Document:

exv10w13

 

Exhibit 10.13

COUNTRYWIDE FINANCIAL CORPORATION

CHANGE IN CONTROL SEVERANCE PLAN 

(As Amended and Restated June 14, 2006)

     WHEREAS, the Board of Directors (the “Board”) of Countrywide FINANCIAL CORPORATION, a Delaware
corporation (the “Company”), originally adopted this Plan on September 12, 1996 and amended and
restated it on February 23, 2005, recognizing that the threat of an unsolicited takeover or other
change in control of the Company may occur which can result in significant distractions of its
personnel and disrupt the business of the Company with respect to attracting and retaining
employees of every level because of the uncertainties inherent in such a situation; and

     WHEREAS, the Board has determined that it is essential and in the best interests of the
Company and its shareholders to be able to retain the services of its personnel at a time when the
Company is considering its strategic alternatives, including possible change in control
transactions, in order to ensure their continued dedication and efforts without undue concern for
their personal financial and employment security.

     NOW, THEREFORE, in order to fulfill the above objectives, the following plan has been
developed and is hereby adopted.

	1.	 	Purpose
	 
	 	 	It is the purpose of the Company, through this Plan, to provide a salary continuation
payment and certain other benefits for each of its employees who is a Participant in the
Plan and (a) who separates from service with the Company for Good Reason or (b) whose
employment with the Company is involuntarily terminated (other than for Cause, death or an
Excluded Termination), in either case, on or after the date on which a Change in Control
occurs and within the time limits specified in Section 5.1.
	 
	2.	 	Contractual Right
	 
	 	 	Upon and after a Change in Control, each Participant shall have a fully vested,
nonforfeitable contractual right, enforceable against the Company, to the benefits provided
for under Section 6 of this Plan upon the conditions specified in Section 5.1. Such
contractual right to receive such benefits if the conditions specified in Section 5.1 are
fulfilled shall arise on the date on which the Change in Control occurs.

 

 

	3.	 	Duration
	 
	 	 	This Plan shall be effective as of the date the Plan is approved by the Board or such other
date as the Board shall designate in its resolution approving the Plan. The Plan shall
continue in effect until terminated in accordance with Section 9.
	 
	4.	 	Definitions. For purposes of this Plan, the following definitions shall apply:

	 	4.1	 	Affiliate: “Affiliate” shall mean with respect to any person or
entity, any entity, directly or indirectly, controlled by, controlling or under common
control with such person or entity.
	 
	 	4.2	 	Board: “Board” shall mean the Board of Directors of Countrywide
Financial Corporation.
	 
	 	4.3	 	Cause: “Cause” shall exist where the Participant (a) intentionally and
continually failed to perform reasonably assigned duties, (b) willfully engaged in
misconduct which is demonstrably and materially injurious to the Company, monetarily or
otherwise , (c) engaged in a transaction in connection with the performance of his or
her duties to the Company for personal profit to himself or herself or (d) willfully
violated any law, rule or regulation in connection with the performance of his or her
duties (other than traffic violations or similar offenses). Failure by a Participant
to perform the Participant’s duties during any period of disability shall not
constitute Cause.
	 
	 	4.4	 	Change in Control: A “Change in Control” shall mean the occurrence
during the term of this Plan, of any one of the following events:

	 	(a)	 	An acquisition (other than directly from Company) of any common
stock or other “Voting Securities” (as hereinafter defined) of Company by any
“Person” (as the term person is used for purposes of Section 13(d) or 14(d) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)),
immediately after which such Person has “Beneficial Ownership” (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty five
percent (25%) or more of the then outstanding shares of Company’s common stock
or the combined voting power of Company’s then outstanding Voting Securities;
provided, however, in determining whether a Change in Control has occurred,
Voting Securities which are acquired in a “Non-Control Acquisition” (as
hereinafter defined) shall not constitute an acquisition which would cause a
Change in Control. For purposes of this Plan, (1) “Voting Securities” shall

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	 	 	 	mean Company’s outstanding voting securities entitled to vote generally in
the election of directors and (2) a “Non-Control Acquisition” shall mean an
acquisition by (i) an employee benefit plan (or a trust forming a part
thereof) maintained by (A) the Company or (B) any corporation or other
Person of which a majority of its voting power or its voting equity
securities or equity interest is owned, directly or indirectly, by the
Company (for purposes of this definition, a “Subsidiary”), (ii) the Company
or any of its Subsidiaries, or (iii) any Person in connection with a
“Non-Control Transaction” (as hereinafter defined);
	 
	 	(b)	 	During any period of twenty-four (24) consecutive months, the
individuals who at the beginning of such period constitute the Board (the
“Incumbent Board”), cease for any reason to constitute at least fifty percent
(50%) of the members of the Board; provided, however, that if the election,
or nomination for election by the Company’s common stockholders, of any new
director was approved by a vote of at least two-thirds of the Incumbent
Board, such new director shall, for purposes of this Plan, be considered as a
member of the Incumbent Board; provided, further, however, that no individual
shall be considered a member of the Incumbent Board if such individual
initially assumed office as a result of either an actual or threatened
“Election Contest” (as described in Rule 14a-11 promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board (a “Proxy Contest”)
including by reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest; or
	 
	 	(c)	 	The consummation of:

	 	(i)	 	A merger, consolidation or reorganization
involving the Company, unless such merger, consolidation or
reorganization is a “Non-Control Transaction.” A “Non-Control
Transaction” shall mean a merger, consolidation or reorganization of
the Company where:

	 	(A)	 	the Company’s stockholders,
immediately before such merger, consolidation or
reorganization, own directly or indirectly immediately
following such merger, consolidation or reorganization, at
least fifty percent (50%) of the combined voting power of the
outstanding Voting Securities of the corporation

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	 	 	 	resulting from such merger, consolidation or reorganization
(the “Surviving Corporation”) in substantially the same
proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or
reorganization;
	 
	 	(B)	 	the individuals who were
members of the Incumbent Board immediately prior to the
execution of the agreement providing for such merger,
consolidation or reorganization constitute at least fifty
percent (50%) of the members of the board of directors of the
Surviving Corporation, or in the event that, immediately
following the consummation of such transaction, a corporation
beneficially owns, directly or indirectly, a majority of the
Voting Securities of the Surviving Corporation, the board of
directors of such corporation; and
	 
	 	(C)	 	no Person other than (i) the
Company, (ii) any Subsidiary, (iii) any employee benefit plan
(or any trust forming a part thereof) maintained by the
Company, the Surviving Corporation, or any Subsidiary, or (iv)
any Person who, immediately prior to such merger,
consolidation or reorganization had Beneficial Ownership of
twenty five percent (25%) or more of the then outstanding
Voting Securities or common stock of the Company, has
Beneficial Ownership of twenty five percent (25%) or more of
the combined voting power of the Surviving Corporation’s then
outstanding Voting Securities or its common stock;

	 	(ii)	 	A complete liquidation or dissolution of the
Company; or
	 
	 	(iii)	 	The sale or other disposition of all or
substantially all of the assets of the Company to any Person (other
than a transfer to a Subsidiary).

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the “Subject Person”) acquired Beneficial Ownership of
more than the permitted amount of the then outstanding common stock or Voting
Securities as a result of the acquisition of common stock or Voting Securities by
the Company which, by reducing the number

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of shares of common stock or Voting Securities then outstanding, increases the
proportional number of shares Beneficially Owned by the Subject Person; provided,
however, that if a Change in Control would occur (but for the operation of this
sentence) as a result of the acquisition of common stock or Voting Securities by the
Company, and after such share acquisition by the Company, the Subject Person becomes
the Beneficial Owner of any additional common stock or Voting Securities which
increases the percentage of the then outstanding common stock or Voting Securities
Beneficially Owned by the Subject Person, then a Change in Control shall occur.

	 	4.5	 	Company: “Company” shall mean Countrywide Financial Corporation and
any successor thereto, including, without limitation, any person (as such term is used
in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended),
partnership(s) or corporation(s) acquiring directly or indirectly all or substantially
all of the business or assets of the Company.
	 
	 	4.6	 	Excluded Termination: “Excluded Termination” shall have the meaning as
set forth in Section 5.2 of this Plan.
	 
	 	4.7	 	Good Reason: A Participant who immediately prior to a Change in
Control is a member of employee classification X (as set forth in Appendix A) shall
have “Good Reason” for terminating employment with the Company only if one or more of
the following occurs, within twenty-four months after a Change in Control, without the
Participant’s express written consent:

	 	(a)	 	a reduction by the Company in the Participant’s base salary or
the termination or reduction of award opportunities (other than equity-based
opportunities) under any bonus or incentive award plan, practice or formula in
which the Participant participates unless a comparable arrangement (embodied in
an ongoing substitute or alternative plan, practice or formula) has been made
with respect to the Participant’s participation in such bonus or incentive
award plan, practice or formula; or
	 
	 	(b)	 	a change in the Participant’s title, position, duties or
responsibilities which represents an adverse change from his or her title,
position, duties or responsibilities as in effect immediately prior to such
change; or

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	 	(c)	 	the relocation of the office at which the Participant is
principally employed immediately prior to the Change in Control to a location
more than fifty (50) miles from the location of such office, or the Participant
being required to be based anywhere other than such office, except to the
extent the Participant was not previously assigned to a principal location and
except for required travel on the Company’s business to an extent substantially
consistent with the Participant’s business travel obligations at the time of
the Change in Control.
	 
	 	(d)	 	Notwithstanding the foregoing, the Participant shall not have
Good Reason to terminate employment with the Company due solely to the fact
that the Company shall cease to be a public company and shall become a
subsidiary of another publicly-traded corporation, so long as the Participant
retains his or her title and retains job authorities and responsibilities
consistent in all material respects with those of the Participant’s
counterparts in the substantial subsidiaries of the parent.

	 	 	 	Notwithstanding the foregoing, no action by the Company shall give rise to Good
Reason if it results from the Participant’s termination for Cause, death or an
Excluded Termination.
	 
	 	4.8	 	Operating Unit: “Operating Unit” shall mean any subsidiary, division
or other business unit of Company or any Affiliate.
	 
	 	4.9	 	Participant: “Participant” shall mean an active, full-time employee of
the Company or any of its subsidiaries who, on the date immediately preceding the date
of a Change in Control, is employed in one of the employee classifications set forth in
Appendix A. Employees of the Company who are Executive Managing Directors and above who
are covered under individualemployment agreements shall not be Participants in this
Plan.
	 
	 	4.10	 	Plan: “Plan” shall mean the Countrywide Financial Corporation Change
in Control Severance Plan (As Amended and Restated June 14, 2006).
	 
	 	4.11	 	“Post-Transaction Good Reason” means, with respect to offered
employment or the continued employment, as the case may be, to employees who
immediately prior to a Change in Control are members of employee classification X (as
set forth in Appendix A) with a Post-Transaction Employer (as defined in Section 5.2)
following a Transaction (as defined in Section 5.2):

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	 	(a)	 	a reduction in the Participant’s annual base salary or the
termination or reduction of award opportunities (other than equity-based
opportunities) under any bonus or incentive award plan, practice or formula in
which the Participant participates unless a comparable arrangement (embodied in
an ongoing substitute or alternative plan, practice or formula) has been made
with respect to the Participant’s participation in such bonus or incentive
award plan, practice or formula, in either case below the greater of the rate
in effect (i) as of the date of the Transaction or (ii) on any date following
the Transaction;
	 
	 	(b)	 	a change in the Participant’s title, position, duties or
responsibilities which represents an adverse change from his or her title,
position, duties or responsibilities as in effect immediately prior to such
change, in any case as determined by the Participant in Good Faith; or
	 
	 	(c)	 	the relocation of the office at which the Participant is
principally employed immediately prior to the Transaction to a location more
than fifty (50) miles from the location of such office, or the Participant
being required to be based anywhere other than such office, except to the
extent the Participant was not previously assigned to a principal location and
except for required travel on the Company’s business to an extent substantially
consistent with the Participant’s business travel obligations at the time of
the Transaction;

	 	4.12	 	Senior Human Resources Manager: “Senior Human Resources Manager” shall
mean the Chief Administrative Officer of the Company prior to a Change in Control or
such person’s designee.
	 
	 	4.13	 	Severance Benefit: “Severance Benefit” shall mean the benefits payable
in accordance with Section 6 of this Plan.

	5.	 	When Provisions Apply

	 	5.1	 	The benefits provided for under Section 6 shall be provided to each Participant
who incurs a “Qualifying Termination.” For purposes of this Plan, a “Qualifying
Termination” shall occur only if a Change in Control occurs and

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	 	(a)	 	within twenty-four months after the Change in Control occurs,
the Company terminates the Participant’s employment other than for Cause; or
	 
	 	(b)	 	(i) within twenty-four months after the Change in Control
occurs, Good Reason occurs, and

     (ii) the Participant terminates employment with the Company within six
months after the Good Reason occurs;

	 	 	 	provided, however, that a Qualifying Termination shall not occur if the
Participant’s employment with the Company terminates by reason of Cause, the
Participant’s death, or an Excluded Termination (as defined in Section 5.2).
	 
	 	5.2	 	Sale of Business or Assets. If, following a Change in Control, a
Participant’s employment with the Company and its Affiliates terminates in connection
with the sale, divestiture or other disposition of any Operating Unit (or part thereof)
(a “Transaction”), such termination shall not be a termination of employment of the
Participant for purposes of the Plan, and (notwithstanding the rights provided to the
Participant by Section 5.1) the Participant shall not be entitled to a Severance
Benefit as a result of such termination of employment if (i) the Participant is offered
continued employment, or continues in employment, with the divested Operating Unit or
the purchaser of the assets of the Operating Unit, as the case may be, (the
“Post-Transaction Employer”) or their respective Affiliates on terms and conditions
that would not constitute Post-Transaction Good Reason and (ii) the Company obtains an
agreement from the acquiror of the stock or assets of the divested Operating Unit,
enforceable by the Participant, to provide or cause the Post-Transaction Employer to
provide severance pay and benefits, if the Participant accepts the offered employment
or continues in employment with the Post-Transaction Employer or its Affiliates
following the Transaction, (A) at least equal to the Severance Benefit and (B) payable
upon a termination of the Participant’s employment with the Post-Transaction Employer
and its Affiliates within the period described in Section 5.1 (or such part of it as
is then remaining) for any reason other than Cause, the Participant’s death or a
termination by the Participant without Post-Transaction Good Reason. For purposes of
this Section 5.2, the term Cause shall have the meaning ascribed to it in Section 4.3,
but the term Company as it is used in Section 4.3 shall be deemed to refer to the
entity employing the Participant after the Transaction.

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	 	 	 	A termination of employment described in this Section 5.2 is herein referred to as
an “Excluded Termination.” In the circumstances described in this Section 5.2, the
Participant shall not be entitled to receive any Severance Benefit under this Plan
whether or not the Participant accepts the offered employment or continues in
employment. The provisions of this Section 5.2 do not create any entitlement to any
Severance Benefit from the Company and its Affiliates in any circumstances
whatsoever and are to be construed solely as a limitation on such entitlement in the
circumstances herein set forth.
	 
	 	5.3	 	The fact that a Participant is eligible to immediately receive retirement
benefits under the Countrywide Financial Corporation Defined Benefit Pension Plan or
any other Company employee benefit plan, practice or policy shall not render him or her
ineligible for the benefits under this Plan.

	6.	 	Severance Benefits

	 	6.1	 	Severance Payment

	 	(a)	 	Each Participant entitled to benefits under this Plan shall
receive as continuation of salary and bonus an amount as determined in
accordance with Appendix A reduced (but not below zero) by the payments and
benefits paid or payable under an employment agreement or letter offering
employment as a result of or in connection with the Qualifying Termination (the
“Salary Separation Payment”).
	 
	 	 	 	For purposes of calculating the Salary Separation Payment, (1) the
Participant’s “Base Pay” shall be the Participant’s base annual salary as of
the date of his or her termination of employment or, if greater, as of the
date on which the Change in Control occurs, (2) the Participant’s “ Bonus”
shall be the greater of (x) the average of the aggregate bonus and/or
incentive award, if any, paid or payable to the Participant for each of the
two (2) fiscal years preceding the fiscal year in which the Participant’s
termination of employment occurs (or such fewer number of fiscal years for
which the Participant was eligible to receive a bonus and/or incentive
award) and (y) the bonus and/or incentive award paid for the fiscal year
immediately preceding the date of the Change in Control, and (3) the
Participant’s “Pay” for Classification C, D and E is base pay and bonus paid
for the preceding twelve months divided by 52.

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	 	(b)	 	Except as required by Section 7, the Salary Separation Payment
provided for in Section 6.1(a) shall be payable in addition to, and not in lieu
of, all other accrued, vested, earned, or deferred compensation rights,
options, or other benefits (other than severance pay or similar benefits) which
may be payable or owing to a Participant following termination of his or her
employment under any plan, including but not limited to retirement and
supplemental retirement benefits, bonus, accrued vacation or sick pay,
compensation, or benefits payable under any of the Company’s employee benefit
plans, practices or policies.
	 
	 	(c)	 	The Salary Separation Payment shall not be offset or reduced by
any unemployment insurance benefit, payment in lieu of notice required under
any law or act, or income from subsequent employment that the Participant may
receive.

	 	6.2	 	The period used in computing the Salary Separation Payment pursuant to Section
6.1(a)(the “Salary Separation Pay Period”) shall be included as accredited service for
the purpose of receiving or accruing benefits under all employee benefit plans of the
Company, including, but not limited to, group health and life insurance, long-term
disability, the Countrywide Financial Corporation Defined Benefit Pension Plan, the
Countrywide Financial Corporation 401(k) Savings and Investment Plan, the Countrywide
Financial Corporation Supplemental Executive Retirement Plan, the Countrywide Financial
Corporation Executive Deferred Compensation Plan, the Countrywide Financial Corporation
Selected Employee Deferred Compensation Plan and the Countrywide Capital Market
Nonqualified ERISA Pension Plan.
	 
	 	6.3	 	For the period equal to the Salary Separation Pay Period and commencing on the
date of Participant’s termination of employment (the “Continuation Period”), the
Company shall at its expense (and without contribution by the Participant) continue on
behalf of the Participant and his or her dependents and beneficiaries (a) medical,
health, dental and prescription drug benefits, (b) short and long-term disability
coverage,(c) life insurance and other death benefits coverage and (d) individual
outplacement services for members of employee classification X, A, B, C and D (as set
forth in Appendix A) and outplacement services at a level to be determined by the
Senior Human Resources Manager for employee classification D,E, F and G. For a period
of thirty-six (36) months for members of employee classification X and A, and
commencing on the date of Participant’s Qualifying Termination, the

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	 	 	 	Company shall at its expense (and without contribution by the Participant) continue,
on behalf of the Participant, financial planning, executive medical examination
program and executive long term disability. The coverages and benefits (including
deductibles, if any) provided under this Section 6.3 during the Continuation Period
shall be no less favorable in the aggregate to the Participant and his or her
beneficiaries than the most favorable of such coverages and benefits provided the
Participant and his or her dependents during the 90-day period immediately preceding
the Change in Control or as of any date following the Change in Control but
preceding the date of Participant’s termination. The obligation under this Section
6.3 with respect to the foregoing benefits shall be limited if the Participant
obtains any such benefits pursuant to a subsequent employer’s benefit plans, in
which case the Company may reduce or eliminate the coverage and benefits it is
required to provide the Participant hereunder as long as the aggregate coverages and
benefits of the combined benefit plans are no less favorable to the Participant than
the coverages and benefits required to be provided hereunder. Any period during
which benefits are continued pursuant to this Section 6.3 shall be considered to be
in satisfaction of the Company’s obligation to provide “continuation coverage”
pursuant to Section 4980B of the Internal Revenue Code of 1986, as amended, and the
period of coverage required under said Section 4980B shall be reduced by the period
during which benefits were provided pursuant to this Section 6.3.
	 
	 	6.4	 	Notwithstanding Section 6.1, a Participant may elect to receive the Salary
Separation Payment in a lump sum. Benefits otherwise receivable by the Participant
pursuant to clause (a), (b) and (c) of Section 6.3 shall be discontinued if the
Participant accepts alternative employment with the Company or any of its Affiliates,
or requests and receives a lump sum payment. Payments under Section 6.1 shall also
cease upon a Participant accepting alternative employment with the Company or any of
its Affiliates. If the Participant elects to receive the Salary Separation Payment as
a lump sum, and the Participant accepts alternative employment with the Company, such
Participant shall owe the Company the portion of the Salary Separation Payment which
exceeds the amount of Base Salary the Participant would have earned had the Participant
been actively employed by the Company from the date his or her termination of
employment commenced to the new employment commencement date.
	 
	 	6.5	 	Any termination of employment following a Change in Control by the Company or
by the Participant shall be communicated by a Notice of Termination to the other party
herein in accordance with Section 11. For purposes of this Plan, a “Notice of
Termination” shall mean a written notice

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	 	 	 	which shall indicate the specific Qualifying Termination provision in this Plan, if
any, relied upon and shall set forth in reasonable detail the facts and
circumstances that provide a basis for termination of the Participant’s employment
under the provision so indicated and shall specify the effective date of the
Qualifying Termination which shall not be less than thirty (30) days nor more than
sixty (60) days from the date such Notice of Termination is given or such shorter or
longer period as may be mutually agreed between the Company and the Participant.
For purposes of this Plan, no such purported Qualifying Termination shall be
effective without such Notice of Termination.
	 
	 	6.6	 	If a Participant who is entitled to Severance Benefits under this Plan dies
before receiving the Salary Separation Payment, such Payment shall be made to the
Participant’s surviving spouse, or, if there is no surviving spouse, to the
Participant’s estate. If a Participant who is entitled to Severance Benefits under
this Plan dies before the end of the Continuation Period, then for the balance of the
Continuation Period, the Company shall be required to continue the benefits provided
for under Section 6.3 to the Participant’s spouse and dependents.
	 
	 	6.7	 	A Participant who is entitled to benefits under this Plan shall not be required
to accept or to seek other employment as a condition of receiving such benefits, and a
Participant’s benefits provided under this Plan shall not be offset by any future
compensation received by the Participant.

	7.	 	Excise Tax 

	 	7.1	 	Excise Tax Limitation. 

	 	(a)	 	With respect to any Participant who immediately prior to the
Change in Control is a member of employee classification X or A (as set forth
in Appendix A), except as provided in subsection (b), in the event it shall be
determined that any payment or distribution of any type to a Participant,
including accelerated vesting, to or for the benefit of the Participant, by the
Company, any Affiliate of the Company, any Person (as the term “person” is used
for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934,
as amended) who acquires ownership or effective control of the Company or
ownership of a substantial portion of the Company’s assets (within the meaning
of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”),
and the regulations thereunder) or any Affiliate of such Person, whether paid
or payable or distributed or distributable pursuant to the terms of this Plan
or

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	 	 	 	otherwise (the “Payments”), is or will be subject to the excise tax imposed
by Section 4999 of the Code or any interest or penalties with respect to
such excise tax (such excise tax, together with any such interest and
penalties, are collectively referred to as the “Excise Tax”), then the
Participant shall be entitled to receive an additional payment (a “Gross-Up
Payment”) in an amount such that after payment by the Participant of all
taxes (including any interest or penalties imposed with respect to such
taxes), including any income tax, employment tax or Excise Tax imposed upon
the Gross-Up Payment, the Participant retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
	 
	 	(b)	 	With respect to any Participant who immediately prior to the
Change in Control is a member of employee classification X or A,
notwithstanding Section (a) or any other provision of this Plan to the
contrary, in the event that the Payments (excluding the payment provided for in
subsection 7.1(a)) exceed by less than 10% or $100,000 the maximum amount of
Payments which if made or provided to the Participant would not be subject to
an Excise Tax, the Participant will not be entitled to a Gross-Up Payment and
the Payments shall be reduced (but not below zero) to the extent necessary so
that no Payment to be made or benefit to be provided to the Participant shall
be subject to the Excise Tax; it being the intent of the parties that the
Payments shall be reduced only if the economic detriment to the Participant (on
a pre-tax basis) is less than the greater of $100,000 or 10% of the Payments.
Unless the Participant shall have given prior written notice specifying a
different order to the Company to effectuate the foregoing, the Company shall
reduce or eliminate the Payments, by first reducing or eliminating the portion
of the Payments which are not payable in cash and then by reducing or
eliminating cash payments, in each case in reverse order beginning with
payments or benefits which are to be paid the farthest in time from the
“Determination” (as defined below). Any notice given by the Participant
pursuant to the preceding sentence shall take precedence over the provisions of
any other plan, arrangement or agreement governing the Participant’s rights and
entitlements to any benefits or compensation.
	 
	 	(c)	 	With respect to any Participant who immediately prior to the
Change in Control is a member of employee classification X or A , the
determination of whether the Payments shall be reduced pursuant to this Plan
and the amount of such reduction, all mathematical

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	 	 	 	determinations, and all determinations as to whether any of the Payments are
“parachute payments” (within the meaning of Section 280G of the Code), that
are required to be made under this Section, including determinations as to
whether a Gross-Up Payment is required, the amount of such Gross-Up Payment
and amounts relevant to the last sentence of this subsection (c), shall be
made by an independent accounting firm selected by the Company from among
the four (4) largest accounting firms in the United States or any nationally
recognized financial planning and benefits consulting company (the
“Accounting Firm”), which shall provide its determination (the
“Determination”), together with detailed supporting calculations regarding
the amount of any Gross-Up Payment and any other relevant matter, both to
the Company and the Participant by no later than ten (10) days following the
Termination Date, if applicable, or such earlier time as is requested by the
Company or the Participant (if the Participant reasonably believes that any
of the Payments may be subject to the Excise Tax). If the Accounting Firm
determines that no Excise Tax is payable by the Participant, it shall
furnish the Participant and the Company with an opinion reasonably
acceptable to the Participant and the Company that no Excise Tax is payable
(including the reasons therefor) and that the Participant has substantial
authority not to report any Excise Tax on his federal income tax return. If
a Gross-Up Payment is determined to be payable, it shall be paid (including
through withholding of taxes) to the Participant no later than the due date
for payment of the Excise Tax. Any determination by the Accounting Firm
shall be binding upon the Company and the Participant, absent manifest
error. As a result of uncertainty in the application of Section 4999 of the
Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments not made by the Company
should have been made (“Underpayment”), or that Gross-Up Payments will have
been made by the Company which should not have been made (“Overpayment”).
In either such event, the Accounting Firm shall determine the amount of the
Underpayment or Overpayment that has occurred. In the case of an
Underpayment, the amount of such Underpayment (together with any interest
and penalties payable by the Participant as a result of such Underpayment)
shall be promptly paid by the Company to or for the benefit of the
Participant. In the case of an Overpayment, the Participant shall, at the
direction and expense of the Company, take such steps as are reasonably
necessary (including the filing of returns and claims for refund), follow

- 14 -

 

	 	 	 	reasonable instructions from, and procedures established by, the Company,
and otherwise reasonably cooperate with the Company to correct such
Overpayment, provided, however, that (i) the Participant shall not in any
event be obligated to return to the Company an amount greater than the net
after-tax portion of the Overpayment that he has retained or has recovered
as a refund from the applicable taxing authorities and (ii) if a Gross-Up
Payment is determined to be payable, this provision shall be interpreted in
a manner consistent with an intent to make the Participant whole, on an
after-tax basis, from the application of the Excise Tax, it being understood
that the correction of an Overpayment may result in the Participant repaying
to the Company an amount which is less than the Overpayment. The cost of
all such determinations made pursuant to this Section shall be paid by the
Company.
	 
	 	(d)	 	With respect to any Participant who immediately prior to the
Change in Control is a member of employee classification B, C, D, E or F (as
set forth in Appendix A), notwithstanding anything in this Plan to the
contrary, in the event it shall be determined that any Payment to or for the
benefit of a Participant would be subject to the Excise Tax, the Payments shall
be reduced (but not below zero) if and to the extent that such reduction would
result in Participant retaining a larger amount, on an after-tax basis (taking
into account federal, state and local income taxes and the imposition of the
Excise Tax), than if Participant received all of the Payments. Unless the
Participant shall have given prior written notice specifying a different order
to the Company to effectuate the foregoing, the Company shall reduce or
eliminate the Payments, by first reducing or eliminating the portion of the
Payments which are not payable in cash and then by reducing or eliminating cash
payments, in each case in reverse order beginning with payments or benefits
which are to be paid the farthest in time from the determination. Any notice
given by the Participant pursuant to the preceding sentence shall take
precedence over the provisions of any other plan, arrangement or agreement
governing the Participant’s rights and entitlements to any benefits or
compensation. All determinations concerning the application of this paragraph
shall be made by a nationally recognized firm of independent accountants or any
nationally recognized financial planning and benefits consulting company,
selected by Participant and satisfactory to Employer, whose determination shall
be conclusive and binding on all parties. The fees and expenses of such
accountants shall be borne by Participant.

- 15 -

 

	 	 	 	The Company shall hold in confidence and not disclose, without the
Participant’s prior written consent, any information with regard to the
Participant’s tax position which the Company obtains pursuant to this
Section.

	 	7.2	 	Pooling Transactions. Notwithstanding anything contained in this Plan
to the contrary, in the event of a Change in Control which is also intended to be
treated as a “pooling of interests” under generally accepted accounting principles (a
“Pooling Transaction”), the Board shall take such actions, if any, as are specifically
recommended by an independent accounting firm retained by the Company to the extent
reasonably necessary in order to assure that the Pooling Transaction will qualify as
such, including but not limited to (a) deferring the vesting, exercise, payment,
settlement or lapsing of restrictions with respect to any option or award, (b)
providing that the payment or settlement in respect of any option or award be made in
the form of cash, shares of common stock or securities of a successor or acquirer of
the Company, or a combination of the foregoing, (c) providing for the extension of the
term of any option or award to the extent necessary to accommodate the foregoing, but
not beyond the maximum term permitted for any option or award and (d) amending,
deleting or making inapplicable to the Participant any provision in this Plan or other
arrangement pursuant to which he or she receives compensation, payments or benefits.

	8.	 	Successor to Company
	 
	 	 	This Plan shall bind 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, in the same manner and to the same extent that the Company would be obligated under
this Plan if no succession had taken place. In the case of any transaction in which a
successor would not by the foregoing provision or by operation of law be bound by this Plan,
the Company shall require such successor expressly and unconditionally to assume and agree
to perform the Company’s obligations under this Plan, in the same manner and to the same
extent that the Company would be required to perform if no such succession had taken place.
In the case any such successor fails to assume the Plan, the rights and benefits under the
Plan shall automatically become the obligation of such successor as though such successor
had expressly and unconditionally assumed and agreed to perform the Company’s obligations
under this Plan.
	 
	9.	 	Amendment and Plan Termination

	 	9.1	 	Amendment and Termination. Prior to a Change in Control, the Plan may
be amended or modified in any respect, and may be terminated, by

- 16 -

 

	 	 	 	resolution adopted by two-thirds of the Board; provided, however, that no such
amendment, modification or termination, which would adversely affect the benefits or
protections hereunder of any individual who is a Participant as of the date such
amendment, modification or termination is adopted shall be effective as it relates
to such individual unless no Change in Control occurs within six (6) months after
such adoption, any such attempted amendment, modification or termination adopted
within six (6) months prior to a Change in Control being null and void ab initio as
it relates to all individuals who were Participants as of the date of such adoption;
provided, further, however, that the Plan may not be amended, modified or
terminated, (a) at the request of a third party who has indicated an intention or
taken steps to effect a Change in Control and who effectuates a Change in Control or
(b) otherwise in connection with, or in anticipation of, a Change in Control which
actually occurs, if the amendment, modification or termination adversely affects the
rights of any Participant under the Plan, any such attempted amendment, modification
or termination being null and void ab initio. From and after the occurrence of a
Change in Control, the Plan (x) may not be amended or modified in any manner that
would in any way adversely affect the benefits or protections provided to any
individual hereunder and (y) may not be terminated until the later of (i)
twenty-four (24) months after the date of the Change in Control or (ii) the date
that all Participants who have become entitled to a Severance Benefit hereunder
shall have received such payments in full.
	 
	 	9.2	 	Form of Amendment. Any amendment or termination of the Plan shall be
effected by a written instrument signed by a duly authorized officer or officers of the
Company, certifying that the amendment or termination has been approved by the Board.

	10.	 	Employment Status/Waiver of Rights
	 
	 	 	This Plan does not constitute a contract of employment or impose on the Company any
obligation to retain the Participant as an employee, to change the status of the
Participant’s employment, or to change the Company’s policies regarding termination of
employment.
	 
	 	 	Following a Change in Control, no waiver of rights by the Participant in return for
continued employment shall be effective with respect to the rights and benefits provided
under this Plan.

- 17 -

 

	11.	 	Notices
	 
	 	 	Any notice provided for in this Plan shall be sent to the Company at 4500 Park Granada,
Calabasas, California 91302, Attention: Senior Human Resources Manager or to such other
address as the Company may from time to time in writing designate, and to a Participant at
such address as he or she may from time to time in writing designate (or his or her business
address of record in the absence of such designation). Such notice shall be deemed to have
been given two (2) business days after it has been deposited as certified mail, return
receipt requested, postage paid and properly addressed to the designated address of the
party to receive the notice.
	 
	12.	 	Severability
	 
	 	 	If any provision of this Plan is held invalid or unenforceable, the remainder of this Plan
shall nevertheless remain in full force and effect, and if any provision is held invalid or
unenforceable with respect to particular circumstances, it shall nevertheless remain in full
force and effect in all other circumstances.
	 
	13.	 	Governing Law
	 
	 	 	The interpretation, construction and performance of this Plan shall in all respects be
governed by the laws of the State of California.
	 
	 	 	IN WITNESS WHEREOF, the Board of Directors having amended this Plan at its meeting of June
14, 2006 has caused this Amendment and Restatement to be executed
this 19th day of June,
2006.
	 
	 	 	Countrywide Financial Corporation

	 	 	 	 	 
	By:

	 	/s/ Marshall M. Gates 	 	 
	 	 	 	 	 
	 

	 	Marshall Gates	 	 
	 

	 	Senior Managing Director	 	 
	 

	 	Chief Administrative Officer	 	 

	 	 	 	 	 
	Attest:

	 	/s/ Gerard A. Healy 	 	 
	 	 	 	 	 
	 

	 	Gerard A. Healy	 	 
	 

	 	Assistant Secretary	 	 

- 18 -

 

APPENDIX A

	 	 	 
	Eligible Employee	 	 
	Classifications	 	Members
	X

	 	Senior Managing Directors and above
	 
	 	 
	A

	 	Managing Directors
	 
	 	 
	B

	 	Executive Vice Presidents, Senior Vice Presidents, Presidents
	 
	 	 
	C

	 	First Vice Presidents, Vice Presidents, Regional Vice Presidents, CSC Directors
	 
	 	 
	D

	 	Branch Managers and all other Exempt Employees
	 
	 	 
	E

	 	All Non-Exempt Employees

Salary Separation Payment

The Salary Separation Payment to which a Participant is entitled shall be based on the
Participant’s employee classification as of the date immediately preceding the date of the
Participant’s Qualifying Termination or, if greater, as of the date on which the Change in Control
occurs, and shall equal the amount described in the table below:

	 	 	 
	Employee	 	 
	Classification	 	Salary Separation Payment
	X

	 	Three (3) years Base Pay (as defined in Section 6.1(a))
plus 300% Bonus (as defined in Section 6.1(a))
	 
	A

	 	Two (2) years Base Pay (as defined in Section 6.1(a)) plus
200% Bonus (as defined in Section 6.1(a)).
	 
	 	 
	B

	 	One (1) year Base Pay plus 100% Bonus.
	 
	 	 
	C

	 	Two (2) weeks Pay for each full year of service from first
hire date with a minimum payment of eight (8) weeks Base
Pay and a maximum payment of twenty-six (26) weeks Base
Pay.

- 1 -

 

	 	 	 
	Employee	 	 
	Classification	 	Salary Separation Payment
	D

	 	Two (2) weeks Pay for each full year of service from first
hire date with a minimum payment of two (2) weeks Base Pay
and a maximum payment of twelve (12) weeks Base Pay.
	 
	 	 
	E

	 	Two (2) weeks Pay from first hire date with a minimum
payment of two (2) weeks Base Pay and a maximum payment of
eight (8) weeks Base Pay.

- 2 -EX-10.1

 

Exhibit 10.1

CHANGE IN CONTROL AGREEMENT

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

1.00 PURPOSE

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

2.00 DEFINITIONS

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

2.01 Board. The Corporation’s board of directors.

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

2.03 Change in Control.

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

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

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

 

 

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

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

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

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

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

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

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

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

2

 

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

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

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

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

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

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

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

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

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

3

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

4

 

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

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

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

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

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

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

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

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

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

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

5

 

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

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

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

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

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

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

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

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

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

6

 

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

2.18 Parties. The Corporation and the Executive.

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

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

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

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

3.00 EXECUTIVE’S OBLIGATIONS

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

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

7

 

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

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

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

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

4.00 COMPENSATION PAID IF EXECUTIVE TERMINATES AFTER A CHANGE IN CONTROL

4.01 Termination For Cause.

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

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

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

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

4.04 Termination Because of Disability.

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

8

 

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

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

[ii] The value of:

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

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

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

The value of these reductions:

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

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

4.05 Termination Without Cause.

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

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

9

 

4.06 Termination for Good Reason.

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

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

5.00 CHANGE IN CONTROL PAYMENTS

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

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

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

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

[b] An additional amount equal to:

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

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

[iii] 365 days.

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

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

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

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

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

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

11

 

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

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

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

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

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

5.03 Conditions Affecting Payments.

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

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

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

12

 

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

6.00 AMENDMENT AND TERMINATION

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

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

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

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

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

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

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

[6]
As provided in Section 4.00.

7.00 EQUITABLE RELIEF/DISPUTE RESOLUTION

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

13

 

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

7.02 Initial Resolution of Disputes Affecting Payment Amount.

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

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

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

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

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

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

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

8.00 MISCELLANEOUS

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

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

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

8.04 Transfers.

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

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

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

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

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

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

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

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

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

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

16

 

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

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

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

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

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

	 	 	 	 	 
	 	 	BOB EVANS FARMS, INC.
	 
	 	 	 	 
	 
	 	By:	 	/s/ Donald J. Radkoski
	 
	 	 	 
	 
	 	 	 	 
	 
	 	Title:	 	Chief Financial Officer, Treasurer and Secretary
	 
	 	 	 
	 
	 	 	 	 
	 
	 	Address:	 	 
	 
	 	 	 	 
	 
	 	 	 	3776 South High Street
	 
	 	 	 	Columbus, Ohio 43207
	 
	 	 	 	 
	 	 	STEVEN A. DAVIS
	 
	 	 	 	 
	 	 	/s/ Steven A. Davis
	 	 	 
	 
	 	 	 	 
	 
	 	Address:	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 

17

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