Form 8-K BOB EVANS FARMS INC For: Nov 17
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 17, 2015 (November 17, 2015)
Bob Evans Farms, Inc.
(Exact name of registrant as specified in its charter)
| Delaware (State or other jurisdiction of incorporation) |
0-1667 (Commission File Number) |
31-4421866 (IRS Employer Identification No.) |
| 8111 Smith’s Mill Road, New Albany, Ohio |
43054 | |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code): (614) 491-2225
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 1.01. | Entry into a Material Definitive Agreement. |
Mr. Mohseni Employment Agreement
On November 14, 2015, Bob Evans Farms, Inc. (the “Company”) entered into an employment agreement with Saed Mohseni (the “2015 Agreement” or “Agreement”). Mr. Mohseni, age 53, will serve as the Company’s President and Chief Executive Officer with a start date effective January 1, 2016. Mr. Mohseni is also expected to be appointed to the Company’s Board of Directors effective January 1, 2016. His employment agreement requires that the Board annually nominate him for election to the Company’s Board of Directors but because of his outstanding qualifications and due to the timing of his appointment, the Board determined to appoint him at this time.
The three year employment agreement with Mr. Mohseni will expire on December 31, 2018. The initial three-year term will be automatically extended unless either Mr. Mohseni or the Company gives notice of non-extension. Under the Agreement Mr. Mohseni receives a base salary of $700,000 with an annual cash bonus with a target of 100 percent of Base Salary with at least 100 percent guaranteed for the first year. The first year bonus will be pro-rated for his time-of-service during the Company’s 2016 fiscal year.
Mr. Mohseni was awarded restricted stock units which will be granted on January 4, 2016. The award was made under the Company’s equity incentive program and has a value of $350,000. The grant was made to compensate him for a portion of the value of his lost equity awards from his prior employer. The award is time-based and vests one third on each of the three anniversary dates. Mr. Mohseni is also entitled to participate in the Company’s equity compensation plan at a rate of 125 percent of his base salary. It is expected that in June 2016 he will be awarded performance stock units equal to 250 percent of his base salary at the time other employees are awarded performance stock units. Mr. Mohseni is entitled to participate in the Company’s benefit plans and programs to the extent generally available to all employees.
The Agreement may be terminated with 14-days’ notice by the Company without any liability for either “Cause,” or if Mr. Mohseni terminates his employment without “Good Reason.” If the Company terminates the Agreement other than for Cause, or if Mr. Mohseni terminates for “Good Reason,” the Company is required to pay him: (a) any Base Salary that is accrued but unpaid; (b) any rights or benefits accrued under Company’s plans; (c) any prior year earned, but unpaid bonus; (d) his base salary for a period of 24-months; (e) a pro-rated bonus for the then-current fiscal year based on the actual achievement of the applicable performance goals for such fiscal year (without pro-ration of such performance goals); and (f) an amount equal to the Company’s estimated obligation for the cost of premiums, and related administrative fees, for group health (medical, dental and/or vision) for a period equal to 24-months, and an amount up to $25,000 for life insurance. If Mr. Mohseni dies during the term of the Agreement, the Company is required to pay to his estate any Base Salary that is accrued but unpaid and any business expenses that are unreimbursed, all as of the date of termination of employment, and any vested rights and benefits provided under plans and programs of the Company in which he was participating immediately prior to his death (collectively, the “Plans and Programs”), determined in accordance with the applicable terms and provisions of such Plans and Programs.
Mr. Mohseni will also be a participant in the Company’s change in control and severance plan with provides that in the event of a change in control (“CIC”), and the subsequent termination of Mr. Mohseni’ position within the 24-months following the CIC, he would be paid an amount equal to three times his base salary and bonus amount, and be provided with life, medical, dental and/or vision programs in which he and his family were participating at the time of termination for a period of 24-months, or the cash equivalent to such benefits.
The Agreement contains certain business protection provisions that include a requirement that Mr. Mohseni not disclose confidential information or trade secrets of the Company and a requirement that during the term of the Agreement and for 24-months following its termination, Mr. Mohseni will neither hold any position with any “Competing Business” nor solicit employees of the Company to leave their employment.
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Item 5.02(c) – Appointment of Named Executive Officer
On November 17, 2015, the Company entered into an employment agreement with Saed Mohseni. Mr. Mohseni, age 53, will serve as the Company’s President and Chief Executive Officer effective January 1, 2016. The terms of the employment agreement and other arrangements with Mr. Mohseni are described above under “Item 1.01 Entry into a Material Definitive Agreement,” which is incorporated by reference from above.
Mr. Mohseni has more than 30 years of management experience in the restaurant industry. He currently serves as the Chief Executive Officer and as a Director of Bravo Brio Restaurant Group, Inc. (NASDAQ: BBRG) (“Bravo Brio”) and held the additional role of President from September 2009 to August 2014. He has served as a director of Bravo Brio since June 2006. He also serves on the Board of Director of Chuy’s Holding, Inc. (NASDAQ:CHUY).
Prior to joining Bravo Brio, Mr. Mohseni was the Chief Executive Officer (January 2000-February 2007) and a director (2004-2007) of McCormick & Schmick’s Seafood Restaurants, Inc. Mr. Mohseni joined McCormick & Schmick’s in 1986 as a General Manager. During his time at McCormick & Schmick’s, he also held the positions of Senior Manager (1988-1993), Vice President of Operations-California (1993-1997), and Senior Vice President of Operations (1997-1999). Mr. Mohseni attended Portland State University and University of Oregon and studied computer science and business.
There are no arrangements or understandings between Mr. Mohseni and any other person pursuant to which he was or is to be selected as an officer. There are no family relationships between Mr. Mohseni and any director, executive officer or person nominated or chosen by the Company to become a director or executive officer and there are no related person transactions involving Mr. Mohseni and the Company.
| Item 7.01. | Regulation FD Disclosure. |
On November 17, 2015, the Company issued the press release that is furnished as Exhibit 99.1 to this Current Report on Form 8-K and that is incorporated by reference into this Item 7.01 announcing the appointment of Mr. Mohseni as the Company’s President and Chief Executive Officer, and to be appointed as a member of the Board of Directors, both effective January 1, 2016.
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| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| Exhibit |
Description | |
| 10.1 | Employment Agreement between the Company and Mr. Mohseni | |
| 10.2 | Amended and Restated Change in Control and Severance Policy | |
| 99.1 | Press Release dated November 17, 2015 | |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BOB EVANS FARMS, INC. | ||||||
| Date: November 17, 2015 | By: | /s/ Kevin C. O’Neil | ||||
| Kevin C. O’Neil, Vice President, Associate General Counsel and Assistant Secretary | ||||||
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Exhibit 10.1
EXECUTION COPY
EMPLOYMENT AGREEMENT
This Employment Agreement (“Agreement”) is entered into as of November 14, 2015, by and between Bob Evans Farms, Inc., a Delaware corporation (the “Company”), and Saed Mohseni (the “Executive”).
WHEREAS, the Company desires to retain the Executive to serve as the Company’s President and Chief Executive Officer and the Executive desires to serve and be so employed by the Company; and
WHEREAS, the Company and the Executive wish to establish the terms of the Executive’s employment with the Company, the financial obligations of the Company to the Executive and to specify certain rights, responsibilities and duties of the Executive.
NOW, THEREFORE, in consideration of the premises and the mutual terms and conditions hereof, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Employment. Subject to the terms and conditions of this Agreement, the Company hereby employs the Executive as the Company’s President and Chief Executive Officer upon the terms and conditions hereinafter set forth. The Board of Directors of the Company (the “Board”) agrees to appoint the Executive as a member of the Board promptly following the Effective Date and 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 for and during the Term.
2. Duties; Exclusive Services. During the Term and subject to the terms and conditions of this Agreement, the Executive shall (a) serve as, and have the title of, the Company’s President and Chief Executive Officer, (b) report to the Board and perform such duties and responsibilities as may be prescribed from time to time by the Board, which shall be generally consistent with the duties and responsibilities of similarly situated executives of companies in similar lines of business, (c) if elected, serve as a member of the Board and as an officer and/or director of any direct or indirect subsidiary of the Company, (d) perform and discharge faithfully, diligently and to the best of his ability such duties and responsibilities and devote his full time and efforts to the business and affairs of the Company, (e) comply with and abide by all terms and conditions set forth in this Agreement, all applicable work policies, procedures and rules as may be issued from time to time by the Company and all federal, state and local statutes, regulatory and public ordinances governing the performance of his duties hereunder, and (f) in addition to the obligations described in Section 9, not engage in any other business activity, whether or not for gain, profit or other pecuniary advantage, that in the reasonable judgment of the Board could interfere with the performance of Executive’s obligations under this Agreement. Notwithstanding the foregoing, it shall not be a violation of this Agreement for Executive to (A) devote reasonable periods of time to charitable and community activities and industry or professional activities (including, without limitation, serving on the board of directors of not-for-profit entities), (B) continue to serve on the boards of
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directors of Chuy’s Holdings, Inc. and Barteca Holdings, LLC or (C) manage personal business interests and investments, so long as such activities in (A), (B) or (C) do not interfere with the performance of Executive’s obligations under this Agreement. Except as set forth in the foregoing sentence, Executive may not, without the prior approval of the Board (or applicable committee thereof), serve on the board of directors (or other governing body) of any other for-profit corporation or entity.
3. Term. Subject to earlier termination as hereinafter provided, this Agreement shall commence on January 1, 2016 (the “Effective Date”) and shall continue through December 31, 2018 (the “Initial Term”) and shall automatically renew for successive one-year periods (each, a “Renewal Term”) upon all terms, conditions and obligations set forth herein unless either party shall provide written notice to the other not less than ninety (90) days prior to the expiration of the Initial Term or any Renewal Term. For purposes hereof, the Initial Term, together with any Renewal Term, are hereinafter referred to as the “Term.” In the event for any reason the Executive does not commence employment on or before the Effective Date, this Agreement shall be deemed void and of no force or effect.
4. Compensation.
a. Subject to the terms and conditions of this Agreement, during the Term and as compensation for his services rendered under this Agreement, the Executive shall be entitled to receive the following:
i. Base Salary. The Executive’s initial annual base salary is Seven Hundred Thousand Dollars ($700,000.00). Such amount may be increased from time to time in the sole discretion of the Compensation Committee of the Board (such amount, as may be so increased, is hereafter referred to as the “Base Salary”), and shall be 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 opportunity (“Bonus”) as may be determined and authorized in the sole discretion of the Compensation Committee based upon 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. For the Company’s 2016 fiscal year (and provided Executive is employed with the Company through the last day of the 2016 fiscal year), the Executive’s Bonus will be no less than his target opportunity of 100% of his Base Salary for the 2016 fiscal year, prorated for time-of-service due to Executive’s employment commencing subsequent to the start of the Company’s fiscal year.
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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 and conditions of any equity compensation plans and award agreements governing the grant of equity awards, the Executive shall be eligible to participate annually during the Term in the Company’s Long Term Incentive Plan or successor program (including, without limitation, the Bob Evans Farms, Inc. Amended and Restated 2010 Equity and Cash Incentive Plan, collectively, the “LTIP”), with a targeted equity award based upon a percentage of the Executive’s Base Salary, but set initially at 125%. Any equity grants made pursuant to the LTIP 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. The terms of the Executive’s initial LTIP awards are more fully provided on Exhibit A attached hereto, and include both a one-time grant to be made at the start of the Executive’s employment that is intended to compensate Executive for equity forfeited on account of accepting this position and a grant to be made in June 2017 with a targeted equity award set at 250% of Base Salary, representing a combined award at 125% of Base Salary in respect of the Company’s 2017 fiscal year and 125% of Base Salary in respect of the Company’s 2016 fiscal year, to compensate for the fact that no annual equity grant will be made to the Executive during fiscal 2016.
b. Recoupment Policy. Notwithstanding any other provision of this Agreement to the contrary, the Executive is subject to the Bob Evans Farms, Inc. Executive Compensation Recoupment Policy, as amended from time to time (the “Recoupment Policy”). In the event of any conflict between this Agreement and the terms of the Recoupment Policy, the terms of the Recoupment Policy shall control.
5. Benefits. In addition to the compensation to be paid to the Executive pursuant to Section 4 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 group life insurance plan; any pension, retirement, or profit sharing plan; and any other perquisites and fringe benefits, in which the Executive is eligible to participate and which may be generally made available from time to time to the Company’s senior executive officers, in accordance with the terms of such plans or arrangements. The Company shall reimburse the Executive for the premium required to continue family health insurance coverage under COBRA under the health plan in which the Executive currently participates from the Effective Date until the date on which he becomes eligible to participate in the Company’s health benefit plans, up to a maximum of $1,600 per month. This amount shall be paid on an after-tax basis.
b. Non-Qualified Deferred Compensation Plans. The Executive shall be eligible to participate in the Company’s Fourth Amended and Restated Executive Deferral Program (the “BEEDP”) in accordance with the terms contained therein, as such plans may be amended from time to time.
c. Vacation. The Executive shall be entitled to four weeks of vacation with full salary and benefits each fiscal year. Under current 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.
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6. 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. To the extent that any expenses, reimbursement, fringe benefit or other, similar plan or arrangement in which Executive participates during the Term (including any reimbursements under this Section 6.a) or thereafter provides for a “deferral of compensation” within the meaning of Code Section 409A, then such amount shall be reimbursed in accordance with Treasury Regulation section 1.409A-3(i)(1)(iv), including (i) the amount eligible for reimbursement or payment under such plan or arrangement in one calendar year may not affect the amount eligible for reimbursement or payment in any other calendar year (except that a plan providing medical or health benefits may impose a generally applicable limit on the amount that may be reimbursed or paid), (ii) subject to any shorter time periods provided herein or the applicable plans or arrangements, any reimbursement or payment of an expense under such plan or arrangement must be made on or before the last day of the calendar year following the calendar year in which the expense was incurred, and (iii) the right to any reimbursement or in-kind benefit is not subject to liquidation or exchange for another benefit.
b. Attorneys’ Fees. The Company agrees to pay up to $10,000 for legal fees incurred by the Executive in connection with the negotiation and documentation of this Agreement.
7. 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.
8. 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 provide reasonable assistance to 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 reasonably requested by the Company 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.
9. 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 (the “Restricted Period”), he shall not, 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 Dining Segment (as hereinafter defined) of the restaurant industry or any other sector of the restaurant industry in which the Company is, or has taken substantial steps toward being, actively engaged at the time of Executive’s termination of employment; (b) produces and distributes food products to the extent the Company is actively engaged in, or has taken substantial steps towards being actively engaged in, producing and distributing the same or similar food products at the time of Executive’s termination of employment; (c) offers products that compete with the products offered by the Company, or with products as to which the Company has taken substantial steps toward launching, during the Executive’s employment with the Company; or (d) is engaged in a
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line of business that competes with any line of business in which the Company is operating, or as to which the Company has taken substantial steps toward beginning to operate, at the time of Executive’s termination of employment. For purposes of this Section 9, “Family Dining Segment” shall mean the segment of the restaurant industry in which Bob Evans Restaurants is categorized, and shall include, without limitation and by way of example, the following restaurant concepts together with such other concepts as are commonly understood within the restaurant industry to be included within the “family dining” segment: Baker’s Square, Frisch’s Big Boy, Cracker Barrel Old Country Store, Denny’s, First Watch, Friendly’s, HomeTown Buffet, Golden Corral, Huddle House, IHOP, Marie Callender’s, Old Country Buffet, Perkins, Ponderosa, Ryan’s, Sizzler, Skyline Chili, Village Inn and Western Sizzlin. The Family Dining Segment shall expressly exclude restaurants in other segments of the restaurant industry including the “casual dining” segment, which would include, without limitation, restaurant concepts such as Applebee’s, Chili’s, Longhorn Steakhouse, Olive Garden, Ruby Tuesday’s and O’Charley’s together with such other concepts as are commonly understood within the restaurant industry to be included within the “casual dining” segment.
10. 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, employ or hire any other person who is then employed by the Company, or solicit, induce, recruit, or cause any other person who is employed by the Company to terminate his/her employment for the purpose of joining, associating, or becoming employed with any other business or activity or to violate any confidentiality, non-competition or employment agreement that such person may have with the Company or any policy of the Company.
11. Cooperation.
a. The Executive agrees that both during the Term of this Agreement and thereafter, he will make himself available at reasonable times, intervals and places for interviews, consultations, internal investigations and/or testimony during which he will provide to the Company, or its designated attorneys or agents, any and all information known to him regarding or relating to the Company or his activities on behalf of the Company pertaining to the subject matter on which his cooperation is sought.
The Executive further agrees that if he is ever subpoenaed or otherwise required by law to provide any statement or other assistance to a party to a dispute or litigation with the Company, other than the Company, then he will provide written notice of the circumstances requiring such statement or other assistance, including where applicable a copy of the subpoena or other legal writ, in such a manner and at such a time that allows the Company to timely respond. Nothing herein shall prevent the Executive from cooperating with co-defendants in litigation or with inquiry in a government investigation without a need to obtain prior consent or approval from the Company; however, the Executive shall provide prompt notice of any voluntary giving of oral or written statements to such parties, and provide to the Company a copy of any written statement so given or a summary of any oral statement provided.
b. Both during the Term of this Agreement and thereafter, the Executive covenants and agrees that he will not disparage the Company.
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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 7, 8, 9, 10, and 11 are reasonable in content and scope and are given by the Executive for adequate consideration and that the violation of any provision of such sections will cause irreparable harm to the Company. 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 18(b).
b. The covenants set forth in Sections 7, 8, and 11 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 and 10 of this Agreement shall continue to be binding upon the Executive following the termination of his employment with the Company for any reason whatsoever for the period 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 without the necessity of posting bond or other security to prevent the breach, or any threatened breach, thereof.
c. For purposes of the provisions of Sections, 7, 8, 9, 10, and 11, any reference to the Company shall include the Company and any entity or entities that control, are controlled by or are under common control with the Company.
13. 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:
a. Death of the Executive. The Executive’s employment hereunder will terminate upon his death, and the Executive’s beneficiary will be entitled to the following payments and benefits:
i. Any Base Salary that is accrued but unpaid 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, including without limitation, the LTIP (including any award agreements applicable to awards thereunder) and the BEEDP (collectively, the “Plans and Programs”), determined in accordance with the applicable terms and provisions of such Plans and Programs.
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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 subsection will be paid to the Executive’s estate. All payments due under Section 13(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, 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, (i) the inability of the Executive to engage in any substantial gainful activity or (ii) the Executive receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering the Company’s employees. Unless otherwise required by law, the existence of a Disability shall be reasonably determined by the Company only upon receipt of a written medical opinion from a qualified physician selected by or reasonably acceptable to both the Company and Executive (“Designated Physician”). At the reasonable request of the Company, and as permitted by law, Executive will submit to a physical examination by the Designated Physician. 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 subsection; 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 “bona fide disability benefit plan” as such term is defined in Treasury Regulation section 1.409A-1(a)(5), with any such offset being made in accordance with Treasury Regulation section 1.409A-3(i)(1)(ii). For purposes of clarification, Executive need not be Disabled for a period of twelve (12) months before the Company does in fact consider Executive to be Disabled pursuant to the definition provided herein, but subject in all instances to applicable law, including Code Section 409A. To the extent that a “disability benefit plan” elects not to pay Executive any sums (or the sums necessary to ensure Executive receives 100% of Base Salary), but Executive otherwise meets the definition of “Disabled” contained in this subsection, then the Company shall ensure that Executive continues to receive 100% of Base Salary until such time as Executive is no longer determined to be Disabled or Executive’s employment is terminated. In the event that the Company elects to terminate the Executive’s employment pursuant to this subsection, the Executive will be entitled to the following payments and benefits:
i. Any Base Salary that is accrued but unpaid 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
iii. An amount equal to the pro-rated Bonus for the then-current fiscal year based on the actual 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 pro-rated based on the number of calendar days the Executive was employed during the fiscal year and paid at the later of (A) the same time payments for that fiscal year are made to other participants, or (B) within sixty (60) days following the date of the Executive’s Separation from Service.
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Any payments of Base Salary during the Disability Period shall be made in accordance with the payroll procedures described in Section 4(a)(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.
c. Termination of Employment for Cause. The Company may terminate the Executive’s employment at any time for “Cause.” 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, crime involving moral turpitude or any other serious criminal offense;
ii. The Executive breaches in any material respect any provision of this Agreement (other than as related to Sections 7, 8, 9, 10, and 11, which is covered by Section 13(c)(iii) below and other than as related to any violation of the Company’s Code of Conduct or other Company policy which is covered by Section 13(c)(vi) below), or habitually neglects to perform his duties under this Agreement (other than for reasons related to Disability) and such breach or habitual neglect is not cured in the Board’s good faith belief within ten (10) business days after Executive’s receipt of written notice on behalf of the Board;
iii. The Executive breaches any provision of Section 7, 8, 9, 10, or 11, and such breach is not cured, to the extent curable, in the Board’s good faith belief within five (5) business days after Executive’s receipt of written notice on behalf of the Board;
iv. After conducting a thorough investigation in compliance with Company policy, the Company determines that the Executive has violated in any material respect any applicable local, state or federal law relating to discrimination or harassment; provided that the Executive shall be afforded an opportunity to respond to any allegations that are the subject of such investigation prior to the Company’s determination;
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 or engages in other conduct, even if not in conjunction with his duties hereunder, that in the Board’s good faith belief could reasonably be expected to bring material disrepute to the Company or adversely affect the Executive’s ability to perform his duties for the Company;
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vi. The Company reasonably determines that the Executive has violated the Company’s Code of Conduct or any other Company policy adopted by the Board and 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 no further payments or benefits hereunder other than the following:
A. Any Base Salary that is accrued but unpaid 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 13(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 13, the Executive will be entitled to the following payments and benefits:
i. Any Base Salary that is accrued but unpaid and business expenses that are unreimbursed as of the date of termination of employment which payment shall be due 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 at the later of (A) the same time that payments for that fiscal year would be made to other participants, or (B) within sixty (60) days following the Executive’s Separation from Service;
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 within sixty (60) days following 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, each installment payment provided for in this Section 13(d)(iv) is a separate “payment” within the meaning of
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Treasury Regulation section 1.409A-2(b)(2)(i) and that the payments are intended to satisfy, to the greatest extent possible, the exemptions from the application of Code Section 409A, including those provided under Treasury Regulation sections 1.409A-1(b)(4) (regarding short-term deferrals), 1.409A-1(b)(9)(iii) (regarding the two-times, two (2) year exception) and 1.409A-1(b)(9)(v) (regarding reimbursements and other separation pay);
v. An amount equal to the pro-rated Bonus for the then-current fiscal year based on the actual 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 shall be pro-rated based on the number of calendar days the Executive was employed during the fiscal year and paid at the later of (A) the same time payments for that fiscal year are made to other participants or (B) within sixty (60) days following the date of the Executive’s Separation from Service;
vi. A lump sum amount, payable by the Company concurrent with the payment provided in Section 13(d)(i) hereunder, equal to the Company’s estimated obligation (as determined by the Company in the reasonable exercise of its discretion) 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, for the same level of benefits as in effect immediately prior to the Executive’s termination of employment and for a period equal to twenty-four (24) months. Notwithstanding the foregoing, if the Company’s payment pursuant to the foregoing sentence would violate the nondiscrimination rules applicable to non-grandfathered plans, or result in the imposition of penalties under, the Patient Protection and Affordable Care Act of 2010 (“PPACA”) and related regulations and guidance promulgated thereunder, the parties agree to reform such sentence in such manner as is necessary to comply with PPACA; 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; or alternately and as determined in the reasonable exercise of the Company’s discretion, the equivalent monetary value of the cumulative premiums for such coverage (payable by the Company concurrent with the payment provided in Section 13(d)(i) hereunder), but in no event shall the Company be required to expend more than $25,000 to provide the life insurance benefit or alternative contemplated pursuant to this subsection.
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 so terminates his employment pursuant to this Section 13(e), the Executive will be entitled to the following payments and benefits:
i. Any Base Salary that is accrued but unpaid 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 (whether by reason of retirement or otherwise), determined in accordance with the applicable terms and provisions of such Plans and Programs.
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All payments due under Section 13(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 Salary or Bonus or LTIP opportunity, except for a reduction that applies to executive officers generally (and does not apply disproportionately to the Executive), (ii) requires the Executive to relocate more than 50 miles from the greater Columbus, Ohio area, (iii) a material adverse change in Executive’s title, position, duties, or responsibilities; (iv) a material reduction in the aggregate health and welfare benefits provided to Executive under the Company’s welfare benefit plans, except for a reduction that applies to executive officers generally (and does not apply disproportionately to the Executive); or (vi) a material breach by the Company of the terms of this Agreement, including, without limitation, the removal of Executive from the Board by the Company (other than as a result of conduct constituting Cause) or the failure by the Company to nominate Executive for re-election to the Board; 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) 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.
In the event that the Executive terminates his employment for Good Reason pursuant to this Section 13(f), the Executive will be entitled to the payments and benefits described in Section 13(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 and subject to the terms and limitation thereof. 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
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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, all in accordance with Treasury Regulation section 1.409A-3(j)(4)(xiii). In addition, except as specifically provided for herein, the payments provided for in Section 13 of this Agreement are in lieu of and supersede 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 unreimbursed business expenses) and to provide other benefits to the Executive after his termination of employment under Section 13 is expressly conditioned on (i) the Executive’s timely execution, without revocation, of a release of claims in a form reasonably satisfactory to the Company prior to the first date that payment is to begin and (ii) the Executive’s continued full performance of his obligations under Sections 7, 8, 9, 10, 11, and 12 to the extent that such sections survive the Executive’s termination of employment as provided thereunder. With respect to any payments or other benefits payable to the Executive after his termination of employment that are subject to Code Section 409A, to the extent that the period during which the Executive may execute, without revocation, a release of claims as set forth in this Section 13(i) begins in one taxable year of the Executive and ends in a second taxable year of the Executive, such payments or benefits shall not commence, be paid or provided until the second taxable year of the Executive, regardless of when the Executive executes the release.
14. Termination and Change in Control Agreement. The Executive is a participant in the Company’s Change in Control and Severance Plan dated November 2015 (the “Change in Control Plan”). If an event or a series of related events entitle the Executive to payments under both this Agreement and the Change in Control Plan, the Executive will be entitled to the payments due under whichever of the Change in Control Plan or this Agreement provides for the greatest amount, and shall not be entitled to the payments otherwise provided under whichever of the Change in Control Plan or this Agreement provides for the least amount. Without limiting
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the generality of the foregoing, the provisions of Section 13(d) and 13(f) are expressly not intended to supersede this Section 14, and to the extent of any conflict, the terms of this Section 14 shall control. Any coordination of benefits under this Section 14 shall be made strictly in accordance with Code Section 409A, including the preservation of the time and form of payment provisions regarding the payment of any amounts which provide for a “deferral of compensation” within the meaning of Code Section 409A under each respective arrangement.
15. Arbitration of Disputes. Except for disputes and claims arising out of or relating to Sections 7 through 12, 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. With the exception of the Company agreeing to pay (or reimburse the Executive) for the arbitration filing fees and the fees paid to the Arbitrator, the Company and the Executive will each bear its/his own fees and expenses incurred in connection with the arbitration proceedings, including attorney’s fees, unless otherwise awarded by the arbitrator[s]. To the extent that the reimbursement of fees during the term of Executive’s employment under this Agreement (including any reimbursements under this Section 15) or thereafter provides for a “deferral of compensation” within the meaning of Code Section 409A, then such amount shall be reimbursed in accordance with Treasury Regulation section 1.409A-3(i)(1)(iv), including (i) the amount eligible for reimbursement or payment under such plan or arrangement in one calendar year may not affect the amount eligible for reimbursement or payment in any other calendar year (except that a plan providing medical or health benefits may impose a generally applicable limit on the amount that may be reimbursed or paid), (ii) subject to any shorter time periods provided herein or the applicable plans or arrangements, any reimbursement or payment of an expense under such plan or arrangement must be made on or before the last day of the calendar year following the calendar year in which the expense was incurred, and (iii) the right to any reimbursement or in-kind benefit is not subject to liquidation or exchange for another benefit.
16. 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.
17. Notices. Any notices to be given hereunder by either party to the other may be effected and shall be deemed to have been given when delivered personally 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. | ||
| 8111 Smiths Mill Road | ||
| New Albany, Ohio 43054 | ||
| Attn: General Counsel — Legal Department | ||
| b. | If to the Executive, to the address on file with the Company. | |
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Either party may change its address for notice by giving notice in accordance with the terms of this Section 17.
18. 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. This Agreement, the Recoupment Policy, the Change in Control Plan 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.
f. Headings. Headings of the sections herein are used solely for convenience and shall not be used for interpretation or construing any word, clause, paragraph, or provision of this Agreement.
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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. Confirmation of execution by electronic transmission of a signature (whether by facsimile or email) shall be binding upon the party so confirming. A faxed or emailed copy of a signed Agreement will be deemed to be the same as an original.
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.
i. Section 409A. This Agreement shall be interpreted and administered in compliance with Code Section 409A, to the extent applicable. By accepting this Agreement, Executive hereby agrees and acknowledges that the Company does not make any representations with respect to the application of Code Section 409A to any tax, economic or legal consequences of any payments payable to Executive hereunder. Further, by the acceptance of this Agreement, Executive acknowledges that (i) Executive has obtained independent tax advice regarding the application of Code Section 409A to the payments due to Executive hereunder, (ii) Executive retains full responsibility for the potential application of Code Section 409A to the tax and legal consequences of payments payable to Executive hereunder and (iii) the Company shall not indemnify or otherwise compensate Executive for any violation of Code Section 409A that may occur in connection with this Agreement. The parties agree to cooperate in good faith to amend such documents and to take such actions as may be necessary or appropriate to comply with Code Section 409A.
j. Coordination with Code Sections 280G and 4999.
i. Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment, benefit, vesting or distribution to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a “Payment”) would but for this Section 18(j) be subject to the excise tax imposed by §4999 of the Code, or any comparable successor provisions (the “Excise Tax”), then the Payments shall be either (i) provided to Executive in full, or (ii) provided to Executive as to such lesser extent which would result in no portion of such Payments being subject to the Excise Tax, whichever of the foregoing amounts, when taking into account applicable income and employment taxes, the Excise Tax, and any other applicable taxes, results in the receipt by Executive on an after-tax basis, of the greatest amount of Payments, notwithstanding that all or some portion of such Payments may be subject to the Excise Tax. Any determination required under this Section 18(j) shall be made in writing in good faith by the Company’s independent certified public accountants, appointed prior to any change in ownership (as defined under Code §280G(b)(2), and/or tax counsel selected by such accountants (the “Accounting Firm”) in accordance with the principles of §280G of the Code. In the event of a reduction of Payments hereunder, the Payments shall be reduced as follows: (i)
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first from cash payments which are included in full as parachute payments, (ii) second from equity awards which are included in full as parachute payments, (iii) third from cash payments which are partially included as parachute payments, and (iv) fourth from equity awards that are partially included as parachute payments. In applying these principles, any reduction or elimination of the Payments shall be made in a manner consistent with the requirements of Code Section 409A and where two economically equivalent amounts are subject to reduction but payable at different times, such amounts shall be reduced on a pro rata basis but not below zero. For purposes of making the calculations required by this Section 18(j), the Accounting Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of the Code, and other applicable legal authority. The Company and Executive shall furnish to the Accounting Firm such information and documents as the Accounting Firm may reasonably request in order to make a determination under this Section 18(j). All fees and expenses of the Accounting Firm shall be borne solely by the Company.
ii. If, notwithstanding any reduction described in this Section 18(j), the Internal Revenue Service (the “IRS”) determines that Executive is liable for the Excise Tax as a result of the receipt of the Payments as described above, then Executive shall be obligated to pay back to the Company, within thirty (30) days after a final IRS determination or in the event that Executive challenges the final IRS determination, a final judicial determination, a portion of the Payments equal to the “Repayment Amount.” The Repayment Amount with respect to the Payments shall be the smallest such amount, if any, as shall be required to be paid to the Company so that Executive’s net after-tax proceeds with respect to the Payments (after taking into account the payment of the Excise Tax and all other applicable taxes imposed on such payment) shall be maximized. The Repayment Amount with respect to the Payments shall be zero if a Repayment Amount of more than zero would not result in Executive’s net after-tax proceeds with respect to the Payments being maximized. If the Excise Tax is not eliminated pursuant to this paragraph, Executive shall pay the Excise Tax.
iii. Notwithstanding any other provision of this Section 18(j), if (i) there is a reduction in the Payments as described in this Section 18(j), (ii) the IRS later determines that Executive is liable for the Excise Tax, the payment of which would result in the maximization of Executive’s net after-tax proceeds (calculated as if Executive’s Payments had not previously been reduced), and (iii) Executive pays the Excise Tax, then the Company shall pay to Executive those Payments which were reduced pursuant to this subsection as soon as administratively possible after Executive pays the Excise Tax so that Executive’s net after-tax proceeds with respect to the Payments are maximized.
For the avoidance of doubt, Executive acknowledges he is solely responsible for the payment of any Excise Tax and that the Company will not reimburse or otherwise indemnify him for such amount. Any reimbursements or repayments provided under this subsection shall be made strictly in accordance with Section 409A of the Code, including Treasury Regulation 1.409A-3(i)(1)(v).
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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: |
| /s/ Saed Mohseni |
| Saed Mohseni |
| BOB EVANS FARMS, INC. | ||
| By: | /s/ Paul S. Williams | |
| Paul S. Williams | ||
| Chairman, Compensation Committee of the Board of Directors | ||
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Exhibit A
Certain Compensation Elements
(i) Section 4.a.(iii), One Time LTIP Grant: That number of Restricted Stock Units equal to $350,000 divided by the closing price of the Company’s common stock on the NASDAQ Market on the date of grant, vesting ratably on each anniversary of the grant date over a three (3) year period and otherwise containing terms and subject to the conditions of the Bob Evans Farm, Inc. Amended and Restated 2010 Equity and Cash Incentive Plan (the “Plan”) and the applicable award agreement.
(ii) Section 4.a.(iii), 2017 LTIP Grant: That number of Performance Stock Units equal to $1,750,000 (equal to 250% of Base Salary, representing a combined award at 125% of Base Salary in respect of the Company’s 2017 fiscal year and 125% of Base Salary in respect of the Company’s 2016 fiscal year) divided by the closing price of the Company’s common stock on the NASDAQ Market on the date of grant, to cliff vest on the third anniversary of the grant date, which Performance Stock Units will otherwise contain terms and be subject to the conditions of the Plan and the applicable award agreement.
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Exhibit 10.2
BOB EVANS FARMS, INC.
AMENDED AND RESTATED CHANGE IN CONTROL AND SEVERANCE PLAN
As of November 14, 2015
Article 1 – Introduction
1.1 Purpose of Plan. The Company considers it essential and in the best interests of the Company and the Company’s stockholders to promote and preserve the continuous employment of key management personnel. The Compensation Committee recognizes that, as is the case with many publicly held corporations, a Change in Control, and the uncertainty and questions that it may raise among management may result in departure or distraction of key management personnel to the detriment of the Company and its stockholders. Therefore, the Compensation Committee has adopted the Plan to enable certain key management personnel to devote their full and continued attention to the Company’s business affairs during the crucial (and often tumultuous) period preceding and immediately following a Change in Control. The Plan is also intended to provide for severance payments to certain key management personnel whose employment is terminated under certain circumstances not involving a Change in Control.
1.2 Plan Status. The Plan is intended to be, and shall be interpreted as an unfunded employee welfare plan under Section 3(1) of ERISA, maintained primarily for the purpose of providing employee welfare benefits. Solely to the extent that the Plan provides benefits in excess of the level permitted in a welfare benefit severance pay plan under Section 2510.3-2(b) of the Department of Labor Regulations, the Plan is intended to be, and shall be interpreted as a plan that is unfunded and maintained primarily for the purpose of providing deferred compensation, to the extent that it provides such compensation, for a select group of management or highly compensated employees pursuant to Section 2520.104-24 of the Department of Labor Regulations.
Article 2 – Definitions
Whenever used herein, the following terms have the following meanings unless a different meaning is clearly intended:
2.1 “Accounting Firm” means the public accounting firm designated in Section 5.3(b).
2.2 “Administrator” means the Compensation Committee, or such other person or committee as may be appointed from time to time by the Board to supervise administration of the Plan.
2.3 “Base Salary” means the Participant’s annual rate of base salary in effect immediately prior to the occurrence of the circumstance giving rise to the Participant’s Termination, or, if greater, the Participant’s annual rate of base salary in effect immediately prior to a Change in Control.
2.4 “Board” means the Company’s Board of Directors.
2.5 “Bonus Amount” means the annual cash bonus (excluding hiring and like bonuses) paid to the Participant by the Company or any member of its Controlled Group for the last full fiscal year ending before the Date of Termination (or, if shorter, over the full period of the Participant’s employment).
2.6 “Cause” means the Participant’s (a) willful and continued failure to substantially perform assigned duties; (b) gross misconduct; (c) breach of any material term of any agreement with the Company or any member of its Controlled Group, which breach is not cured within any permitted or applicable cure period; (d) conviction of (or plea of no contest or nolo contendere to) (i) a felony or a misdemeanor that originally was charged as a felony but which was subsequently reduced to a misdemeanor through negotiation with the charging entity or (ii) a crime which involves a breach of trust or fiduciary duty owed to the Company or any member of its Controlled Group; or (e) a material violation of the Company’s code of conduct or a material violation of any other policy of the Company or any member of its Controlled Group that applies to the Participant. Notwithstanding the foregoing, Cause will not arise solely because the Participant is absent from active employment during periods of vacation, consistent with the Company’s applicable vacation policy, or other period of absence approved by the Company.
2.7 “Change in Control” means an event that shall be deemed to have occurred on any of the following:
(a) the acquisition by any person or group (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act), other than the Company, any Subsidiary or any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary of the Company, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of 30% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors of the Company provided, however, that the provisions of this paragraph (b) shall not include the acquisition of voting securities by any entity or person with respect to which that acquirer has filed SEC Schedule 13G (or any successor form or filing) indicating that the voting securities were not acquired and are not held for the purpose of or with the effect of changing or influencing, directly or indirectly, the Company’s management or policies, unless and until that entity or person indicates that its intent has changed by filing SEC Schedule 13D (or any successor form or filing);
(b) the consummation of a merger, consolidation or other business combination of the Company with or into another entity, or the acquisition by the Company of assets or shares or equity interests of another entity, as a result of which the stockholders of the Company immediately prior to such merger, consolidation, other business combination or acquisition, do not, immediately thereafter, beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the entity resulting from such merger, consolidation or other business combination of the Company;
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(c) the sale or other disposition of all or substantially all of the assets of the Company; or
(d) the liquidation or dissolution of the Company.
Notwithstanding the foregoing, with respect to any amount payable under this Plan that is subject to Code Section 409A (and for which no exception applies), a Change in Control shall not be deemed to have occurred unless the events or circumstances constituting a Change in Control also constitute a “change in control event” within the meaning of Code Section 409A and the Treasury Regulations promulgated thereunder (excluding a “change in effective control” event regarding the composition of the Board as provided in Treasury Regulation Section 1.409A-3(I)(5)(vi)(A)(1), which is not applicable).
2.8 “CIC Participant” means a Participant who the Compensation Committee has designated as an individual eligible for the change in control benefits set forth in Article 5. Exhibit A sets forth the list of CIC Participants as of the Effective Date. Exhibit A may be amended by the Compensation Committee as indicated in Section 10.2.
2.9 A “Class A” officer means the Company’s chief executive officer (“CEO”).
2.10 A “Class B” officer means the chief financial officer and officers of the Company holding the title of president, executive vice president, or senior vice president.
2.11 A “Class C” officer means the officers of the Company holding the title of vice president.
2.12 “Code” means the Internal Revenue Code of 1986, as amended.
2.13 “Company” means Bob Evans Farms, Inc., a Delaware corporation, and any successor entity thereto.
2.14 “Compensation Committee” means the compensation committee of the Board.
2.15 “Confidential Information” means any and all confidential or proprietary information of the Company or any member of its Controlled Group, including without limitation: trade secrets (as defined by the laws of the State of Ohio); business plans; financial information; accounting data; employment or employee-related information; marketing plans and information; sales information (including sales records, plans and projections); pricing information; supplier and customer (current and prospective) information; product information (including new products, recipes, formulas and samples); information related to the siting of new or existing restaurants; information related to the design or construction of the Company’s restaurants or plants; manufacturing processes; hiring and recruitment information; all information relating to
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the Company’s goods and services; research and development information; legal information (including legal issues, cases and strategies) or other information, technology, data and materials, disclosed verbally or in writing by the Company or any member of its Controlled Group to a Participant. “Confidential Information” does not include information that is or becomes generally available to the public, other than through disclosure by a Participant.
2.16 “Controlled Group” means a group of corporations or other legal entities that are part of a controlled group with the Company as defined in Code Section 414(b) or (c).
2.17 “Date of Termination” means the date of the Participant’s Termination for purposes of receiving benefits under the terms of this Plan.
2.18 “Effective Date” means the effective date of this Plan, November 17, 2015, amending and restating the Plan originally effective January 1, 2011.
2.19 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
2.20 “Exchange Act” means the Securities Exchange Act of 1934, as amended.
2.21 “Excise Tax” means the excise tax imposed by Code Section 4999, together with any interest or penalties imposed with respect to such tax.
2.22 “Good Reason” means any of the following to which a CIC Participant has not consented in writing: (a) a material diminution in the CIC Participant’s Base Salary; (b) a material diminution in the CIC Participant’s authority, duties, or responsibilities; (c) a material diminution in the budget over which the CIC Participant retains authority; (d) a material change in the geographic location (i.e., 50 or more miles from the CIC Participant’s principal business location) at which the CIC Participant must perform services for the Company; or (e) any other action or inaction that constitutes a material breach of the terms of this Plan. Without limiting the generality of the foregoing, in order for any of the foregoing to constitute Good Reason hereunder, (i) the CIC Participant must provide written notice to the Company as to the basis for such Good Reason within thirty (30) days following the date on which CIC Participant alleges the condition giving rise to such Good Reason initially occurs; (ii) the Company must fail to cure or contest such Good Reason within thirty (30) days following its receipt of notice; and (iii) the CIC Participant must Terminate his/her employment within ninety (90) days of the time in which the condition giving rise to Good Reason initially occurs.
2.23 Intentionally Omitted.
2.24 “Participant” means any officer of the Company participating in this Plan, whether as a CIC Participant and/or a Severance Participant, including any beneficiary of either.
2.25 “Plan” means The Bob Evans Farms, Inc. Amended and Restated Change in Control and Severance Plan, as evidenced by this document, and any amendments thereto.
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2.26 “Protected Period” means a time period that shall begin on the date of a Change in Control and shall continue (a) for 24 consecutive calendar months for the Class A Participant, to the extent that the Class A Participant is a CIC Participant, or (b) for 12 consecutive calendar months for any other CIC Participant.
2.27 “Recoupment Policy” means the Company’s Executive Compensation Recoupment Policy, as in effect on the Effective Date and any amendments thereto.
2.28 “Reduction in Force” means a decrease in the number of positions at the Company due to a lack of business, lack of work, reasons of economy or reorganization for efficiency.
2.29 “Safe Harbor Cap” has the meaning set forth in Section 5.3(a).
2.30 “Severance Participant” means the Class B and C officers of the Company.
2.32 “Specified Employee” means any Participant who is a “key employee” (as defined in Code Section 416(i) without regard to paragraph (5) thereof), as determined by the Company in accordance with its uniform policy with respect to all arrangements subject to Code Section 409A, based upon the 12 month period ending on each December 31st (such 12 month period is referred to below as the “identification period”). All Participants who are determined to be key employees under Code Section 416(i) (without regard to paragraph (5) thereof) during the identification period shall be treated as Specified Employees for purposes of the Plan during the 12 month period that begins on the first day of the fourth month following the close of such identification period.
2.33 “Subsidiary” means any corporation, partnership, venture or other entity in which the Company holds, directly or indirectly, a 50% or greater ownership interest. The Compensation Committee may, at its sole discretion, designate, on such terms and conditions as the Compensation Committee shall determine, any other corporation, partnership, limited liability company, venture or other entity a Subsidiary for purposes of this Plan.
2.34 “Termination” or “Terminates” means a “separation from service” from the Company or any member of its Controlled Group within the meaning of Treasury Regulation Section 1.409A-1(h).
Article 3 – Eligibility to Participate
3.1 Participation. Each officer of the Company (other than the CEO) shall become a Severance Participant as of the later of the Effective Date and the date the individual is appointed to serve as a Class B or C officer of the Company.
A Participant shall become a CIC Participant as of the date designated by the Compensation Committee and shall participate solely for the period designated by the Compensation Committee, although anything in this Agreement to the contrary notwithstanding, the Class A officer shall remain a CIC Participant for the duration of his/her employment with the Company.
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3.2 Duration of Participation. A Participant shall cease to be a Participant in the Plan if (a) the Participant Terminates employment with the Company under circumstances not entitling him or her to benefits under the Plan; (b) the Participant breaches his or her obligations under Article 8, as described in Section 8.5; (c) the amounts and benefits payable under the Plan to a Participant who is entitled to receive benefits under Article 4 of the Plan have been paid or provided to the Participant in full; or (d) the Participant accepts a new position with the Company or a member of its Controlled Group and such new position does not qualify the Participant as a Class A, B or C Participant (provided, however, that this subsection (d) excludes any change in the Participant’s position in connection with a Change in Control that constitutes Good Reason). The Compensation Committee in its sole discretion may remove any CIC Participant other than the Class A Participant from participation in the Plan as a CIC Participant, although the individual will remain a Severance Participant, as of any date specified by the Compensation Committee, provided that no individual may be so removed from participation in the Plan as a CIC Participant in connection with or in anticipation of a Change in Control that actually occurs.
Article 4 – Eligibility for Benefits
4.1 Termination on or Following a Change in Control. If on or following a Change in Control (a) (i) the Company Terminates a CIC Participant without Cause by delivering to the CIC Participant a written notice that describes in reasonable detail the facts and circumstances claimed to provide a basis for Termination, or (ii) a CIC Participant Terminates for Good Reason; and (b) the date of Termination is within the Protected Period, then the Company will, except as otherwise provided in Section 8.1 hereunder, pay or provide to the CIC Participant the payments and benefits described in Article 5.
4.2 Termination Not on or Connected with Change in Control. If the Company Terminates a Severance Participant (a) as part of a Reduction in Force or (b) without Cause, and (c) such Termination is either (i) not connected with a Change in Control or (ii) connected with a Change in Control but not within the Protected Period, then the Company will, except as otherwise provided in Section 8.1 hereunder, pay or provide to the Severance Participant the payments and benefits described in Article 6.
4.3 Termination for Any Other Reason. If the Participant Terminates for any reason other than those described in either Section 4.1 or 4.2, including, but not limited to, death, disability, voluntary retirement, termination by the Company for Cause, or voluntary resignation (except for certain Good Reason resignations by a CIC Participant), no payments or benefits will be paid or due to or on behalf of the Participant under this Plan at any time. Notwithstanding this Section 4.3, a Participant may be entitled to benefits under other plans maintained by the Company if the terms of such plans provide such benefits.
4.4 Effect of Employment Agreement. If, at any time a Participant is employed by the Company pursuant to an employment agreement (“Employment Agreement”), the following rules of application will be applied:
(a) If a term is defined in the Plan and in the Employment Agreement and those definitions are not identical, (i) the definition contained in the Plan will supersede the definition contained in the Employment Agreement for purposes of applying that term under the Plan and (ii) the definition contained in the Employment Agreement will supersede the definition contained in the Plan for purposes of applying that term under the Employment Agreement;
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(b) If an event or a series of related events entitle a CIC Participant to payments under both the Employment Agreement and Article 5 of the Plan, the CIC Participant will be entitled to the payments due under Article 5 reduced by the amounts (if any) received under the Employment Agreement before the payments become due under the Plan and no further payments will be due under the Employment Agreement; and
(c) If an event or series of related events entitle a Severance Participant to payments under both the Employment Agreement and Article 6 of the Plan, the Severance Participant will be entitled to the payments due under the Employment Agreement and no payments will be due under the Plan.
Article 5 – Change in Control Payments and Benefits
5.1 Calculation of Change in Control Payments. If a CIC Participant is eligible for payments and benefits under Section 4.1, the Company will (and/or will cause its Subsidiaries, Control Group or Successors to):
(a) Continue to pay the CIC Participant’s compensation and other benefits through the Date of Termination and also will pay the CIC Participant the value of any unused vacation or other paid-time off determined under the Company’s personnel policy. These amounts will be paid no later than 30 days after the CIC Participant’s Date of Termination and will be based on the rate of compensation and value of benefits in effect before the Participant was notified of his or her Termination.
(b) Make to the CIC Participant a severance payment, calculated in accordance with the following schedule:
| Participant’s Class |
Amount of Payment | |
| Class A |
300% of the sum of (i) Base Salary and (ii) Bonus Amount | |
| Class B |
200% of the sum of (i) Base Salary and (ii) Bonus Amount | |
| Class C |
100% of the sum of (i) Base Salary and (ii) Bonus Amount | |
(c) Make to the CIC Participant a benefits offset payment equal to the Company’s estimated obligation (as determined by the Company in the reasonable exercise of its discretion)
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for the Company’s cost of premiums and related administrative fees, for Company sponsored life insurance programs and group health (medical, dental and vision) continuation coverage for the CIC Participant and the CIC Participant’s eligible dependents, for the same level of benefits and the same level of cost as in effect immediately prior to CIC Participant’s Termination of employment and for a period of: (i) 24 months, in the case of the Class A Participant and (ii) 18 months, in the case of a Class B or Class C Participant. For purposes of clarification, the Company’s obligation pursuant to this subsection (c) is not intended to, nor shall it be construed as, obviating the CIC Participant’s share of premiums for such insurance. Notwithstanding the foregoing, if the Company’s payment pursuant to the foregoing sentence would violate the nondiscrimination rules applicable to non-grandfathered plans, or result in the imposition of penalties under, the Patient Protection and Affordable Care Act of 2010 (“PPACA”) and related regulations and guidance promulgated thereunder, the Plan shall be reformed in such manner as is necessary to comply with the PPACA.
(d) In addition to the payments and benefits described above, the CIC Participant shall receive any other change in control benefits to which the CIC Participant is entitled under any other plan, program or agreement with the Company or any member of its Controlled Group. Such benefits shall be provided in accordance with the terms and conditions of the applicable plan, program or agreement.
5.2 Form and Timing of Change in Control Payments.
(a) For all CIC Participants, other than the Class A Participant, unless a payment delay is required under Section 7.4, the change in control severance payments described in Sections 5.1(a), (b), (c) and (d) shall be made in a single lump sum no later than 30 days after the Participant’s Date of Termination.
(b) For the Class A Participant, the payment described in Section 5.1(b) shall be paid in separate, equal monthly payments over a 24 month period, beginning no later than 30 days after the latest of (i) the Class A Participant’s Date of Termination or (ii) the date payment may commence following a payment delay required under Section 7.4. The other payments described in Sections 5.1(a), (c) and (d) shall be made in a single lump sum no later than 30 days after the latest of (i) the Class A Participant’s Date of Termination or (ii) the date payment may commence following a payment delay required under Section 7.4.
5.3 Treatment Under Code Section 280G.
(a) Anything in the Plan to the contrary notwithstanding, in the event it shall be determined that any payment or benefit provided under this Plan, when combined with payments and benefits under all other plans, programs or agreements with the Company, would be subject to an Excise Tax, then the amounts payable to the Participant under the Plan shall be reduced (but not below zero) to the maximum amount that could be paid to the Participant without giving rise to an Excise Tax (the “Safe Harbor Cap”). The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the cash payments under Section 5.1(b), then by reducing the cash payments under Section 5.1(a) and last by reducing the cash payments under
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Section 5.1(c). For purposes of reducing the payments and benefits to the Safe Harbor Cap, only amounts payable under the Plan (and no other payments) shall be reduced. In applying these principles, any reduction or elimination of the payments shall be made in a manner consistent with the requirements of Code Section 409A and where two economically equivalent amounts are subject to reduction but payable at different times, such amounts shall be reduced on a pro rata basis but not below zero.
(b) All determinations required to be made under this Section 5.3 shall be made by a public accounting firm that is retained by the Company to provide tax advice as of the date immediately prior to the Change in Control (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Participant within 15 business days of the receipt of notice from the Company or the Participant that there has been a payment, or such earlier time as is requested by the Company. Notwithstanding the foregoing, in the event (i) the Compensation Committee shall determine prior to the Change in Control that the Accounting Firm is precluded from performing such services under applicable auditor independence rules or (ii) the Audit Committee of the Board determines that it does not want the Accounting Firm to perform such services because of auditor independence concerns or (iii) the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Audit Committee shall appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). If payments are reduced to the Safe Harbor Cap, the Accounting Firm shall provide a reasonable opinion to the Participant that he or she is not required to report any Excise Tax on his or her federal income tax return. All fees, costs and expenses (including, but not limited to, the costs of retaining experts) of the Accounting Firm shall be borne by the Company. In the event the Accounting Firm determines that the payments shall be reduced to the Safe Harbor Cap, it shall furnish the Participant with a written opinion to such effect. The determination by the Accounting Firm shall be binding upon the Company and the Participant.
(c) If any good faith dispute arises regarding the determination of a payment of an Excise Tax, then the Company shall pay any and all of the Participant’s professional fees and expenses relating to such dispute, including but not limited to the Participant’s reasonable attorney’s fees. Such amounts shall be paid in accordance with Code Section 409A, including Treasury Regulations Sections 1.409A-1(b)(11), 1.409A-3(g) and 1.409A-3(i)(1)(v).
Article 6 – Severance Benefits
6.1 Severance Payments. If a Severance Participant is eligible for payments and benefits under Section 4.2, the Company shall provide to such Severance Participant the following (i) a payment of 100% of his or her Base Salary, subject to the conditions listed herein under Section 6.2, (ii) the “Benefits Offset” (as defined below); and (iii) the accelerated vesting of those unvested equity grants of Participant, whether as stock options, restricted stock, restricted stock units, dividend equivalent units or like equity grant (rounded to whole shares), where (x) the grant agreements or awards expressly provide for the vesting of some or all of such grants on account of the classification of the Termination event, or (y) the records of the Compensation
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Committee indicate formal action approving the vesting of some or all of such grants on account of the classification of the Termination event, whether at such date or upon the expiration of the respective performance period, strictly in accordance with the terms of the agreement or Compensation Committee action. Any grants not so vested shall be immediately forfeited; provided however, where the Compensation Committee has deferred vesting / forfeiture of such equity grants until the expiration of the applicable performance period, such grants shall either be vested or forfeited at such time in accordance with the requirements established by the Compensation Committee. Notwithstanding the foregoing, in no event shall any performance based award granted to a “covered employee” (as defined under Section 162(m) of the Code) that is intended to qualify as “performance based compensation” under Section 162(m) of the Code, be settled or become exercisable in full or in part, upon the termination of employment of Participant without regard to the satisfaction of the related performance criteria.
“Benefits Offset” shall mean an amount payment equal to the Company’s estimated obligation (as determined by the Company in the reasonable exercise of its discretion) for the Company’s cost of premiums and related administrative fees, for Company sponsored group health (medical, dental and vision) continuation coverage for the Severance Participant and the Severance Participant’s eligible dependents, for the same level of benefits and the same level of cost as in effect immediately prior to Severance Participant’s Termination of employment and for a period of 12 months. For purposes of clarification, the Company’s obligation pursuant to this subsection (c) is not intended to, nor shall it be construed as, obviating the Severance Participant’s share of premiums for such insurance. Notwithstanding the foregoing, if the Company’s payment pursuant to the foregoing sentence would violate the nondiscrimination rules applicable to non-grandfathered plans, or result in the imposition of penalties under, the PPACA and related regulations and guidance promulgated thereunder, the Plan shall be reformed in such manner as is necessary to comply with the PPACA.
6.2 Form and Timing of Severance Payments.
(a) Except to the extent that payment is delayed pursuant to Section 7.4, the amounts determined pursuant to the provisions of Section 6.1 shall be paid to the Severance Participant as follows: (i) the Benefits Offset as a lump sum with the initial payment of item 6.2(a)(ii); and (ii) the Base Salary as 26 pro-rata payments over a period of 52-weeks (“Base Salary Payments”); in each case less appropriate deductions and tax withholding amounts.
(b) The Severance Participant covenants and agrees that at any time after their Date of Termination and for a period of 52 weeks thereafter, if the Severance Participant accepts new employment, directly or indirectly, as an employee, consultant, agent, principal, partner, officer, director, member, or manager (collectively “New Employment”), the amount of the pro-rata Base Salary payment, as provided in Section 6.2(a) above, shall be reduced by the corresponding monthly salary or other compensation amount Employee receives as a result of such New Employment, all as determined by the Company in the reasonable exercise of its discretion. The Severance Participant covenants and agrees that he/she shall have a continuing obligation to advise the Company of any such New Employment during the 52 weeks following the date of Termination and prior to the date that the Severance Participant first begins his/her New
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Employment. To the extent that Severance Participant should fail to so notify Company as provided in the preceding sentence, then the Company’s obligations to provide severance payments under Section 6.1 shall cease immediately and in their entirety.
Article 7 – Conditions Affecting Payments
7.1 Other Benefits. Except as expressly provided in this Plan, a Participant’s right to receive the payments and benefits described in Article 5 or Article 6 will not decrease the amount of, or otherwise adversely affect, any other benefits payable to the Participant under any plan, program or agreement between the Participant and the Company or any member of its Controlled Group.
7.2 Change in Control Mitigation. The CIC Participant is not required to mitigate the amount of any payment described in this Plan by seeking other employment or otherwise, nor will the amount of any payment or benefit provided for in Article 5 be reduced by any compensation the CIC Participant earns in any capacity after Termination or by reason of the CIC Participant’s receipt of or right to receive any retirement or other benefits on or after Termination.
7.3 Withholding. The amount of any payment made under this Plan will be reduced by amounts the Company is required to withhold with respect to any income, wage or employment taxes imposed on the payment.
7.4 Payment Delay Required By Code Section 409A. Notwithstanding anything in the Plan to the contrary, if a Participant is a Specified Employee on the Date of Termination and the Participant is entitled to a payment and/or a benefit under the Plan 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 (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 Participant’s death. The first payment that can be made to the Participant 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 Section 409A(a)(2)(B)(i).
7.5 Limit on Number of Changes in Control. Regardless of any provision of this Plan, if more than one Change in Control (whether or not related) occurs while this Plan is in effect, the total amount payable under this Plan for any one Participant will be the largest amount calculated for that Participant with respect to any single Change in Control occurring during the Plan’s effective period.
Article 8 – Separation Agreement and Participant Obligations
8.1 Separation Agreement. The obligations of the Company to pay or provide the payments and benefits described in Article 5 or Article 6 are contingent on the Participant’s (for him/herself, his/her heirs, legal representatives and assigns) agreement to execute a separation or like agreement in the form and substance to be provided by Company, containing a general release of the Company, all members of its Controlled Group and their officers, directors, agents
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and employees from any claims or causes of action of any kind that the Participant might have, regarding his/her employment or the termination of that employment and shall require that the Participant acknowledge and agree to be subject to the Participant obligations set forth in Article 8 of the Plan, including specifically the obligation to repay Plan benefits pursuant to Section 8.5 of the Plan. The Participant understands that the release portion of the agreement will apply to the maximum extent permitted by law to all claim(s) he or she might have under any federal, state or local statute or ordinance, or the common law, for employment discrimination, wrongful discharge, breach of contract, violations of Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Employee Retirement Income Security Act, the Americans with Disabilities Act, or the Family and Medical Leave Act, and all other claims related in any way to the Participant’s employment or the termination of that employment. With respect to any payments or other benefits payable to a Participant after his termination of employment that are subject to Code Section 409A, to the extent that the period during which the Participant may execute, without revocation, a release of claims as set forth in this Section 8.1 begins in one taxable year of the Participant and ends in a second taxable year of the Participant, such payments or benefits shall not commence, be paid or provided until the second taxable year of the Participant, regardless of when the Participant executes the agreement.
8.2 Confidential Information. Except as otherwise required by applicable law, a Participant expressly agrees to keep and maintain Confidential Information confidential and not, at any time during or subsequent to the Participant’s employment with the Company or any member of its Controlled Group, to use any Confidential Information for the Participant’s own benefit or to divulge, disclose or communicate any Confidential Information to any person or entity in any manner except (a) to employees or agents of the Company or any member of its Controlled Group that need the Confidential Information to perform their duties on behalf of the Company or any member of its Controlled Group or (b) in the performance of the Participant’s duties to the Company. The Participant also agrees to notify the Company promptly of any circumstance the Participant believes may legally compel the disclosure of Confidential Information and to give this notice before disclosing any Confidential Information.
8.3 Non-Competition and Non-Solicitations.
(a) The Participant covenants and agrees that for a period of one (1) year following the Participant’s Termination (or two (2) years in the case of a Class A Participant), the Participant shall not, without the prior written consent of the Administrator, 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 Participant 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 Plan, “Competing Business” shall mean any business in North America that (i) is engaged in the Family Dining Segment (as hereinafter defined) of the restaurant industry or any other sector of the restaurant industry in which the Company is actively engaged or has taken substantial steps towards being actively engaged at the time of
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Participant’s termination; (ii) produces and distributes food products to the extent that the Company or any member of its Controlled Group is actively engaged in such business or has taken substantial steps towards being actively engaged in producing and distributing the same or similar food products at the time of Participant’s termination; (iii) offers products that compete with products offered by the Company or any member of its Controlled Group; (iv) offers products that compete with products the Company or any member of its Controlled Group has taken substantial steps toward launching during the Participant’s employment with the Company; or (v) is engaged in a line of business that competes with any line of business that the Company or any member of its Controlled Group enters into, or has taken substantial steps to enter into, during the Participant’s employment with the Company. For purposes of this Plan, “Family Dining Segment” shall mean the segment of the restaurant industry in which Bob Evans Restaurants is categorized, and shall include, without limitation and by way of example, the following restaurant concepts together with such other concepts as are commonly understood within the restaurant industry to be included within the “family dining” segment: Baker’s Square, Frisch’s Big Boy, Cracker Barrel Old Country Store, Denny’s, First Watch, Friendly’s, HomeTown Buffet, Golden Corral, Huddle House, IHOP, Marie Callender’s, Old Country Buffet, Perkins, Ponderosa, Ryan’s, Sizzler, Skyline Chili, Village Inn and Western Sizzlin. The Family Dining Segment shall expressly exclude restaurants in other segments of the restaurant industry including the “casual dining” segment, which would include, without limitation, restaurant concepts such as Applebee’s, Chili’s, Longhorn Steakhouse, Olive Garden, Ruby Tuesday’s and O’Charley’s together with such other concepts as are commonly understood within the restaurant industry to be included within the “casual dining” segment.
(b) The Participant agrees that during the one year period following his or her Termination (or two (2) years in the case of a Class A Participant), he or she shall not, either directly or indirectly, for himself/herself or the benefit of any third party, employ or hire any other person who is then employed by the Company, or solicit, induce, recruit, or cause any other person who is employed by the Company to terminate his/her employment for the purpose of joining, associating or becoming employed with any other business or activity or to violate any confidentiality, non-competition or employment agreement that such person may have with the Company or any policy of the Company.
8.4 Non-Disparagement. The Participant agrees that he or she shall not make or publish any statement (orally or in writing) that becomes or reasonably could be expected to become publicly known or otherwise impact the Company’s business, or instigate, assist or participate in the making or publication of any such statement, which would libel, slander or disparage (whether or not such disparagement legally constitutes libel or slander) the Company, any member of its Controlled Group or their officers, directors and employees, or any person affiliated with the Company, or the reputations of any of its past or present shareholders, officers, directors, agents, representatives and employees unless compelled to do so by valid subpoena or other court order, and in such case only after first notifying the Company in advance of such subpoena or court order.
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8.5 Effect of Breach of Obligations. If a Participant breaches in any material respect an obligation contained in this Article 8 and such breach is not cured, to the extent curable, in the Company’s good faith belief within ten (10) business days after Participant’s receipt of written notice on behalf of the Board, then:
(a) If the uncured breach occurs prior to the Participant’s Termination, his or her participation in this Plan shall terminate at the expiration of the aforementioned notice and cure period, and no amounts will be due under this Plan; or
(b) If the uncured breach occurs after the Participant’s Termination, no amounts will be due under this Plan and the Participant must repay any amounts paid under either Article 5 or Article 6 of this Plan, plus interest calculated at the prime rate of interest quoted in the Wall Street Journal, over the period beginning on the expiration of the aforementioned notice and cure period and ending on the date of repayment.
8.6 Recoupment. In addition to the recovery right described in Section 8.5, the Participant is subject to the Bob Evans Farms, Inc. Executive Recoupment Policy, as amended from time to time (the “Recoupment Policy”), and the provisions of the Recoupment Policy are incorporated herein for each of the Participants that are subject to this Plan. In the event of any conflict between this Plan and the terms of the Recoupment Policy, the terms of the Recoupment Policy shall control.
8.6 Enforceability. If any provision of this Plan is held to be illegal, invalid or unenforceable, then such provision shall be fully severable and this Plan 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. The Participant acknowledges the uncertainty of the law in this respect and expressly stipulates that this Article 8 shall be given the construction that renders the provisions valid and enforceable to the maximum extent (not exceeding its express terms) possible under applicable law.
Article 9 – Administration of the Plan
9.1 Administrator. The administration of the Plan shall be under the supervision of the Administrator. The Administrator shall have the discretionary authority to make eligibility determinations, all necessary factual determinations and to construe terms under this Plan. The Administrator shall have the discretionary authority to delegate its authority to any committee or individual and to hire such accountants, counsel, actuaries, consultants or other experts it determines necessary for the administration of this Plan.
9.2 Reliance on Tables, Etc. In administering the Plan, the Administrator will be entitled, to the extent permitted by law, to rely conclusively on all tables, valuations, certificates, opinions and reports which are furnished by, or in accordance with the instructions or recommendations of accountants, counsel, actuaries, consultants or other experts employed or engaged by the Administrator.
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9.3 Claims and Review Procedure.
(a) Claims Procedure. Any person who believes he or she is being denied any rights or benefits under the Plan may file a claim in writing with the Administrator. If any such claim is wholly or partially denied, the Administrator will notify such person of its decision in writing. Such notification will contain (i) specific reasons for the denial, (ii) specific reference to pertinent Plan provisions, (iii) a description of any additional material or information necessary for such person to perfect such claim and an explanation of why such material or information is necessary, and (iv) information as to the steps to be taken if the person wishes to submit a request for review. Such notification will be given within 90 days after the claim is received by the Administrator (or within one hundred 180 days, if special circumstances require an extension of time for processing the claim, and if written notice of such extension and circumstances are given to such person within the initial 90-day period). If such notification is not given within such period, the claim will be considered denied as of the last day of such period, and such person may request a review of his or her claim.
(b) Review Procedure. Within 60 days after the date on which a person receives a written notice of a denied claim (or, if applicable, within 60 days after the date on which such denial is considered to have occurred) such person (or his or her duly authorized representative) may (i) file a written request with the Administrator for the review of the denied claim and of pertinent documents and (ii) submit written issues and comments to the Administrator. The Administrator will notify such person of its decision in writing. Such notification will be written in a manner calculated to be understood by such person and will contain specific reasons for the decision as well as specific reference to pertinent Plan provisions. The decision on review will be made within 60 days after the request for review is received by the Administrator (or within 120 days, if special circumstances require an extension of time for processing the request, such as an election by the Administrator to hold a hearing, and if written notice of such extension and circumstances are given to such person within the initial 60-day period). If the decision on review is not made within such period, the claim will be considered denied.
9.4 Indemnification of Administrator. The Company agrees to indemnify and to defend to the fullest extent permitted by law any member of the Compensation Committee serving as the Administrator and any employee assisting the Administrator in connection with its duties (including any individual who formerly served as a member of the Compensation Committee or who assisted the Administrator), against all liabilities, damages, costs and expenses (including attorneys’ fees and amounts paid in settlement of any claims approved by the Compensation Committee) incurred by the Administrator or such employee in connection with the administration of this Plan, including but not limited to the application of the Claims and Reviews Procedures set forth herein.
9.5 Named Fiduciary. For purposes of ERISA, the named fiduciary of the Plan shall be the Company.
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Article 10 – Duration, Amendment and Termination
10.1 Duration. This Plan shall remain in effect until terminated as provided in Section 10.2. Notwithstanding the foregoing, if a Change in Control occurs, this Plan shall continue in full force and effect and shall not terminate or expire until the later of (a) the date on which all Participants who become entitled to any payments or benefits hereunder shall have received such payments and benefits in full or (b) 36 consecutive calendar months have elapsed after the Change in Control.
10.2 Amendment and Termination.
(a) The Plan, including but not limited to Exhibit A, may be terminated or amended in any respect by resolution adopted by the Compensation Committee unless a Change in Control has previously occurred. However, after the Compensation Committee has knowledge of a possible transaction or event that if consummated would constitute a Change in Control, this Plan may not be terminated or amended in any manner which would adversely affect the rights or potential rights of Participants, unless and until the Compensation Committee has determined that all transactions or events that, if consummated, would constitute a Change in Control have been abandoned and will not be consummated, and, provided that, the Compensation Committee does not have knowledge of other transactions or events that, if consummated, would constitute a Change in Control. If a Change in Control occurs, the Plan shall no longer be subject to amendment, change, substitution, deletion, revocation or termination in any respect that adversely affects the rights of Participants, and no Participant shall be removed from Plan participation.
(b) The Compensation Committee in its sole discretion may add or remove any CIC Participant (other than the Class A Participant) from participation in the Plan as a CIC Participant as of any date specified by the Compensation Committee, provided that no individual may be so removed from participation in the Plan as a CIC Participant in connection with or in anticipation of a Change in Control that actually occurs. At the time that the Compensation Committee adds or removes any CIC Participant from participation in the Plan as a CIC Participant, the Compensation Committee should also amend Exhibit A to the Plan. In the event of a conflict between the official record of proceedings of the Compensation Committee and the Plan and Exhibit A, the official record of proceedings of the Compensation Committee shall control.
Article 11 – Successors; Binding Agreement
11.1 Successors. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company (each a “Successor” and collectively the “Successors”) to unconditionally assume all of the obligations of the Company hereunder. Failure of the Company to obtain such assumption prior to the effectiveness of any such succession shall constitute Good Reason hereunder and shall entitle the CIC Participants to payments and benefits in the same amount and on the same terms as the CIC Participants would be entitled hereunder if they had satisfied the requirements of Section 4.1, except that for purposes of implementing the foregoing, the date on which any succession becomes effective shall be deemed the Date of Termination.
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11.2 Binding Agreement. The benefits provided under this Plan shall inure to the benefit of and be enforceable by the Participant’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Participant shall die while any amounts would be payable to the Participant hereunder had the Participant continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Plan to such person or persons appointed in writing by the Participant to receive such amounts or, if no person is so appointed, to the Participant’s estate.
Article 12 – Miscellaneous
12.1 Elections and Notices. Notwithstanding anything to the contrary contained in this Plan, all elections and notices of every kind under this Plan shall be made on forms prepared by the Company or shall be made in such other manner as permitted or required by the Company, including through electronic means, over the internet or otherwise. An election shall be deemed made when received by the Company (or its designated agent, but only in cases where the designated agent has been appointed for the purpose of receiving such election), which may waive any defects in form.
If not otherwise specified by this Plan or the Company, any notice or filing required or permitted to be given to the Company under the Plan shall be delivered to the principal office of the Company, directed to the attention of the General Counsel for the Company or his or her successor. Such notice shall be deemed given on the date of delivery.
Notice to the Participant shall be deemed given when mailed (or sent by telecopy) to the Participant’s work or home address as shown on the records of the Company or, at the option of the Company, to the Participant’s e-mail address as shown on the records of the Company. It is the Participant’s responsibility to ensure that the Participant’s addresses are kept up to date on the records of the Company. In the case of notices affecting multiple Participants, the notices may be given by general distribution at the Participants’ work locations.
12.2 Governing Law; Validity. To the extent not preempted by Federal law, the Plan, and all benefits and agreements hereunder, and any and all disputes in connection therewith, shall be governed by and construed in accordance with the substantive laws of the State of Ohio, without regard to conflict or choice of law principles which might otherwise refer the construction, interpretation or enforceability of this Plan to the substantive law of another jurisdiction.
12.3 Employment Not Guaranteed. Nothing contained in the Plan nor any action taken thereunder shall be construed as giving any Participant the right to be retained in the employ of the Company.
12.4 Funding. Benefits are paid from the Company’s general assets.
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12.5 Code Section 409A. The Plan shall be interpreted, construed and operated to reflect the intent of the Company that all aspects of the Plan shall be interpreted either to be exempt from the provisions of Code Section 409A or, to the extent subject to Code Section 409A, comply with Code Section 409A and any regulations and other guidance thereunder. Notwithstanding anything to the contrary in Article 10, this Plan may be amended at any time, without the consent of any Participant, to avoid the application of Code Section 409A in a particular circumstance or to the extent determined necessary or desirable to satisfy any of the requirements under Code Section 409A, but the Company shall not be under any obligation to make any such amendment. Nothing in the Plan shall provide a basis for any person to take action against the Company based on matters covered by Code Section 409A, including the tax treatment of any award made under the Plan, and the Company shall not under any circumstances have any liability to any Participant or other person for any taxes, penalties or interest due on amounts paid or payable under the Plan, including taxes, penalties or interest imposed under Code Section 409A.
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Exhibit 99.1
BOB EVANS FARMS NAMES SAED MOHSENI PRESIDENT AND CHIEF EXECUTIVE OFFICER
New Albany, OH – November 17, 2015 – Bob Evans Farms, Inc. (NASDAQ: BOBE) today named Saed Mohseni President and Chief Executive Officer, effective January 1, 2016. The Bob Evans Board has also agreed to appoint Mr. Mohseni to the Board of Directors effective January 1, 2016.
Mr. Mohseni is the Chief Executive Officer of Bravo Brio Restaurant Group, Inc. (NASDAQ: BBRG) (“Bravo Brio”) and also a Director, positions he will hold through December 28, 2015. He held the additional role of President from September 2009 to August 2014 and served as a director since June 2006.
“Saed Mohseni brings dynamic leadership to Bob Evans, and a notable track record as a restaurant operator with an intense focus on raising the quality of the overall guest experience,” said Doug Benham, Chair of the Bob Evans Board of Directors. “The CEO Search Committee conducted a careful, extensive review over many months and the Board unanimously concluded that Saed was the right person to lead Bob Evans in fulfilling its potential. His energy, the depth of his knowledge of all aspects of the industry, and his ability to lead a team to perform at a higher level made him the standout candidate. We look forward to his joining us in January 2016.”
“Bob Evans is an iconic brand with a long track record of providing its restaurant guests with farm fresh food and outstanding service, while building a successful and expanding foods business,” said Mr. Mohseni. “I look forward to working with the dedicated people of Bob Evans to build on this foundation, providing an excellent experience for our guests, and opportunity for our employees, while sustainably improving margins and creating value for its shareholders.”
Mr. Mohseni, 53, has more than 30 years of management experience in the restaurant industry. He currently also serves on the Board of Directors of Chuy’s Holding, Inc. (NASDAQ: CHUY). Prior to joining Bravo Brio, Mr. Mohseni was the Chief Executive Officer (January 2000-February 2007) and a director (2004-2007) of McCormick & Schmick’s Seafood Restaurants, Inc. Mr. Mohseni joined McCormick & Schmick’s in 1986 as a General Manager. During his time at McCormick & Schmick’s, he also held the positions of Senior Manager (1988-1993), Vice President of Operations-California (1993-1997), and Senior Vice President of Operations (1997-1999).
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Certain statements in this news release that are not historical facts are forward-looking statements. Forward-looking statements involve various important assumptions, risks and uncertainties. Actual results may differ materially from those predicted by the forward-looking statements because of various factors and possible events. We discuss these factors and events, along with certain other risks, uncertainties and assumptions, under the heading “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended April 24, 2015, and in our other filings with the Securities and Exchange Commission. We note these factors for investors as contemplated by the Private Securities Litigation Reform Act of 1995. Predicting or identifying all such risk factors is impossible. Consequently, investors should not consider any such list to be a complete set of all potential risks and uncertainties. Any strategic transaction with respect to our headquarters or a portion of our restaurant real estate remains subject to evaluation by the Board and there can be no assurance if and when any such transaction will be undertaken or consummated. Forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update any forward-looking statement to reflect circumstances or events that occur after the date of the statement to reflect unanticipated events. All subsequent written and oral forward-looking statements attributable to us or any person acting on behalf of the Company are qualified by the cautionary statements in this section.
About Bob Evans Farms, Inc.
Bob Evans Farms, Inc. owns and operates full-service restaurants under the Bob Evans Restaurants brand name. At the end of the first fiscal quarter (July 24, 2015), Bob Evans Restaurants owned and operated 549 family restaurants in 19 states, primarily in the Midwest, mid-Atlantic and Southeast regions of the United States. Bob Evans Farms, Inc., through its BEF Foods segment, is also a leading producer and distributor of refrigerated side dishes, pork sausage and a variety of refrigerated and frozen convenience food items under the Bob Evans and Owens brand names. For more information about Bob Evans Farms, Inc., visit www.bobevans.com
Contact:
Scott C. Taggart
Vice President, Investor Relations
(614) 492-4954
BOBE-G
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