Steven A. Davis

Amended and Restated Employment Agreement

Employment Agreement

First Amendment to Employment Agreement

Amended and Restated Change in Control Agreement

Change in Control Agreement


EX-10.3 3 l36813aexv10w3.htm EX-10.3

Exhibit 10.3

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     This Amended and Restated Employment Agreement (“Agreement”) is entered into as of June 18, 2009, by and between Bob Evans Farms, Inc., a Delaware corporation (the “Company”), and Steven A. Davis (the “Executive”).

     WHEREAS, the Company and the Executive previously entered into an employment agreement effective May 1, 2006, as amended effective December 24, 2008 (the “Prior Agreement”);

     WHEREAS, the Company believes it to be in its best interest to provide for continuity of management and to provide protection for its valuable trade secrets and confidential information;

     WHEREAS, the Board of Directors of the Company (the “Board”) and the Compensation Committee of the Board (the “Compensation Committee”) have determined that it is in the best interests of the Company to continue securing the services and employment of the Executive, and the Executive is willing to continue rendering such services on the terms and conditions set forth herein.

     NOW, THEREFORE, in consideration of the premises and the mutual terms and conditions hereof, the Company and the Executive hereby agree to amend and restate the Prior Agreement as follows:

     1. Employment. During the Term, (a) the Company agrees to employ the Executive and the Executive hereby accepts employment with the Company as the Company’s Chief Executive Officer upon the terms and conditions hereinafter set forth, and (b) the Board agrees to continue to nominate the Executive for election as a member of the Board and to recommend that the Company’s stockholders elect the Executive as a member of the Board at each meeting of the Company’s stockholders.

     2. Exclusive Services. During the Term, the Executive agrees (a) to serve as the Company’s Chief Executive Officer and to perform the services customarily performed by persons in similar executive capacities, (b) to discharge any other duties and responsibilities that the Board assigns, (c) if elected, to serve as an officer and/or director of any direct or indirect subsidiary of the Company, (d) to primarily perform his duties hereunder at the Company’s principal business offices, as such may be located from time to time, unless otherwise agreed in writing between the Board and the Executive, (e) except for periods of absence because of illness, vacations of reasonable duration and any leaves of absence approved by the Board to (i) devote his full attention and energies to promoting the Company’s business, (ii) fulfill the obligations described in this Agreement and (iii) exercise the highest degree of loyalty and the highest standards of conduct in the performance of his duties, and (f) in addition to the obligations described in Section 10, not to engage in any other business activity, whether or not for gain, profit or other pecuniary advantage, that does not involve promoting the Company’s business. However, the Executive may serve as a director of entities that are not related to the Company if that service (a) does not violate any term or condition of this Agreement, (b) does not injure the Company or any entity related to the Company, (c) is not prohibited by law or by rules adopted by the Company, and (d) is approved in advance by the Board.

 


 

     The restrictions described in this section will not be construed to prevent the Executive from (a) investing his personal assets in (i) businesses that do not compete or do business with the Company and do not require the Executive to perform any services connected with the operation or affairs of the businesses in which the investment is made or (ii) stocks or corporate securities described in Section 10 but subject to the limits described in that section, or (b) participating in, or serving as a trustee or director of, civic and charitable organizations or activities, but only if this activity does not interfere with the performance of his duties under this Agreement.

     3. Duties. The Executive shall perform the duties, undertake the responsibilities, and exercise the authority customarily performed, undertaken, and exercised by persons employed in a similar executive capacity. The Executive shall report to the Board.

     4. Term. Subject to earlier termination as hereinafter provided, this Agreement is effective as of May 1, 2009 (the “Effective Date” and shall have a term of five (5) years commencing as of the Effective Date (the “Term”). The Term may be extended or renewed only by written agreement signed by the Executive and an expressly authorized representative of the Board.

     5. Compensation.

          a. As compensation for his services rendered under this Agreement, the Executive shall be entitled to receive the following in addition to any discretionary awards that the Compensation Committee determines in its sole discretion from time to time:

               i. Base Salary. The Executive shall be paid an initial base salary of $770,000.00 for the first fiscal year of the Term. Thereafter, the base salary shall be determined by the Compensation Committee in its sole discretion on an annual basis (“Base Salary”) during the Term of this Agreement, payable in 26 equal bi-weekly installments or, if different, the Company’s regular payroll schedule, prorated for any partial employment month.

               ii. Annual Cash Bonus. The Executive shall be eligible for an annual cash bonus (“Bonus”) as may be determined and authorized in the sole discretion of the Compensation Committee based upon reasonable performance goals that the Compensation Committee establishes in good faith. Some or all of the Bonus may, in the sole discretion of the Compensation Committee, be subject to performance goals designed to comply with the performance-based compensation exception under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), or any successor rule or regulation. The Executive’s target Bonus opportunity shall be determined by the Compensation Committee in its sole discretion on an annual basis, except that the Executive’s target Bonus opportunity for any given year during the Term will not be less than 100% of his Base Salary unless the parties mutually agree to reduce the percentage as part of a negotiated restructuring of the Executive’s compensation.

               iii. Performance Incentive Plan. As may be determined and authorized from time to time in the sole discretion of the Compensation Committee, and subject to the terms and conditions of any equity compensation plans and award agreements governing the grant of equity awards, the Executive shall be eligible to participate in the Company’s

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Performance Incentive Plan or successor program (the “PIP”), with a targeted equity award (“TEA”) based upon a percentage of the Executive’s Base Salary. Per the terms of the PIP, after the end of each fiscal year, the Compensation Committee shall make an equity grant to the Executive, the value of which will be based on the Executive’s TEA. Any equity grants made pursuant to the PIP shall be dependent upon the achievement of performance goals, and the vesting and other terms and conditions of such equity grants shall be determined by the Compensation Committee in its sole discretion.

               iv. Long-Term Performance-Based Incentive Award. The Executive shall be entitled to receive a special long-term performance-based incentive award (the “Long-Term Performance-Based Incentive Award”) for the five-year performance period beginning on April 25, 2009 and ending on April 25, 2014 (the “Five-Year Performance Period”). The Long-Term Performance-Based Incentive Award shall be comprised of five individual grants of performance shares at the beginning of each fiscal year during the Five-Year Performance Period, the vesting of which will be based upon the attainment of both annual performance objectives as well as overall performance objectives for the Five-Year Performance Period. The terms and conditions of the Long-Term Performance-Based Incentive Award and the individual grants of performance shares comprising the Long-Term Performance-Based Incentive Award shall be substantially similar to the terms and conditions set forth in Appendices A (the CEO Long-Term Performance-Based Incentive Award Program — Conditions for the Five-Year Performance Period) and B (the CEO Long-Term Performance-Based Incentive Award Program — Fiscal Year Performance Share Award Agreement) hereto. The Company’s obligation to provide this Long-Term Performance-Based Incentive Award shall not extend to any renewal or amendment of this Agreement, unless expressly provided in such renewal or amendment.

     6. Benefits. In addition to the compensation to be paid to the Executive pursuant to Section 5 hereof, the Executive shall be entitled to receive the following benefits, subject to the Company continuing to sponsor and maintain such benefits for its senior executive officers and subject to any modification or amendment to the plans or policies governing such benefits:

          a. Participation in Employee Plans. In addition to the plans described in this Agreement, the Executive shall be entitled to participate in any health, disability, or grouplife insurance plan; any pension, retirement, or profit sharing plan; any executive bonus plan; and any other perquisites and fringe benefits, in which the Executive is eligible to participate and which may be extended from time to time to the Company’s senior executive officers.

          b. Non-Qualified Deferred Compensation Plans. In accordance with the terms contained therein, the Executive shall be eligible to participate in the Company’s Supplemental Executive Retirement Plan and the Company’s Executive Deferral Program.

          c. Vacation. The Executive shall be entitled to a minimum of four weeks vacation with full salary and benefits each fiscal year. Under current Company policy (which may be changed at the discretion of the Company) no cash or other payment will be due, however, for unused vacation and vacation may not be carried over from any fiscal year to the next. Upon any termination of the Executive’s employment, earned and unused vacation accrued

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in the fiscal year in which the termination occurs will be paid in accordance with the Company’s policy then in effect.

          d. Automobile. The Company shall provide the Executive with the use of an automobile or a monthly allowance in accordance with the Company’s automobile policy for officers, as approved by the Compensation Committee. If a monthly allowance is provided pursuant to this Section 6(d), such allowance shall be paid to the Executive in substantially equal bi-weekly installments or, if different, the Company’s regular payroll schedule, which will be not less than monthly installments.

     7. Reimbursement of Expenses.

          a. Business Expense Reimbursements. Subject to such rules and procedures as from time to time are specified by the Company and in accordance with the Company’s expense reimbursement policy (which may be changed at the discretion of the Company), the Company shall reimburse the Executive for reasonable business expenses necessarily incurred in the performance of his duties under this Agreement.

          b. Attorneys’ Fees. The Company agrees to pay directly to the Executive’s counsel or to reimburse the Executive for his legal fees incurred in connection with the negotiation and documentation of this Agreement, any additional amendments to this Agreement and any renewal or extension of this Agreement; subject to the approval of the Compensation Committee, whose approval shall not be unreasonably withheld. Any payment or reimbursement under this Section 7(b) shall be made no later than the 15th day of the third month following the later of (i) the end of the Executive’s taxable year during which the applicable fees are incurred or (ii) the end of the Company’s taxable year during which the applicable fees are incurred.

     8. Confidentiality/Trade Secrets. The Executive acknowledges that his position with the Company is one of the highest trust and confidence both by reason of his position and by reason of his access to and contact with the trade secrets and confidential and proprietary business information of the Company. Both during the Term of this Agreement and thereafter, the Executive covenants and agrees as follows:

          a. He shall use his best efforts and exercise reasonable diligence to protect and safeguard the trade secrets and confidential and proprietary information of the Company, including but not limited to financial information, the identity of its customers and suppliers, its arrangements with customers and suppliers, and its technical and financial data, records, compilations of information, processes, recipes and specifications relating to its customers, suppliers, products and services;

          b. He shall not disclose any of such trade secrets and confidential and proprietary information, except as may be required in the course of his employment with the Company or by law; and

          c. He shall not use, directly or indirectly, for his own benefit or for the benefit of another, any of such trade secrets and confidential and proprietary information.

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     All files, records, documents, drawings, specifications, memoranda, notes, or other documents relating to the business of the Company, in whatever form, format or medium, whether prepared by the Executive or otherwise coming into his possession, shall be the exclusive property of the Company and shall be delivered to the Company and not retained by the Executive upon termination of his employment for any reason whatsoever or at any other time upon request of the Board, or, at the option of the Company, he may destroy all such material and certify such destruction in writing to the Company within ten (10) days following the termination of his employment or such request by the Company.

     9. Discoveries. The Executive covenants and agrees that he will fully inform the Company of and disclose to the Company all inventions, designs, improvements, discoveries, and processes (“Discoveries”) that he has now or may hereafter have during his employment with the Company and that pertain or relate to the business of the Company or to any experimental work, products, services, or processes of the Company in progress or planned for the future, whether conceived by the Executive alone or with others, and whether or not conceived during regular working hours or in conjunction with the use of any Company assets. All such Discoveries shall be the exclusive property of the Company whether or not patent or trademark applications are filed thereon. The Executive shall assist the Company, at any time during or after his employment, in obtaining patents and other intellectual property protection on all such Discoveries deemed patentable or otherwise protectable by the Company and shall execute all documents and do all things necessary to obtain letters patent, vest the Company with full and exclusive title thereto, and protect the same against infringement by others, all at the expense of the Company. If such assistance takes place after his employment is terminated, the Executive shall be paid by the Company for any time actually spent in rendering such assistance at the request of the Company at an hourly rate equivalent to fifty percent (50%) of the Executive’s Base Salary as in effect on the date of termination of his employment divided by 2500.

     10. Non-Competition. The Executive covenants and agrees that during the period of his employment, and for a period of two (2) years following the effective date of the termination of his employment for any reason, he shall not, without the prior written consent of the Board, directly or indirectly, as an employee, employer, consultant, agent, principal, partner, shareholder, officer, director, member, manager or through any other kind of ownership (other than ownership of securities of publicly held corporations of which the Executive owns less than three percent 3% of any class of outstanding securities), membership, affiliation, association, or in any other representative or individual capacity, engage in or render, or agree to engage in or render, any services to any Competing Business. For purposes of this Agreement, “Competing Business” shall mean any business in North America that (a) is engaged in the family or casual dining restaurant industry; (b) offers products that compete with products offered by the Company or any of its affiliates; (c) offers products that compete with products the Company or its affiliates have taken substantial steps toward launching during the Executive’s employment with the Company; or (d) is engaged in a line of business that competes with any line of business that the Company or its affiliates enter into, or have taken substantial steps to enter into, during the Executive’s employment with the Company. During the two-year period following the Executive’s separation from employment with the Company, the Executive may request, in writing, the approval of the Board to provide services to a Competing Business in a capacity that is unrelated to the business and products of the Company and its affiliates and that will not result

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in the unauthorized use or disclosure of trade secrets and confidential information to which the Executive had access by virtue of his employment with the Company. The Executive agrees to provide any information the Board deems necessary to make this determination, and the Board shall not unreasonably withhold its approval.

     11. Non-Solicitation. The Executive agrees that during the period of his employment, and for a period of two (2) years following the effective date of the termination of the Executive’s employment for any reason, he will not, either directly or indirectly, for himself or for any third party, except as otherwise agreed to in writing by the Board, employ or hire any other person who is then employed by the Company, or solicit, induce, recruit, or cause any other person who is then employed by the Company to terminate his/her employment for the purpose of joining, associating, or becoming employed with any other business or activity.

     12. Cooperation.

          a. The Executive agrees that during the period of his employment he will consult with, supply information to, and otherwise cooperate with the Company or any of its affiliates after having been requested to do so.

          b. Both during the Term of this Agreement and thereafter, the Executive covenants and agrees that he will not disparage the Company or any of its affiliates.

     13. Remedies for Breach of Covenants of the Executive.

          a. The Company and the Executive specifically acknowledge and agree that the foregoing covenants of the Executive in Sections 8, 9, 10, 11 and 12 are reasonable in content and scope and are given by the Executive for adequate consideration. The Company and the Executive further acknowledge and agree that if any court of competent jurisdiction or other appropriate authority disagrees with the parties’ foregoing agreement as to reasonableness, then such court or other authority shall reform or otherwise amend the foregoing covenants to the extent permitted by law and in accordance with Section 19(b).

          b. The covenants set forth in Sections 8 and 12(b) of this Agreement shall continue to be binding upon the Executive notwithstanding the termination of his employment with the Company for any reason whatsoever, and the covenants set forth in Sections 9, 10 and 11 of this Agreement shall continue to be binding upon the Executive following the termination of his employment with the Company for any reason whatsoever as provided therein. Such covenants shall be deemed and construed as separate agreements independent of any other provisions of this Agreement and any other agreement between the Company and the Executive. The existence of any claim or cause of action by the Executive against the Company, unless predicated on this Agreement, shall not constitute a defense to the enforcement by the Company of any or all such covenants. It is expressly agreed that the remedy at law for the breach of any such covenant is inadequate and injunctive relief and specific performance shall be available to prevent the breach, or any threatened breach, thereof.

     14. Termination of Employment. Any reference to the Executive’s “Separation from Service” or “Separate from Service” shall have the same meaning as provided in Treasury Regulation section 1.409A-1(h). The Executive’s employment with the Company may be terminated as follows:

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          a. Death of the Executive. The Executive’s employment hereunder will terminate upon his death, and the Executive’s beneficiary (as designated by the Executive in writing with the Company prior to his death) will be entitled to the following payments and benefits:

               i. Any Base Salary that is accrued but unpaid, the value of any vacation that is accrued but unused (determined by dividing Base Salary by 365 and multiplying such amount by the number of unused vacation days), and any business expenses that are unreimbursed — all, as of the date of termination of employment; and

               ii. Any rights and benefits (if any) provided under plans and programs of the Company in which the Executive was participating immediately prior to his death, determined in accordance with the applicable terms and provisions of such plans and programs.

     In the absence of a beneficiary designation by the Executive, or if the Executive’s designated beneficiary does not survive him, payments and benefits described in this subparagraph will be paid to the Executive’s estate. All payments due under Section 14(a)(i) shall be made within thirty (30) days after the date of the Executive’s death.

          b. Disability. The Executive’s employment hereunder may be terminated by the Company in the event of his Disability upon not less than thirty (30) days prior written notice to the Executive. For purposes of this Agreement, “Disability” or “Disabled” means the inability of the Executive to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months. During any period that the Executive fails to perform his duties hereunder as a result of a Disability (“Disability Period”), the Executive will continue to receive his Base Salary at the rate then in effect for such period commencing on the date the Executive is determined to be Disabled until his employment is terminated pursuant to this subparagraph; provided, however, that payments of Base Salary so made to the Executive will be reduced by the sum of the amounts, if any, that were payable to the Executive under any disability benefit plan, with any such offset being made in accordance with Treasury Regulation section 1.409A-3(i)(1)(ii). In the event that the Company elects to terminate the Executive’s employment pursuant to this subparagraph, the Executive will be entitled to the following payments and benefits:

               i. Any Base Salary that is accrued but unpaid, the value of any vacation that is accrued but unused (determined by dividing Base Salary by 365 and multiplying such amount by the number of unused vacation days), and any business expenses that are unreimbursed — all, as of the date of termination of employment;

               ii. Any rights and benefits (if any) provided under plans and programs of the Company in which the Executive was participating immediately prior to the time he became Disabled, determined in accordance with the applicable terms and provisions of such plans and programs; and

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               iii. An amount equal to the pro-rated Bonus for the then-current fiscal year based on the achievement of the applicable performance goals for such fiscal year (without pro-ration of such performance goals) and as approved by the Compensation Committee, which Bonus shall be paid at the same time payments for that fiscal year are made to other participants, is intended to be paid within the short-term deferral period as defined in Code Section 409A and shall be pro-rated based on the number of calendar days the Executive was employed during the fiscal year.

     Any payments of Base Salary during the Disability Period shall be made in accordance with the payroll procedures described in Section 5(a)(i) of this Agreement. Any payments due under Section 14(b)(i) shall be made within thirty (30) days after the date of the Executive’s termination of employment.

          c. Termination of Employment for Cause. The Company may terminate the Executive’s employment at any time for “Cause” if such Cause is determined by the Board. For purposes of this Agreement, the following shall constitute “Cause”:

               i. The Executive is convicted of — or pleads no contest/nolo contendere to — any felony or any other serious criminal offense;

               ii. The Executive breaches any material provision of this Agreement (other than as related to Sections 8, 9, 10, 11 and 12, which is covered by Section 14(c)(iii) below), or habitually neglects to perform his duties under this Agreement (other than for reasons related to Disability) and such breach or neglect is not corrected in the Company’s good faith belief within ten (10) business days after receipt of written notice on behalf of the Board;

               iii. The Executive breaches any provision of Section 8, 9, 10, 11 or 12, and such breach is not corrected in the Company’s good faith belief within five (5) business days after receipt of written notice on behalf of the Board;

               iv. The Company reasonably determines that the Executive has intentionally acted in material violation of any applicable local, state or federal law relating to discrimination or harassment;

               v. The Executive engages in any inappropriate relationship (romantic, sexual, or otherwise) with an employee, customer, or supplier of the Company, or misuses or abuses Company property and/or resources;

               vi. The Executive violates the Company’s Code of Conduct or any other material Company policy applicable to senior executives of the Company; or

               vii. The Executive acts, without Board direction or approval, in an intentionally reckless manner (but not mere unsatisfactory performance) that is materially injurious to the financial condition of the Company.

     In the event that the Company terminates the Executive’s employment for Cause, the Executive will be entitled to the following payments and benefits:

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                    A. Any Base Salary that is accrued but unpaid, the value of any vacation that is accrued but unused (determined by dividing Base Salary by 365 and multiplying such amount by the number of unused vacation days), and any business expenses that are unreimbursed — all, as of the date of termination of employment; and

                    B. Any rights and benefits (if any) provided under plans and programs of the Company, determined in accordance with the applicable terms and provisions of such plans and programs.

     All payments due under Section 14(c)(A) shall be made within thirty (30) days after the date of the Executive’s termination of employment.

          d. Termination Without Cause. The Company may terminate the Executive’s employment for any reason upon fourteen (14) days prior written notice to the Executive. If the Executive’s employment is involuntarily terminated by the Company for any reason other than the reasons set forth in paragraphs (a), (b) or (c) of this Section 14, the Executive will be entitled to the following payments and benefits:

               i. Any Base Salary that is accrued but unpaid, the value of any vacation that is accrued but unused (determined by dividing Base Salary by 365 and multiplying such amount by the number of unused vacation days), and any business expenses that are unreimbursed — all as of the date of termination of employment and all payments due under this Section 14(d)(i) shall be made within thirty (30) days after the date of the Executive’s termination of employment;

               ii. Any rights and benefits (if any) provided under plans and programs of the Company in which the Executive was participating at the time of the termination of his employment, determined in accordance with the applicable terms and provisions of such plans and programs;

               iii. Any prior year earned, but unpaid Bonus, which shall be paid in accordance with the terms and provisions of the applicable plan or program;

               iv. Continuation of the Executive’s Base Salary, as in effect on the date of his Separation from Service, for a period of twenty-four (24) months commencing on the date of his Separation from Service; provided, that these payments will be made in equal monthly payments over such twenty-four (24) month period and each installment payment provided for in this Section 14(d)(iv) is a separate “payment” within the meaning of Treasury Regulation section 1.409A-2(b)(2)(i);

               v. An amount equal to the pro-rated Bonus for the then-current fiscal year based on the achievement of the applicable performance goals for such fiscal year (without pro-ration of such performance goals) and as approved by the Compensation Committee, which bonus shall be paid at the same time payments for that fiscal year are made to other participants, is intended to be paid within the short-term deferral period as defined in Code Section 409A and shall be pro-rated based on the number of calendar days the Executive was employed during the fiscal year;

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               vi. The payment by the Company directly to the carrier for the cost of premiums, and related administrative fees, for group health (medical, dental and/or vision) continuation coverage for the Executive and the Executive’s eligible dependents under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), as amended from time to time for the same level of benefits as in effect immediately prior to the Executive’s termination of employment, which shall commence on the date that the Executive Separates from Service and continue for a period equal to the lesser of (A) twenty-four (24) months, or (B) the date the Executive and the Executive’s eligible dependents are no longer eligible to receive continuation coverage pursuant to COBRA (the “COBRA Coverage”). In order to receive the COBRA Coverage, the Executive must timely elect COBRA Coverage within the required time period; and

               vii. The payment by the Company for all Company-sponsored life insurance programs in which the Executive was participating or covered immediately before termination for twenty-four (24) months following the date of his Separation from Service.

          e. Voluntary Termination by the Executive. The Executive may resign and terminate his employment with the Company for any reason whatsoever upon not less than sixty (60) days prior written notice to the Company. In the event that the Executive terminates his employment voluntarily pursuant to this Section 14(e), the Executive will be entitled to the following payments and benefits:

               i. Any Base Salary that is accrued but unpaid, the value of any vacation that is accrued but unused (determined by dividing Base Salary by 365 and multiplying such amount by the number of unused vacation days), and any business expenses that are unreimbursed — all, as of the date of termination of employment; and

               ii. Any rights and benefits (if any) provided under plans and programs of the Company in which the Executive was participating at the time of the termination of his employment, determined in accordance with the applicable terms and provisions of such plans and programs.

     All payments due under Section 14(e)(i) shall be made within thirty (30) days after the date of the Executive’s termination of employment.

          f. Good Reason Termination. The Executive may resign and terminate his employment with the Company for “Good Reason.” The Executive shall have “Good Reason” to effect a termination of his employment if without his consent the Company (i) materially reduces the Executive’s base compensation, except for a reduction that generally applies to executive officers, (ii) requires the Executive to relocate more than 50 miles from the greater Columbus, Ohio area, or (iii) diminishes the functional responsibilities of the Executive in a substantial and negative manner; all provided the Executive (A) has given written notice to the Board as to the details of the basis for such Good Reason within thirty (30) days following the date on which the Executive alleges the condition giving rise to such Good Reason initially occurs and the Company has failed to provide a reasonable cure within thirty (30) business days after its receipt of such notice and (B) terminates his employment within ninety (90) days of the time in which the condition giving rise to such Good Reason initially occurs.

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     In the event that the Executive terminates his employment for Good Reason pursuant to this Section 14(f), the Executive will be entitled to the payments and benefits described in Section 14(d).

          g. Benefit Plans/Offset. In the event of any termination of the Executive’s employment, whether by the Executive or the Company and for any reason, participation by the Executive in all compensation and benefit plans of the Company will cease upon the effective termination date and all unvested bonuses, equity awards and other like items will immediately lapse, except as otherwise provided in applicable Company plans or hereunder. In the event of the Executive’s termination of employment, all amounts owed by the Executive to the Company for any reasons whatsoever will become immediately due and payable. The Company will have the right, in its discretion, to collect any or all such amounts by offset against any amounts due to the Executive from the Company whether or not under this Agreement; provided that such offset complies with the requirements of Code Section 409A. Notwithstanding the foregoing, any such offset that would have the effect (directly or indirectly) of accelerating amounts due to the Executive under this Agreement that are subject to Code Section 409A must meet the following requirements: (i) such offset must relate to a debt that was incurred in the ordinary course of the service relationship between the Company and the Executive; (ii) the entire amount of reduction in any of the Executive’s taxable years may not exceed $5,000; and (iii) the offset must be made at the same time and in the same amount as the debt otherwise would have been due and collected from the Executive. In addition, except as specifically provided for herein, the payments provided for in Section 14 of this Agreement are in lieu of and supercede any severance or termination benefits to which the Executive might otherwise be entitled, and there will be no duplication of payments or benefits made under this Agreement and any other agreement with, or plan, policy, or program maintained by, the Company.

          h. Certain Delays in Payment if the Executive is a Specified Employee. Notwithstanding anything in this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of Treasury Regulation section 1.409A-1(i) and as determined under the Company’s policy for determining specified employees) on the date of his Separation from Service and the Executive is entitled to a payment and/or a benefit under this Agreement that is required to be delayed pursuant to Code Section 409A(a)(2)(B)(i), then such payment or benefit, as the case may be, shall not be paid or provided for (or begin to be paid or provided for) until the first business day of the seventh month following the date of the Executive’s Separation from Service (or, if earlier, the date of the Executive’s death). The first payment that can be made to the Executive following such postponement period shall include the cumulative amount of any payments or benefits that could not be paid or provided for during such postponement period due to the application of Code Section 409A(a)(2)(B)(i).

          i. Conditions to Payment and Benefits. Except as required under applicable law, the obligation of the Company to make payments (other than Base Salary earned by the Executive prior to his separation from employment and payment for any earned but unused vacation) and to provide other benefits to the Executive after his termination of employment under Section 14 is expressly conditioned on (i) the Executive’s timely execution,

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without revocation, of a release of claims in a form satisfactory to the Company and (ii) the Executive’s continued full performance of his obligations under Sections 8, 9, 10, 11, 12 and 13 to the extent that such sections survive the Executive’s termination of employment as provided thereunder.

     15. Termination and Change in Control Agreement. The Executive and the Company have entered into an amended and restated Change in Control Agreement, effective December 24, 2008 (the “Change in Control Agreement”). If an event or a series of related events entitle the Executive to payments under both this Agreement and the Change in Control Agreement, the Executive will be entitled to the payments due under the Change in Control Agreement reduced by the amounts (if any) received under this Agreement before the payments become due under the Change in Control Agreement and no further payments will be due under this Agreement.

     16. Arbitration of Disputes. Except for disputes and claims arising out of or relating to Sections 8 through 13, disputes or controversies arising out of or relating to this Agreement, including the basis on which the Executive is terminated, will be resolved by arbitration in accordance with the rules of the American Arbitration Association. The award of the arbitrator will be final, conclusive and non-appealable and judgment upon the award rendered by the arbitrator may be entered in any court having competent jurisdiction. The arbitrator must be an arbitrator qualified to serve in accordance with the rules of the American Arbitration Association and one who is approved by the Company and the Executive. If the Executive and the Company fail to agree on an arbitrator, each must designate a person qualified to serve as an arbitrator in accordance with the rules of the American Arbitration Association and these persons will select the arbitrator from among those persons qualified to serve in accordance with the rules of the American Arbitration Association. Any arbitration relating to this Agreement will be held in Columbus, Ohio. The Company will pay (or reimburse the Executive) for arbitration filing fees, but the Company and the Executive will each bear its/his other fees and expenses incurred in connection with the arbitration proceedings unless otherwise awarded by the arbitrator[s]. With respect to any payment or reimbursement by the Company of arbitration filing fees, (a) any such reimbursement shall be made on or before the last day of the Executive’s taxable year following the taxable year of the Executive in which the expense was incurred, (b) the amount of the fees eligible for payment or reimbursement during any taxable year of the Executive may not affect the expenses eligible for reimbursement or payment in any other taxable year, and (c) the right to payment or reimbursement of such fees may not be subject to liquidation or exchange for any other benefit.

     17. Representation and Warranty. The Executive represents and warrants to the Company that no existing covenant, restriction, or other obligation restricts or limits in any way the Executive’s ability to enter into this Agreement and to perform his duties hereunder.

     18. Notices. Any notices to be given hereunder by either party to the other may be effected either by personal delivery in writing or by mail, registered or certified, postage prepaid, with return receipt requested. Mailed notices shall be addressed as follows:

12


 

          a. If to the Company:

Bob Evans Farms, Inc.
3776 S. High Street
Columbus, Ohio 43207
Attn: General Counsel — Legal Department

          b. If to the Executive, to the address on file with the Company.

Either party may change its address for notice by giving notice in accordance with the terms of this Section 18.

     19. General Provisions.

          a. Law Governing. This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio.

          b. Invalid Provisions. If any provision of this Agreement is held to be illegal, invalid, or unenforceable, then such provision shall be fully severable and this Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part hereof, and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance herefrom. Furthermore, in lieu of such illegal, invalid, or unenforceable provision, there shall be added automatically as a part of this Agreement a provision as similar in terms to such illegal, invalid, or unenforceable provision as may be possible and still be legal, valid or enforceable.

          c. Entire Agreement. The Company’s Executive Compensation Recoupment Policy (the “Recoupment Policy”) shall apply to this Agreement. This Agreement, the Recoupment Policy, the Change in Control Agreement and any governing award agreements, grant notices, and plan documents referenced herein together set forth the entire understanding of the parties and supersede all prior agreements or understandings, whether written or oral, with respect to the subject matter hereof. No terms, conditions or warranties, other than those contained herein, and no amendments or modifications hereto shall be binding unless made in writing and signed by the parties hereto.

          d. Binding Effect. This Agreement shall extend to and be binding upon and inure to the benefit of the parties hereto, their respective heirs, representatives, successors and assigns. This Agreement may not be assigned by the Executive, but may be assigned by the Company to any person or entity that succeeds to the ownership or operation of the business in which the Executive is primarily employed by the Company.

          e. Waiver. The waiver by either party hereto of a breach of any term or provision of this Agreement shall not operate or be construed as a waiver of a subsequent breach of the same provision by any party or of the breach of any other term or provision of this Agreement.

13


 

          f. Titles. Titles of the paragraphs herein are used solely for convenience and shall not be used for interpretation or construing any word, clause, paragraph, or provision of this Agreement.

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

          h. Taxes. Anything in this Agreement to the contrary notwithstanding, all payments required to be made hereunder by the Company to the Executive shall be subject to withholding of such amounts relating to taxes as the Company may reasonably determine that it should withhold pursuant to any applicable law or regulations. In lieu of withholding such amounts, in whole or in part, however, the Company may, in its discretion, accept other provision for payment of taxes, provided that it is satisfied that all requirements of the law affecting its responsibilities to withhold such taxes have been satisfied.

14


 

     IN WITNESS WHEREOF, the Company and the Executive have executed this Agreement as of the date and year first above written.

     THIS AGREEMENT CONTAINS AN ARBITRATION CLAUSE.

 

 

 

 

 

 

 

 

 

EXECUTIVE:

 

 

 

BOB EVANS FARMS, INC.

 

 

 

 

 

 

 

 

 

 

 

/s/Steven A. Davis

 

Steven A. Davis

 

 

 

By:

 

/s/Michael J. Gasser

 

Michael J. Gasser

 

 

 

 

 

 

 

 

Lead Independent Director

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

/s/Paul S. Williams

 

Paul S. Williams

 

 

 

 

 

 

 

 

Chairman, Compensation Committee

 

 

 

 

 

 

 

 

of the Board of Directors

 

 

15


 

APPENDIX A
CEO Long-Term Performance-Based Incentive Award Program — Conditions for the Five-Year Performance Period

Please refer to Exhibit 10.4 to Bob Evans Farms, Inc.’s Annual Report on Form 10-K for the fiscal year ended April 24, 2009 (File No. 0-1667)

 


 

APPENDIX B
CEO Long-Term Performance-Based Incentive Award Program — Fiscal Year Performance Share Award Agreement

Please refer to Exhibit 10.5 to Bob Evans Farms, Inc.’s Annual Report on Form 10-K for the fiscal year ended April 24, 2009 (File No. 0-1667)

 

EMPLOYMENT AGREEMENT
 
         This Employment Agreement ("Agreement") is made and entered into to be
effective as of May 1, 2006, by and between Bob Evans Farms, Inc., a Delaware
corporation (the "Company"), and Steven A. Davis (the "Executive").
 
         WHEREAS, the Company believes it to be in its best interest to provide
for continuity of management and to provide protection for its valuable trade
secrets and confidential information;
 
         WHEREAS, the Company desires to employ the Executive and the Executive
is willing to render his services to the Company on the terms and conditions
with respect to such employment hereinafter set forth; and
 
         WHEREAS, the Board of Directors of the Company (the "Board") and the
Compensation Committee of the Board (the "Compensation Committee") have
determined that it is in the best interests of the Company to secure the
services and employment of the Executive, and the Executive is willing to render
such services on the terms and conditions set forth herein.
 
         NOW, THEREFORE, in consideration of the premises and the mutual terms
and conditions hereof, the Company and the Executive hereby agree as follows:
 
         1. EMPLOYMENT. The Company hereby employs the Executive and the
Executive hereby accepts employment with the Company as the Company's Chief
Executive Officer upon the terms and conditions hereinafter set forth. The
Company (through its Board) also agrees to appoint the Executive as a member of
the Board to fill the currently vacant directorship and to recommend that the
Company's stockholders elect the Executive as a member of the Board at the
Company's next annual meeting of stockholders.
 
         2. EXCLUSIVE SERVICES. During the Term, the Executive agrees (a) to
serve as the Company's Chief Executive Officer and to perform the services
customarily performed by persons in similar executive capacities, (b) to
discharge any other duties and responsibilities that the Board assigns, (c) if
elected, to serve as an officer and/or director of any direct or indirect
subsidiary of the Company, (d) to primarily perform his duties hereunder at the
Company's principal business offices, as such may be located from time to time,
unless otherwise agreed in writing between the Board and the Executive, (e)
except for periods of absence because of illness, vacations of reasonable
duration and any leaves of absence approved by the Board to (i) devote his full
attention and energies to promoting the Company's business, (ii) fulfill the
obligations described in this Agreement and (iii) exercise the highest degree of
loyalty and the highest standards of conduct in the performance of his duties,
and (f) in addition to the obligations described in Section 10, not to engage in
any other business activity, whether or not for gain, profit or other pecuniary
advantage, that does not involve promoting the Company's business. However, the
Executive may serve as a director of entities that are not related to the
Company if that service (i) does not violate any term or condition of this
Agreement, (ii) does not injure the Company or any entity related to the
Company, (iii) is not prohibited by law or by rules adopted by the Company, and
(iv) is approved in advance by the Board.
 
The restrictions described in this section will not be construed to prevent
Executive from (a) investing his personal assets in (i) businesses that do not
compete or do business with the
 
 
 
<PAGE>
 
Company and do not require Executive to perform any services connected with the
operation or affairs of the businesses in which the investment is made or (ii)
stocks or corporate securities described in Section 10 but subject to the limits
described in that section, or (b) participating in, or serving as a trustee or
director of, civic and charitable organizations or activities, but only if this
activity does not interfere with the performance of his duties under this
Agreement.
 
         3. DUTIES. The Executive shall perform the duties, undertake the
responsibilities, and exercise the authority customarily performed, undertaken,
and exercised by persons employed in a similar executive capacity. The Executive
shall report to the Board.
 
         4. TERM. This Agreement shall have an initial term of three (3) years
commencing as of May 1, 2006. This Agreement will automatically renew at the end
of the initial term and at the end of each subsequent term, for a subsequent
term of one (1) year unless either party gives written notice of non-renewal to
the other at least sixty (60) days prior to the expiration of the then current
term. Such notice may be given for any or no reason. This Agreement is subject
to earlier termination as hereinafter provided. The initial term of this
Agreement and any subsequent one-year extensions will be referred to as the
"Term".
 
         5. COMPENSATION.
 
                  a. In recognition of the compensation, bonus, and equity lost
or forfeited by Executive from his prior place of employment and to further
induce Executive to enter into this Agreement, the Company agrees to provide
Executive, within forty-five (45) days after he commences employment with the
Company, the following:
 
                            i. A grant of ten thousand (10,000) shares of
Company common stock; and
 
                            ii. A grant of Twenty Thousand One Hundred Sixty-Six
(20,166) restricted shares of Company common stock, subject to the terms of a
separate award agreement which will provide that such restricted shares will
vest over three (3) years commencing on June 13, 2007 in equal amounts of Six
Thousand Seven Hundred Twenty-Two (6,722) shares per year.
 
The foregoing grants to Executive reflect an assumed price per share of Company
common stock of $30.00 per share. In the event the price per share of Company
common stock on the grant date is greater or lesser than $30.00 per share, the
number of shares granted to Executive will be appropriately adjusted to
approximate the intended financial value to Executive as contemplated hereby.
 
                  b. As compensation for his services rendered under this
Agreement, the Executive shall be entitled to receive the following:
 
                            i. BASE SALARY. The executive shall be paid a base
salary of $650,000 ("Base Salary") per year, payable in 26 equal bi-weekly
installments during the term of this Agreement, prorated for any partial
employment month. The Base Salary may be increased, but not decreased, by the
Compensation Committee in its sole discretion.
 
                                       2
 
<PAGE>
 
                            ii. ANNUAL CASH BONUS. The Executive shall be
eligible for an annual cash bonus ("Bonus") as may be determined and authorized
in the sole discretion of the Compensation Committee based upon identified
objective criteria. Some or all of the annual bonus to be paid pursuant to this
subparagraph may, in the discretion of the Compensation Committee, be subject to
performance-based criteria designed to comply with the incentive compensation
exception under Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"). The Executive's target bonus for fiscal year 2007 is 70% of his
Base Salary.
 
                            iii. LONG TERM INCENTIVE PLAN. As may be determined
and authorized from time to time in the sole discretion of the Compensation
Committee, and subject to the terms of a separate award agreement, the Executive
shall be eligible to participate in the Company's Performance Incentive Plan and
will have, for fiscal year 2007, a Targeted Equity Award ("TEA") of 250% of
Executive's Base Salary through a combination of a guaranteed award of 25% of
stock options and a performance-based targeted award of 75% of Restricted Stock
Awards if certain identified earnings per share ("EPS") and other objective
goals are reached. If the identified EPS and other goals are exceeded, the
foregoing Restricted Stock Awards may be increased up to an additional 50%.
 
                            iv. STOCK OPTION GRANT. Subject to the terms of a
separate award agreement, the Executive shall be granted an option to purchase
eighteen thousand (18,000) shares of the Company's common stock at the closing
price of the Company's common shares on the date of the June 2006 meeting of the
Compensation Committee (or, if later, the effective date of this Agreement),
said option to vest over three (3) years commencing on June 13, 2007 in equal
amounts of six thousand (6,000) shares per year.
 
         6. BENEFITS. In addition to the compensation to be paid to the
Executive pursuant to Section 5 hereof, the Executive shall further be entitled
to receive the following:
 
                  a. PARTICIPATION IN EMPLOYEE PLANS. In addition to the plans
described in this Agreement, the Executive shall be entitled to participate in
any health, disability, group term life insurance plan, any pension, retirement,
or profit sharing plan, any executive bonus plan, or any other perquisites and
fringe benefits that may be extended from time to the Company's next most senior
executive officer.
 
                  b. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. Executive shall be
eligible to participate in the Company's Supplemental Executive Retirement Plan
("SERP") in accordance with the terms contained therein.
 
                  c. EXECUTIVE DEFERRAL PROGRAM. Executive shall be eligible to
participate in the Company's Executive Deferral Program ("BEEDP"), which allows
for deferrals up to 25% of Base Salary and 100% of Bonus, in accordance with the
terms contained therein.
 
                  d. VACATION. The Executive shall be entitled to a minimum of
four weeks vacation with full salary and benefits each year. Under current
Company policy (which may be changed at the discretion of the Company) no cash
or other payment will be due, however, for unused vacation and vacation may not
be carried over from any calendar year to the next. Upon
 
                                       3
 
 
<PAGE>
 
 
any termination of the Executive's employment, earned but unused vacation will
be paid in accordance with the Company's policy then in effect.
 
                  e. EQUITY AWARDS. The Executive shall be entitled to
equity-based compensation awards that may be extended from time to time at the
level extended to the Company's next most senior executive officer, as approved
by the Compensation Committee, subject to the terms and conditions of the
respective equity-based compensation plans and award agreements and the
provisions of this Agreement.
 
                  f. AUTOMOBILE. The Company shall provide the Executive with
the use of an automobile or a monthly allowance (for the first year, in the
amount of One Thousand Eight Hundred Forty-Six Dollars [$1846.00] per month) as
approved by the Compensation Committee.
 
                  g. RELOCATION EXPENSES. Executive's relocation expenses shall
be reimbursed in accordance with Company policy and shall include necessary and
reasonable expenses related to house-hunting trips for Executive and his spouse,
closing costs related to his purchase of, and moving Executive's household goods
to, a residence in the Columbus, Ohio area, and up to three (3) months of
temporary housing. The Company will also pay Executive a lump sum of Fifty
Thousand Dollars ($50,000.00) to cover unitemized miscellaneous moving,
relocation, and housing expenses. In addition, the Company agrees, at
Executive's option, to purchase his residence in the Louisville, Kentucky area
for a price to be determined on the basis of independent fair market appraisals.
 
                  h. ATTORNEYS' FEES. The Company agrees to reimburse Executive
for his legal fees incurred in connection with the negotiation and documentation
of this Agreement in an amount not to exceed $10,000.00.
 
         7. REIMBURSEMENT OF EXPENSES. Subject to such rules and procedures as
from time to time are specified by the Company, the Company shall reimburse the
Executive on a monthly basis for reasonable business expenses necessarily
incurred in the performance of his duties under this Agreement.
 
         8. CONFIDENTIALITY/TRADE SECRETS. The Executive acknowledges that his
position with the Company is one of the highest trust and confidence both by
reason of his position and by reason of his access to and contact with the trade
secrets and confidential and proprietary business information of the Company.
Both during the Term of this Agreement and thereafter, the Executive covenants
and agrees as follows:
 
                  a. He shall use his best efforts and exercise reasonable
diligence to protect and safeguard the trade secrets and confidential and
proprietary information of the Company, including but not limited to the
identity of its customers and suppliers, its arrangements with customers and
suppliers, and its technical and financial data, records, compilations of
information, processes, recipes and specifications relating to its customers,
suppliers, products and services;
 
                  b. He shall not disclose any of such trade secrets and
confidential and proprietary information, except as may be required in the
course of his employment with the Company or by law; and
 
                                       4
 
<PAGE>
 
                  c. He shall not use, directly or indirectly, for his own
benefit or for the benefit of another, any of such trade secrets and
confidential and proprietary information.
 
         All files, records, documents, drawings, specifications, memoranda,
notes, or other documents relating to the business of the Company, in whatever
form, format or medium, whether prepared by the Executive or otherwise coming
into his possession, shall be the exclusive property of the Company and shall be
delivered to the Company and not retained by the Executive upon termination of
his employment for any reason whatsoever or at any other time upon request of
the Board, or, at the option of the Company, he may destroy all such material
and certify such destruction in writing to the Company within ten (10) days
following the termination of his employment or such request by the Company.
 
         9. DISCOVERIES. The Executive covenants and agrees that he will fully
inform the Company of and disclose to the Company all inventions, designs,
improvements, discoveries, and processes ("Discoveries") that he has now or may
hereafter have during his employment with the Company and that pertain or relate
to the business of the Company or to any experimental work, products, services,
or processes of the Company in progress or planned for the future, whether
conceived by the Executive alone or with others, and whether or not conceived
during regular working hours or in conjunction with the use of any Company
assets. All such Discoveries shall be the exclusive property of the Company
whether or not patent or trademark applications are filed thereon. The Executive
shall assist the Company, at any time during or after his employment, in
obtaining patents and other intellectual property protection on all such
Discoveries deemed patentable or otherwise protectable by the Company and shall
execute all documents and do all things necessary to obtain letters patent, vest
the Company with full and exclusive title thereto, and protect the same against
infringement by others, all at the expense of the Company. If such assistance
takes place after his employment is terminated, then the Executive shall be paid
by the Company at an hourly rate determined based on fifty percent (50%) of his
existing salary at the date of termination divided by 2500 for any time actually
spent in rendering such assistance at the request of the Company.
 
         10. NON-COMPETITION. The Executive covenants and agrees that during the
period of his employment and for additional periods after termination of
employment as provided in Section 13, he shall not, without the prior written
consent of the Board, directly or indirectly, as an employee, employer,
consultant, agent, principal, partner, shareholder, corporate officer, director,
member, manager or through any other kind of ownership (other than ownership of
securities of publicly held corporations of which the Executive owns less than
three percent 3% of any class of outstanding securities), affiliation,
association, or in any other representative or individual capacity, engage in or
render any services to any business in North America engaged in the family or
casual dining restaurant industry, or in any other segment of the restaurant
industry in which the Company or any subsidiary of the Company may become
involved after the date hereof and prior to the date of termination of
Executive's employment. For purposes of this Agreement "family or casual dining
restaurant industry" consists of "sit down table service" restaurants,
irrespective of whether they serve alcoholic beverages, with a per guest average
guest check within the United States of under $20.00 (adjusted upward each year
to recognize Company menu price increases).
 
                                       5
 
<PAGE>
 
         11. NONSOLICITATION. The Executive agrees that during the period of his
employment, and for a period of two (2) years following the effective date of
the termination of the Executive's employment for any reason, he will not,
either directly or indirectly, for himself or for any third party, except as
otherwise agreed to in writing by the Board, employ or hire any other person who
is then employed by the Company, or solicit, induce, recruit, or cause any other
person who is then employed by the Company to terminate his/her employment for
the purpose of joining, associating, or becoming employed with any other
business or activity.
 
         12. REMEDIES FOR BREACH OF COVENANTS OF THE EXECUTIVE.
 
                  a. The Company and the Executive specifically acknowledge and
agree that the foregoing covenants of the Executive in Sections 9, 10, and 11
are reasonable in content and scope and are given by the Executive for adequate
consideration. The Company and the Executive further acknowledge and agree that,
if any court of competent jurisdiction or other appropriate authority shall
disagree with the parties' foregoing agreement as to reasonableness, then such
court or other authority shall reform or otherwise amend the foregoing covenants
as reason dictates.
 
                  b. The covenants set forth in Section 9 of this Agreement
shall continue to be binding upon the Executive notwithstanding the termination
of his employment with the Company for any reason whatsoever, and the covenants
set forth in Sections 10 and 11 of this Agreement shall continue to be binding
upon the Executive as provided in Section 13. Such covenants shall be deemed and
construed as separate agreements independent of any other provisions of this
Agreement and any other agreement between the Company and the Executive. The
existence of any claim or cause of action by the Executive against the Company,
unless predicated on this Agreement, shall not constitute a defense to the
enforcement by the Company of any or all such covenants. It is expressly agreed
that the remedy at law for the breach of any such covenant is inadequate and
injunctive relief and specific performance shall be available to prevent the
breach or any threatened breach thereof.
 
         13. TERMINATION OF EMPLOYMENT. The Executive's employment with the
Company may be terminated as follows:
 
                  a. DEATH OF EXECUTIVE. The Executive's employment hereunder
will terminate upon his death and the Executive's beneficiary (as designated by
the Executive in writing with the Company prior to his death) will be entitled
to the following payments and benefits:
 
                           i. any Base Salary that is accrued but unpaid, the
value of any vacation that is accrued but unused (determined by dividing Base
Salary by 365 and multiplying such amount by the number of unused vacation
days), and any business expenses that are unreimbursed--all, as of the date of
termination of employment; and
 
                           ii. any rights and benefits (if any) provided under
plans and programs of the Company, determined in accordance with the applicable
terms and provisions of such plans and programs.
 
         In the absence of a beneficiary designation by the Executive, or, if
the Executive's
 
                                       6
 
<PAGE>
 
designated beneficiary does not survive him, payments and benefits described in
this subparagraph will be paid to the Executive's estate.
 
                  b. DISABILITY. The Executive's employment hereunder may be
terminated by the Company in the event of his Disability upon not less than
thirty (30) days prior written notice to Executive. For purposes of this
Agreement, "Disability" means the inability of the Executive to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than twelve (12) months. During any
period that the Executive fails to perform his duties hereunder as a result of a
Disability ("Disability Period"), the Executive will continue to receive his
Base Salary at the rate then in effect for such period until his employment is
terminated pursuant to this subparagraph; provided, however, that payments of
Base Salary so made to the Executive will be reduced by the sum of the amounts,
if any, that were payable to the Executive at or before the time of any such
salary payment under any disability benefit plan or plans of the Company and
that were not previously applied to reduce any payment of Base Salary. In the
event that the Company elects to terminate the Executive's employment pursuant
to this subparagraph, the provisions of Sections 11 and 12 shall survive and
remain in force for twenty-four (24) months following the Executive's
termination of employment, the provisions of Section 10 shall expire upon the
Executive's termination of Employment and the Executive will be entitled to the
following payments and benefits:
 
                            i. any Base Salary that is accrued but unpaid, the
value of any vacation that is accrued but unused (determined by dividing Base
Salary by 365 and multiplying such amount by the number of unused vacation
days), and any business expenses that are unreimbursed--all, as of the date of
termination of employment; and
 
                            ii. any rights and benefits (if any) provided under
plans and programs of the Company, determined in accordance with the applicable
terms and provisions of such plans and programs.
 
                  c. TERMINATION OF EMPLOYMENT FOR CAUSE. The Company may
terminate the Executive's employment at any time for "Cause" if such Cause is
determined by the Board. For purposes of this Agreement, the following shall
constitute "Cause":
 
                            i. The Executive is convicted of -- or pleads no
contest/nolo contendere to -- any felony or any other serious criminal offense;
 
                            ii. The Executive breaches any material provision of
this Agreement (other than as related to Sections 8, 9, 10 and 11 which is
covered by Section 13(c)(iii) below), or habitually neglects to perform his
duties under this Agreement (other than for reasons related to illness, injury
or temporary disability or "Good Reason," as defined in paragraph (f) of this
Section 13) and such breach or neglect is not corrected in the Company's good
faith belief within ten (10) business days after receipt of written notice from
the Board; or
 
                            iii. The Executive breaches any provision of Section
8, 9, 10 or 11, and such breach is not corrected in the Company's good faith
belief within five (5) business days after receipt of written notice from the
Board;
 
                                       7
 
<PAGE>
 
                            iv. The Company reasonably determines that Executive
has intentionally acted in material violation of any applicable local, state or
federal law relating to discrimination or harassment;
 
                            v. The Executive engages in any inappropriate
relationship (romantic, sexual, or otherwise) with an employee, customer, or
supplier of the Company, or misuses or abuses Company property and/or resources;
 
                            vi. The Executive violates any material Company
policy applicable to senior executives of the Company; or
 
                            vii. The Executive acts, without Board direction or
approval, in a manner that is materially injurious to the financial condition of
the Company.
 
         In the event that the Company terminates the Executive's employment for
Cause, the provisions of Sections 10, 11 and 12 shall survive and be in force
for twenty-four (24) months and the Executive will be entitled to the following
payments and benefits:
 
                                    A. any Base Salary that is accrued but
unpaid, the value of any vacation that is accrued but unused (determined by
dividing Base Salary by 365 and multiplying such amount by the number of unused
vacation days), and any business expenses that are
unreimbursed--all, as of the date of termination of employment; and
 
                                    B. any rights and benefits (if any) provided
 under plans and programs of the Company, determined in accordance with the
applicable terms and provisions of such plans and programs.
 
                  d. TERMINATION WITHOUT CAUSE. The Company may terminate the
Executive's employment for any reason upon fourteen (14) days prior written
notice to the Executive. If the Executive's employment is terminated by the
Company for any reason other than the reasons set forth in paragraphs (a), (b)
or (c) of this Section 13, the provisions of Sections 10, 11 and 12 shall
survive and be in force for twenty-four (24) months and the Executive will be
entitled to the following payments and benefits:
 
                            i. any Base Salary that is accrued but unpaid, the
value of any vacation that is accrued but unused (determined by dividing Base
Salary by 365 and multiplying such amount by the number of unused vacation
days), and any business expenses that are unreimbursed--all, as of the date of
termination of employment;
 
                            ii. any rights and benefits (if any) provided under
plans and programs of the Company, determined in accordance with the applicable
terms and provisions of such plans and programs;
 
                            iii. any prior year earned, but unpaid bonus;
 
                            iv. continuation of the Executive's Base Salary in
effect on the date of his termination of employment for a period of twenty-four
(24) months; provided, that these
 
                                       8
<PAGE>
 
 
payments will be made in separate, equal monthly payments over such twenty-four
month period;
 
                            v. a pro-rated bonus for the then current fiscal
year as approved by the Compensation Committee; and
 
                            vi. the payment by the Company of premiums on behalf
of the Executive, for coverage substantially similar to that provided to the
Executive and his dependents as of the date of termination under the Company's
group health and medical policies, for so long as the Executive elects to
continue such coverage, but for no longer than the twenty-four (24) month
severance payment period.
 
                  e. VOLUNTARY TERMINATION BY EXECUTIVE. The Executive may
resign and terminate his employment with the Company for any reason whatsoever
upon not less than sixty (60) days prior written notice to the Company. In the
event that the Executive terminates his employment voluntarily pursuant to this
Section 13(e), the provisions of Sections 10, 11 and 12 shall survive and be in
force for twenty-four (24) months and the Executive will be entitled to the
following payments and benefits:
 
                            i. any Base Salary that is accrued but unpaid, the
value of any vacation that is accrued but unused (determined by dividing Base
Salary by 365 and multiplying such amount by the number of unused vacation
days), and any business expenses that are unreimbursed--all, as of the date of
termination of employment; and
 
                            ii. any rights and benefits (if any) provided under
plans and programs of the Company, determined in accordance with the applicable
terms and provisions of such plans and programs.
 
                  f. GOOD REASON TERMINATION. The Executive may resign and
terminate his employment with the Company for "Good Reason." The Executive shall
have "Good Reason" to effect a termination in the event that the Company (i)
breaches its obligations to pay any salary, benefit or bonus due hereunder or,
(ii) requires the Executive to relocate more than 50 miles from the greater
Columbus, Ohio area, or (iii) diminishes the functional responsibilities of the
Executive in a substantial and negative manner; and in the event of any of (i),
(ii), or (iii), the Executive has given written notice to the Board as to the
details of the basis for such Good Reason within thirty (30) days following the
date on which the Executive alleges the event giving rise to such Good Reason
occurred and the Company has failed to provide a reasonable cure within ten (10)
business days after its receipt of such notice.
 
         In the event that the Executive terminates his employment for Good
Reason pursuant to this Section 13(f), the provisions of Sections 10, 11 and 12
shall survive and be in force for twenty-four (24) months and the Executive will
be entitled to the payments and benefits described in Section 13(d).
 
                  g. FAILURE TO EXTEND TERM OF AGREEMENT. If either party
notifies the other that the Term of this Agreement will not be extended under
the provisions of Section 4 hereof, the Executive's employment under this
Agreement will terminate at the end of such Term. In the event that the Term
expired due to the Executive's providing notice to the Company, the
 
                                       9
<PAGE>
 
provisions of Sections 10, 11 and 12 shall survive and be in force for
twenty-four (24) months following the Executive's termination of employment and
the Executive will be entitled to the following payments and benefits:
 
                            i. any Base Salary that is accrued but unpaid, the
value of any vacation that is accrued but unused (determined by dividing Base
Salary by 365 and multiplying such amount by the number of unused vacation
days), and any business expenses that are unreimbursed -- all as of the date of
termination of employment; and
 
                            ii. any rights and benefits (if any) provided under
plans and programs of the Company, determined in accordance with the applicable
terms and provisions of such plans and programs.
 
          In the event that the Term expired due to the Company's providing
notice to the Executive, (A) the provisions of Sections 11 and 12 shall survive
and be in force for twenty-four (24) months following the Executive's
termination of employment and (B) the Executive may elect either (1) that the
provisions of Section 10 shall expire upon the Executive's termination of
employment, in which event the Company shall provide and the Executive shall
receive only the payments and benefits listed above in (i) and (ii) of this
Section 13(g); or (2) that the provisions of Section 10 shall survive and be in
force for a period up to twenty-four (24) months in which event the Company
shall provide and the Executive shall receive (I) the payments and benefits
listed above in (i) and (ii) of this Section 13(g), and (II) continuation of the
Executive's Base Salary in effect on the date of his termination of employment
for each month during which the Executive elects for the provisions of Section
10 to survive and be in force.
 
                  h. BENEFIT PLANS/OFFSET. In the event of any termination of
the Executive, whether by the Executive or the Company and for any reason,
participation by the Executive in all compensation and benefit plans of the
Company will cease upon the effective termination date and all unvested bonuses,
equity awards and other like items will immediately lapse, except as otherwise
provided in applicable Company plans or hereunder. All amounts owed by the
Executive to the Company for any reasons whatsoever will become immediately due
and payable and the Company will have the right in its discretion to collect any
or all such amounts by offset against any amounts due to the Executive from the
Company whether or not under this Agreement. In addition, the severance payments
hereunder are in lieu of and supercede any other severance or termination
benefits to which the Executive might otherwise be entitled.
 
         14. TERMINATION AND CHANGE IN CONTROL AGREEMENT. On or about the
effective date of this Agreement, Executive and the Company will enter a Change
in Control Agreement substantially in a form of the comparable agreement
provided to the Company's next most senior executive officer. However, if an
event or a series of related events entitle the Executive to payments under both
this Agreement and the Change in Control Agreement, the Executive will be
entitled to the payments due under the Change in Control Agreement reduced by
the amounts (if any) received under this Agreement before the payments become
due under the Change in Control Agreement and no further payments will be due
under this Agreement.
 
         15. ARBITRATION OF DISPUTES. Except for disputes and claims arising out
of or relating to Sections 8 through 12, disputes or controversies arising out
of or relating to this Agreement,
 
                                       10
<PAGE>
 
including the basis on which the Executive is terminated, will be resolved by
arbitration in accordance with the rules of the American Arbitration
Association. The award of the arbitrator will be final, conclusive and
non-appealable and judgment upon the award rendered by the arbitrator may be
entered in any court having competent jurisdiction. The arbitrator must be an
arbitrator qualified to serve in accordance with the rules of the American
Arbitration Association and one who is approved by the Company and the
Executive. If the Executive and the Company fail to agree on an arbitrator, each
must designate a person qualified to serve as an arbitrator in accordance with
the rules of the American Arbitration Association and these persons will select
the arbitrator from among those persons qualified to serve in accordance with
the rules of the American Arbitration Association. Any arbitration relating to
this Agreement will be held in Columbus, Ohio. The Company will pay (or
reimburse Executive) for arbitration filing fees, but Company and Executive will
each bear its/his other fees and expenses incurred in connection with the
arbitration proceedings unless otherwise awarded by the arbitrator[s].
 
         16. WAIVER OF STATUTES OF LIMITATIONS. Executive and Company agree that
any claim or lawsuit relating to this Agreement or Executive's employment with
the Company must be filed no more than six (6) months after the date of the
action or conduct that is, or gives rise to, the subject of the claim or
lawsuit.
 
         17. REPRESENTATION AND WARRANTY. Executive represents and warrants to
the Company that no existing covenant, restriction, or other obligation
restricts or limits in any way Executive's ability to enter into this Agreement
and to perform his duties hereunder.
 
         18. NOTICES. Any notices to be given hereunder by either party to the
other may be effected either by personal delivery in writing or by mail,
registered or certified, postage prepaid, with return receipt requested. Mailed
notices shall be addressed as follows:
 
                  a.  If to the Company:
 
                           Bob Evans Farms, Inc.
                           3776 S. High Street
                           Columbus, Ohio  43207
                           Attn:  Chief Financial Officer
 
                  b.  If to the Executive:
 
                           Steven A. Davis
                           15201 Beckley Crossing Drive
                           Louisville, Kentucky 40245
 
Either party may change its address for notice by giving notice in accordance
with the terms of this Section 18.
 
         19. GENERAL PROVISIONS.
 
                   a. LAW GOVERNING. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio.
 
                                       11
<PAGE>
 
                   b. INVALID PROVISIONS. If any provision of this Agreement is
held to be illegal, invalid, or unenforceable, then such provision shall be
fully severable and this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised a part hereof;
and the remaining provisions hereof shall remain in full force and effect and
shall not be affected by the illegal, invalid, or unenforceable provision or by
its severance herefrom. Furthermore, in lieu of such illegal, invalid, or
unenforceable provision there shall be added automatically as a part of this
Agreement a provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible and still be legal, valid or
enforceable.
 
                   c. ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding of the parties and supersedes all prior agreements or
understandings, whether written or oral, with respect to the subject matter
hereof. No terms, conditions, warranties, other than those contained herein, and
no amendments or modifications hereto shall be binding unless made in writing
and signed by the parties hereto.
 
                   d. BINDING EFFECT. This Agreement shall extend to and be
binding upon and inure to the benefit to the parties hereto, their respective
heirs, representatives, successors and assigns. This Agreement may not be
assigned by the Executive, but may be assigned by the Company to any person or
entity that succeeds to the ownership or operation of the business in which the
Executive is primarily employed by the Company.
 
                   e. WAIVER. The waiver by either party hereto of a breach of
any term or provision of this Agreement shall not operate or be construed as a
waiver of a subsequent breach of the same provision by any party or of the
breach of any other term or provision of this Agreement.
 
                   f. TITLES. Titles of the paragraphs herein are used solely
for convenience and shall not be used for interpretation or construing any work,
clause, paragraph, or provision of this Agreement.
 
                   g. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
 
                   h. TAXES. Anything in this Agreement to the contrary
notwithstanding, all payments required to be made hereunder by the Company to
the Executive shall be subject to withholding of such amounts relating to taxes
as the Company may reasonably determine that it should withhold pursuant to any
applicable law or regulations. In lieu of withholding such amounts, in whole or
in part, however, the Company may, in its sole discretion, accept other
provision for payment of taxes, provided that it is satisfied that all
requirements of the law affecting its responsibilities to withhold such taxes
have been satisfied.
 
                   i. COMPLIANCE WITH IRC SECTION 409A. The parties acknowledge
that portions of this Agreement are or may be subject to Code Section 409A. The
parties also acknowledge that their mutual intent is to avoid generating any
penalties under Section 409A. To that end, the parties agree that (i) this
Agreement will be administered in a manner that will avoid penalties under
Section 409A while adhering as closely as possible to the intent of this
 
                                       12
<PAGE>
 
Agreement and (ii) within the period prescribed by the Internal Revenue Service
for this purpose, they will work in good faith together to amend this Agreement
(without any further consideration from or to either party) to ensure that its
terms comply with Section 409A; provided that in the event that the parties
cannot, as a matter of tax law, make changes to this Agreement that would avoid
tax penalties under Section 409A, the Company shall pay to the Executive an
income tax "gross up" payment such that the Executive will be made whole for any
penalties the Executive would incur due to accelerated taxation and penalties.
 
         IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date and year first above written.
 
         THIS AGREEMENT CONTAINS AN ARBITRATION CLAUSE AND A WAIVER OF STATUTE
OF LIMITATIONS PROVISION.
 
 
 
EXECUTIVE:                          BOB EVANS FARMS, INC.
 
 
/s/ Steven A. Davis                 By: /s/ Robert E.H. Rabold
-------------------------------         --------------------------------
Steven A. Davis                         Robert E.H. Rabold

EX-10.5 6 l34984aexv10w5.htm EX-10.5

Exhibit 10.5

FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT

     WHEREAS, Bob Evans Farms, Inc. (the “Company”) and Steven A. Davis (the “Executive”) entered into an Employment Agreement effective as of May 1, 2006 (the “Agreement”);

     WHEREAS, pursuant to Section 19(c) of the Agreement, the Agreement may be amended if the amendments are made in writing and signed by both the Company and the Executive;

     WHEREAS, the Company and the Executive desire to amend the Agreement to comply with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”); and

     WHEREAS, Section 19(i) of the Agreement provides that the Agreement may be amended to comply with Section 409A without any further consideration from or to either party.

     NOW, THEREFORE, the Company and the Executive mutually agree as follows:

     1. Section 6(c) of the Agreement is hereby deleted in its entirety and the following is substituted therefor:

     c. Executive Deferral Program. The Executive shall be eligible to participate in the Company’s Executive Deferral Program (“BEEDP”), in accordance with the terms contained therein.

     2. Section 6(f) of the Agreement is hereby deleted in its entirety and the following is substituted therefor:

     f. Automobile. The Company shall provide the Executive with the use of an automobile or a monthly allowance in accordance with the Company’s then current automobile policy for officers, as approved by the Compensation Committee. If a monthly allowance is provided pursuant to this Section 6(f), such allowance shall be paid to the Executive in substantially equal bi-weekly installments.

     3. Sections 6(g) and 6(h) of the Agreement are hereby deleted in their entirety and the following is substituted therefor:

     g. Attorneys’ Fees. The Company agrees to reimburse the Executive for his legal fees incurred in connection with the negotiation and documentation of the First Amendment to this Agreement, any additional amendments to this Agreement and any renewal or extension of this Agreement; provided, however, that such reimbursement shall be subject to the Executive’s providing the Compensation Committee with a good faith estimate of such legal fees prior to the applicable negotiation and documentation and the Compensation Committee’s approval of such estimate. Any reimbursement under this Section 6(g) shall be made no later than the 15th day of the third month following the later of (i) the end of the Executive’s taxable year during which the applicable fees are incurred or (ii) the end of the Company’s taxable year during which the applicable fees are incurred.

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     4. Section 13 of the Agreement is hereby amended by adding the following to the beginning thereof:

For purposes of this Agreement, any reference to the Executive’s termination of employment or any form thereof shall mean a “separation from service” with the Company and all persons with whom the Company would be considered a single employer under Code Sections 414(b) and (c) and within the meaning of Treasury Regulation §1.409A-1(h).

     5. Section 13(a) of the Agreement is hereby amended by adding the following to the end thereof:

All payments due under Section 13(a)(i) shall be made within thirty (30) days after the date of the Executive’s death.

     6. Section 13(b) of the Agreement is hereby amended by adding the following to the end thereof:

Any payments of Base Salary during the Disability Period shall be made in accordance with the payroll procedures described in Section 5(b)(i) of this Agreement. Any payments due under Section 13(b)(i) shall be made within thirty (30) days after the date of the Executive’s termination of employment.

     7. Section 13(c) of the Agreement is hereby amended by adding the following to the end thereof:

All payments due under Section 13(c)(A) shall be made within thirty (30) days after the date of the Executive’s termination of employment.

     8. Subsections (i) through (vi) of Section 13(d) of the Agreement are hereby deleted in their entirety and the following are substituted therefor:

     i. any Base Salary that is accrued but unpaid, the value of any vacation that is accrued but unused (determined by dividing Base Salary by 365 and multiplying such amount by the number of unused vacation days), and any business expenses that are unreimbursed — all, as of the date of termination of employment. All payments due under this Section 13(d)(i) shall be made within thirty (30) days after the date of the Executive’s termination of employment;

     ii. any rights and benefits (if any) provided under plans and programs of the Company, determined in accordance with the applicable terms and provisions of such plans and programs;

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     iii. any prior year earned, but unpaid bonus, which shall be paid in accordance with the terms and provisions of the applicable plan or program;

     iv. continuation of the Executive’s Base Salary in effect on the date of his termination of employment for a period of twenty-four (24) months following the date of his termination; provided, that these payments will be made in separate, equal monthly payments over such twenty-four month period;

     v. a pro-rated bonus for the then current fiscal year based on the achievement of the applicable performance goals for such fiscal year and as approved by the Compensation Committee, which bonus shall be paid within ninety (90) days following the end of such fiscal year; and

     vi. the payment by the Company of premiums on behalf of the Executive, for coverage substantially similar to that provided to the Executive and his dependents as of the date of termination under the Company’s group health and medical policies, for so long as the Executive elects to continue such coverage, but for no longer than the twenty-four (24) month severance payment period; provided, however, that, with respect to the payment by the Company of such premiums on behalf of the Executive for any coverage provided after the end of the applicable COBRA health insurance benefit continuation period described in Code Section 4980B, (A) the amount of the premiums paid during any taxable year of the Executive shall not affect the premiums eligible for payment in any other taxable year and (B) the right to payment of such premiums may not be subject to liquidation or exchange for another benefit.

     9. Section 13(e) of the Agreement is hereby amended by adding the following to the end thereof:

All payments due under this Section 13(e)(i) shall be made within thirty (30) days after the date of the Executive’s termination of employment.

     10. Section 13(g) of the Agreement is hereby amended by adding the following paragraph to the end thereof:

     All payments due under paragraph (i) of this Section 13(g) shall be made within thirty (30) days after the date of the Executive’s termination of employment. Any payments of continued Base Salary made pursuant to clause (B)(2)(II) of this Section 13(g) shall be made in accordance with the payroll procedures described in Section 5(b)(i) of this Agreement.

     11. The second sentence of Section 13(h) of the Agreement is hereby deleted in its entirety and the following sentences are substituted therefor:

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In the event of the Executive’s termination of employment, all amounts owed by the Executive to the Company for any reason whatsoever will become immediately due and payable. The Company will have the right in its discretion to collect any or all such amounts by offset against any amounts due to the Executive from the Company whether or not under this Agreement; provided that such offset complies with the requirements of Code Section 409A. Notwithstanding the foregoing, any such offset that would have the effect (directly or indirectly) of accelerating amounts due to the Executive under this Agreement that are subject to Code Section 409A must meet the following requirements: (i) such offset must relate to a debt that was incurred in the ordinary course of the service relationship between the Company and the Executive; (ii) the entire amount of reduction in any of Executive’s taxable years may not exceed $5,000; and (iii) the offset must be made at the same time and in the same amount as the debt otherwise would have been due and collected from the Executive.

     12. The Agreement is amended by adding the following new Section 13(i) thereto:

i. Certain Delays in Payment if the Executive is a Specified Employee. Notwithstanding anything in this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of Treasury Regulation §1.409A-1(i) and as determined under the Company’s policy for determining specified employees) on the date of his termination of employment and the Executive is entitled to a payment and/or a benefit under this Agreement that is required to be delayed pursuant to Code §409A(a)(2)(B)(i), then such payment or benefit, as the case may be, shall not be paid or provided (or begin to be paid or provided) until the first business day of the seventh month following the date of the Executive’s termination of employment (or, if earlier, the date of the Executive’s death). The first payment that can be made to the Executive following such postponement period shall include the cumulative amount of any payments or benefits that could not be paid or provided during such postponement period due to the application of Code §409A(a)(2)(B)(i).

     13. Section 15 of the Agreement is hereby amended by adding the following to the end thereof:

With respect to any payment or reimbursement by the Company of arbitration filing fees, (a) such arbitration filing fees must relate to a claim filed within the timeframe specified in Section 16 of this Agreement, (b) any such reimbursement shall be made on or before the last day of the Executive’s taxable year following the taxable year of the Executive in which the expense was incurred, (c) the amount of the fees eligible for payment or reimbursement during any taxable year of the Executive may not affect the expenses eligible for reimbursement or payment in any other taxable year, and (d) the right to payment or reimbursement of such fees may not be subject to liquidation or exchange for any other benefit.

     14. Section 18(b) of the Agreement is hereby deleted in its entirety and the following is substituted therefor:

b. If to the Executive, to the address of the Executive on file with the Company.

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     15. Section 19(i) of the Agreement is hereby deleted in its entirety and the following is substituted therefor:

i. Compliance with Code Section 409A. The parties acknowledge that portions of this Agreement are or may be subject to Code Section 409A. The parties also acknowledge that their mutual intent is to avoid generating any penalties under Code Section 409A. To that end, the parties agree that this Agreement is intended to be administered and interpreted in compliance with Code Section 409A to the maximum extent permitted by applicable law.

     IN WITNESS WHEREOF, the Company and the Executive hereby enter into this First Amendment effective this 24th day of December, 2008.

BOB EVANS FARMS, INC.

/s/ Donald J. Radkoski

 

Name: Donald J. Radkoski
Title: Chief Financial Officer, Treasurer and Assistant Secretary

EXECUTIVE

/s/ Steven A. Davis

 

Steven A. Davis

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EX-10.7 8 l34984aexv10w7.htm EX-10.7

Exhibit 10.7

AMENDED AND RESTATED
CHANGE IN CONTROL AGREEMENT

This Agreement between Steven A. Davis (“Executive”) and Bob Evans Farms, Inc., a Delaware corporation (the “Corporation”), was originally effective May 1, 2006 (“Effective Date”). The Parties hereby amend and restate this Agreement in its entirety effective December 24, 2008 (the “Restatement Effective Date”).

1.00 PURPOSE

The Corporation believes that [1] a sound and stable management team is essential to promoting the best interests of the Group and the Corporation’s stockholders, [2] as is the case with many publicly held corporations, a Change in Control may materially alter the Group’s structure and adversely affect managers’ employment security, [3] appropriate steps should be taken to enable certain managers, including the Executive, to devote their full and continued attention to the Group’s business affairs during the crucial (and often tumultuous) period preceding and immediately following a Change in Control and [4] subject to the terms of this Agreement, these objectives can best be met by providing the Executive with the severance payments described in this Agreement.

2.00 DEFINITIONS

When used in this Agreement, the following terms will have the meanings given to them in this section unless another meaning is expressly provided elsewhere in this Agreement. When applying these definitions, the form of any term or word will include any of its other forms.

2.01 Board. The Corporation’s board of directors.

2.02 Cause. The Executive’s [1] willful and continued refusal to substantially perform assigned duties (other than any refusal resulting from incapacity due to physical or mental illness), [2] willful engagement in gross misconduct materially and demonstrably injurious to any Group Member or [3] breach of any term of this Agreement. However, [4] Cause will not arise [a] solely because the Executive is absent from active employment during periods of vacation, consistent with the Employer’s applicable vacation policy, or other period of absence initiated by the Executive and approved by the Employer or [b] due to any event that constitutes Good Reason.

2.03 Change in Control.

[1] Subject to the rules of application described in Section 2.03[2], the date on which the earliest of the following events occurs:

[a] After the Effective Date, an event that would be required to be reported as a change in control for purposes of the Exchange Act.

[b] During any 12-consecutive-calendar-month period ending after the Effective Date, there is a change in a majority of the Incumbent Directors for any reason other than death or disability as reasonably established by the Corporation on the basis of medical and other information known (or made available) to it.

 


 

[c] After the Effective Date, any entity or “person,” [including a “group” as contemplated by Exchange Act §§13(d)(3) and 14(d)(2)] is or becomes the “beneficial owner” [as defined in Rule 13d-3 under the Exchange Act], through a tender offer or otherwise, of Common Shares representing 50 percent or more of the combined voting power of the Corporation’s then outstanding Common Shares.

[d] During any 12-consecutive-calendar-month period ending after the Effective Date, any entity or “person,” [including a “group” as contemplated by Exchange Act §§13(d)(3) and 14(d)(2)] acquires, either directly or as a “beneficial owner” [as defined in Rule 13d-3 under the Exchange Act], through a tender offer or otherwise, Common Shares representing more than 20 percent of the combined voting power of the Corporation’s then outstanding Common Shares. However, this element of this definition will be applied without regard to the effect of any redemption of Common Shares by the Corporation or the acquisition of Common Shares by any Group Member and after ignoring any Common Shares acquired:

[i] Before the beginning of any 12-consecutive-calendar-month measurement period;

[ii] By or through an employee benefit plan [whether or not intended to comply with Code §401(a) and whether or not the Executive participates in that plan] maintained by any Group Member;

[iii] Directly, through an equity compensation plan maintained by any Group Member;

[iv] Directly, through inheritance, gift, bequest or by operation of law on the death of an individual; or

[v] By any entity or “person” [including a “group” as contemplated by Exchange Act §§13(d)(3) and 14(d)(2)] with respect to which that acquirer has filed SEC Schedule 13G indicating that the Common Shares were not acquired and are not held for the purpose of or with the effect of changing or influencing, directly or indirectly, the Corporation’s management or policies, unless and until that entity or person indicates that its intent has changed by filing SEC Schedule 13D.

[e] After the Effective Date, the Corporation’s stockholders approve a definitive agreement to merge or combine the Corporation with or into another entity, a majority of the directors of which were not Incumbent Directors immediately before the merger and in which the Corporation’s stockholders will hold less than 50 percent of the voting power of the surviving entity. When applying this element of this definition:

2


 

[i] Stockholders will be determined immediately before and immediately after the merger or combination; and

[ii] The Common Shares owned before the transaction by the entity with which the Corporation merges or combines will be disregarded for all purposes.

[f] Within any 12-consecutive-calendar-month period ending after the Effective Date, any entity or “person” [including a “group” as contemplated by Exchange Act §§13(d)(3) and 14(d)(2) and Code §280G] acquires, either directly or as a “beneficial owner” [as defined in Rule 13d-3 under the Exchange Act] of another entity or person, Group assets having a total gross fair market value equal to or greater than 50 percent of the book value of the Group’s assets. For purposes of this definition, “book value” will be established on the basis of the latest consolidated financial statement the Corporation filed with the Securities and Exchange Commission before the date any 12-consecutive calendar month measurement period began. However, except as otherwise provided in this section, this element of this definition will be applied after ignoring:

[i] Any transfer of assets to a stockholder of the Corporation (determined immediately before the asset transfer), but only to the extent exchanged for or with respect to the Corporation’s stock;

[ii] Any transfer of assets to an entity, 50 percent or more of the total value or voting power of which is owned by one or more Group Members;

[iii] Any transfer of assets to any entity or “person” [including a “group” as contemplated by Exchange Act §§13(d)(3) and 14(d)(2)] that, immediately before the transfer, owns, directly or as a “beneficial owner” [as defined in Rule 13d-3 under the Exchange Act], 50 percent or more of the total value or voting power of the Corporation’s outstanding securities; or

[iv] Any transfer of assets to an entity, at least 50 percent or more of the total value or voting power of which, immediately before the transfer, is owned, directly or indirectly, by a person described in Section 2.03[1][c] of this definition.

[2] The following rules of application will be applied to this definition:

[a] For purposes of applying all parts of this definition, [i] Common Shares owned or acquired by the Executive or by any other entity or “person” [including a “group” as contemplated by Exchange Act §§13(d)(3) and 14(d)(2)] acting in concert with the Executive will be disregarded, [ii] any transfer of assets to the Executive or to any other entity or “person” [including a “group” as contemplated by Exchange Act §§13(d)(3) and 14(d)(2)] acting in concert with the Executive will be disregarded and [iii] the constructive ownership rules of Code §318(a) will be applied to determine stock ownership;

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[b] For purposes of applying Section 2.03[1][f], an entity’s or a person’s status (unless specifically indicated otherwise) will be determined immediately after the transfer of assets; and

[c] Any transfer of assets disregarded under Section 2.03[1][f][i] will not be ignored when applying that subsection if that transaction is part of a larger transaction or series of transactions that also involve the transfer of assets for cash or consideration other than Common Shares.

2.04 Code. The Internal Revenue Code of 1986, as amended, or any successor statute.

2.05 Common Shares. The Corporation’s shares of common stock, par value $0.01 per share, or any security of the Corporation issued in substitution, exchange or in place of these shares.

2.06 Confidential Information. Any and all information (other than information in the public domain) related to the Group’s business or that of any Group Member, including all processes, inventions, trade secrets, computer programs, engineering or technical data, drawings or designs, manufacturing techniques, information concerning pricing and pricing policies, marketing techniques, plans and forecasts, new product information, information concerning suppliers, methods and manner of operations, and information relating to the identity and location of all past, present and prospective customers.

2.07 Date of Termination. The date that the Executive incurs a Termination.

2.08 Disability. The Executive’s inability (established by an independent physician selected by the Board and reasonably acceptable to the Executive or to the Executive’s legal representative) due to illness, accident or otherwise to perform his duties, which is expected to be permanent or for an indefinite duration longer than one year.

2.09 Effective Period. The 36 consecutive calendar months beginning on the date a Change in Control occurs during the Term, even if that period extends beyond the Term.

2.10 Employer. The Group Member by which the Executive is directly employed on the date of any event, act or occurrence described in this Agreement, including execution of this Agreement. If, without incurring a Termination, the Executive becomes a common law employee of a Group Member other than the Employer, that Group Member will automatically become the Executive’s “Employer” under this Agreement and will be fully liable, as the Executive’s Employer, for all obligations arising under this Agreement during the period of that employment relationship, including the payment of any amount described in Section 5.00 that becomes due during the course of that employment relationship.

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2.11 Exchange Act. The Securities Exchange Act of 1934, as amended, or any successor statute.

2.12 Good Reason. For purposes of Section 4.05, any of the following to which the Executive has not consented in writing:

[1] Any breach of this Agreement of any nature whatsoever by or in behalf of the Group or any Group Member;

[2] A reduction in the Executive’s title, duties, responsibilities or status, as compared to either [a] the Executive’s title, duties, responsibilities or status as of the Restatement Effective Date or [b] any enhanced or increased title, duties, responsibilities or status to which the Executive accedes after the Restatement Effective Date;

[3] The assignment to the Executive of duties that are inconsistent with [a] the Executive’s office immediately before the Restatement Effective Date or [b] any more senior office to which the Executive is promoted after the Restatement Effective Date;

[4] During any calendar year ending after the Restatement Effective Date, a 10 percent (or larger) reduction (other than a reduction attributable to any Termination for death, Disability or Cause or for any period the Executive is temporarily absent from active employment) in the highest of [a] the Executive’s total cash compensation for the preceding calendar year or, if higher, [b] the Executive’s total cash compensation for the last calendar year ending before the Restatement Effective Date, but [c] in both cases, determined without regard to any amounts described in this Agreement;

[5] A requirement that the Executive relocate to a principal office or worksite (or accept indefinite assignment) to a location more than 50 miles distant from [a] the principal office or worksite to which the Executive was assigned as of the Restatement Effective Date or [b] any location to which the Executive agreed to be assigned after the Restatement Effective Date;

[6] The imposition on the Executive of business travel obligations substantially greater than the Executive’s business travel obligations during the 12-consecutive-calendar-month period ending before the Restatement Effective Date; provided that this subsection [6] shall be applied without regard to any special business travel obligations associated with activities relating to a Change in Control; or

[7] The Employer’s [a] failure to continue in effect any material fringe benefit or compensation plan, retirement or deferred compensation plan, life insurance plan, health and accident plan or disability plan in which the Executive is participating at the time of the Restatement Effective Date, [b] modification of any of the plans or programs just described that adversely affects the value of the Executive’s benefits under those plans, or [c] failure to provide the Executive with the same number of paid vacation days to which the Executive is or becomes entitled at or any time on or after the Restatement Effective Date under the terms of the Employer’s vacation policy or program. However, Good Reason will not arise under this subsection solely because [d] the Corporation or the Employer terminates or modifies any program on or after the Restatement Effective Date solely to comply with applicable law but only to the extent of the change required or [e] a plan or benefit program expires under self-executing terms contained in that plan or benefit program before the Restatement Effective Date.

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2.13 Group. The Corporation and any entity with whom the Corporation would be considered a single employer under Code §§414(b) and 414(c).

2.14 Group Member. Each entity that is a member of the Group.

2.15 Incumbent Director. Each person who was a member of the Board on the Effective Date and, after the Effective Date, each director whose election or nomination for election by the Corporation’s stockholders was approved by a vote of at least a majority of the then Incumbent Directors.

2.16 Notice of Payment. The written notice by which the Corporation apprises the Executive of [1] the amount of any payment due under this Agreement, [2] the reason that such amount is payable and [3] the basis on which that payment was calculated.

2.17 Notice of Termination. A written notice that describes in reasonable detail the facts and circumstances claimed to provide a basis for Termination.

2.18 Parties. The Corporation and the Executive.

2.19 Term. Initially, the period beginning on the Restatement Effective Date and ending on the first anniversary of the Restatement Effective Date (“Expiration Date”). Subject to Section 6.00, the Term will automatically be extended for successive one-year periods beginning on the Expiration Date and each anniversary thereof.

2.20 Termination. A “separation from service” with the Group within the meaning of Treasury Regulation §1.409A-1(h).

3.00 EXECUTIVE’S OBLIGATIONS

3.01 Confidential Information. Except as otherwise required by applicable law, the Executive expressly agrees to keep and maintain Confidential Information confidential and not, at any time during or subsequent to the Executive’s employment with any Group Member, to use any Confidential Information for the Executive’s own benefit or to divulge, disclose or communicate any Confidential Information to any person or entity in any manner except [1] to employees or agents of the Employer or of the Corporation that need the Confidential Information to perform their duties on behalf of any Group Member or [2] in the performance of the Executive’s duties to the Employer. The Executive also agrees to notify the Corporation promptly of any circumstance the Executive believes may legally compel the disclosure of Confidential Information and to give this notice before disclosing any Confidential Information.

3.02 Effect of Breach of Obligations. If the Executive breaches any obligation described in this Agreement:

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[1] If that breach occurs before a Change in Control, this Agreement will terminate as of the date of the breach, even if the fact of the breach becomes apparent at a later date;

[2] If that breach occurs on or after a Change in Control but before the Executive has Terminated, this Agreement will terminate as of the date of the breach, even if the fact of the breach becomes apparent at a later date and no amounts will be due under this Agreement; or

[3] If that breach occurs on or after a Change in Control and after the Executive Terminates, the Executive will repay any amounts paid under Section 5.01[2] of this Agreement plus interest calculated at the prime interest rate quoted in the Wall Street Journal, over the period beginning on the date of the payment to the Executive (or any beneficiary) under Section 5.01[2] of this Agreement and ending on the date of repayment.

4.00 EFFECT OF TERMINATION

4.01 Termination For Cause or Without Good Reason.

[1] The Employer may Terminate the Executive for Cause at any time by delivering to the Executive a Notice of Termination. The Executive may Terminate without Good Reason at any time by delivering to the Employer a Notice of Termination.

[2] As of the Date of Termination, [a] this Agreement will terminate and [b] no amounts will be paid or due under this Agreement at any time.

4.02 Termination Because of Death. Subject to Section 8.03, if the Executive dies, this Agreement will terminate as of the date the Executive dies and no amounts will be paid or due under this Agreement at any time.

4.03 Termination Because of Disability.

[1] After the Executive has been determined to be Disabled as provided in Section 2.08, the Employer may Terminate the Executive due to the Executive’s Disability by delivering to the Executive a Notice of Termination for Disability and the Executive may Terminate due to the Executive’s Disability by delivering to the Corporation a Notice of Termination for Disability.

[2] If the Executive’s employment Terminates due to the Executive’s Disability and the Date of Termination is within an Effective Period (whether or not the Executive’s absence began before or after the Effective Period began), then, as of the Date of Termination, [a] this Agreement will terminate and [b] the Executive will be entitled to receive an amount equal to:

[i] The amount described in Section 5.00, calculated on the basis of the compensation paid to the Executive before the absence began or, if higher, the amount the Executive was receiving during the period of absence; minus

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[ii] The value of:

[A] One half of the disability benefit payable under the Social Security Act of 1935, as amended;

[B] The amount by which the Executive’s employer-funded benefit under any retirement or deferred compensation plan [whether or not intended to comply with Code §401(a)] is enhanced by the Disability; and

[C] The value of any employer-funded disability income or other benefits the Executive is entitled to receive from any disability plan or program.

The value of these reductions:

[D] Will be calculated by applying the factors described in Section 5.02[4]; and

[E] Will be applied before application of Section 5.02[1] or [2].

4.04 Termination Without Cause.

[1] The Employer may Terminate the Executive without Cause for any reason by delivering to the Executive a Notice of Termination.

[2] The Corporation will pay or provide (or cause the Employer to pay or provide) to the Executive the payments and benefits described in Section 5.00 if the Executive’s employment is Terminated by the Employer without Cause and:

[a] the Date of Termination is within the period beginning six months before the beginning of an Effective Period and ending on the day before a Change in Control occurs; provided that such Change in Control also constitutes a “change in control event” within the meaning of Treasury Regulation §1.409A-3(i)(5) (“Section 409A Change in Control Event”); or

[b] the Date of Termination is within an Effective Period.

After any such payments and benefits have been paid or provided, this Agreement will terminate and no further amounts will be paid or due under this Agreement.

4.05 Termination for Good Reason.

[1] The Executive may Terminate for Good Reason by delivering to the Corporation a Notice of Termination for Good Reason specifying the basis upon which the Executive believes that Good Reason has arisen; provided that the Corporation does not cure such Good Reason event within 30 days after the Notice of Termination is delivered.

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[2] The Corporation will pay or provide (or cause the Employer to pay or provide) to the Executive the payments and benefits described in Section 5.00 if the Executive Terminates for Good Reason and:

[a] the Date of Termination is within the period beginning six months before the beginning of an Effective Period and ending on the day before a Change in Control occurs; provided that such Change in Control also constitutes a Section 409A Change in Control Event; or

[b] the Date of Termination is within an Effective Period.

After any such payments and benefits have been paid or provided, this Agreement will terminate and no further amounts will be paid or due under this Agreement.

5.00 CHANGE IN CONTROL PAYMENTS

5.01 Calculation of Change in Control Payments. Subject to the terms of this Agreement, if the Executive is Terminated under Section 4.03[2], 4.04 or 4.05, the Corporation (or the Employer) will:

[1] Continue to pay the Executive’s compensation and other benefits through the Date of Termination and also will pay the Executive the value of any unused vacation and compensation days determined under the Employer’s personnel policy. These amounts will be paid no later than 30 days after the Executive’s Date of Termination and will be based on the rate of compensation and value of benefits in effect before the Notice of Termination was delivered.

[2] Pay to the Executive an amount equal to the sum of:

[a] 299 percent of the Executive’s “base amount” as defined under Code §280G [whether or not the Change in Control generating benefits under this Agreement is a “change in control” as defined under Code §280G]; plus

[b] An additional amount equal to:

[i] The annual cash bonus paid to the Executive by all Group Members averaged over the three full fiscal years ending before the Date of Termination (or, if shorter, over the full period of the Executive’s employment by all Group Members); multiplied by

[ii] The number of days between the Executive’s Date of Termination and the last day of the Corporation’s last complete fiscal year ending before that Date of Termination; and divided by

[iii] 365 days.

Subject to Sections 5.02 and 5.03[4], the amount payable under this subsection [2] will be paid in separate, equal monthly payments over a twenty-four month period, beginning no more than 30 days after the Executive’s Date of Termination (or, if later, the date of the occurrence of the Change in Control). The first monthly payment under this subsection will be accompanied by a Notice of Payment.

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[3] For 36 months after the Executive’s Date of Termination, the Corporation also will maintain (or cause the Employer to maintain) in full force and effect, for the Executive’s continued benefit (and that of all family members and other dependents who were enrolled in the programs on the Executive’s Date of Termination) all life, medical and dental insurance programs in which the Executive (or members of the Executive’s family or other dependents) was participating or was covered immediately before the Executive’s Date of Termination. If the terms of any of the programs just described do not allow the continued participation described in the preceding sentence, the Corporation (or the Employer) will [a] provide benefits that are substantially similar (including eligibility conditions, conditions on benefits, the value of benefits and the scope of coverage) to those provided by the life, medical and dental insurance programs in which the Executive, members of the Executive’s family and dependents were participating immediately before the Executive’s Date of Termination and [b] ensure that any eligibility or other conditions on benefits under these programs, including deductibles and co-payments, will be administered by applying the Executive’s experience under any predecessor program in which the Executive (or members of the Executive’s family and dependents) were participating before Termination. With respect to this Section 5.01[3], any benefits or payments relating to medical and dental insurance that are provided after completion of the applicable continuation period permitted under the Consolidated Omnibus Budget Reconciliation Act, as amended, and any benefits or payments relating to life insurance shall be subject to the following: [i] the benefits or payments provided during any taxable year of the Executive may not affect the benefits or payments to be provided to the Executive in any other taxable year; [ii] reimbursement of any eligible expense must be made on or before the last day of the Executive’s taxable year following the taxable year in which the expense was incurred; and [iii] the right to such benefits or payments is not subject to liquidation or exchange for another benefit or payment.

In addition to the payments and benefits described above, the Executive shall receive any other change in control benefits to which the Executive is entitled under any other plan, program or agreement with any Group Member. Such benefits shall be provided in accordance with the terms and conditions of the applicable plan, program or agreement.

5.02 Effect of Code §280G. If the sum of the amounts described in Section 5.01 and those promised under any other plan, program or agreement between the Executive and any Group Member constitute “excess parachute payments” as defined in Code §280G(b)(1), in the Corporation’s sole discretion, the Corporation (or the Employer) will either:

[1] Reimburse the Executive for the amount of any excise tax due under Code §4999, if this procedure provides the Executive with an after-tax amount that is greater than the after-tax amount produced under Section 5.02[2]; or

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[2] Reduce the Executive’s payments under this Agreement so that the Executive’s total payments under this and any all other agreements will be $1.00 less than the amount that would trigger the excise tax under Code §4999 if this procedure provides the Executive with an after-tax amount that is greater than the after-tax amount produced under Section 5.02[1].

[3] Any reimbursement by the Corporation pursuant to Section 5.02[1] shall be made no later than the end of the taxable year of the Executive next following the taxable year of the Executive in which the Executive remits the related taxes. Any reduction pursuant to Section 5.02[2] shall be made in accordance with Code §409A and the Treasury Regulations promulgated thereunder.

[4] The value of all amounts due under this Agreement will be established by a nationally recognized certified public accounting firm designated by the Corporation and by applying principles, assumptions and procedures consistent with Code §280G.

5.03 Conditions Affecting Payments.

[1] Except as expressly provided in this Agreement, the Executive’s right to receive the payments described in this Agreement will not decrease the amount of, or otherwise adversely affect, any other benefits payable to the Executive under any plan, agreement or arrangement between the Executive and any Group Member.

[2] The Executive is not required to mitigate the amount of any payment described in this Agreement by seeking other employment or otherwise, nor will the amount of any payment or benefit provided for in this Agreement be reduced by any compensation the Executive earns in any capacity after Termination or, except as provided in Sections 4.03 and 8.04, by reason of the Executive’s receipt of or right to receive any retirement or other benefits on or after Termination.

[3] The amount of any payment made under this Agreement will be reduced by amounts the Employer is required to withhold with respect to any income, wage or employment taxes imposed on the payment.

[4] Notwithstanding anything in this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of Treasury Regulation §1.409A-1(i) and as determined under the Corporation’s policy for determining specified employees) on the Date of Termination and the Executive is entitled to a payment and/or a benefit under this Agreement that is required to be delayed pursuant to Code §409A(a)(2)(B)(i), then such payment or benefit, as the case may be, shall not be paid or provided (or begin to be paid or provided) until the first business day of the seventh month following the Date of Termination or, if earlier, the date of the Executive’s death. The first payment that can be made to the Executive following such postponement period shall include the cumulative amount of any payments or benefits that could not be paid or provided during such postponement period due to the application of Code §409A(a)(2)(B)(i).

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5.04 Limit on Number of Changes in Control. Regardless of any provision of this Agreement, if more than one Change in Control (whether or not related) occurs during the Term, the total amount payable under this Agreement will be the largest amount (after application of Section 5.02[1] or [2]) calculated with respect to any single change in control occurring during the Effective Period.

6.00 AMENDMENT AND TERMINATION

6.01 Amendment. This Agreement may be amended at any time by written agreement between the Executive and the Corporation.

6.02 Termination. This Agreement will terminate on the earliest of the following to occur:

[1] Except to the extent necessary to implement the eligibility provisions of Sections 4.04[2][a] and 4.05[2][a] (dealing with a Termination without Cause or a Termination for Good Reason within the period beginning six months before a Change in Control), the Executive’s employment with all Group Members is Terminated before a Change in Control;

[2] The Corporation and the Executive mutually agree, in writing, to terminate this Agreement, whether or not it is replaced with a similar agreement;

[3] The Corporation notifies the Executive, in writing, that the Agreement is to terminate at the end of its then current Term. To be effective, however, this written notice [a] must be given at least 60 days prior to the end of the then current Term but [b] may never be effective [i] during an Effective Period or [ii] at any time after the Corporation learns that activities have begun that, if completed, would cause a Change in Control, although the notice may be given if those activities end without generating a Change in Control;

[4] All payments due under this Agreement have been fully paid; or

[5] As provided in Section 4.00.

7.00 EQUITABLE RELIEF/DISPUTE RESOLUTION

7.01 Uniqueness of Obligations. The Executive’s obligations described in this Agreement are of a special and unique character which gives them a peculiar value to the Group and the Group cannot be reasonably or adequately compensated in damages in an action at law if the Executive breaches those obligations. The Executive therefore expressly agrees that, in addition to any other rights or remedies that the Corporation, the Employer or the Group may have, the Corporation, the Employer and the Group will be entitled to injunctive and other equitable relief in the form of preliminary and permanent injunctions without bond or other security if the Executive actually breaches (or threatens to breach) any obligation under this Agreement.

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7.02 Initial Resolution of Disputes Affecting Payment Amount.

[1] The Executive may request the Corporation to recalculate the amount of payments due under this Agreement. That request must [a] be filed in writing no later than 30 days after the Executive receives the Notice of Payment and [b] specify the basis upon which the Executive believes that an additional amount is due. Any request for recalculation that does not comply with both requirements will be ineffective.

[2] Within 30 days of receiving a request that complies with Section 7.02[1], the Corporation will notify the Executive of any changes to its calculations and the effect of any changes on the amount payable to the Executive. If the Corporation does not deliver this information to the Executive within this 30-day period, the Executive may regard the request as having been denied.

[3] The Executive expressly waives any right to proceed under Section 7.03 to dispute the calculation of the amount payable under this Agreement unless and until the administrative remedies described in this Section 7.02 are fully exhausted.

7.03 Arbitration. Any [a] disagreement concerning the calculation of any payment due under this Agreement that is not resolved after utilizing the procedures described in Section 7.02, [b] breach of any term of this Agreement or [c] other dispute or controversy arising out of or relating to this Agreement, including the basis on which the Executive is Terminated, will be resolved by arbitration in accordance with the rules of the American Arbitration Association. The award of the arbitrator will be final, conclusive and nonappealable and judgment upon the award rendered by the arbitrator may be entered in any court having competent jurisdiction. The arbitrator must be an arbitrator qualified to serve in accordance with the rules of the American Arbitration Association and one who is approved by the Corporation and the Executive. If the Executive and the Corporation fail to agree on an arbitrator, each must designate a person qualified to serve as an arbitrator in accordance with the rules of the American Arbitration Association and these persons will select the arbitrator from among those persons qualified to serve in accordance with the rules of the American Arbitration Association. Any arbitration relating to this Agreement will be held in the city in which the Executive’s last principal place of employment with a Group Member before the Executive’s Date of Termination is or was located or another place the Parties mutually select immediately before the arbitration.

7.04 Costs.

[1] The Corporation will bear all reasonable costs associated with any dispute arising under this Agreement, including reasonable accounting and legal fees incurred by the Executive through any proceeding described in Section 7.02 or 7.03, subject to the following requirements: [a] such costs are incurred during the Executive’s remaining lifetime; [b] any reimbursement or payment of such costs shall be made on or before the last day of the Executive’s taxable year following the Executive’s taxable year in which the costs were incurred; provided, that the Corporation shall not be obligated to reimburse or pay any such costs for which the Executive fails to submit an invoice at least 10 business days before the end of the Executive’s taxable year following the Executive’s taxable year in which the costs were incurred; [c] the amount of the costs eligible for payment or reimbursement during any taxable year of the Executive may not affect the costs eligible for reimbursement or payment in any other taxable year; and [d] the right to payment or reimbursement of such costs may not be subject to liquidation or exchange for any other benefit.

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[2] Notwithstanding the foregoing, no amounts will be paid under this subsection to the extent that those payments are “excess parachute payments.”

7.05 Payment During Dispute Resolution Period. If otherwise due, the Corporation may not defer (or cause the Employer to defer) payment of any amount that is not being contested under Section 7.02 or 7.03.

8.00 MISCELLANEOUS

8.01 Security. At any time during the Term, the Corporation may provide (or cause the Employer to provide) security for payment of the amounts and benefits described in Section 5.00. This security may include one or more of [1] a stand-by letter of credit issued by a reputable financial institution, [2] an irrevocable grantor trust (the “Trust”) established on terms the Corporation believes to be appropriate, including a ruling from the Internal Revenue Service (or opinion of counsel satisfactory to the Corporation), to the effect that any funds held by the Trust will be includible in the Executive’s gross income only for the taxable year or years paid to the Executive under the terms of the Trust’s related trust agreement or [3] any other form of security the Corporation believes is appropriate.

8.02 Nonassignment. The right of the Executive or any other person to receive any amount under this Agreement may not be assigned, transferred, pledged or encumbered except by will or by applicable laws of descent and distribution. Any attempt to assign, transfer, pledge or encumber any amount that is or may be receivable under this Agreement will be null and void and of no legal effect.

8.03 Successors to the Executive. Subject to Section 8.02, this Agreement inures to the benefit of and may be enforced by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

8.04 Effect of Employment Agreement. If, at any time during the period beginning six months before any Effective Period and ending on the last day of the same Effective Period, the Executive is employed by an Employer pursuant to an employment agreement (“Employment Agreement”), the following rules of application will be applied:

[1] Subject to Section 8.04[2], if a term is defined in this Agreement and in the Employment Agreement and those definitions are not identical, [a] the definition contained in this Agreement will supersede the definition contained in the Employment Agreement for purposes of applying that term under this Agreement and [b] the definition contained in the Employment Agreement will supersede the definition contained in this Agreement for purposes of applying that term under the Employment Agreement;

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[2] If, prior to a Change in Control that also constitutes a Section 409A Change in Control Event, the Executive’s employment with all Group Members is Terminated by the Employer without Cause (as defined in this Agreement) or if the Executive Terminates with Good Reason (as defined in this Agreement), this Agreement will not Terminate until six months after the Executive’s Termination. If a Change in Control that also constitutes a Section 409A Change in Control Event occurs during this six-month period, the Corporation will pay or provide (or cause the Employer to pay or provide) to the Executive the amounts and benefits described in Section 5.00 (adjusted as provided in Section 8.04[3]). After those amounts and benefits have been paid and provided, this Agreement will terminate and no further amounts will be paid or due under this Agreement. If a Change in Control that also constitutes a Section 409A Change in Control Event does not occur during this six-month period, this Agreement will terminate at the end of that six-month period and no amount will be due under it (although amounts due under the Employment Agreement on account of that termination of employment will be unaffected by the termination of this Agreement); and

[3] If an event or a series of related events entitle the Executive to payments under both the Employment Agreement and this Agreement, the Executive will be entitled to the payments due under this Agreement reduced by the amounts (if any) received under the Employment Agreement before the payments become due under this Agreement and no further payments will be due under the Employment Agreement.

8.05 Notices. All notices and other communications provided for in this Agreement must be written and will be deemed to have been given when deposited with a reputable delivery service or in United States registered mail, return receipt requested, postage prepaid. Also:

[1] All notices must be directed to the addresses shown on the last page of this Agreement.

[2] Notices and other communications to the Corporation and the Employer will not be deemed to have been given unless they are directed to the attention of the Corporation’s Chief Executive Officer and copies are sent to the Corporation’s Secretary.

[3] Neither Party will be required to use any address other than that shown on the last page of this Agreement unless notified of a change in the other Party’s address. Any change in either Party’s address must be given in writing to the other Party and will be effective only upon receipt.

8.06 Complete Agreement. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter of this Agreement have been made by either Party that are not set forth expressly in this Agreement.

8.07 Applicable Law. The validity, interpretation, construction and performance of this Agreement will be governed by the laws (but not the law of conflicts of laws) of the State of Ohio.

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

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement to be effective as of the date and year first above written.

 

 

 

 

 

 

BOB EVANS FARMS, INC.
 

 

 

By:  

/s/ Donald J. Radkoski

 

 

 

Title:  

Chief Financial Officer, Treasurer and
Assistant Secretary

 

 

 

Address:

 

 

 

 

 

 

3776 South High Street
Columbus, Ohio 43207 

 

 

 

 

 

 

 

 

 

 

STEVEN A. DAVIS  

 

 

  

/s/ Steven A. Davis

 

 

 

Address:

 

 

 

 

 

 

3776 South High Street
Columbus, Ohio 43207 

 

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Exhibit 10.1

CHANGE IN CONTROL AGREEMENT

This Agreement between Steven A. Davis (“Executive”) and Bob Evans Farms, Inc., a Delaware corporation (the “Corporation”), is effective May 1, 2006 (“Effective Date”).

1.00 PURPOSE

The Corporation believes that [1] a sound and stable management team is essential to promoting the best interests of the Group and the Corporation’s stockholders, [2] as is the case with many publicly held corporations, a Change in Control may materially alter the Group’s structure and adversely affect managers’ employment security, [3] appropriate steps should be taken to enable certain managers, including the Executive, to devote their full and continued attention to the Group’s business affairs during the crucial (and often tumultuous) period preceding and immediately following a Change in Control and [4] subject to the terms of this Agreement, these objectives can best be met by providing the Executive with the severance payments described in this Agreement.

2.00 DEFINITIONS

When used in this Agreement, the following terms will have the meanings given to them in this section unless another meaning is expressly provided elsewhere in this Agreement. When applying these definitions, the form of any term or word will include any of its other forms.

2.01 Board. The Corporation’s board of directors.

2.02 Cause. The Executive’s [1] willful and continued refusal to substantially perform assigned duties (other than any refusal resulting from incapacity due to physical or mental illness), [2] willful engagement in gross misconduct materially and demonstrably injurious to any Group Member or [3] breach of any term of this Agreement. However, [4] Cause will not arise [a] solely because the Executive is absent from active employment during periods of vacation, consistent with the Employer’s applicable vacation policy, or other period of absence initiated by the Executive and approved by the Employer or [b] due to any event that constitutes Good Reason.

2.03 Change in Control.

[1] Subject to the rules of application described in Section 2.03[2], the date on which the earliest of the following events occurs:

[a] After the Effective Date, an event that would be required to be reported as a change in control for purposes of the Exchange Act.

[b] During any 12-consecutive-calendar-month period ending after the Effective Date, there is a change in a majority of the Incumbent Directors for any reason other than death or disability as reasonably established by the Corporation on the basis of medical and other information known (or made available) to it.

 


 

[c] After the Effective Date, any entity or “person,” [including a “group” as contemplated by Exchange Acts §§13(d)(3) and 14(d)(2)] is or becomes the “beneficial owner” [as defined in Rule 13d-3 under the Exchange Act], through a tender offer or otherwise, of Common Shares representing 50 percent or more of the combined voting power of the Corporation’s then outstanding Common Shares.

[d] During any 12-consecutive-calendar-month period ending after the Effective Date, any entity or “person,” [including a “group” as contemplated by Exchange Act §§13(d)(3) and 14(d)(2)] acquires, either directly or as a “beneficial owner” [as defined in Rule 13d-3 under the Exchange Act], through a tender offer or otherwise, Common Shares representing more than 20 percent of the combined voting power of the Corporation’s then outstanding Common Shares. However, this element of this definition will be applied without regard to the effect of any redemption of Common Shares by the Corporation or the acquisition of Common Shares by any Group Member and after ignoring any Common Shares acquired:

[i] Before the beginning of any 12-consecutive-calendar-month measurement period;

[ii] By or through an employee benefit plan [whether or not intended to comply with Code §401(a) and whether or not the Executive participates in that plan] maintained by any Group Member;

[iii] Directly, through an equity compensation plan maintained by any Group Member;

[iv] Directly, through inheritance, gift, bequest or by operation of law on the death of an individual; or

[v] By any entity or “person” [including a “group” as contemplated by Exchange Act §§13(d)(3) and 14(d)(2)] with respect to which that acquirer has filed SEC Schedule 13G indicating that the Common Shares were not acquired and are not held for the purpose of or with the effect of changing or influencing, directly or indirectly, the Corporation’s management or policies, unless and until that entity or person indicates that its intent has changed by filing SEC Schedule 13D.

[e] After the Effective Date, the Corporation’s stockholders approve a definitive agreement to merge or combine the Corporation with or into another entity, a majority of the directors of which were not Incumbent Directors immediately before the merger and in which the Corporation’s stockholders will hold less than 50 percent of the voting power of the surviving entity. When applying this element of this definition:

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[i] Stockholders will be determined immediately before and immediately after the merger or combination; and

[ii] The Common Shares owned before the transaction by the entity with which the Corporation merges or combines will be disregarded for all purposes.

[f] Within any 12-consecutive-calendar-month period ending after the Effective Date, any entity or “person” [including a “group” as contemplated by Exchange Act §§13(d)(3) and 14(d)(2) and Code §280G] acquires, either directly or as a “beneficial owner” [as defined in Rule 13d-3 under the Exchange Act] of another entity or person, Group assets having a total gross fair market value equal to or greater than 50 percent of the book value of the Group’s assets. For purposes of this definition, “book value” will be established on the basis of the latest consolidated financial statement the Corporation filed with the Securities and Exchange Commission before the date any 12-consecutive calendar month measurement period began.. However, except as otherwise provided in this section, this element of this definition will be applied after ignoring:

[i] Any transfer of assets to a stockholder of the Corporation (determined immediately before the asset transfer), but only to the extent exchanged for or with respect to the Corporation’s stock;

[ii] Any transfer of assets to an entity, 50 percent or more of the total value or voting power of which is owned by one or more Group Members;

[iii] Any transfer of assets to any entity or “person” [including a “group” as contemplated by Exchange Act §§13(d)(3) and 14(d)(2)] that, immediately before the transfer, owns, directly or as a “beneficial owner” [as defined in Rule 13d-3 under the Exchange Act], 50 percent or more of the total value or voting power of the Corporation’s outstanding securities; or

[iv] Any transfer of assets to an entity, at least 50 percent or more of the total value or voting power of which, immediately before the transfer, is owned, directly or indirectly, by a person described in Section 2.03[1][c] of this definition.

[2] The following rules of application will be applied to this definition:

[a] For purposes of applying all parts of this definition, [i] Common Shares owned or acquired by the Executive or by any other entity or “person” [including a “group” as contemplated by Exchange Act §§13(d)(3) and 14(d)(2)] acting in concert with the Executive will be disregarded, [ii] any transfer of assets to the Executive or to any other entity or “person” [including a “group” as contemplated by Exchange Act §§13(d)(3) and 14(d)(2)] acting in concert with the Executive

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will be disregarded and [iii] the constructive ownership rules of Code §318(a) will be applied to determine stock ownership;

[b] For purposes of applying Section 2.03[1][f], an entity’s or a person’s status (unless specifically indicated otherwise) will be determined immediately after the transfer of assets; and

[c] Any transfer of assets disregarded under Section 2.03[1][f][i] will not be ignored when applying that subsection if that transaction is part of a larger transaction or series of transactions that also involve the transfer of assets for cash or consideration other than Common Shares.

2.04 Code. The Internal Revenue Code of 1986, as amended, or any successor statute.

2.05 Common Shares. The Corporation’s shares of Common Stock or any security issued in substitution, exchange or in place of the Corporation’s Common Stock.

2.06 Confidential Information. Any and all information (other than information in the public domain) related to the Group’s business or that of any Group Member, including all processes, inventions, trade secrets, computer programs, engineering or technical data, drawings or designs, manufacturing techniques, information concerning pricing and pricing policies, marketing techniques, plans and forecasts, new product information, information concerning suppliers, methods and manner of operations, and information relating to the identity and location of all past, present and prospective customers.

2.07 Date of Termination. Except as otherwise provided in Section 4.00:

[1] If the Executive is Terminated because of Retirement or for Cause, the date specified in the Notice of Termination;

[2] If the Executive is Terminated because of Disability, the date determined under Section 4.04[1];

[3] If the Executive dies, the date of death;

[4] If the Executive is Terminated for Good Reason, the date specified in the Notice of Termination;

[5] If the Executive is Terminated for any reason other than Retirement, Cause, Disability, death or Good Reason, the date on which a Notice of Termination is given; or

[6] If the Employer Terminates the Executive without giving a Notice of Termination, the date on which that Termination is effective.

However, if either Party utilizes the procedures described in Section 7.03 to dispute the basis on which the Executive’s employment is being terminated, the Date of Termination will be no later

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than the last day of the Executive’s active employment as a common law employee of all Group Members.

2.08 Disability. An incapacity due to physical or mental illness that has prevented the Executive from discharging assigned duties on a full-time basis for at least the lesser of [1] 26 consecutive weeks or [2] the period between the date the incapacity arose and the last day but one of the Effective Period.

2.09 Effective Period. The 36 consecutive calendar months beginning after a Change in Control occurring during the Term, even if that period extends beyond the Term.

2.10 Employer. The Group Member by which the Executive is directly employed on the date of any event, act or occurrence described in this Agreement, including execution of this Agreement. If, without incurring a Termination, the Executive becomes a common law employee of a Group Member other than the Employer, that Group Member will automatically become the Executive’s “Employer” under this Agreement and will be fully liable, as the Executive’s Employer, for all obligations arising under this Agreement during the period of that employment relationship, including the payment of any amount described in Section 5.00 that becomes due during the course of that employment relationship.

2.11 Exchange Act. The Securities Exchange Act of 1934, as amended, or any successor statute.

2.12 Good Reason. For purposes of Section 4.06, any of the following to which the Executive has not consented in writing:

[1] At any time after a Change in Control, any breach of this Agreement of any nature whatsoever by or in behalf of the Group or any Group Member;

[2] At any time after a Change in Control, a reduction in the Executive’s title, duties, responsibilities or status, as compared to either [a] the Executive’s title, duties, responsibilities or status immediately before a Change in Control or [b] any enhanced or increased title, duties, responsibilities or status to which the Executive accedes after the Change in Control;

[3] At any time after a Change in Control, the assignment to the Executive of duties that are inconsistent with [a] the Executive’s office immediately before the date of a Change in Control or [b] any more senior office to which the Executive is promoted after a Change in Control;

[4] During any calendar year ending after a Change in Control, a 10 percent (or larger) reduction (other than a reduction attributable to any Termination for death, Disability or Cause or for any period the Executive is temporarily absent from active employment) in the highest of [a] the Executive’s total cash compensation for the preceding calendar year or, if higher, [b] the Executive’s total cash compensation for the

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last calendar year ending before the Change in Control but [c] in both cases, determined without regard to any amounts described in this Agreement;

[5] At any time after a Change in Control, a requirement that the Executive relocate to a principal office or worksite (or accept indefinite assignment) to a location more than 50 miles distant from [a] the principal office or worksite to which the Executive was assigned immediately before a Change in Control or [b] any location to which the Executive agreed to be assigned after a Change in Control;

[6] At any time after a Change in Control, the imposition on the Executive of business travel obligations substantially greater than the Executive’s business travel obligations during the 12-consecutive-calendar-month period ending before the Change in Control but determined without regard to any special business travel obligations associated with activities relating to the Change in Control;

[7] At any time after a Change in Control, the Employer’s [a] failure to continue in effect any material fringe benefit or compensation plan, retirement or deferred compensation plan, life insurance plan, health and accident plan or disability plan in which the Executive is participating at the time of a Change in Control, [b] modification of any of the plans or programs just described that adversely affects the value of the Executive’s benefits under those plans, or [c] failure to provide the Executive, after a Change in Control, with the same number of paid vacation days to which the Executive is or becomes entitled at or anytime on or after a Change in Control under the terms of the Employer’s vacation policy or program. However, Good Reason will not arise under this subsection solely because [d] the Corporation or the Employer terminates or modifies any program after a Change in Control solely to comply with applicable law but only to the extent of the change required or [e] a plan or benefit program expires under self-executing terms contained in that plan or benefit program before the Change in Control; or

[8] The Employer fails to deliver a Notice of Termination to the Executive within 30 days after the Executive becomes Disabled.

2.13 Group. The Employer, the Corporation and any other entity to which either is related through common ownership as defined in Code §1504.

2.14 Group Member. Each entity that is a member of the Group.

2.15 Incumbent Director. Each person who was a member of the Board on the Effective Date and, after the Effective Date, each director whose election or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the then Incumbent Directors.

2.16 Notice of Payment. The written notice by which the Corporation apprises the Executive of [1] the amount of any payment due under this Agreement, [2] the reason that amount is payable and [3] the basis on which that payment was calculated.

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2.17 Notice of Termination. A written notice that describes in reasonable detail the facts and circumstances claimed to provide a basis for Termination.

2.18 Parties. The Corporation and the Executive.

2.19 Retirement. The Executive’s Termination in accordance with [1] the Employer’s normal retirement policy in effect on the date of a Change in Control and which is generally applicable to its salaried employees or [2] in accordance with any individual retirement arrangement agreed upon by the Parties.

2.20 Retirement Age. The normal or mandatory retirement age specified in any of the policies or arrangements described in Section 2.19.

2.21 Term. Initially, the period beginning on the Effective Date and ending midnight, April 30, 2007 (“Termination Date”). Subject to Section 6.00, the Term will automatically be extended for successive one-year periods beginning on the Termination Date and anniversaries of each Termination Date.

2.22 Termination. Termination of the common law employee-employer relationship between the Executive and all Group Members for any reason, whether or not the Executive subsequently becomes a consultant or adviser to any Group Member or serves as a member of the board of directors of any Group Member. However, a Termination will not be deemed to have occurred [1] solely because the Executive’s Employer ceases to be a Group Member and the Executive continues to be employed by that former Group Member or [2] subject to Section 4.06, if the Executive’s common law employment relationship is transferred between Group Members without interruption.

3.00 EXECUTIVE’S OBLIGATIONS

3.01 Services During Certain Events. If any “person” (as used in Section 2.03[1][c]) initiates a tender or exchange offer, distributes proxy materials to the Corporation’s stockholders or takes other steps to effect, or that may result in, a Change in Control, the Executive agrees not to Terminate voluntarily during the pendency of that activity other than by reason of Retirement and to continue to serve as a full-time employee of the Employer until those efforts are abandoned, that activity is terminated or until a Change in Control has occurred.

3.02 Confidential Information. Except as otherwise required by applicable law, Executive expressly agrees to keep and maintain Confidential Information confidential and not, at any time during or subsequent to the Executive’s employment with any Group Member, to use any Confidential Information for Executive’s own benefit or to divulge, disclose or communicate any Confidential Information to any person or entity in any manner except [1] to employees or agents of the Employer or of the Corporation that need the Confidential Information to perform their duties on behalf of any Group Member or [2] in the performance of Executive’s duties to the Employer. Executive also agrees to notify the Corporation promptly of any circumstance Executive believes may legally compel the disclosure of Confidential Information and to give this notice before disclosing any Confidential Information.

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3.03 Effect of Breach of Obligations. If the Executive breaches any obligation described in this Agreement:

[1] If that breach occurs before a Change in Control, this Agreement will terminate as of the date of the breach, even if the fact of the breach becomes apparent at a later date;

[2] If that breach occurs after a Change in Control but before the Executive has Terminated, this Agreement will terminate as of the date of the breach, even if the fact of the breach becomes apparent at a later date and no amounts will be due under this Agreement; or

[3] If that breach occurs after a Change in Control and after the Executive Terminates, the Executive will repay any amounts paid under this Agreement plus interest calculated at the prime interest rate quoted in the Wall Street Journal, over the period beginning on the date of the payment to the Executive (or any beneficiary under this Agreement and ending on the date of repayment.

4.00 COMPENSATION PAID IF EXECUTIVE TERMINATES AFTER A CHANGE IN CONTROL

4.01 Termination For Cause.

[1] The Employer may Terminate the Executive for Cause at any time by delivering to the Executive a Notice of Termination specifying the effective date of the Termination (which may not be earlier than the date the Notice of Termination is given) and the basis upon which the Employer believes that it has Cause to Terminate the Executive.

[2] As of the Date of Termination specified in the Notice of Termination, [a] the Executive’s employment will end, [b] this Agreement will terminate and [c] no amounts will be paid or due under this Agreement at any time.

4.02 Termination Because of Death. Subject to Section 8.03, if the Executive dies, this Agreement will terminate as of the date the Executive dies and no amounts will be paid or due under this Agreement at any time.

4.03 Termination After Retirement Age. If the Executive Terminates after Retirement Age for any reason, this Agreement will terminate as of the date specified in the Notice of Termination (which may not be earlier than the Executive’s Retirement Age) and no amounts will be paid or due under this Agreement at any time.

4.04 Termination Because of Disability.

[1] The Employer may Terminate the Executive at any time after the Executive has become Disabled but only if it delivers to the Executive a Notice of Termination specifying the effective Date of Termination, which may be [a] no earlier than 30 days after this Notice of Termination is delivered or [b] no later than the last day but one of the Effective Period during which the Disability began.

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[2] If the Executive does not return to full-time active employment before the Date of Termination specified in the Notice of Termination and if the specified Date of Termination is within an Effective Period (whether or not the Executive’s absence began before or after the Effective Period began) or if the Executive Terminates for Good Reason (as defined in Section 2.12[8]), [a] the Executive’s employment will Terminate as of the Date of Termination specified in the Notice of Termination, [b] this Agreement will terminate and [c] the Executive will receive an amount equal to:

[i] The amount described in Section 5.00, calculated on the basis of the compensation paid to the Executive before the absence began or, if higher, the amount the Executive was receiving during the period of absence; minus

[ii] The value of:

[A] One half of the disability benefit payable under the Social Security Act;

[B] The amount by which the Executive’s employer-funded benefit under any retirement or deferred compensation plan [whether or not intended to comply with Code §401(a)] is enhanced by the Disability; and

[C] The value of any employer-funded disability income or other benefits the Executive is entitled to receive from any disability plan or program.

The value of these reductions:

[D] Will be calculated by applying the factors described in Section 5.02[5]; and

[E]Will be applied before application of Section 5.02[1] or [2].

4.05 Termination Without Cause.

[1] The Employer may Terminate the Executive without Cause for any reason by delivering to the Executive a Notice of Termination that specifies the Date of Termination, which may not be earlier than the date the Notice of Termination is given.

[2] If [a] the Date of Termination specified in the Notice of Termination is within the period beginning six months before the beginning of an Effective Period and ending on the last day of the same Effective Period and [b] the Executive’s employment is not being Terminated due to death, Disability or Cause, [c] the Corporation will pay (or cause the Employer to pay) to the Executive the amount described in Section 5.00. After those amounts have been paid, this Agreement will terminate and no further amounts will be paid or due under this Agreement.

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4.06 Termination for Good Reason.

[1] The Executive may Terminate for Good Reason after a Change in Control by delivering to the Corporation a Notice of Termination for Good Reason (other than Good Reason as defined in Section 2.12[8]) specifying the Date of Termination (which may not be earlier than the date the Notice of Termination is given) and the basis upon which the Executive believes that Good Reason has arisen.

[2] If [a] the Date of Termination specified in the Notice of Termination is within the period beginning six months before the beginning of an Effective Period and ending on the last day of the same Effective Period and [b] within 30 days after the Date of Termination, the Employer does not cure the Good Reason event described in the Notice of Termination, [c] the Corporation will pay (or cause the Employer to pay) to the Executive the amount described in Section 5.00. After those amounts have been paid, this Agreement will terminate and no further amounts will be paid or due under this Agreement.

5.00 CHANGE IN CONTROL PAYMENTS

5.01 Calculation of Change in Control Payments. Subject to the terms of this Agreement, if the Executive is Terminated under Section 4.04, 4.05 or 4.06, the Corporation (or the Employer) will:

[1] Continue to pay the Executive’s compensation and other benefits through the Date of Termination and also will pay the Executive the value of any unused vacation and compensation days determined under the Employer’s personnel policy. These amounts will be paid no later than 30 days after the Executive’s Date of Termination and will be based on the rate of compensation and value of benefits in effect before the Notice of Termination was delivered.

[2] Pay the Executive a lump sum equal to the amount described in this subsection. This payment will be accompanied by a Notice of Payment and, subject to Section 5.02, made no more than 30 days after the Executive’s Date of Termination. The amount payable under this subsection will be the sum of:

[a] 299 percent of the Executive’s “base amount” as defined under Code §280G [whether or not the Change in Control generating benefits under this Agreement is a “change in control” as defined under Code §280G]; plus

[b] An additional amount equal to:

[i] The cash bonus paid to the Executive by all Group Members averaged over the three full fiscal years ending before the Date of Termination (or, if shorter, over the full period of the Executive’s employment by all Group Members); multiplied by

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[ii] The number of days between the Executive’s Date of Termination and the last day of the Corporation’s last complete fiscal year ending before that Date of Termination; and divided by

[iii] 365 days.

[c] Any other change in control benefit to which the Executive is entitled under any other plan, program or agreement with any Group Member.

[3] For 36 months after the Executive’s Date of Termination, the Corporation also will maintain (or cause the Employer to maintain) in full force and effect, for the Executive’s continued benefit (and that of all family members and other dependents who were enrolled in the programs on the Executive’s Date of Termination) all life, medical and dental insurance programs in which the Executive (or members of the Executive’s family or other dependents) was participating or was covered immediately before the Executive’s Date of Termination. If the terms of any of the programs just described do not allow the continued participation described in the preceding sentence, the Corporation (or the Employer) will [a] provide benefits that are substantially similar (including eligibility conditions, conditions on benefits, the value of benefits and the scope of coverage) to those provided by the life, medical and dental insurance programs in which the Executive, members of the Executive’s family and dependents were participating immediately before the Executive’s Date of Termination and [b] ensure that any eligibility or other conditions on benefits under these programs, including deductibles and copayments, will be administered by applying the Executive’s experience under any predecessor program in which the Executive (or members of the Executive’s family and dependents) were participating before Termination.

5.02 Effect of Code §280G. If the sum of the amounts described in Section 5.01 and those promised under any other plan, program or agreement between the Executive and any Group Member constitute “excess parachute payments” as defined in Code §280G(b)(1), the Corporation (or the Employer) will either:

[1] Reimburse the Executive for the amount of any excise tax due under Code §4999, if this procedure provides the Executive with an after-tax amount that is larger than the after-tax amount produced under Section 5.02[2]; or

[2] Reduce the Executive’s payments under this Agreement so that the Executive’s total “parachute payment” as defined in Code §280G(b)(2)(A) under this and any all other agreements will be $1.00 less than the amount that would be an “excess parachute payment” if this procedure provides the Executive with an after-tax amount that is larger than the after-tax amount produced under Section 5.02[1].

[3] If Section 5.02[2] is to be applied, the Executive may designate the payments or type of payments that will be reduced (and the order in which that reduction will be applied) to ensure that the total amounts paid will not be an “excess parachute payment.” This information must be returned, in writing, within 30 days of the date of the Notice of

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Payment. If the Corporation does not receive written instructions within that 30-day period, all payments will be reduced prorata. All payments under this Agreement that are subject to Section 5.02[2] will be deferred for [a] 30 days after the Executive notifies the Corporation of the payments or types of payments to be reduced or [b] 30 days after the expiration of the period during which the Executive may notify the Corporation of the payments or types of payments to be reduced.

[4] If the Internal Revenue Service or any court of competent jurisdiction subsequently and conclusively decides that the Corporation has miscalculated the amount of any “excess parachute payment” and if that decision, had it been made initially:

[a] Would have resulted in a larger payment than initially calculated, the Corporation will reapply Section 5.02 based on the revised calculation to identify the Executive’s revised parachute payment and immediately pay that additional amount to the Executive; but

[b] If, after that reapplication, the Executive is entitled to a smaller amount under this Agreement than initially calculated, the Executive will repay the amount of any overpayment to the Corporation within 30 days of the date of that decision, together with interest on that amount at the prime rate of interest quoted in the Wall Street Journal, as of the date of that final decision, calculated over the period beginning on the date the excess amount was paid and ending on the date the excess amount is repaid.

[5] The value of all amounts due under this Agreement will be established by the Corporation’s independent auditors applying principles, assumptions and procedures consistent with Code §280G. These principles, assumptions and procedures will be explained to the Executive in the Notice of Payment.

5.03 Conditions Affecting Payments.

[1] Except as expressly provided in this Agreement, the Executive’s right to receive the payments described in this Agreement will not decrease the amount of, or otherwise adversely affect, any other benefits payable to the Executive under any plan, agreement or arrangement between the Executive and any Group Member.

[2] The Executive is not required to mitigate the amount of any payment described in this Agreement by seeking other employment or otherwise, nor will the amount of any payment or benefit provided for in this Agreement be reduced by any compensation the Executive earns in any capacity after Termination or, except as provided in Section 4.04, by reason of the Executive’s receipt of or right to receive any retirement or other benefits on or after Termination.

[3] The amount of any payment made under this Agreement will be reduced by amounts the Employer is required to withhold in payment (or in anticipation of payment) of any income, wage or employment taxes imposed on the payment.

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5.04 Limit on Number of Changes in Control. Regardless of any provision of this Agreement, if more than one Change in Control (whether or not related) occurs during the Term, the total amount payable under this Agreement will be the largest amount (after application of Section 5.02[1] or [2]) calculated with respect to any single change in control occurring during the Effective Period.

6.00 AMENDMENT AND TERMINATION

6.01 Amendment. This Agreement may be amended at any time by written agreement between the Executive and the Corporation.

6.02 Termination. This Agreement will terminate on the earliest of the following to occur:

[1] Except to the extent necessary to implement the eligibility provisions of Sections 4.05[2][a] and 4.06[2][a] (dealing with a Termination without Cause or a termination for Good Reason within the period beginning six months before a Change in Control), the Executive’s employment with all Group Members is Terminated before a Change in Control;

[2] Before a Change in Control, the Executive is reassigned to a more junior position, unless the Corporation decides that the new position is sufficiently senior to justify continuation of this Agreement;

[3] The Corporation and the Executive mutually agree, in writing, to terminate this Agreement, whether or not it is replaced with a similar agreement;

[4] The Corporation notifies the Executive, in writing, that the Agreement is to terminate at the end of its then current Term. To be effective, however, this written notice [a] must be given no later than midnight of the February 28 preceding the end of the then current Term but [b] may never be effective [i] during an Effective Period or [ii] at any time after the Corporation learns that activities have begun that, if completed, would cause a Change in Control, although the notice may be given if those activities end without generating a Change in Control;

[5] All payments due under this Agreement have been fully paid; or

[6] As provided in Section 4.00.

7.00 EQUITABLE RELIEF/DISPUTE RESOLUTION

7.01 Uniqueness of Obligations. The Executive’s obligations described in this Agreement are of a special and unique character which gives them a peculiar value to the Group and the Group cannot be reasonably or adequately compensated in damages in an action at law if Executive breaches those obligations. Executive therefore expressly agrees that, in addition to any other rights or remedies that the Corporation, the Employer or the Group may have, the Corporation, the Employer and the Group will be entitled to injunctive and other equitable relief

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in the form of preliminary and permanent injunctions without bond or other security if the Executive actually breaches (or threatens to breach) any obligation under this Agreement.

7.02 Initial Resolution of Disputes Affecting Payment Amount.

[1] The Executive may request the Corporation to recalculate the amount of payments due under this Agreement. That request must [a] be filed in writing no later than 30 days after the Executive receives the Notice of Payment and [b] specify the basis upon which the Executive believes that an additional amount is due. Any request for recalculation that does not comply with both requirements will be ineffective.

[2] Within 30 days of receiving a request that complies with Section 7.02[1], the Corporation will notify the Executive of any changes to its calculations and the effect of any changes on the amount payable to the Executive. If the Corporation does not deliver this information to the Executive within this 30-day period, the Executive may regard the request as having been denied.

[3] The Executive expressly waives any right to proceed under Section 7.03 to dispute the calculation of the amount payable under this Agreement unless and until the administrative remedies described in this Section 7.02 are fully exhausted.

7.03 Arbitration Any [a] disagreement concerning the calculation of any payment due under this Agreement that is not resolved after utilizing the procedures described in Section 7.02, [b] breach of any term of this Agreement or [c] other dispute or controversy arising out of or relating to this Agreement, including the basis on which the Executive is Terminated, will be resolved by arbitration in accordance with the rules of the American Arbitration Association. The award of the arbitrator will be final, conclusive and nonappealable and judgment upon the award rendered by the arbitrator may be entered in any court having competent jurisdiction. The arbitrator must be an arbitrator qualified to serve in accordance with the rules of the American Arbitration Association and one who is approved by the Corporation and the Executive. If the Executive and the Corporation fail to agree on an arbitrator, each must designate a person qualified to serve as an arbitrator in accordance with the rules of the American Arbitration Association and these persons will select the arbitrator from among those persons qualified to serve in accordance with the rules of the American Arbitration Association. Any arbitration relating to this Agreement will be held in the city in which the Executive’s last principal place of employment with a Group Member before the Executive’s Date of Termination is or was located or another place the Parties mutually select immediately before the arbitration.

7.04 Costs. The Corporation will bear all reasonable costs associated with any dispute arising under this Agreement, including reasonable accounting and legal fees incurred by the Executive through any proceeding described in Section 7.02 or 7.03. However, no amounts will be paid under this subsection to the extent that those payments are “excess parachute payments.”

7.05 Payment During Dispute Resolution Period. If otherwise due, the Corporation may not defer (or cause the Employer to defer) payment of any amount that is not being contested under Section 7.02 or 7.03.

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7.06 Payment of Additional Amounts. If the arbitrators decide, at the conclusion of the arbitration proceedings described in Section 7.03, that the Corporation has understated the amount due under this Agreement, the Corporation will pay the additional amount to the Executive within 30 days after the date of the award along with interest calculated at the prime rate quoted in the Wall Street Journal, for the period beginning on the Executive’s Date of Termination and ending on the date of payment. However, no amounts will be paid under this subsection to the extent that those payments are “excess parachute payments.”

8.00 MISCELLANEOUS

8.01 Security. At any time during the Term, the Corporation may provide (or cause the Employer to provide) security for payment of the amounts and benefits described in Section 5.00. This security may include one or more of [1] a stand-by letter of credit issued by a reputable financial institution, [2] an irrevocable grantor trust (the “Trust”) established on terms the Corporation believes to be appropriate, including a ruling from the Internal Revenue Service, (or opinion of counsel satisfactory to the Corporation), to the effect that any funds held by the Trust will be includible in the Executive’s gross income only for the taxable year or years paid to the Executive under the terms of the Trust’s related trust agreement or [3] any other form of security the Corporation believes is appropriate.

8.02 Nonassignment. The right of an Executive or any other person to receive any amount under this Agreement may not be assigned, transferred, pledged or encumbered except by will or by applicable laws of descent and distribution. Any attempt to assign, transfer, pledge or encumber any amount that is or may be receivable under this Agreement will be null and void and of no legal effect.

8.03 Successors to the Executive. Subject to Section 8.02, this Agreement inures to the benefit of and may be enforced by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

8.04 Transfers.

[1] If, either before or after a Change in Control, the Executive’s common law employment relationship shifts within the Group and there has been no intervening Termination, this Agreement will remain in full force and effect and for all purposes of this Agreement, the Executive’s new Employer will be substituted for the Executive’s prior Employer.

[2] If the Employer is no longer a Group Member, whether or not as part of a transaction that constitutes a Change in Control, this Agreement will remain in full force and effect as described in Section 8.02. However, the Executive will not be entitled to any amount under this Agreement on account of a Change in Control that [a] solely affects the Group after that transfer and [b] is not part of the same transaction through which the Employer left the Group.

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8.05 Effect of Employment Agreement. If, at any time during the period beginning six months before any Effective Period and ending on the last day of the same Effective Period, the Executive is employed by an Employer pursuant to an employment agreement (“Employment Agreement”), the following rules of application will be applied:

[1] Subject to Section 8.05[2], if a term is defined in this Agreement and in the Employment Agreement and those definitions are not identical, [a] the definition contained in this Agreement will supercede the definition contained in the Employment Agreement for purposes of applying that term under this Agreement and [b] the definition contained in the Employment Agreement will supercede the definition contained in this Agreement for purposes of applying that term under the Employment Agreement;

[2] If the Executive’s employment with all Group Members is Terminated by the Employer without Cause (as defined in this Agreement) or if the Executive Terminates with Good Reason (as defined in this Agreement) within the period beginning six months before the beginning of an Effective Period, this Agreement will not Terminate until six months after the Executive’s Termination. If a Change in Control does not occur during this six-month period, this Agreement will terminate at the end of that six-month period and no amount will be due under it (although amounts due under the Employment Agreement on account of that termination of employment will be unaffected by the termination of this Agreement). If a Change in Control does occur during this six-month period, the Corporation will pay (or cause the Employer to pay) to the Executive the amount described in Section 5.00 (adjusted as provided in Section 8.05[3]). After those amounts have been paid, this Agreement will terminate and no further amounts will be paid or due under this Agreement; and

[3] If an event or a series of related events entitle the Executive to payments under both the Employment Agreement and this Agreement, the Executive will be entitled to the payments due under this Agreement reduced by the amounts (if any) received under the Employment Agreement before the payments become due under this Agreement and no further payments will be due under the Employment Agreement.

8.06 Notices. All notices and other communications provided for in this Agreement must be written and will be deemed to have been given when deposited with a reputable delivery service or in United States registered mail, return receipt requested, postage prepaid. Also,:

[1] All notices must be directed to the address shown on the last page of this Agreement;

[2] Notices and other communications to the Corporation and the Employer will not be deemed to have been given unless they are directed to the attention of the Corporation’s Chief Executive Officer and copies are sent to the Corporation’s Secretary.

[3] Neither Party will be required to use any address other than that shown on the last page of this Agreement unless notified of a change in the other Party’s address. Any

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change in either Party’s address must be given in writing to the other Party and will be effective only upon receipt.

8.07 Complete Agreement. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter of this Agreement have been made by either Party that are not set forth expressly in this Agreement.

8.08 Applicable Law. The validity, interpretation, construction and performance of this Agreement will be governed by the laws (but not the law of conflicts of laws) of the State of Ohio.

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

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement to be effective as of the date and year first above written.

 

 

 

 

 

 

 

BOB EVANS FARMS, INC.

 

 

 

 

 

 

 

By:

 

/s/ Donald J. Radkoski

 

 

 

 

 

 

 

 

 

 

 

Title:

 

Chief Financial Officer, Treasurer and Secretary

 

 

 

 

 

 

 

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

3776 South High Street

 

 

 

 

Columbus, Ohio 43207

 

 

 

 

 

 

 

STEVEN A. DAVIS

 

 

 

 

 

 

 

/s/ Steven A. Davis

 

 

 

 

 

 

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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