share Options, Share Appreciation Rights,
Restricted Shares, Deferred Shares or Share Purchase Rights granted under the
Plan and/or cash awards made outside of the Plan.

                                       16

<PAGE>

         Subject to the provisions of the Plan, the Committee shall have
authority to determine the persons to whom and the time or times at which such
Awards shall be made, the number of Shares to be awarded pursuant to such
Awards, and all other conditions of the Awards. The Committee may also provide
for the grant of Shares upon the completion of a specified performance period.

         The provisions of Other Share-Based Awards need not be the same with
respect to each recipient.

         (b)      Terms and Conditions. Other Share-Based Awards made pursuant
to this Section 10 shall be subject to the following terms and conditions:

                           (i) Subject to the provisions of this Plan and the
                  Award agreement referred to in Section 10(b)(v), Shares
                  subject to Awards made under this Section 10 may not be sold,
                  assigned, transferred, pledged or otherwise encumbered prior
                  to the date on which the Shares are issued, or, if later, the
                  date on which any applicable restriction, performance or
                  deferral period lapses.

                           (ii) Subject to the provisions of this Plan and the
                  Award agreement and unless otherwise determined by the
                  Committee at grant, the recipient of an Award under this
                  Section 10 shall be entitled to receive, currently or on a
                  deferred basis, interest or dividends or interest or dividend
                  equivalents with respect to the number of Shares covered by
                  the Award, as determined at the time of the Award by the
                  Committee, in its sole discretion, and the Committee may
                  provide that such amounts (if any) shall be deemed to have
                  been reinvested in additional Shares or otherwise reinvested.

                           (iii) Any Award under Section 10 and any Shares
                  covered by any such Award shall vest or be forfeited to the
                  extent so provided in the Award agreement, as determined by
                  the Committee, in its sole discretion; provided, however, that
                  any Award based on a Restricted Share Award shall not vest in
                  full prior to the third anniversary of the date of grant.

                           (iv) In the event of the participant's Retirement,
                  Disability or death, or in cases of special circumstances, the
                  Committee may, in its sole discretion, waive in whole or in
                  part any or all of the remaining limitations imposed hereunder
                  (if any) with respect to any or all of an Award under this
                  Section 10.

                           (v) Each Award under this Section 10 shall be
                  confirmed by, and subject to the terms of, an agreement or
                  other instrument by the Company and by the participant.

                           (vi) Shares (including securities convertible into
                  Shares) issued on a bonus basis under this Section 10 may be
                  issued for no cash consideration. Shares (including securities
                  convertible into Shares) purchased pursuant to a purchase

                                       17

<PAGE>

                  right awarded under this Section 10 shall be priced at the
                  Fair Market Value of the Shares on the date of grant.

         SECTION 11. CHANGE IN CONTROL PROVISIONS.

         (a)      Impact of Event. In the event of:

         (1)      a "Change in Control" as defined in Section 11(b), or

         (2)      a "Potential Change in Control" as defined in section 11(c),
but only if and to the extent so determined by the Committee or the Board at or
after grant (subject to any right of approval expressly reserved by the
Committee or the Board at the time of such determination), the following
acceleration and valuation provisions shall apply:

                  (i)      Any Share Appreciation Rights (including, without
         limitation, any Limited Share Appreciation Rights) outstanding for at
         least six months and any Share Option awarded under the Plan not
         previously exercisable and vested shall become fully exercisable and
         vested.

                  (ii)     The restrictions and deferral limitations applicable
         to any Restricted Shares, Deferred Shares, Share Purchase Rights and
         Other Share-Based Awards, in each case to the extent not already vested
         under the Plan, shall lapse and such Shares and Awards shall be deemed
         fully vested.

                  (iii)    The value of all outstanding Awards, in each case to
         the extent vested, shall, unless otherwise determined by the Committee
         in its sole discretion at or after grant but prior to any Change in
         Control, be cashed out on the basis of the "Change in Control Price" as
         defined in Section 11(d) as of the date such Change in Control or such
         Potential Change in Control is determined to have occurred or such
         other date as the Committee may determine prior to the Change in
         Control.

         (b)      Definition of "Change in Control". For purposes of Section
11(a), 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 Exchange Act, other than the Company or a
         wholly-owned subsidiary thereof or any employee benefit plan of the
         Company or any of its Subsidiaries, becomes the beneficial owner of the
         Company's securities having 20% 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

                                       18

<PAGE>

         power of the then outstanding securities of the Company or any
         successor corporation or entity entitled to vote generally in the
         election of the trustees 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 trustees of the Company at
         the beginning of any such period.

         (c)      Definition of Potential Change in Control. For purposes of
Section 11(a), a "Potential Change in Control" means the happening of any one of
the following:

                  (i)      The approval by shareholders of an agreement by the
         Company, the consummation of which would result in a Change in Control
         of the Company as defined in Section 11(b); or

                  (ii)     The acquisition of beneficial ownership, directly or
         indirectly, by any entity, person or group (other than the Company or a
         Subsidiary or any Company employee benefit plan (including any trustee
         of such plan acting as such trustee)) of securities of the Company
         representing 10% or more of the combined voting power of the Company's
         outstanding securities and the adoption by the Board of Directors of a
         resolution to the effect that a Potential Change in Control of the
         Company has occurred for purposes of this Plan.

         (d)      Definition of Change in Control Price. For purposes of this
Section 11, "Change in Control Price" means the highest price per share paid in
any transaction reported on the New York Stock Exchange or paid or offered in
any bona fide transaction related to a potential or actual Change in Control of
the Company at any time during the 60 day period immediately preceding the
occurrence of the Change in Control (or, where applicable, the occurrence of the
Potential Change in Control event), in each case as determined by the Committee
except that, in the case of Incentive Options and Share Appreciation Rights
relating to Incentive Options, such price shall be based only on transactions
reported for the date on which the optionee exercises such Share Appreciation
Rights (or Limited Share Appreciation Rights) or, where applicable, the date on
which a cashout occurs under Section 11(a)(2)(iii).

                                       19

<PAGE>

         SECTION 12. 1999 REIT ELECTION.

         Notwithstanding anything herein to the contrary, no provision in this
Plan shall be construed in a manner so as to adversely affect the Company's
ability to elect taxable status as a REIT (as contemplated by the Code) for its
1999 taxable year and any Award which shall be deemed to have such an adverse
effect shall be void ab initio.

         SECTION 13. REPRICING PROHIBITED.

         Except for adjustments made pursuant to Section 3 above,
notwithstanding any provision in this Plan to the contrary, unless approved by
the holders of a majority of the shares of the Company's capital stock present
and entitled to vote on the matter at a duly convened meeting of the Company's
stockholders (or by such other number as may be required by law or securities
exchange listing requirement applicable to the Company), an Award may not: (i)
be amended to reduce the option price (or the purchase price, as applicable) per
share of the Shares subject to the Award below the option price (or purchase
price) as of the date such Award is granted; or (ii) be granted in exchange for,
or in connection with, the cancellation or surrender of an Award having a higher
option price (or purchase price) or less favorable vesting schedule.

         SECTION 14. TERMINATION AND AMENDMENTS.

         Unless suspended or terminated sooner by action of the Committee, no
Awards may be granted under this Plan after April 21, 2007 (i.e., the tenth
(10th) anniversary of the Effective Date (as hereinafter defined) of the Plan).
This Plan may be suspended or terminated at any time by the Board. Rights and
obligations under any Award granted while the Plan is in effect shall not be
impaired by suspension or termination of the Plan except with the consent of the
person to whom the Award was granted.

         The Board at any time, and from time to time, may amend the Plan.
However, (i) except as provided in Section 3 above relating to adjustments upon
changes in stock, no amendment with respect to a material revision to the Plan
or where stockholder approval is necessary for the Plan to satisfy the
requirements of Section 422 of the Code, Rule 16b-3 promulgated under the
Exchange Act or any securities exchange listing requirements applicable to the
Company shall be effective unless approved by the holders of a majority of the
shares of the Company's capital stock present and entitled to vote on the matter
at a duly convened meeting of the Company's stockholders (or by such other
number as may be required by law or securities exchange listing requirement
applicable to the Company). For the purpose of the foregoing, a material
revision shall be deemed to include (but shall not be limited to): (i) a
material increase in the number of Shares subject to the Plan under Section 3;
(ii) an expansion of the types of Awards under the Plan; (iii) a material
expansion of the class of employees eligible to participate in the Plan; (iv) a
material extension of the term of the Plan; (v) a material change to the method
of determining the option price under the Plan; and (vi) an amendment to Section
13 of the Plan. A material revision shall not include any revision that
curtails, rather than expands, the scope of the Plan. The Board may in its sole
discretion submit any other amendment to the Plan for stockholder approval,
including, but not limited to, amendments to the Plan intended to satisfy the

                                       20

<PAGE>

requirements of Section 162(m) of the Code and the regulations thereunder
regarding the exclusion of performance-based compensation from the limit on
corporate deductibility of compensation paid to certain executive officers. It
is expressly contemplated that, subject to this Section 14, the Board may amend
the Plan in any respect the Board deems necessary or advisable to provide
eligible employees with the maximum benefits provided or to be provided under
the provisions of the Code and the regulations promulgated thereunder relating
to Incentive Options and/or to bring the Plan and/or Incentive Options granted
under it into compliance therewith. Rights and obligations under any Award
granted before amendment of the Plan shall not be impaired by any amendment of
the Plan unless (i) the Company requests the consent of the person to whom the
Award was granted and (ii) such person consents in writing. The Committee at any
time, and from time to time, may amend the terms of any one or more Awards;
provided, however, that the rights and obligations under any Award shall not be
impaired by any such amendment unless (i) the Company requests the consent of
the person to whom the Award was granted, and (ii) such person consents in
writing.

         SECTION 15. UNFUNDED STATUS OF PLAN.

         The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Shares or payments in lieu of or with respect to Awards
hereunder; provided, however, that, unless the Committee otherwise determines
with the consent of the affected participant, the existence of such trusts or
other arrangements is consistent with the "unfunded" status of the Plan.

         SECTION 16. GENERAL PROVISIONS.

         (a)      The Committee may require each person purchasing Shares
pursuant to a Share Option or other Award under the Plan to represent to and
agree with the Company in writing that the optionee or participant is acquiring
the Shares without a view to distribution thereof. The certificates for such
Shares may include any legend which the Committee deems appropriate to reflect
any restrictions on transfer.

         All certificates for Shares or other securities delivered under the
Plan shall be subject to such stock-transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Shares are then listed, and any applicable Federal or state securities
law, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.

         (b)      Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is

                                       21

<PAGE>

required; and such arrangements may be either generally applicable or applicable
only in specific cases.

         (c)      The adoption of the Plan shall not confer upon any employee of
the Company or any Subsidiary or Affiliate any right to continued employment
with the Company or a Subsidiary or Affiliate, as the case may be, nor shall it
interfere in any way with the right of the Company or a Subsidiary or Affiliate
to terminate the employment of any of its employees at any time.

         (d)      No later than the date as of which an amount first becomes
includable in the gross income of the participant for Federal income tax
purposes with respect to any Award under the Plan, the participant shall pay to
the Company, or make arrangements satisfactory to the Committee regarding the
payment of, any Federal, state, or local taxes of any kind required by law to be
withheld with respect to such amount. Unless otherwise determined by the
Committee, withholding obligations may be settled with Shares, including Shares
that are part of the Award that gives rise to the withholding requirement. The
obligations of the Company under the Plan shall be conditional on such payment
or arrangements and the Company and its Subsidiaries or Affiliates shall, to the
extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the participant.

         (e)      The actual or deemed reinvestment of dividends or dividend
equivalents in additional Restricted Shares (or in Deferred Shares or other
types of Plan Awards) at the time of any dividend payment shall only be
permissible if sufficient Shares are available under Section 3 above for such
reinvestment (taking into account then outstanding Share Options, Share Purchase
Rights and other Plan Awards).

         (f)      The Plan and all Awards made and actions taken thereunder
shall be governed by and construed in accordance with the laws of the State of
Maryland.

         SECTION 17. EFFECTIVE DATE OF PLAN.

         The original effective date of the Plan was April 21, 1997 (the
"Effective Date"). The Plan set forth herein constitutes an amendment and
restatement of the Corrections Corporation of America 1997 Employee Share
Incentive Plan, as previously adopted by the Board and the stockholders of the
Company and/or its predecessor, as the case may be and shall supercede and
replace in its entirety the previously adopted plan and all amendments thereto.
The amended and restated Plan became effective February 18, 2004.

         SECTION 18. RESTRICTIONS ON TRANSFER.

         Awards of derivative securities (as defined in Rule 16a-1(c) under the
Exchange Act or any successor definition adopted by the Securities and Exchange
Commission) granted under the Plan shall not be transferable except (a) by will
or the laws of descent and distribution, or (b) as provided in Sections 5(e) and
6(b)(iii) of the Plan.

                                       22

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