Exhibit 10.16
EXECUTIVE SEPARATION
AGREEMENT
This Executive Separation Agreement
(“Agreement”) is between Einstein Noah Restaurant
Group, Inc. (“ENRGI” or the “Company”) and
Paul J.B. Murphy, III (“Executive”).
RECITALS
1. Executive was employed by ENRGI
until December 3, 2008, (the “Separation Date”),
at which time the Executive’s employment with Company
terminated.
2. Executive and ENRGI wish to
provide for payment of severance benefits to Executive, the
protection of the Company’s business interests, and the
resolution of all differences between them, including without
limitation all matters relating to or arising from
Executive’s employment with ENRGI and/or the termination of
that employment.
AGREEMENT
In consideration of the conditions,
covenants and agreements set forth below, the parties agree as
follows:
1. Severance
Compensation.
(a) Executive hereby acknowledges
the termination of Executive’s employment with ENRGI and all
offices and positions with ENRGI and all of its affiliates,
including, but not limited to his position as President, Chief
Executive Officer and member of the Board of Directors, all
effective as of the Separation Date. Executive confirms that he has
received all wages and other compensation payable to him for his
services before the Separation Date. In addition, Executive and the
Company acknowledge that, prior to the Separation Date, Executive
incurred certain business expenses on the Company’s behalf.
Executive shall file an expense report for the same no later than
December 17, 2008, in accordance with the Company’s
current expense reimbursement policies and procedures, and the
Company shall timely reimburse, but no later than March 15,
2009, Executive for all such valid expenses.
(b) The “Effective Date”
of this Agreement shall be the date seven days after the Agreement
is signed by Executive and not revoked by him.
(c) If Executive does not timely
exercise his right of revocation under paragraph 15(b), below and
complies with all of the terms of this Agreement;
i. ENRGI shall pay Executive
severance compensation in the gross amount of $708,333.33, which
amount shall be payable over a period of 20 months, less legally
required withholdings, in 44 equal installments commencing
on December 16, 2008 with payments to be made every two weeks
on every other Tuesday, without acceleration, until the end of
the 20-month period and the payment in full of the severance
amount; and
ii. ENRGI shall pay Executive a lump
sum tax gross-up payment of $13,314.67, and a lump sum payment of
$1997.20 intended to reimburse Executive for the cost of insurance
coverage, each by March 15, 2009.
iii. ENRGI shall pay Executive the
pro-rata portion of his full 2008 bonus (e.g. both company
performance portion and the individual performance portion)
representing the time between January 2, 2008, and the
Separation Date; provided, however, that the payment shall be made
by March 15, 2009.
iv. If Executive
makes a timely election, pursuant to COBRA, to continue his
participation in eligible employee benefits programs sponsored by
Company, then Company shall either, at its sole election, pay for
the costs or reimburse Executive on the 1 st day of each month for the costs
associated with the continuation of such benefits for a maximum
period of eighteen (18) months following the Effective Date.
COBRA reimbursement shall cease if and when Executive secures
employment with another employer. It is the intent of the parties
that, to the maximum extent permitted, the payment of COBRA
premiums provided pursuant to this subparagraph shall be exempt
from the application of Code Section 409A pursuant to Treasury
Regulation Section 1.409A-1(b)(9)(v)(B).
v. Company shall reimburse Executive
in the amount of up to $5,000 for legal fees; provided, however,
that the Executive shall submit the reimbursement prior to
February 15, 2009. ENRGI shall pay this reimbursement within
15 days of submission.
vi. Upon signing this Agreement,
Executive will have until December 31, 2009, in which to
exercise all Company stock options. Additionally, all unvested
outstanding options awarded to Executive, as set forth in Exhibit
“A” attached hereto, shall be vested as of the
Effective Date.
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(d) For purposes of this
Agreement:
i. Each separate payment or benefit
identified in subsections 1(c)(i) through 1(c)(v) is intended to be
a separate payment for 409A purposes pursuant to Treasury
Regulation Section 1.409A-2(b)(i). In addition, any such
payment or benefit that is made in installments or periodically
shall be deemed a series of separate payments pursuant to Treasury
Regulation Section 1.409A-2(b)(2)(iii).
ii. Payments under subsections
1(c)(i) through 1(c)(iv) are intended to qualify to the maximum
extent possible as “short-term deferrals” exempt from
the application of Code Section 409A. Any payments that do not
so qualify are intended to qualify for the Code Section 409A
exemption set forth in Treasury Regulation
Section 1.409A-1(b)(9)(iii) (which exempts from Code
Section 409A certain payments made upon an “involuntary
separation from service”). To the extent that payments made
pursuant to subsections 1(c)(1) through 1(c)(v) are not
“short-term deferrals” and exceed the exemption
threshold set forth in Treasury Regulation
Section 1.409A-1(b)(9)(iii), such exemption will first be
applied to the payment of COBRA premiums set forth in subsection
1(c)(iv) above (to the extent such benefits are subject to Code
Section 409A and are payable within six (6) months from
the Executive’s “separation from service,” as
defined for purposes of Code Section 409A (the “Delayed
Payment Date”)) and thereafter to the cash payments that are
payable closest in time to the date of termination, until such
exemption has been applied in full. Any payments under subsections
1(c)(i) through 1(c)(v) that are not exempted from Code
Section 409A and that are payable prior to the Delayed Payment
Date shall be withheld by the Company and paid to Executive on the
Delayed Payment Date or as soon thereafter as is administratively
feasible. Nothing in this paragraph shall prohibit the Company and
Executive from making use of any other Code Section 409A
exemption that may be applicable to a payment or benefit
hereunder.
(e) The Company agrees to withhold
all applicable payroll taxes, including without limitation
withholding of federal, state and local taxes, from the severance
compensation paid to Executive pursuant to paragraph 1(c) above.
Executive agrees to pay all applicable individual income taxes
imposed on him by any governmental taxing authority relating to or
arising from any payment made or benefit provided pursuant to this
Agreement, other than ENRGI’s share of FICA taxes, which
shall be borne by ENRGI. Executive agrees to pay all personal taxes
relating to or arising from any payment made pursuant to this
Agreement, as necessary. Executive shall defend and indemnify ENRGI
from and against all claims by any party arising from
Executive’s failure or refusal to pay taxes due, Executive
including costs and attorneys’ fees.
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2. Release.
(a) Executive, for himself, his
heirs, personal representatives and assigns, and any other person
or entity that could or might act on behalf of him, including,
without limitation, his counsel (all of whom are collectively
referred to as “Executive Releasers”), hereby fully and
forever release and discharge ENRGI, its parents, divisions,
subsidiaries, affiliates, and each of their past, present and
future officers, agents, directors, employees, shareholders,
independent contractors, attorneys, insurers, and any and all other
persons or entities that are now or may become liable to any
Executive Releaser due to any ENRGI Releasee’s act or
omission (all of whom are collectively referred to as ENRGI
Releasees, of and from any and all actions, causes of action,
claims, demands, costs and expenses, including attorneys’
fees, of every kind and nature whatsoever, in law or in equity,
whether now known or unknown, that Executive Releasers or any
person acting under any of them, may now have, or claim at any
future time to have, based in whole or in part upon any act or
omission occurring from the beginning of time through the date of
execution of this Agreement, including but not limited to, any
claim in connection with Executive’s employment relationship
with ENRGI, or the termination thereof, without regard to present
actual knowledge of such acts or omissions, including specifically,
but not by way of limitation, matters which may arise at common
law, such as breach of contract, express or implied, promissory
estoppel, wrongful discharge, tortious interference with
contractual rights, infliction of emotional distress, defamation,
or under federal, state or local laws, such as the Fair Labor
Standards Act, the Employee Retirement Income Security Act, the
National Labor Relations Act, Title VII of the Civil Rights Act of
1964, the Age Discrimination in Employment Act (except for claims
arising after the date of execution this Agreement) , the
Rehabilitation Act of 1973, the Equal Pay Act, the Americans with
Disabilities Act; EXCEPT for the rights and obligations created by
this Agreement AND EXCEPT for any vested rights under any pension,
retirement, profit sharing, health and welfare or stock option, or
similar plan.
(b) Executive hereby warrants that
he has not assigned or transferred to any person any portion of any
claim which is released, waived and discharged above.
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(c) Executive hereby warrants that
he has not brought and will not bring any legal or administrative
action for damages against ENRGI Releasees for matters which are
released herein.
(d) Executive further states and
agrees that except as he has reported to the Company before the
Separation Date, he has not experienced any illness, injury, or
disability compensable or recoverable under the worker’s
compensation laws of any state, and Executive agrees that he will
not file a worker’s compensation claim asserting the
existence of any such previously unreported illness, injury, or
disability.
(e) Executive specifically
represents that he has had a full and fair opportunity to consult
with counsel of his own choosing concerning the agreements,
representations, and declarations set forth in the previous
sentence. Executive understands and agrees that by signing this
Agreement he is giving up his right to bring any legal claim
against ENRGI concerning, directly or indirectly, Executive’s
employment relationship with ENRGI, including his separation from
employment. Executive agrees that this legal release is intended to
be interpreted in the broadest possible manner in favor of ENRGI,
to include all actual or potential legal claims that Executive may
have against ENRGI, except as specifically provided otherwise in
this Agreement. Notwithstanding any other provision of this
Agreement, this release shall not waive or in any way limit or
otherwise affect Executive’s rights, if any, to
indemnification and/or defense in connection with any claim that
may be asserted against Executive as a consequence of his
employment with the Company, whether such rights arise under the
Company’s articles of incorporation, bylaws, insurance
contracts or otherwise.
3. Protection of Trade Secrets
and Confidential Information.
(a) Definition of
“Confidential Information.” As used in this
Agreement, “Confidential Information” means all
nonpublic information (whether in paper or electronic form, or
contained in Executive’s memory, or otherwise stored or
recorded) relating to or arising from Company’s business,
including, without limitation, trade secrets used, developed or
acquired by Company in connection with its business. Without
limiting the generality of the foregoing, “Confidential
Information” shall specifically include all information
concerning the manner and details of Company’s operation,
organization and management; financial information and/or documents
and nonpublic policies, procedures and other printed, written or
electronic material generated or used in connection with
Company’s business; Company’s business plans and
strategies; the details of Company’s relationships
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with its distributors, customers,
contractors and vendors; nonpublic forms, contracts and other
documents used in Company’s business; all confidential
information concerning Company’s employees, agents and
contractors, including without limitation such persons’
compensation, benefits, skills, abilities, experience, knowledge
and shortcomings, if any; the nature and content of proprietary
computer software used in Company’s business; and all other
information concerning Company’s concepts, prospects,
customers, employees, agents, contractors, earnings, products,
services, equipment, systems, and/or prospective and executed
contracts and other business arrangements. “Confidential
Information” does not include information that (i) is
now in or later enters the public domain through no wrongful act on
the part of Executive, (ii) was in possession of the Executive
prior to receipt from the Company, (iii) is or was
independently developed by the Executive without use of the
Company’s confidential information, (iv) is furnished to
others by the Company without restrictions similar to those herein
on the right of the Executive to use or disclose such information,
(v) constitutes his skills, industry knowledge, or other
“know how” or (vi) must be disclosed pursuant to
requirements of law or valid legal process, provided that the
Executive shall promptly notify the Company in advance of any such
disclosure and reasonably cooperate in the Company’s attempts
to maintain the confidentiality of its information at
issue.
(b) Executive’s Use of
Confidential Information. Executive shall not, wit
