10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 22, 2016

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission file number 0-1667

Bob Evans Farms, Inc.

(Exact name of registrant as specified in its charter)

Delaware	31-4421866
(State or other jurisdiction of incorporation or organization)	(I.R.S. 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, former address and formal fiscal year, if changed since last report):

_______________________________________________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes xNo ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes xNo ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer	x	Accelerated Filer	¨
Non-Accelerated Filer	¨(Do not check if a smaller reporting company)	Smaller Reporting Company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ¨     No   x

As of February 26, 2016, the registrant had 19,800,838 shares of its common stock, $.01 par value, outstanding.

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BOB EVANS FARMS, INC.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION	3
ITEM 1. UNAUDITED FINANCIAL STATEMENTS	3
CONSOLIDATED BALANCE SHEETS	3
CONSOLIDATED STATEMENTS OF NET INCOME	4
CONSOLIDATED STATEMENTS OF CASH FLOWS	5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS	6
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	18
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	30
ITEM 4. CONTROLS AND PROCEDURES	30
PART II—OTHER INFORMATION	31
ITEM 1. LEGAL PROCEEDINGS	31
ITEM 1A. RISK FACTORS	31
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	31
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	32
ITEM 4. MINE SAFETY DISCLOSURES	32
ITEM 5. OTHER INFORMATION	32
ITEM 6. EXHIBITS	32
SIGNATURES	33
INDEX TO EXHIBITS	34

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PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BOB EVANS FARMS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value amounts)

	Unaudited January 22, 2016			April 24, 2015
Assets
Current Assets
Cash and equivalents	$	7,680		$	6,358
Accounts receivable, net	28,827			26,100
Inventories	23,275			24,620
Deferred income taxes	16,974			16,117
Federal and state income taxes receivable	4,530			23,722
Prepaid expenses and other current assets	8,235			5,035
Current assets held for sale	12,221			22,243
Total Current Assets	101,742			124,195
Property, Plant and Equipment	1,564,698			1,585,882
Less accumulated depreciation	799,768			756,015
Net Property, Plant and Equipment	764,930			829,867
Other Assets
Deposits and other	5,093			3,756
Notes receivable	20,420			18,544
Rabbi trust assets	20,534			32,302
Goodwill and other intangible assets	19,868			19,986
Non-current deferred tax assets	2,326			2,326
Long-term assets held for sale	—			1,611
Total Other Assets	68,241			78,525
Total Assets	$	934,913		$	1,032,587
Liabilities and Stockholders’ Equity
Current Liabilities
Current portion of long-term debt	$	417		$	409
Accounts payable	28,238			30,019
Accrued property, plant and equipment purchases	3,283			4,820
Accrued non-income taxes	17,832			14,951
Accrued wages and related liabilities	22,851			34,529
Self-insurance reserves	21,644			18,900
Deferred gift card revenue	18,659			13,714
Current reserve for uncertain tax provision	1,481			1,594
Other accrued expenses	43,059			34,156
Total Current Liabilities	157,464			153,092
Long-Term Liabilities
Deferred compensation	17,607			22,481
Reserve for uncertain tax positions	2,807			2,767
Deferred income taxes	18,546			17,825
Deferred rent and other	8,309			5,755
Credit facility borrowings and other long-term debt	495,626			450,676
Total Long-Term Liabilities	542,895			499,504
Stockholders’ Equity
Common stock, $.01 par value; authorized 100,000 shares; issued 42,638 shares at January 22, 2016, and April 24, 2015	426			426
Capital in excess of par value	241,156			235,958
Retained earnings	838,564			836,362
Treasury stock, 22,512 shares at January 22, 2016, and 19,231 shares at April 24, 2015, at cost	(845,592		)	(692,755		)
Total Stockholders’ Equity	234,554			379,991
Total Liabilities and Stockholders' Equity	$	934,913		$	1,032,587

The accompanying notes are an integral part of the financial statements.

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CONSOLIDATED STATEMENTS OF NET INCOME

UNAUDITED

(in thousands, except per share amounts)

	Three Months Ended					Nine Months Ended
	January 22, 2016		January 23, 2015			January 22, 2016		January 23, 2015
Net Sales	$	346,505	$	357,177		$	993,239	$	1,016,796
Cost of sales	118,581		124,544			317,611		354,723
Operating wage and fringe benefit expenses	106,607		109,116			315,894		319,158
Other operating expenses	53,592		54,804			161,407		162,713
Selling, general and administrative expenses	29,005		38,965			99,366		100,353
Depreciation and amortization expense	19,856		20,403			60,116		59,851
Impairments	804		1,672			1,089		3,249
Operating Income	18,060		7,673			37,756		16,749
Net interest expense	2,367		2,406			7,856		6,225
Income Before Income Taxes	15,693		5,267			29,900		10,524
Provision (Benefit) for income taxes	2,762		(653		)	6,258		(419		)
Net Income	$	12,931	$	5,920		$	23,642	$	10,943
Earnings Per Share — Net Income
Basic	$	0.62	$	0.25		$	1.08	$	0.47
Diluted	$	0.62	$	0.25		$	1.08	$	0.46
Cash Dividends Paid Per Share	$	0.34	$	0.31		$	0.96	$	0.93
Weighted Average Shares Outstanding
Basic	20,692		23,515			21,845		23,487
Dilutive shares	111		231			144		230
Diluted	20,803		23,746			21,989		23,717

The accompanying notes are an integral part of the financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

(in thousands)

	Nine Months Ended
	January 22, 2016			January 23, 2015
Operating activities:
Net income	$	23,642		$	10,943
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	60,116			59,851
Impairments	1,089			3,249
Loss on disposal of fixed assets	820			1,624
Loss (Gain) on rabbi trust assets	1,768			(204		)
(Gain) Loss Deferred compensation	(1,146		)	1,953
Share-based compensation	4,656			2,158
Accretion on long-term note receivable	(1,539		)	(1,374		)
Deferred income taxes	(136		)	(4,596		)
Amortization of deferred financing costs	1,762			749
Cash provided by (used for) assets and liabilities:
Accounts receivable	(2,727		)	2,585
Inventories	1,345			(166		)
Prepaid expenses and other current assets	1,555			(267		)
Accounts payable	(1,781		)	505
Federal and state income taxes	19,119			4,279
Accrued wages and related liabilities	(6,633		)	3,583
Self-insurance	2,744			1,125
Accrued non-income taxes	2,881			(3,320		)
Deferred gift card revenue	4,945			5,250
Other assets and liabilities	5,001			(6,927		)
Net cash provided by operating activities	117,481			81,000
Investing activities:
Purchase of property, plant and equipment	(48,663		)	(58,921		)
Proceeds from sale of property, plant and equipment	64,065			9,696
Liquidation of rabbi trust assets	5,245			—
Deposits and other	(582		)	(246		)
Net cash provided by (used in) investing activities	20,065			(49,471		)
Financing activities:
Cash dividends paid	(21,132		)	(21,711		)
Gross proceeds from credit facility borrowings and other long-term debt	506,626			316,253
Gross repayments of credit facility borrowings and other long-term debt	(461,668		)	(327,995		)
Payments of debt issuance costs	(2,517		)	(1,279		)
Purchase of treasury stock	(156,654		)	—
Proceeds from share-based compensation	214			478
Cash paid for taxes on share-based compensation	(1,177		)	(1,790		)
Excess tax benefits from share-based compensation	84			513
Net cash used in financing activities	(136,224		)	(35,531		)
Net decrease in cash and equivalents	1,322			(4,002		)
Cash and equivalents at the beginning of the period	6,358			7,826
Cash and equivalents at the end of the period	$	7,680		$	3,824

The accompanying notes are an integral part of the financial statements.

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BOB EVANS FARMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Summary of Significant Accounting Policies

Unaudited Consolidated Financial Statements: The accompanying unaudited consolidated financial statements of Bob Evans Farms, Inc. (“Bob Evans”) and its subsidiaries (collectively, Bob Evans and its subsidiaries are referred to as the “Company,” “we,” “us” and “our”) are presented in accordance with the requirements of Form 10-Q and, consequently, do not include all of the disclosures normally required by U.S. generally accepted accounting principles or those normally made in our Form 10-K filing. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of our financial position and results of operations have been included. The consolidated financial statements are not necessarily indicative of the results of operations for a full fiscal year. No significant changes have occurred in the financial disclosures made in our Form 10-K for the fiscal year ended April 24, 2015 (refer to the Form 10-K for a summary of significant accounting policies followed in the preparation of the consolidated financial statements). Throughout the Unaudited Consolidated Financial Statements and Notes to the Consolidated Financial Statements, dollars are in thousands, except share amounts.

Description of Business: As of January 22, 2016, we operated 548 full-service Bob Evans Restaurants in 18 states. Bob Evans Restaurants are primarily located in the Midwest, Mid-Atlantic and Southeast regions of the United States. In the BEF Foods segment we produce and distribute a variety of complementary home-style, refrigerated side dish convenience food items and pork sausage under the Bob Evans ®, Owens ® and Country Creek ® brand names. These food products are available throughout the United States and Canada. We also manufacture and sell similar products to food-service accounts, including Bob Evans Restaurants and other restaurants and food sellers.

Reporting Segments: We have two reporting segments: Bob Evans Restaurants and BEF Foods. The revenues from these two segments include both net sales to unaffiliated customers and intersegment net sales, which are accounted for on a basis consistent with net sales to unaffiliated customers. Intersegment net sales and other intersegment transactions have been eliminated in the consolidated financial statements. Operating income represents earnings before interest and income taxes. All direct costs related to our two reporting segments are included in segment results, while certain costs related to corporate and other functions are not allocated to our reporting segments. Prior to the first quarter of fiscal 2016, we allocated these corporate and other costs to our reporting segments. This change in reporting was made to present our results in line with the changes made during the first quarter in how our chief operating decision maker measures results of operations and allocates resources. We have adjusted the prior year amounts to reflect this change in presentation. See Note 9 for detailed segment information.

Revenue Recognition: Revenue in the Bob Evans Restaurants segment is recognized at the point of sale, other than revenue from the sale of gift cards, which is deferred and recognized upon redemption. Our gift cards do not have expiration dates or inactivity fees. Revenue in the BEF Foods segment is recognized when products are received by our customers. All revenue is presented net of sales tax collections.

In addition, we recognize income on unredeemed gift cards (“gift card breakage”) based on historical redemption patterns, referred to as the redemption recognition method. Gift card breakage is recognized proportionately over the period of redemption in net sales in the Consolidated Statements of Net Income. The liability for unredeemed gift cards is included in deferred revenue on the Consolidated Balance Sheets, and was $18,659 and $13,714 at January 22, 2016, and April 24, 2015, respectively.

Promotional (Trade) Spending: We engage in promotional (sales incentive / trade spend) programs in the form of promotional discounts and coupons at Bob Evans Restaurants, and off-invoice deductions, billbacks, and cooperative advertising at BEF Foods. Costs associated with these programs are classified as a reduction of gross sales in the period in which the sale occurs. Promotional spending at Bob Evans Restaurants, primarily comprised of discounts taken on dine-in sales, was $12,275 and $13,858 for the three months ended January 22, 2016, and January 23, 2015, respectively, and $30,528 and $43,648 for the nine months ended January 22, 2016, and January 23, 2015, respectively. Promotional spending at BEF Foods, primarily comprised of off-invoice deductions and billbacks, was $26,658 and $18,539 for the three months ended January 22, 2016, and January 23, 2015, respectively, and $57,066 and $39,699 for the nine months ended January 22, 2016, and January 23, 2015, respectively.

Shipping and Handling costs: Expenditures related to shipping our BEF Foods' products to our customers are expensed when incurred. Shipping and handling costs were $3,680 and $4,319 for the three months ended January 22, 2016, and January 23, 2015, respectively, and $10,871 and $12,610 for the nine months ended January 22, 2016, and January 23, 2015, respectively, and are recorded in the other operating expenses line of the Consolidated Statements of Net Income.

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Accounts Receivable: Accounts receivable represents amounts owed to us through our operating activities and are presented net of allowance for doubtful accounts. Accounts receivable for Bob Evans Restaurants consist primarily of credit card receivables, while accounts receivable for BEF Foods consist primarily of trade receivables from customer sales. We evaluate the collectability of our accounts receivable based on a combination of factors. In circumstances where we are aware of a specific customer’s inability to meet its financial obligations to us, we record a specific allowance for bad debts against amounts due to reduce the net recognized receivable to the amount we reasonably believe will be collected. In addition, we recognize allowances for bad debts based on the length of time receivables are past due with allowance percentages, based on our historical experiences, applied on a graduated scale relative to the age of the receivable amounts. If circumstances such as higher than expected bad debt experience or an unexpected material adverse change in a major customer’s ability to meet its financial obligations to us were to occur, the recoverability of amounts due to us could change by a material amount. We had allowance for doubtful accounts of $441 and $542 as of January 22, 2016, and April 24, 2015, respectively. Accounts receivable included credits of $7,949 and $3,671 as of January 22, 2016, and April 24, 2015, respectively, related to promotional incentives that reduce what is owed to the Company from certain BEF Foods' customers.

Notes Receivable: As a result of the sale of Mimi’s Café to Le Duff America, Inc. ("Le Duff"), we received a Promissory Note ("the Note") for $30,000. The Note has an annual interest rate of 1.5%, a term of seven years and a principal and interest payment due in February 2020. Partial prepayments are required prior to maturity if the buyer's business reaches certain levels of EBITDA during specified periods. Our right to repayment under the Note is subordinated to third-party lenders as well as other funding that may be provided by the parent company. In the event of a sale or liquidation of the Mimi’s Café restaurant chain or the entity that owns it by its parent company, our right to repayment may be subordinated to payments owed to the parent company and / or potentially reduced based on the funds available for repayment. The note was originally valued using a discounted cash flow model. The Company recognized accretion income on the Note of $528 and $471 for the three months ended January 22, 2016, and January 23, 2015, respectively, and $1,539 and $1,374 for the nine months ended January 22, 2016, and January 23, 2015, respectively. These gains are reflected within the Net Interest Expense caption of the Consolidated Statements of Net Income.

Inventories: We value our Bob Evans Restaurants' inventories at the lower of first-in, first-out cost (“FIFO”) or market and our BEF Foods' inventories at an average cost method which approximates a FIFO basis due to the perishable nature of that inventory. Inventory includes raw materials and supplies ($15,009 at January 22, 2016, and $12,898 at April 24, 2015) and finished goods ($8,266 at January 22, 2016, and $11,722 at April 24, 2015).

Property, Plant and Equipment: Property, plant and equipment is recorded at cost less accumulated depreciation. The straight-line depreciation method is used for nearly all capitalized assets, although some assets purchased prior to fiscal 1995 continue to be depreciated using accelerated methods. Depreciation is calculated at rates adequate to amortize costs over the estimated useful lives of buildings and improvements (5 to 50 years) and machinery and equipment (3 to 10 years). Improvements to leased properties are depreciated over the shorter of their useful lives or the initial lease terms. Total depreciation expense was $19,816 and $20,364 in the three months ended January 22, 2016, and January 23, 2015, respectively, and $59,997 and $59,733 for the nine months ended January 22, 2016, and January 23, 2015, respectively.

During the three and nine months ended January 22, 2016, we capitalized internal labor costs of $514 and $1,615primarily for our enterprise resource planning system ("ERP") and other IT projects. During the three and nine months ended January 23, 2015, we capitalized internal labor costs of $1,077 and $3,473, which included $2,528 of capitalized costs for ERP and $945 for new restaurant construction on a year to date basis. The first phase of our ERP system was put in service on April 25, 2015, and has an expected useful life of 10 years. We are working to implement the second phase of our ERP system, which is expected to go live in fiscal 2017.

We evaluate property, plant and equipment held and used in the business for impairment whenever events or changes in circumstance indicate that the carrying amount of a long-lived asset may not be recoverable. Impairment is determined by comparing the estimated fair value for the asset group to the carrying amount of its assets. If impairment exists, the amount of impairment is measured as the excess of the carrying amount over the estimated fair values of the assets. See Note 5 for further information. Assets for nine nonoperating Bob Evans Restaurants' locations and our former Richardson, Texas, plant location totaling $12,221 are classified as current assets held for sale in the Consolidated Balance Sheet as of January 22, 2016. Assets for 19 nonoperating Bob Evans Restaurants' locations, as well as our Richardson, Texas, location totaling $22,243 are classified as current assets held for sale in the Consolidated Balance Sheet as of April 24, 2015. Assets for two nonoperating Bob Evans Restaurants' locations totaling $1,611 are classified as long-term assets held for sale in the Consolidated Balance Sheet as of April 24, 2015.

Goodwill and Other Intangible Assets: Goodwill, which represents the cost in excess of fair market value of net assets acquired, was $19,634 as of January 22, 2016, and April 24, 2015. Other intangible assets were $234 and $352 as of January 22, 2016, and April 24, 2015, respectively. The goodwill and other intangible assets are related to the BEF Foods

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segment. Other intangible assets represents definite-lived non-compete agreements that are amortized on a straight-line basis over the estimated economic life of five years. Goodwill is tested for impairment during the fourth quarter each year, or on a more frequent basis when indicators of impairment exist.

Goodwill impairment testing involves a comparison of the estimated fair value of reporting units to the respective carrying amount. If the estimated fair value exceeds the carrying amount, then no impairment exists. If the carrying amount exceeds the estimated fair value, then a second step is performed to determine the amount of impairment, if any. We perform our impairment test using a combination of income based and market-based approaches. The income based approach indicates the fair value of an asset or business based on the cash flows it can be expected to generate over its remaining useful life. Under the market-based approach, fair value is determined by comparing our reporting segments to similar businesses or guideline companies whose securities are actively traded in public markets.

Earnings Per Share ("EPS"): Our basic EPS computation is based on the weighted-average number of shares of common stock outstanding during the period presented. Our diluted EPS calculation reflects the assumed vesting of restricted shares and market-based performance shares, the exercise and conversion of outstanding employee stock options and the settlement of share-based obligations recorded as liabilities on the Consolidated Balance Sheet (see Note 7 for more information), net of the impact of anti-dilutive shares.

The numerator in calculating both basic and diluted EPS for each period is reported net income. The denominator is based on the following weighted-average shares outstanding:

	Three Months Ended		Nine Months Ended
(in thousands)	January 22, 2016	January 23, 2015	January 22, 2016	January 23, 2015
Basic	20,692	23,515	21,845	23,487
Dilutive shares	111	231	144	230
Diluted	20,803	23,746	21,989	23,717

In the three and nine months ended January 22, 2016, 249,684 and 240,974 shares of common stock, respectively, were excluded from the diluted EPS calculations because they were anti-dilutive. In the three and nine months ended January 23, 2015, 34,419 and 40,627 shares of common stock, respectively, were excluded from the diluted EPS calculations because they were anti-dilutive.

Dividends: In the three months ended January 22, 2016, and January 23, 2015, the Company paid a quarterly dividend equal to $0.34 and $0.31, respectively, per share on our outstanding common stock. In the nine months ended January 22, 2016, and January 23, 2015, the Company paid dividends equal to $0.96 and $0.93, respectively, per share on our outstanding common stock. Individuals that hold awards for unvested and outstanding restricted stock units, market-based performance share units and outstanding deferred stock awards are entitled to receive dividend equivalent rights equal to the per-share cash dividends paid on outstanding units. Dividend equivalent rights are forfeitable until the underlying share-units from which they were derived vest. Share-based dividend equivalents are recorded as a reduction to retained earnings, with an offsetting increase to capital in excess of par value. Refer to table below:

	Nine Months Ended
(in thousands)	January 22, 2016		January 23, 2015
Cash dividends paid to common stockholders	$	21,132	$	21,711
Dividend equivalent rights	307		276
Total dividends	$	21,439	$	21,987

Share-based Employee Compensation: The Stock Compensation Topic of the FASB ASC 718 ("ASC 718") requires that we measure the cost of employee services received in exchange for an equity award, such as stock options, restricted stock awards, restricted stock units and market-based performance share units, based on the estimated fair value of the award on the grant date. The cost is recognized in the income statement over the vesting period of the award on a straight-line basis with the exception of compensation cost related to awards for "Retirement Eligible" (as defined in the applicable plan) employees, which is recognized immediately on the grant date. Compensation cost is recognized based on the grant date fair value estimated in accordance with ASC 718. See Note 6 for more information.

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Financial Instruments: The fair values of our financial instruments approximate their carrying values as of January 22, 2016, and April 24, 2015.

Accrued Non-Income Taxes: Accrued non-income taxes primarily represent obligations for real estate and personal property taxes, as well as sales and use taxes for Bob Evans Restaurants. Accrued non-income taxes were $17,832 and $14,951 as of January 22, 2016, and April 24, 2015, respectively.

Self-Insurance Reserves: We record estimates for certain health, workers’ compensation and general insurance costs that are self-insured programs. Self-insurance reserves include actuarial estimates of both claims filed, carried at their expected ultimate settlement value, and claims incurred but not yet reported. Our liability represents an estimate of the ultimate cost of claims incurred as of the balance sheet date. Self-insurance reserves were $21,644 and $18,900 as of January 22, 2016, and April 24, 2015, respectively.

Advertising Costs: Media advertising is expensed at the time the media first airs. We expense all other advertising costs as incurred. Advertising expense was $9,243 and $9,212 in the three months ended January 22, 2016, and January 23, 2015, respectively, and $28,269 and $26,413 for the nine months ended January 22, 2016, and January 23, 2015, respectively. Approximately 80% of year-to-date advertising costs were incurred in the Bob Evans Restaurants segment. Advertising costs are classified as other operating expenses in the Consolidated Statements of Net Income.

Commitments and Contingencies: We rent certain restaurant facilities and, effective the second quarter of fiscal 2016, two of our manufacturing facilities (refer to Note 11 for additional information) under operating leases having initial terms that primarily expire 20 years from inception. The leases typically contain renewal clauses of 5 to 30 years exercisable at our option. Most leases contain either fixed or inflation-adjusted escalation clauses.

We occasionally use purchase commitment contracts to stabilize the potentially volatile pricing associated with certain commodity items.

We are self-insured for most casualty losses and employee health-care claims up to certain stop-loss limits per claimant. We have accounted for liabilities for casualty losses, including both reported claims and incurred, but not reported claims. We have accounted for our employee health-care claims liability through a review of incurred and paid claims history. We do not believe that our calculation of casualty losses and employee health-care claims liabilities would change materially under different conditions and/or different methods.

Reclassifications and corrections: Certain prior period amounts have been reclassified or adjusted to conform to the current presentation.

We reclassified $4,319 and $12,610 of BEF Foods' shipping and handling costs from the selling, general, and administrative ("S,G&A") line to the other operating expenses line on the Consolidated Statements of Net Income for the three months and nine months ended January 23, 2015, respectively. We believe these costs are better reflected as other operating expenses.

We reclassified $1,672 and $2,991 of Bob Evans Restaurants' impairment charges related to impairments on long-lived assets classified as held-and-used from the S,G&A line to the impairments line on the Consolidated Statements of Net Income for the three months and nine months ended January 23, 2015. Formerly, we only separately presented impairments on assets classified as held-for-sale.

We reclassified $1,389 and $2,643 of BEF Foods' advertising costs from the S,G&A line to the other operating expenses line on the Consolidated Statements of Net Income for the three months and nine months ended January 23, 2015, respectively. We believe these costs are better classified as other operating expenses rather than S,G&A. Advertising costs for both Bob Evans Restaurants and BEF Foods are now classified as other operating expenses.

These reclassifications and corrections had no impact on operating income for the three months and nine months ended January 23, 2015.

New Accounting Pronouncements: In the normal course of business, management evaluates all new accounting pronouncements issued by the FASB, the Securities and Exchange Commission (“SEC”), the Emerging Issues Task Force, the American Institute of Certified Public Accountants or any other authoritative accounting body to determine the potential impact they may have on the Company’s consolidated financial statements.

In May 2014, the FASB and the International Accounting Standards Board ("IASB") issued new joint guidance surrounding revenue recognition. Under U.S. generally accepted accounting principles ("US GAAP"), this guidance is being introduced to the ASC as Topic 606, Revenue from Contracts with Customers ("Topic 606"), by Accounting Standards Update

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No. 2014-09. The new standard supersedes a majority of existing revenue recognition guidance under US GAAP, and requires companies to recognize revenue when it transfers goods or services to a customer in an amount that reflects the consideration to which a company expects to be entitled. Companies may need to use more judgment and make more estimates while recognizing revenue, which could result in additional disclosures to the financial statements. Topic 606 allows for either a "full retrospective" adoption or a "modified retrospective" adoption. The standard is effective for us in fiscal 2019. We are currently evaluating which method we will use and the revenue recognition impact this guidance will have once implemented.

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements - Going Concern to provide guidance about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern. The guidance requires management to assess whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity's ability to continue as a going concern within one year after the date that the financial statements are issued. When management identifies such conditions or events, a footnote disclosure is required to disclose their nature, as well as management's plans to alleviate the substantial doubt to continue as a going concern. We do not expect this update to have an impact on the consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, to ASC 835-30 "Interest - Imputation of Interest." ASU 2015-03 will require that debt issuance costs related to a recognized term-debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. We adopted ASU 2015-03 in the first quarter of fiscal 2016. This update did not have an impact on the consolidated financial statements.

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. ASU 2015-11 simplifies the subsequent measurement of inventory by replacing today's lower of cost or market test with a lower of cost and net realizable test, which is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The standard is effective for us in fiscal 2018. We do not expect this update to have a material impact on the consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes. ASU 2015-17 requires that deferred tax assets and liabilities be classified as noncurrent in a classified statement of financial position. The adoption of this standard will result in the reclassification of all current deferred tax assets and liabilities to noncurrent in the Company's consolidated balance sheets. The standard is effective for us in fiscal 2018.

2. Debt

As of January 22, 2016, long-term debt was comprised of the outstanding balance on our Revolving Credit Facility Amended and Restated Credit Agreement ("Credit Agreement") of $492,850, a portion of a $3,000 Research and Development Investment Loan ("R&D Loan") with the State of Ohio totaling $2,323, and an interest-free loan of $1,000, due 10 years from the date of borrowing, with imputed interest, which as a result is discounted to $870. Refer to the table below:

(in thousands)	January 22, 2016			April 24, 2015
Credit Agreement borrowings (1)	$	492,850		$	447,599
R&D Loan (1)	2,323			2,631
Interest-free loan (1)	870			855
Total borrowings	496,043			451,085
Less current portion	(417		)	(409		)
Long-term debt	$	495,626		$	450,676

⁽¹⁾ The Credit Agreement, R&D Loan and Interest-free loan mature in fiscals 2019, 2021, and 2022, respectively

On January 2, 2014, we entered into the Credit Agreement, which represents a syndicated secured revolving credit facility. We incurred financing costs of $2,064 associated with this Credit Agreement, which are being amortized over the remaining term of the agreement. As a result of the Third Amendment to the Credit Agreement, effective October 21, 2015, and discussed further below, up to $650,000 of borrowings are available, including a letter of credit sub-facility of $50,000, and an accordion provision that permits the Company to request an additional $300,000 for certain transactions, which could increase the revolving credit commitment to $950,000. It is secured by the stock pledges of certain material subsidiaries. This Credit Agreement replaced our existing variable-rate revolving credit facility. Borrowings under the Credit Agreement bear interest, at Borrower’s option, at a rate based on LIBOR or the Base Rate, plus a margin based on the Leverage Ratio, ranging from

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1.00% to 2.75% per annum for LIBOR, and ranging from 0.00% to 1.75% per annum for Base Rate. The Base Rate means for any day, a fluctuating per annum rate of interest equal to the highest of (i) the Federal Funds Open Rate, plus 0.5%, (ii) the Prime Rate, or (iii) the Daily LIBOR Rate, plus 1.0%. We are also required to pay a commitment fee of 0.15% per annum to 0.25% per annum of the average unused portion of the total lender commitments then in effect.

In the first quarter of fiscal 2015, we entered into a First Amendment to the Credit Agreement dated July 23, 2014. The terms of the Credit Agreement that were amended related to: (a) an increase to the Maximum Leverage Ratio for the period starting July 25, 2014, through July 22, 2016, (b) certain restricted payment requirements related to share repurchases, and (c) an update to the Pricing Grid, which determines variable pricing and fees, to reflect changes in the allowable Maximum Leverage Ratio. We incurred financing costs of $1,279 associated with this amendment, which are being amortized using the straight line method, which approximates the effective interest method.

In the first quarter of fiscal 2016, we entered into a Second Amendment to the Credit Agreement dated May 11, 2015, with an effective date of April 24, 2015. The terms of the Credit Agreement were amended related to: (a) an increase to the Maximum Leverage Ratio for the period starting April 24, 2015, through the remaining term of the agreement, (b) a change in the restrictions related to payments for share repurchases, and (c) a change in the definition of the LIBOR and Daily LIBOR rates that are used to calculate interest on outstanding borrowings. We incurred and paid fees of $1,705 associated with this amendment, which will be amortized over the remaining term of the Credit Agreement using the straight line method, which approximates the effective interest method.

In the second quarter of fiscal 2016, we entered into a Third Amendment to the Credit Agreement dated and effective as of October 21, 2015. The terms of the Credit Agreement were amended related to: (a) an increase of the level of permitted indebtedness in connection with sale and leaseback transactions of assets from $100,000 to $300,000, (b) a removal of the $150,000 share repurchase restriction during the 2016 fiscal year, (c) a decrease of the size of the facility from $750,000 to $650,000, (d) a modification of the definition of the leverage ratio to account for rent expense from leases, so that the leverage ratio will be calculated as consolidated indebtedness plus 600% of annual rent expense versus consolidated EBITDAR, and (e) an inclusion of an add back to the leverage ratio calculation for costs related to the settlement of a class action lawsuit. We incurred and paid fees of $812 associated with this amendment, which will be amortized over the remaining term of the Credit Agreement using the straight line method, which approximates the effective interest method. In addition, as a result of lowering the borrowing capacity on the credit facility, we wrote off $480 of previously unamortized deferred financing costs related to the agreement.

Our Credit Agreement contains financial and other various affirmative and negative covenants that are typical for financings of this type. Our Credit Agreement contains financial covenants that require us to maintain a specified minimum coverage ratio and maximum leverage ratio at January 22, 2016, of (1) a minimum coverage ratio of not less than 3.00 to 1.00; and (2) a maximum leverage ratio that may not exceed 4.50 to 1.00. As of January 22, 2016, our minimum coverage ratio was 12.54, and our leverage ratio was 3.15, as defined in our Credit Agreement. A breach of any of these covenants could result in a default under our Credit Agreement in which all amounts under our Credit Agreement may become immediately due and payable and commitments under the Credit Agreement to extend further credit, terminated. We were in compliance with the financial covenant requirements of our Credit Agreement as of January 22, 2016. The Credit Agreement also allows for the incurrence of additional indebtedness of up to $300,000, a sale leaseback of our real estate of up to $300,000 and mortgage indebtedness on our corporate headquarters of up to $50,000. Refer to Note 12 for additional information.

Our effective interest rate for the Credit Agreement was 1.99% and 2.31% for the three months ended January 22, 2016, and January 23, 2015, respectively, and 2.05% and 2.00% for the nine months ended January 22, 2016, and January 23, 2015, respectively.

As of January 22, 2016, we had outstanding letters of credit that totaled $12,618, of which $12,318 is utilized as part of the total amount available under our Credit Agreement. The letters of credit are used primarily to satisfy insurance-related collateral requirements.

As of January 22, 2016, we had $492,850 outstanding on the Credit Agreement. The primary purposes of the Credit Agreement is to fund working capital, capital expenditures, stock repurchases, joint ventures and acquisitions and other general corporate purposes as well as for trade and standby letters of credit.

3. Income Taxes

The provision for income taxes is based on a current estimate of the annual effective income tax rate adjusted to reflect the impact of discrete items. The Company’s effective income tax rate was 17.6% for the three months ended January 22, 2016, as compared to a benefit of 12.4% for the corresponding period a year ago. The Company’s effective income tax rate was 20.9% for the nine months ended January 22, 2016, as compared to a benefit of 4.0% for the corresponding period a year

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ago. The increase in tax rate for the three and nine months ended January 22, 2016, was driven primarily by the impact of yearly variances in the forecasted annual rate related to wage credits, officers' life insurance, and the domestic productions activities deduction, plus discrete items booked in the third quarter of fiscal year 2015 related to the federal return to provision and FIN48 reserves.

4. Restructuring and Severance Charges

In fiscal 2013, we began a strategic organizational realignment including a closure of production facilities and a reduction of personnel at Bob Evans Restaurants, BEF Foods and at our corporate headquarters, as part of our comprehensive plan to reduce S,G&A expenses. In the second quarter of fiscal 2014, we closed our BEF Foods production plant in Richardson, Texas, and in the third quarter of fiscal 2014, we closed our BEF Foods production plants in Springfield and Bidwell, Ohio. The actions to close these food production facilities was intended to increase efficiency by consolidating production to our high capacity food production facility in Sulphur Springs, Texas. In the fourth quarter of fiscal 2014, we recorded charges related to a reduction of personnel at our corporate headquarters. In the fourth quarter of fiscal 2015, management approved a plan to further reduce headcount as part of the overall S,G&A cost reduction initiative. Additionally, in the fourth quarter of fiscal 2015, management committed to a plan to close 16 owned and four leased under-performing restaurants in fiscal 2016. As of January 22, 2016, all 20 of these restaurants have been closed. We believe these closures strengthen our restaurant portfolio by improving overall returns and freeing up resources for other uses.

We recorded $140 of pretax restructuring charges in the nine months ended January 22, 2016, as compared to $950 of pretax restructuring charges in the nine months ended January 23, 2015. These costs, reflected primarily in S,G&A, related to the organizational realignments discussed above.

Liabilities related to restructuring charges as of January 22, 2016, were $348, and relate to corporate severance charges primarily recorded in the fourth quarter of fiscal 2015.

See tables below for detail of restructuring activity for the nine months ended January 22, 2016, and January 23, 2015, respectively:

(in thousands)	Bob Evans Restaurants			BEF Foods			Corporate and Other			Total
Balance, April 24, 2015	$	1,105		$	481		$	2,040		$	3,626
Restructuring and related severance charges incurred	112			28			—			140
Amounts paid	(1,086		)	(488		)	(1,276		)	(2,850		)
Adjustments	(131		)	(21		)	(416		)	(568		)
Balance, January 22, 2016	$	—		$	—		$	348		$	348

(in thousands)	Bob Evans Restaurants		BEF Foods			Corporate and Other			Total
Balance, April 25, 2014	$	—	$	553		$	674		$	1,227
Restructuring and related severance charges incurred	—		528			422			950
Amounts paid	—		(906		)	(959		)	(1,865		)
Balance, January 23, 2015	$	—	$	175		$	137		$	312

5. Impairments

We measure certain assets and liabilities at fair value on a nonrecurring basis, including long-lived assets that have been reduced to fair value when they are held for sale and long-lived assets that are written down to fair value when they are impaired.

We evaluate the carrying amount of long-lived assets held and used in the business periodically and when facts and circumstances indicate that an impairment may exist. A long-lived asset group is considered impaired when the carrying value of the asset group exceeds its fair value. The impairment loss recognized is the excess of carrying value above its fair value. The estimation of fair value requires significant judgment regarding future restaurant performance and market-based real estate appraisals. To estimate fair value for locations where we own the land and building, we obtain appraisals from third-party real estate valuation firms based on sales of comparable properties in the same area as our restaurant location, which we believe approximates fair value. We use discounted future cash flows to estimate fair value of long-lived assets for our leased locations. Our weighted average cost of capital is used as the discount rate in our fair value measurements for leased locations,

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which is considered a Level 3 measurement. A reasonable change in this discount rate would not have a significant impact on these fair value measurements.

Impairment charges of $804 and $1,089 were recorded in the three months and nine months ended January 22, 2016, respectively, and related to four and six nonoperating restaurant properties respectively, where the respective fair values were determined to be lower than the carrying value. We recorded $1,672 and $3,249 of impairment charges in the three months and nine months ended January 23, 2015, a result of adverse performance in fiscal 2015 and a reassessment of expected future cash flows at 11 operating and three nonoperating restaurant properties.

The following table represents impairments for those assets remeasured to fair value during the three and nine months ended January 22, 2016, and the corresponding period last year.

	Three Months Ended						Nine Months Ended
(in thousands)	January 22, 2016			January 23, 2015			January 22, 2016			January 23, 2015
Bob Evans Restaurants
Assets held and used	$	245	(1)	$	1,672	(3)	$	392	(4)	$	2,991	(6)
Assets held for sale	559		(2)	—			697		(5)	258		(7)
Total Impairments	$	804		$	1,672		$	1,089		$	3,249

(1)    Relates to one nonoperating location

(2)    Relates to three nonoperating locations

(3)    Relates to six operating and two nonoperating locations

(4)     Relates to two nonoperating locations

(5)    Relates to four nonoperating locations

(6)    Relates to eleven operating and two nonoperating locations

(7)    Relates to one nonoperating location

6. Share-Based Compensation

As of January 22, 2016, there were equity awards outstanding under the Amended and Restated Bob Evans Farms, Inc. 2010 Equity and Cash Incentive Plan (the “2010 Plan”), as well as previous equity plans adopted in 2006, 1998 and 1993. The types of awards that may be granted under the 2010 Plan include: stock options, stock appreciation rights, restricted stock awards ("RSAs"), restricted stock units ("RSUs"), cash incentive awards, performance share units ("PSUs"), and other awards. During the three months ended January 22, 2016, and January 23, 2015, the Company granted approximately 14,000 and 50,000 RSAs and RSUs, respectively, under the 2010 Plan. During the nine months ended January 22, 2016, the Company granted approximately 126,000 RSAs and RSUs and 70,000 PSUs under the 2010 Plan, while during the nine months ended January 23, 2015, the Company granted approximately 90,000 RSAs and RSUs under the 2010 Plan.

The PSUs granted under the 2010 Plan have market-based vesting conditions, while RSAs and RSUs granted under the 2010 Plan vest ratably, primarily over three years for employees, and one year for nonemployee directors of the Company. The PSUs awarded in the first quarter of fiscal 2016 vest at the end of a three-year performance period if they achieve the market-based vesting conditions.

Share-based compensation expense, included primarily within the S,G&A line on the Consolidated Statements of Net Income, was $1,327 and $271 for the three months ended January 22, 2016, and January 23, 2015, respectively, and $4,656 and $2,158 for the nine months ended January 22, 2016, and January 23, 2015, respectively.

7. Other Compensation Plans

We have a 401(k) retirement savings plan that is available to substantially all employees who have at least 1,000 hours of service. We also have nonqualified deferred compensation plans, the Bob Evans Farms, Inc. Executive Deferral Plan ("BEEDP") and the Bob Evans Farms, Inc. Director Deferral Plan ("BEDDP"), which provide certain executives and members of the Board of Directors, respectively, the opportunity to defer a portion of their current income to future years. A third-party manages the investments directed by the employees and board members who participate in the plans. Gains and losses related to investment results of these deferrals are recorded within the S,G&A line in the Consolidated Statements of Net Income.

Obligations to participants who defer equity compensation through our deferral plans are satisfied only in Company common stock. There is no change in the vesting term for equity awards that are deferred into these plans. Obligations related to these deferred equity awards are treated as "Plan A" instruments, as defined by ASC 710. These obligations are classified as equity instruments within the Capital in excess of par value line of the Consolidated Balance Sheets. No subsequent changes in

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fair value are recognized in the Consolidated Financial Statements for these instruments. Participants earn share-based dividend equivalents in an amount equal to the value of per-share dividends paid to holders of our common stock. These dividends accumulate into additional shares of common stock, and are recorded through retained earnings in the period in which dividends are paid. Deferred shares that vest are included in the denominator of basic and diluted EPS in accordance with ASC 260 - Earnings per Share. The dilutive impact of unvested, deferred stock awards is included in the denominator of our diluted EPS calculation. Refer to Note 6 for additional information on share-based compensation.

Participants who defer cash compensation into our deferral plans have a range of investment options, one of which is Company stock. Obligations for participants who choose this investment election are satisfied only in shares of Company stock, while all other obligations are satisfied in cash. These share-based obligations are treated as "Plan B" instruments as defined by ASC 710, and are recorded as liabilities on the Consolidated Balance Sheets, in the deferred compensation line. We record compensation cost for subsequent changes in the fair value of these obligations. Participants earn share-based dividend equivalents in an amount equal to the value of per-share dividends paid to holders of our common stock. These dividends accumulate into additional shares of common stock, and are recorded as compensation cost in the period in which the dividends are paid. The dilutive impact of these shares is included in the denominator of our diluted EPS calculation.

The Supplemental Executive Retirement Plan ("SERP") provides awards to a limited number of executives in the form of nonqualified deferred cash compensation. Gains and losses related to these benefits and the related investment results are recorded within the S,G&A caption in the consolidated statements of net income. The SERP is frozen and no further persons can be added, and funding was reduced to a nominal amount per year for the remaining participants.

Deferred compensation liabilities expected to be satisfied within the next 12 months are classified as current liabilities within the Accrued wages and related liabilities line of the Consolidated Balance Sheets. Our deferred compensation liabilities as of  January 22, 2016, and April 24, 2015, consisted of the following:

(in thousands)	January 22, 2016			April 24, 2015
Liability for deferred cash obligations in BEEDP and BEDDP Plans	$	12,799		$	17,904
Liability for deferred cash obligations in SERP plan	7,816			9,198
Liability for deferred share-based obligations in BEEDP and BEDDP Plans	572			2,676
Other noncurrent compensation arrangements	216			958
Total deferred compensation liabilities	21,403			30,736
Less current portion (1)	(3,796		)	(8,255		)
Noncurrent deferred compensation liabilities	$	17,607		$	22,481

⁽¹⁾    Current portion of deferred compensation is included within the accrued wages and related liabilities line on the Consolidated Balance Sheets

The Rabbi Trust is intended to be used as a source of funds to match respective funding obligations in our nonqualified deferred compensation plans. Assets held by the Rabbi Trust are recorded on our Consolidated Balance Sheets, and include company-owned life insurance ("COLI") policies, short-term money market securities and Bob Evans common-stock. The company-owned life insurance policies held by the Rabbi Trust are recorded at cash surrender value on the Rabbi Trust Assets line of Consolidated Balance Sheets and totaled $20,534 and $32,302 as of January 22, 2016, and April 24, 2015, respectively. The cash receipts and payments related to the company-owned life insurance proceeds are included in cash flows from operating activities on the Consolidated Statements of Cash Flows and changes in the cash surrender value for these assets are reflected within the S,G&A line in the Consolidated Statements of Net Income.

During the quarter ended January 22, 2016, the Company liquidated $5,245 of cash value from the COLI policies held by the Rabbi Trust and returned those funds to the Company to use for general corporate purposes.  The Rabbi Trust remains fully funded, as assets held by the trust as of January 22, 2016, are greater than the current value of our deferred compensation liabilities.  The proceeds were recorded as a cash inflow in the investing section of the Consolidated Statement of Cash Flows. The transaction had no impact on the Consolidated Statements of Net Income.

The Company also directed the Trustee to liquidate $4,755 of cash value from the COLI policies and to invest those funds in short-term money market securities.  These assets will be used to fund future participant distributions. This transaction had no impact on the Consolidated Statements of Net Income or Cash Flows.

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The short-term securities held by the Rabbi Trust are recorded at their carrying value, which approximates fair value, on the prepaid expenses and other current assets line of the Consolidated Balance Sheets and totaled $4,128 and $487 as of January 22, 2016, and April 24, 2015, respectively. All assets held by the Rabbi Trust are restricted to their use as noted above.

8. Commitments and Contingencies

We are from time-to-time involved in ordinary and routine litigation, typically involving claims from customers, employees and others related to operational issues common to the restaurant and food manufacturing industries, and incidental to our business. Management presently believes that the ultimate outcome of these proceedings, individually or in the aggregate, will not have a material adverse effect on our financial position, cash flows or results of operations.

Class Action Litigation: In August 2012, a former Bob Evans Restaurant employee filed an action against the Company in the United States District Court for the Southern District of Ohio, styled David Snodgrass v. Bob Evans Farms, LLC, Case No. 2:12-cvg-00768 (“Snodgrass”). The lead plaintiff alleged that the Company violated the Fair Labor Standards Act by misclassifying assistant managers as exempt employees and failing to pay overtime compensation during the period of time the employee worked as an assistant manager. The plaintiff's complaint requested an unspecified amount of alleged back wages, liquidated damages, statutory damages and attorneys’ fees. The lead plaintiff sought to maintain the suit as a collective action on behalf of other similarly situated assistant managers employed at Bob Evans Restaurants between August 2009 and present. In December 2013, the Court in Snodgrass granted conditional certification of those assistant managers that elected to opt-in to the collective action.

In May 2014, the same plaintiffs’ counsel in the Snodgrass matter filed essentially duplicative claims under the overtime laws of the State of Ohio and Commonwealth of Pennsylvania, styled Utterback v. Bob Evans Farms, LLC Case No. CV14826909 in the Court of Common Pleas of Cuyahoga County, Ohio (“Utterback”) and Mackin v. Bob Evans Farms, LLC Case No. 2:14-cv-450 in the United States District Court for the Southern District of Ohio (“Mackin”), respectively. Neither the Utterback nor Mackin proceedings have been certified for class status at this time.

While we continue to believe that our assistant managers were properly classified as exempt from the respective Federal and State overtime requirements and that we have meritorious defenses to the claims in each of the Snodgrass, Utterback and Mackin matters, as previously reported in our Annual Report in Form 10-K for the fiscal year ended April 24, 2015, in the fourth quarter of fiscal 2015 we received an unfavorable ruling related to the Snodgrass litigation and determined a settlement of all three matters was in the best interest of the Company. In connection with the unfavorable ruling, we recorded a charge of $6,000 in the fourth quarter of fiscal 2015. This expense was recorded to the Bob Evans Restaurants segment and in the S,G&A line of the Consolidated Statements of Net Income.

In June 2015, counsel for all parties attended the second mediation in the Snodgrass matter in an attempt to resolve each of the Snodgrass, Utterback and Mackin litigation matters. On July 31, 2015, the Company and counsel for the plaintiffs reached an agreement in principle to resolve all claims presented in the Snodgrass, Mackin and Utterback cases for the total sum of up to $16,500 on a claims made basis.  A Settlement Agreement was executed by the parties on October 2, 2015, and the Court provided preliminary approval on October 23, 2015. As a result of the agreement in principle, we recorded an additional charge of $10,500 in the first quarter of fiscal 2016. This expense was recorded to the Bob Evans Restaurants segment and in the S,G&A line of the Consolidated Statements of Net Income.

The Court held a Final Approval Hearing on February 18, 2016, and issued the Final Approval Order on February 26, 2016. The settlement remains conditioned upon completion of a 30-day appeals period, without any appeal being filed.

Other Matters: The Division of Enforcement of the SEC is conducting a formal investigation relating to disclosures set forth in our filings on Form 8 - K and Form 10 - Q/A both filed on December 3, 2014.  Those filings  addressed  the correction of our error in the classification of our borrowings under our credit agreement as a current liability rather than as a long-term liability, as reported in our Form 10 - Q filed on August 27, 2014.  We are cooperating fully with the SEC in this matter.   The Company cannot predict the duration, scope or outcome of the SEC’s investigation.

9. Reporting Segments

We have two reporting segments: Bob Evans Restaurants and BEF Foods. We determine our segments on the same basis that the Company's chief operating decision maker uses to allocate resources and assess performance. We evaluate our segments based on operating income, excluding expenses and charges from corporate and other functions which we consider to be overall corporate costs, or costs not reflective of the reporting segment’s core operating businesses. This includes corporate functions such as information technology, finance, legal, human resources, supply chain and other corporate functions, and includes costs such as ongoing IT infrastructure costs, certain legal and professional fees, depreciation on our corporate assets and other costs. Prior to the first quarter of fiscal 2016, we allocated these costs to our reporting segments. This change in

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reporting was made to present our results in line with the changes made during the first quarter in how management measures results of operations and allocates resources. We have adjusted the prior year amounts to reflect this change in presentation. Operating income represents earnings before interest and income taxes.

Information on our reporting segments is summarized as follows:

	Three Months Ended						Nine Months Ended
(in thousands)	January 22, 2016			January 23, 2015			January 22, 2016			January 23, 2015
Net Sales:
Bob Evans Restaurants	$	238,608		$	250,389		$	708,018		$	731,691
BEF Foods	112,858			112,060			298,386			300,618
Intersegment net sales of food products	(4,961		)	(5,272		)	(13,165		)	(15,513		)
Subtotal of BEF Foods	107,897			106,788			285,221			285,105
Total	$	346,505		$	357,177		$	993,239		$	1,016,796
Operating income (loss):
Bob Evans Restaurants	$	14,453		$	14,153		$	37,585		$	49,709
BEF Foods	20,609			15,274			50,443			24,675
Corporate and Other	(17,002		)	(21,754		)	(50,272		)	(57,635		)
Total	$	18,060		$	7,673		$	37,756		$	16,749

(in thousands)	January 22, 2016		April 24, 2015
Identifiable Assets:
Bob Evans Restaurants	$	633,152	$	665,910
BEF Foods	133,404		179,137
General corporate assets	168,357		187,540
Total	$	934,913	$	1,032,587

Discussion of segment results is included within Management's Discussion and Analysis of Financial Condition and Results of Operations.

10. Supplemental Cash Flow Information

Cash paid for income taxes and interest for the nine months ended January 22, 2016, and January 23, 2015, is summarized as follows:

	Nine Months Ended
(in thousands)	January 22, 2016			January 23, 2015
Income taxes paid	$	412		$	4,929
Income taxes refunded	(12,986		)	(5,533		)
Income taxes refunded, net	(12,574		)	(604		)
Interest paid	$	7,755		$	7,332

11. Sale and Leaseback Transactions

In the second quarter of fiscal 2016, we entered into an agreement pursuant to which we sold our BEF Foods industrial properties located in Lima, Ohio, and Sulphur Springs, Texas, for $51,600.  We received net proceeds of $50,017, after consideration of closing and other transaction costs. In conjunction with the sale, assets with a net book value of $22,415 and $29,142 for the Lima and Sulphur Springs properties, respectively, were retired. The transaction resulted in a deferred gain of $2,305 for the Lima facility, which is recorded in the deferred rent and other line on the Consolidated Balance Sheets, and a pretax loss on disposal of $3,432, recognized in the nine months ended January 22, 2016, for the Sulphur Springs facility, which is recorded within the S,G&A line on the Consolidated Statements of Net Income and in the BEF Foods segment. Concurrent with the sale, the Company also entered into a master lease agreement with the same party that purchased the assets, pursuant to which we leased both the Lima and Sulphur Springs properties for an initial 20-year term at an annual, straight-line rent expense of $4,127, inclusive of the amortized deferred gain for the Lima property and recorded within the other operating expenses line on the Consolidated Statements of Net Income and in the BEF Foods segment. The master lease agreement provides for twoten-year renewal options. Refer to the table below for a summary of the sale and leaseback transaction:

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(in thousands)	Lima, Ohio			Sulphur Springs, Texas
Selling price	$	25,284		$	26,316
Direct transaction costs	564			606
Net book value of assets sold	22,415			29,142
Net gain (loss) on sale	$	2,305	(1)	$	(3,432	)

⁽¹⁾    The gain on the sale of our Lima facility is deferred and will be recognized over the lease term

12. Subsequent Events

On February 9, 2016, the Company closed on a $30,000 loan and mortgage on our corporate headquarters in New Albany, Ohio. The loan has a ten year term and is payable in equal quarterly installments over that period. The rate of interest is variable and is initially set at 5.1%. The Company and several wholly owned subsidiaries have provided guaranties for the loan. We intend to use the net proceeds from this loan to pay down debt under the Company's credit agreement and for other corporate purposes.

On February 18, 2016, the Board of Directors approved a quarterly cash dividend of $0.34 per share, payable on March 14, 2016, to shareholders of record at the close of business on February 29, 2016.

On February 23, 2016, the Company signed purchase and sale agreements on 145 restaurant properties for an aggregate purchase price of $200,000. The Company has agreed to sell 119 restaurant properties for $163,400 to National Retail Properties, LP ("National"), and 26 restaurant properties for $36,600 to Mesirow Realty Sale-Leaseback, Inc. ("Mesirow"). As part of the transactions, the Company has agreed to enter into absolute net master leases with each buyer, pursuant to which we will lease each location for an initial term of 20 years. The first year rent expense resulting from these transactions will be approximately $13,800, excluding the impact of deferred gains. The National lease includes a CPI-based rent escalator with a maximum 1.5% annual increase, while the Mesirow lease includes a fixed 1.5% annual rent escalator. The transactions are expected to provide the Company with after tax net proceeds of approximately $165,000 to $170,000. The Company and BEF Foods, Inc. have agreed to provide the lessors with a payment and performance guarantee. Consummation of the transactions is subject to completion of due diligence and certain customary closing conditions. Closing of the transaction is expected during the fourth fiscal quarter, which ends April 29, 2016.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General Overview

In this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), we use the terms “Bob Evans,” “company,” “we,” “us” and “our” to collectively refer to Bob Evans Farms, Inc., a Delaware corporation, and its subsidiaries. This MD&A may contain forward-looking statements that set forth our expectations and anticipated results based on management’s plans and assumptions. These statements are often indicated by words such as “expects,” “anticipates,” “believes,” “estimates,” “intends” and “plans.” Actual results may differ materially from those predicted by the forward-looking statements because of various factors and possible events, including the assumptions, risks and uncertainties discussed in our Annual Report on Form 10-K for the fiscal year ended April 24, 2015, under the heading “Item 1A. Risk Factors,” and as supplemented in our other filings with the SEC.

The following terms are the principal trademarks and registered trademarks of Bob Evans, many of which are used herein: Get in on Something Good™, BE Express ®, BE Fit ®, BE Mail ®, BEST Bob Evans Special Touch ®, Big Farm Burgers ®, Bob Evans ®, Bob Evans Express ®, Bob Evans Oven Bake ®, Bob Evans Restaurants ®, Bob Evans Wildfire ®, Country Creek Farm ®, Discover Farm-Fresh Goodness ®, Farm-Fresh Goodness ®, Farmhouse Feast ®, Fit From the Farm ®, Kettle Creations ®, and Owens ®. Bob Evans uses additional registered trademarks and proprietary marks in its business.

As part of our Broasted Chicken® platform, we have licensed the use of the Broasted ®, Broaster Chicken ®, Genuine Broaster Chicken ®, and Broasted Chicken ® trademarks from The Broaster Company. Our Development Agreement provides us with limited exclusivity rights to use these licensed trademarks and proprietary Broaster equipment for a period of 10 years within the domestic family dining segment.

We have two reporting segments, Bob Evans Restaurants and BEF Foods, which is reflected in management's discussion and analysis of financial condition and result of operations. As of January 22, 2016, we operated 548 full-service Bob Evans Restaurants in 18 states. Bob Evans Restaurants are primarily located in the Midwest, mid-Atlantic and Southeast regions of the United States. In the BEF Foods segment we produce and distribute a variety of complementary home-style, refrigerated side dish convenience food items and pork sausage under the Bob Evans, Owens and Country Creek brand names. These food products are available throughout the United States and Canada. We also manufacture and sell similar products to food-service accounts, including Bob Evans Restaurants and other restaurants and food sellers.

All direct costs related to our two reporting segments are included in segment results. Effective with the first quarter of fiscal year 2016, the results of operations of our reporting segments exclude expenses from certain corporate and other functions which we consider overall corporate costs, or costs not reflective of the reporting segment’s core operating business. Prior year amounts have been adjusted to reflect the change in presentation. Refer to Note 9 for additional reporting segment information.

Results: Three Months EndedJanuary 22, 2016, as Compared to Three Months EndedJanuary 23, 2015

Bob Evans Farms, Inc. Consolidated Overview

Net sales were $346.5 million in the three months endedJanuary 22, 2016, a decrease of $10.7 million as compared to the corresponding period last year. Operating income was $18.1 million for the three months endedJanuary 22, 2016, an increase of $10.4 million as compared to the corresponding period last year. The increase in operating income as compared to the prior year was due to lower selling, general, and administrative ("S,G&A") of $10.0 million, lower cost of sales of $6.0 million, lower operating wages of $2.5 million, lower other operating expense of $1.2 million, and lower depreciation and impairment costs of $1.4 million, partially offset by the operating income impact of lower sales.

Pretax income in the three months endedJanuary 22, 2016, was $15.7 million as compared to a pretax income of $5.3 million in the corresponding period last year. The provision for income taxes was $2.8 million in the three months endedJanuary 22, 2016, as compared to a benefit of $0.7 million in the corresponding period last year. Earnings per diluted share was $0.62 per share in the three months endedJanuary 22, 2016, as compared to $0.25 in the corresponding period last year. Refer to the sections below for analysis on our third quarter fiscal 2016 operating results as compared to the comparable prior year period.

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	Three Months Ended
	Consolidated Results								Bob Evans Restaurants
(in thousands)	January 22, 2016				January 23, 2015				January 22, 2016				January 23, 2015
Net Sales	$	346,505			$	357,177			$	238,608			$	250,389
Cost of sales	118,581		34.2	%	124,544		34.9	%	66,255		27.8	%	69,134		27.6	%
Operating wage and fringe benefit expenses	106,607		30.8	%	109,116		30.5	%	95,792		40.1	%	98,317		39.3	%
Other operating expenses	53,592		15.5	%	54,804		15.3	%	40,731		17.1	%	41,882		16.7	%
Selling, general and administrative expenses	29,005		8.4	%	38,965		11.0	%	6,938		2.9	%	10,589		4.2	%
Depreciation and amortization expense	19,856		5.7	%	20,403		5.7	%	13,635		5.7	%	14,642		5.8	%
Impairments	804		0.2	%	1,672		0.5	%	804		0.3	%	1,672		0.7	%
Operating Income	$	18,060	5.2	%	$	7,673	2.1	%	$	14,453	6.1	%	$	14,153	5.7	%

	Three Months Ended
	BEF Foods								Corporate and Other
(in thousands)	January 22, 2016				January 23, 2015				January 22, 2016			January 23, 2015
Net Sales	$	107,897			$	106,788			$	—		$	—
Cost of sales	52,326		48.5	%	55,410		51.9	%	—			—
Operating wage and fringe benefit expenses	10,815		10.0	%	10,799		10.1	%	—			—
Other operating expenses	12,861		11.9	%	12,922		12.1	%	—			—
Selling, general and administrative expenses	7,473		7.0	%	8,021		7.5	%	14,595			20,355
Depreciation and amortization expense	3,813		3.5	%	4,362		4.1	%	2,407			1,399
Impairments	—		—	%	—		—	%	—			—
Operating Income	$	20,609	19.1	%	$	15,274	14.3	%	$	(17,002	)	$	(21,754	)

These tables reflect data for the three months endedJanuary 22, 2016, compared to the three months endedJanuary 23, 2015. The consolidated information is derived from the accompanying Consolidated Statements of Net Income. The tables also include data for our two reporting segments, Bob Evans Restaurants and BEF Foods, and unallocated corporate and other costs. The ratios presented reflect the underlying dollar values expressed as a percentage of the applicable net sales amounts.

Sales

Consolidated net sales decreased 3.0% to $346.5 million, for the three months endedJanuary 22, 2016, compared to $357.2 million in the corresponding period last year. The net sales decrease was comprised of a decrease of $11.8 million in Bob Evans Restaurants, partially offset by an increase of $1.1 million in BEF Foods.

Bob Evans Restaurants’ net sales decreased $11.8 million, or 4.7%, for the three months endedJanuary 22, 2016, compared to the corresponding period last year. Same-store sales declined 3.6%, primarily the result of a 4.3% decline in on premise dining. Additionally there was a $5.0 million net reduction of sales due to the impact of closing 20 restaurants to date in fiscal 2016, partially offset by $2.2 million of higher sales from the eight restaurants that opened since the beginning of fiscal 2015.

Same-store sales computations for a given period are based on net sales of restaurants that are open for at least 18 months prior to the start of that period. Net sales of closed restaurants are excluded from the same-store sales computation in the period in which the restaurants are closed.

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The following chart summarizes the restaurant openings and closings during the last seven quarters for Bob Evans Restaurants:

	Beginning	Opened	Closed	Ending
Fiscal 2016
1st quarter	567	—	18	549
2nd quarter	549	—	2	547
3rd quarter	547	1	—	548
Fiscal 2015
1st quarter	561	1	—	562
2nd quarter	562	—	—	562
3rd quarter	562	2	—	564
4th quarter	564	4	1	567

BEF Foods' net sales increased $1.1 million, or 1.0%, for the three months endedJanuary 22, 2016, compared to the corresponding period last year. Total pounds sold increased by 8.8%, including a 16.1% increase in refrigerated side dish products and an 11.1% increase in sausage products, partially offset by a 10.8% decrease in food service. The increase in pounds sold was partially offset by lower net sausage pricing. Average sow costs in the third quarter of fiscal 2016 were lower than the prior year, which drove an $8.2 million increase in trade spending offered to customers, reducing our net sales and allowing us to remain price competitive in a low sow cost environment. The following chart summarizes pounds sold by category in the three months endedJanuary 22, 2016, and the corresponding period last year:

	Three Months Ended
(in thousands)	January 22, 2016			January 23, 2015
Category
Refrigerated Sides	34,190	54.1	%	29,461	50.8	%
Sausage	17,846	28.3	%	16,066	27.7	%
Food Service	7,009	11.1	%	7,861	13.5	%
Frozen	2,053	3.3	%	2,539	4.4	%
Other	2,042	3.2	%	2,095	3.6	%
Total	63,140			58,022

Cost of Sales

Consolidated cost of sales was $118.6 million, or 34.2% of net sales, in the three months endedJanuary 22, 2016, compared to $124.5 million, or 34.9% of net sales, in the corresponding period a year ago. The 70 basis points ("bps") decrease in the cost of sales ratio was driven by a 20 bps weighted increase in Bob Evans Restaurants, offset by a 90 bps weighted decrease in BEF Foods.

Bob Evans Restaurants’ cost of sales, predominantly food costs, was $66.3 million, or 27.8% of net sales, for the three months endedJanuary 22, 2016, compared to $69.1 million, or 27.6% of net sales, in the corresponding period a year ago. The increase in the food cost rate as compared to last year was driven primarily by a $1.7 million negative impact from our sales mix and partially offset by a $0.8 million positive impact from increased pricing as well as lower discounting and lower commodities costs.

BEF Foods’ cost of sales was $52.3 million, or 48.5% of net sales, in the three months endedJanuary 22, 2016, compared to $55.4 million, or 51.9% of net sales, in the corresponding period a year ago. The decrease in cost of sales as a percentage of sales was primarily due to the $3.4 million positive impact from an increase in sales mix of our higher margin refrigerated side dish products, and a $0.6 million positive impact of improved production yields. Cost of sales as a percentage of sales was also impacted by a $7.6 million benefit of lower sow costs as compared to the prior year, however that benefit was offset by an $8.2 million increase in trade spending, primarily on sausage products as a result of lower sow costs. Sow costs averaged $41.53 per hundredweight in the third quarter of fiscal 2016, compared to $67.79 per hundredweight in the corresponding period last year.

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Operating Wage and Fringe Benefit Expenses

Consolidated operating wage and fringe benefit expenses (“operating wages”) were $106.6 million, or 30.8% of net sales, in the three months endedJanuary 22, 2016, compared to $109.1 million, or 30.5% of net sales, in the corresponding period last year. The 30 bps increase in operating wages ratio was driven by a weighted bps increase in Bob Evans Restaurants.

Bob Evans Restaurants’ operating wages were $95.8 million, or 40.1% of net sales, in the three months endedJanuary 22, 2016, compared to $98.3 million, or 39.3% of net sales, in the corresponding period last year. The increase in wages as a percentage of sales resulted from an increase in wage rates and the impact of lower sales driven by the 3.6% decline in same-store sales. The decrease in total wage and fringe benefit expenses was the result of $2.0 million lower operating wages, primarily driven by the impact of closing of 20 restaurants in the first nine months of fiscal 2016 and offset partially by higher wage rates, and $0.5 million of lower costs related to other benefits including health insurance.

In BEF Foods, operating wages were $10.8 million, or 10.0% of net sales, for the three months endedJanuary 22, 2016, as well as the corresponding period last year.

Other Operating Expenses

Consolidated other operating expenses were $53.6 million, or 15.5% of net sales, for the three months endedJanuary 22, 2016, compared to $54.8 million, or 15.3% of net sales, in the corresponding period last year. The 20 bps increase in other operating expenses ratio was driven by 30 bps weighted increase in Bob Evans Restaurants, offset by a 10 bps weighted decrease from BEF Foods. The most significant components of other operating expenses are utilities, advertising costs, repairs and maintenance, restaurant supplies, BEF Foods' shipping and handling costs, credit and gift card processing fees and non-income based taxes.

Bob Evans Restaurants’ other operating expenses were $40.7 million, or 17.1% of net sales, for the three months endedJanuary 22, 2016, compared to $41.9 million, or 16.7% of net sales, in the corresponding period last year. The increase in other operating expenses as a percentage of sales resulted from the impact of lower sales driven by the 3.6% decline in same-store sales. The decrease in total other operating expenses is due to a $1.3 million reduction in utility costs, primarily driven by lower gas costs.

BEF Foods’ other operating expenses were $12.9 million, or 11.9% of net sales, for the three months endedJanuary 22, 2016, compared to $12.9 million, or 12.1% of net sales, in the corresponding period last year. Rent expense increased $1.0 million due to the sale and leaseback of our Lima, Ohio, and Sulphur Springs, Texas, manufacturing facilities in the second quarter of fiscal 2016. These costs were offset by $0.6 million of lower transportation costs, primarily driven by declining gas prices, and $0.4 million of other lower operating costs.

Selling, General and Administrative Expenses

Consolidated S,G&A expenses were $29.0 million, or 8.4% of net sales, for the three months endedJanuary 22, 2016, compared to $39.0 million, or 11.0% of net sales, in the corresponding period last year. The 260 bps decrease in the S,G&A ratio was driven by a weighted bps decrease from Bob Evans Restaurants and lower corporate and other costs.

S,G&A expenses incurred by Bob Evans Restaurants include above-restaurant management and restaurant executive leadership. Bob Evans Restaurants' S,G&A was $6.9 million, or 2.9% of net sales, for the three months endedJanuary 22, 2016, compared to $10.6 million, or 4.2% of net sales, in the corresponding period last year. The decrease of $3.7 million is primarily due to $1.4 million of lower wage and incentive compensation costs, a $1.3 million increase in gains related to the sale of nonoperating restaurant properties and a $0.9 million reduction in severance costs.

S,G&A expenses incurred by BEF Foods include costs of our BEF Foods sales organization, and BEF Foods executive leadership. BEF Foods' S,G&A was $7.5 million, or 7.0% of net sales, for the three months endedJanuary 22, 2016, compared to $8.0 million, or 7.5%, of net sales in the corresponding period last year. The decrease in BEF Foods' S,G&A is primarily the result of the lower professional fees associated with programs designed to improve plant operating efficiencies.

Corporate and other costs that are not allocated to our reporting segments include information technology, finance, legal, human resources, supply chain and other corporate functions, and includes costs such as ongoing IT infrastructure costs, third-party legal and professional fees and other costs. Corporate and other costs that are not allocated to our reporting segments were $14.6 million for the three months endedJanuary 22, 2016, as compared to $20.4 million in the corresponding period last year. The decrease in corporate and other S,G&A was primarily the result of $3.8 million in separation costs related to our former CEO and a $1.7 million loss on the sale of our interest in a jointly owned aircraft incurred in the prior year.

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Depreciation and Amortization

Consolidated depreciation and amortization expenses (“D&A”) were $19.9 million, or 5.7% of net sales, for the three months endedJanuary 22, 2016, compared to $20.4 million, or 5.7% of net sales, in the corresponding period last year.

Bob Evans Restaurants’ D&A expenses were $13.6 million, or 5.7% of net sales, for the three months endedJanuary 22, 2016, compared to $14.6 million, or 5.8% of net sales, in the corresponding period last year. The decrease was primarily driven by the impact of stores that were closed in the first quarter of fiscal 2016 and are classified as held for sale on our Consolidated Balance Sheet.

BEF Foods’ D&A expenses were $3.8 million, or 3.5% of net sales, for the three months ended January 22, 2016, compared to $4.4 million, or 4.1% of net sales, in the prior year period. The decrease of $0.6 million is due to the sale and leaseback of our Lima, Ohio and Sulphur Springs, Texas, manufacturing facilities in the second quarter of fiscal 2016.

D&A expenses for unallocated corporate assets were $2.4 million for the three months endedJanuary 22, 2016, compared to $1.4 million, in the corresponding period last year. The increase is primarily driven by depreciation and amortization on the first phase of our ERP system, which was put in service on the first day of fiscal 2016.

Impairments

Impairment charges were $0.8 million, or 0.2% of net sales, for the three months endedJanuary 22, 2016, compared to $1.7 million, or 0.5% of net sales, in the corresponding period last year. Impairment charges in each comparable period were recorded to the Bob Evans Restaurants segment. In the three months endedJanuary 22, 2016, we recorded impairments on four nonoperating properties, including three that are classified as held for sale on our Consolidated Balance Sheet, as the respective fair value were determined to be lower than the carrying value. In the three months endedJanuary 23, 2015, we recorded impairments on six operating and two nonoperating properties, as a result of adverse performance in fiscal 2015 and a reassessment of expected future cash flows at those properties.

Interest

Net interest expense for the three months endedJanuary 22, 2016, compared to the corresponding period last year, is as follows:

	Three Months Ended
(in thousands)	January 22, 2016			January 23, 2015
Gross interest expense:
Variable-rate debt	$	2,631		$	2,892
Amortization of deferred financing costs and other	431			321
Capitalized interest	(50		)	(150		)
Total interest expense	3,012			3,063
Gross interest income:
Accretion	(528		)	(471		)
Other	(117		)	(186		)
Total interest income	(645		)	(657		)
Net interest expense	$	2,367		$	2,406

Income Taxes

The provision for income taxes is based on our current estimate of the annual effective income tax rate adjusted to reflect the impact of discrete items. The Company’s effective income tax rate for the three months endedJanuary 22, 2016, was 17.6% compared to a benefit of 12.4% in the corresponding period a year ago. The higher tax rate for the three months endedJanuary 22, 2016, was driven primarily by the impact of yearly variances in the forecasted annual rate, as well as discrete items booked in the third quarter of fiscal year 2015. Recent federal legislation providing a five-year extension to the Work Opportunity Tax Credit ("WOTC") program reduced the fiscal 2016 third-quarter tax rate approximately 6.1%.

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Results: Nine Months EndedJanuary 22, 2016, as Compared to Nine Months EndedJanuary 23, 2015

Bob Evans Farms, Inc. Consolidated Overview

Net sales were $993.2 million in the nine months ended January 22, 2016, a decrease of $23.6 million compared to the prior year. Operating income was $37.8 million for the nine months ended January 22, 2016, an increase of $21.0 million as compared to the corresponding period last year. The increase in operating income as compared to the corresponding period last year was due to lower cost of sales of $37.1 million, lower operating wages of $3.3 million, lower other operating expenses of $1.3 million, lower S,G&A costs of $1.0 million and lower impairment charges of $2.2 million. Offsetting these expense improvements was the operating income impact of lower sales and higher depreciation and amortization expenses of $0.3 million.

Pretax income in the nine months ended January 22, 2016, was $29.9 million as compared to a pretax income of $10.5 million in the corresponding period last year. The provision for income taxes was $6.3 million in the nine months ended January 22, 2016, as compared to a benefit of $0.4 million in the prior year. Earnings per diluted share was $1.08 per share in the nine months ended January 22, 2016, as compared to $0.46 per share in the corresponding period last year. Refer to the sections below for analysis on our year-to-date fiscal 2016 operating results as compared to the comparable prior year period.

	Nine Months Ended
	Consolidated Results								Bob Evans Restaurants
(in thousands)	January 22, 2016				January 23, 2015				January 22, 2016				January 23, 2015
Net Sales	$	993,239			$	1,016,796			$	708,018			$	731,691
Cost of sales	317,611		32.0	%	354,723		34.9	%	189,447		26.8	%	196,509		26.9	%
Operating wage and fringe benefit expenses	315,894		31.8	%	319,158		31.4	%	284,714		40.2	%	287,991		39.4	%
Other operating expenses	161,407		16.3	%	162,713		16.0	%	123,732		17.5	%	126,677		17.3	%
Selling, general and administrative expenses	99,366		9.9	%	100,353		9.9	%	30,806		4.3	%	25,015		3.4	%
Depreciation and amortization expense	60,116		6.1	%	59,851		5.9	%	40,645		5.7	%	42,541		5.8	%
Impairments	1,089		0.1	%	3,249		0.3	%	1,089		0.2	%	3,249		0.4	%
Operating Income	$	37,756	3.8	%	$	16,749	1.6	%	$	37,585	5.3	%	$	49,709	6.8	%

	Nine Months Ended
	BEF Foods								Corporate and Other
(in thousands)	January 22, 2016				January 23, 2015				January 22, 2016			January 23, 2015
Net Sales	$	285,221			$	285,105			$	—		$	—
Cost of sales	128,164		44.9	%	158,214		55.5	%	—			—
Operating wage and fringe benefit expenses	31,180		10.9	%	31,167		10.9	%	—			—
Other operating expenses	37,675		13.2	%	36,036		12.6	%	—			—
Selling, general and administrative expenses	25,353		9.0	%	22,053		7.8	%	43,208			53,285
Depreciation and amortization expense	12,406		4.3	%	12,960		4.5	%	7,064			4,350
Impairments	—		—	%	—		—	%	—			—
Operating Income	$	50,443	17.7	%	$	24,675	8.7	%	$	(50,272	)	$	(57,635	)

These tables reflect data for the nine months ended January 22, 2016, compared to the nine months ended January 23, 2015. The consolidated information is derived from the accompanying Consolidated Statements of Net Income. The tables also include data for our two reporting segments, Bob Evans Restaurants and BEF Foods, and unallocated corporate and other costs. The ratios presented reflect the underlying dollar values expressed as a percentage of the applicable net sales amounts.

Sales

Consolidated net sales decreased 2.3% to $993.2 million, for the nine months ended January 22, 2016, compared to $1,016.8 million in the corresponding period last year. The net sales decline was comprised of a $23.7 million decrease in Bob Evans Restaurants' sales, partially offset by a $0.1 million increase in BEF Foods' sales.

Bob Evans Restaurants’ net sales decreased $23.7 million, or 3.2%, for the nine months ended January 22, 2016, compared to the corresponding period last year. Same-store sales declined 2.4%, primarily the result of a decline in on premise dining attributable to lower transaction volumes in our dinner daypart. The impact of declining dine-in sales was

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partially offset by growth in off-premises sales, which comprise approximately 16% of total restaurant net sales. Additionally there was a $13.2 million net reduction of sales driven by the impact of closing 20 restaurants in the first nine months of fiscal 2016, partially offset by the impact of a $7.3 million increase in sales from eight restaurants that opened since the beginning of the prior year.

BEF Foods' net sales increased $0.1 million for the nine months ended January 22, 2016, compared to the corresponding period last year. While total pounds sold increased by 5.2%, net sales remained flat due to lower net sausage pricing. Average sow costs in the first nine months of fiscal 2016 were lower than the prior year, which drove a $17.5 million increase in trade spending offered to customers, reducing our net sales and allowing us to remain price competitive in a low sow cost environment. The increase in total pounds sold as compared to last year is a function of increased refrigerated side dish and sausage pounds sold, offset by lower food service pounds sold. The following chart summarizes pounds sold by category in the nine months ended January 22, 2016, and the corresponding period last year:

	Nine Months Ended
(in thousands)	January 22, 2016			January 23, 2015
Category
Refrigerated Sides	86,200	53.8	%	74,462	48.9	%
Sausage	40,857	25.5	%	36,092	23.7	%
Food Service	20,696	12.9	%	28,599	18.8	%
Frozen	6,796	4.2	%	7,342	4.8	%
Other	5,613	3.6	%	5,722	3.8	%
Total	160,162			152,217

Cost of Sales

Consolidated cost of sales was $317.6 million , or 32.0% of net sales, in the nine months ended January 22, 2016, compared to $354.7 million, or 34.9% of net sales, in the corresponding period a year ago. The 290 bps decrease in the cost of sales ratio was driven by a 10 bps weighted decrease in Bob Evans Restaurants and a 280 bps weighted decrease in BEF Foods.

Bob Evans Restaurants’ cost of sales, predominantly food costs, was $189.4 million, or 26.8% of net sales, for the nine months ended January 22, 2016, compared to $196.5 million, or 26.9% of net sales, in the corresponding period a year ago. Rising food costs were offset by a reduction in discounting and a sales mix increase of breakfast items, which typically have lower ingredient costs.

BEF Foods’ cost of sales was $128.2 million, or 44.9% of net sales, in the nine months ended January 22, 2016, compared to $158.2 million, or 55.5% of net sales, in the corresponding period a year ago. The decrease in cost of sales as a percentage of sales was primarily due to the $17.3 million impact from a higher sales mix of our higher margin refrigerated side dish products and improved production yields. Cost of sales as a percentage of sales were also positively impacted by a $24.0 million benefit of lower sow costs as compared to the prior year. This benefit was partially offset by a $17.5 million increase in trade spending, primarily on sausage as a result of lower sow costs, which resulted in a net positive $6.5 million impact on margins. Sow costs averaged $44.84 per hundredweight in the first nine months of fiscal 2016, compared to $77.75 per hundredweight in the corresponding period last year.

Operating Wage and Fringe Benefit Expenses

Consolidated operating wage and fringe benefit expenses (“operating wages”) was $315.9 million, or 31.8% of net sales, in the nine months ended January 22, 2016, compared to $319.2 million, or 31.4% of net sales, in the corresponding period last year. The 40 bps increase in operating wages ratio was driven by a weighted bps increase in Bob Evans Restaurants.

Bob Evans Restaurants’ operating wages were $284.7 million, or 40.2% of net sales, in the nine months ended January 22, 2016, compared to $288.0 million, or 39.4% of net sales, in the corresponding period last year. The increase in wages as a percentage of sales resulted from an increase in wage rates and the impact of lower sales driven by the 2.4% decline in same-store sales. The decrease in total operating wages as compared to the prior year was primarily the result of $6.6 million in lower restaurant wages due to the closing of 20 restaurants in the first nine months of fiscal 2016 and $0.8 million of lower costs related to other benefits. This decrease was partially offset by $3.2 million higher restaurant wages related to eight stores that opened since the beginning of fiscal 2015, as well as a $1.1 million impact from higher wage rates.

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BEF Foods' operating wages were $31.2 million, or 10.9% of net sales, for the nine months ended January 22, 2016, as well as the corresponding period last year. Production wages decreased by $1.0 million as compared to the prior year, the result of improved plant efficiencies, and were offset by higher employee benefit costs, including incentive compensation.

Other Operating Expenses

Consolidated other operating expenses were $161.4 million, or 16.3% of net sales, for the nine months ended January 22, 2016, compared to $162.7 million, or 16.0% of net sales, in the corresponding period last year. The 30 bps increase in other operating expenses ratio was driven by 10 bps weighted increase in Bob Evans Restaurants and a 20 bps weighted increase from BEF Foods. The most significant components of other operating expenses are utilities, advertising costs, repairs and maintenance, restaurant supplies, BEF Foods' shipping and handling, credit and gift card processing fees and non-income based taxes.

Bob Evans Restaurants’ other operating expenses were $123.7 million, or 17.5% of net sales, for the nine months ended January 22, 2016, compared to $126.7 million, or 17.3% of net sales, in the corresponding period last year. The increase in other operating expenses as a percentage of sales resulted from the impact of lower sales driven by the 2.4% decline in same-store sales. The decrease in total other operating expenses is primarily due to a $2.5 million reduction in utilities and a $2.1 million reduction in occupancy costs including real estate taxes and insurance, partially offset by a $0.9 million increase in repairs and maintenance and service contract costs and a $0.7 million increase in other direct operating costs including restaurant supplies and smallwares.

BEF Foods’ other operating expenses were $37.7 million, or 13.2% of net sales, for the nine months ended January 22, 2016, compared to $36.0 million, or 12.6% of net sales, in the corresponding period last year. The increase in the other operating expenses is primarily due to a $2.4 million increase in advertising expense and a $1.2 million increase in rent expense associated with the sale and leaseback of two of our manufacturing facilities, partially offset by a $1.7 million reduction in shipping and handling costs, primarily driven by lower fuel costs.

Selling, General and Administrative Expenses

Consolidated S,G&A expenses were $99.4 million, or 9.9% of net sales, for the nine months ended January 22, 2016, compared to $100.4 million, or 9.9% of net sales, in the corresponding period last year. The flat S,G&A ratio was driven by a 30 bps weighted increase from Bob Evans Restaurants and a 30 bps weighted increase from BEF Foods, partially offset by lower corporate and other costs.

S,G&A expenses incurred by Bob Evans Restaurants include above-restaurant management and restaurant executive leadership. Bob Evans Restaurants' S,G&A was $30.8 million, or 4.3% of net sales, for the nine months ended January 22, 2016, compared to $25.0 million, or 3.4% of net sales, in the corresponding period last year. The increase of $5.8 million is primarily due to a $10.5 million charge for a settlement of a class action lawsuit in the current year. The increase was partially offset by a $2.6 million decrease in other SG&A costs including above-restaurant management wages and other benefits, driven by headcount reductions and lower incentive compensation, and a $2.1 million increase in gains related to the sale of nonoperating restaurant properties.

S,G&A expenses incurred by BEF Foods include costs of our BEF Foods sales organization and BEF Foods executive leadership. BEF Foods' S,G&A was $25.4 million, or 9.0% of net sales, for the nine months ended January 22, 2016, compared to $22.1 million, or 7.8% of net sales, in the corresponding period last year. The increase in BEF Foods' SG&A costs is primarily driven by the $3.4 million loss recorded on the sale and subsequent leaseback of our Sulphur Springs, Texas, manufacturing facility.

Corporate and other costs that are not allocated to our reporting segments include information technology, finance, legal, human resources, supply chain and other corporate functions, and includes costs such as ongoing IT infrastructure costs, including certain costs related to our new ERP system, third-party legal and professional fees and other costs. Corporate and other costs that are not allocated to our reporting segments were $43.2 million for the nine months ended January 22, 2016, as compared to $53.3 million in the corresponding period last year. The decrease in corporate and other S,G&A was primarily the result of a $5.9 million decrease in third-party legal and professional fees, a $3.3 million decline in separation costs related to our former CEO and a $1.7 million charge incurred in the prior year for the loss on sale of our interest in a jointly owned aircraft. These lower costs were partially offset by higher employee benefit costs, including a $1.1 million increase in expenses related to our deferred compensation plans.

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Depreciation and Amortization

Consolidated depreciation and amortization expenses (“D&A”) were $60.1 million, or 6.1% of net sales, for the nine months ended January 22, 2016, compared to $59.9 million, or 5.9% of net sales, in the corresponding period last year. The 20 bps increase in the D&A ratio was driven by higher depreciation and amortization on unallocated corporate assets.

Bob Evans Restaurants’ D&A expenses were $40.6 million, or 5.7% of net sales, for the nine months ended January 22, 2016, compared to $42.5 million, or 5.8% of net sales, in the corresponding period last year. The decrease was primarily driven by stores that were closed in the first nine months of fiscal 2016 and are classified as held for sale on our Consolidated Balance Sheet, and the impact of assets on accelerated depreciation methods.

BEF Foods’ D&A expenses were $12.4 million, or 4.3% of net sales, for the nine months ended January 22, 2016, compared to $13.0 million, or 4.5% of net sales, in the prior year period. The decrease of $0.6 million is a result of the sale and leaseback of our Lima, Ohio, and Sulphur Springs, Texas, manufacturing facilities in the second quarter of fiscal 2016.

D&A expenses for unallocated corporate assets were $7.1 million for the nine months ended January 22, 2016, compared to $4.4 million, in the corresponding period last year. The increase is primarily driven by depreciation and amortization on the first phase of our ERP system, which was put in service on the first day of fiscal 2016.

Impairments

Impairment charges of $1.1 million, or 0.1% of net sales, were recorded in the nine months ended January 22, 2016, compared to $3.2 million, or 0.3% of net sales, in the corresponding period last year. Impairment charges in each comparable period were recorded to the Bob Evans Restaurants segment. In the nine months ended January 22, 2016, we recorded impairments on six nonoperating properties, including four that are classified as held for sale on our Consolidated Balance Sheet, as the respective fair values were determined to be lower than the carrying value. In the nine months ended January 23, 2015, we recorded impairments on eleven operating and three nonoperating properties, including one that was classified as held for sale, as a result of adverse performance in fiscal 2015 and a reassessment of expected future cash flows at those properties.

Interest

Net interest expense for the nine months ended January 22, 2016, compared to the corresponding period last year, is as follows:

	Nine Months Ended
(in thousands)	January 22, 2016			January 23, 2015
Gross interest expense:
Variable-rate debt	$	8,039		$	7,546
Amortization of deferred financing costs and other	1,806			807
Capitalized interest	(100		)	(298		)
Total interest expense	9,745			8,055
Gross interest income:
Accretion	(1,539		)	(1,374		)
Other	(350		)	(456		)
Total interest income	(1,889		)	(1,830		)
Net interest expense	$	7,856		$	6,225

The increase in variable-rate debt was primarily driven by higher average borrowings on our Credit Agreement during the nine months ended January 22, 2016, as compared to the corresponding period last year. The increase in amortization of deferred financing costs is driven by the additional deferred costs incurred as part of our second and third amendments to the Credit Agreement as well as a $0.5 million write off of previously unamortized deferred financing fees associated with the third amendment to our Credit Agreement, which was effective in the second quarter of fiscal 2016.

Income Taxes

The provision for income taxes is based on our current estimate of the annual effective income tax rate adjusted to reflect the impact of discrete items. The Company’s effective income tax rate was 20.9% for the nine months ended January 22, 2016, as compared to a benefit of 4.0% for the corresponding period a year ago. The higher tax rate for the nine months ended January 22, 2016, was driven primarily by the impact of yearly variances in the forecasted annual rate, as well as discrete items

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booked in the third quarter of fiscal year 2015. Recent federal legislation providing a five-year extension to the WOTC program reduces our estimated full-year fiscal 2016 tax rate by approximately 320 basis points.

Liquidity and Capital Resources

Our primary sources of liquidity are cash generated from operating activities, the borrowing capacity under our Credit Agreement and our ability to incur sale leaseback indebtedness of up to $300.0 million.

Historically, our working capital requirements have been minimal; overall, our current liabilities have generally exceeded our current assets (excluding cash and equivalents). This favorable working capital position results from transacting substantially all of our Bob Evans Restaurants' sales for cash or third-party credit or debit cards; the relatively short trade credit terms with our BEF Foods' customers as well as most of our major suppliers and distributors; and the quick turnover of our inventories in both of our reporting segments.

Capital expenditures were $48.7 million and $58.9 million, respectively, for the nine months ended January 22, 2016, and January 23, 2015. In the nine months ended January 22, 2016, capital expenditures primarily related to the next phase of our ERP system, a new restaurant point-of-sale system, an additional refrigerated side dish production line at our Lima, Ohio, plant, other IT infrastructure projects and general restaurant improvements. In the nine months ended January 23, 2015, capital expenditures primarily related to new restaurant construction and our ERP system. In fiscal 2016, capital expenditures are expected to approximate $70.0 million to $74.0 million and include expenditures for those items discussed above.

During each of the first and second quarters of fiscal years 2016 and 2015, and the third quarter of fiscal year 2015, we paid cash dividends of $0.31 per share. During the third quarter of fiscal year 2016 we paid a cash dividend of $0.34 per share. While we expect to continue paying regular quarterly cash dividends, the declaration, amount and timing of future dividends are at the discretion of our Board of Directors.

On August 20, 2014, the Board of Directors increased the authorization of our stock repurchase program for up to $150.0 million through fiscal 2016. The program authorizes the Company to repurchase its outstanding common stock pursuant to plans approved by the Board under SEC Rules 10b-18 and 10b5-1, and in the open market or through privately negotiated transactions. The ability to repurchase stock and complete the repurchase program is dependent upon our having available funds and complying with the financial covenants and other restrictions contained in our Credit Agreement and the repurchase authorization.

On November 19, 2015, the Board of Directors approved an additional $100.0 million authorization under our share repurchase program, for a total authorization of $250.0 million. The program authorizes the Company to repurchase its outstanding common stock pursuant to plans approved by the Board under SEC Rules 10b-18 and 10b5-1, and in the open market or through privately negotiated transactions, while maintaining prudent leverage levels. The share repurchase authorization was extended to expire on December 31, 2016. We expect to repurchase shares through this program after we complete the initial $150.0 million of authorized repurchases. The additional repurchase program will be funded in part through the net proceeds from the expected sale leaseback of restaurant properties (see below for additional information).

In the first three quarters of fiscal 2016 we repurchased approximately 3.5 million shares for $156.7 million. The repurchases were funded primarily through additional borrowings on our Credit Agreement, cash from operations and the $50.0 million of proceeds from the plant sale leaseback transaction.

On January 2, 2014, we entered into the Credit Agreement, which represents a syndicated secured revolving credit facility. We incurred financing costs of $2.1 million associated with this Credit Agreement, which are being amortized over the remaining term of the agreement. As a result of the Third Amendment to the Credit Agreement, effective October 21, 2015, and discussed further below, up to $650.0 million of borrowings are available, including a letter of credit sub-facility of $50.0 million, and an accordion provision that permits the Company to request an additional $300.0 million for certain transactions, which could increase the revolving credit commitment to $950.0 million. It is secured by the stock pledges of certain of our material subsidiaries. Borrowings under the Credit Agreement bear interest, at our option, at a rate based on LIBOR or the Base Rate, plus a margin based on the Leverage Ratio, ranging from 1.00% to 2.75% per annum for LIBOR, and ranging from 0.00% to 1.75% per annum for Base Rate. The Base Rate means for any day, a fluctuating per annum rate of interest equal to the highest of (i) the Federal Funds Open Rate, plus 0.50%, (ii) the Prime Rate, or (iii) the Daily LIBOR Rate, plus 1.00%. We are also required to pay a commitment fee of 0.15% per annum to 0.25% per annum of the average unused portion of the total lender commitments then in effect. Our effective interest rate for the Credit Agreement was 2.05% during the nine months ended January 22, 2016. As of January 22, 2016, we had outstanding borrowings of $492.9 million under our credit facility and $12.6 million was reserved for certain standby letters of credit.

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In the first quarter of fiscal 2015, we entered into a First Amendment to the Credit Agreement dated July 23, 2014. The terms of the Credit Agreement that were amended related to: (a) an increase to the Maximum Leverage Ratio for the period starting July 25, 2014, through July 22, 2016, (b) add certain restricted payment requirements related to share repurchases, and (c) an update to the Pricing Grid, which determines variable pricing and fees, to reflect changes in the allowable Maximum Leverage Ratio. We incurred financing costs of $1.3 million associated with this amendment, which are being amortized using the straight line method, which approximates the effective interest method.

In the first quarter of fiscal 2016, we entered into a Second Amendment to the Credit Agreement dated May 11, 2015. The amendment has an effective date of April 24, 2015. The terms of the Credit Agreement were amended related to: (a) an increase of the Maximum Leverage Ratio for the period starting April 24, 2015, through the remaining term of the Credit Agreement, (b) a change in the restrictions related to payments for share repurchases, and (c) a change in the definition of the LIBOR and Daily LIBOR rates that are used to calculate interest on outstanding borrowings. We incurred and paid fees of $1.7 million associated with this amendment, which will be amortized over the remaining term of the Credit Agreement using the straight line method, which approximates the effective interest method.

We entered into an Agreement Regarding Financial Covenant Calculation ("Agreement") on August 10, 2015, with an effective as date of April 24, 2015, in which the terms of the Credit Agreement were clarified regarding the treatment of certain noncash charges in the calculation of our Maximum Leverage Ratio. The Agreement had no impact on our financial covenants.

In the second quarter of fiscal 2016, we entered into a Third Amendment to the Credit Agreement dated and effective as of October 21, 2015. The terms of the Credit Agreement were amended related to: (a) increase the level of permitted indebtedness in connection with sale and leaseback transactions of assets from $100.0 million to $300.0 million, (b) removal of the $150.0 million share repurchase restriction during the 2016 fiscal year, (c) decrease the size of the facility from $750.0 million to $650.0 million, (d) modification of the definition of the leverage ratio to account for rent expense from leases so that the leverage ratio will be calculated as consolidated indebtedness plus 600% of annual rent expense versus consolidated EBITDAR, and (e) inclusion of an add back to the leverage ratio calculation for costs related to the settlement of a class action lawsuit. We incurred and paid fees of $0.8 million associated with this amendment, which will be amortized over the remaining term of the Credit Agreement using the straight line method, which approximates the effective interest method.

Our Credit Agreement contains financial and other various affirmative and negative covenants that are typical for financings of this type. It requires us to maintain a specified minimum coverage ratio and maximum leverage ratio at January 22, 2016, of (1) a minimum coverage ratio of not less than 3.00 to 1.00; and (2) a maximum leverage ratio that may not exceed 4.50 to 1.00. As of January 22, 2016, our leverage ratio was 3.15, and our coverage ratio was 12.54, as defined in our Credit Agreement. Our Credit Agreement also limits repurchases of our common stock and the amount of dividends that we pay to holders of our common stock in certain circumstances. The Credit Agreement also allows for the incurrence of additional indebtedness of up to $300.0 million, a sale leaseback of our real estate of up to $300.0 million and mortgage indebtedness on our corporate headquarters of up to $50.0 million. A breach of any of these covenants could result in a default under our Credit Agreement, in which all amounts under our Credit Agreement may become immediately due and payable, and all commitments under our Credit Agreement to extend further credit, terminated. We were in compliance with the financial covenant requirements of our Credit Agreement as of January 22, 2016.

Beginning in fiscal 2015, management has worked closely with the Board of Directors and its strategic advisers to assess various alternatives to increase shareholder value. In particular, the Company determined it would pursue several transactions with respect to its real estate assets. In the second quarter of fiscal 2016, we entered into an agreement pursuant to which we sold our manufacturing properties located in Lima, Ohio, and Sulphur Springs, Texas, for $51.6 million.  We received net proceeds of $50.0 million, after consideration of closing and other transaction costs. Concurrent with the sale, we entered into a lease agreement pursuant to which we leased both the Lima and Sulphur Springs manufacturing properties for an initial 20-year term at an annual, straight-line rent expense of $4.1 million, inclusive of the amortized deferred gain on the Lima, Ohio, location. The master lease agreement includes two ten-year renewal options.

On February 9, 2016, we entered into a $30.0 million loan and mortgage on our corporate headquarters in New Albany, Ohio. The loan has a ten-year term and is amortized over that period. The rate of interest is variable and is initially set at 5.1%. The Company and several wholly owned subsidiaries have provided guaranties for the loan. We intend to use the net proceeds from this loan to pay down debt under the Company's Credit Agreement and for other corporate purposes.

On February 23, 2016, the Company signed purchase and sales agreements on 145 restaurant properties for a combined $200.0 million. The Company has agreed to sell 119 restaurant properties for $163.4 million to National Retail Properties, LP ("National"), and 26 restaurant properties for $36.6 million to Mesirow Realty Sale-Leaseback, Inc. ("Mesirow"). As part of the transactions, the Company has agreed to enter into absolute net master leases with each buyer, pursuant to which we will lease the locations for an initial term of 20 years. The first year rent expense resulting from these transactions will be

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approximately $13.8 million, excluding the impact of deferred gains. The National lease includes a CPI-based rent escalator with a maximum 1.5% annual increase, while the Mesirow lease includes a fixed 1.5% annual rent escalator. The transaction is expected to provide the Company with net proceeds of approximately $165.0 to $170.0 million. Consummation of the transactions is subject to completion of due diligence and certain customary closing conditions. We intend to use the net proceeds to pay down debt under the Company's Credit Agreement, to repurchase shares of the Company's common stock and for other corporate purposes, while maintaining prudent leverage. Closing of the transaction is expected during the fourth fiscal quarter, which ends April 29, 2016.

We believe that our cash flow from operations, as well as the available borrowings under our Credit Agreement and our ability to incur sale leaseback indebtedness, will be sufficient to fund anticipated capital expenditures, working capital requirements, dividend payments and share repurchases.

Operating activities

Net cash provided by operating activities was $117.5 million and $81.0 million for the nine months ended January 22, 2016, and January 23, 2015, respectively. The increase in cash provided by operating activities as compared to a year ago is primarily due to an increase in net income from operations, a $14.8 million increase in tax refunds received and improved working capital management.

Investing activities

Cash provided by investing activities was $20.1 million for the nine months ended January 22, 2016, while cash used in investing activities was $49.5 million for the nine months ended January 23, 2015. The increase in cash provided by investing activities was primarily due to an increase in proceeds from sale of property, plant and equipment of $54.4 million, which includes $50.0 million of net proceeds from the sale of our Lima, Ohio, and Sulphur Springs, Texas, facilities as well as proceeds from the sale of nonoperating restaurant properties. In addition, capital expenditures decreased $10.3 million as compared to the prior year, as the Company completed the first phase of our ERP system in the fourth quarter of fiscal 2015. We also liquidated $5.2 million of rabbi trust assets during the nine months ended January 22, 2016.

Financing activities

Cash used in financing activities was $136.2 million for the nine months ended January 22, 2016, as compared to $35.5 million for the nine months ended January 23, 2015. The increase in cash used by financing activities was primarily due to the $156.7 million of repurchases of our common stock in fiscal 2016, partially offset by $44.9 million of incremental borrowings on our Credit Agreement and other long-term debt in the current year as compared to $11.7 million net repayments on our Credit Agreement and other long-term debt in the corresponding period last year.

Contractual obligations

Other than the amendment to our Credit Agreement, discussed in Note 2, and the sale leaseback transaction discussed in Note 11, there have been no significant changes in our contractual obligations and outstanding indebtedness as disclosed in our Annual Report on Form 10-K, for the fiscal year ended April 24, 2015.

Off-Balance Sheet Arrangements

As of January 22, 2016, we have not entered into any “off-balance sheet” arrangements with unconsolidated entities or other persons, as that term is defined in rules issued by the SEC.

Critical Accounting Policies and Estimates

As discussed in Note 1 to our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, the preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of commitments and contingencies at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. We base these estimates and judgments on our historical experience and other factors we believe to be relevant, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The process of determining significant estimates is fact-specific and takes into account factors such as historical experience, current and expected economic conditions, product mix, and in some cases, actuarial and appraisal techniques. We routinely re-evaluate these significant factors and make adjustments where facts and circumstances dictate. Our critical accounting policies have not changed materially from those previously reported in our Annual Report on Form 10-K for the fiscal year ended April 24, 2015.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We do not currently use derivative financial instruments for speculative or hedging purposes. We maintain our cash and cash equivalents in financial instruments with maturities of three months or less when purchased.

Interest Rate Risk

At January 22, 2016, our outstanding debt included $492.9 million  outstanding on the credit facility, and $3.2 million of other outstanding long-term notes. A change in market interest rates will impact our Credit Agreement when there is an outstanding balance.  For example, a one percent increase in the benchmark rate used for our credit facility would increase our annual interest expense by approximately $5.0 million, assuming the $492.9 million  outstanding at January 22, 2016, was outstanding for the entire year.

Commodities Prices

We purchase certain commodities such as beef, pork, poultry, seafood, produce and dairy products. These commodities are generally purchased based upon market prices established with suppliers. These purchase arrangements may contain contractual features that fix the price paid for certain commodities. We do not use financial instruments to hedge commodity prices, because these purchase arrangements help control the ultimate cost paid. Most commodity price aberrations are generally short-term in nature and for some commodities, such as sows, hedge instruments are not available.

ITEM 4. CONTROLS AND PROCEDURES

Changes in Internal Control Over Financial Reporting

On April 25, 2015, we implemented the first phase of an enterprise resource planning (“ERP”) system on a company-wide basis, which is expected to improve the efficiency of certain financial and related transaction processes. The implementation resulted in business and operational changes, which required changes to our internal controls over financial reporting. We believe we have designed adequate controls into and around the new ERP system, which includes performing significant procedures, both within the ERP and outside the ERP, to monitor, review and reconcile financial activity for the third quarter of fiscal 2016 to ensure ongoing reliability of our financial reporting.

Except as has been described above, there has been no material changes in our internal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act) during the quarter ended January 22, 2016, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Evaluation of Disclosure Controls and Procedures

With the participation of our management, including Bob Evans’ principal executive officer and principal financial officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(c) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon this evaluation, Bob Evans’ principal executive officer and principal financial officer have concluded our disclosure controls and procedures were effective.

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PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are from time-to-time involved in ordinary and routine litigation, typically involving claims from customers, employees and others related to operational issues common to the restaurant and food manufacturing industries, and incidental to our business.  Management presently believes that the ultimate outcome of these proceedings, individually or in the aggregate, will not have a material adverse effect on our financial position, cash flows or results of operations.

Class Action Litigation: In August 2012, a former Bob Evans Restaurant employee filed an action against the Company in the United States District Court for the Southern District of Ohio, styled David Snodgrass v. Bob Evans Farms, LLC, Case No. 2:12-cvg-00768 (“Snodgrass”). The lead plaintiff alleged that the Company violated the Fair Labor Standards Act by misclassifying assistant managers as exempt employees and failing to pay overtime compensation during the period of time the employee worked as an assistant manager. The plaintiff's complaint requested an unspecified amount of alleged back wages, liquidated damages, statutory damages and attorneys’ fees. The lead plaintiff sought to maintain the suit as a collective action on behalf of other similarly situated assistant managers employed at Bob Evans Restaurants between August 2009 and present. In December 2013, the Court in Snodgrass granted conditional certification of those assistant managers that elected to opt-in to the collective action.

In May 2014, the same plaintiffs’ counsel in the Snodgrass matter filed essentially duplicative claims under the overtime laws of the State of Ohio and Commonwealth of Pennsylvania, styled Utterback v. Bob Evans Farms, LLC Case No. CV14826909 in the Court of Common Pleas of Cuyahoga County, Ohio (“Utterback”) and Mackin v. Bob Evans Farms, LLC Case No. 2:14-cv-450 in the United States District Court for the Southern District of Ohio (“Mackin”), respectively. Neither the Utterback nor Mackin proceedings have been certified for class status at this time.

While we continue to believe that our assistant managers were properly classified as exempt from the respective Federal and State overtime requirements and that we have meritorious defenses to the claims in each of the Snodgrass, Utterback and Mackin matters, as previously reported in our Annual Report in Form 10-K for the fiscal year ended April 24, 2015, in the fourth quarter of fiscal 2015 we received an unfavorable ruling related to the Snodgrass litigation and determined a settlement of all three matters was in the best interest of the Company. In connection with the unfavorable ruling, we recorded a charge of $6.0 million in the fourth quarter of fiscal 2015. This expense was recorded to the Bob Evans Restaurants segment and in the S,G&A line of the Consolidated Statements of Net Income.

In June 2015, counsel for all parties attended the second mediation in the Snodgrass matter in an attempt to resolve each of the Snodgrass, Utterback and Mackin litigation matters. On July 31, 2015, the Company and counsel for the plaintiffs reached an agreement in principle to resolve all claims presented in the Snodgrass, Mackin and Utterback cases for the total sum of up to $16.5 million on a claims made basis.  A Settlement Agreement was executed by the parties on October 2, 2015, and the Court provided preliminary approval on October 23, 2015. As a result of the agreement in principle, we recorded an additional charge of $10.5 million in the first quarter of fiscal 2016. This expense was recorded to the Bob Evans Restaurants segment and in the S,G&A line of the Consolidated Statements of Net Income.

The Court held a Final Approval Hearing on February 18, 2016, and issued the Final Approval Order on February 26, 2016. The settlement remains conditioned upon completion of a 30-day appeals period, without any appeal being filed.

Other Matters: The Division of Enforcement of the SEC is conducting a formal investigation relating to disclosures set forth in our filings on Form 8 - K and Form 10 - Q/A both filed on December 3, 2014.  Those filings  addressed  the correction of our error in the classification of our borrowings under our credit agreement as a current liability rather than as a long-term liability, as reported in our Form 10 - Q filed on August 27, 2014.  We are cooperating fully with the SEC in this matter.   The Company cannot predict the duration, scope or outcome of the SEC’s investigation.

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors disclosed in Part 1, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended April 24, 2015.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On February 25, 2014, the Board of Directors authorized a stock repurchase program for up to $100.0 million. The program authorized the Company to repurchase its outstanding common stock pursuant to plans approved by the Board under SEC Rules 10b-18 and 10b5-1, and in the open market or through privately negotiated transactions. The ability to repurchase stock and complete the repurchase program is dependent upon the Company having available funds and complying with the financial covenants and other restrictions contained within the Company’s Credit Agreement and the repurchase authorization.

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On August 20, 2014, the Board of Directors increased the authorization for the current stock repurchase program to $150.0 million and extended the authorization period through fiscal 2016.

On November 19, 2015, the Board of Directors approved an additional $100.0 million share repurchase program. The program authorizes the Company to repurchase its outstanding common stock pursuant to plans approved by the Board under SEC Rules 10b-18 and 10b5-1, and in the open market or through privately negotiated transactions. The share repurchase authorization expires on December 31, 2016. We expect to repurchase shares through this program after we complete the initial $150.0 million of authorized repurchases.

In the third quarter of fiscal 2016 we repurchased approximately 1.3 million shares for $51.7 million. The repurchases were funded primarily through additional borrowings on our Credit Agreement, cash from operations and the $50.0 million of proceeds from the plant sale leaseback transaction.

The following table provides information regarding the purchases of shares of Common Stock of Bob Evans made by the Company during each fiscal month of the three months ended January 22, 2016:

Period (Fiscal Month)	Total Number of Shares Purchased	Average Price Paid per Share		Total Shares Purchased as part of Publicly Announced Plans or Programs	Maximum Value of Shares that May Yet be Purchased Under the Plans or Programs
October 24, 2015 through November 27, 2015	543,198	$	42.18	543,198	$	122,159,275
November 28, 2015 through December 25, 2015	560,116	$	40.18	560,116	$	99,653,814
December 26, 2015 through January 22, 2016	164,960	$	38.23	164,960	$	93,347,393
	1,268,274			1,268,274

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable

ITEM 5. OTHER INFORMATION

Not Applicable

ITEM 6. EXHIBITS

See index to exhibits

-32-

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 thereunto duly authorized.

	BOB EVANS FARMS, INC.
Date: March 2, 2016	By:	/s/ Saed Mohseni
		Saed Mohseni President and Chief Executive Officer (Principal Executive Officer)
Date: March 2, 2016	By:	/s/ Mark E. Hood
		Mark E. Hood* Chief Administrative Officer and Chief Financial Officer (Principal Financial Officer)
Date: March 2, 2016	By:	/s/ Sylvester J. Johnson
		Sylvester J. Johnson* Senior Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)

 * Messrs. Hood and Johnson have been duly authorized to sign on behalf of the Registrant as its principal financial officer and its principal accounting officer, respectively.

-33-

INDEX TO EXHIBITS

Quarterly Report on Form 10-Q

Dated January 22, 2016

Bob Evans Farms, Inc.

Exhibit Number	Description	Location
3.1	Amended and Restated Certificate of Incorporation of company reflecting amendments through Aug. 20, 2014. [This document represents the Company’s Certificate of Incorporation in restated format incorporating all amendments. This compiled document has not been filed with the Delaware Secretary of State.]	Incorporated herein by reference to Exhibit 3.1 to Bob Evans Farms, Inc.’s Annual Report on Form 8-K filed September 3, 2014 (File No. 0-1667)
3.2	Amended and Restated By-Laws of Bob Evans Farms, Inc. (Effective August 20, 2014)	Incorporated herein by reference to Exhibit 3.2 to Bob Evans Farms, Inc.’s Current Report on Form 8-K filed September 3, 2014 (File No. 0-1667)
10.1	Employment Agreement for Saed Mohseni dated November 14, 2015	Incorporated herein by reference to Exhibit 10.1 to Bob Evans Farms, Inc.'s Form 8-K Filed November 17, 2015 (File No. 0-1667)
10.2	Bob Evans Farms, Inc. Amended and Restated Change In Control and Severance Plan dated November 14, 2015	Incorporated herein by reference to Exhibit 10.2 to Bob Evans Farms, Inc.'s Form 8-K Filed November 17, 2015 (File No. 0-1667)
10.3	Purchase and Sale Agreement between Bob Evans Farms, LLC and National Retail Properties, LP dated February 23, 2016	Filed herewith
10.4	First Amendment to Purchase and Sale Agreement between Bob Evans Farms, LLC and National Retail Properties, LP dated February 25, 2016	Filed herewith
10.5	Purchase and Sale Agreement between Bob Evans Farms, LLC and Mesirow Realty Sale-Leaseback, Inc. dated February 23, 2016	Filed herewith
31.1	Rule 13a-14(a)/15d-14(a) Certification (Principal Executive Officer)	Filed herewith
31.2	Rule 13a-14(a)/15d-14(a) Certification (Principal Financial Officer)	Filed herewith
32.1	Section 1350 Certification (Principal Executive Officer)	Filed herewith
32.2	Section 1350 Certification (Principal Financial Officer)	Filed herewith
101.INS	XBRL Instance Document	Filed herewith
101.SCH	XBRL Taxonomy Extension Schema Document	Filed herewith
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	Filed herewith
101.PRE	XBRL Taxonomy Presentation Linkbase Document	Filed herewith
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith

-34-

EX-10.3

Exhibit 10.3

PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is made and entered into as of February 23, 2016 (the “Effective Date”), by and among NATIONAL RETAIL PROPERTIES, LP, a Delaware limited partnership (“Buyer”) and BOB EVANS FARMS, LLC, a Ohio limited liability company (“Seller”), and BOB EVANS FARMS, INC., a Delaware corporation (“Lease Guarantor”).

In consideration of the mutual covenants and agreements set forth in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Buyer, Seller and Lease Guarantor hereby enter into this Agreement and covenant and agree as follows:

1.Definitions.

(a)“Affiliate” means any entity directly or indirectly controlling, controlled by or under common control with Seller or Lease Guarantor.

(b)“Agent” means any member, shareholder, equity owner, director, manager, officer, employee, or Affiliate of Seller.

(c)“Aggregate Amount” means the sum of $35,000 multiplied by the number of Original Locations.

(d) “Association Estoppels” means, individually and collectively, if any and as applicable to a particular Location, the one or more estoppel certificates that may be requested in writing by Buyer to confirm that each Location and Seller is in compliance with any and all obligations, covenants, conditions, assessments, restrictions or regulations created or imposed by any existing declaration of record, business/owner/condominium/industrial park association, developer agreement, mutual, shared or common maintenance, access or driveway agreements, or any other material duties or obligations encumbering such Location or imposed on the owner of such Location (that benefit other parties or lands/areas outside of such Location), and the like, if any. The form of said estoppel certificate(s) shall be reasonably acceptable to Buyer, Seller and Title Company.

(e)“Bill of Sale and Assignment” means the bill of sale and assignment that shall be delivered by Seller to Buyer at Closing, and sufficient to transfer all of Seller’s right, title and interest in and to the Intangible Property free and clear of all liens, security interests and other encumbrances.

(f)“Building” shall mean the Bob Evans Restaurant building located on each Location and each Substitution Location.

(g)“Building Systems” means the mechanical, electrical, plumbing, sanitary, sprinkler, heating, ventilation and air conditioning, security, life-safety, building management, elevator and other service systems or facilities of the buildings located on each Location.

(h)“Business Day” or “business day” means any day other than a Saturday, Sunday or legal holiday under the laws of the United States.

(i)““Close” or “Closing” means the consummation of the transactions contemplated by this Agreement.

(j)“Closing Date” means April 14, 2016, unless another date is mutually agreed to by the parties.

(k)“Deed” or “Deeds” means, individually and collectively, as appropriate, the special warranty deeds (or the equivalent instrument under the laws of the jurisdiction where each Location is located by which Seller shall warrant title for matters arising by, through or under Seller), one for each Location, conveying fee simple marketable title to each Location to Buyer, subject only to Permitted Encumbrances.

(l)“Due Diligence Documents” means copies of: (i) the Existing Survey Documents in the possession or control of Seller or any Agent; (ii) the Existing Environmental Reports in the possession or control of Seller or any Agent; (iii) the Existing Construction Documents in the possession or control of

Seller or any Agent; (iv) the Warranties; (v) the Tax Information in the possession or control of Seller or any Agent; (vi) certificates of insurance evidencing types and amounts of coverage for the Property and liability insurance policies relating to the Property; and (vii) the Organizational Documents for Seller and Lease Guarantor.

(m)“Due Diligence Period” means the period commencing on the Effective Date and expiring at 11:59 p.m. (eastern) on the later of (i)  the date that is twenty (20) business days after Buyer’s receipt of the last of (A) the Due Diligence Documents; (B) the Environmental Assessments; (C) the Surveys, and (D) the Title Commitments, or (ii) the date that is ten (10) business days after Buyer’s receipt of the last of the Zoning Reports.

(n)“Earnest Money Deposit” means the Initial Deposit and any Additional Deposit (as each term is defined in Section 3 of this Agreement), together with any accrued interest thereon.

(o)“Environmental Assessments” means the ASTM Phase I Environmental Site Assessments that Seller has ordered for each Location and each Substitution Location. The Environmental Assessments shall be certified to Buyer and the applicable Landlord, and their respective successors and assigns and be dated not earlier than December 31, 2015.

(p)“Environmental Laws” shall have the meaning ascribed to such term in the form of Lease.

(q)“Escrow Agent” means Fidelity National Title, c/o Sherry Phillips, Closing and Escrow, 4111 Executive Parkway, Suite 304, Westerville, OH 43081-3862, Phone: (614) 865-1562; Fax (614) 865-1565.

(r)“Excluded Substitute Location” shall have the meaning set forth in Section 4.

(s)“Existing Construction Documents” means copies of all plans and specifications and site plans and other similar documentation related to the development, construction, renovation, alteration or improvement of any Location and each Substitution Location, in Seller’s possession or control, which were obtained prior to December 16, 2015.

(t)“Existing Environmental Reports” means copies of all environmental, soils or engineering reports, assessments, studies, test results, notices, agreements and other similar documentation with respect to each Location and each Substitution Location, in Seller’s possession or control, which were obtained prior to December 16, 2015.

(u)“Existing Survey Documents” means copies of all existing surveys, site plans, or other similar maps of each Location and each Substitution Location, or portion thereof, in Seller’s possession or control, which were obtained prior to December 16, 2015.

(v)“Governmental Authority” means any federal, state, county, city, local, municipal or other governmental, regulatory or administrative agency, governmental commission, department, board, subdivision, court, tribunal, or other governmental arbitrator, arbitral body and all of their respective departments, bureaus, agencies or officers, and any insurance underwriting board or insurance inspection bureau or any other body exercising similar functions.

(w)“Hazardous Substances” shall have the meaning ascribed to such term in the form of Lease.

(x)“Inspection Reports” means, collectively, the Environmental Assessments and the Zoning Reports.

(y)“Intangible Property” means, collectively, (i) all records and files of Seller relating to the operation, maintenance, improvement and renovation of the Locations and (ii) all of Seller’s right, title and interest in and to (A) all architectural and engineering drawings, records, licenses, permits, plans, approvals and other written authorizations used or useful solely in connection with the Locations for the use, operation or ownership of the Locations or any of them, and (B) all Warranties, to the extent in effect and assignable

(z)“Landlord” shall mean each of the following: (i) National Retail Properties Trust, a Maryland real estate investment trust, for the eight Locations located in Pennsylvania (“Pennsylvania

Landlord”); and (ii) Buyer for all other Locations (“NNN Landlord”) (Pennsylvania Landlord and NNN Landlord may be referred to individually and collectively as “Landlord”).

(aa)“Lease” means each of the Master Lease Agreements to be entered into by Seller, as tenant, and the applicable Landlord, as landlord, at Closing, dated as of the Closing Date, and in form and substance as that attached hereto as Exhibit B. The initial Base Annual Rental under each Lease shall be an amount equal to 6.65% times the Purchase Price allocated in Exhibit A to the Locations under each Lease. Landlord and Tenant will enter into a single Lease agreement covering the eight (8) Locations located in Pennsylvania. For all other sites, each Lease between Landlord and Tenant will cover no more than 35 Locations, and Buyer will allocate the Locations to the appropriate Lease by the end of the Due Diligence Period.

(ab)“Lease Guaranty” means a lease guaranty of each Lease to be executed by Lease Guarantor in favor of Pennsylvania Landlord and NNN Landlord, as the case may be, at Closing, dated as of the Closing Date, and in form and substance as that attached hereto as Exhibit D.

(ac)“Legal Requirements” means all laws, ordinances, statutes, rules, regulations, orders, directions and requirements of all Governmental Authorities currently in existence or hereafter enacted or rendered and of all other Governmental Authorities applicable to or claimed to be applicable to any Location or the business activities conducted thereon or therein.

(ad)“Location” means, individually, each of those certain parcels of real property listed on Exhibit A, attached hereto, together with all buildings, improvements and fixtures located thereon, now or in the future, and all rights, privileges, tenements, easements, licenses, hereditaments and appurtenances belonging or pertaining thereto and any mineral rights or interest pertaining thereto, but does not include any Substitution Location unless and until a Substitution Location becomes a Location pursuant to Section 4 hereof. The term “Location” does not include Seller’s trade fixtures, machinery, and equipment used in connection with Seller’s business but does include all Building Systems.

(ae)“Memorandum of Lease” means the Memorandum of Lease to be entered into by the applicable Landlord and Seller at Closing, evidencing the existence of each Lease and recorded in each county in which a Location under such Lease is located; the Memorandum of Lease shall be dated as of the Closing Date and be in form and substance reasonably satisfactory to both Buyer and Seller, but in all events subject to local recording requirements.

(af)“Minimum Number of Locations” means 125 minus the sum of (i) the number of Locations that become Terminated Locations pursuant to Section 6(d), Section 8, Section 9, Section 10(a) or Section 13, (ii) the number of “Locations” that become “Terminated Locations” under the Other Purchase Agreement pursuant to Section 6(d), Section 8, Section 9, Section 10(a) or Section 13 thereof, (iii) the number of Terminated Locations that are terminated pursuant to Section 4 and/or Section 5 with respect to environmental, zoning, title or survey matters if there are remaining Substitution Locations and Seller does not offer to substitute Substitution Locations for such Terminated Locations and (iv) the number of “Terminated Locations” under the Other Purchase Agreement that are terminated pursuant to Section 4 and/or Section 5 thereof with respect to environmental, zoning, title or survey matters if there are remaining “Substitution Locations” under the Other Purchase Agreement and Seller does not offer to substitute any such “Substitution Locations” for such “Terminated Locations”.

(ag)“Monetary Encumbrances” means all mortgages, deeds of trust, mechanics’ liens, security interests, security instruments encumbering any Location, judgments and other monetary liens and encumbrances affecting title to or ownership of any Location, including, without limitation, liens for delinquent real estate taxes and assessments, but excluding, however, liens for taxes and assessments on any Location not yet due and payable.

(ah)“Organization and Authorization Certificate” means the Organization and Authorization Certificate to be executed by Seller and Lease Guarantor in favor of Buyer and each Landlord and by Buyer and each Landlord in favor of Seller and Lease Guarantor, at Closing, dated as of the Closing

Date, and in form and substance as that attached hereto as Exhibit C subject to reasonable revisions to reflect their respective Organizational Documents.

(ai)“Organizational Documents” means the articles of incorporation, certificate of incorporation, trust agreement, charter, bylaws, articles of formation, certificate of formation, regulations, operating agreement, certificate of limited partnership, partnership agreement and all other similar documents, instruments or certificates executed, adopted, or filed in connection with the creation, formation, or organization of Buyer, each Landlord, Seller and Lease Guarantor, including any amendments and modifications thereto, together with a complete list of all officers, directors, shareholders, members, and managers (excluding, however, the officers, directors, and shareholders of the Lease Guarantor) of each such entity.

(aj)“Original Locations” means (i) the Locations listed as such on Exhibit A excluding any such Locations that become Terminated Locations and exclusing Substitution Locations that become Locations pursuant to this Agreement and (ii) “Original Locations” as such term is defined in the Other Purchase Agreement.

(ak)“Other Purchase Agreement” means that certain Purchase and Sale Agreement, dated of even date herewith, between Seller and Other Purchaser pertaining to the sale by Seller and the purchase by Other Purchaser of restaurant locations.

(al)“Other Purchaser” means MESIROW REALTY SALE-LEASEBACK, INC., an Illinois corporation.

(am)“Permitted Encumbrances” means all of the following: (i) zoning, building and land use laws, ordinances, rules and regulations applicable to a Location; (ii) the lien of taxes and assessments on a Location not yet due and payable; (iii) the rights of Seller, as tenant only, under the applicable Lease; and (iv) all matters of record which are enumerated in “Schedule B” of the applicable Title Commitment other than those matters specified in Section 5 that Seller is obligated to Remove at Closing and those Title Objections which Seller has elected in writing to Remove as provided in Section 5. Except as expressly agreed to in writing by Buyer, all Monetary Encumbrances are excluded from the definition of Permitted Encumbrances.

(an)“Property” means, collectively, (i) each Location and (ii) the Intangible Property.

(ao)“Purchase Price” means One Hundred Sixty-Three Million Four Hundred Ten Thousand Four Hundred Twenty and No/Dollars ($163,410,420.00), in the aggregate, allocated per Location as shown on Exhibit A, as the same may be adjusted pursuant to the terms of this Agreement. The Purchase Prices of individual Locations are listed only to determine the amounts of Transfer Taxes, determine insurance amounts under the Title Policies and provide a mechanism for substitution or deletion of Locations prior to Closing. Subject to the terms of this Agreement, Buyer and Seller intend to buy and sell the Property as a whole and not individually and the allocated Purchase Prices are not intended to create separate agreements with respect to the individual Locations. Furthermore, as between each Landlord and Seller, as Landlord and Tenant under each Lease, the allocated Purchase Prices shall have no effect following Closing.

(ap)“Remove” means to release, correct or satisfy or, with Buyer’s prior written consent which consent shall not be unreasonably withheld, conditioned or delayed, cause the Title Company to affirmatively insure over (as applicable).

(aq)“Section 4 Notice” shall have the meaning set forth in Section 4.

(ar)“Substitution Locations” means those seven (7)additional properties identified as such in Exhibit A attached hereto except that the term “Substitution Locations” shall not include any Substitution Location that becomes a “Location” or an “Excluded Substitution Location” pursuant to the terms of this Agreement or the Other Purchase Agreement.

(as)“Surveys” means the 2011 ALTA/ACSM surveys of each Location and each Substitution Location dated no earlier than December 31, 2015, containing a current ALTA/ACSM certification addressed to Buyer, the applicable Landlord, and Title Company, and including Table A items 1, 2, 3, 4, 6(a), 6(b), 7(a), 8, 9, 10, 11a, 13, 16 and 21. If required by Bock & Clark in order to complete a

particular Zoning Report, Seller will cause the surveyor, if necessary, to revise the applicable Survey to cover Table A item 7(b)(1).

(at)“Tax Information” means, collectively, copies of: (i) any current betterment assessments; (ii) any tax abatement, economic incentive, or “PILOT” agreements; and (iii) complete files on any pending tax appeal proceedings.

(au)“Terminated Location” shall have the meaning set forth in Section 4.

(av)“Title Commitments” means the commitments issued by the Title Company to issue the Title Policies with respect to each Location and each Substitution Location. The Title Commitments shall be dated no earlier than December 31, 2015.

(aw)“Title Company” means Fidelity National Title, c/o Ray Lewandowski, 4111 Executive Parkway, Suite 304, Westerville, OH 43081-3862, Phone: (614) 865-1562; Fax (614) 865-1565.

(ax)“Title Objections” shall mean any exceptions to coverage for matters set forth in the Title Commitments, any matters affecting title to the applicable Locations, and any matters shown on the Surveys thereof, to which Buyer timely objects in accordance with the terms of Section 5. The failure of any Title Commitment to include a commitment to issue any of the Endorsements may be raised by Buyer as a Title Objection.

(ay)“Title Policies” means, collectively, the ALTA Owner’s Policy (6‑17‑06) Title Policies which shall be issued by the Title Company and reflect that fee title to each Location is vested of record in the applicable Landlord, subject only to the Permitted Encumbrances with the “standard exceptions” for survey, parties in possession and mechanics’ liens deleted, and shall contain the following endorsements (except for any of the following that are not generally available under local law or local title insurance procedures) (collectively, “Endorsements”):

1. Comprehensive CC&R and Minerals (ALTA 9.2)

2. Commercial Environmental Protection Line (ALTA 8.2)

3. Access and Entry (ALTA 17-06)

4. Utility Access (ALTA 17.2-06)

5. Single Tax Parcel/Multiple Tax Parcel (ALTA 18.1-06)

6. Location/Address (ALTA 22-06)

7. Same as Survey (ALTA 25-06)

8. Contiguity (ALTA 19-06), if applicable

9. Deletion of Arbitration

10. Subdivision (ALTA 26-06)

11. Electronic Signatures

12. Recharacterization

13. At Buyer’s option and sole cost and expense, zoning with parking and loading (ALTA 3.1).

(az)“Transfer Taxes” means any and all documentary transfer, stamp, sales, use, excise, privilege or similar tax, fee or charge of any Governmental Authority payable in connection with the delivery of any Deed, any Lease, any Memorandum of Lease, or any other instrument or document provided in or contemplated by this Agreement or the Exhibits hereto together with interest and penalties, if any, thereon.

(ba)“Unrecorded Third Party Leases” means unrecorded leases, licenses or other rights of third parties to erect, maintain and use free standing structures on a Location other than the Building located thereon, such as billboards, cellular towers and free-standing ATMs, that are (i) shown on the Survey of such Location, or (ii) listed in Schedule 1 attached hereto.

(bb)“Warranties” means all right, title and interest held by Seller (or any Affiliate) in and to any and all warranties, indemnities and guaranties, if any, related to the renovation, construction, replacement, maintenance or ownership of any Location, including, without limitation, for roof, HVAC and other structural components and systems.

(bc)“Zoning Reports” means the Zoning Reports that Seller has ordered from Bock & Clark for each Location and each Substitution Location. The Zoning Reports shall be dated on or after

December 31, 2015, and be addressed to Buyer, the applicable Landlord, the Title Company, and their respective successors and assigns.

2.Sale-Leaseback Transaction. In accordance with and subject to the terms and conditions of this Agreement, the following shall occur contemporaneously at Closing: (a) Seller shall sell and convey to the applicable Landlord, and Buyer shall cause such Landlord to purchase and accept from Seller, those Locations to be included in the applicable Lease and the Intangible Property associated therewith; (b) Buyer shall cause the applicable Landlord to lease to Seller, and Seller shall accept and take from such Landlord, such Locations and Intangible Property; and (c) Lease Guarantor shall guarantee the Seller’s obligations as Tenant under each such Lease in accordance with the terms of the applicable Lease Guaranty. Notwithstanding the foregoing, the Location identified on Exhibit A as “ID# 1” located in Rio Grande, Ohio is currently situated on approximately 119 acres of real property and prior to Closing said real property will be subdivided and/or lot split in accordance with applicable Legal Requirements and in a commercially reasonable manner reasonably acceptable to Buyer so that the real property on which Location ID# 1 is situated will be comprised of approximately 2 acres, more or less, and shall include only (i) the Building and (ii) the amount of parking necessary under applicable Legal Requirements.

3.Earnest Money Deposit. Within three (3) business days after the Effective Date, Buyer shall deposit Eight Hundred Seventeen Thousand and No/Dollars ($817,000.00)with Escrow Agent (the “Initial Deposit”) to be held in escrow pursuant to the terms of this Agreement. In the event Buyer does not terminate this Agreement by written notice delivered to Seller prior to the expiration of the Due Diligence Period, Buyer shall deposit with Escrow Agent an additional Eight Hundred Seventeen Thousand and No/Dollars ($817,000.00)(the “Additional Deposit”) within three (3) business days after the expiration of the Due Diligence Period. All interest and other income from time to time earned on the Earnest Money Deposit shall be earned for the account of Buyer, and shall be a part of the Earnest Money Deposit. At the Closing, the Earnest Money Deposit shall be applied as a credit against the Purchase Price.

4.Due Diligence.

(a)Within five (5) Business Days following the Effective Date, Seller will furnish the Due Diligence Documents to Buyer. Seller shall use commercially reasonable efforts to furnish to Buyer the Title Commitments, Surveys, Zoning Reports, and Environmental Assessments for each Location at the earliest possible date. Buyer shall furnish to Seller copies of the Organizational Documents of Buyer and Landlord within five (5) business days of the Effective Date. Buyer shall have the right to terminate this Agreement at any time prior to the expiration of the Due Diligence Period, for any or no reason at all, upon written notice to Seller, in which event this Agreement shall be null and void and of no further force and effect (except for rights and obligations that survive a termination of this Agreement pursuant to the express terms of this Agreement) and, notwithstanding anything in this Section 4 of this Agreement to the contrary, Escrow Agent shall immediately return the Earnest Money Deposit to Buyer.

If, prior to the end of the Due Diligence Period, Buyer has a commercially reasonable objection as to a particular Location based upon information contained in the applicable Zoning Reports and/or Environmental Assessments, then Buyer shall have the right to terminate this Agreement as to the affected Location by sending written notice of such termination to Seller which notice shall identify such objection and the affected Location and provide copies of relevant documentation supporting such objection (as used in this Agreement each such written notice to Seller, a “Section 4 Notice”). If pursuant to Section 5, Buyer desires to terminate this Agreement as to a particular Location, Buyer shall send a Section 4 Notice to Seller in accordance with the provisions of Section 5. If prior to Closing, Buyer has a commercially reasonable objection due to a condition arising under Section 6(d), Section 8, Section 9, Section 10(a), or Section 13, then Buyer shall have the right to terminate this Agreement as to the affected Location by sending a Section 4 Notice to Seller. If, prior to a Substitution Location becoming a Location pursuant to Section 4(c) below, Buyer has a commercially reasonable objection to the Substitution Location such that Buyer would be able to send a Section 4 Notice with respect to such Substitution Location if the Substitution Location were a Location, then Buyer shall be entitled to exclude that Substitution Location from the pool of Substitution

Locations by sending a written notice to Seller to that effect within the time period prescribed in Section 4(b) or, as applicable, in Section 5, 6(d), 8, 9, 10(a) or 13. Any Substitution Location so excluded shall no longer be a Substitution Location for purposes of this Section 4 and the definition of “Minimum Number of Locations” and is referred to as an “Excluded Substitution Location”. In no event shall Buyer have the right to terminate this Agreement by reason of title, survey, zoning or environmental matters as to more than 16 Locations (other than any Terminated Location for which a Substitution Location is substituted pursuant to Section 4(c) below).

(b)Buyer and Other Purchaser shall have the right, by joint written notice, to Seller to reallocate the number of Locations that each may terminate for title, survey, zoning or environmental matters so long as the total number of such terminations under this Agreement and the Other Purchase Agreement does not exceed 20.

(c)In the event that Buyer terminates this Agreement as to a Location pursuant to a Section 4 Notice (other than a Section 4 Notice given with reference to Section 6(d), 10(a) or 13) and Seller offers a specific Substitution Location as chosen by Seller, (A) this Agreement shall be terminated as to such Location (each a “Terminated Location”), (B) a Substitution Location as designated by Seller shall be substituted for such Terminated Location and such Substitution Location shall be a Location for all purposes of this Agreement (except the definition of “Original Locations”), (C) the Purchase Price hereunder shall be adjusted to reflect the difference between the price as shown on Exhibit A for each such Terminated Location and the price as shown on Exhibit A for the corresponding Substitution Location, and (D) this Agreement shall otherwise remain in full force and effect.

(d)In the event (A) Buyer terminates this Agreement as to a Location pursuant to a Section 4 Notice (other than a Section 4 Notice given with reference to Section 6(d), 10(a) or 13) and there are no remaining Substitution Locations or Seller fails to offer a Substitution Location with five (5) Business Days following such termination, or (B) Buyer terminates this Agreement as to a Location pursuant to a Section 4 Notice given with reference to Section 6(d), 10(a) or 13, then (1)  this Agreement shall be terminated as to such Terminated Location, (2) the Purchase Price shall be reduced by an amount equal to the price set forth on Exhibit A for such Terminated Location and (3) this Agreement shall otherwise remain in full force and effect.

(e)Notwithstanding anything contained herein to the contrary, in the event that the total number of Locations that are sold pursuant to this Agreement plus the number of Locations sold pursuant to the Other Purchase Agreement is less than 145, then, upon the request of Seller following Closing, Buyer shall negotiate in good faith with Seller in order to enter into an agreement substantially similar to this Agreement to effectuate the purchase, sale and leaseback of alternate locations, as determined by Seller, equal to up to the number of Locations not so purchased pursuant to this Agreement, such agreement to contain, inter alia, due diligence provisions comparable to this Agreement and purchase price and rent as the parties may then agree. The immediately preceding sentence is a statement of intent and shall not be binding on the parties.

(f)At all times prior to Closing, Buyer and its respective agents and independent contractors shall, upon reasonable notice to Seller (including the purpose of the entry), have the right to enter upon each Location and Substitution Location, at their own risk and at times acceptable to Seller which do not interrupt normal business operations, to inspect the Location and conduct such due diligence investigations as Buyer deems necessary. Seller agrees to provide access to all parts of each Location and Substitution Location and cooperate with such inspections and investigations in any way reasonably requested by Buyer, provided however, neither Buyer nor its agents or independent contractors shall communicate with any of Seller’s employees at any Location or Substitution Location. Notwithstanding the foregoing, Buyer and its respective agents and independent contractors shall not conduct any invasive testing without the prior written consent of Seller. Buyer agrees to repair any damage and to indemnify and hold Seller harmless from and against any loss, liability, mechanics’ lien, cost, damage, expense, claim or judgment incurred or suffered by

Seller arising out of or related to such investigations of the Locations and Substitution Locations by Buyer; excluding, however, any loss, liability, cost, damage, expense, claim or judgment resulting from any unfavorable test result or the discovery of any undesirable existing condition on, in, under or about any Location or Substitution Location, such exclusion including, without limitation, any loss resulting from any decrease in the fair market value of all or any of the Locations and Substitution Locations or the inability of Seller to market any or all of the Locations and Substitution Locations due to any such discovery or unfavorable test result. Buyer and its respective agents and independent contractors shall provide proof of insurance reasonably satisfactory to Seller prior to entry to inspect any Location or Substitution Location. Any provision of this Agreement to the contrary notwithstanding, the repair and indemnification obligation of Buyer under this Section 4 shall survive Closing and the transfer of title or any earlier termination of this Agreement.

5.Title.

(a)Prior to the expiration of the Due Diligence Period, Buyer will give Seller written notice of any Title Objections as to each Location. Title Objections as to different Locations may be given by Buyer in one or more notices. Seller will then respond to Buyer in writing within ten (10) business days after receipt of each of Buyer’s notices of Title Objections indicating whether Seller elects to Remove the same. Failure of Seller to notify Buyer in writing within such ten (10) business day period shall be deemed an election by Seller not to Remove such Title Objections. If Seller elects not to Remove one or more Title Objections as to a particular Location, then Buyer may either (i) send a Section 4 Notice to Seller with respect to such Location in which event the applicable provisions of Section 4 shall control or (ii) waive such Title Objections as to such Location. Failure of Buyer to send a Section 4 Notice to Seller as to such Location on or before the date that is five (5) business days after Buyer’s receipt of Seller’s response (or, in the absence of a Seller response, failure of Buyer to send a Section 4 Notice to Seller as to such Location on or before expiration of five (5) business days after the period in which Seller is permitted to respond pursuant to this Section 5(a)) shall be deemed an election by Buyer to waive such Title Objections as to such Location. Any such Title Objection so waived by Buyer shall be deemed to constitute a Permitted Encumbrance, and the Closing shall occur as herein provided without any reduction of or credit against the Purchase Price with respect to such Title Objection. For purposes of this Section 5(a), the term “Location” shall include each Substitution Location so that the process with respect to Buyer’s Title Objections regarding Substitution Locations will proceed simultaneously with the process with respect to Buyer’s Title Objections regarding Locations generally, provided, however, a Substitution Location may not be the subject of a Section 4 Notice unless and until the Substitution Location becomes a Location pursuant to Section 4.

(b)Notwithstanding anything in this Agreement to the contrary, Seller shall be obligated to Remove at Closing, to Title Company’s reasonable satisfaction, all Monetary Encumbrances regardless of whether Buyer objects to any Monetary Encumbrances in its Title Objections. Seller will also be responsible to use commercially reasonable efforts to satisfy all requirements in Section 1 of Schedule B of the Title Commitments that require action by Seller regardless of whether Buyer makes reference to any such Seller requirements in its Title Objections. Seller shall, at Closing, Remove or cause to be Removed (i) any Title Objections which Seller elected in writing to Remove as provided above and (ii) all Monetary Encumbrances.

(c)Notwithstanding anything in this Agreement to the contrary, Buyer reserves the right during the Due Diligence Period to review and approve all liens, encumbrances, easements, covenants, conditions, restrictions and reservations affecting title to each Location, whether or not a matter of public record. If any of the same are first disclosed to or discovered after Buyer’s receipt of the Title Commitments, then Seller shall afford Buyer the opportunity to review and object to the same as provided by this Section 5. No Title Objection may be insured over or Removed of record by indemnification or similar arrangement with the Title Company without Buyer’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed.

(d)At Closing, the Title Company will issue the Title Policies to Buyer insuring that fee simple title to each Location is vested in Buyer subject only to the Permitted Encumbrances.

6.Representations and Warranties.

(a)Buyer, Seller and Lease Guarantor each represents and warrants to the others that: (i) it is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization or incorporation, and is duly licensed and qualified to transact business in and in good standing as a foreign entity in each jurisdiction wherein the nature of the business transacted by it or the nature of the property owned or leased by it makes such licensing or qualification necessary; (ii) all necessary action has been taken by it to authorize the execution, delivery and performance of this Agreement, and this Agreement is the legal, valid and binding obligation of it, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency and other laws of general application affecting the rights of creditors and subject to the effect of general principles of equity, regardless of whether enforcement is sought in a proceeding at law or in equity; (iii) neither the entering into of this Agreement nor the consummation of the transactions contemplated by this Agreement will constitute or result in a violation or breach of any contract or any other instrument or agreement to which it or its assets may be subject to or bound; (iv) neither the entering into of this Agreement nor the consummation of the transactions contemplated by this Agreement will constitute a violation or breach by it of any judgment, order, writ, injunction or decree issued against or imposed upon it or will result in a violation of any applicable law, order, rule or regulation of any duly constituted Governmental Authority; and (v) no bankruptcy, insolvency, rearrangement or similar action or proceeding, whether voluntary or involuntary, is pending or, to its knowledge, threatened against it, nor has it any intention of filing or commencing any such action or proceeding.

(b)Seller represents and warrants to Buyer that: (i)  each Location is owned in fee simple by Seller; (ii) each Location is operated by Seller and is not subject to a sublease; (iii) except for (A) matters of record listed in the applicable Title Commitment; (B) items shown on the applicable Survey; or (C) rights of third parties under Unrecorded Third Party Leases which rights (x) do not interfere with Seller’s ability to operate its business, (y) will terminate prior to the expiration of the Initial Term (as defined in the form of Lease) and (z) do not pertain to any portion of the interior or exterior of the Building on the subject Location, no party has any lease, license, or other right to a use, occupancy or possession of any Location or any portion thereof, and no adverse or other parties are in possession of any Location, or any portion thereof; (iv) except for matters listed in the applicable Title Commitment, no party has any purchase right, right of first offer, right of first refusal or other right or interest relating to the ownership of any Location, or any portion thereof; (v) to Seller’s knowledge, each Location, the use of each Location, and all current operations of each Location are in compliance with Legal Requirements in all material respects, and it has not received any written notice to the contrary; (vi) to Seller’s knowledge, all material permits, licenses or similar authorizations required to occupy and operate each Location with respect to its current use and in compliance with Legal Requirements have been obtained and are in full force and effect; (vii) except as expressly listed on Schedule 2attached hereto, Seller has not received a written notice of and has no knowledge of any pending or contemplated condemnation action with respect to any Location or any improvements located thereon, or its means of ingress and egress; (viii) no litigation, action, or proceeding before any Governmental Authority is instituted or pending involving any Location that would prevent or impair Seller from complying with its obligations hereunder or under any Lease or that would question the validity or enforceability of this Agreement or any action to be taken by Seller as part of the transaction contemplated by this Agreement, except as has been expressly listed on Schedule 3 attached hereto or as listed in the applicable Title Commitment, (ix) Seller is not a “foreign person” as defined in Internal Revenue Code Section 1445 and any related regulations and Buyer will have no duty to collect withholding taxes for it at Closing pursuant to the Foreign Investors Real Property Tax Act of 1980, as amended; (x) except as set forth in the Title Commitments, no written commitments to or agreements with any third party or Governmental Authority affect any Location which would be binding on Buyer after Closing; (xi) there are no delinquent bills for labor performed or materials furnished to or for the benefit of any Location for the period prior to the date of Closing and there are no mechanic’s liens or materialmen’s liens (whether or not perfected) on or affecting any Location except as set forth in the Title Commitments; (xii) except as expressly set forth in the existing Environmental Reports or the Environment Assessments, there are no underground storage tanks

at any Location; (xiii) except as expressly set forth in the Existing Environmental Reports or the Environmental Assessments, no Location is subject to any environmental liens or active remediation; (xiv) to Seller’s knowledge, and without further inquiry, except as set forth in the Existing Environmental Reports or the Environmental Assessments, there are no Hazardous Substances used, handled, disposed of or otherwise released in, on, under, from or about any Location in violation of Environmental Law; (xv) all of the Due Diligence Documents have been delivered to Buyer, none of which have been edited or altered by Seller, and, to Seller’s knowledge, without further inquiry, none are inaccurate or misleading in any material respect, and (xvi) no unrepaired or unrestored casualty in excess of $200,000 has occurred at any Location. Seller shall use diligent efforts prior to Closing to repair and restore all unrepaired and unrestored casualties to the Propertiesthat have occurred prior to the Effective Date or occur prior to Closing. For purposes of this Section 6, Section 7(a) and Section 10(a) only, “material” means, with respect to any matter the remediation, resolution or compliance of which would exceed $100,000 per Location, or the Aggregate Amountwith respect to all Locations, or would interfere with Seller’s ability to operate its business at such Location, except that, with respect to any litigation, action or proceeding, “material” means any litigation, action or proceeding that (i) seeks damages in excess of $100,000 with respect to any single Location or in excess of the Aggregate Amount with respect to all Locations or (ii) if resolved adversely to Seller, would either (1) impair the fair market value of a Location by $100,000 or more or would impair the fair market value of all Locations by the Aggregate Amount or more (in each case, as such fair market value would be determined independent of the existence of any Lease) or (2) interfere with Seller’s ability to operate its business at such Location provided that (A) alleged non-compliance by Seller with Legal Requirements asserted by a Governmental Authority in any such litigation, action or other proceeding shall be deemed “material” and (B) “material” shall not include any tort claim that has been tendered to and accepted by Seller’s insurance company provided that the claim does not exceed Seller’s applicable insurance coverage. Seller shall deliver a copy of each Unrecorded Third Party Lease to Buyer as soon as reasonably practicable but in no event later than ten (10) Business Days following the delivery of the applicable Survey showing the existence of the pertinent structure. Seller acknowledges that Buyer may include any Unrecorded Third Party Lease in Seller’s Title Objections if such Unrecorded Third Party Lease is not acceptable to Buyer in the exercise of Buyer’s commercially reasonable discretion.

(c)The representations and warranties made by one party in favor of another party are made as of the Effective Date and will be deemed to be remade as of the Closing Date and are a requirement of Closing.

(d)(i)Notwithstanding any contrary provision of this Agreement, if Buyer, Seller or Lease Guarantor becomes aware between the Effective Date of this Agreement and the Closing Date of any matters that make any of Seller’s or Lease Guarantor’s respective representations or warranties untrue in any material respect, Seller, Lease Guarantor or Buyer, as applicable, shall promptly disclose such matters to the others in a written notice that specifically references this Section 6(d) and Seller or Lease Guarantor shall have fifteen (15) days to cure such representations or warranties. In the event that Seller, Lease Guarantor or Buyer so discloses any such matters and Seller or Lease Guarantor does not cure them during such fifteen (15) day period, Buyer shall have the right, in its sole discretion, by written notice to Seller and Lease Guarantor on or before the Closing Date, to: (A) as to those representation and warranties made in Section 6(b), terminate this Agreement as to the affected Location, in which event the applicable provisions of Section 4 shall control, (B) as to those representations and warranties made by Seller and Lease Guarantor in Section 6(a), terminate this Agreement in its entirety, whereupon (x) Escrow Agent shall return the Earnest Money Deposit to Buyer, and (y) except for those provisions of this Agreement which by their express terms survive the termination of this Agreement, no party hereto shall have any other or further rights or obligations under this Agreement; (C) if applicable, exercise Buyer’s remedy pursuant to Section 13 below; (D) request that Seller or Lease Guarantor, as applicable, cure such breach as a condition to Closing; provided, however, that Seller or Lease Guarantor, as applicable, shall be under no obligation to cure such breach if it is unable or unwilling to cure such breach on or before the Closing Date; or (E) waive such matters and consummate the

transactions contemplated by this Agreement without reduction of the Purchase Price in accordance with the terms of this Agreement, in which case the applicable representation or warranty shall be deemed updated to include such information and Buyer shall have no further right as a result thereof. The failure of Buyer to exercise a right provided by the foregoing clauses (A), (B), (C) or (D) within five (5) business days of the receipt of the notice provided by Seller or Lease Guarantor, as applicable, shall be deemed an election by Buyer to proceed to Closing under clause (E).

(i)If Buyer elects to request that Seller or Lease Guarantor cure such breach in accordance with subsection (D) above and Seller or Lease Guarantor, as applicable, is unable or unwilling to cure such breach on or before the Closing Date, Buyer shall then have the right, in its sole discretion, by written notice to Seller and Lease Guarantor, to elect to proceed in accordance with subsection (A), (B), (C) or (E) above.

(ii)Notwithstanding any contrary provision of this Agreement, if Buyer, Seller or Lease Guarantor becomes aware between the Effective Date of this Agreement and the Closing Date of any matters that make any of Buyer’s representations or warranties untrue in any material respect, Buyer, Seller, or Lease Guarantor shall promptly disclose such matters to the others in a written notice that specifically references this Section 6 (e) and Buyer shall have fifteen (15) days to cure such representations or warranties. In the event Buyer so discloses such matters and Buyer does not cure them during such fifteen (15) day period, Seller shall have the right, in its sole discretion, by written notice to Buyer on or before the Closing Date, to: (A) terminate this Agreement, whereupon (x) Escrow Agent shall disburse the Earnest Money Deposit to Seller, and (y) except for those provisions of this Agreement which by their express terms survive the termination of this Agreement, no party shall have any other or further rights or obligations under this Agreement; (B) if applicable, exercise Seller’s remedy pursuant to Section 12 below; (C) request that Buyer cure such breach as a condition to Closing; provided, however, that Buyer shall be under no obligation to cure such breach if it is unable to cure such breach on or before the Closing Date; and/or (D) waive such matters and to consummate the transactions contemplated by this Agreement without reduction of the Purchase Price in accordance with the terms of this Agreement, in which case the applicable representation or warranty shall be deemed updated to include such information and Seller shall have no further right to terminate this Agreement as a result thereof.  The failure of Seller to exercise a right provided by the foregoing clauses (A), (B) or (C) within five (5) business days of the receipt of the notice provided by Buyer shall be deemed an election by Seller to terminate this Agreement.

7.Covenants.

(a)Affirmative. From and including the Effective Date until Closing or the earlier termination of this Agreement, Seller shall: (i) maintain, repair and keep each Location in good condition and repair in the ordinary course in all material respects and in material compliance with all Legal Requirements and matters of record; (ii) maintain the insurance coverage currently in effect for the Property, or comparable coverage, through the Closing Date; and (iii) give prompt written notice to Buyer upon: (A) receiving any written notices of default or any written notices of lawsuits affecting Seller and/or any part of the Property; (B) receiving any written notices of lawsuits affecting Lease Guarantor which could reasonably be expected to have a material adverse effect on Lease Guarantor’s ability to perform its obligations under any Lease Guaranty; (C) acquiring knowledge of any casualty or condemnation of any part of any Location, whether actual, or pending; (D) acquiring knowledge of the presence of any Hazardous Substances in violation of any Environmental Law on, in, under or about any part of any Location; (E) receiving written notice from a Governmental Authority of a material violation of any Legal Requirements with respect to the condition or use of any part of a Location; (F) acquiring knowledge of the conduct or occurrence of an inspection of any part of a Location by a Governmental Authority; or (G) acquiring knowledge of any fact or circumstance that renders (or is likely to render as of the Closing Date) any of Seller’s or Lease Guarantor’s representations or warranties untrue or inaccurate in any material respect, or any of the conditions of this Agreement unfulfilled. Seller shall provide to Buyer, when the results become available to Seller but in any event prior to five (5) Business Days prior to the end of the Due Diligence Period, sales and EBITDAR

reports for each Location covering Seller’s fiscal quarter ending January 31, 2016 on a then last 12 month basis (collectively, the “Interim Financial Reports”).

(b)Negative. From and including the Effective Date until Closing or the earlier termination of this Agreement, neither Seller nor Lease Guarantor shall do, cause, permit or authorize any of the following, unless, in each case, Buyer’s prior written consent has been obtained: (i) enter into any new, or amend any existing, lease, easement, contract or agreement affecting or encumbering a Location (or any part thereof); (ii) assign, transfer, convey, hypothecate, create a security interest in or lien upon, grant any easement or right-of-way, or otherwise further encumber any part of a Location or any interest therein or take any other action that would affect the title to any part of a Location as it exists as of the Effective Date; or (iii) amend or otherwise modify the Organizational Documents or structure of Seller or Lease Guarantor in a manner that is adverse to Buyer or the transactions contemplated by this Agreement, any Lease, or any Lease Guaranty, and provided further that no amendment or modifications to the Organizational Documents or structure of Seller or Lease Guarantor shall be made after the date that is five (5) business days prior to the Closing Date.

(c)Publicity. Buyer, Seller and Lease Guarantor each hereby covenants and agrees that: (i) prior to Closing, none of Seller, Buyer or Lease Guarantor shall issue any press release or public statement with respect to any of the transactions contemplated by this Agreement without the prior consent of the others, except to the extent required by Legal Requirements, and (ii) after the Closing, any such press release or public statement issued by Buyer, Seller or Lease Guarantor shall be subject to the review and approval of the other parties (which approval shall not be unreasonably withheld, conditioned or delayed), except to the extent required by Legal Requirements, which obligations under this clause (ii) shall survive the Closing and the transfer of title to the Property. If Buyer, Seller or Lease Guarantor is required by Legal Requirements to issue a press release or public statement, such party shall, at least three (3) business days prior to the issuance of the same, deliver a copy of the proposed press release or public statement to the other party for its review.

8.Casualty. Seller agrees to give Buyer prompt notice of any material damage or destruction of any Location or any portion thereof. In the event that prior to Closing any part of any Location is destroyed or damaged and the cost to restore the Location exceeds $250,000, Buyer shall have the right, exercisable by giving notice to Seller within ten (10) business days after receiving written notice of such damage or destruction, to either: (a) terminate this Agreement as to the affected Location, in which event the applicable provisions of Section 4 shall control; or (b) accept the affected Location in its then condition and to proceed with the Closing; provided, however, that in the event that Buyer elects to proceed under clause (b) or if the cost to restore is $250,000 or less, then any insurance proceeds related to such damage shall be made available to Seller and Seller shall repair and restore the affected Location to its condition immediately prior to such damage promptly after Closing in accordance with the applicable Lease, there shall be no abatement or reduction of Base Annual Rental under the applicable Lease (as Base Annual Rental is defined in the form of Lease) and Seller shall not compromise, settle or adjust any claims to such proceeds without Buyer’s prior written consent. If Buyer exercises its rights under Subsection 8(b) or if the cost to restore the affected Location is $250,000 or less, then the immediately preceding sentence shall survive Closing and the transfer of title as to the affected Location until such affected Location is repaired and restored.

9.Condemnation. Seller agrees to give Buyer prompt notice of any taking, condemnation or eminent domain proceeding of any Location or any portion thereof. In the event that prior to the Closing, all or any portion of any Location is subject to a taking or a condemnation by public authority and the portion subject to a taking or a condemnation would, in Buyer’s good faith opinion, render the Location unusable for Seller’s use thereof or otherwise have a material adverse impact of the value of such Location, as determined by Buyer in good faith (each a “Material Taking”), Buyer shall have the right, exercisable by giving notice to Seller within ten (10) business days after receiving written notice of such taking or condemnation, to either: (a) terminate this Agreement as to the affected Location in which event the applicable provisions of Section 4 shall control, or (b) accept the affected Location in its then condition; provided,

however, that in the event that Buyer elects to proceed under clause (b) or if the taking, condemnation or eminent domain proceeding is not a Material Taking, then any condemnation award related to such taking shall be handled as provided for in the applicable Lease with respect to such Location, there shall be no abatement or reduction of Base Annual Rental under such Lease and Seller shall not compromise, settle or adjust any claims to such award without Buyer’s prior written consent. If Buyer exercises its rights under Subsection 9(b) or if the affected Location is not a Material Taking then the immediately preceding sentence shall survive Closing and the transfer of title as to the affected Location until the condemnation award for such affected Location is final.

10.Conditions Precedent to Closing.

(a)Buyer. Unless waived in writing by Buyer, the obligation of Buyer to Close is subject to the fulfillment of all of the following conditions on or prior to the Closing Date: (i) the respective representations and warranties made by Seller and Lease Guarantor in this Agreement shall be true and correct in all material respects, and all of the terms, provisions, covenants, conditions, agreements and obligations required to be performed by Seller and Lease Guarantor under this Agreement shall have been performed, met or complied with in all material respects; (ii) Seller and Lease Guarantor shall have delivered their respective Closing documents pursuant to Section 11(c) and Section 11(d) of this Agreement; (iii) there shall be no action or proceeding, instituted, or pending in writing against or involving Seller, Lease Guarantor or any Location before any Governmental Authority that (A) could reasonably be expected to have a material adverse impact on (1) Seller’s ability to Close, or (2) the value of any Location or (B) would constitute a default under a Lease or a Lease Guaranty; (iv) the financial condition of either Seller or Lease Guarantor shall not have materially deteriorated on or after the date that is two business days prior to the end of the Due Diligence Period from the financial condition thereof disclosed in the Interim Financial Reports delivered to Buyer prior to such date; (v) Seller shall have delivered to Buyer and Landlord copies of all Association Estoppels if any were requested in Buyer’s Title Objections; (vi) Seller shall have delivered to Buyer insurance certificates confirming compliance, as of the Closing Date, with the insurance requirements of each Lease; (vii) all real estate taxes and assessments due and owing for each Location must be paid in full; and (viii) Title Company shall be irrevocably committed to issue the Title Policies. In the event any of the conditions in this Section 10(a) have not been satisfied (or otherwise waived in writing by Buyer) on or prior to the Closing Date, then Buyer shall have the right, in its sole discretion, by written notice to Seller, to: (A) terminate this Agreement as to the affected Location or Locations, in which event the applicable provisions of Section 4 shall control; (B) as to those conditions that pertain to Seller or Lease Guarantor generally (that is, excluding conditions that relate to a particular Location or to the ability of Seller to operate its business at a particular location) and that are not cured by Seller within five (5) Business Days following notice thereof from Buyer, terminate this Agreement at any time by written notice to Seller, whereupon (x) Escrow Agent shall return the Earnest Money Deposit to Buyer, and (y) except for those provisions of this Agreement which by their express terms survive the termination of this Agreement, no party hereto shall have any other or further rights or obligations under this Agreement; or (C)if applicable, exercise Buyer’s remedy pursuant to Section 13 below.

(b)Seller. Unless waived in writing by Seller, the obligation of Seller and Lease Guarantor to Close is subject to the fulfillment of all of the following conditions on or prior to the Closing Date: (i) the representations and warranties made by Buyer in this Agreement shall be true and correct in all material respects, and all of the terms, provisions, covenants, conditions, agreements and obligations required to be performed by Buyer under this Agreement shall have been performed, met or complied with in all material respects, and (ii) Buyer shall have delivered its Closing documents and balance of the Purchase Price pursuant to Section 11(b) of this Agreement. In the event any of the conditions in this Section 10(b) have not been satisfied (or otherwise waived in writing by Seller and Lease Guarantor) on or prior to the Closing Date and the same are not cured by Buyer within five (5) Business Days following notice thereof from Seller, Seller and Lease Guarantor shall have the right, in their sole discretion, to either: (A) terminate this Agreement at any time by written notice to Buyer, whereupon, (x) Escrow Agent shall pay the Earnest Money Deposit to

Seller and (y) except for those provisions of this Agreement which by their express terms survive the termination of this Agreement, no party hereto shall have any other or further rights or obligations under this Agreement; or (B) if applicable, exercise Seller’s remedy pursuant to Section 12 below.

(c)The cure periods referenced in the foregoing Sections 10(a) and (b) shall run concurrently with any applicable cure periods set forth in Section 12 and Section 13.

(d)In the event that, by reason of either (i) a termination of the Other Purchase Agreement by Seller by reason of a default by Other Purchaser thereunder or (ii) a termination of the Other Purchase Agreement by the Other Purchaser, the total number of remaining Locations under this Agreement is less than the Minimum Number of Locations, Seller, at Seller’s sole option, may terminate this Agreement by written notice to Buyer, whereupon the Earnest Money Deposit shall be returned to the Buyer and the parties shall have no further obligation to one another hereunder. Notwithstanding the foregoing, in the event the Other Purchase Agreement terminates for any reason, and Seller elects to terminate this Agreement for failure of Buyer to meet the Minimum Number of Locations, Buyer may, within two (2) business days of receiving notice from Seller that Seller intends to terminate this Agreement, provide notice to Seller of Buyer’s intent to acquire enough additional “Locations from the Other Purchase Agreement” for Buyer to satisfy (or, upon agreement of Buyer and Seller, to exceed) the Minimum Number of Locations requirement, in which event Seller’s right to terminate this Agreement for Buyer’s failure to meet the Minimum Number of Locations shall be null and void and of no further force and effect. Any additional “Locations from the Other Purchase Agreement” added to this Agreement under this Section 10(d) will be selected by Seller, and purchased by Buyer and sold by Seller pursuant to the terms of this Agreement, provided however that the purchase price for each additional “Location from the Other Purchase Agreement” added to this Agreement shall be the allocated purchase price for such “Location” as specified in the Other Purchase Agreement. Buyer shall have ten (10) business days from Seller’s selection of additional “Locations from the Other Purchase Agreement” to conduct all of the same due diligence Buyer may conduct under Section 4 hereof for such “Locations”, except that in response to a Section 4 Notice Seller shall be entitled to offer to Buyer a Substitution Location or a “Location from the Other Purchase Agreement”.

11.Closing.

(a)Generally. Closing shall occur on or before the Closing Date in mail away format (the parties will not be present at Closing) with immediately available funds and Closing documents delivered to Escrow Agent, in escrow, on or before the Closing Date. Escrow Agent shall serve as the closing agent and shall be responsible for preparing the closing statement, the Deeds and customary transfer documents in accordance with and subject to the terms and conditions of this Agreement.

(b)Buyer Closing Documents. Buyer shall deliver to Escrow Agent on or before the Closing Date: (i) a counterpart of the closing statement executed by Buyer; (ii) duplicate originals of each Lease executed by the applicable Landlord; (iii) one original Memorandum of Lease for each Location executed by the applicable Landlord; (iv) an original Organization and Authorization Certificate executed by Buyer; (v) any other documents, instruments or agreements called for under this Agreement or applicable Legal Requirements, which have not previously been delivered or which are reasonably necessary to Close; and (vi) the balance of the Purchase Price and all other funds due and owing from Buyer to Seller, after all applicable credits, adjustments and prorations called for under this Agreement.

(c)Seller Closing Documents. Seller shall deliver to Escrow Agent on or before the Closing Date: (i) a counterpart of the closing statement executed by Seller; (ii) one original Deed for each Location executed by Seller in favor of the applicable Landlord; (iii) duplicate originals of each Lease executed by Seller; (iv) one original Memorandum of Lease for each Location executed by Seller; (v) an original Organization and Authorization Certificate executed by Seller; (vi) an original Bill of Sale and Assignment executed by Seller in favor of each Landlord; (vii) a Title Affidavit with respect to each Location in favor of Buyer confirming Seller’s knowledge with respect to certain title matters, in form and substance reasonably satisfactory to Buyer, executed by Seller; (viii) a subordination, non-disturbance and attornment agreement with any lender and an estoppel certificate in favor of Buyer, and the applicable Landlord and

their respective successors and assigns with respect to each Lease in the forms contemplated by such Lease; and (ix) any other documents, instruments, agreements or curatives called for under this Agreement or applicable Legal Requirements, which have not previously been delivered or which are reasonably necessary to Close, including, without limitation, such affidavits as the Title Company may reasonably require in order to issue, without additional charge, the Title Policies.

(d)Lease Guarantor Closing Documents. Lease Guarantor shall deliver to Escrow Agent on or before the Closing Date: (i) a counterpart of the closing statement executed by Lease Guarantor; (ii) an original Lease Guaranty executed by Lease Guarantor with respect to each Lease; (iii) an original Organization and Authorization Certificate executed by Lease Guarantor; and (iv) any other documents, instrument or agreements called for under this Agreement or applicable Legal Requirements, which have not previously been delivered or which are reasonably necessary to Close.

(e)Costs.

(i)Seller shall be responsible for: (A) the cost to record the Deeds;

(ii)(B) the actual costs incurred by the Title Company in preparing the Title Commitments; (C)  the costs, including premiums, charged for the Title Policies, and to issue the Endorsements (other than any zoning endorsements); (D) Escrow Agent’s closing fee; (E) any and all Transfer Taxes (regardless of the party responsible for any such tax under applicable Legal Requirements); (F) the cost to record each Memorandum of Lease (including any taxes associated therewith); (G) the cost of any charges to Remove all liens, encumbrances and other exceptions to coverage required to be removed by this Agreement including, without limitation, the cost to record applicable curative documents; and (H) the cost of the Surveys, and Inspection Reports, (collectively, the “Transaction Costs”). Buyer shall be responsible for the costs related to any loan policies of title insurance and any endorsements required therewith.

(iii)Except as otherwise provided in Section 13 or Section 16, Buyer, Seller and Lease Guarantor shall pay for their own legal fees. Any and all other closing costs not specifically addressed in this Section 11(e) shall be paid in accordance with the customs and practices of the jurisdiction where each Location is located, with Seller also being responsible for all such costs customarily paid by tenants in similar transactions.

(f)Prorations and Apportionments. As set forth in each Lease, Seller will be responsible for the payment of all utilities, taxes, assessments, charges and costs of every kind and nature associated with the operation and use of a Location. As such, Buyer and Seller shall not adjust, prorate or apportion any such items at Closing but rather Seller shall continue to be fully responsible for all such items. Seller shall have no claims against Buyer, and Seller hereby releases Buyer from and agrees to indemnify and hold Buyer harmless from all claims and liability with respect to the agreement herein not to make any such adjustments, prorations and apportionments.

(g)Rent. The first partial payment of Base Monthly Rental (as defined in each Lease) under each Lease shall be made by Seller at Closing and shall be prorated to cover the period from and including the Closing Date through and including the last day of the calendar month in which the Closing occurs. In the event the Closing occurs after the 25th day of the month, Seller shall also pay at Closing the full payment of Base Monthly Rental due under each Lease for the month following the month of Closing.

(h)Application of Proceeds. If there shall be any Monetary Encumbrances that Seller is obligated to pay and discharge in whole or part at Closing, Title Company may use the net proceeds due Seller at Closing to release and discharge the same, and Seller shall satisfy Title Company’s reasonable requirements with respect to the delivery of documents necessary for Title Company to issue the Title Policies without exception for such Monetary Encumbrances, including, without limitation, payment of the cost of recording or filing said instruments which shall be deducted from the balance of the Purchase Price payable to Seller at Closing.

(i)Possession and Condition. At Closing, Seller shall deliver to Buyer full possession and occupancy of the Locations on which Buyer and Seller closed free from all claims of occupancy or use of any kind whatsoever, except for Permitted Encumbrances and Seller’s right to occupy and use the same

pursuant to the terms of the applicable Lease. Buyer acknowledges and agrees that the Locations are being purchased by Buyer in an “AS IS” and “WHERE IS” condition. Seller and Lease Guarantor acknowledge and agree that the Locations are being leased to Seller in an “AS IS” and “WHERE IS” condition. Buyer, the applicable Landlord and Seller shall accept the Locations at the time of Closing in the same condition as the Locations are in as of the Effective Date, as such condition shall have changed by reason of ordinary wear and tear.

(j)Broker’s Fees. Buyer, Seller and Lease Guarantor each represents and warrants to the others that there are no fees or commissions due as a result of their employment of any broker, except that JP Morgan, Quantum Global, LLC and Franchise Capital Advisors (collectively, the “Broker”) are acting as Seller’s agents and shall be compensated at Closing by Seller pursuant to a separate written agreement. Seller and Lease Guarantor shall indemnify and hold Buyer harmless from all claims and expenses of Broker in connection with this Agreement. Buyer, Seller and Lease Guarantor each agree to indemnify and hold the others harmless for any and all claims and expenses, including legal fees, if any fees or commission is determined to be due by reason of employment of a broker other than the Broker. The terms of this Section 11(j) shall survive Closing and the transfer of title or the earlier termination of this Agreement.

(k)Tax Deferred Exchange. Buyer and Seller agree to cooperate with each other in effecting for the benefit of either party a tax deferred exchange pursuant to Section 1031 of the United States Internal Revenue Code and similar provisions of applicable state law; provided that: (i) neither party shall be obligated to delay the Closing; and (ii) neither party shall be obligated to execute any note, contract, deed or other document not otherwise expressly provided for in this Agreement providing for any personal liability, nor shall either party be obligated to take title to any property other than the Locations as otherwise contemplated in this Agreement or incur additional expense for the benefit of the other party. Each party shall indemnify and hold the other harmless against any liability arising or is claimed to have arisen on account of any exchange proceeding which is initiated on behalf of the indemnifying party. The terms of this Section 11(k) shall survive Closing and the transfer of title.

12.Default by Buyer; Liquidated Damages. Prior to Closing, provided that Seller and Lease Guarantor are both ready, willing and able to Close and also that neither Seller nor Lease Guarantor is in material default of this Agreement, then, if any of Buyer’s representations and warranties in this Agreement prove to be untrue in any material respect, or if Buyer materially defaults in the performance of its obligations under this Agreement at any time after the expiration of the Due Diligence Period, and Buyer fails to cure such default or breach within five (5) business days after Seller or Lease Guarantor have provided written notice of such default to Buyer, the parties agree that Seller and Lease Guarantor may, as their sole and exclusive remedy, terminate this Agreement upon written notice delivered to Buyer and in which event the Escrow Agent shall immediately pay to the Seller the Earnest Money Deposit. The parties agree that (i) the amount of the Earnest Money Deposit is a reasonable sum considering all of the circumstances existing on the date of this Agreement, including the relationship of its amount to the range of harm to Seller and Lease Guarantor that reasonably could be anticipated, and the anticipation that proving actual damages would be costly, impracticable and extremely difficult, and (ii) retention of the Earnest Money Deposit by Seller and Lease Guarantor as liquidated damages is not intended as a forfeiture or penalty, but instead is intended to constitute liquidated damages to Seller and Lease Guarantor. Receipt by Seller and Lease Guarantor of the Earnest Money Deposit as liquidated damages as set forth above shall not prohibit Seller from enforcing its indemnification rights under Section 4 against Buyer.

13.Default by Seller and/or Lease Guarantor; Liquidated Damages. Prior to Closing, provided that Buyer is ready, willing and able to Close and also that Buyer is not in material default of this Agreement, then if at that time, any of Seller’s or Lease Guarantor’s representations and warranties in this Agreement prove to be untrue in any material respect, or if Seller or Lease Guarantor otherwise materially defaults in the performance of any of their respective obligations under this Agreement with respect to one or more Locations and Seller or Lease Guarantor fails, within five (5) businessdays after Buyer has provided written

notice of such default to Seller to cure such default, Buyer may, by written notice to Seller prior to Closing, as its sole remedy with respect to such default, elect one of the following, as applicable:

1) Terminate this Agreement by written notice to Seller as to any such Locations as to which the default is not the result of any intentional act or omission of Seller or Lease Guarantor in which event the provisions of Section 4 shall control except that Seller shall reimburse Buyer for all of Buyer’s customary and reasonable third party out-of-pocket costs and other expenses relating to Buyer’s due diligence in respect of such Terminated Locations (including reasonable attorneys’ fees) and, if applicable, Buyer shall also have the remedy set forth in (3) below.

2) If the default is the result of one or more intentional acts or omissions of Seller or Lease Guarantor terminate this Agreement upon written notice delivered to Seller, in which event:

(a) Escrow Agent shall immediately refund the Earnest Money Deposit to Buyer;

(b) Seller shall (i) reimburse Buyer for all of Buyer’s customary and reasonable third party out-of-pocket costs and other expenses relating to Buyer’s due diligence in respect of the transaction contemplated by this Agreement (including reasonable attorneys’ fees), (ii) reimburse Buyer for reasonable and customary breakage costs, loan deposits and loan fees and (iii) pay the Transaction Costs, if earned and unpaid, provided however, that the total of all amounts paid by Seller under the foregoing clauses (i) and (ii) shall not exceed $1,634,000.00; and

(c) If such default by Seller or Lease Guarantor occurs prior to the date upon which Buyer makes the Additional Deposit following the end of the Due Diligence Period, Seller agrees (as a covenant that will survive such termination) that it shall not, within nine (9) months from the Effective Date transfer, directly or indirectly, or permit the transfer, directly or indirectly, of more than 20 Original Locations to any person or persons other than (1) an Affiliate that exists on the Effective Date or any subsequently created subsidiary of any such Affiliate (each an “Existing Affiliate Transferee”), provided that in the case of such transfer to an Existing Affiliate Transferee, such transferee shall not make a further transfer in violation of this clause (c), (2) pursuant to order of a Governmental Authority, (3) a charitable organization, (4) Buyer or (5) a Landlord. For purposes of this clause (c), a “transfer” shall include any merger or other reorganization, or the sale of assets of Seller, Lease Guarantor or Existing Affiliate Transferee that results in more than 20 Original Locations being owned, directly or indirectly, by another person or entity. For purposes of this Section 13(c), “transfer” shall not include subjecting a Location to a mortgage or a deed of trust. In the event of a breach by Seller of this Section 13(c), Seller shall pay to Buyer the amount of $2,451,000.00 as liquidated damages for such breach. The parties agree that (i) the amount of the liquidated damages is a reasonable sum considering all of the circumstances existing on the date of this Agreement, including the relationship of its amount to the range of harm to Buyer that reasonably could be anticipated, and the anticipation that proving actual damages would be costly, impracticable and extremely difficult, and (ii) payment to Buyer of such liquidated damages is not intended as a forfeiture or penalty, but instead is intended to constitute liquidated damages to Buyer; or

(3) If and only if Buyer has made the Additional Deposit following the expiration of the Due Diligence Period, exercise the remedy of specific performance.

If a Landlord becomes aware, and Buyer’s knowledge is imputed to each Landlord, after Closing, that any of Seller’s or Lease Guarantor’s representations and warranties in this Agreement were untrue in any material respect when made, subject to the other limitations set forth in Section 6 and elsewhere in this Agreement, such Landlord shall have the right to pursue any remedies available at law or in equity for a

breach of said representations and warranties; provided, however, in order for such Landlord to pursue any such remedies, such Landlord must send notice to Seller of its intent to do so prior to the expiration of the Survival Period. Such Landlord’s post-Closing rights under this Section 13 shall be in addition to any of the its rights under its Lease, and the rights of such Landlord under such Lease for the same or similar representations and warranties made under such Lease shall not be affected by the expiration of the Survival Period. The immediately-preceding two sentences of this Section 13 shall survive Closing and the transfer of title.

14.Disposition of Earnest Money Deposit. In the event Escrow Agent is instructed by Buyer to return the Earnest Money Deposit to Buyer, or Escrow Agent otherwise intends to disburse or return all or any portion of the Earnest Money Deposit to Buyer based on Escrow Agent’s interpretation of this Agreement or otherwise, before making any such return or disbursement, Escrow Agent shall notify Seller of Buyer’s demand or Escrow Agent’s intention, and, unless Escrow Agent receives written objection from Seller within five (5) business days thereafter stating that there is a genuine dispute as to who is entitled to the Earnest Money Deposit and describing the basis of Seller’s objection, then Escrow Agent shall return the Earnest Money Deposit to Buyer. If Escrow Agent receives a written objection from Seller within said 5-business day period, Escrow Agent shall not return or disburse all or any portion of the Earnest Money Deposit to Buyer. In the event Escrow Agent is instructed by Seller to release the Earnest Money Deposit to Seller, or Escrow Agent otherwise intends to disburse all or any portion of the Earnest Money Deposit to Seller based on Escrow Agent’s interpretation of this Agreement or otherwise, before making any such disbursement, Escrow Agent shall notify Buyer of Seller’s demand or Escrow Agent’s intention, and, unless Escrow Agent receives written objection from Buyer within five (5) business days thereafter stating that there is a genuine dispute as to who is entitled to the Earnest Money Deposit and describing the basis of Buyer’s objection, Escrow Agent shall release and disburse the Earnest Money Deposit to Seller. If Escrow Agent receives a written objection from Buyer within said 5-business day period, Escrow Agent shall not release or disburse the Earnest Money Deposit to Seller. Except for the willful misconduct or gross negligence of Escrow Agent or Escrow Agent’s default of its obligations under this Agreement, Escrow Agent shall have no liability to either Buyer or Seller in acting or refraining from acting hereunder. In the event there is any dispute as to the proper disbursement of the Earnest Money Deposit, Escrow Agent shall be entitled to deposit the Earnest Money Deposit with a court of competent jurisdiction in Franklin County, Ohio, and to interplead each of Buyer and Seller in an appropriate interpleader action. Escrow Agent shall not release, return or disburse the Earnest Money Deposit or any portion thereof, except: (a) in strict compliance with the terms of this Section 14; (b) in accordance with a joint written direction signed by Seller and Buyer; or (c) in obedience to a court order issued by a court of competent jurisdiction. Notwithstanding anything contained in this Section 14 to the contrary, Escrow Agent shall immediately return the Earnest Money Deposit to Buyer upon receipt of notice of termination of this Agreement by Buyer at any time prior to the expiration of the Due Diligence Period and Seller shall have no rights to object as contemplated in this Section 14.

15.Confidentiality. Buyer, Seller and Lease Guarantor acknowledge that any and all information that either party has heretofore furnished or hereafter furnishes to any of the others with respect to the Property, the transactions contemplated by this Agreement or other non-public proprietary or confidential information of the parties has been and will be furnished on the condition that the receiving party maintains the confidentiality thereof until Closing. Accordingly, prior to Closing, Buyer, Seller and Lease Guarantor shall not disclose, and shall prohibit their respective agents, consultants, employees, representatives and any parties identified in clause (i) below (each, a “Receiving Agent”) from disclosing, to any other person or entity without the prior written consent of the non-disclosing party: (a) the material terms of this Agreement; (b) any of the information in respect of the Property, including, but not limited to, the Due Diligence Documents and

any information heretofore or hereafter obtained by Buyer or its Receiving Agents, consultants or representatives in connection with Buyer’s due diligence investigations of the Property; and (c) any other non-public proprietary or confidential information of the disclosing party. In the event the Closing does not occur or this Agreement is terminated, each party shall, upon request from the other, promptly return to the other all documents containing any of such information without retaining any copy thereof or extract therefrom except as provided in this Section 15. Notwithstanding anything to the contrary hereinabove set forth, either party may disclose such information (i) on a need-to-know basis to the Title Company, to receiving party’s agents, employees, consultants, managers, investors, lenders, accountants, attorneys and contractors, to its potential lenders and subsequent purchasers, and to members of professional firms serving it or its potential lenders and (ii) as may be necessary to comply with applicable Legal Requirements or a court order. Notwithstanding the foregoing, the foregoing confidentiality obligation shall not apply to any such information that (1) is or becomes generally available to the public other than as a result of a breach of this Agreement; (2) is obtained by receiving party or its Receiving Agents on a non-confidential basis from a third-party that, to receiving party’s knowledge, was not legally or contractually restricted from disclosing such information; (3) was in receiving party’s or its Receiving Agents’ possession prior to disclosing party’s disclosure hereunder; or (4) was or is independently developed by receiving party or its Receiving Agents without using any such confidential information. Notwithstanding the foregoing, the recipient and its Receiving Agents may: (i) pursuant to its and their records retention policies and regulatory obligations, have the right to retain copies of any confidential information provided to the party or its Receiving Agents so long as it and they keep such confidential information in accordance with the confidentiality and other provisions of this Section 15; and (ii) retain any confidential information to the extent it is “backed-up” on its or their electronic information management and communications system or servers. Notwithstanding the retention of any confidential information provided hereunder, any recipient and its Receiving Agents will continue to be bound by their obligations of confidentiality and other obligations under this Section 15. The terms of this Section 15 shall survive the termination of this Agreement.

16.Attorney Fees. Except as otherwise provided in this Agreement, in a suit to enforce this Agreement or any provision contained herein, the party prevailing in such suit shall be entitled to recover, in addition to all other remedies or damages allowed pursuant to this Agreement, reasonable legal expenses, attorney and paralegal fees and court costs incurred in such suit and any appeal thereof. This paragraph shall survive Closing or the early termination of this Agreement.

17.Notices. Any notice, request, tender, demand, delivery, approval or other communication provided for, required or arising under this Agreement shall be in writing and shall be deemed delivered: (a) if delivered in person, upon delivery to an individual or to an officer of an entity; (b) if delivered via overnight courier with instructions to deliver the next business day, one business day after delivery to such overnight courier addressed to the other party or parties at the address or addresses below or at such other address or addresses of which such party may give notice in accordance with the provisions of this Section 17; or (c) if by email, upon receipt of confirmation of the email transmittal, transmitted to the other party or parties at the email address or addresses provided below or such other email address or addresses of which such party may give notice in accordance with the provisions of this Section 17. Any and all such notices may be given on behalf of either party by its below named attorney.

Buyer:	National Retail Properties, LP 450 South Orange Avenue, Suite 900 Orlando, Florida 32801 Attention: Christopher P. Tessitore Phone: (407) 650-1115 Fax: (321) 206-2138 Email: Chris.Tessitore@NNNReit.com
With a copy to:	Lowndes, Drosdick, Doster, Kantor & Reed, P.A. 450 S. Orange, Suite 200 Orlando, Florida 32801 Attention: Timothy R. Miedona Phone: (407) 418-6358 Fax: (407) 843-4444 Email: tim.miedona@lowndes-law.com
Seller and Lease Guarantor:	Bob Evans Farms, LLC Bob Evans Farms, Inc. 8111 Smith’s Mill Road New Albany, Ohio 43054 Attn: Chief Financial Officer Email: Mark_Hood@BobEvans.Com
With a copy to:	Bob Evans Farms, LLC 8111 Smith’s Mill Road New Albany, Ohio 43054 Attn: General Counsel Email: Colin_Daly@BobEvans.Com
	and
	Vorys Sater Seymour and Pease LLP 52 East Gay Street Columbus, Ohio 43215 Attn: Daniel J. Minor Sheila Nolan Gartland Email: djminor@vorys.comSngartland@vorys.com

18.Miscellaneous.

(a)Further Assurances. Buyer, Seller and Lease Guarantor shall in good faith cooperate with each other in satisfying all conditions contained in this Agreement, including, without limitation, executing or re-executing any and all documents reasonably required to be executed by Seller as record owner of the Locations to accomplish any verifications, approvals or determinations. Buyer, Seller and Lease Guarantor agree that they will, at any time and from time to time after Closing, upon request of the other

party, do, execute, acknowledge and deliver, or will cause to be done, executed, acknowledged and delivered, all such further acts, assignments, transfers, conveyances, and assurances as may be reasonably required in order to more fully complete the terms of this Agreement to the extent usual and customary for commercial real estate closings where the applicable Location is located.

(b)Assignment. No party may assign this Agreement, in whole or in part, without the prior written consent of the other parties, provided however, Buyer may assign, without the consent of Seller (i) all of its rights and obligations hereunder to one or two entities (each a “Landlord”) provided each such assignee shall be 100% owned and controlled by Buyer or (ii) its rights and obligations hereunder with respect to some or all of the Locations to one or more of the entities that are a “Landlord” under the Other Purchase Agreement and, in the case of (i) or (ii), such assignee or assignees execute an assumption agreement reasonably acceptable to Seller under which such assignee or assignees assumes all of Buyer’s obligations hereunder. Notwithstanding the foregoing, Buyer shall not be released and will remain responsible for the performance of all of Buyer’s and/or any permitted assignee’s obligations under this Agreement.

(c)Survival. The representations and warranties of the parties contained in this Agreement shall survive the Closing and the transfer of title to the Property for a period of twelve (12) months (the “Survival Period”).

(d)Successors and Assigns. All terms of this Agreement shall be binding upon, and inure to the benefit of and be enforceable by the parties hereto and their respective, successors and permitted assigns.

(e)Modifications. No modification, waiver, amendment, discharge or change of this Agreement, except as otherwise provided herein, shall be valid unless the same is in writing and signed by the party against which the enforcement of such modification, waiver, amendment, discharge or change is sought. This Agreement contains the entire agreement between the parties relating to the transactions contemplated hereby, and all prior or contemporaneous agreements, understandings, representations and statements, oral or written, including without limitation, that certain letter of intent between Buyer and Seller dated December 16, 2015, are merged herein. Without limiting the generality of the foregoing, this Agreement alone fully and completely expresses the agreement between the parties and it is specifically understood that no oral representation is binding on Buyer, Seller or Lease Guarantor.

(f)Governing Law and Venue. This Agreement shall be construed and enforced in accordance with the laws of the State of Ohio. Each party hereto consents to the jurisdiction of any court of competent jurisdiction located in Franklin County, Ohio for any action arising out of matters related to this Agreement. Each of the parties hereto waives the right to commence an action in connection with this Agreement in any court outside of said county.

(g)Interpretation. The principle that an agreement should be construed against the party drafting the agreement shall not apply to this Agreement as both parties hereto have contributed substantially in the negotiation and drafting of this Agreement. The captions of this Agreement are inserted for convenience of reference only and do not define, describe or limit the scope or the intent of this Agreement of any term hereof. All personal pronouns used in this Agreement, whether used in the masculine, feminine, or neuter gender, shall include all other genders. The singular shall include the plural and vice versa.

(h)Invalid Provision. If any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future laws, such provision shall be fully severable and the remaining provisions of this Agreement shall remain in full force.

(i)Time of Essence. Time is of the essence of this Agreement. However, if the final date of any time period under or provided by this Agreement falls on a day that is not a business day, then, and in such event, the time of such period shall be extended to the next business day.

(j)Waiver. Each of the parties hereto reserves the right to waive, in whole or in part, any provision hereof which is for its benefit.

(k)Non-Recording. Neither this Agreement nor any memorandum or disclosure thereof shall be recorded without the prior written consent of all parties to this Agreement.

(l)Counterparts. This Agreement may be executed in any number of counterparts, each of which, when taken together and confirmed between the attorneys identified herein, shall constitute but one and the same fully executed instrument. Signatures on counterparts of this Agreement that are delivered via fax, email or by other electronic means are authorized and shall be acknowledged as if such signatures were an original execution.

(m)Schedules and Exhibits. The following schedule and exhibits attached hereto are hereby expressly made a part of this Agreement:

(i)SCHEDULE 1 - Certain Unrecorded Third Party Leases

(ii)SCHEDULE 2 - Eminent Domain Matters

(iii)SCHEDULE 3 - List of Litigation

(iv)EXHIBIT A - List of Locations and Substitution Locations

(v)EXHIBIT B - Master Lease Agreement

(vi)EXHIBIT C - Organization and Authorization Certificate

(vii)EXHIBIT D - Lease Guaranty

[SIGNATURE PAGES FOLLOW]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

BUYER: NATIONAL RETAIL PROPERTIES, LP, a Delaware limited partnership By:NNN GP Corp., a Delaware corporation, as general partner By: /s/ Kevin B. Habicht Name: Kevin B. Habicht Title: Executive Vice President

[SELLER & LEASE GUARANTOR SIGNATURE PAGE FOLLOWS]

SELLER:	BOB EVANS FARMS, LLC, an Ohio limited liability company By: /s/ Mark E. Hood Name: Mark E. Hood, Title: Manager and Chief Financial Officer
LEASE GUARANTOR:	BOB EVANS FARMS, INC., a Delaware corporation By: /s/ Mark E. Hood Name: Mark E. Hood, Title: Chief Administrative Officer and Chief      Financial Officer

[ESCROW AGENT SIGNATURE PAGE FOLLOWS]

Escrow Agent joins in the execution hereof solely for the purpose of evidencing its agreement to hold, administer and disburse the Earnest Money Deposit pursuant to the terms of the foregoing Agreement.

ESCROW AGENT: FIDELITY NATIONAL TITLE By: /s/ Sherry Phillips Name: Sherry Phillips Title: Commercial Escrow

EX-10.4

Exhibit 10.4

FIRST AMENDMENT TO

PURCHASE AND SALE AGREEMENT

THIS FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (this “Amendment”) is made and entered into effective as of the 25 day of February, 2016, by and between NATIONAL RETAIL PROPERTIES, LP, a Delaware limited partnership (“Buyer”), and BOB EVANS FARMS, LLC, an Ohio limited liability company (“Seller”), and BOB EVANS FARMS, INC., a Delaware corporation.

RECITALS

WHEREAS, Buyer and Seller entered into that certain Purchase and Sale Agreement with an effective date of February 23, 2016 (the “Agreement”) for the purchase and sale of the Property, as defined and more particularly described in the Agreement; and

WHEREAS, Buyer and Seller have agreed to amend the Agreement as set forth below.

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1.Recitals. The Recitals set forth above are true and correct and are incorporated herein by reference.

2.Defined Terms. Except as specified to the contrary in this Amendment, all defined terms in this Amendment have the same meaning set forth in the Agreement.

3.Section 4.02 of Exhibit “B”. Section 4.02 of the Master Lease Agreement attached as Exhibit “B” to the Agreement is hereby deleted in its entirety and is hereby replaced with the following:

“Section 4.02. Adjustments. The capitalized terms used herein are defined below. Effective on each Adjustment Date, Base Annual Rental shall be increased by the lesser of (i) one and thirty-five hundredths (1.35) times the increases in the CPI, or (ii) one and one-half percent (1.5%). The amount of the increase in the Base Annual Rental shall be calculated as follows: (a) subtract one point zero (1.0) from a fraction, the numerator of which shall be the Variable Index, and the denominator of which shall be the Base Index; then (b) multiply the result obtained in (a) above by one and thirty-five hundredths (1.35); and then (c) multiply the Base Annual Rental for the month immediately prior to the then current Adjustment Date by the result obtained in (b) above. Notwithstanding the foregoing, in no event shall the increase in Base Annual Rental on any Adjustment Date be more than one and one-half percent (1.5%) and in no event shall the Base Annual Rental decrease on any Adjustment Date. By way of example, if the Variable Index is 101 and Base Index is 100, and if the Base Annual Rental is $20,000, the amount of the increase in the Base Annual Rental would be (1.35 x 101/100 - 1.0) x 20,000 = $270.

The new Base Annual Rental shall be payable in advance in consecutive monthly installments on the first (1st) day of each month until the next Adjustment Date, or the expiration of the Lease Term, as the case may be. Landlord’s delay or the failure of Landlord, beyond commencement of any Adjustment Date, in computing or billing for these adjustments will not impair the continuing obligation of Tenant to pay any and all Base Annual Rental or other Rental due hereunder including any increased Base Annual Rental from the Adjustment Date, when calculated and billed by Landlord. In applying the foregoing formula for Base Annual Rental adjustments, the following terms shall have the following meaning:

“Base Index” for the first (1st) Adjustment Date shall mean the CPI for the month which is two (2) months prior to the Effective Date. Thereafter, the Base Index shall mean the CPI for the month which is two (2) months prior to the prior Adjustment Date. By way of example, for the first (1st) Adjustment Date, the Base Index will be the CPI for the month which is two (2) months prior to the Effective Date, for the second (2nd) Adjustment Date, the Base Index will be the CPI for the month which is two (2) months prior to the first (1st) Adjustment Date, for the third (3rd) Adjustment Date the Base Index will be the CPI for the month which is two (2) months prior to the second (2nd) Adjustment Date, etc.

“CPI” shall mean the Consumer Price Index for All Urban Consumers, All Items, U.S.A. Area, 1982-1984 = 100, as published by the Bureau of Labor Statistics, United States Department of Labor (U.S. City Average). If such index is discontinued, CPI shall then mean the most nearly comparable index published by the Bureau of Labor Statistics or other official agency of the United States Government as determined by Landlord.

“Variable Index” shall mean the CPI for the month which is two (2) months prior to the then current Adjustment Date.

4.Section 4.03(a) of Exhibit B. Section 4.03(a) of the Master Lease Agreement attached as Exhibit “B” to the Agreement is hereby deleted in its entirety and is hereby replaced with the following:

“(a)Base Annual Rental. Notwithstanding the terms and provisions of Sections 1.06 and 4.02, upon the commencement of each Extension Term of this Lease, the Base Annual Rental shall be adjusted to an amount equal to the greater of (i) 95% of the fair market rent for the Properties for the first year of the Extension Term (the “Fair Market Rent”) or (ii) Base Annual Rental paid during the immediately preceding year increased in accordance with Section 4.02 of this Lease (the greater of (i) or (ii) being the “Initial Increased Rent”). The parties shall commence the process for determining Fair Market Rent upon Tenant’s delivery of Tenant’s Extension Notice with respect to such Extension Term. The foregoing shall in no way affect the Base Annual Rental adjustments under Sections 1.06 and 4.02 that are scheduled to occur on dates other than at the commencement of each Extension Term; provided, however, with respect to the Adjustment Date that occurs at the commencement of each Extension Term, the adjustment to the Initial Increased Rent shall be the only adjustment to Base Annual Rental.”

5.Conflict. If there is a conflict between the terms of the Agreement and the terms of this Amendment, the terms of this Amendment shall control.

6.Ratification. Except as herein expressly amended, each and every other term of the Agreement shall remain unchanged and in full force and effect without modification, and Buyer and Seller hereby ratify and affirm the same.

7.Counterparts. This Amendment may be executed in several counterparts, all of which are identical and all of which counterparts together shall constitute one and the same document. This Amendment may be executed by facsimile or other electronic signature.

[SIGNATURES BEGIN ON THE FOLLOWING PAGE]

IN WITNESS WHEREOF, the parties hereto have executed this Amendment effective as of the date set forth above.

BUYER:

NATIONAL RETAIL PROPERTIES, LP,

a Delaware limited partnership

By: NNN GP Corp., a Delaware

corporation, as general partner

By: /s/ Paul E. Bayer

Name: Paul E. Bayer

Title: Executive Vice President

Date: February 25, 2016

[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]

SELLER:

BOB EVANS FARMS, LLC, an Ohio limited liability company

By: /s/ Mark E. Hood

Name: Mark E. Hood

Title: Manager and Chief Financial Officer

Date: _________________

LEASE GUARANTOR:

BOB EVANS FARMS, INC., a Delaware corporation

By: /s/ Mark E. Hood

Name: Mark E. Hood

Title: Chief Administrative Officer and

 Chief Financial Officer

Date: _________________

EX-10.5

Exhibit 10.5

PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is made and entered into as of February 23, 2016 (the “Effective Date”), by and among MESIROW REALTY SALE-LEASEBACK, INC., an Illinois corporation (“Buyer”) and BOB EVANS FARMS, LLC, a Ohio limited liability company (“Seller”), and BOB EVANS FARMS, INC., a Delaware corporation (“Lease Guarantor”).

In consideration of the mutual covenants and agreements set forth in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Buyer, Seller and Lease Guarantor hereby enter into this Agreement and covenant and agree as follows:

1.Definitions.

(a)“Affiliate” means any entity directly or indirectly controlling, controlled by or under common control with Seller or Lease Guarantor.

(b)“Agent” means any member, shareholder, equity owner, director, manager, officer, employee, or Affiliate of Seller.

(c)“Aggregate Amount” means the sum of $35,000 multiplied by the number of Original Locations.

(d)“Appraisals” means appraisals of each of the Locations and the Substitution Locations to be ordered by Buyer.

(e)“Association Estoppels” means, individually and collectively, if any and as applicable to a particular Location, the one or more estoppel certificates that may be requested in writing by Buyer to confirm that each Location and Seller is in compliance with any and all obligations, covenants, conditions, assessments, restrictions or regulations created or imposed by any existing declaration of record, business/owner/condominium/industrial park association, developer agreement, mutual, shared or common maintenance, access or driveway agreements, or any other material duties or obligations encumbering such Location or imposed on the owner of such Location (that benefit other parties or lands/areas outside of such Location), and the like, if any. The form of said estoppel certificate(s) shall be reasonably acceptable to Buyer, Seller and Title Company.

(f)“Bill of Sale and Assignment” means the bill of sale and assignment that shall be delivered by Seller to Buyer at Closing, and sufficient to transfer all of Seller’s right, title and interest in and to the Intangible Property free and clear of all liens, security interests and other encumbrances.

(g)“Building” shall mean the Bob Evans Restaurant building located on each Location and each Substitution Location.

(h)“Building Systems” means the mechanical, electrical, plumbing, sanitary, sprinkler, heating, ventilation and air conditioning, security, life-safety, building management, elevator and other service systems or facilities of the buildings located on each Location.

(i)“Business Day” or “business day” means any day other than a Saturday, Sunday or legal holiday under the laws of the United States.

(j)““Close” or “Closing” means the consummation of the transactions contemplated by this Agreement.

(k)“Closing Date” means April 14, 2016, unless another date is mutually agreed to by the parties.

(l)“Deed” or “Deeds” means, individually and collectively, as appropriate, the special warranty deeds (or the equivalent instrument under the laws of the jurisdiction where each Location is located by which Seller shall warrant title for matters arising by, through or under Seller), one for each Location, conveying fee simple marketable title to each Location to Buyer, subject only to Permitted Encumbrances.

(m)“Due Diligence Documents” means copies of: (i) the Existing Survey Documents in the possession or control of Seller or any Agent; (ii) the Existing Environmental Reports in the possession or control of Seller or any Agent; (iii) the Existing Construction Documents in the possession or control of Seller or any Agent; (iv) the Warranties; (v) the Tax Information in the possession or control of Seller or any Agent; (vi) certificates of insurance evidencing types and amounts of coverage for the Property and liability insurance policies relating to the Property; and (vii) the Organizational Documents for Seller and Lease Guarantor.

(n)“Due Diligence Period” means the period commencing on the Effective Date and expiring at 11:59 p.m. (eastern) on the later of (i)  the date that is twenty (20) business days after Buyer’s receipt of the last of (A) the Due Diligence Documents; (B) the Environmental Assessments; (C) the Surveys, and (D) the Title Commitments, or (ii) the date that is ten (10) business days after Buyer’s receipt of the last of the Zoning Reports.

(o)“Earnest Money Deposit” means the Initial Deposit and any Additional Deposit (as each term is defined in Section 3 of this Agreement), together with any accrued interest thereon.

(p)“Environmental Assessments” means the ASTM Phase I Environmental Site Assessments that Seller has ordered for each Location and each Substitution Location. The Environmental Assessments shall be certified to Buyer, the applicable Landlord, Lender and their respective successors and assigns and be dated not earlier than December 31, 2015.

(q)“Environmental Laws” shall have the meaning ascribed to such term in the form of Lease.

(r)“Escrow Agent” means Fidelity National Title, c/o Sherry Phillips, Closing and Escrow, 4111 Executive Parkway, Suite 304, Westerville, OH 43081-3862, Phone: (614) 865-1562; Fax (614) 865-1565.

(s)“Excluded Substitute Location” shall have the meaning set forth in Section 4.

(t)“Existing Construction Documents” means copies of all plans and specifications and site plans and other similar documentation related to the development, construction, renovation, alteration or improvement of any Location and each Substitution Location, in Seller’s possession or control, which were obtained prior to December 16, 2015.

(u)“Existing Environmental Reports” means copies of all environmental, soils or engineering reports, assessments, studies, test results, notices, agreements and other similar documentation with respect to each Location and each Substitution Location, in Seller’s possession or control, which were obtained prior to December 16, 2015.

(v)“Existing Survey Documents” means copies of all existing surveys, site plans, or other similar maps of each Location and each Substitution Location, or portion thereof, in Seller’s possession or control, which were obtained prior to December 16, 2015.

(w)“Governmental Authority” means any federal, state, county, city, local, municipal or other governmental, regulatory or administrative agency, governmental commission, department, board, subdivision, court, tribunal, or other governmental arbitrator, arbitral body and all of their respective departments, bureaus, agencies or officers, and any insurance underwriting board or insurance inspection bureau or any other body exercising similar functions.

(x)“Hazardous Substances” shall have the meaning ascribed to such term in the form of Lease.

(y)“Inspection Reports” means, collectively, the Environmental Assessments and the Zoning Reports.

(z)“Intangible Property” means, collectively, (i) all records and files of Seller relating to the operation, maintenance, improvement and renovation of the Locations and (ii) all of Seller’s right, title and interest in and to (A) all architectural and engineering drawings, records, licenses, permits, plans, approvals and other written authorizations used or useful solely in connection with the Locations for the use,

operation or ownership of the Locations or any of them, and (B) all Warranties, to the extent in effect and assignable

(aa)“Landlord” shall have the meaning set forth in Section 18(b), which Landlord shall be identified by Buyer in writing to Seller within three business (3) days of the Effective Date.

(ab)“Lease” means each of the Master Lease Agreements to be entered into by Seller, as tenant, and the applicable Landlord, as landlord, at Closing, dated as of the Closing Date, and in form and substance as that attached hereto as Exhibit B. The initial Base Annual Rental under each Lease shall be an amount equal to 6.65% times the Purchase Price allocated in Exhibit A to the Locations under each Lease. Each Lease will have no more than 35 Locations and Buyer will allocate the Locations to the appropriate Lease no later than three (3) Business Days following the Effective Date.

(ac)“Lease Guaranty” means a lease guaranty of each Lease to be executed by Lease Guarantor in favor of Landlord at Closing, dated as of the Closing Date, and in form and substance as that attached hereto as Exhibit D.

(ad)“Legal Requirements” means all laws, ordinances, statutes, rules, regulations, orders, directions and requirements of all Governmental Authorities currently in existence or hereafter enacted or rendered and of all other Governmental Authorities applicable to or claimed to be applicable to any Location or the business activities conducted thereon or therein.

(ae)“Lender” means the lender, if any, that may provide first mortgage financing to Buyer in connection with the transaction contemplated under this Agreement, which Lender, if any, shall be identified by Buyer in writing to Seller within ten (10) days of the Effective Date.

(af)“Location” means, individually, each of those certain parcels of real property listed on Exhibit A, attached hereto, together with all buildings, improvements and fixtures located thereon, now or in the future, and all rights, privileges, tenements, easements, licenses, hereditaments and appurtenances belonging or pertaining thereto and any mineral rights or interest pertaining thereto, but does not include any Substitution Location unless and until a Substitution Location becomes a Location pursuant to Section 4 hereof. The term “Location” does not include Seller’s trade fixtures, machinery, and equipment used in connection with Seller’s business but does include all Building Systems.

(ag)“Memorandum of Lease” means the Memorandum of Lease to be entered into by the applicable Landlord and Seller at Closing, evidencing the existence of each Lease and recorded in each county in which a Location under such Lease is located; the Memorandum of Lease shall be dated as of the Closing Date and be in form and substance reasonably satisfactory to both Buyer and Seller, but in all events subject to local recording requirements.

(ah)“Minimum Number of Locations” means 125 minus the sum of (i) the number of Locations that become Terminated Locations pursuant to Section 6(d), Section 8, Section 9, Section 10(a) or Section 13, (ii) the number of “Locations” that become “Terminated Locations” under the Other Purchase Agreement pursuant to Section 6(d), Section 8, Section 9, Section 10(a) or Section 13 thereof, (iii) the number of Terminated Locations that are terminated pursuant to Section 4 and/or Section 5 with respect to environmental, zoning, title or survey matters if there are remaining Substitution Locations and Seller does not offer to substitute Substitution Locations for such Terminated Locations and (iv) the number of “Terminated Locations” under the Other Purchase Agreement that are terminated pursuant to Section 4 and/or Section 5 thereof with respect to environmental, zoning, title or survey matters if there are remaining “Substitution Locations” under the Other Purchase Agreement and Seller does not offer to substitute any such “Substitution Locations” for such “Terminated Locations”.

(ai)“Monetary Encumbrances” means all mortgages, deeds of trust, mechanics’ liens, security interests, security instruments encumbering any Location, judgments and other monetary liens and encumbrances affecting title to or ownership of any Location, including, without limitation, liens for delinquent real estate taxes and assessments, but excluding, however, liens for taxes and assessments on any Location not yet due and payable.

(aj)“Organization and Authorization Certificate” means the Organization and Authorization Certificate to be executed by Seller and Lease Guarantor in favor of Buyer and each Landlord and by Buyer and each Landlord in favor of Seller and Lease Guarantor, at Closing, dated as of the Closing Date, and in form and substance as that attached hereto as Exhibit C subject to reasonable revisions to reflect their respective Organizational Documents.

(ak)“Organizational Documents” means the articles of incorporation, certificate of incorporation, trust agreement, charter, bylaws, articles of formation, certificate of formation, regulations, operating agreement, certificate of limited partnership, partnership agreement and all other similar documents, instruments or certificates executed, adopted, or filed in connection with the creation, formation, or organization of Buyer, each Landlord, Seller and Lease Guarantor, including any amendments and modifications thereto, together with a complete list of all officers, directors, shareholders, members, and managers (excluding, however, the officers, directors, and shareholders of the Lease Guarantor) of each such entity.

(al)“Original Locations” means (i) the Locations listed as such on Exhibit A excluding any such Locations that become Terminated Locations and excluding Substitution Locations that become Locations pursuant to this Agreement and (ii) “Original Locations” as such term is defined in the Other Purchase Agreement.

(am)“Other Purchase Agreement” means that certain Purchase and Sale Agreement, dated of even date herewith, between Seller and Other Purchaser pertaining to the sale by Seller and the purchase by Other Purchaser of restaurant locations.

(an)“Other Purchaser” means National Retail Properties, LP, a Delaware limited partnership.

(ao)“Permitted Encumbrances” means all of the following: (i) zoning, building and land use laws, ordinances, rules and regulations applicable to a Location; (ii) the lien of taxes and assessments on a Location not yet due and payable; (iii) the rights of Seller, as tenant only, under the applicable Lease; and (iv) all matters of record which are enumerated in “Schedule B” of the applicable Title Commitment other than those matters specified in Section 5 that Seller is obligated to Remove at Closing and those Title Objections which Seller has elected in writing to Remove as provided in Section 5. Except as expressly agreed to in writing by Buyer, all Monetary Encumbrances are excluded from the definition of Permitted Encumbrances.

(ap) “Property” means, collectively, (i) each Location and (ii) the Intangible Property.

(aq) “Purchase Price” means Thirty-Six Million, Five Hundred Eighty-Nine Thousand Five Hundred Eighty and No/00 Dollars ($36,589,580.00) in the aggregate, allocated per Location as shown on Exhibit A, as the same may be adjusted pursuant to the terms of this Agreement. The Purchase Prices of individual Locations are listed only to determine the amounts of Transfer Taxes, determine insurance amounts under the Title Policies and provide a mechanism for substitution or deletion of Locations prior to Closing. Subject to the terms of this Agreement, Buyer and Seller intend to buy and sell the Property as a whole and not individually and the allocated Purchase Prices are not intended to create separate agreements with respect to the individual Locations. Furthermore, as between each Landlord and Seller, as Landlord and Tenant under each Lease, the allocated Purchase Prices shall have no effect following Closing.

(ar)“Remove” means to release, correct or satisfy or, with Buyer’s prior written consent which consent shall not be unreasonably withheld, conditioned or delayed, cause the Title Company to affirmatively insure over (as applicable).

(as)“Section 4 Notice” shall have the meaning set forth in Section 4.

(at)“Substitution Locations” means those seven (7)additional properties identified as such in Exhibit A attached hereto except that the term “Substitution Locations” shall not include any Substitution Location that becomes a “Location” or an “Excluded Substitution Location” pursuant to the terms of this Agreement or the Other Purchase Agreement.

(au)“Surveys” means the 2011 ALTA/ACSM surveys of each Location and each Substitution Location dated no earlier than December 31, 2015, containing a current ALTA/ACSM certification addressed to Buyer, the applicable Landlord, Title Company, and Lender and including Table A items 1, 2, 3, 4, 6(a), 6(b), 7(a), 8, 9, 10, 11a, 13, 16 and 21. If required by Bock & Clark in order to complete a particular Zoning Report, Seller will cause the surveyor, if necessary, to revise the applicable Survey to cover Table A item 7(b)(1).

(av)“Tax Information” means, collectively, copies of: (i) any current betterment assessments; (ii) any tax abatement, economic incentive, or “PILOT” agreements; and (iii) complete files on any pending tax appeal proceedings.

(aw)“Terminated Location” shall have the meaning set forth in Section 4.

(ax) “Title Commitments” means the commitments issued by the Title Company to issue the Title Policies with respect to each Location and each Substitution Location. The Title Commitments shall be dated no earlier than December 31, 2015.

(ay)“Title Company” means Fidelity National Title, c/o Ray Lewandowski, 4111 Executive Parkway, Suite 304, Westerville, OH 43081-3862, Phone: (614) 865-1562; Fax (614) 865-1565.

(az)“Title Objections” shall mean any exceptions to coverage for matters set forth in the Title Commitments, any matters affecting title to the applicable Locations, and any matters shown on the Surveys thereof, to which Buyer timely objects in accordance with the terms of Section 5. The failure of any Title Commitment to include a commitment to issue any of the Endorsements may be raised by Buyer as a Title Objection.

(ba)“Title Policies” means, collectively, the ALTA Owner’s Policy (6‑17‑06) Title Policies which shall be issued by the Title Company and reflect that fee title to each Location is vested of record in the applicable Landlord, subject only to the Permitted Encumbrances with the “standard exceptions” for survey, parties in possession and mechanics’ liens deleted, and shall contain the following endorsements (except for any of the following that are not generally available under local law or local title insurance procedures) (collectively, “Endorsements”):

1. Comprehensive CC&R and Minerals (ALTA 9.2)

2. Commercial Environmental Protection Line (ALTA 8.2)

3. Access and Entry (ALTA 17-06)

4. Utility Access (ALTA 17.2-06)

5. Single Tax Parcel/Multiple Tax Parcel (ALTA 18.1-06)

6. Location/Address (ALTA 22-06)

7. Same as Survey (ALTA 25-06)

8. Contiguity (ALTA 19-06), if applicable

9. Deletion of Arbitration

10. Subdivision (ALTA 26-06)

11. Electronic Signatures

12. Recharacterization

13. At Buyer’s option and sole cost and expense, zoning with parking and loading (ALTA 3.1).

(bb)“Transfer Taxes” means any and all documentary transfer, stamp, sales, use, excise, privilege or similar tax, fee or charge of any Governmental Authority payable in connection with the delivery of any Deed, any Lease, any Memorandum of Lease, or any other instrument or document provided in or contemplated by this Agreement or the Exhibits hereto together with interest and penalties, if any, thereon.

(bc)“Unrecorded Third Party Leases” means unrecorded leases, licenses or other rights of third parties to erect, maintain and use free standing structures on a Location other than the Building located thereon, such as billboards, cellular towers and free-standing ATMs, that are (i) shown on the Survey of such Location or (ii) listed in Schedule 1 attached hereto.

(bd)“Warranties” means all right, title and interest held by Seller (or any Affiliate) in and to any and all warranties, indemnities and guaranties, if any, related to the renovation, construction, replacement, maintenance or ownership of any Location, including, without limitation, for roof, HVAC and other structural components and systems.

(be)“Zoning Reports” means the Zoning Reports that Seller has ordered from Bock & Clark for each Location and each Substitution Location. The Zoning Reports shall be dated on or after December 31, 2015, and be addressed to Buyer, the applicable Landlord, Lender, the Title Company and their respective successors and assigns.

2.Sale-Leaseback Transaction. In accordance with and subject to the terms and conditions of this Agreement, the following shall occur contemporaneously at Closing: (a) Seller shall sell and convey to the applicable Landlord, and Buyer shall cause such Landlord to purchase and accept from Seller, those Locations to be included in the applicable Lease and the Intangible Property associated therewith; (b) Buyer shall cause the applicable Landlord to lease to Seller, and Seller shall accept and take from such Landlord, such Locations and Intangible Property; and (c) Lease Guarantor shall guarantee the Seller’s obligations as Tenant under each such Lease in accordance with the terms of the applicable Lease Guaranty.

3.Earnest Money Deposit. Within three (3) business days after the Effective Date, Buyer shall deposit One Hundred Eighty-Three Thousand and No/00 Dollars ($183,000.00)with Escrow Agent (the “Initial Deposit”) to be held in escrow pursuant to the terms of this Agreement. In the event Buyer does not terminate this Agreement by written notice delivered to Seller prior to the expiration of the Due Diligence Period, Buyer shall deposit with Escrow Agent an additional One Hundred Eighty-Three Thousand and No/00 Dollars ($183,000.00) (the “Additional Deposit”) within three (3) business days after the expiration of the Due Diligence Period. All interest and other income from time to time earned on the Earnest Money Deposit shall be earned for the account of Buyer, and shall be a part of the Earnest Money Deposit. At the Closing, the Earnest Money Deposit shall be applied as a credit against the Purchase Price.

4.Due Diligence.

(a)Within five (5) Business Days following the Effective Date, Seller will furnish the Due Diligence Documents to Buyer. Seller shall use commercially reasonable efforts to furnish to Buyer the Title Commitments, Surveys, Zoning Reports, and Environmental Assessments for each Location at the earliest possible date. Buyer shall furnish to Seller copies of the Organizational Documents of Buyer and Landlord within five (5) business days of the Effective Date. Buyer shall have the right to terminate this Agreement at any time prior to the expiration of the Due Diligence Period, for any or no reason at all, upon written notice to Seller, in which event this Agreement shall be null and void and of no further force and effect (except for rights and obligations that survive a termination of this Agreement pursuant to the express terms of this Agreement) and, notwithstanding anything in this Section 4 of this Agreement to the contrary, Escrow Agent shall immediately return the Earnest Money Deposit to Buyer.

(b)If, prior to the end of the Due Diligence Period, Buyer has a commercially reasonable objection as to a particular Location based upon information contained in the applicable Zoning Reports and/or Environmental Assessments, then Buyer shall have the right to terminate this Agreement as to the affected Location by sending written notice of such termination to Seller which notice shall identify such objection and the affected Location and provide copies of relevant documentation supporting such objection (as used in this Agreement each such written notice to Seller, a “Section 4 Notice”). If pursuant to Section 5, Buyer desires to terminate this Agreement as to a particular Location, Buyer shall send a Section 4 Notice to Seller in accordance with the provisions of Section 5. If prior to Closing, Buyer has a commercially reasonable objection due to a condition arising under Section 6(d), Section 8, Section 9, Section 10(a), or Section 13, then Buyer shall have the right to terminate this Agreement as to the affected Location by sending a Section 4 Notice to Seller. If, prior to a Substitution Location becoming a Location pursuant to Section 4(c) below, Buyer has a commercially reasonable objection to the Substitution Location such that Buyer would be able to send a Section 4 Notice with respect to such Substitution Location if the Substitution Location were a Location, then Buyer shall be entitled to exclude that Substitution Location from the pool of Substitution

Locations by sending a written notice to Seller to that effect within the time period prescribed in Section 4(b) or, as applicable, in Section 5, 6(d), 8, 9, 10(a) or 13. Any Substitution Location so excluded shall no longer be a Substitution Location for purposes of this Section 4 and the definition of “Minimum Number of Locations” and is referred to as an “Excluded Substitution Location”. In no event shall Buyer have the right to terminate this Agreement by reason of title, survey, zoning or environmental matters as to more than 4 Locations (other than any Terminated Location for which a Substitution Location is substituted pursuant to Section 4(c) below). Buyer and the Other Purchaser shall have the right, by joint written notice, to Seller to reallocate the number of Locations that each may terminate for title, survey, zoning or environmental matters so long as the total number of such terminations under this Agreement and the Other Purchase Agreement does not exceed 20.

(c)In the event that Buyer terminates this Agreement as to a Location pursuant to a Section 4 Notice (other than a Section 4 Notice given with reference to Section 6(d), 10(a) or 13) and Seller offers a specific Substitution Location as chosen by Seller, (A) this Agreement shall be terminated as to such Location (each a “Terminated Location”), (B) a Substitution Location as designated by Seller shall be substituted for such Terminated Location and such Substitution Location shall be a Location for all purposes of this Agreement (except the definition of “Original Locations”), (C) the Purchase Price hereunder shall be adjusted to reflect the difference between the price as shown on Exhibit A for each such Terminated Location and the price as shown on Exhibit A for the corresponding Substitution Location, and (D) this Agreement shall otherwise remain in full force and effect.

(d)In the event (A) Buyer terminates this Agreement as to a Location pursuant to a Section 4 Notice (other than a Section 4 Notice given with reference to Section 6(d), 10(a) or 13) and there are no remaining Substitution Locations or Seller fails to offer a Substitution Location with five (5) Business Days following such termination or (B) Buyer terminates this Agreement as to a Location pursuant to a Section 4 Notice given with reference to Section 6(d), 10(a) or 13, then (1)  this Agreement shall be terminated as to such Terminated Location, (2) the Purchase Price shall be reduced by an amount equal to the price set forth on Exhibit A for such Terminated Location and (3) this Agreement shall otherwise remain in full force and effect.

(e)Notwithstanding anything contained herein to the contrary, in the event that the total number of Locations that are sold pursuant to this Agreement plus the number of Locations sold pursuant to the Other Purchase Agreement is less than 145, then, upon the request of Seller following Closing, Buyer shall negotiate in good faith with Seller in order to enter into an agreement substantially similar to this Agreement to effectuate the purchase, sale and leaseback of alternate locations, as determined by Seller, equal to up to the number of Locations not so purchased pursuant to this Agreement, such agreement to contain, inter alia, due diligence provisions comparable to this Agreement and purchase price and rent as the parties may then agree. The immediately preceding sentence is a statement of intent and shall not be binding on the parties.

(f)At all times prior to Closing, Buyer, Lender and their respective agents and independent contractors shall, upon reasonable notice to Seller (including the purpose of the entry), have the right to enter upon each Location and Substitution Location, at their own risk and at times acceptable to Seller which do not interrupt normal business operations, to inspect the Location and conduct such due diligence investigations as Buyer deems necessary. Seller agrees to provide access to all parts of each Location and Substitution Location and cooperate with such inspections and investigations in any way reasonably requested by Buyer, provided however, neither Buyer, Lender nor their agents or independent contractors shall communicate with any of Seller’s employees at any Location or Substitution Location. Notwithstanding the foregoing, Buyer, Lender and their respective agents and independent contractors shall not conduct any invasive testing without the prior written consent of Seller. Buyer agrees to repair any damage and to indemnify and hold Seller harmless from and against any loss, liability, mechanics’ lien, cost, damage, expense, claim or judgment incurred or suffered by Seller arising out of or related to such investigations of the Locations and Substitution Locations by Buyer; excluding, however, any loss, liability, cost, damage, expense, claim or judgment

resulting from any unfavorable test result or the discovery of any undesirable existing condition on, in, under or about any Location or Substitution Location, such exclusion including, without limitation, any loss resulting from any decrease in the fair market value of all or any of the Locations and Substitution Locations or the inability of Seller to market any or all of the Locations and Substitution Locations due to any such discovery or unfavorable test result. Buyer, Lender and their respective agents and independent contractors shall provide proof of insurance reasonably satisfactory to Seller prior to entry to inspect any Location or Substitution Location. Any provision of this Agreement to the contrary notwithstanding, the repair and indemnification obligation of Buyer under this Section 4 shall survive Closing and the transfer of title or any earlier termination of this Agreement.

5.Title.

(a)Prior to the expiration of the Due Diligence Period, Buyer will give Seller written notice of any Title Objections as to each Location. Title Objections as to different Locations may be given by Buyer in one or more notices. Seller will then respond to Buyer in writing within ten (10) business days after receipt of each of Buyer’s notices of Title Objections indicating whether Seller elects to Remove the same. Failure of Seller to notify Buyer in writing within such ten (10) business day period shall be deemed an election by Seller not to Remove such Title Objections. If Seller elects not to Remove one or more Title Objections as to a particular Location, then Buyer may either (i) send a Section 4 Notice to Seller with respect to such Location in which event the applicable provisions of Section 4 shall control or (ii) waive such Title Objections as to such Location. Failure of Buyer to send a Section 4 Notice to Seller as to such Location on or before the date that is five (5) business days after Buyer’s receipt of Seller’s response (or, in the absence of a Seller response, failure of Buyer to send a Section 4 Notice to Seller as to such Location on or before expiration of five (5) business days after the period in which Seller is permitted to respond pursuant to this Section 5(a)) shall be deemed an election by Buyer to waive such Title Objections as to such Location. Any such Title Objection so waived by Buyer shall be deemed to constitute a Permitted Encumbrance, and the Closing shall occur as herein provided without any reduction of or credit against the Purchase Price with respect to such Title Objection. For purposes of this Section 5(a), the term “Location” shall include each Substitution Location so that the process with respect to Buyer’s Title Objections regarding Substitution Locations will proceed simultaneously with the process with respect to Buyer’s Title Objections regarding Locations generally, provided, however, a Substitution Location may not be the subject of a Section 4 Notice unless and until the Substitution Location becomes a Location pursuant to Section 4.

(b)Notwithstanding anything in this Agreement to the contrary, Seller shall be obligated to Remove at Closing, to Title Company’s reasonable satisfaction, all Monetary Encumbrances regardless of whether Buyer objects to any Monetary Encumbrances in its Title Objections. Seller will also be responsible to use commercially reasonable efforts to satisfy all requirements in Section 1 of Schedule B of the Title Commitments that require action by Seller regardless of whether Buyer makes reference to any such Seller requirements in its Title Objections. Seller shall, at Closing, Remove or cause to be Removed (i) any Title Objections which Seller elected in writing to Remove as provided above and (ii) all Monetary Encumbrances.

(c)Notwithstanding anything in this Agreement to the contrary, Buyer reserves the right during the Due Diligence Period to review and approve all liens, encumbrances, easements, covenants, conditions, restrictions and reservations affecting title to each Location, whether or not a matter of public record. If any of the same are first disclosed to or discovered after Buyer’s receipt of the Title Commitments, then Seller shall afford Buyer the opportunity to review and object to the same as provided by this Section 5. No Title Objection may be insured over or Removed of record by indemnification or similar arrangement with the Title Company without Buyer’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed.

(d)At Closing, the Title Company will issue the Title Policies to Buyer insuring that fee simple title to each Location is vested in Buyer subject only to the Permitted Encumbrances.

6.Representations and Warranties.

(a)Buyer, Seller and Lease Guarantor each represents and warrants to the others that: (i) it is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization or incorporation, and is duly licensed and qualified to transact business in and in good standing as a foreign entity in each jurisdiction wherein the nature of the business transacted by it or the nature of the property owned or leased by it makes such licensing or qualification necessary; (ii) all necessary action has been taken by it to authorize the execution, delivery and performance of this Agreement, and this Agreement is the legal, valid and binding obligation of it, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency and other laws of general application affecting the rights of creditors and subject to the effect of general principles of equity, regardless of whether enforcement is sought in a proceeding at law or in equity; (iii) neither the entering into of this Agreement nor the consummation of the transactions contemplated by this Agreement will constitute or result in a violation or breach of any contract or any other instrument or agreement to which it or its assets may be subject to or bound; (iv) neither the entering into of this Agreement nor the consummation of the transactions contemplated by this Agreement will constitute a violation or breach by it of any judgment, order, writ, injunction or decree issued against or imposed upon it or will result in a violation of any applicable law, order, rule or regulation of any duly constituted Governmental Authority; and (v) no bankruptcy, insolvency, rearrangement or similar action or proceeding, whether voluntary or involuntary, is pending or, to its knowledge, threatened against it, nor has it any intention of filing or commencing any such action or proceeding.

(b)Seller represents and warrants to Buyer that: (i)  each Location is owned in fee simple by Seller; (ii) each Location is operated by Seller and is not subject to a sublease; (iii) except for (A) matters of record listed in the applicable Title Commitment; (B) items shown on the applicable Survey; or (C) rights of third parties under Unrecorded Third Party Leases which rights (x) do not interfere with Seller’s ability to operate its business, (y) will terminate prior to the expiration of the Initial Term (as defined in the form of Lease) and (z) do not pertain to any portion of the interior or exterior of the Building on the subject Location, no party has any lease, license, or other right to a use, occupancy or possession of any Location or any portion thereof, and no adverse or other parties are in possession of any Location, or any portion thereof; (iv) except for matters listed in the applicable Title Commitment, no party has any purchase right, right of first offer, right of first refusal or other right or interest relating to the ownership of any Location, or any portion thereof; (v) to Seller’s knowledge, each Location, the use of each Location, and all current operations of each Location are in compliance with Legal Requirements in all material respects, and it has not received any written notice to the contrary; (vi) to Seller’s knowledge, all material permits, licenses or similar authorizations required to occupy and operate each Location with respect to its current use and in compliance with Legal Requirements have been obtained and are in full force and effect; (vii) except as expressly listed on Schedule 2 attached hereto, Seller has not received a written notice of and has no knowledge of any pending or contemplated condemnation action with respect to any Location or any improvements located thereon, or its means of ingress and egress; (viii) no litigation, action, or proceeding before any Governmental Authority is instituted or pending involving any Location that would prevent or impair Seller from complying with its obligations hereunder or under any Lease or that would question the validity or enforceability of this Agreement or any action to be taken by Seller as part of the transaction contemplated by this Agreement, except as has been expressly listed on Schedule 3 attached hereto or as listed in the applicable Title Commitment, (ix) Seller is not a “foreign person” as defined in Internal Revenue Code Section 1445 and any related regulations and Buyer will have no duty to collect withholding taxes for it at Closing pursuant to the Foreign Investors Real Property Tax Act of 1980, as amended; (x) except as set forth in the Title Commitments, no written commitments to or agreements with any third party or Governmental Authority affect any Location which would be binding on Buyer after Closing; (xi) there are no delinquent bills for labor performed or materials furnished to or for the benefit of any Location for the period prior to the date of Closing and there are no mechanic’s liens or materialmen’s liens (whether or not perfected) on or affecting any Location except as set forth in the Title Commitments; (xii) except as expressly set forth in the existing Environmental Reports or the Environment Assessments, there are no underground storage tanks

at any Location; (xiii) except as expressly set forth in the Existing Environmental Reports or the Environmental Assessments, no Location is subject to any environmental liens or active remediation; (xiv) to Seller’s knowledge, and without further inquiry, except as set forth in the Existing Environmental Reports or the Environmental Assessments, there are no Hazardous Substances used, handled, disposed of or otherwise released in, on, under, from or about any Location in violation of Environmental Law; (xv) all of the Due Diligence Documents have been delivered to Buyer, none of which have been edited or altered by Seller, and, to Seller’s knowledge, without further inquiry, none are inaccurate or misleading in any material respect, and (xvi) no unrepaired or unrestored casualty in excess of $200,000 has occurred at any Location. Seller shall use diligent efforts prior to Closing to repair and restore all unrepaired and unrestored casualties to the Propertiesthat have occurred prior to the Effective Date or occur prior to Closing. For purposes of this Section 6, Section 7(a) and Section 10(a) only, “material” means, with respect to any matter the remediation, resolution or compliance of which would exceed $100,000 per Location, or the Aggregate Amountwith respect to all Locations, or would interfere with Seller’s ability to operate its business at such Location, except that, with respect to any litigation, action or proceeding, “material” means any litigation, action or proceeding that (i) seeks damages in excess of $100,000 with respect to any single Location or in excess of the Aggregate Amount with respect to all Locations or (ii) if resolved adversely to Seller, would either (1) impair the fair market value of a Location by $100,000 or more or would impair the fair market value of all Locations by the Aggregate Amount or more (in each case, as such fair market value would be determined independent of the existence of any Lease) or (2) interfere with Seller’s ability to operate its business at such Location provided that (A) alleged non-compliance by Seller with Legal Requirements asserted by a Governmental Authority in any such litigation, action or other proceeding shall be deemed “material” and (B) “material” shall not include any tort claim that has been tendered to and accepted by Seller’s insurance company provided that the claim does not exceed Seller’s applicable insurance coverage. Seller shall deliver a copy of each Unrecorded Third Party Lease to Buyer as soon as reasonably practicable but in no event later than ten (10) Business Days following the delivery of the applicable Survey showing the existence of the pertinent structure. Seller acknowledges that Buyer may include any Unrecorded Third Party Lease in Seller’s Title Objections if such Unrecorded Third Party Lease is not acceptable to Buyer in the exercise of Buyer’s commercially reasonable discretion.

(c)The representations and warranties made by one party in favor of another party are made as of the Effective Date and will be deemed to be remade as of the Closing Date and are a requirement of Closing.

(d)(i)Notwithstanding any contrary provision of this Agreement, if Buyer, Seller or Lease Guarantor becomes aware between the Effective Date of this Agreement and the Closing Date of any matters that make any of Seller’s or Lease Guarantor’s respective representations or warranties untrue in any material respect, Seller, Lease Guarantor or Buyer, as applicable, shall promptly disclose such matters to the others in a written notice that specifically references this Section 6(d) and Seller or Lease Guarantor shall have fifteen (15) days to cure such representations or warranties. In the event that Seller, Lease Guarantor or Buyer so discloses any such matters and Seller or Lease Guarantor does not cure them during such fifteen (15) day period, Buyer shall have the right, in its sole discretion, by written notice to Seller and Lease Guarantor on or before the Closing Date, to: (A) as to those representation and warranties made in Section 6(b), terminate this Agreement as to the affected Location, in which event the applicable provisions of Section 4 shall control, (B) as to those representations and warranties made by Seller and Lease Guarantor in Section 6(a), terminate this Agreement in its entirety, whereupon (x) Escrow Agent shall return the Earnest Money Deposit to Buyer, and (y) except for those provisions of this Agreement which by their express terms survive the termination of this Agreement, no party hereto shall have any other or further rights or obligations under this Agreement; (C) if applicable, exercise Buyer’s remedy pursuant to Section 13 below; (D) request that Seller or Lease Guarantor, as applicable, cure such breach as a condition to Closing; provided, however, that Seller or Lease Guarantor, as applicable, shall be under no obligation to cure such breach if it is unable or unwilling to cure such breach on or before the Closing Date; or (E) waive such matters and consummate the

transactions contemplated by this Agreement without reduction of the Purchase Price in accordance with the terms of this Agreement, in which case the applicable representation or warranty shall be deemed updated to include such information and Buyer shall have no further right as a result thereof. The failure of Buyer to exercise a right provided by the foregoing clauses (A), (B), (C) or (D) within five (5) business days of the receipt of the notice provided by Seller or Lease Guarantor, as applicable, shall be deemed an election by Buyer to proceed to Closing under clause (E).

(i)If Buyer elects to request that Seller or Lease Guarantor cure such breach in accordance with subsection (D) above and Seller or Lease Guarantor, as applicable, is unable or unwilling to cure such breach on or before the Closing Date, Buyer shall then have the right, in its sole discretion, by written notice to Seller and Lease Guarantor, to elect to proceed in accordance with subsection (A), (B), (C) or (E) above.

(ii)Notwithstanding any contrary provision of this Agreement, if Buyer, Seller or Lease Guarantor becomes aware between the Effective Date of this Agreement and the Closing Date of any matters that make any of Buyer’s representations or warranties untrue in any material respect, Buyer, Seller, or Lease Guarantor shall promptly disclose such matters to the others in a written notice that specifically references this Section 6 (e) and Buyer shall have fifteen (15) days to cure such representations or warranties. In the event Buyer so discloses such matters and Buyer does not cure them during such fifteen (15) day period, Seller shall have the right, in its sole discretion, by written notice to Buyer on or before the Closing Date, to: (A) terminate this Agreement, whereupon (x) Escrow Agent shall disburse the Earnest Money Deposit to Seller, and (y) except for those provisions of this Agreement which by their express terms survive the termination of this Agreement, no party shall have any other or further rights or obligations under this Agreement; (B) if applicable, exercise Seller’s remedy pursuant to Section 12 below; (C) request that Buyer cure such breach as a condition to Closing; provided, however, that Buyer shall be under no obligation to cure such breach if it is unable to cure such breach on or before the Closing Date; and/or (D) waive such matters and to consummate the transactions contemplated by this Agreement without reduction of the Purchase Price in accordance with the terms of this Agreement, in which case the applicable representation or warranty shall be deemed updated to include such information and Seller shall have no further right to terminate this Agreement as a result thereof.  The failure of Seller to exercise a right provided by the foregoing clauses (A), (B) or (C) within five (5) business days of the receipt of the notice provided by Buyer shall be deemed an election by Seller to terminate this Agreement.

1.Covenants.

(a)Affirmative. From and including the Effective Date until Closing or the earlier termination of this Agreement, Seller shall: (i) maintain, repair and keep each Location in good condition and repair in the ordinary course in all material respects and in material compliance with all Legal Requirements and matters of record; (ii) maintain the insurance coverage currently in effect for the Property, or comparable coverage, through the Closing Date; and (iii) give prompt written notice to Buyer upon: (A) receiving any written notices of default or any written notices of lawsuits affecting Seller and/or any part of the Property; (B) receiving any written notices of lawsuits affecting Lease Guarantor which could reasonably be expected to have a material adverse effect on Lease Guarantor’s ability to perform its obligations under any Lease Guaranty; (C) acquiring knowledge of any casualty or condemnation of any part of any Location, whether actual, or pending; (D) acquiring knowledge of the presence of any Hazardous Substances in violation of any Environmental Law on, in, under or about any part of any Location; (E) receiving written notice from a Governmental Authority of a material violation of any Legal Requirements with respect to the condition or use of any part of a Location; (F) acquiring knowledge of the conduct or occurrence of an inspection of any part of a Location by a Governmental Authority; or (G) acquiring knowledge of any fact or circumstance that renders (or is likely to render as of the Closing Date) any of Seller’s or Lease Guarantor’s representations or warranties untrue or inaccurate in any material respect, or any of the conditions of this Agreement unfulfilled. Seller shall provide to Buyer, when the results become

available to Seller but in any event prior to five (5) Business Days prior to the end of the Due Diligence Period, sales and EBITDAR reports for each Location covering Seller’s fiscal quarter ending January 31, 2016 on a then last 12 month basis (collectively, the “Interim Financial Reports”).

(b)Negative. From and including the Effective Date until Closing or the earlier termination of this Agreement, neither Seller nor Lease Guarantor shall do, cause, permit or authorize any of the following, unless, in each case, Buyer’s prior written consent has been obtained: (i) enter into any new, or amend any existing, lease, easement, contract or agreement affecting or encumbering a Location (or any part thereof); (ii) assign, transfer, convey, hypothecate, create a security interest in or lien upon, grant any easement or right-of-way, or otherwise further encumber any part of a Location or any interest therein or take any other action that would affect the title to any part of a Location as it exists as of the Effective Date; or (iii) amend or otherwise modify the Organizational Documents or structure of Seller or Lease Guarantor in a manner that is adverse to Buyer or the transactions contemplated by this Agreement, any Lease, or any Lease Guaranty, and provided further that no amendment or modifications to the Organizational Documents or structure of Seller or Lease Guarantor shall be made after the date that is five (5) business days prior to the Closing Date.

(c)Publicity. Buyer, Seller and Lease Guarantor each hereby covenants and agrees that: (i) prior to Closing, none of Seller, Buyer or Lease Guarantor shall issue any press release or public statement with respect to any of the transactions contemplated by this Agreement without the prior consent of the others, except to the extent required by Legal Requirements, and (ii) after the Closing, any such press release or public statement issued by Buyer, Seller or Lease Guarantor shall be subject to the review and approval of the other parties (which approval shall not be unreasonably withheld, conditioned or delayed), except to the extent required by Legal Requirements, which obligations under this clause (ii) shall survive the Closing and the transfer of title to the Property. If Buyer, Seller or Lease Guarantor is required by Legal Requirements to issue a press release or public statement, such party shall, at least three (3) business days prior to the issuance of the same, deliver a copy of the proposed press release or public statement to the other party for its review.

1.Casualty. Seller agrees to give Buyer prompt notice of any material damage or destruction of any Location or any portion thereof. In the event that prior to Closing any part of any Location is destroyed or damaged and the cost to restore the Location exceeds $250,000, Buyer shall have the right, exercisable by giving notice to Seller within ten (10) business days after receiving written notice of such damage or destruction, to either: (a) terminate this Agreement as to the affected Location, in which event the applicable provisions of Section 4 shall control; or (b) accept the affected Location in its then condition and to proceed with the Closing; provided, however, that in the event that Buyer elects to proceed under clause (b) or if the cost to restore is $250,000 or less, then any insurance proceeds related to such damage shall be made available to Seller and Seller shall repair and restore the affected Location to its condition immediately prior to such damage promptly after Closing in accordance with the applicable Lease, there shall be no abatement or reduction of Base Annual Rental under the applicable Lease (as Base Annual Rental is defined in the form of Lease) and Seller shall not compromise, settle or adjust any claims to such proceeds without Buyer’s prior written consent. If Buyer exercises its rights under Subsection 8(b) or if the cost to restore the affected Location is $250,000 or less, then the immediately preceding sentence shall survive Closing and the transfer of title as to the affected Location until such affected Location is repaired and restored.

2.Condemnation. Seller agrees to give Buyer prompt notice of any taking, condemnation or eminent domain proceeding of any Location or any portion thereof. In the event that prior to the Closing, all or any portion of any Location is subject to a taking or a condemnation by public authority and the portion subject to a taking or a condemnation would, in Buyer’s good faith opinion, render the Location unusable for Seller’s use thereof or otherwise have a material adverse impact of the value of such Location, as determined by Buyer in good faith (each a “Material Taking”), Buyer shall have the right, exercisable by giving notice to Seller within ten (10) business days after receiving written notice of such taking or condemnation, to either: (a) terminate this Agreement as to the affected Location in which event the applicable

provisions of Section 4 shall control, or (b) accept the affected Location in its then condition; provided, however, that in the event that Buyer elects to proceed under clause (b) or if the taking, condemnation or eminent domain proceeding is not a Material Taking, then any condemnation award related to such taking shall be handled as provided for in the applicable Lease with respect to such Location, there shall be no abatement or reduction of Base Annual Rental under such Lease and Seller shall not compromise, settle or adjust any claims to such award without Buyer’s prior written consent. If Buyer exercises its rights under Subsection 9(b) or if the affected Location is not a Material Taking then the immediately preceding sentence shall survive Closing and the transfer of title as to the affected Location until the condemnation award for such affected Location is final.

3.Conditions Precedent to Closing.

(a)Buyer. Unless waived in writing by Buyer, the obligation of Buyer to Close is subject to the fulfillment of all of the following conditions on or prior to the Closing Date: (i) the respective representations and warranties made by Seller and Lease Guarantor in this Agreement shall be true and correct in all material respects, and all of the terms, provisions, covenants, conditions, agreements and obligations required to be performed by Seller and Lease Guarantor under this Agreement shall have been performed, met or complied with in all material respects; (ii) Seller and Lease Guarantor shall have delivered their respective Closing documents pursuant to Section 11(c) and Section 11(d) of this Agreement; (iii) there shall be no action or proceeding, instituted, or pending in writing against or involving Seller, Lease Guarantor or any Location before any Governmental Authority that (A) could reasonably be expected to have a material adverse impact on (1) Seller’s ability to Close, or (2) the value of any Location or (B) would constitute a default under a Lease or a Lease Guaranty; (iv) the financial condition of either Seller or Lease Guarantor shall not have materially deteriorated on or after the date that is two business days prior to the end of the Due Diligence Period from the financial condition thereof disclosed in the Interim Financial Reports delivered to Buyer prior to such date; (v) Seller shall have delivered to Buyer, Landlord and Lender copies of all Association Estoppels if any were requested in Buyer’s Title Objections; (vi) Seller shall have delivered to Buyer insurance certificates confirming compliance, as of the Closing Date, with the insurance requirements of each Lease; (vii) all real estate taxes and assessments due and owing for each Location must be paid in full; and (viii) Title Company shall be irrevocably committed to issue the Title Policies. In the event any of the conditions in this Section 10(a) have not been satisfied (or otherwise waived in writing by Buyer) on or prior to the Closing Date, then Buyer shall have the right, in its sole discretion, by written notice to Seller, to: (A) terminate this Agreement as to the affected Location or Locations, in which event the applicable provisions of Section 4 shall control; (B) as to those conditions that pertain to Seller or Lease Guarantor generally (that is, excluding conditions that relate to a particular Location or to the ability of Seller to operate its business at a particular location) and that are not cured by Seller within five (5) Business Days following notice thereof from Buyer, terminate this Agreement at any time by written notice to Seller, whereupon (x) Escrow Agent shall return the Earnest Money Deposit to Buyer, and (y) except for those provisions of this Agreement which by their express terms survive the termination of this Agreement, no party hereto shall have any other or further rights or obligations under this Agreement; or (C)if applicable, exercise Buyer’s remedy pursuant to Section 13 below.

(b)Seller. Unless waived in writing by Seller, the obligation of Seller and Lease Guarantor to Close is subject to the fulfillment of all of the following conditions on or prior to the Closing Date: (i) the representations and warranties made by Buyer in this Agreement shall be true and correct in all material respects, and all of the terms, provisions, covenants, conditions, agreements and obligations required to be performed by Buyer under this Agreement shall have been performed, met or complied with in all material respects; (ii) Buyer shall have delivered its Closing documents and balance of the Purchase Price pursuant to Section 11(b) of this Agreement; and (iii) the Other Purchase Agreement shall have simultaneously closed unless the failure to close is due to Seller’s default thereunder. In the event any of the conditions in this Section 10(b) have not been satisfied (or otherwise waived in writing by Seller and Lease Guarantor) on or prior to the Closing Date and the same are not cured by Buyer within five (5) Business Days following notice

thereof from Seller, Seller and Lease Guarantor shall have the right, in their sole discretion, to either: (A) terminate this Agreement at any time by written notice to Buyer, whereupon, (x) Escrow Agent shall pay the Earnest Money Deposit to Seller and (y) except for those provisions of this Agreement which by their express terms survive the termination of this Agreement, no party hereto shall have any other or further rights or obligations under this Agreement; or (B) if applicable, exercise Seller’s remedy pursuant to Section 12 below.

(c)The cure periods referenced in the foregoing Sections 10(a) and (b) shall run concurrently with any applicable cure periods set forth in Section 12 and Section 13.

(d)In the event that, by reason of either (i) a termination of the Other Purchase Agreement by Seller by reason of a default by Other Purchaser thereunder or (ii) a termination of the Other Purchase Agreement by the Other Purchaser pursuant to Section 4(a) thereof, the total number of remaining Locations under this Agreement is less than the Minimum Number of Locations, Seller, at Seller’s sole option, may terminate this Agreement by written notice to Buyer, whereupon the Earnest Money Deposit shall be returned to the Buyer and the parties shall have no further obligation to one another hereunder.

4.Closing.

(a)Generally. Closing shall occur on or before the Closing Date in mail away format (the parties will not be present at Closing) with immediately available funds and Closing documents delivered to Escrow Agent, in escrow, on or before the Closing Date. Escrow Agent shall serve as the closing agent and shall be responsible for preparing the closing statement, the Deeds and customary transfer documents in accordance with and subject to the terms and conditions of this Agreement.

(b)Buyer Closing Documents. Buyer shall deliver to Escrow Agent on or before the Closing Date: (i) a counterpart of the closing statement executed by Buyer; (ii) duplicate originals of each Lease executed by the applicable Landlord; (iii) one original Memorandum of Lease for each Location executed by the applicable Landlord; (iv) an original Organization and Authorization Certificate executed by Buyer; (v) any other documents, instruments or agreements called for under this Agreement or applicable Legal Requirements, which have not previously been delivered or which are reasonably necessary to Close; and (vi) the balance of the Purchase Price and all other funds due and owing from Buyer to Seller, after all applicable credits, adjustments and prorations called for under this Agreement.

(c)Seller Closing Documents. Seller shall deliver to Escrow Agent on or before the Closing Date: (i) a counterpart of the closing statement executed by Seller; (ii) one original Deed for each Location executed by Seller in favor of the applicable Landlord; (iii) duplicate originals of each Lease executed by Seller; (iv) one original Memorandum of Lease for each Location executed by Seller; (v) an original Organization and Authorization Certificate executed by Seller; (vi) an original Bill of Sale and Assignment executed by Seller in favor of each Landlord; (vii) a Title Affidavit with respect to each Location in favor of Buyer confirming Seller’s knowledge with respect to certain title matters, in form and substance reasonably satisfactory to Buyer, executed by Seller; (viii) a subordination, non-disturbance and attornment agreement with Lender and an estoppel certificate in favor of Buyer, the applicable Landlord, Lender and their respective successors and assigns with respect to each Lease in the forms contemplated by such Lease; and (ix) any other documents, instruments, agreements or curatives called for under this Agreement or applicable Legal Requirements, which have not previously been delivered or which are reasonably necessary to Close, including, without limitation, such affidavits as the Title Company may reasonably require in order to issue, without additional charge, the Title Policies.

(d)Lease Guarantor Closing Documents. Lease Guarantor shall deliver to Escrow Agent on or before the Closing Date: (i) a counterpart of the closing statement executed by Lease Guarantor; (ii) an original Lease Guaranty executed by Lease Guarantor with respect to each Lease; (iii) an original Organization and Authorization Certificate executed by Lease Guarantor; and (iv) any other documents, instrument or agreements called for under this Agreement or applicable Legal Requirements, which have not previously been delivered or which are reasonably necessary to Close.

(e)Costs.

(i)Seller shall be responsible for: (A) the cost to record the Deeds;

(ii) (B) the actual costs incurred by the Title Company in preparing the Title Commitments; (C)  the costs, including premiums, charged for the Title Policies, and to issue the Endorsements (other than any zoning endorsements); (D) Escrow Agent’s closing fee; (E) any and all Transfer Taxes (regardless of the party responsible for any such tax under applicable Legal Requirements); (F) the cost to record each Memorandum of Lease (including any taxes associated therewith); (G) the cost of any charges to Remove all liens, encumbrances and other exceptions to coverage required to be removed by this Agreement including, without limitation, the cost to record applicable curative documents; and (H) the cost of the Surveys, Inspection Reports, and Appraisals (collectively, the “Transaction Costs”). Buyer shall be responsible for the costs related to any loan policies of title insurance and any endorsements required therewith.

(iii)Except as otherwise provided in Section 13 or Section 16, Buyer, Seller and Lease Guarantor shall pay for their own legal fees. Any and all other closing costs not specifically addressed in this Section 11(e) shall be paid in accordance with the customs and practices of the jurisdiction where each Location is located, with Seller also being responsible for all such costs customarily paid by tenants in similar transactions.

(a)Prorations and Apportionments. As set forth in each Lease, Seller will be responsible for the payment of all utilities, taxes, assessments, charges and costs of every kind and nature associated with the operation and use of a Location. As such, Buyer and Seller shall not adjust, prorate or apportion any such items at Closing but rather Seller shall continue to be fully responsible for all such items. Seller shall have no claims against Buyer, and Seller hereby releases Buyer from and agrees to indemnify and hold Buyer harmless from all claims and liability with respect to the agreement herein not to make any such adjustments, prorations and apportionments.

(b)Rent. The first partial payment of Base Monthly Rental (as defined in each Lease) under each Lease shall be made by Seller at Closing and shall be prorated to cover the period from and including the Closing Date through and including the last day of the calendar month in which the Closing occurs. In the event the Closing occurs after the 25th day of the month, Seller shall also pay at Closing the full payment of Base Monthly Rental due under each Lease for the month following the month of Closing.

(c)Application of Proceeds. If there shall be any Monetary Encumbrances that Seller is obligated to pay and discharge in whole or part at Closing, Title Company may use the net proceeds due Seller at Closing to release and discharge the same, and Seller shall satisfy Title Company’s reasonable requirements with respect to the delivery of documents necessary for Title Company to issue the Title Policies without exception for such Monetary Encumbrances, including, without limitation, payment of the cost of recording or filing said instruments which shall be deducted from the balance of the Purchase Price payable to Seller at Closing.

(d)Possession and Condition. At Closing, Seller shall deliver to Buyer full possession and occupancy of the Locations on which Buyer and Seller closed free from all claims of occupancy or use of any kind whatsoever, except for Permitted Encumbrances and Seller’s right to occupy and use the same pursuant to the terms of the applicable Lease. Buyer acknowledges and agrees that the Locations are being purchased by Buyer in an “AS IS” and “WHERE IS” condition. Seller and Lease Guarantor acknowledge and agree that the Locations are being leased to Seller in an “AS IS” and “WHERE IS” condition. Buyer, the applicable Landlord and Seller shall accept the Locations at the time of Closing in the same condition as the Locations are in as of the Effective Date, as such condition shall have changed by reason of ordinary wear and tear.

(e)Broker’s Fees. Buyer, Seller and Lease Guarantor each represents and warrants to the others that there are no fees or commissions due as a result of their employment of any broker, except that JP Morgan, Quantum Global, LLC and Franchise Capital Advisors (collectively, the “Broker”) are acting as Seller’s agents and shall be compensated at Closing by Seller pursuant to a separate written agreement. Seller and Lease Guarantor shall indemnify and hold Buyer harmless from all claims and expenses of Broker in connection with this Agreement. Buyer, Seller and Lease Guarantor each agree to indemnify and hold the

others harmless for any and all claims and expenses, including legal fees, if any fees or commission is determined to be due by reason of employment of a broker other than the Broker. The terms of this Section 11(j) shall survive Closing and the transfer of title or the earlier termination of this Agreement.

(f)Tax Deferred Exchange. Buyer and Seller agree to cooperate with each other in effecting for the benefit of either party a tax deferred exchange pursuant to Section 1031 of the United States Internal Revenue Code and similar provisions of applicable state law; provided that: (i) neither party shall be obligated to delay the Closing; and (ii) neither party shall be obligated to execute any note, contract, deed or other document not otherwise expressly provided for in this Agreement providing for any personal liability, nor shall either party be obligated to take title to any property other than the Locations as otherwise contemplated in this Agreement or incur additional expense for the benefit of the other party. Each party shall indemnify and hold the other harmless against any liability arising or is claimed to have arisen on account of any exchange proceeding which is initiated on behalf of the indemnifying party. The terms of this Section 11(k) shall survive Closing and the transfer of title.

1.Default by Buyer; Liquidated Damages. Prior to Closing, provided that Seller and Lease Guarantor are both ready, willing and able to Close and also that neither Seller nor Lease Guarantor is in material default of this Agreement, then, if any of Buyer’s representations and warranties in this Agreement prove to be untrue in any material respect, or if Buyer materially defaults in the performance of its obligations under this Agreement at any time after the expiration of the Due Diligence Period, and Buyer fails to cure such default or breach within five (5) business days after Seller or Lease Guarantor have provided written notice of such default to Buyer, the parties agree that Seller and Lease Guarantor may, as their sole and exclusive remedy, terminate this Agreement upon written notice delivered to Buyer and in which event the Escrow Agent shall immediately pay to the Seller the Earnest Money Deposit. The parties agree that (i) the amount of the Earnest Money Deposit is a reasonable sum considering all of the circumstances existing on the date of this Agreement, including the relationship of its amount to the range of harm to Seller and Lease Guarantor that reasonably could be anticipated, and the anticipation that proving actual damages would be costly, impracticable and extremely difficult, and (ii) retention of the Earnest Money Deposit by Seller and Lease Guarantor as liquidated damages is not intended as a forfeiture or penalty, but instead is intended to constitute liquidated damages to Seller and Lease Guarantor. Receipt by Seller and Lease Guarantor of the Earnest Money Deposit as liquidated damages as set forth above shall not prohibit Seller from enforcing its indemnification rights under Section 4 against Buyer.

2.Default by Seller and/or Lease Guarantor; Liquidated Damages. Prior to Closing, provided that Buyer is ready, willing and able to Close and also that Buyer is not in material default of this Agreement, then if at that time, any of Seller’s or Lease Guarantor’s representations and warranties in this Agreement prove to be untrue in any material respect, or if Seller or Lease Guarantor otherwise materially defaults in the performance of any of their respective obligations under this Agreement with respect to one or more Locations and Seller or Lease Guarantor fails, within five (5) businessdays after Buyer has provided written notice of such default to Seller, to cure such default, Buyer may, by written notice to Seller prior to Closing, as its sole remedy with respect to such default, elect one of the following, as applicable:

(1) Terminate this Agreement by written notice to Seller as to any such Locations as to which the default is not the result of any intentional act or omission of Seller or Lease Guarantor in which event the provisions of Section 4 shall control except that Seller shall reimburse Buyer for all of Buyer’s customary and reasonable third party out-of-pocket costs and other expenses relating to Buyer’s due diligence in respect of such Terminated Locations (including reasonable attorneys’ fees) and, if applicable, Buyer shall also have the remedy set forth in clause (3) below;

(2) If the default is the result of one or more intentional acts or omissions of Seller or Lease Guarantor, terminate this Agreement upon written notice delivered to Seller in which event:

(a) Escrow Agent shall immediately refund the Earnest Money Deposit to Buyer;

(b) Seller shall (i) reimburse Buyer for all of Buyer’s customary and reasonable third party out-of-pocket costs and other expenses relating to Buyer’s due diligence in respect of the

transaction contemplated by this Agreement (including reasonable attorneys’ fees), (ii) reimburse Buyer for reasonable and customary breakage costs, loan deposits and loan fees and (iii) pay the Transaction Costs, if earned and unpaid, provided however, that the total of all amounts paid by Seller under the foregoing clauses (i) and (ii) shall not exceed $ 366,000; and

(c) If such default by Seller or Lease Guarantor occurs prior to the date upon which Buyer makes the Additional Deposit following the end of the Due Diligence Period, Seller agrees (as a covenant that will survive such termination) that it shall not, within nine (9) months from the Effective Date transfer, directly or indirectly, or permit the transfer, directly or indirectly, of more than 20 Original Locations to any person or persons other than (1) an Affiliate that exists on the Effective Date or any subsequently created subsidiary of any such Affiliate (each an “Existing Affiliate Transferee”), provided that in the case of such transfer to an Existing Affiliate Transferee, such transferee shall not make a further transfer in violation of this clause (c), (2) pursuant to order of a Governmental Authority, (3) a charitable organization, (4) Buyer or (5) a Landlord. For purposes of this clause (c), a “transfer” shall include any merger or other reorganization, or the sale of assets of Seller, Lease Guarantor or Existing Affiliate Transferee that results in more than 20 Original Locations being owned, directly or indirectly, by another person or entity. For purposes of this Section 13(c), “transfer” shall not include subjecting a Location to a mortgage or a deed of trust. In the event of a breach by Seller of this Section 13(c), Seller shall pay to Buyer the amount of $549,000.00 as liquidated damages for such breach. The parties agree that (i) the amount of the liquidated damages is a reasonable sum considering all of the circumstances existing on the date of this Agreement, including the relationship of its amount to the range of harm to Buyer that reasonably could be anticipated, and the anticipation that proving actual damages would be costly, impracticable and extremely difficult, and (ii) payment to Buyer of such liquidated damages is not intended as a forfeiture or penalty, but instead is intended to constitute liquidated damages to Buyer; or

(3) If and only if Buyer has made the Additional Deposit following the expiration of the Due Diligence Period, exercise the remedy of specific performance.

If a Landlord becomes aware, and Buyer’s knowledge is imputed to each Landlord, after Closing, that any of Seller’s or Lease Guarantor’s representations and warranties in this Agreement were untrue in any material respect when made, subject to the other limitations set forth in Section 6 and elsewhere in this Agreement, such Landlord shall have the right to pursue any remedies available at law or in equity for a breach of said representations and warranties; provided, however, in order for such Landlord to pursue any such remedies, such Landlord must send notice to Seller of its intent to do so prior to the expiration of the Survival Period. Such Landlord’s post-Closing rights under this Section 13 shall be in addition to any of the its rights under its Lease, and the rights of such Landlord under such Lease for the same or similar representations and warranties made under such Lease shall not be affected by the expiration of the Survival Period. The immediately-preceding two sentences of this Section 13 shall survive Closing and the transfer of title.

3.Disposition of Earnest Money Deposit. In the event Escrow Agent is instructed by Buyer to return the Earnest Money Deposit to Buyer, or Escrow Agent otherwise intends to disburse or return all or any portion of the Earnest Money Deposit to Buyer based on Escrow Agent’s interpretation of this Agreement or otherwise, before making any such return or disbursement, Escrow Agent shall notify Seller of Buyer’s demand or Escrow Agent’s intention, and, unless Escrow Agent receives written objection from Seller within five (5) business days thereafter stating that there is a genuine dispute as to who is entitled to the Earnest Money Deposit and describing the basis of Seller’s

objection, then Escrow Agent shall return the Earnest Money Deposit to Buyer. If Escrow Agent receives a written objection from Seller within said 5-business day period, Escrow Agent shall not return or disburse all or any portion of the Earnest Money Deposit to Buyer. In the event Escrow Agent is instructed by Seller to release the Earnest Money Deposit to Seller, or Escrow Agent otherwise intends to disburse all or any portion of the Earnest Money Deposit to Seller based on Escrow Agent’s interpretation of this Agreement or otherwise, before making any such disbursement, Escrow Agent shall notify Buyer of Seller’s demand or Escrow Agent’s intention, and, unless Escrow Agent receives written objection from Buyer within five (5) business days thereafter stating that there is a genuine dispute as to who is entitled to the Earnest Money Deposit and describing the basis of Buyer’s objection, Escrow Agent shall release and disburse the Earnest Money Deposit to Seller. If Escrow Agent receives a written objection from Buyer within said 5-business day period, Escrow Agent shall not release or disburse the Earnest Money Deposit to Seller. Except for the willful misconduct or gross negligence of Escrow Agent or Escrow Agent’s default of its obligations under this Agreement, Escrow Agent shall have no liability to either Buyer or Seller in acting or refraining from acting hereunder. In the event there is any dispute as to the proper disbursement of the Earnest Money Deposit, Escrow Agent shall be entitled to deposit the Earnest Money Deposit with a court of competent jurisdiction in Franklin County, Ohio, and to interplead each of Buyer and Seller in an appropriate interpleader action. Escrow Agent shall not release, return or disburse the Earnest Money Deposit or any portion thereof, except: (a) in strict compliance with the terms of this Section 14; (b) in accordance with a joint written direction signed by Seller and Buyer; or (c) in obedience to a court order issued by a court of competent jurisdiction. Notwithstanding anything contained in this Section 14 to the contrary, Escrow Agent shall immediately return the Earnest Money Deposit to Buyer upon receipt of notice of termination of this Agreement by Buyer at any time prior to the expiration of the Due Diligence Period and Seller shall have no rights to object as contemplated in this Section 14.

4.Confidentiality. Buyer, Seller and Lease Guarantor acknowledge that any and all information that either party has heretofore furnished or hereafter furnishes to any of the others with respect to the Property, the transactions contemplated by this Agreement or other non-public proprietary or confidential information of the parties has been and will be furnished on the condition that the receiving party maintains the confidentiality thereof until Closing. Accordingly, prior to Closing, Buyer, Seller and Lease Guarantor shall not disclose, and shall prohibit their respective agents, consultants, employees, representatives and any parties identified in clause (i) below (each, a “Receiving Agent”) from disclosing, to any other person or entity without the prior written consent of the non-disclosing party: (a) the material terms of this Agreement; (b) any of the information in respect of the Property, including, but not limited to, the Due Diligence Documents and any information heretofore or hereafter obtained by Buyer or its Receiving Agents, consultants or representatives in connection with Buyer’s due diligence investigations of the Property; and (c) any other non-public proprietary or confidential information of the disclosing party. In the event the Closing does not occur or this Agreement is terminated, each party shall, upon request from the other, promptly return to the other all documents containing any of such information without retaining any copy thereof or extract therefrom except as provided in this Section 15. Notwithstanding anything to the contrary hereinabove set forth, either party may disclose such information (i) on a need-to-know basis to the Title Company, to receiving party’s agents, employees, consultants, managers, investors, lenders, accountants, attorneys and contractors, to its potential lenders and subsequent purchasers, and to members of professional firms serving it or its potential lenders and (ii) as may be necessary to comply with applicable Legal Requirements or a court order. Notwithstanding the foregoing, the foregoing confidentiality obligation shall not apply to any such information that (1) is or becomes generally available to the public other than as a result of a breach of this Agreement; (2) is obtained by receiving party or its Receiving Agents on a non-confidential basis from a third-party that, to receiving party’s knowledge, was not legally or contractually restricted from disclosing such information; (3) was in receiving party’s or its Receiving Agents’ possession prior to disclosing party’s

disclosure hereunder; or (4) was or is independently developed by receiving party or its Receiving Agents without using any such confidential information. Notwithstanding the foregoing, the recipient and its Receiving Agents may: (i) pursuant to its and their records retention policies and regulatory obligations, have the right to retain copies of any confidential information provided to the party or its Receiving Agents so long as it and they keep such confidential information in accordance with the confidentiality and other provisions of this Section 15; and (ii) retain any confidential information to the extent it is “backed-up” on its or their electronic information management and communications system or servers. Notwithstanding the retention of any confidential information provided hereunder, any recipient and its Receiving Agents will continue to be bound by their obligations of confidentiality and other obligations under this Section 15. The terms of this Section 15 shall survive the termination of this Agreement.

5.Attorney Fees. Except as otherwise provided in this Agreement, in a suit to enforce this Agreement or any provision contained herein, the party prevailing in such suit shall be entitled to recover, in addition to all other remedies or damages allowed pursuant to this Agreement, reasonable legal expenses, attorney and paralegal fees and court costs incurred in such suit and any appeal thereof. This paragraph shall survive Closing or the early termination of this Agreement.

6.Notices. Any notice, request, tender, demand, delivery, approval or other communication provided for, required or arising under this Agreement shall be in writing and shall be deemed delivered: (a) if delivered in person, upon delivery to an individual or to an officer of an entity; (b) if delivered via overnight courier with instructions to deliver the next business day, one business day after delivery to such overnight courier addressed to the other party or parties at the address or addresses below or at such other address or addresses of which such party may give notice in accordance with the provisions of this Section 17; or (c) if by email, upon receipt of confirmation of the email transmittal, transmitted to the other party or parties at the email address or addresses provided below or such other email address or addresses of which such party may give notice in accordance with the provisions of this Section 17. Any and all such notices may be given on behalf of either party by its below named attorney.

Buyer:Mesirow Realty Sale-Leaseback, Inc.

353 North Clark Street

Chicago IL 60654

Attn: Senior Managing Director

Email: dbarker@mesirowfinancial.com

With a copy to:Grady Bell LLP

53 West Jackson Blvd., Suite 1250

Chicago IL 60604

Attn: Stephen Bell

Email: sbell@gradybell.com

Seller andBob Evans Farms, LLC

Lease Guarantor:Bob Evans Farms, Inc.

8111 Smith’s Mill Road

New Albany, Ohio 43054

Attn: Chief Financial Officer

Email: Mark_Hood@BobEvans.Com

With a copy to:Bob Evans Farms, LLC

8111 Smith’s Mill Road

New Albany, Ohio 43054

Attn: General Counsel

Email: Colin_Daly@BobEvans.Com

and

Vorys Sater Seymour and Pease LLP

52 East Gay Street

Columbus, Ohio 43215

Attn: Daniel J. Minor

Sheila Nolan Gartland

Email: djminor@vorys.comSngartland@vorys.com

7.Miscellaneous.

(a)Further Assurances. Buyer, Seller and Lease Guarantor shall in good faith cooperate with each other in satisfying all conditions contained in this Agreement, including, without limitation, executing or re-executing any and all documents reasonably required to be executed by Seller as record owner of the Locations to accomplish any verifications, approvals or determinations. Buyer, Seller and Lease Guarantor agree that they will, at any time and from time to time after Closing, upon request of the other party, do, execute, acknowledge and deliver, or will cause to be done, executed, acknowledged and delivered, all such further acts, assignments, transfers, conveyances, and assurances as may be reasonably required in order to more fully complete the terms of this Agreement to the extent usual and customary for commercial real estate closings where the applicable Location is located.

(b)Assignment. No party may assign this Agreement, in whole or in part, without the prior written consent of the other parties, provided however, Buyer may assign, without the consent of Seller (i) all of its rights and obligations hereunder to one or two entities (each a “Landlord”) provided each such assignee shall be 100% owned and controlled by Buyer or (ii) its rights and obligations hereunder with respect to some or all of the Locations to one or more of the entities that are a “Landlord” under the Other Purchase Agreement and, in the case of (i) or (ii), such assignee or assignees execute an assumption agreement reasonably acceptable to Seller under which such assignee or assignees assumes all of Buyer’s obligations hereunder. Notwithstanding the foregoing, Buyer shall not be released and will remain responsible for the performance of all of Buyer’s and/or any permitted assignee’s obligations under this Agreement.

(c)Survival. The representations and warranties of the parties contained in this Agreement shall survive the Closing and the transfer of title to the Property for a period of twelve (12) months (the “Survival Period”).

(d)Successors and Assigns. All terms of this Agreement shall be binding upon, and inure to the benefit of and be enforceable by the parties hereto and their respective, successors and permitted assigns.

(e)Modifications. No modification, waiver, amendment, discharge or change of this Agreement, except as otherwise provided herein, shall be valid unless the same is in writing and signed by the party against which the enforcement of such modification, waiver, amendment, discharge or change is sought. This Agreement contains the entire agreement between the parties relating to the transactions contemplated hereby, and all prior or contemporaneous agreements, understandings, representations and statements, oral or written, including without limitation, that certain letter of intent between Buyer and Seller dated December 16, 2015, are merged herein. Without limiting the generality of the foregoing, this Agreement alone fully and completely expresses the agreement between the parties and it is specifically understood that no oral representation is binding on Buyer, Seller or Lease Guarantor.

(f)Governing Law and Venue. This Agreement shall be construed and enforced in accordance with the laws of the State of Ohio. Each party hereto consents to the jurisdiction of any court of

competent jurisdiction located in Franklin County, Ohio for any action arising out of matters related to this Agreement. Each of the parties hereto waives the right to commence an action in connection with this Agreement in any court outside of said county.

(g)Interpretation. The principle that an agreement should be construed against the party drafting the agreement shall not apply to this Agreement as both parties hereto have contributed substantially in the negotiation and drafting of this Agreement. The captions of this Agreement are inserted for convenience of reference only and do not define, describe or limit the scope or the intent of this Agreement of any term hereof. All personal pronouns used in this Agreement, whether used in the masculine, feminine, or neuter gender, shall include all other genders. The singular shall include the plural and vice versa.

(h)Invalid Provision. If any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future laws, such provision shall be fully severable and the remaining provisions of this Agreement shall remain in full force.

(i)Time of Essence. Time is of the essence of this Agreement. However, if the final date of any time period under or provided by this Agreement falls on a day that is not a business day, then, and in such event, the time of such period shall be extended to the next business day.

(j)Waiver. Each of the parties hereto reserves the right to waive, in whole or in part, any provision hereof which is for its benefit.

(k)Non-Recording. Neither this Agreement nor any memorandum or disclosure thereof shall be recorded without the prior written consent of all parties to this Agreement.

(l)Counterparts. This Agreement may be executed in any number of counterparts, each of which, when taken together and confirmed between the attorneys identified herein, shall constitute but one and the same fully executed instrument. Signatures on counterparts of this Agreement that are delivered via fax, email or by other electronic means are authorized and shall be acknowledged as if such signatures were an original execution.

(m)Schedules and Exhibits. The following schedule and exhibits attached hereto are hereby expressly made a part of this Agreement:

(i)SCHEDULE 1 - Certain Unrecorded Third Party Leases

(ii)SCHEDULE 2 - Eminent Domain Matters

(iii)SCHEDULE 3 - List of Litigation

(iv)EXHIBIT A - List of Locations and Substitution Locations

(v)EXHIBIT B - Master Lease Agreement

(vi)EXHIBIT C - Organization and Authorization Certificate

(vii)EXHIBIT D - Lease Guaranty

[SIGNATURE PAGES FOLLOW]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

BUYER: MESIROW REALTY SALE-LEASEBACK, INC., an Illinois corporation

By: /s/ Doug Barker

Name: Doug Barker

Title: Sr. Managing Director

[SELLER & LEASE GUARANTOR SIGNATURE PAGE FOLLOWS]

SELLER:	BOB EVANS FARMS, LLC, an Ohio limited liability company By: /s/ Mark E. Hood      Mark E. Hood,      Manager and Chief Financial Officer
LEASE GUARANTOR:	BOB EVANS FARMS, INC., a Delaware corporation By:/s/ Mark E. Hood      Mark E. Hood,      Chief Administrative Officer and Chief      Financial Officer

[ESCROW AGENT SIGNATURE PAGE FOLLOWS]

Escrow Agent joins in the execution hereof solely for the purpose of evidencing its agreement to hold, administer and disburse the Earnest Money Deposit pursuant to the terms of the foregoing Agreement.

ESCROW AGENT:FIDELITY NATIONAL TITLE

By: /s/ Sherry Phillips

Name: Sherry Phillips

Title: Commercial Escrow

EX-31.1

Exhibit 31.1

Rule 13a-14(a)/15d-14(a) CERTIFICATION

I, Saed Mohseni, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Bob Evans Farms, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 2, 2016

/s/ Saed Mohseni

Saed Mohseni

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Rule 13a-14(a)/15d-14(a) CERTIFICATION

I, Mark E. Hood, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Bob Evans Farms, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors:

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 2, 2016

/s/ Mark E. Hood

Mark E. Hood

Chief Administrative Officer and Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

SECTION 1350 CERTIFICATION*

In connection with the Quarterly Report of Bob Evans Farms, Inc. (the “Company”) on Form 10-Q for the quarterly period ended January 22, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Saed Mohseni, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 2, 2016

/s/ Saed Mohseni

Saed Mohseni

President and Chief Executive Officer

(Principal Executive Officer)

 * This certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise stated in such filing.

EX-32.2

Exhibit 32.2

SECTION 1350 CERTIFICATION*

In connection with the Quarterly Report of Bob Evans Farms, Inc. (the “Company”) on Form 10-Q for the quarterly period ended January 22, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark E. Hood, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 2, 2016

/s/ Mark E. Hood

Mark E. Hood

Chief Administrative Officer and Chief Financial Officer

(Principal Financial Officer)

* This certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise stated in such filing.

XML

Document and Entity Information - shares	9 Months Ended
	Jan. 22, 2016	Feb. 26, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Document Period End Date	Jan. 22, 2016
Amendment Flag	false
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Entity Registrant Name	Bob Evans Farms Inc.
Entity Central Index Key	0000033769
Current Fiscal Year End Date	--04-29
Entity Filer Category	Large Accelerated Filer
Entity Common Stock Shares Outstanding		19,800,838

XML

CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Jan. 22, 2016	Apr. 24, 2015
Current Assets
Cash and equivalents	$ 7,680	$ 6,358
Accounts receivable, net	28,827	26,100
Inventories	23,275	24,620
Deferred income taxes	16,974	16,117
Federal and state income taxes receivable	4,530	23,722
Prepaid expenses and other current assets	8,235	5,035
Current assets held for sale	12,221	22,243
Total Current Assets	101,742	124,195
Property, Plant and Equipment	1,564,698	1,585,882
Less accumulated depreciation	799,768	756,015
Net Property, Plant and Equipment	764,930	829,867
Other Assets
Deposits and other	5,093	3,756
Notes receivable	20,420	18,544
Rabbi trust assets	20,534	32,302
Goodwill and other intangible assets	19,868	19,986
Non-current deferred tax assets	2,326	2,326
Long-term assets held for sale	0	1,611
Total Other Assets	68,241	78,525
Total Assets	934,913	1,032,587
Current Liabilities
Current portion of long-term debt	417	409
Accounts payable	28,238	30,019
Accrued property, plant and equipment purchases	3,283	4,820
Accrued non-income taxes	17,832	14,951
Accrued wages and related liabilities	22,851	34,529
Self-insurance reserves	21,644	18,900
Deferred gift card revenue	18,659	13,714
Current reserve for uncertain tax provision	1,481	1,594
Other accrued expenses	43,059	34,156
Total Current Liabilities	157,464	153,092
Long-Term Liabilities
Deferred compensation	17,607	22,481
Reserve for uncertain tax positions	2,807	2,767
Deferred income taxes	18,546	17,825
Deferred rent and other	8,309	5,755
Credit facility borrowings and other long-term debt	495,626	450,676
Total Long-Term Liabilities	542,895	499,504
Stockholders’ Equity
Common stock, $.01 par value; authorized 100,000 shares; issued 42,638 shares at January 22, 2016, and April 24, 2015	426	426
Capital in excess of par value	241,156	235,958
Retained earnings	838,564	836,362
Treasury stock, 22,512 shares at January 22, 2016, and 19,231 shares at April 24, 2015, at cost	(845,592)	(692,755)
Total Stockholders’ Equity	234,554	379,991
Total Liabilities and Stockholders' Equity	$ 934,913	$ 1,032,587

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CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares	Jan. 22, 2016	Apr. 24, 2015
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	42,638,000	42,638,000
Treasury stock, shares outstanding (in shares)	22,512,000	19,231,000

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CONSOLIDATED STATEMENTS OF NET INCOME (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Jan. 22, 2016	Jan. 23, 2015	Jan. 22, 2016	Jan. 23, 2015
Income Statement [Abstract]
Net Sales	$ 346,505	$ 357,177	$ 993,239	$ 1,016,796
Cost of sales	118,581	124,544	317,611	354,723
Operating wage and fringe benefit expenses	106,607	109,116	315,894	319,158
Other operating expenses	53,592	54,804	161,407	162,713
Selling, general and administrative expenses	29,005	38,965	99,366	100,353
Depreciation and amortization expense	19,856	20,403	60,116	59,851
Impairments	804	1,672	1,089	3,249
Operating Income	18,060	7,673	37,756	16,749
Net interest expense	2,367	2,406	7,856	6,225
Income Before Income Taxes	15,693	5,267	29,900	10,524
Provision (Benefit) for income taxes	2,762	(653)	6,258	(419)
Net Income	$ 12,931	$ 5,920	$ 23,642	$ 10,943
Earnings Per Share — Net Income
Basic (in dollars per share)	$ 0.62	$ 0.25	$ 1.08	$ 0.47
Diluted (in dollars per share)	0.62	0.25	1.08	0.46
Cash Dividends Paid Per Share (in dollars per share)	$ 0.34	$ 0.31	$ 0.96	$ 0.93
Weighted Average Shares Outstanding
Basic (in shares)	20,692	23,515	21,845	23,487
Dilutive shares (in shares)	111	231	144	230
Diluted (in shares)	20,803	23,746	21,989	23,717

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	9 Months Ended
	Jan. 22, 2016	Jan. 23, 2015
Operating activities:
Net income	$ 23,642	$ 10,943
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	60,116	59,851
Impairments	1,089	3,249
Loss on disposal of fixed assets	820	1,624
Loss (Gain) on rabbi trust assets	1,768	(204)
(Gain) Loss Deferred compensation	(1,146)	1,953
Share-based compensation	4,656	2,158
Accretion on long-term note receivable	(1,539)	(1,374)
Deferred income taxes	(136)	(4,596)
Amortization of deferred financing costs	1,762	749
Cash provided by (used for) assets and liabilities:
Accounts receivable	(2,727)	2,585
Inventories	1,345	(166)
Prepaid expenses and other current assets	1,555	(267)
Accounts payable	(1,781)	505
Federal and state income taxes	19,119	4,279
Accrued wages and related liabilities	(6,633)	3,583
Self-insurance	2,744	1,125
Accrued non-income taxes	2,881	(3,320)
Deferred gift card revenue	4,945	5,250
Other assets and liabilities	5,001	(6,927)
Net cash provided by operating activities	117,481	81,000
Investing activities:
Purchase of property, plant and equipment	(48,663)	(58,921)
Proceeds from sale of property, plant and equipment	64,065	9,696
Liquidation of rabbi trust assets	5,245	0
Deposits and other	(582)	(246)
Net cash provided by (used in) investing activities	20,065	(49,471)
Financing activities:
Cash dividends paid	(21,132)	(21,711)
Gross proceeds from credit facility borrowings and other long-term debt	506,626	316,253
Gross repayments of credit facility borrowings and other long-term debt	(461,668)	(327,995)
Payments of debt issuance costs	(2,517)	(1,279)
Purchase of treasury stock	(156,654)	0
Proceeds from share-based compensation	214	478
Cash paid for taxes on share-based compensation	(1,177)	(1,790)
Excess tax benefits from share-based compensation	84	513
Net cash used in financing activities	(136,224)	(35,531)
Net decrease in cash and equivalents	1,322	(4,002)
Cash and equivalents at the beginning of the period	6,358	7,826
Cash and equivalents at the end of the period	$ 7,680	$ 3,824

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Summary of Significant Accounting Policies

9 Months Ended

Jan. 22, 2016

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Unaudited Consolidated Financial Statements: The accompanying unaudited consolidated financial statements of Bob Evans Farms, Inc. (“Bob Evans”) and its subsidiaries (collectively, Bob Evans and its subsidiaries are referred to as the “Company,” “we,” “us” and “our”) are presented in accordance with the requirements of Form 10-Q and, consequently, do not include all of the disclosures normally required by U.S. generally accepted accounting principles or those normally made in our Form 10-K filing. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of our financial position and results of operations have been included. The consolidated financial statements are not necessarily indicative of the results of operations for a full fiscal year. No significant changes have occurred in the financial disclosures made in our Form 10-K for the fiscal year ended April 24, 2015 (refer to the Form 10-K for a summary of significant accounting policies followed in the preparation of the consolidated financial statements). Throughout the Unaudited Consolidated Financial Statements and Notes to the Consolidated Financial Statements, dollars are in thousands, except share amounts.

Description of Business: As of January 22, 2016, we operated 548 full-service Bob Evans Restaurants in 18 states. Bob Evans Restaurants are primarily located in the Midwest, Mid-Atlantic and Southeast regions of the United States. In the BEF Foods segment we produce and distribute a variety of complementary home-style, refrigerated side dish convenience food items and pork sausage under the Bob Evans ®, Owens ® and Country Creek ® brand names. These food products are available throughout the United States and Canada. We also manufacture and sell similar products to food-service accounts, including Bob Evans Restaurants and other restaurants and food sellers.

Reporting Segments: We have two reporting segments: Bob Evans Restaurants and BEF Foods. The revenues from these two segments include both net sales to unaffiliated customers and intersegment net sales, which are accounted for on a basis consistent with net sales to unaffiliated customers. Intersegment net sales and other intersegment transactions have been eliminated in the consolidated financial statements. Operating income represents earnings before interest and income taxes. All direct costs related to our two reporting segments are included in segment results, while certain costs related to corporate and other functions are not allocated to our reporting segments. Prior to the first quarter of fiscal 2016, we allocated these corporate and other costs to our reporting segments. This change in reporting was made to present our results in line with the changes made during the first quarter in how our chief operating decision maker measures results of operations and allocates resources. We have adjusted the prior year amounts to reflect this change in presentation. See Note 9 for detailed segment information.

Revenue Recognition: Revenue in the Bob Evans Restaurants segment is recognized at the point of sale, other than revenue from the sale of gift cards, which is deferred and recognized upon redemption. Our gift cards do not have expiration dates or inactivity fees. Revenue in the BEF Foods segment is recognized when products are received by our customers. All revenue is presented net of sales tax collections.

In addition, we recognize income on unredeemed gift cards (“gift card breakage”) based on historical redemption patterns, referred to as the redemption recognition method. Gift card breakage is recognized proportionately over the period of redemption in net sales in the Consolidated Statements of Net Income. The liability for unredeemed gift cards is included in deferred revenue on the Consolidated Balance Sheets, and was $18,659 and $13,714 at January 22, 2016, and April 24, 2015, respectively.

Promotional (Trade) Spending: We engage in promotional (sales incentive / trade spend) programs in the form of promotional discounts and coupons at Bob Evans Restaurants, and off-invoice deductions, billbacks, and cooperative advertising at BEF Foods. Costs associated with these programs are classified as a reduction of gross sales in the period in which the sale occurs. Promotional spending at Bob Evans Restaurants, primarily comprised of discounts taken on dine-in sales, was $12,275 and $13,858 for the three months ended January 22, 2016, and January 23, 2015, respectively, and $30,528 and $43,648 for the nine months ended January 22, 2016, and January 23, 2015, respectively. Promotional spending at BEF Foods, primarily comprised of off-invoice deductions and billbacks, was $26,658 and $18,539 for the three months ended January 22, 2016, and January 23, 2015, respectively, and $57,066 and $39,699 for the nine months ended January 22, 2016, and January 23, 2015, respectively.

Shipping and Handling costs: Expenditures related to shipping our BEF Foods' products to our customers are expensed when incurred. Shipping and handling costs were $3,680 and $4,319 for the three months ended January 22, 2016, and January 23, 2015, respectively, and $10,871 and $12,610 for the nine months ended January 22, 2016, and January 23, 2015, respectively, and are recorded in the other operating expenses line of the Consolidated Statements of Net Income.

Accounts Receivable: Accounts receivable represents amounts owed to us through our operating activities and are presented net of allowance for doubtful accounts. Accounts receivable for Bob Evans Restaurants consist primarily of credit card receivables, while accounts receivable for BEF Foods consist primarily of trade receivables from customer sales. We evaluate the collectability of our accounts receivable based on a combination of factors. In circumstances where we are aware of a specific customer’s inability to meet its financial obligations to us, we record a specific allowance for bad debts against amounts due to reduce the net recognized receivable to the amount we reasonably believe will be collected. In addition, we recognize allowances for bad debts based on the length of time receivables are past due with allowance percentages, based on our historical experiences, applied on a graduated scale relative to the age of the receivable amounts. If circumstances such as higher than expected bad debt experience or an unexpected material adverse change in a major customer’s ability to meet its financial obligations to us were to occur, the recoverability of amounts due to us could change by a material amount. We had allowance for doubtful accounts of $441 and $542 as of January 22, 2016, and April 24, 2015, respectively. Accounts receivable included credits of $7,949 and $3,671 as of January 22, 2016, and April 24, 2015, respectively, related to promotional incentives that reduce what is owed to the Company from certain BEF Foods' customers.

Notes Receivable: As a result of the sale of Mimi’s Café to Le Duff America, Inc. ("Le Duff"), we received a Promissory Note ("the Note") for $30,000. The Note has an annual interest rate of 1.5%, a term of seven years and a principal and interest payment due in February 2020. Partial prepayments are required prior to maturity if the buyer's business reaches certain levels of EBITDA during specified periods. Our right to repayment under the Note is subordinated to third-party lenders as well as other funding that may be provided by the parent company. In the event of a sale or liquidation of the Mimi’s Café restaurant chain or the entity that owns it by its parent company, our right to repayment may be subordinated to payments owed to the parent company and / or potentially reduced based on the funds available for repayment. The note was originally valued using a discounted cash flow model. The Company recognized accretion income on the Note of $528 and $471 for the three months ended January 22, 2016, and January 23, 2015, respectively, and $1,539 and $1,374 for the nine months ended January 22, 2016, and January 23, 2015, respectively. These gains are reflected within the Net Interest Expense caption of the Consolidated Statements of Net Income.

Inventories: We value our Bob Evans Restaurants' inventories at the lower of first-in, first-out cost (“FIFO”) or market and our BEF Foods' inventories at an average cost method which approximates a FIFO basis due to the perishable nature of that inventory. Inventory includes raw materials and supplies ($15,009 at January 22, 2016, and $12,898 at April 24, 2015) and finished goods ($8,266 at January 22, 2016, and $11,722 at April 24, 2015).

Property, Plant and Equipment: Property, plant and equipment is recorded at cost less accumulated depreciation. The straight-line depreciation method is used for nearly all capitalized assets, although some assets purchased prior to fiscal 1995 continue to be depreciated using accelerated methods. Depreciation is calculated at rates adequate to amortize costs over the estimated useful lives of buildings and improvements (5 to 50 years) and machinery and equipment (3 to 10 years). Improvements to leased properties are depreciated over the shorter of their useful lives or the initial lease terms. Total depreciation expense was $19,816 and $20,364 in the three months ended January 22, 2016, and January 23, 2015, respectively, and $59,997 and $59,733 for the nine months ended January 22, 2016, and January 23, 2015, respectively.

During the three and nine months ended January 22, 2016, we capitalized internal labor costs of $514 and $1,615primarily for our enterprise resource planning system ("ERP") and other IT projects. During the three and nine months ended January 23, 2015, we capitalized internal labor costs of $1,077 and $3,473, which included $2,528 of capitalized costs for ERP and $945 for new restaurant construction on a year to date basis. The first phase of our ERP system was put in service on April 25, 2015, and has an expected useful life of 10 years. We are working to implement the second phase of our ERP system, which is expected to go live in fiscal 2017.

We evaluate property, plant and equipment held and used in the business for impairment whenever events or changes in circumstance indicate that the carrying amount of a long-lived asset may not be recoverable. Impairment is determined by comparing the estimated fair value for the asset group to the carrying amount of its assets. If impairment exists, the amount of impairment is measured as the excess of the carrying amount over the estimated fair values of the assets. See Note 5 for further information. Assets for nine nonoperating Bob Evans Restaurants' locations and our former Richardson, Texas, plant location totaling $12,221 are classified as current assets held for sale in the Consolidated Balance Sheet as of January 22, 2016. Assets for 19 nonoperating Bob Evans Restaurants' locations, as well as our Richardson, Texas, location totaling $22,243 are classified as current assets held for sale in the Consolidated Balance Sheet as of April 24, 2015. Assets for two nonoperating Bob Evans Restaurants' locations totaling $1,611 are classified as long-term assets held for sale in the Consolidated Balance Sheet as of April 24, 2015.

Goodwill and Other Intangible Assets: Goodwill, which represents the cost in excess of fair market value of net assets acquired, was $19,634 as of January 22, 2016, and April 24, 2015. Other intangible assets were $234 and $352 as of January 22, 2016, and April 24, 2015, respectively. The goodwill and other intangible assets are related to the BEF Foods segment. Other intangible assets represents definite-lived non-compete agreements that are amortized on a straight-line basis over the estimated economic life of five years. Goodwill is tested for impairment during the fourth quarter each year, or on a more frequent basis when indicators of impairment exist.

Goodwill impairment testing involves a comparison of the estimated fair value of reporting units to the respective carrying amount. If the estimated fair value exceeds the carrying amount, then no impairment exists. If the carrying amount exceeds the estimated fair value, then a second step is performed to determine the amount of impairment, if any. We perform our impairment test using a combination of income based and market-based approaches. The income based approach indicates the fair value of an asset or business based on the cash flows it can be expected to generate over its remaining useful life. Under the market-based approach, fair value is determined by comparing our reporting segments to similar businesses or guideline companies whose securities are actively traded in public markets.

Earnings Per Share ("EPS"): Our basic EPS computation is based on the weighted-average number of shares of common stock outstanding during the period presented. Our diluted EPS calculation reflects the assumed vesting of restricted shares and market-based performance shares, the exercise and conversion of outstanding employee stock options and the settlement of share-based obligations recorded as liabilities on the Consolidated Balance Sheet (see Note 7 for more information), net of the impact of anti-dilutive shares.

The numerator in calculating both basic and diluted EPS for each period is reported net income. The denominator is based on the following weighted-average shares outstanding:

	Three Months Ended		Nine Months Ended
(in thousands)	January 22, 2016	January 23, 2015	January 22, 2016	January 23, 2015
Basic	20,692	23,515	21,845	23,487
Dilutive shares	111	231	144	230
Diluted	20,803	23,746	21,989	23,717

In the three and nine months ended January 22, 2016, 249,684 and 240,974 shares of common stock, respectively, were excluded from the diluted EPS calculations because they were anti-dilutive. In the three and nine months ended January 23, 2015, 34,419 and 40,627 shares of common stock, respectively, were excluded from the diluted EPS calculations because they were anti-dilutive.

Dividends: In the three months ended January 22, 2016, and January 23, 2015, the Company paid a quarterly dividend equal to $0.34 and $0.31, respectively, per share on our outstanding common stock. In the nine months ended January 22, 2016, and January 23, 2015, the Company paid dividends equal to $0.96 and $0.93, respectively, per share on our outstanding common stock. Individuals that hold awards for unvested and outstanding restricted stock units, market-based performance share units and outstanding deferred stock awards are entitled to receive dividend equivalent rights equal to the per-share cash dividends paid on outstanding units. Dividend equivalent rights are forfeitable until the underlying share-units from which they were derived vest. Share-based dividend equivalents are recorded as a reduction to retained earnings, with an offsetting increase to capital in excess of par value. Refer to table below:

	Nine Months Ended
(in thousands)	January 22, 2016		January 23, 2015
Cash dividends paid to common stockholders	$	21,132	$	21,711
Dividend equivalent rights	307		276
Total dividends	$	21,439	$	21,987

Share-based Employee Compensation: The Stock Compensation Topic of the FASB ASC 718 ("ASC 718") requires that we measure the cost of employee services received in exchange for an equity award, such as stock options, restricted stock awards, restricted stock units and market-based performance share units, based on the estimated fair value of the award on the grant date. The cost is recognized in the income statement over the vesting period of the award on a straight-line basis with the exception of compensation cost related to awards for "Retirement Eligible" (as defined in the applicable plan) employees, which is recognized immediately on the grant date. Compensation cost is recognized based on the grant date fair value estimated in accordance with ASC 718. See Note 6 for more information.

Financial Instruments: The fair values of our financial instruments approximate their carrying values as of January 22, 2016, and April 24, 2015.

Accrued Non-Income Taxes: Accrued non-income taxes primarily represent obligations for real estate and personal property taxes, as well as sales and use taxes for Bob Evans Restaurants. Accrued non-income taxes were $17,832 and $14,951 as of January 22, 2016, and April 24, 2015, respectively.

Self-Insurance Reserves: We record estimates for certain health, workers’ compensation and general insurance costs that are self-insured programs. Self-insurance reserves include actuarial estimates of both claims filed, carried at their expected ultimate settlement value, and claims incurred but not yet reported. Our liability represents an estimate of the ultimate cost of claims incurred as of the balance sheet date. Self-insurance reserves were $21,644 and $18,900 as of January 22, 2016, and April 24, 2015, respectively.

Advertising Costs: Media advertising is expensed at the time the media first airs. We expense all other advertising costs as incurred. Advertising expense was $9,243 and $9,212 in the three months ended January 22, 2016, and January 23, 2015, respectively, and $28,269 and $26,413 for the nine months ended January 22, 2016, and January 23, 2015, respectively. Approximately 80% of year-to-date advertising costs were incurred in the Bob Evans Restaurants segment. Advertising costs are classified as other operating expenses in the Consolidated Statements of Net Income.

Commitments and Contingencies: We rent certain restaurant facilities and, effective the second quarter of fiscal 2016, two of our manufacturing facilities (refer to Note 11 for additional information) under operating leases having initial terms that primarily expire 20 years from inception. The leases typically contain renewal clauses of 5 to 30 years exercisable at our option. Most leases contain either fixed or inflation-adjusted escalation clauses.

We occasionally use purchase commitment contracts to stabilize the potentially volatile pricing associated with certain commodity items.

We are self-insured for most casualty losses and employee health-care claims up to certain stop-loss limits per claimant. We have accounted for liabilities for casualty losses, including both reported claims and incurred, but not reported claims. We have accounted for our employee health-care claims liability through a review of incurred and paid claims history. We do not believe that our calculation of casualty losses and employee health-care claims liabilities would change materially under different conditions and/or different methods.

Reclassifications and corrections: Certain prior period amounts have been reclassified or adjusted to conform to the current presentation.

We reclassified $4,319 and $12,610 of BEF Foods' shipping and handling costs from the selling, general, and administrative ("S,G&A") line to the other operating expenses line on the Consolidated Statements of Net Income for the three months and nine months ended January 23, 2015, respectively. We believe these costs are better reflected as other operating expenses.

We reclassified $1,672 and $2,991 of Bob Evans Restaurants' impairment charges related to impairments on long-lived assets classified as held-and-used from the S,G&A line to the impairments line on the Consolidated Statements of Net Income for the three months and nine months ended January 23, 2015. Formerly, we only separately presented impairments on assets classified as held-for-sale.

We reclassified $1,389 and $2,643 of BEF Foods' advertising costs from the S,G&A line to the other operating expenses line on the Consolidated Statements of Net Income for the three months and nine months ended January 23, 2015, respectively. We believe these costs are better classified as other operating expenses rather than S,G&A. Advertising costs for both Bob Evans Restaurants and BEF Foods are now classified as other operating expenses.

These reclassifications and corrections had no impact on operating income for the three months and nine months ended January 23, 2015.

New Accounting Pronouncements: In the normal course of business, management evaluates all new accounting pronouncements issued by the FASB, the Securities and Exchange Commission (“SEC”), the Emerging Issues Task Force, the American Institute of Certified Public Accountants or any other authoritative accounting body to determine the potential impact they may have on the Company’s consolidated financial statements.

In May 2014, the FASB and the International Accounting Standards Board ("IASB") issued new joint guidance surrounding revenue recognition. Under U.S. generally accepted accounting principles ("US GAAP"), this guidance is being introduced to the ASC as Topic 606, Revenue from Contracts with Customers ("Topic 606"), by Accounting Standards Update No. 2014-09. The new standard supersedes a majority of existing revenue recognition guidance under US GAAP, and requires companies to recognize revenue when it transfers goods or services to a customer in an amount that reflects the consideration to which a company expects to be entitled. Companies may need to use more judgment and make more estimates while recognizing revenue, which could result in additional disclosures to the financial statements. Topic 606 allows for either a "full retrospective" adoption or a "modified retrospective" adoption. The standard is effective for us in fiscal 2019. We are currently evaluating which method we will use and the revenue recognition impact this guidance will have once implemented.

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements - Going Concern to provide guidance about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern. The guidance requires management to assess whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity's ability to continue as a going concern within one year after the date that the financial statements are issued. When management identifies such conditions or events, a footnote disclosure is required to disclose their nature, as well as management's plans to alleviate the substantial doubt to continue as a going concern. We do not expect this update to have an impact on the consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, to ASC 835-30 "Interest - Imputation of Interest." ASU 2015-03 will require that debt issuance costs related to a recognized term-debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. We adopted ASU 2015-03 in the first quarter of fiscal 2016. This update did not have an impact on the consolidated financial statements.

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. ASU 2015-11 simplifies the subsequent measurement of inventory by replacing today's lower of cost or market test with a lower of cost and net realizable test, which is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The standard is effective for us in fiscal 2018. We do not expect this update to have a material impact on the consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes. ASU 2015-17 requires that deferred tax assets and liabilities be classified as noncurrent in a classified statement of financial position. The adoption of this standard will result in the reclassification of all current deferred tax assets and liabilities to noncurrent in the Company's consolidated balance sheets. The standard is effective for us in fiscal 2018.

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Debt

9 Months Ended

Jan. 22, 2016

Debt Disclosure [Abstract]

Debt

Debt

As of January 22, 2016, long-term debt was comprised of the outstanding balance on our Revolving Credit Facility Amended and Restated Credit Agreement ("Credit Agreement") of $492,850, a portion of a $3,000 Research and Development Investment Loan ("R&D Loan") with the State of Ohio totaling $2,323, and an interest-free loan of $1,000, due 10 years from the date of borrowing, with imputed interest, which as a result is discounted to $870. Refer to the table below:

(in thousands)	January 22, 2016			April 24, 2015
Credit Agreement borrowings (1)	$	492,850		$	447,599
R&D Loan (1)	2,323			2,631
Interest-free loan (1)	870			855
Total borrowings	496,043			451,085
Less current portion	(417		)	(409		)
Long-term debt	$	495,626		$	450,676

⁽¹⁾ The Credit Agreement, R&D Loan and Interest-free loan mature in fiscals 2019, 2021, and 2022, respectively

On January 2, 2014, we entered into the Credit Agreement, which represents a syndicated secured revolving credit facility. We incurred financing costs of $2,064 associated with this Credit Agreement, which are being amortized over the remaining term of the agreement. As a result of the Third Amendment to the Credit Agreement, effective October 21, 2015, and discussed further below, up to $650,000 of borrowings are available, including a letter of credit sub-facility of $50,000, and an accordion provision that permits the Company to request an additional $300,000 for certain transactions, which could increase the revolving credit commitment to $950,000. It is secured by the stock pledges of certain material subsidiaries. This Credit Agreement replaced our existing variable-rate revolving credit facility. Borrowings under the Credit Agreement bear interest, at Borrower’s option, at a rate based on LIBOR or the Base Rate, plus a margin based on the Leverage Ratio, ranging from 1.00% to 2.75% per annum for LIBOR, and ranging from 0.00% to 1.75% per annum for Base Rate. The Base Rate means for any day, a fluctuating per annum rate of interest equal to the highest of (i) the Federal Funds Open Rate, plus 0.5%, (ii) the Prime Rate, or (iii) the Daily LIBOR Rate, plus 1.0%. We are also required to pay a commitment fee of 0.15% per annum to 0.25% per annum of the average unused portion of the total lender commitments then in effect.

In the first quarter of fiscal 2015, we entered into a First Amendment to the Credit Agreement dated July 23, 2014. The terms of the Credit Agreement that were amended related to: (a) an increase to the Maximum Leverage Ratio for the period starting July 25, 2014, through July 22, 2016, (b) certain restricted payment requirements related to share repurchases, and (c) an update to the Pricing Grid, which determines variable pricing and fees, to reflect changes in the allowable Maximum Leverage Ratio. We incurred financing costs of $1,279 associated with this amendment, which are being amortized using the straight line method, which approximates the effective interest method.

In the first quarter of fiscal 2016, we entered into a Second Amendment to the Credit Agreement dated May 11, 2015, with an effective date of April 24, 2015. The terms of the Credit Agreement were amended related to: (a) an increase to the Maximum Leverage Ratio for the period starting April 24, 2015, through the remaining term of the agreement, (b) a change in the restrictions related to payments for share repurchases, and (c) a change in the definition of the LIBOR and Daily LIBOR rates that are used to calculate interest on outstanding borrowings. We incurred and paid fees of $1,705 associated with this amendment, which will be amortized over the remaining term of the Credit Agreement using the straight line method, which approximates the effective interest method.

In the second quarter of fiscal 2016, we entered into a Third Amendment to the Credit Agreement dated and effective as of October 21, 2015. The terms of the Credit Agreement were amended related to: (a) an increase of the level of permitted indebtedness in connection with sale and leaseback transactions of assets from $100,000 to $300,000, (b) a removal of the $150,000 share repurchase restriction during the 2016 fiscal year, (c) a decrease of the size of the facility from $750,000 to $650,000, (d) a modification of the definition of the leverage ratio to account for rent expense from leases, so that the leverage ratio will be calculated as consolidated indebtedness plus 600% of annual rent expense versus consolidated EBITDAR, and (e) an inclusion of an add back to the leverage ratio calculation for costs related to the settlement of a class action lawsuit. We incurred and paid fees of $812 associated with this amendment, which will be amortized over the remaining term of the Credit Agreement using the straight line method, which approximates the effective interest method. In addition, as a result of lowering the borrowing capacity on the credit facility, we wrote off $480 of previously unamortized deferred financing costs related to the agreement.

Our Credit Agreement contains financial and other various affirmative and negative covenants that are typical for financings of this type. Our Credit Agreement contains financial covenants that require us to maintain a specified minimum coverage ratio and maximum leverage ratio at January 22, 2016, of (1) a minimum coverage ratio of not less than 3.00 to 1.00; and (2) a maximum leverage ratio that may not exceed 4.50 to 1.00. As of January 22, 2016, our minimum coverage ratio was 12.54, and our leverage ratio was 3.15, as defined in our Credit Agreement. A breach of any of these covenants could result in a default under our Credit Agreement in which all amounts under our Credit Agreement may become immediately due and payable and commitments under the Credit Agreement to extend further credit, terminated. We were in compliance with the financial covenant requirements of our Credit Agreement as of January 22, 2016. The Credit Agreement also allows for the incurrence of additional indebtedness of up to $300,000, a sale leaseback of our real estate of up to $300,000 and mortgage indebtedness on our corporate headquarters of up to $50,000. Refer to Note 12 for additional information.

Our effective interest rate for the Credit Agreement was 1.99% and 2.31% for the three months ended January 22, 2016, and January 23, 2015, respectively, and 2.05% and 2.00% for the nine months ended January 22, 2016, and January 23, 2015, respectively.

As of January 22, 2016, we had outstanding letters of credit that totaled $12,618, of which $12,318 is utilized as part of the total amount available under our Credit Agreement. The letters of credit are used primarily to satisfy insurance-related collateral requirements.

As of January 22, 2016, we had $492,850 outstanding on the Credit Agreement. The primary purposes of the Credit Agreement is to fund working capital, capital expenditures, stock repurchases, joint ventures and acquisitions and other general corporate purposes as well as for trade and standby letters of credit.

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Income Taxes

9 Months Ended

Jan. 22, 2016

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The provision for income taxes is based on a current estimate of the annual effective income tax rate adjusted to reflect the impact of discrete items. The Company’s effective income tax rate was 17.6% for the three months ended January 22, 2016, as compared to a benefit of 12.4% for the corresponding period a year ago. The Company’s effective income tax rate was 20.9% for the nine months ended January 22, 2016, as compared to a benefit of 4.0% for the corresponding period a year ago. The increase in tax rate for the three and nine months ended January 22, 2016, was driven primarily by the impact of yearly variances in the forecasted annual rate related to wage credits, officers' life insurance, and the domestic productions activities deduction, plus discrete items booked in the third quarter of fiscal year 2015 related to the federal return to provision and FIN48 reserves.

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Restructuring and Severance Charges

9 Months Ended

Jan. 22, 2016

Restructuring and Related Activities [Abstract]

Restructuring and Severance Charges

Restructuring and Severance Charges

In fiscal 2013, we began a strategic organizational realignment including a closure of production facilities and a reduction of personnel at Bob Evans Restaurants, BEF Foods and at our corporate headquarters, as part of our comprehensive plan to reduce S,G&A expenses. In the second quarter of fiscal 2014, we closed our BEF Foods production plant in Richardson, Texas, and in the third quarter of fiscal 2014, we closed our BEF Foods production plants in Springfield and Bidwell, Ohio. The actions to close these food production facilities was intended to increase efficiency by consolidating production to our high capacity food production facility in Sulphur Springs, Texas. In the fourth quarter of fiscal 2014, we recorded charges related to a reduction of personnel at our corporate headquarters. In the fourth quarter of fiscal 2015, management approved a plan to further reduce headcount as part of the overall S,G&A cost reduction initiative. Additionally, in the fourth quarter of fiscal 2015, management committed to a plan to close 16 owned and four leased under-performing restaurants in fiscal 2016. As of January 22, 2016, all 20 of these restaurants have been closed. We believe these closures strengthen our restaurant portfolio by improving overall returns and freeing up resources for other uses.

We recorded $140 of pretax restructuring charges in the nine months ended January 22, 2016, as compared to $950 of pretax restructuring charges in the nine months ended January 23, 2015. These costs, reflected primarily in S,G&A, related to the organizational realignments discussed above.

Liabilities related to restructuring charges as of January 22, 2016, were $348, and relate to corporate severance charges primarily recorded in the fourth quarter of fiscal 2015.

See tables below for detail of restructuring activity for the nine months ended January 22, 2016, and January 23, 2015, respectively:

(in thousands)	Bob Evans Restaurants			BEF Foods			Corporate and Other			Total
Balance, April 24, 2015	$	1,105		$	481		$	2,040		$	3,626
Restructuring and related severance charges incurred	112			28			—			140
Amounts paid	(1,086		)	(488		)	(1,276		)	(2,850		)
Adjustments	(131		)	(21		)	(416		)	(568		)
Balance, January 22, 2016	$	—		$	—		$	348		$	348

(in thousands)	Bob Evans Restaurants		BEF Foods			Corporate and Other			Total
Balance, April 25, 2014	$	—	$	553		$	674		$	1,227
Restructuring and related severance charges incurred	—		528			422			950
Amounts paid	—		(906		)	(959		)	(1,865		)
Balance, January 23, 2015	$	—	$	175		$	137		$	312

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Impairments

9 Months Ended

Jan. 22, 2016

Fair Value Disclosures [Abstract]

Impairments

Impairments

We measure certain assets and liabilities at fair value on a nonrecurring basis, including long-lived assets that have been reduced to fair value when they are held for sale and long-lived assets that are written down to fair value when they are impaired.

We evaluate the carrying amount of long-lived assets held and used in the business periodically and when facts and circumstances indicate that an impairment may exist. A long-lived asset group is considered impaired when the carrying value of the asset group exceeds its fair value. The impairment loss recognized is the excess of carrying value above its fair value. The estimation of fair value requires significant judgment regarding future restaurant performance and market-based real estate appraisals. To estimate fair value for locations where we own the land and building, we obtain appraisals from third-party real estate valuation firms based on sales of comparable properties in the same area as our restaurant location, which we believe approximates fair value. We use discounted future cash flows to estimate fair value of long-lived assets for our leased locations. Our weighted average cost of capital is used as the discount rate in our fair value measurements for leased locations, which is considered a Level 3 measurement. A reasonable change in this discount rate would not have a significant impact on these fair value measurements.

Impairment charges of $804 and $1,089 were recorded in the three months and nine months ended January 22, 2016, respectively, and related to four and six nonoperating restaurant properties respectively, where the respective fair values were determined to be lower than the carrying value. We recorded $1,672 and $3,249 of impairment charges in the three months and nine months ended January 23, 2015, a result of adverse performance in fiscal 2015 and a reassessment of expected future cash flows at 11 operating and three nonoperating restaurant properties.

The following table represents impairments for those assets remeasured to fair value during the three and nine months ended January 22, 2016, and the corresponding period last year.

	Three Months Ended						Nine Months Ended
(in thousands)	January 22, 2016			January 23, 2015			January 22, 2016			January 23, 2015
Bob Evans Restaurants
Assets held and used	$	245	(1)	$	1,672	(3)	$	392	(4)	$	2,991	(6)
Assets held for sale	559		(2)	—			697		(5)	258		(7)
Total Impairments	$	804		$	1,672		$	1,089		$	3,249

(1)    Relates to one nonoperating location

(2)    Relates to three nonoperating locations

(3)    Relates to six operating and two nonoperating locations

(4)     Relates to two nonoperating locations

(5)    Relates to four nonoperating locations

(6)    Relates to eleven operating and two nonoperating locations

(7)    Relates to one nonoperating location

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Stock-Based Compensation

9 Months Ended

Jan. 22, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Share-Based Compensation

As of January 22, 2016, there were equity awards outstanding under the Amended and Restated Bob Evans Farms, Inc. 2010 Equity and Cash Incentive Plan (the “2010 Plan”), as well as previous equity plans adopted in 2006, 1998 and 1993. The types of awards that may be granted under the 2010 Plan include: stock options, stock appreciation rights, restricted stock awards ("RSAs"), restricted stock units ("RSUs"), cash incentive awards, performance share units ("PSUs"), and other awards. During the three months ended January 22, 2016, and January 23, 2015, the Company granted approximately 14,000 and 50,000 RSAs and RSUs, respectively, under the 2010 Plan. During the nine months ended January 22, 2016, the Company granted approximately 126,000 RSAs and RSUs and 70,000 PSUs under the 2010 Plan, while during the nine months ended January 23, 2015, the Company granted approximately 90,000 RSAs and RSUs under the 2010 Plan.

The PSUs granted under the 2010 Plan have market-based vesting conditions, while RSAs and RSUs granted under the 2010 Plan vest ratably, primarily over three years for employees, and one year for nonemployee directors of the Company. The PSUs awarded in the first quarter of fiscal 2016 vest at the end of a three-year performance period if they achieve the market-based vesting conditions.

Share-based compensation expense, included primarily within the S,G&A line on the Consolidated Statements of Net Income, was $1,327 and $271 for the three months ended January 22, 2016, and January 23, 2015, respectively, and $4,656 and $2,158 for the nine months ended January 22, 2016, and January 23, 2015, respectively.

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Other Compensation Plans

9 Months Ended

Jan. 22, 2016

Compensation and Retirement Disclosure [Abstract]

Other Compensation Plans

Other Compensation Plans

We have a 401(k) retirement savings plan that is available to substantially all employees who have at least 1,000 hours of service. We also have nonqualified deferred compensation plans, the Bob Evans Farms, Inc. Executive Deferral Plan ("BEEDP") and the Bob Evans Farms, Inc. Director Deferral Plan ("BEDDP"), which provide certain executives and members of the Board of Directors, respectively, the opportunity to defer a portion of their current income to future years. A third-party manages the investments directed by the employees and board members who participate in the plans. Gains and losses related to investment results of these deferrals are recorded within the S,G&A line in the Consolidated Statements of Net Income.

Obligations to participants who defer equity compensation through our deferral plans are satisfied only in Company common stock. There is no change in the vesting term for equity awards that are deferred into these plans. Obligations related to these deferred equity awards are treated as "Plan A" instruments, as defined by ASC 710. These obligations are classified as equity instruments within the Capital in excess of par value line of the Consolidated Balance Sheets. No subsequent changes in fair value are recognized in the Consolidated Financial Statements for these instruments. Participants earn share-based dividend equivalents in an amount equal to the value of per-share dividends paid to holders of our common stock. These dividends accumulate into additional shares of common stock, and are recorded through retained earnings in the period in which dividends are paid. Deferred shares that vest are included in the denominator of basic and diluted EPS in accordance with ASC 260 - Earnings per Share. The dilutive impact of unvested, deferred stock awards is included in the denominator of our diluted EPS calculation. Refer to Note 6 for additional information on share-based compensation.

Participants who defer cash compensation into our deferral plans have a range of investment options, one of which is Company stock. Obligations for participants who choose this investment election are satisfied only in shares of Company stock, while all other obligations are satisfied in cash. These share-based obligations are treated as "Plan B" instruments as defined by ASC 710, and are recorded as liabilities on the Consolidated Balance Sheets, in the deferred compensation line. We record compensation cost for subsequent changes in the fair value of these obligations. Participants earn share-based dividend equivalents in an amount equal to the value of per-share dividends paid to holders of our common stock. These dividends accumulate into additional shares of common stock, and are recorded as compensation cost in the period in which the dividends are paid. The dilutive impact of these shares is included in the denominator of our diluted EPS calculation.

The Supplemental Executive Retirement Plan ("SERP") provides awards to a limited number of executives in the form of nonqualified deferred cash compensation. Gains and losses related to these benefits and the related investment results are recorded within the S,G&A caption in the consolidated statements of net income. The SERP is frozen and no further persons can be added, and funding was reduced to a nominal amount per year for the remaining participants.

Deferred compensation liabilities expected to be satisfied within the next 12 months are classified as current liabilities within the Accrued wages and related liabilities line of the Consolidated Balance Sheets. Our deferred compensation liabilities as of  January 22, 2016, and April 24, 2015, consisted of the following:

(in thousands)	January 22, 2016			April 24, 2015
Liability for deferred cash obligations in BEEDP and BEDDP Plans	$	12,799		$	17,904
Liability for deferred cash obligations in SERP plan	7,816			9,198
Liability for deferred share-based obligations in BEEDP and BEDDP Plans	572			2,676
Other noncurrent compensation arrangements	216			958
Total deferred compensation liabilities	21,403			30,736
Less current portion (1)	(3,796		)	(8,255		)
Noncurrent deferred compensation liabilities	$	17,607		$	22,481

⁽¹⁾    Current portion of deferred compensation is included within the accrued wages and related liabilities line on the Consolidated Balance Sheets

The Rabbi Trust is intended to be used as a source of funds to match respective funding obligations in our nonqualified deferred compensation plans. Assets held by the Rabbi Trust are recorded on our Consolidated Balance Sheets, and include company-owned life insurance ("COLI") policies, short-term money market securities and Bob Evans common-stock. The company-owned life insurance policies held by the Rabbi Trust are recorded at cash surrender value on the Rabbi Trust Assets line of Consolidated Balance Sheets and totaled $20,534 and $32,302 as of January 22, 2016, and April 24, 2015, respectively. The cash receipts and payments related to the company-owned life insurance proceeds are included in cash flows from operating activities on the Consolidated Statements of Cash Flows and changes in the cash surrender value for these assets are reflected within the S,G&A line in the Consolidated Statements of Net Income.

During the quarter ended January 22, 2016, the Company liquidated $5,245 of cash value from the COLI policies held by the Rabbi Trust and returned those funds to the Company to use for general corporate purposes.  The Rabbi Trust remains fully funded, as assets held by the trust as of January 22, 2016, are greater than the current value of our deferred compensation liabilities.  The proceeds were recorded as a cash inflow in the investing section of the Consolidated Statement of Cash Flows. The transaction had no impact on the Consolidated Statements of Net Income.

The Company also directed the Trustee to liquidate $4,755 of cash value from the COLI policies and to invest those funds in short-term money market securities.  These assets will be used to fund future participant distributions. This transaction had no impact on the Consolidated Statements of Net Income or Cash Flows.

The short-term securities held by the Rabbi Trust are recorded at their carrying value, which approximates fair value, on the prepaid expenses and other current assets line of the Consolidated Balance Sheets and totaled $4,128 and $487 as of January 22, 2016, and April 24, 2015, respectively. All assets held by the Rabbi Trust are restricted to their use as noted above.

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Commitments and Contingencies

9 Months Ended

Jan. 22, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

We are from time-to-time involved in ordinary and routine litigation, typically involving claims from customers, employees and others related to operational issues common to the restaurant and food manufacturing industries, and incidental to our business. Management presently believes that the ultimate outcome of these proceedings, individually or in the aggregate, will not have a material adverse effect on our financial position, cash flows or results of operations.

Class Action Litigation: In August 2012, a former Bob Evans Restaurant employee filed an action against the Company in the United States District Court for the Southern District of Ohio, styled David Snodgrass v. Bob Evans Farms, LLC, Case No. 2:12-cvg-00768 (“Snodgrass”). The lead plaintiff alleged that the Company violated the Fair Labor Standards Act by misclassifying assistant managers as exempt employees and failing to pay overtime compensation during the period of time the employee worked as an assistant manager. The plaintiff's complaint requested an unspecified amount of alleged back wages, liquidated damages, statutory damages and attorneys’ fees. The lead plaintiff sought to maintain the suit as a collective action on behalf of other similarly situated assistant managers employed at Bob Evans Restaurants between August 2009 and present. In December 2013, the Court in Snodgrass granted conditional certification of those assistant managers that elected to opt-in to the collective action.

In May 2014, the same plaintiffs’ counsel in the Snodgrass matter filed essentially duplicative claims under the overtime laws of the State of Ohio and Commonwealth of Pennsylvania, styled Utterback v. Bob Evans Farms, LLC Case No. CV14826909 in the Court of Common Pleas of Cuyahoga County, Ohio (“Utterback”) and Mackin v. Bob Evans Farms, LLC Case No. 2:14-cv-450 in the United States District Court for the Southern District of Ohio (“Mackin”), respectively. Neither the Utterback nor Mackin proceedings have been certified for class status at this time.

While we continue to believe that our assistant managers were properly classified as exempt from the respective Federal and State overtime requirements and that we have meritorious defenses to the claims in each of the Snodgrass, Utterback and Mackin matters, as previously reported in our Annual Report in Form 10-K for the fiscal year ended April 24, 2015, in the fourth quarter of fiscal 2015 we received an unfavorable ruling related to the Snodgrass litigation and determined a settlement of all three matters was in the best interest of the Company. In connection with the unfavorable ruling, we recorded a charge of $6,000 in the fourth quarter of fiscal 2015. This expense was recorded to the Bob Evans Restaurants segment and in the S,G&A line of the Consolidated Statements of Net Income.

In June 2015, counsel for all parties attended the second mediation in the Snodgrass matter in an attempt to resolve each of the Snodgrass, Utterback and Mackin litigation matters. On July 31, 2015, the Company and counsel for the plaintiffs reached an agreement in principle to resolve all claims presented in the Snodgrass, Mackin and Utterback cases for the total sum of up to $16,500 on a claims made basis.  A Settlement Agreement was executed by the parties on October 2, 2015, and the Court provided preliminary approval on October 23, 2015. As a result of the agreement in principle, we recorded an additional charge of $10,500 in the first quarter of fiscal 2016. This expense was recorded to the Bob Evans Restaurants segment and in the S,G&A line of the Consolidated Statements of Net Income.

The Court held a Final Approval Hearing on February 18, 2016, and issued the Final Approval Order on February 26, 2016. The settlement remains conditioned upon completion of a 30-day appeals period, without any appeal being filed.

Other Matters: The Division of Enforcement of the SEC is conducting a formal investigation relating to disclosures set forth in our filings on Form 8 - K and Form 10 - Q/A both filed on December 3, 2014.  Those filings  addressed  the correction of our error in the classification of our borrowings under our credit agreement as a current liability rather than as a long-term liability, as reported in our Form 10 - Q filed on August 27, 2014.  We are cooperating fully with the SEC in this matter.   The Company cannot predict the duration, scope or outcome of the SEC’s investigation.

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Reporting Segments

9 Months Ended

Jan. 22, 2016

Segment Reporting [Abstract]

Reporting Segments

Reporting Segments

We have two reporting segments: Bob Evans Restaurants and BEF Foods. We determine our segments on the same basis that the Company's chief operating decision maker uses to allocate resources and assess performance. We evaluate our segments based on operating income, excluding expenses and charges from corporate and other functions which we consider to be overall corporate costs, or costs not reflective of the reporting segment’s core operating businesses. This includes corporate functions such as information technology, finance, legal, human resources, supply chain and other corporate functions, and includes costs such as ongoing IT infrastructure costs, certain legal and professional fees, depreciation on our corporate assets and other costs. Prior to the first quarter of fiscal 2016, we allocated these costs to our reporting segments. This change in reporting was made to present our results in line with the changes made during the first quarter in how management measures results of operations and allocates resources. We have adjusted the prior year amounts to reflect this change in presentation. Operating income represents earnings before interest and income taxes.

Information on our reporting segments is summarized as follows:

	Three Months Ended						Nine Months Ended
(in thousands)	January 22, 2016			January 23, 2015			January 22, 2016			January 23, 2015
Net Sales:
Bob Evans Restaurants	$	238,608		$	250,389		$	708,018		$	731,691
BEF Foods	112,858			112,060			298,386			300,618
Intersegment net sales of food products	(4,961		)	(5,272		)	(13,165		)	(15,513		)
Subtotal of BEF Foods	107,897			106,788			285,221			285,105
Total	$	346,505		$	357,177		$	993,239		$	1,016,796
Operating income (loss):
Bob Evans Restaurants	$	14,453		$	14,153		$	37,585		$	49,709
BEF Foods	20,609			15,274			50,443			24,675
Corporate and Other	(17,002		)	(21,754		)	(50,272		)	(57,635		)
Total	$	18,060		$	7,673		$	37,756		$	16,749

(in thousands)	January 22, 2016		April 24, 2015
Identifiable Assets:
Bob Evans Restaurants	$	633,152	$	665,910
BEF Foods	133,404		179,137
General corporate assets	168,357		187,540
Total	$	934,913	$	1,032,587

Discussion of segment results is included within Management's Discussion and Analysis of Financial Condition and Results of Operations.

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Supplemental Cash Flow Information

9 Months Ended

Jan. 22, 2016

Supplemental Cash Flow Information [Abstract]

Supplemental Cash Flow Information

Supplemental Cash Flow Information

Cash paid for income taxes and interest for the nine months ended January 22, 2016, and January 23, 2015, is summarized as follows:

	Nine Months Ended
(in thousands)	January 22, 2016			January 23, 2015
Income taxes paid	$	412		$	4,929
Income taxes refunded	(12,986		)	(5,533		)
Income taxes refunded, net	(12,574		)	(604		)
Interest paid	$	7,755		$	7,332

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Sale and Leaseback Transaction

9 Months Ended

Jan. 22, 2016

Leases [Abstract]

Sale and Leaseback Transaction

Sale and Leaseback Transactions

In the second quarter of fiscal 2016, we entered into an agreement pursuant to which we sold our BEF Foods industrial properties located in Lima, Ohio, and Sulphur Springs, Texas, for $51,600.  We received net proceeds of $50,017, after consideration of closing and other transaction costs. In conjunction with the sale, assets with a net book value of $22,415 and $29,142 for the Lima and Sulphur Springs properties, respectively, were retired. The transaction resulted in a deferred gain of $2,305 for the Lima facility, which is recorded in the deferred rent and other line on the Consolidated Balance Sheets, and a pretax loss on disposal of $3,432, recognized in the nine months ended January 22, 2016, for the Sulphur Springs facility, which is recorded within the S,G&A line on the Consolidated Statements of Net Income and in the BEF Foods segment. Concurrent with the sale, the Company also entered into a master lease agreement with the same party that purchased the assets, pursuant to which we leased both the Lima and Sulphur Springs properties for an initial 20-year term at an annual, straight-line rent expense of $4,127, inclusive of the amortized deferred gain for the Lima property and recorded within the other operating expenses line on the Consolidated Statements of Net Income and in the BEF Foods segment. The master lease agreement provides for twoten-year renewal options. Refer to the table below for a summary of the sale and leaseback transaction:

(in thousands)	Lima, Ohio			Sulphur Springs, Texas
Selling price	$	25,284		$	26,316
Direct transaction costs	564			606
Net book value of assets sold	22,415			29,142
Net gain (loss) on sale	$	2,305	(1)	$	(3,432	)

⁽¹⁾    The gain on the sale of our Lima facility is deferred and will be recognized over the lease term

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Subsequent Events

9 Months Ended

Jan. 22, 2016

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On February 9, 2016, the Company closed on a $30,000 loan and mortgage on our corporate headquarters in New Albany, Ohio. The loan has a ten year term and is payable in equal quarterly installments over that period. The rate of interest is variable and is initially set at 5.1%. The Company and several wholly owned subsidiaries have provided guaranties for the loan. We intend to use the net proceeds from this loan to pay down debt under the Company's credit agreement and for other corporate purposes.

On February 18, 2016, the Board of Directors approved a quarterly cash dividend of $0.34 per share, payable on March 14, 2016, to shareholders of record at the close of business on February 29, 2016.

On February 23, 2016, the Company signed purchase and sale agreements on 145 restaurant properties for an aggregate purchase price of $200,000. The Company has agreed to sell 119 restaurant properties for $163,400 to National Retail Properties, LP ("National"), and 26 restaurant properties for $36,600 to Mesirow Realty Sale-Leaseback, Inc. ("Mesirow"). As part of the transactions, the Company has agreed to enter into absolute net master leases with each buyer, pursuant to which we will lease each location for an initial term of 20 years. The first year rent expense resulting from these transactions will be approximately $13,800, excluding the impact of deferred gains. The National lease includes a CPI-based rent escalator with a maximum 1.5% annual increase, while the Mesirow lease includes a fixed 1.5% annual rent escalator. The transactions are expected to provide the Company with after tax net proceeds of approximately $165,000 to $170,000. The Company and BEF Foods, Inc. have agreed to provide the lessors with a payment and performance guarantee. Consummation of the transactions is subject to completion of due diligence and certain customary closing conditions. Closing of the transaction is expected during the fourth fiscal quarter, which ends April 29, 2016.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Jan. 22, 2016

Accounting Policies [Abstract]

Reporting Segments

Reporting Segments: We have two reporting segments: Bob Evans Restaurants and BEF Foods. The revenues from these two segments include both net sales to unaffiliated customers and intersegment net sales, which are accounted for on a basis consistent with net sales to unaffiliated customers. Intersegment net sales and other intersegment transactions have been eliminated in the consolidated financial statements. Operating income represents earnings before interest and income taxes. All direct costs related to our two reporting segments are included in segment results, while certain costs related to corporate and other functions are not allocated to our reporting segments. Prior to the first quarter of fiscal 2016, we allocated these corporate and other costs to our reporting segments. This change in reporting was made to present our results in line with the changes made during the first quarter in how our chief operating decision maker measures results of operations and allocates resources. We have adjusted the prior year amounts to reflect this change in presentation. See Note 9 for detailed segment information.

Revenue Recognition

Revenue Recognition: Revenue in the Bob Evans Restaurants segment is recognized at the point of sale, other than revenue from the sale of gift cards, which is deferred and recognized upon redemption. Our gift cards do not have expiration dates or inactivity fees. Revenue in the BEF Foods segment is recognized when products are received by our customers. All revenue is presented net of sales tax collections.

In addition, we recognize income on unredeemed gift cards (“gift card breakage”) based on historical redemption patterns, referred to as the redemption recognition method. Gift card breakage is recognized proportionately over the period of redemption in net sales in the Consolidated Statements of Net Income.

Promotional (Trade) Spending

Promotional (Trade) Spending: We engage in promotional (sales incentive / trade spend) programs in the form of promotional discounts and coupons at Bob Evans Restaurants, and off-invoice deductions, billbacks, and cooperative advertising at BEF Foods. Costs associated with these programs are classified as a reduction of gross sales in the period in which the sale occurs.

Shipping and Handling Costs

Shipping and Handling costs: Expenditures related to shipping our BEF Foods' products to our customers are expensed when incurred.

Accounts Receivable

Accounts Receivable: Accounts receivable represents amounts owed to us through our operating activities and are presented net of allowance for doubtful accounts. Accounts receivable for Bob Evans Restaurants consist primarily of credit card receivables, while accounts receivable for BEF Foods consist primarily of trade receivables from customer sales. We evaluate the collectability of our accounts receivable based on a combination of factors. In circumstances where we are aware of a specific customer’s inability to meet its financial obligations to us, we record a specific allowance for bad debts against amounts due to reduce the net recognized receivable to the amount we reasonably believe will be collected. In addition, we recognize allowances for bad debts based on the length of time receivables are past due with allowance percentages, based on our historical experiences, applied on a graduated scale relative to the age of the receivable amounts. If circumstances such as higher than expected bad debt experience or an unexpected material adverse change in a major customer’s ability to meet its financial obligations to us were to occur, the recoverability of amounts due to us could change by a material amount.

Notes Receivable

Notes Receivable: As a result of the sale of Mimi’s Café to Le Duff America, Inc. ("Le Duff"), we received a Promissory Note ("the Note") for $30,000. The Note has an annual interest rate of 1.5%, a term of seven years and a principal and interest payment due in February 2020. Partial prepayments are required prior to maturity if the buyer's business reaches certain levels of EBITDA during specified periods. Our right to repayment under the Note is subordinated to third-party lenders as well as other funding that may be provided by the parent company. In the event of a sale or liquidation of the Mimi’s Café restaurant chain or the entity that owns it by its parent company, our right to repayment may be subordinated to payments owed to the parent company and / or potentially reduced based on the funds available for repayment. The note was originally valued using a discounted cash flow model.

Inventories

Inventories: We value our Bob Evans Restaurants' inventories at the lower of first-in, first-out cost (“FIFO”) or market and our BEF Foods' inventories at an average cost method which approximates a FIFO basis due to the perishable nature of that inventory.

Property, Plant and Equipment

Property, Plant and Equipment: Property, plant and equipment is recorded at cost less accumulated depreciation. The straight-line depreciation method is used for nearly all capitalized assets, although some assets purchased prior to fiscal 1995 continue to be depreciated using accelerated methods. Depreciation is calculated at rates adequate to amortize costs over the estimated useful lives of buildings and improvements (5 to 50 years) and machinery and equipment (3 to 10 years). Improvements to leased properties are depreciated over the shorter of their useful lives or the initial lease terms. Total depreciation expense was $19,816 and $20,364 in the three months ended January 22, 2016, and January 23, 2015, respectively, and $59,997 and $59,733 for the nine months ended January 22, 2016, and January 23, 2015, respectively.

During the three and nine months ended January 22, 2016, we capitalized internal labor costs of $514 and $1,615primarily for our enterprise resource planning system ("ERP") and other IT projects. During the three and nine months ended January 23, 2015, we capitalized internal labor costs of $1,077 and $3,473, which included $2,528 of capitalized costs for ERP and $945 for new restaurant construction on a year to date basis. The first phase of our ERP system was put in service on April 25, 2015, and has an expected useful life of 10 years. We are working to implement the second phase of our ERP system, which is expected to go live in fiscal 2017.

We evaluate property, plant and equipment held and used in the business for impairment whenever events or changes in circumstance indicate that the carrying amount of a long-lived asset may not be recoverable. Impairment is determined by comparing the estimated fair value for the asset group to the carrying amount of its assets. If impairment exists, the amount of impairment is measured as the excess of the carrying amount over the estimated fair values of the assets. See Note 5 for further information.

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets: Goodwill, which represents the cost in excess of fair market value of net assets acquired, was $19,634 as of January 22, 2016, and April 24, 2015. Other intangible assets were $234 and $352 as of January 22, 2016, and April 24, 2015, respectively. The goodwill and other intangible assets are related to the BEF Foods segment. Other intangible assets represents definite-lived non-compete agreements that are amortized on a straight-line basis over the estimated economic life of five years. Goodwill is tested for impairment during the fourth quarter each year, or on a more frequent basis when indicators of impairment exist.

Goodwill impairment testing involves a comparison of the estimated fair value of reporting units to the respective carrying amount. If the estimated fair value exceeds the carrying amount, then no impairment exists. If the carrying amount exceeds the estimated fair value, then a second step is performed to determine the amount of impairment, if any. We perform our impairment test using a combination of income based and market-based approaches. The income based approach indicates the fair value of an asset or business based on the cash flows it can be expected to generate over its remaining useful life. Under the market-based approach, fair value is determined by comparing our reporting segments to similar businesses or guideline companies whose securities are actively traded in public markets.

Earnings Per Share (EPS)

Earnings Per Share ("EPS"): Our basic EPS computation is based on the weighted-average number of shares of common stock outstanding during the period presented. Our diluted EPS calculation reflects the assumed vesting of restricted shares and market-based performance shares, the exercise and conversion of outstanding employee stock options and the settlement of share-based obligations recorded as liabilities on the Consolidated Balance Sheet (see Note 7 for more information), net of the impact of anti-dilutive shares.

Dividends

Dividends: In the three months ended January 22, 2016, and January 23, 2015, the Company paid a quarterly dividend equal to $0.34 and $0.31, respectively, per share on our outstanding common stock. In the nine months ended January 22, 2016, and January 23, 2015, the Company paid dividends equal to $0.96 and $0.93, respectively, per share on our outstanding common stock. Individuals that hold awards for unvested and outstanding restricted stock units, market-based performance share units and outstanding deferred stock awards are entitled to receive dividend equivalent rights equal to the per-share cash dividends paid on outstanding units. Dividend equivalent rights are forfeitable until the underlying share-units from which they were derived vest. Share-based dividend equivalents are recorded as a reduction to retained earnings, with an offsetting increase to capital in excess of par value.

Stock-based Employee Compensation

-based Employee Compensation: The Stock Compensation Topic of the FASB ASC 718 ("ASC 718") requires that we measure the cost of employee services received in exchange for an equity award, such as stock options, restricted stock awards, restricted stock units and market-based performance share units, based on the estimated fair value of the award on the grant date. The cost is recognized in the income statement over the vesting period of the award on a straight-line basis with the exception of compensation cost related to awards for "Retirement Eligible" (as defined in the applicable plan) employees, which is recognized immediately on the grant date. Compensation cost is recognized based on the grant date fair value estimated in accordance with ASC 718. See Note 6 for more information.

Financial Instruments

Financial Instruments: The fair values of our financial instruments approximate their carrying values as of January 22, 2016, and April 24, 2015.

Accrued Non-Income Taxes

Accrued Non-Income Taxes: Accrued non-income taxes primarily represent obligations for real estate and personal property taxes, as well as sales and use taxes for Bob Evans Restaurants.

Self-Insurance Reserves

Self-Insurance Reserves: We record estimates for certain health, workers’ compensation and general insurance costs that are self-insured programs. Self-insurance reserves include actuarial estimates of both claims filed, carried at their expected ultimate settlement value, and claims incurred but not yet reported. Our liability represents an estimate of the ultimate cost of claims incurred as of the balance sheet date.

Advertising Costs

Advertising Costs: Media advertising is expensed at the time the media first airs. We expense all other advertising costs as incurred. Advertising expense was $9,243 and $9,212 in the three months ended January 22, 2016, and January 23, 2015, respectively, and $28,269 and $26,413 for the nine months ended January 22, 2016, and January 23, 2015, respectively. Approximately 80% of year-to-date advertising costs were incurred in the Bob Evans Restaurants segment. Advertising costs are classified as other operating expenses in the Consolidated Statements of Net Income.

Commitments and Contingencies

Commitments and Contingencies: We rent certain restaurant facilities and, effective the second quarter of fiscal 2016, two of our manufacturing facilities (refer to Note 11 for additional information) under operating leases having initial terms that primarily expire 20 years from inception. The leases typically contain renewal clauses of 5 to 30 years exercisable at our option. Most leases contain either fixed or inflation-adjusted escalation clauses.

We occasionally use purchase commitment contracts to stabilize the potentially volatile pricing associated with certain commodity items.

We are self-insured for most casualty losses and employee health-care claims up to certain stop-loss limits per claimant. We have accounted for liabilities for casualty losses, including both reported claims and incurred, but not reported claims. We have accounted for our employee health-care claims liability through a review of incurred and paid claims history. We do not believe that our calculation of casualty losses and employee health-care claims liabilities would change materially under different conditions and/or different methods.

Reclassifications and Corrections

Reclassifications and corrections: Certain prior period amounts have been reclassified or adjusted to conform to the current presentation.

We reclassified $4,319 and $12,610 of BEF Foods' shipping and handling costs from the selling, general, and administrative ("S,G&A") line to the other operating expenses line on the Consolidated Statements of Net Income for the three months and nine months ended January 23, 2015, respectively. We believe these costs are better reflected as other operating expenses.

We reclassified $1,672 and $2,991 of Bob Evans Restaurants' impairment charges related to impairments on long-lived assets classified as held-and-used from the S,G&A line to the impairments line on the Consolidated Statements of Net Income for the three months and nine months ended January 23, 2015. Formerly, we only separately presented impairments on assets classified as held-for-sale.

We reclassified $1,389 and $2,643 of BEF Foods' advertising costs from the S,G&A line to the other operating expenses line on the Consolidated Statements of Net Income for the three months and nine months ended January 23, 2015, respectively. We believe these costs are better classified as other operating expenses rather than S,G&A. Advertising costs for both Bob Evans Restaurants and BEF Foods are now classified as other operating expenses.

These reclassifications and corrections had no impact on operating income for the three months and nine months ended January 23, 2015.

New Accounting Pronouncements

New Accounting Pronouncements: In the normal course of business, management evaluates all new accounting pronouncements issued by the FASB, the Securities and Exchange Commission (“SEC”), the Emerging Issues Task Force, the American Institute of Certified Public Accountants or any other authoritative accounting body to determine the potential impact they may have on the Company’s consolidated financial statements.

In May 2014, the FASB and the International Accounting Standards Board ("IASB") issued new joint guidance surrounding revenue recognition. Under U.S. generally accepted accounting principles ("US GAAP"), this guidance is being introduced to the ASC as Topic 606, Revenue from Contracts with Customers ("Topic 606"), by Accounting Standards Update No. 2014-09. The new standard supersedes a majority of existing revenue recognition guidance under US GAAP, and requires companies to recognize revenue when it transfers goods or services to a customer in an amount that reflects the consideration to which a company expects to be entitled. Companies may need to use more judgment and make more estimates while recognizing revenue, which could result in additional disclosures to the financial statements. Topic 606 allows for either a "full retrospective" adoption or a "modified retrospective" adoption. The standard is effective for us in fiscal 2019. We are currently evaluating which method we will use and the revenue recognition impact this guidance will have once implemented.

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements - Going Concern to provide guidance about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern. The guidance requires management to assess whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity's ability to continue as a going concern within one year after the date that the financial statements are issued. When management identifies such conditions or events, a footnote disclosure is required to disclose their nature, as well as management's plans to alleviate the substantial doubt to continue as a going concern. We do not expect this update to have an impact on the consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, to ASC 835-30 "Interest - Imputation of Interest." ASU 2015-03 will require that debt issuance costs related to a recognized term-debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. We adopted ASU 2015-03 in the first quarter of fiscal 2016. This update did not have an impact on the consolidated financial statements.

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. ASU 2015-11 simplifies the subsequent measurement of inventory by replacing today's lower of cost or market test with a lower of cost and net realizable test, which is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The standard is effective for us in fiscal 2018. We do not expect this update to have a material impact on the consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes. ASU 2015-17 requires that deferred tax assets and liabilities be classified as noncurrent in a classified statement of financial position. The adoption of this standard will result in the reclassification of all current deferred tax assets and liabilities to noncurrent in the Company's consolidated balance sheets. The standard is effective for us in fiscal 2018.

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Jan. 22, 2016

Accounting Policies [Abstract]

Schedule of Weighted Average Number of Shares Outstanding

The denominator is based on the following weighted-average shares outstanding:

	Three Months Ended		Nine Months Ended
(in thousands)	January 22, 2016	January 23, 2015	January 22, 2016	January 23, 2015
Basic	20,692	23,515	21,845	23,487
Dilutive shares	111	231	144	230
Diluted	20,803	23,746	21,989	23,717

Schedule of Dividends Declared

Refer to table below:

	Nine Months Ended
(in thousands)	January 22, 2016		January 23, 2015
Cash dividends paid to common stockholders	$	21,132	$	21,711
Dividend equivalent rights	307		276
Total dividends	$	21,439	$	21,987

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Debt (Tables)

9 Months Ended

Jan. 22, 2016

Debt Disclosure [Abstract]

Schedule of Long-term Debt

Refer to the table below:

(in thousands)	January 22, 2016			April 24, 2015
Credit Agreement borrowings (1)	$	492,850		$	447,599
R&D Loan (1)	2,323			2,631
Interest-free loan (1)	870			855
Total borrowings	496,043			451,085
Less current portion	(417		)	(409		)
Long-term debt	$	495,626		$	450,676

⁽¹⁾ The Credit Agreement, R&D Loan and Interest-free loan mature in fiscals 2019, 2021, and 2022, respectively

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Restructuring and Severance Charges (Tables)

9 Months Ended

Jan. 22, 2016

Restructuring and Related Activities [Abstract]

Schedule of Restructuring and Severance Charges

See tables below for detail of restructuring activity for the nine months ended January 22, 2016, and January 23, 2015, respectively:

(in thousands)	Bob Evans Restaurants			BEF Foods			Corporate and Other			Total
Balance, April 24, 2015	$	1,105		$	481		$	2,040		$	3,626
Restructuring and related severance charges incurred	112			28			—			140
Amounts paid	(1,086		)	(488		)	(1,276		)	(2,850		)
Adjustments	(131		)	(21		)	(416		)	(568		)
Balance, January 22, 2016	$	—		$	—		$	348		$	348

(in thousands)	Bob Evans Restaurants		BEF Foods			Corporate and Other			Total
Balance, April 25, 2014	$	—	$	553		$	674		$	1,227
Restructuring and related severance charges incurred	—		528			422			950
Amounts paid	—		(906		)	(959		)	(1,865		)
Balance, January 23, 2015	$	—	$	175		$	137		$	312

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Impairments (Tables)

9 Months Ended

Jan. 22, 2016

Fair Value Disclosures [Abstract]

Impairments Remeasured at Fair Value

The following table represents impairments for those assets remeasured to fair value during the three and nine months ended January 22, 2016, and the corresponding period last year.

	Three Months Ended						Nine Months Ended
(in thousands)	January 22, 2016			January 23, 2015			January 22, 2016			January 23, 2015
Bob Evans Restaurants
Assets held and used	$	245	(1)	$	1,672	(3)	$	392	(4)	$	2,991	(6)
Assets held for sale	559		(2)	—			697		(5)	258		(7)
Total Impairments	$	804		$	1,672		$	1,089		$	3,249

(1)    Relates to one nonoperating location

(2)    Relates to three nonoperating locations

(3)    Relates to six operating and two nonoperating locations

(4)     Relates to two nonoperating locations

(5)    Relates to four nonoperating locations

(6)    Relates to eleven operating and two nonoperating locations

(7)    Relates to one nonoperating location

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Other Compensation Plans (Tables)

9 Months Ended

Jan. 22, 2016

Compensation and Retirement Disclosure [Abstract]

Schedule of Deferred Compensation Liabilities

Our deferred compensation liabilities as of  January 22, 2016, and April 24, 2015, consisted of the following:

(in thousands)	January 22, 2016			April 24, 2015
Liability for deferred cash obligations in BEEDP and BEDDP Plans	$	12,799		$	17,904
Liability for deferred cash obligations in SERP plan	7,816			9,198
Liability for deferred share-based obligations in BEEDP and BEDDP Plans	572			2,676
Other noncurrent compensation arrangements	216			958
Total deferred compensation liabilities	21,403			30,736
Less current portion (1)	(3,796		)	(8,255		)
Noncurrent deferred compensation liabilities	$	17,607		$	22,481

⁽¹⁾    Current portion of deferred compensation is included within the accrued wages and related liabilities line on the Consolidated Balance Sheets

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Reporting Segments (Tables)

9 Months Ended

Jan. 22, 2016

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

Information on our reporting segments is summarized as follows:

	Three Months Ended						Nine Months Ended
(in thousands)	January 22, 2016			January 23, 2015			January 22, 2016			January 23, 2015
Net Sales:
Bob Evans Restaurants	$	238,608		$	250,389		$	708,018		$	731,691
BEF Foods	112,858			112,060			298,386			300,618
Intersegment net sales of food products	(4,961		)	(5,272		)	(13,165		)	(15,513		)
Subtotal of BEF Foods	107,897			106,788			285,221			285,105
Total	$	346,505		$	357,177		$	993,239		$	1,016,796
Operating income (loss):
Bob Evans Restaurants	$	14,453		$	14,153		$	37,585		$	49,709
BEF Foods	20,609			15,274			50,443			24,675
Corporate and Other	(17,002		)	(21,754		)	(50,272		)	(57,635		)
Total	$	18,060		$	7,673		$	37,756		$	16,749

(in thousands)	January 22, 2016		April 24, 2015
Identifiable Assets:
Bob Evans Restaurants	$	633,152	$	665,910
BEF Foods	133,404		179,137
General corporate assets	168,357		187,540
Total	$	934,913	$	1,032,587

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Supplemental Cash Flow Information (Tables)

9 Months Ended

Jan. 22, 2016

Supplemental Cash Flow Information [Abstract]

Schedule of Cash Flow, Supplemental Disclosures

Cash paid for income taxes and interest for the nine months ended January 22, 2016, and January 23, 2015, is summarized as follows:

	Nine Months Ended
(in thousands)	January 22, 2016			January 23, 2015
Income taxes paid	$	412		$	4,929
Income taxes refunded	(12,986		)	(5,533		)
Income taxes refunded, net	(12,574		)	(604		)
Interest paid	$	7,755		$	7,332

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Sale and Leaseback Transaction Sale and Leaseback Transaction (Tables)

9 Months Ended

Jan. 22, 2016

Leases [Abstract]

Schedule of Sale Leaseback Transactions

Refer to the table below for a summary of the sale and leaseback transaction:

(in thousands)	Lima, Ohio			Sulphur Springs, Texas
Selling price	$	25,284		$	26,316
Direct transaction costs	564			606
Net book value of assets sold	22,415			29,142
Net gain (loss) on sale	$	2,305	(1)	$	(3,432	)

⁽¹⁾    The gain on the sale of our Lima facility is deferred and will be recognized over the lease term

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Summary of Significant Accounting Policies - Narrative (Details)		3 Months Ended			9 Months Ended
	Apr. 24, 2015 USD ($) property	Jan. 22, 2016 USD ($) restaurant state property $ / shares shares	Jan. 23, 2015 USD ($) $ / shares shares	Apr. 26, 2013 USD ($)	Jan. 22, 2016 USD ($) restaurant state property segment $ / shares shares	Jan. 23, 2015 USD ($) $ / shares shares
Accounting Policies [Line Items]
Number of restaurants | restaurant		548			548
Number of states in which entity operates | state		18			18
Number of reporting segments | segment					2
Deferred gift card revenue	$ 13,714,000	$ 18,659,000			$ 18,659,000
Shipping and handling costs		3,680,000	$ 4,319,000		10,871,000	$ 12,610,000
Allowance for doubtful accounts receivable	542,000	441,000			441,000
Accounts receivable reduction related to sales promotions	3,671,000	7,949,000			7,949,000
Accretion income		528,000	471,000		1,539,000	1,374,000
Raw materials and supplies	12,898,000	15,009,000			15,009,000
Finished goods	11,722,000	8,266,000			8,266,000
Depreciation		19,816,000	$ 20,364,000		59,997,000	$ 59,733,000
Current assets held for sale	22,243,000	12,221,000			12,221,000
Long-term assets held for sale	1,611,000	0			0
Goodwill and other intangible assets	19,634,000	19,634,000			19,634,000
Other intangible assets	352,000	$ 234,000			$ 234,000
Dilutive shares not included in computation of dilutive earnings per share | shares		249,684	34,419		240,974	40,627
Cash dividends (in dollars per share) | $ / shares		$ 0.34	$ 0.31		$ 0.96	$ 0.93
Accrued non-income taxes	14,951,000	$ 17,832,000			$ 17,832,000
Self-insurance reserves	18,900,000	21,644,000			21,644,000
Advertising expense		$ 9,243,000	$ 9,212,000		$ 28,269,000	$ 26,413,000
Number of rental properties | property		2
Operating lease initial term					20 years
Reclassification			1,389,000			2,643,000
Noncompete Agreements
Accounting Policies [Line Items]
Intangible asset, useful life					5 years
Minimum
Accounting Policies [Line Items]
Renewal term					5 years
Maximum
Accounting Policies [Line Items]
Renewal term					30 years
Building and Improvements | Minimum
Accounting Policies [Line Items]
Property, plant and equipment, useful lives					5 years
Building and Improvements | Maximum
Accounting Policies [Line Items]
Property, plant and equipment, useful lives					50 years
Machinery and Equipment | Minimum
Accounting Policies [Line Items]
Property, plant and equipment, useful lives					3 years
Machinery and Equipment | Maximum
Accounting Policies [Line Items]
Property, plant and equipment, useful lives					10 years
Capitalized Internal Labor Costs
Accounting Policies [Line Items]
Depreciation		$ 514,000	1,077,000		$ 1,615,000	3,473,000
Capitalized costs for ERP
Accounting Policies [Line Items]
Depreciation						2,528,000
Restaurant Construction
Accounting Policies [Line Items]
Depreciation						945,000
Enterprise Resource Planning System
Accounting Policies [Line Items]
Property, plant and equipment, useful lives					10 years
Mimi's Cafe
Accounting Policies [Line Items]
Sale note receivable				$ 30,000,000
Sale interest rate				1.50%
Sale note receivable term				7 years
Long Term Assets Held-For-Sale
Accounting Policies [Line Items]
Long-term assets held for sale	$ 1,611,000
Bob Evans Restaurants
Accounting Policies [Line Items]
Promotional spending		12,275,000	13,858,000		$ 30,528,000	43,648,000
Reclassification adjustment		$ 245,000	1,672,000		392,000	2,991,000
Bob Evans Restaurant
Accounting Policies [Line Items]
Advertising expense allocated percentage		80.00%
BEF Foods
Accounting Policies [Line Items]
Promotional spending		$ 26,658,000	18,539,000		$ 57,066,000	39,699,000
Nonoperating Restaurant | Bob Evans Restaurants | Current assets held for sale
Accounting Policies [Line Items]
Number of locations held-for-sale | property	19				9
Nonoperating Restaurant | Bob Evans Restaurants | Long Term Assets Held-For-Sale
Accounting Policies [Line Items]
Number of locations held-for-sale | property	2
Other Expense | Reclassification Adjustment | BEF Foods
Accounting Policies [Line Items]
Shipping and handling costs			4,319,000			12,610,000
Impairments | Reclassification Adjustment | Bob Evans Restaurants
Accounting Policies [Line Items]
Reclassification adjustment			$ 1,672,000			$ 2,991,000

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Summary of Significant Accounting Policies - Weighted Average Shares Outstanding (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Jan. 22, 2016	Jan. 23, 2015	Jan. 22, 2016	Jan. 23, 2015
Accounting Policies [Abstract]
Basic (in shares)	20,692	23,515	21,845	23,487
Dilutive shares (in shares)	111	231	144	230
Diluted (in shares)	20,803	23,746	21,989	23,717

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Summary of Significant Accounting Policies - Dividends (Details) - USD ($) $ in Thousands	9 Months Ended
	Jan. 22, 2016	Jan. 23, 2015
Accounting Policies [Abstract]
Cash dividends paid to common stockholders	$ 21,132	$ 21,711
Dividend equivalent rights	307	276
Total dividends	$ 21,439	$ 21,987

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Debt - Narrative (Details)			3 Months Ended			9 Months Ended
	Oct. 21, 2015 USD ($)	Jan. 02, 2014 USD ($)	Jan. 22, 2016 USD ($)	Jul. 24, 2015 USD ($)	Jan. 23, 2015	Jan. 22, 2016 USD ($)	Jan. 23, 2015	Apr. 24, 2015 USD ($)	Jul. 23, 2014 USD ($)
Line of Credit Facility [Line Items]
Total borrowings			$ 496,043,000			$ 496,043,000		$ 451,085,000
Financing costs		$ 2,064,000		$ 1,705,000
Revolving credit facility (up to)	$ 650,000,000
Line of credit facility, amount outstanding	50,000,000
Line of credit facility, borrowing increase	$ 950,000,000
Credit facility unused capacity commitment fee percentage low end of range	0.15%
Credit facility unused capacity commitment fee percentage high end of range	0.25%
Revolving credit facility, maximum borrowing capacity		$ 750,000,000
Debt instrument, fee amount	$ 812,000
Write off of deferred debt issuance cost	480,000
Additional indebtedness allowed (up to)	$ 300,000,000
Effective interest rate			1.99%		2.31%	2.05%	2.00%
LIBOR
Line of Credit Facility [Line Items]
Credit facility variable rate low end	1.00%
Credit facility variable rate high end	2.75%
Debt instrument, basis spread on variable rate	1.00%
Base Rate
Line of Credit Facility [Line Items]
Credit facility variable rate low end	0.00%
Credit facility variable rate high end	1.75%
Federal Funds Rate
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate	0.50%
First Amendment to the Credit Agreement
Line of Credit Facility [Line Items]
Share repurchase restriction, credit agreement covenant	$ 150,000,000
Rent expense coverage ratio	6
First Amendment to the Credit Agreement | Credit Agreement borrowings
Line of Credit Facility [Line Items]
Unamortized debt financing cost									$ 1,279,000
Credit agreement, sale leaseback capacity	$ 100,000,000
Coverage ratio requirement (not less than)			3.00			3.00
Leverage ratio requirement (not to exceed)			4.50			4.50
Current coverage ratio			12.54			12.54
Current leverage ratio			3.15			3.15
Third Amendment to the Credit Agreement | Credit Agreement borrowings
Line of Credit Facility [Line Items]
Credit agreement, sale leaseback capacity	$ 300,000,000		$ 300,000,000			$ 300,000,000
Additional indebtedness allowed (up to)			300,000,000			300,000,000
Credit agreement, additional capacity, mortgage indebtedness (up to)			50,000,000			50,000,000
Credit Agreement borrowings
Line of Credit Facility [Line Items]
Total borrowings			492,850,000			492,850,000		447,599,000
Credit Agreement borrowings | Standby Letters of Credit
Line of Credit Facility [Line Items]
Line of credit facility, amount outstanding			12,318,000			12,318,000
Letters of credit outstanding, amount			12,618,000			12,618,000
R&D Loan
Line of Credit Facility [Line Items]
Total borrowings			2,323,000			2,323,000		2,631,000
Loans payable			3,000,000			3,000,000
Interest-free loan
Line of Credit Facility [Line Items]
Total borrowings			870,000			870,000		$ 855,000
Loans payable			1,000,000			$ 1,000,000
Debt instrument, term						10 years
OHIO | R&D Loan
Line of Credit Facility [Line Items]
Total borrowings			$ 2,323,000			$ 2,323,000

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Debt Schedule of Long-term Debt (Details) - USD ($) $ in Thousands	Jan. 22, 2016	Apr. 24, 2015
Debt Instrument [Line Items]
Total borrowings	$ 496,043	$ 451,085
Less current portion	(417)	(409)
Long-term debt	495,626	450,676
Credit Agreement borrowings
Debt Instrument [Line Items]
Total borrowings	492,850	447,599
R&D Loan
Debt Instrument [Line Items]
Total borrowings	2,323	2,631
Interest-free loan
Debt Instrument [Line Items]
Total borrowings	$ 870	$ 855

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Income Taxes (Details)	3 Months Ended		9 Months Ended
	Jan. 22, 2016	Jan. 23, 2015	Jan. 22, 2016	Jan. 23, 2015
Income Tax Disclosure [Abstract]
Effective income tax rate, continuing operations	17.60%	12.40%	20.90%	4.00%

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Restructuring and Severance Charges (Details) $ in Thousands	9 Months Ended		12 Months Ended
	Jan. 22, 2016 USD ($) restaurant	Jan. 23, 2015 USD ($)	Apr. 24, 2015 USD ($) restaurant
Restructuring Cost and Reserve [Line Items]
Number of restaurants closed | restaurant	20
Restructuring Reserve [Roll Forward]
Balance, beginning	$ 3,626	$ 1,227	$ 1,227
Restructuring and related severance charges incurred	140	950
Amounts paid	(2,850)	(1,865)
Adjustments	(568)
Balance, ending		312	$ 3,626
Wholly Owned Properties
Restructuring Cost and Reserve [Line Items]
Planned number of restaurants to be closed | restaurant			16
Property Subject to Operating Lease
Restructuring Cost and Reserve [Line Items]
Planned number of restaurants to be closed | restaurant			4
Bob Evans Restaurants
Restructuring Reserve [Roll Forward]
Balance, beginning	1,105	0	$ 0
Restructuring and related severance charges incurred	112	0
Amounts paid	(1,086)	0
Adjustments	(131)
Balance, ending	0	0	1,105
BEF Foods
Restructuring Reserve [Roll Forward]
Balance, beginning	481	553	553
Restructuring and related severance charges incurred	28	528
Amounts paid	(488)	(906)
Adjustments	(21)
Balance, ending	0	175	481
Corporate and Other
Restructuring Reserve [Roll Forward]
Balance, beginning	2,040	674	674
Restructuring and related severance charges incurred		422
Amounts paid	(1,276)	(959)
Adjustments	(416)
Balance, ending	$ 348	$ 137	$ 2,040

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Impairments (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Jan. 22, 2016 USD ($) restaurant property	Jan. 23, 2015 USD ($) property	Jan. 22, 2016 USD ($) restaurant property	Jan. 23, 2015 USD ($) property
Impaired Long-Lived Assets Held and Used [Line Items]
Assets held for sale | $	$ 804	$ 1,672	$ 1,089	$ 3,249
Total Impairments | $	$ 804		$ 1,089
Number of locations where cash flow reassessment was performed | restaurant	4		6
Operating Restaurant
Impaired Long-Lived Assets Held and Used [Line Items]
Number of locations where cash flow reassessment was performed | property				11
Nonoperating Restaurant
Impaired Long-Lived Assets Held and Used [Line Items]
Number of locations where cash flow reassessment was performed | property				3
Bob Evans Restaurants
Impaired Long-Lived Assets Held and Used [Line Items]
Assets held and used | $	$ 245	1,672	$ 392	$ 2,991
Assets held for sale | $	559	0	697	258
Total Impairments | $	$ 804	$ 1,672	$ 1,089	$ 3,249
Assets Held and Used | Operating Restaurant
Impaired Long-Lived Assets Held and Used [Line Items]
Number of locations where cash flow reassessment was performed | property		6
Assets Held and Used | Nonoperating Restaurant
Impaired Long-Lived Assets Held and Used [Line Items]
Number of locations where cash flow reassessment was performed | property	1	2	2	2
Assets Held-for-sale | Nonoperating Restaurant
Impaired Long-Lived Assets Held and Used [Line Items]
Number of locations where cash flow reassessment was performed | property	4		3

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Stock-Based Compensation (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Jan. 22, 2016	Jan. 23, 2015	Jan. 22, 2016	Jan. 23, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation expense	$ 1,327	$ 271	$ 4,656	$ 2,158
2010 Plan | RSAs and RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted (in shares)	14	50	126	90
2010 Plan | RSAs and RSUs | Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period			3 years
2010 Plan | RSAs and RSUs | Non-employee directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period			1 year
2010 Plan | PSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted (in shares)			70
2010 Plan | PSUs | Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period			3 years

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Other Compensation Plans (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Jan. 22, 2016 USD ($)	Jan. 22, 2016 USD ($) hour	Jan. 23, 2015 USD ($)	Apr. 24, 2015 USD ($)
Compensation and Retirement Disclosure [Line Items]
Minimum hours of service required for 401(k) eligibility (at least) | hour		1,000
Other noncurrent compensation arrangements	$ 216	$ 216		$ 958
Total deferred compensation liabilities	21,403	21,403		30,736
Less current portion (1)	(3,796)	(3,796)		(8,255)
Noncurrent deferred compensation liabilities	17,607	17,607		22,481
Rabbi trust assets	20,534	20,534		32,302
Liquidation of rabbi trust assets	5,245	5,245	$ 0
Liquidation of cash value from COLI policies	4,755
BEEDP and BEDDP Plans
Compensation and Retirement Disclosure [Line Items]
Liability for deferred cash obligations	12,799	12,799		17,904
Liability for deferred share-based obligations in BEEDP and BEDDP Plans	572	572		2,676
SERP Plan
Compensation and Retirement Disclosure [Line Items]
Liability for deferred cash obligations	7,816	7,816		9,198
Prepaid Expenses and Other Current Assets [Member]
Compensation and Retirement Disclosure [Line Items]
Short-term securities held in Rabbit Trust	$ 4,128	$ 4,128		$ 487

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Commitments and Contingencies (Details) - Settled litigation - Snodgrass, Mackin and Utterback cases $ in Thousands		3 Months Ended
	Jul. 31, 2015 USD ($)	Jul. 24, 2015 USD ($)	Apr. 24, 2015 USD ($) claim
Loss Contingencies [Line Items]
Litigation settlement, amount (up to)	$ 16,500
Bob Evans Restaurants
Loss Contingencies [Line Items]
Number of settled litigations | claim			3
Bob Evans Restaurants | SG&A
Loss Contingencies [Line Items]
Litigation settlement charge		$ 10,500	$ 6

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Reporting Segments (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Jan. 22, 2016 USD ($)	Jan. 23, 2015 USD ($)	Jan. 22, 2016 USD ($) segment	Jan. 23, 2015 USD ($)	Apr. 24, 2015 USD ($)
Segment Reporting Information [Line Items]
Number of reporting segments | segment			2
Net sales	$ 346,505	$ 357,177	$ 993,239	$ 1,016,796
Operating Income	18,060	7,673	37,756	16,749
Assets	934,913		934,913		$ 1,032,587
BEF Foods
Segment Reporting Information [Line Items]
Net sales	107,897	106,788	285,221	285,105
Operating Segments | Bob Evans Restaurants
Segment Reporting Information [Line Items]
Net sales	238,608	250,389	708,018	731,691
Operating Income	14,453	14,153	37,585	49,709
Assets	633,152		633,152		665,910
Operating Segments | BEF Foods
Segment Reporting Information [Line Items]
Net sales	112,858	112,060	298,386	300,618
Operating Income	20,609	15,274	50,443	24,675
Assets	133,404		133,404		179,137
Intersegment Eliminations | BEF Foods
Segment Reporting Information [Line Items]
Net sales	4,961	5,272	13,165	15,513
Corporate and Other
Segment Reporting Information [Line Items]
Operating Income	(17,002)	$ (21,754)	(50,272)	$ (57,635)
Assets	$ 168,357		$ 168,357		$ 187,540

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Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Jan. 22, 2016	Jan. 23, 2015
Supplemental Cash Flow Information [Abstract]
Income taxes paid	$ 412	$ 4,929
Income taxes refunded	(12,986)	(5,533)
Income taxes refunded, net	(12,574)	(604)
Interest paid	$ 7,755	$ 7,332

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Sale and Leaseback Transaction (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Jan. 22, 2016 USD ($)	Oct. 23, 2015 USD ($) lease_renewal	Jan. 22, 2016 USD ($)
Sale Leaseback Transaction [Line Items]
Operating lease initial term			20 years
BEF Foods Industrial Properties - Lima and Sulphur Springs
Sale Leaseback Transaction [Line Items]
Selling price		$ 51,600
Net proceeds		$ 50,017
Operating lease initial term		20 years
Rent expense		$ 4,127
Renewal options | lease_renewal		2
Renewal term		10 years
Lima Facility
Sale Leaseback Transaction [Line Items]
Selling price	$ 25,284
Direct transaction costs	564
Net book value of assets sold	22,415	$ 22,415	$ 22,415
Net gain (loss) on sale	2,305
Sulphur Springs Facility
Sale Leaseback Transaction [Line Items]
Selling price	26,316
Direct transaction costs	606
Net book value of assets sold	29,142	29,142	29,142
Net gain (loss) on sale	$ (3,432)
SG&A | Sulphur Springs Facility
Sale Leaseback Transaction [Line Items]
Net gain (loss) on sale			$ (3,432)
Deferred Rent and Other | Lima Facility
Sale Leaseback Transaction [Line Items]
Deferred gain		$ 2,305

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Subsequent Events (Details)			9 Months Ended
	Feb. 23, 2016 USD ($) restaurant	Feb. 09, 2016 USD ($)	Jan. 22, 2016 restaurant	Feb. 18, 2016 $ / shares
Subsequent Event [Line Items]
Number of restaurants | restaurant			548
Operating lease initial term			20 years
Cash Dividend Declared
Subsequent Event [Line Items]
Dividends payable, date declared			Feb. 18, 2016
Dividends payable, date to be paid			Mar. 14, 2016
Dividends payable, date of record			Feb. 29, 2016
Subsequent event
Subsequent Event [Line Items]
Number of restaurants | restaurant	145
Subsequent event | Cash Dividend Declared
Subsequent Event [Line Items]
Dividends payable, amount per share | $ / shares				$ 0.34
Mortgages | Subsequent event
Subsequent Event [Line Items]
Mortgage on corporate headquarters		$ 30,000,000
Term of mortgage		10 years
Rate of interest		5.10%
National and Mesirow Sale Leaseback | Subsequent event
Subsequent Event [Line Items]
Selling price	$ 200,000,000
Operating lease initial term	20 years
Rent expense	$ 13,800,000
National | Subsequent event
Subsequent Event [Line Items]
Number of restaurants | restaurant	119
Selling price	$ 163,400,000
Rent escalator	1.50%
Mesirow | Subsequent event
Subsequent Event [Line Items]
Number of restaurants | restaurant	26
Selling price	$ 36,600,000
Rent escalator	1.50%
Minimum | National and Mesirow Sale Leaseback | Subsequent event
Subsequent Event [Line Items]
Net proceeds	$ 165,000,000
Maximum | National and Mesirow Sale Leaseback | Subsequent event
Subsequent Event [Line Items]
Net proceeds	$ 170,000,000