-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, INgrxX02cv5zgs/FbRtHxyUHsK8cpUhVRtuWNHZj9FEfrELNkJ8ExpyR61i73AIP WZbxob4uUgbkuemE9I4Bxg== 0000912057-00-019391.txt : 20000425 0000912057-00-019391.hdr.sgml : 20000425 ACCESSION NUMBER: 0000912057-00-019391 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19991225 FILED AS OF DATE: 20000424 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PANERA BREAD CO CENTRAL INDEX KEY: 0000724606 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 042723701 STATE OF INCORPORATION: DE FISCAL YEAR END: 1226 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 000-19253 FILM NUMBER: 607516 BUSINESS ADDRESS: STREET 1: 19 FID KENNEDY AVE CITY: BOSTON STATE: MA ZIP: 02210 BUSINESS PHONE: 6174232100 MAIL ADDRESS: STREET 1: 19 FID KENNEDY AVE CITY: BOSTON STATE: MA ZIP: 02210 FORMER COMPANY: FORMER CONFORMED NAME: AU BON PAIN CO INC DATE OF NAME CHANGE: 19940201 10-K/A 1 FORM 10-K/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ------------- FORM 10-K/A ------------ AMENDMENT NO. 1 TO FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 25, 1999 COMMISSION FILE NUMBER 0-19253 ------------ PANERA BREAD COMPANY -------------------- (Exact name of registrant as specified in its charter) DELAWARE 04-2723701 -------- ---------- (State or other jurisdiction (I.R.S. employer of incorporation or identification No.) organization) 7930 BIG BEND BOULEVARD, ST. LOUIS, MISSOURI 63119 - -------------------------------------------- ------------- (Address of principal executive offices) (Zip Code) (314) 918-7779 -------------- (Registrant's telephone number, including area code) AMENDMENT NO. 1 --------------- The undersigned registrant hereby amends the following items, financial statements, exhibits or other portions of its Annual Report for the fiscal year ended December 25, 1999 on Form 10-K as set forth in the pages attached hereto: 1. Part III: Item 10 - Directors and Executive Officers of the Registrant. 2. Part III: Item 11 - Executive Compensation. 3. Part III: Item 12 - Security Ownership of Certain Beneficial Owners and Management. 4. Part III: Item 13 - Certain Relationships and Related Transactions. 5. Part IV: Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. BACKGROUND INFORMATION REGARDING DIRECTORS AND EXECUTIVE OFFICERS The following table and biographical descriptions set forth information regarding the principal occupation, other affiliations, committee memberships and age, for each Director in office and the executive officers of the Company, based on information furnished to the Company by each director and officer. The following information is as of April 1, 2000 unless otherwise noted.
TERM AS A NAME AGE POSITION WITH COMPANY DIRECTOR ENDS ---- --- --------------------- ------------- Domenic Colasacco(3)........... 51 Director 2000 George E. Kane (1)(2)(3)....... 95 Director 2001 Henry J. Nasella (1)(2)(3)..... 53 Director 2001 Ronald M. Shaich(2)............ 45 Chairman, Director, 2002 Chief Executive Officer Thomas R. Howley............... 49 Vice President, General Counsel and Construction -- William W. Moreton............. 40 Senior Vice President, Chief Financial Officer -- Richard C. Postle.............. 51 President, Chief Operating Officer --
- ----------- (1) Member of the Compensation and Stock Option Committee. (2) Member of the Committee on Nominations. (3) Member of the Audit Committee. DOMENIC COLASACCO, Director since March 2000. Mr. Colasacco has been President and Chief Executive Officer of United States Trust Company since 1992. He joined USTC in 1974 after beginning his career in the research division of Merrill Lynch & Co., in New York City. Mr. Colasacco is also a director of Hometown Auto Retailers. GEORGE E. KANE, Director since November 1988. Mr. Kane was a Director of the Company from March 1981 to December 1985 and a Director Emeritus from December 1985 to November 1988. Mr. Kane retired in 1970 as President of Garden City Trust Company (now University Trust Company). Mr. Kane is an Honorary Director of USTrust. HENRY J. NASELLA, Director since June 1995. Since May 1999, Mr. Nasella has been the Chairman and Chief Executive Officer of OnLine Retail Partners, an e-commerce company. Prior to that he was the President, Chief Executive Officer and Chairman of Star Markets Company, Inc. from September 1994. From January 1994 to September 1994, he was a principal of Phillips-Smith Specialty Venture Capital. From 1988 to July 1993, Mr. Nasella served as the President and Chief Operating Officer of Staples, Inc. Mr. Nasella served as President and Chief Executive Officer of Staples USA (Domestic) from 1992 to July 1993. Mr. Nasella currently is a member of the Board of Visitors of Northeastern University School of Business and a member of the Board of Trustees of Northeastern University Corporation. Mr. Nasella is also a director of Zany Brainy and Blinds to Go. -2- RONALD M. SHAICH, Director since 1981, co-founder of the Company, Chairman of the Board since May 1999, Co-Chairman of the Board from January 1988 to May 1999, Chief Executive Officer since May 1994 and Co-Chief Executive Officer from January 1988 to May 1994. Mr. Shaich is Chairman of the Board of Trustees of Clark University. EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS THOMAS R. HOWLEY, Vice President, General Counsel, and Assistant Secretary since January 1993, and Vice President, Construction since June 1999. Prior to that time, and for the five years preceding January 1993, Mr. Howley was an attorney with the law firm of Rackemann, Sawyer & Brewster. WILLIAM W. MORETON, Senior Vice President, Chief Financial Officer, and Treasurer since May 1999. Senior Vice President and Chief Financial Officer of the Saint Louis Bread Co./Panera Bread business unit since November 1998. Prior to that time and since April 1997, Mr. Moreton served as Executive Vice President and Chief Financial Officer of Quality Dining, Inc. Prior to that time and since October 1992, Mr. Moreton served as Executive Vice President and Chief Financial Officer of Houlihan's Restaurants, Inc. RICHARD C. POSTLE, Chief Operating Officer and President since May 1999. President of the Saint Louis Bread Co./Panera Bread business unit since August 1995. From August 1994 through August 1995, Mr. Postle was President and Chief Operating Officer of Checkers Drive-In Restaurants, Inc. From January 1992 through August 1994, Mr. Postle was Senior Vice President, Operations of KFC-USA. From 1988 through December 1991, Mr. Postle was Chief Operating Executive of Brice Foods, Inc. COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934 Section 16(a) of the Securities Exchange Act of 1934 requires the Company's officers and Directors, and persons who own more than 10% of the Company's outstanding shares of Common Stock to file reports of ownership and changes in ownership with the Commission and Nasdaq. Officers, Directors and greater than 10% stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. In accordance with the provisions of Item 405 of Regulation S-K, to the Company's knowledge, based solely on review of the copies of such reports furnished to the Company and written representations that no other reports were required during the fiscal year ended December 25, 1999, all Section 16(a) filing requirements applicable to its executive officers, Directors and greater than 10% beneficial owners were satisfied. ITEM 11. EXECUTIVE COMPENSATION. COMPENSATION TABLES The following tables set forth information concerning the compensation paid or accrued by the Company during the fiscal years ended December 27, 1997, December 26, 1998, and December 25, 1999, to or for the Company's Chief Executive Officer and its four other most highly compensated executive officers whose salary and bonus combined exceeded $100,000 for fiscal year 1999 (hereinafter referred to as the "named executive officers"). -3- SUMMARY COMPENSATION TABLE
ANNUAL LONG-TERM COMPENSATION COMPENSATION ------------ ------------ NAME AND SALARY BONUS OPTIONS/SARS PRINCIPAL POSITION YEAR ($) ($) (#) ------------------ ---- --- --- --- Ronald M. Shaich 1999 325,000 - - Chairman and Chief 1998 254,807 - - Executive Officer 1997 250,000 - 400,000 Richard C. Postle 1999 310,492 - 108,178 President and Chief 1998 316,067 - 100,000 Operating Officer 1997 295,192 75,000 10,000 William W. Moreton (a) 1999 274,976 - - Senior Vice President and 1998 48,461 - 150,000 Chief Financial Officer Michael J. Kupstas 1999 160,230 - - Vice President, 1998 165,231 38,975 45,000 Franchising and Brand 1997 159,813 78,785 8,000 Communication Thomas R. Howley 1999 150,000 23,452 - Vice President, General 1998 122,260 22,659 12,000 Counsel and Vice 1997 118,295 16,380 5,000 President, Construction
(a) Mr. Moreton commenced his employment with the Company in November 1998. -4- AGGREGATED OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS --------------------------------------- ANNUAL RATES OF STOCK NUMBER OF PERCENT OF VALUED AT ASSUMED PRICE SECURITIES TOTAL OPTIONS/ APPRECIATION PRICES UNDERLYING SARS GRANTED EXERCISE OR FOR OPTION TERM ($)* NAME OPTIONS/SARS TO EMPLOYEES IN BASE PRICE EXPIRATION ------------------------------ NAME GRANTED (#) FISCAL YEAR (%) ($/SHARE) DATE 5% 10% ----------- --------------- --------- ---- -- --- Ronald M. Shaich n/a n/a n/a n/a n/a n/a Richard C. Postle (1) 108,178 47 6.63 06/03/09 451,056 1,143,064 William W. Moreton n/a n/a n/a n/a n/a n/a Michael J. Kupstas n/a n/a n/a n/a n/a n/a Thomas R. Howley n/a n/a n/a n/a n/a n/a
* The dollar amounts in this table are the result of calculations at stock appreciation rates specified by the Securities and Exchange Commission and are not intended to forecast actual future appreciation rates of the Company's stock price. (1) Options were awarded under the 1992 Equity Incentive Plan. The options are exercisable in four annual installments of 25% per year beginning June 3, 2001. AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/ ACQUIRED ON VALUE OPTIONS/SARS AT FY-END (#) SARS AT FISCAL YEAR END NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE - ---- ------------ ------------ ------------------------- ------------------------- Ronald M. Shaich - - 677,330/0 293,337/0 Richard C. Postle - - 53,867/246,133 45,407/304,283 William W. Moreton - - 0/150,000 0/214,950 Michael J. Kupstas - - 7,750/56,750 4,553/70,290 Thomas R. Howley - - 18,320/13,975 8,756/1,745
-5- THE BOARD OF DIRECTORS AND ITS COMMITTEES The Company's Board of Directors held 8 meetings, including 2 actions by written consent, during fiscal year 1999. The Board of Directors has established an Audit Committee, a Compensation and Stock Option Committee and a Committee on Nominations. The Audit Committee, which held 3 meetings in fiscal year 1999, meets with the Company's auditors and principal financial personnel to review the results of the annual audit. The Audit Committee also reviews the scope of, and establishes fees for, audit and non-audit services performed by the independent accountants, reviews the independence of the independent accountants and the adequacy and effectiveness of the Company's internal accounting controls. The Audit Committee consists of 3 members, currently Messrs. George E. Kane, Henry J. Nasella, and Domenic Colasacco, and is reconstituted annually. The Compensation and Stock Option Committee (the "Compensation Committee"), which held 3 meetings in fiscal year 1999, establishes the compensation, including stock options and other incentive arrangements, of the Company's Chairman and Chief Executive Officer. It also administers the Company's 1992 Equity Incentive Plan and 1992 Employee Stock Purchase Plan. The Compensation Committee consists of 2 members, currently Messrs. George E. Kane and Henry J. Nasella, and is reconstituted annually. The Committee on Nominations was established in November 1995 and held 1 meeting in fiscal year 1999. The Committee on Nominations selects nominees for election as Directors and will consider written recommendations from any stockholder of record with respect to nominees for Directors of the Company. The Committee on Nominations consists of 3 members, currently Messrs. Ronald M. Shaich, George E. Kane, and Henry J. Nasella, and is reconstituted annually. All Directors attended 100% of the meetings of the Board and of the committees of which they are members in fiscal year 1999. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION None of the members of the Compensation Committee has interlocking or other relationships with other boards or with the Company. COMPENSATION OF DIRECTORS Directors who are not employees of the Company receive a quarterly fee ranging from $3,000 to $3,500 for serving on the Board, plus reimbursement of out-of-pocket expenses for attendance at each Board or committee meeting. Under a formula-based stock option plan for independent directors (the "Directors' Plan"), as amended by the stockholders at the 1995 Annual Meeting of Stockholders, each current Director who is not an employee or principal stockholder of the Company (an "Independent Director") and who is first elected after the effective date of the Directors' Plan receives, upon his or her election to the Board, a one-time grant of an option to purchase 5,000 shares of Class A Common Stock. Each Independent Director who serves as such at the end of each of the Company's fiscal years receives at the end of such fiscal year an option to purchase an additional 5,000 shares of Class A Common Stock. All such options have an exercise price per share equal to the closing price of a share of Class A Common Stock as of the close of the market the trading day immediately preceding the grant date, are fully vested when granted, and are exercisable for a period of 10 years. -6- REPORT OF THE COMPENSATION COMMITTEE This report is made by the Compensation and Stock Option Committee (the "Compensation Committee") of the Board of Directors, the committee which is responsible for establishing the compensation, including base salary and incentive compensation, for the Company's Chairman of the Board and Chief Executive Officer, Ronald M. Shaich. PHILOSOPHY The Compensation Committee seeks to set the compensation of the Company's Chief Executive Officer and Chairman at a level which is competitive with companies of similar size in the Company's industry. Mr. Shaich has the overall responsibility of Chairman of the Board of Directors and Chief Executive Officer. The Compensation Committee examined compensation structures for the chief executive officer of companies in the restaurant industry using generally available source material from business periodicals and other sources, and sought to structure the Chairman and Chief Executive Officer's compensation at a competitive level appropriate to the comparable companies' group. The companies that were examined for purposes of evaluating and setting compensation of the Chairman and Chief Executive Officer are not necessarily included in the "Standard & Poor's 400 - MidCap Restaurant Index" used in the Stock Performance Graph set forth under "Stock Performance" below. COMPENSATION STRUCTURE The compensation of the Chairman and Chief Executive Officer is structured to be competitive within the Company's industry and is based upon the general performance of the Company, and is reviewed annually by the Committee. COMPONENTS OF COMPENSATION SALARY. The salary shown in the Summary Compensation Table represents the fixed portion of compensation for the Chairman and Chief Executive Officer for the year. Changes in salary depend upon overall Company performance as well as levels of base salary paid by companies of similar size in the Company's industry. BONUS. The cash bonus is the principal incentive-based compensation paid annually to the Chairman and Chief Executive Officer. The Chairman and Chief Executive Officer receives a bonus in a predetermined amount if the Company achieves its objectives for the fiscal year. A higher bonus is paid if the Company exceeds the objectives by a predetermined percentage. In determining the bonus amount, the Compensation Committee seeks to create an overall compensation package for the Chairman and Chief Executive Officer which is at the mid-point for comparable companies in the restaurant industry. For 1999, Mr. Shaich asked the Board not to award a bonus to him for the current fiscal year as he believed the Company was in a transitional period. The Chairman and Chief Executive Officer may elect to take the bonus in the form of 10-year, fully vested stock options for that number of shares of the Company's Class A Common Stock that could be purchased with an amount equal to two times the cash value of his bonus. The exercise price of the option equals the fair market value of the Company's Class A Common Stock on the date of grant. STOCK OPTIONS. Mr. Shaich does not participate in either the Performance-Based Option Program under the Company's 1992 Equity Incentive Plan or the 1992 Employee Stock Purchase Plan. In order to provide what the Compensation Committee believes to be appropriate and continuing long-term incentives to its Chairman and Chief Executive Officer, and in order to align -7- more fully the interests of the stockholders and the Chairman and Chief Executive Officer, the Compensation Committee on June 12, 1997 granted to Mr. Shaich a 10-year option, vesting in equal monthly installments over a five-year period, subject to continued employment, or immediately in the event of the sale of the Company, to purchase 400,000 shares of the Company's Class A Common Stock at an exercise price per share equal to the closing price of a share of the Class A Common Stock calculated immediately preceding the date of grant. On November 17, 1998, the Board of Directors approved the recommendation of the Compensation Committee to accelerate the vesting of Mr. Shaich's options to the date on which the proposed sale of the Company's Au Bon Pain Division was completed. As these options have exercise prices equal to the market value of the Company's Class A Common Stock on the date immediately preceding the grant date, they provide incentive for the creation of stockholder value over the long term since their full benefit cannot be realized unless there occurs over time an appreciation in the price of the Company's Class A Common Stock. The Compensation Committee considers the number of shares to be an appropriate incentive for the Chairman and Chief Executive Officer to continue to focus on building stockholder value. The Compensation Committee has not determined whether any ongoing program of long-term incentive compensation should or will be adopted with respect to its Chairman and Chief Executive Officer. DEDUCTIBILITY OF EXECUTIVE COMPENSATION The Compensation Committee has reviewed the potential consequences for the Company of Section 162(m) of the Code which imposes a limit on tax deductions for annual compensation in excess of one million dollars paid to any of the five most highly compensated executive officers. Based on such review, the Compensation Committee believes that the limitation will have no effect on the Company in 2000. Respectfully submitted, HENRY J. NASELLA, GEORGE E. KANE COMPENSATION COMMITTEE EXECUTIVE OFFICER COMPENSATION The Company's Chief Executive Officer is responsible for establishing the compensation, including salary, bonus and incentive compensation, for all of the Company's executive officers other than the Chief Executive Officer and Chairman of the Board. PHILOSOPHY In compensating its executive officers, the Chief Executive Officer seeks to structure a salary, bonus and incentive compensation package that will help attract and retain talented -8- individuals and align the interests of the executive officers with the interests of the Company's stockholders. COMPONENTS OF COMPENSATION There are two components to the compensation of the Company's executive officers: annual cash compensation (consisting of salary and bonus incentives) and long-term incentive compensation. CASH COMPENSATION. The Company participates annually in an industry-specific survey of executive officers, which serves as the basis for determining total target cash compensation packages, which are crafted individually for each executive officer. The individual's compensation consists of a base salary and contingent compensation based on actual performance against agreed to expectations of performance. The individual compensation packages are structured so that, if the executive officer attains the expected level of achievement of each performance goal, the cash compensation of the executive officer will be approximately at the 75th percentile of the compensation of individuals occupying similar positions in the industry, using generally available surveys of executive compensation within the retail industry for companies with comparable revenues. At the beginning of each fiscal year, the Chief Executive Officer and each executive officer establish a series of individual performance goals which are specific to the executive's responsibilities. These goals seek to measure performance of each executive officer's job responsibilities: for executive officers whose responsibilities are operational in nature, attainment of operating group goals and objectives is stressed, and for corporate staff officers, overall Company performance measured by earnings per share growth is utilized. Currently, the maximum potential cash bonus for the Company's executive officers, as a percentage of base salary, ranges from 20% to 60%. Thus, the Company's cash compensation practices seek to motivate executives by requiring excellent performance measured against both internal goals and competitive performance. LONG-TERM INCENTIVE COMPENSATION. The second element of executive compensation, long-term incentive compensation, currently takes the form of stock options granted under the Company's 1992 Equity Incentive Plan. Currently, stock options are granted under the Performance-Based Option program, which consists of a series of guidelines which provide for the periodic granting of specific amounts of stock options, denominated in dollars rather than in numbers of shares, depending upon the executive's position within the Company. Existing holdings of stock or stock options are not a factor in determining the dollar value of an individual executive officer's award. As is the case with short-term incentive compensation, at the beginning of each fiscal year, the Chief Executive Officer and each executive officer establish a series of individual performance goals specifically related to the executive's responsibilities and designed to measure execution of these responsibilities. In addition, a Company-wide performance goal measured in earnings per share growth is established. Further consideration is given to each executive officer's accountability and/or level of responsibility for managing one or more aspects of the Company's overall business. These factors are weighted for each executive officer, with greater emphasis and value being placed on those factors which could have a greater impact on the Company's long-term profitability. An individual executive officer's performance against each of these criteria is then graded at one of five levels: significantly less than expected, less than expected, as expected, exceeds expectation, and significantly exceeds expectation. Awards of options are then made based upon a dollar value, which increases as the executive officer achieves higher grades for overall performance. -9- As often as seems appropriate, but at least annually, the Chief Executive Officer reviews the Company's executive compensation program to judge its consistency with the Company's compensation philosophy, whether it supports the Company's strategic and financial objectives, and whether it is competitive within the Company's industry. EMPLOYMENT RELATED AGREEMENTS The Company and Richard C. Postle are parties to an Executive Employment Agreement dated September 1, 1995, which provides Mr. Postle with a base salary of $300,000 for a two year period. The Agreement automatically renews for additional one year periods unless either party gives notice of his or its intent not to renew the Agreement at least twenty-six weeks prior to its expiration. In the event that the Company gives notice of its intent not to renew the Agreement, Mr. Postle will be entitled to his base salary, car allowance (if any) and other benefits for twenty-six weeks, such payments to be reduced dollar for dollar by any compensation and benefits received by Mr. Postle from other sources. In the event the Company chooses to terminate Mr. Postle's employment without cause, it may do so by giving Mr. Postle thirty (30) days' written notice. In the event of a termination without cause, Mr. Postle would be entitled to fifty-two (52) weeks severance. The Company and William W. Moreton are parties to an Executive Employment Letter Agreement dated September 29, 1998, which provides Mr. Moreton with a base salary of $275,000, a bonus of $25,000 payable in March 2000 which is based on continued employment, 150,000 stock options vesting over five years and a relocation assistance package. The Letter Agreement also provides that under the terms of a separate severance agreement, in the event of an involuntary termination of Mr. Moreton's employment without cause, Mr. Moreton will be entitled to continue to receive his base salary, car allowance and medical and/or dental benefits for a period of up to twelve months, such payments to be reduced by any compensation received by Mr. Moreton in connection with any future employment during such twelve month period. The Company and Michael J. Kupstas are parties to an Executive Employment Letter Agreement dated December 22, 1995, which provides Mr. Kupstas with a base salary of $150,000, a right to participate in the Company's Incentive Compensation Program with a guaranteed minimum bonus under the plan of 20% of his annual salary for fiscal 1996, subject to continued employment, 11,500 stock options subject to the discretion of the Company's Board of Directors, reimbursement of one year of COBRA expenses and a relocation assistance package. The Letter Agreement also provides that under the terms of a separate severance agreement, in the event of an involuntary termination of Mr. Kupstas' employment without cause, Mr. Kupstas will be entitled to continue to receive his base salary, car allowance and medical and/or dental benefits for a period of up to twelve months, such payments to be reduced by any compensation received by Mr. Kupstas in connection with any future employment during such twelve month period. -10- The Company and Thomas R. Howley are parties to Executive Employment Agreement dated December 13, 1996 and an Amendment thereto dated November 17, 1999. The Amendment provides Mr. Howley with a base salary of $150,000, the right to participate in the Company's performance compensation program and a $5,000 per year car allowance. The Amendment also provides that all of Mr. Howley's nonqualified stock options held on May 15, 1999, the effective date of the sale of the Company's Au Bon Pain division shall vest and be immediately exercisable, subject to the approval of the Company's Board of Directors and that the Company will make best efforts to replace expired options at the same exercise price. The Amendment also provides that in the event of an involuntary termination of Mr. Howley's employment without cause, Mr. Howley will be entitled to continue to receive his base salary, car allowance and medical and/or dental benefits for a period of up to twelve months, such payments to be reduced by any compensation received by Mr. Howley in connection with any future employment during such twelve month period. TOTAL RETURN TO STOCKHOLDERS (ASSUMES $100 INVESTMENT ON DECEMBER 31, 1994) The following graph and chart compare the cumulative annual stockholder return on the Company's Class A Common Stock over the period commencing December 31, 1994, and continuing through December 31, 1999, to that of the total return index for the NASDAQ Stock Market (U.S. Companies) and the Standard & Poor's 400 - MidCap Restaurant Index, assuming the investment of $100 on December 31, 1994. In calculating total annual stockholder return, reinvestment of dividends is assumed. The stock performance graph and chart below are not necessarily indicative of future price performance. PERFORMANCE GRAPH
- ---------------------------------------------------------------------------------------------------------------------- TOTAL RETURN ANALYSIS 12/31/94 12/29/95 12/30/96 12/31/97 12/31/98 12/31/99 - ------------------- ---------------- --------------- ---------------- --------------- ---------------- --------------- Panera Bread $ 100.00 $ 51.56 $ 40.63 $ 47.27 $ 42.19 $ 48.44 Company - ------------------- ---------------- --------------- ---------------- --------------- ---------------- --------------- S&P MidCap $ 100.00 $ 98.22 $ 58.06 $ 66.14 $ 80.64 $ 63.40 Restaurants - ------------------- ---------------- --------------- ---------------- --------------- ---------------- --------------- Nasdaq Composite $ 100.00 $ 139.92 $ 171.69 $ 208.83 $ 291.60 $ 541.16 - ------------------- ---------------- --------------- ---------------- --------------- ---------------- ---------------
-11- ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. OWNERSHIP OF PANERA BREAD COMPANY COMMON STOCK The following table sets forth certain information as of March 31, 2000, with respect to the Company's Class A and Class B Common Stock owned by (1) each director of the Company, (2) the executive officers named in the Summary Compensation Table, (3) all directors and executive officers of the Company as a group, and (4) each person who is known by the Company to beneficially own more than five percent of the Company's capital stock. Unless otherwise indicated in the footnotes to the table, all stock is owned of record and beneficially by the persons listed in the table.
CLASS A COMMON CLASS B COMMON COMBINED VOTING NAME AND, WITH RESPECT TO OWNER -------------- -------------- --------------- OF MORE THAN 5%, ADDRESS NUMBER PERCENT (1) NUMBER PERCENT (2) PERCENTAGE (3) - ------------------------------ ------ ----------- ------ ----------- -------------- Ronald M. Shaich............................ 740,865(4) 6.5% 1,291,646 84.4% 29.0% c/o Panera Bread Company 7930 Big Bend Boulevard St. Louis, MO 63119 George E. Kane.............................. 28,542(5) * 20,000 1.3% * Director Domenic Colasacco........................... 5,000(6) * -- -- * Director Henry J. Nasella............................ 25,080(7) * -- -- * Director Richard C. Postle........................... 92,531(8) * -- -- * William W. Moreton.......................... -- -- -- -- -- Michael J. Kupstas.......................... 13,781(9) * -- -- * Thomas R. Howley............................ 22,198(10) * -- -- *
-12-
CLASS A COMMON CLASS B COMMON COMBINED VOTING NAME AND, WITH RESPECT TO OWNER -------------- -------------- --------------- OF MORE THAN 5%, ADDRESS NUMBER PERCENT (1) NUMBER PERCENT (2) PERCENTAGE (3) - ------------------------------ ------ ----------- ------ ----------- -------------- All Directors and executive officers as a group (8 persons)....................... 927,997(11) 8.7% 1,311,646 85.7% 31.9% Louis I. Kane............................... 678,580(12) 6.0% 35,800 2.3% 4.9% 19 Fid Kennedy Avenue Boston, MA 02210 Brown Capital Management.................... 1,957,750(13) 18.4% -- -- 12.8% 1201 N. Calvert Street Baltimore, MD 21201 Merrill Lynch & Co., Inc. Merrill Lynch Asset Management Group........ 1,131,100(14) 10.6% -- -- 7.4% Merrill Lynch Special Value Fund, Inc. 800 Scudders Mill Road Plainsboro, NJ 08536 Dimensional Fund Advisors Inc. 1299 Ocean Avenue, 11th Floor Santa Monica, CA 90401 ................... 804,000(15) 7.5% -- -- 5.3% Cobalt Capital Management, Inc.............. 623,300(16) 5.8% -- -- 4.1% 237 Park Avenue, Suite 801 New York, NY 10012
- ------------- * Less than one percent. (1) Percentage ownership of Class A Common Stock is based on 10,668,831 shares issued and outstanding plus shares subject to options exercisable within sixty days of March 31, 2000 held by the stockholder or group. (2) Percentage ownership of Class B Common Stock is based on 1,530,524 shares issued and outstanding plus shares subject to options exercisable within sixty days of March 31, 2000 held by the stockholder or group. (3) This column represents voting power rather than percentage of equity interest as each share of Class A Common Stock is entitled to one vote while each share of Class B Common Stock is entitled to three votes. (4) Includes options exercisable within 60 days for 677,330 shares. (5) Includes options for 28,542 shares exercisable within sixty days of March 31, 2000 pursuant to the Directors' Plan for independent directors. (6) Consists of options for 5,000 shares exercisable within 60 days of March 31, 2000, issued pursuant to the Director's plan for independent directors. (7) Consists of (a) options for 24,080 shares exercisable within sixty days of March 31, 2000 pursuant to the Directors' Plan for independent directors, (b) 1,000 shares owned by Mr. Nasella. -13- (8) Includes options for 53,867 shares exercisable within 60 days of March 31, 2000. (9) Includes options for 10,625 shares exercisable within 60 days of March 31, 2000. (10) Includes options for 19,426 shares exercisable within sixty days of March 31, 2000. (11) Includes options for 818,870 shares exercisable within sixty days of March 31, 2000. (12) Consists of (a) 1,200 shares owned by Mr. Kane's spouse and as to which Mr. Kane disclaims beneficial ownership (b) 50 shares owned by Mr. Kane and (c) options exercisable within 60 days for 677,330 shares. (13) All of the shares of Common Stock are owned by various investment advisory clients of Brown Capital Management, Inc., which is deemed to be a beneficial owner of those shares pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, due to its discretionary power to make investment decisions over such shares for its clients and its ability to vote such shares. In all cases, persons other than Investment Counselors of Maryland, Inc. have the right to receive, or the power to direct the receipt of, dividends from, or the proceeds from the sale of the shares. No individual client holds more than five percent of the class. Information regarding beneficial ownership of the shares has been obtained solely from the Schedule 13G, Amendment No. 1 filed with the Commission on February 10, 2000. (14) Merrill Lynch & Co., Inc. ("ML & Co.") is a parent holding company. The Merrill Lynch Asset Management Group ("AMG") is an operating division of ML & Co. consisting of ML & Co.'s indirectly-owned asset management subsidiaries. The following asset management subsidiaries hold certain shares of the common stock of the Company. Merrill Lynch Asset Management, L.P., Fund Asset Management, L.P. Merrill Lynch Asset Management Group of ML & Co. ("AMG") is comprised of doing business as Merrill Lynch Asset Management ("MLAM"), QA Advisers, LLC ("QA"), Merrill Lynch Quantitative Advisers, Inc. Hotchkis and Wiley divisions thereof; Fund Asset Management, L.P., doing business as Fund Asset Management ("FAM"); Merrill Lynch Asset Management U.K. Limited ("MLAM UK"); Merrill Lynch (Suisse) Investment Management Limited ("MLS"); Mercury Asset Management International Limited ("MAMI"); Mercury Asset Management Ltd; Mercury Asset Management, Ltd.; Mercury Asia Limited; Merrill Lynch Mercury Kapitalanlagegesellschaft MBH; Munich London Investment Management, Ltd.; Merrill Lynch Asset Management (Hong Kong) Limited; Merrill Lynch Mercury Asset Management Japan Limited; Atlas Asset Management, Inc.; Merrill Lynch Investment Management Canada, Inc.; DSP Merrill Lynch Asset Management (India) Limited; PT Merrill Lynch Indonesia; Merrill Lynch Phatra Securities Co., Ltd.; Merrill Lynch Global Asset Management, Limited; Mercury Asset Management Channel Islands, Limited; Mercury Asset Management International Channel Islands Limited ("MAMCI"); Grosvenor Venture Managers, Limited; and Mercury Fund Managers, Limited. Each of MLAM, FAM, MLAM UK, MAMCI, QA, MLS, and MAMI is an investment adviser registered under Section 203 of the Investment Advisers Act of 1940, which acts as investment adviser to various investment companies registered under Section 8 of the Investment Company Act of 1940. Each other firm constituting part of AMG is an investment adviser operating under the laws of a jurisdiction other than the united States. The investment advisers that comprise AMG exercise voting and investment powers over portfolio securities independently from other direct and indirect subsidiaries of ML & Co. Information regarding beneficial ownership of the shares has been obtained solely from the joint Schedule 13G, Amendment No. 3 filed with the Commission on February 7, 2000. (15) Dimensional Fund Advisors Inc. ("Dimensional"), an investment advisor registered under Section 203 of the Investment Advisors Act of 1940, furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager to certain other commingled group trusts and separate accounts. These investment companies, trusts and accounts are the :Funds:. In its role as investment adviser or manager, Dimensional possesses voting and/or investment power over the securities of the Issuer described in this schedule that are owned the Funds. All securities reported in this schedule are owned by the Funds. Dimensional disclaims beneficial ownership of such securities. Information regarding beneficial ownership of the shares has been obtained solely from the Schedule 13G filed with the Commission on February 3, 2000. (16) Information on beneficial ownership of the shares has been obtained solely from the Schedule 13G, Amendment No. 1 filed with the Commission on February 15, 2000. -14- ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS There are no Certain Relationships or Related Transactions during the fiscal year ended December 25, 1999 that exceeded $60,000 to report. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) 1. FINANCIAL STATEMENTS The following described consolidated financial statements of the Company are included in this report: Report of Independent Accountants Consolidated Balance Sheets as of December 25, 1999, and December 26, 1998. Consolidated Statements of Operations for the fiscal years ended December 25, 1999, December 26, 1998, and December 27, 1997. Consolidated Statements of Cash Flows for the fiscal years ended December 25, 1999, December 26, 1998, and December 27, 1997. Consolidated Statements of Stockholders' Equity for the fiscal years ended December 25, 1999, December 26, 1998, and December 27, 1997. Notes to Consolidated Financial Statements. (a) 2. FINANCIAL STATEMENT SCHEDULE The following financial statement schedule for the Company is filed herewith: SCHEDULE II--Valuations and Qualifying Accounts PANERA BREAD COMPANY VALUATION AND QUALIFYING ACCOUNTS (in thousands)
BALANCE AT BALANCE BEGINNING AT END OF DESCRIPTION OF PERIOD ADDITIONS DEDUCTIONS PERIOD - ----------- ---------- --------- ---------- --------- Allowance for Doubtful Accounts Fiscal Year ended December 27, 1997................. $ 104 $ 49 $ 19 $ 134 Fiscal Year ended December 26, 1998................. $ 134 $ 96 $ 22 $ 208 Fiscal Year ended December 25, 1999................. $ 208 $ 93 $104 $ 197 Deferred Tax Valuation Allowance Fiscal Year ended December 27, 1997................. $ -- $1,308 $ -- $1,308 Fiscal Year ended December 26, 1998................. $1,308 $3,434 $ -- $4,742 Fiscal Year ended December 25, 1999................. $4,742 $ -- $ -- $4,742
(b) Form 8-K No reports on Form 8-K have been filed during the fourth quarter of the fiscal year ended December 25, 1999. (a) 3. EXHIBITS
EXHIBIT DESCRIPTION NUMBER ----------- ------- 2.1 Asset Purchase Agreement by and among Au Bon Pain Co., Inc., ABP Midwest Manufacturing Co., Inc. and Bunge Foods Corporation dated as of February 11, 1998; Amendment to Asset Purchase Agreement, dated as of March 23, 1998. Incorporated by reference to Exhibit 2.1 to the Company's Annual Report on Form 10-K for the year ended December 27, 1997. 2.2.1 Stock Purchase Agreement dated August 12, 1998 by and between the Company, ABP Holdings, Inc. ("ABPH") and ABP Corporation. Incorporated by reference to the Company's Report on Form 8-K filed August 21, 1998. 2.2.2 Amendment to Stock Purchase Agreement dated October 28, 1998 by and among the Company, ABPH and ABP Corporation. Incorporated by reference to the Company's Report on Form 8-K filed November 6, 1998. 3.1 Certificate of Incorporation of Registrant, as amended to June 2, 1991. Incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994. 3.1.1 Certificate of Amendment to Certificate of Incorporation, dated and filed June 3, 1991. Incorporated by reference to Exhibit 3.1.1 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994. 3.1.2 Certificate of Amendment to the Certificate of Incorporation filed on June 2, 1994. Incorporated by reference to Exhibit 3.1.2 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994. 3.1.3 Certificate of Designations, Preferences and Rights of the Class B Preferred Stock (Series 1), filed November 30, 1994. Incorporated by reference to Exhibit 3.1.3 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994. 3.2 Bylaws of Registrant, as amended to date. Incorporated by reference to Registrant's registration statement on Form S-1 (File No. 33-40153), Exhibit 3.2. 4.1.1 Amended and Restated Revolving Credit Agreement dated as of February 13, 1998 among the Issuer, Saint Louis Bread Company, Inc., ABP Midwest Manufacturing Co., Inc., BankBoston, N.A., USTrust and BankBoston N.A. as Agent. Incorporated by reference to Exhibit 4.1.1 to the Company's Annual Report on Form 10-K for the year ended December 27, 1997. 4.1.2 Amended and Restated Revolving Credit Note dated as of February 13, 1998 of the Issuer, Saint Louis Bread Company, Inc. and ABP Midwest Manufacturing Co., Inc. in favor of BankBoston, N.A. Incorporated by reference to Exhibit 4.1.2 to the Company's Annual Report on Form 10-K for the year ended December 27, 1997. 4.1.3 Amended and Restated Revolving Credit Note dated as of February 13, 1998 of the Issuer, Saint Louis Bread Company, Inc. and ABP Midwest Manufacturing Co., Inc. in favor of USTrust. Incorporated by reference to Exhibit 4.1.3 to the Company's Annual Report on Form 10-K for the year ended December 27, 1997. 4.1.4 First Amendment to Amended and Restated Revolving Credit Agreement dated as of June 30, 1998. 4.1.5 Second Amendment and Waiver to Amended and Restated Revolving Credit Agreement dated as of October 14, 1998. 4.1.6 Third Amendment and Waiver to Amended and Restated Revolving Credit Agreement dated as of January 20, 1999. 4.1.7 Fourth Amendment to Amended and Restated Revolving Credit Agreement dated as of March 25, 1999. 4.1.8 Fifth Amendment to Amended and Restated Revolving Credit Agreement dated as of May 14, 1999. * 4.2 Form of 4.75% Convertible Subordinated Note due 2001. Incorporated by reference to Registrant's Form 8-K filed December 22, 1993, Exhibit 4. 10.3.3 Registrant's 1992 Employee Stock Purchase Plan. Incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended December 30, 1995. 10.3.4 Registrant's Formula Stock Option Plan for Independent Directors and form of option agreement thereunder, as amended. Incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended December 30, 1995. 10.4 Amended and Restated Coffee Supply Agreement by and among Registrant and Peet's Companies, Inc., Peet's Coffee and Tea, Inc., and Peet's Trademark Company, dated as of the 26th day of October, 1994. Incorporated by reference to Exhibit 10.8 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994. 10.5 Indenture of Trust dated as of July 1, 1995 by and between the Industrial Development Authority of the City of Mexico, Missouri and Mark Twain Bank, as Trustee. Incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended December 30, 1995. 10.5.1 Loan Agreement dated as of July 1, 1995 by and between the Industrial Development Authority of the City of Mexico, Missouri and ABP Midwest Manufacturing Co., Inc. Incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended December 30, 1995. 10.5.2 Promissory Note issued by ABP Midwest Manufacturing Co., Inc. in the face amount of $8,741,370. Incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended December 30, 1995. 10.6.1 Employment Agreement between the Registrant and Richard Postle. Incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended December 30, 1995.+ 10.6.2 Employment Agreement between the Registrant and Robert Taft. Incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended December 28, 1996.+ 10.6.3 Employment Agreement between the Registrant and Maxwell Abbott. Incorporated by reference to Exhibit 10.6.3 of the Registrant's Annual Report on Form 10-K for the year ended December 28, 1996.+ 10.6.4 Employment Letter between the Registrant and Samuel Yong. Incorporated by reference to Exhibit 10.6.4 of the Registrant's Annual Report on Form 10-K for the year ended December 28, 1996.+ 10.6.5 Employment Letter between the Registrant and William Moreton.* 10.6 Employment Letter between the Registrant and Michael Kupstas.* 10.7 Employment Letter between the Registrant and Thomas Howley. 10.8 Executive Employment Agreement between the Registrant and Thomas R. Howley. 10.6.8.1 Amendment to Executive Employment Agreement between the Registrant and Thomas R. Howley.**+ 10.7.1 Form of Stock Purchase Warrant from Au Bon Pain Co., Inc. to Allied Capital Corporation, Allied Capital Corporation II, and Capital Trust Investments, Ltd. Incorporated by reference to Exhibit 10.7.1 of the Registrant's Annual Report on Form 10-K for the year ended December 28, 1996. 10.7.2 Form of Contingent Stock Purchase Warrant from Au Bon Pain Co., Inc. to Allied Capital Corporation, Allied Capital Corporation II and Capital Trust Investments, Ltd. Incorporated by reference to Exhibit 10.7.2 of the Registrant's Annual Report on Form 10-K for the year ended December 28, 1996. 10.7.3 Form of Stock Purchase Warrant from Au Bon Pain Co, Inc. to Princes Gate Investors, L.P., Acorn Partnership I L.P., PG Investments Limited, PGI Sweden AB and Gregor Von Open. Incorporated by reference to Exhibit 10.7.3 of the Registrant's Annual Report on Form 10-K for the year ended December 28, 1996. 10.7.4 Registration Rights Agreement dated as of July 24, 1996 among Allied Capital Corporation, Allied Capital Corporation II, Capital Trust Investments, Ltd., Princes Gate Investors, L.P., Acorn Partnership I, L.P., PGI Investments Limited, PGI Sweden AB, Gregor Von Open and Au Bon Pain Co., Inc., Incorporated by reference to Exhibit 10.7.4 of the Registrant's Annual Report on Form 10-K for the year ended December 28, 1996. 10.8.4 Form of Rights Agreement, dated as of October 21, 1996 between the Registrant and State Street Bank and Trust Company. Incorporated by reference to the Registrant's Registration Statement on Form 8-A (File No. 000-19253). 10.9 Bakery Product Supply Agreement by and between Bunge Foods Corporation and Saint Louis Bread Company, Inc. dated as of March 23, 1998. Incorporated by reference to Exhibit 10.9 to the Company's Annual Report on Form 10-K for the year ended December 27, 1997. 10.10 Bakery Product Supply Agreement by and between Bunge Foods Corporation and Au Bon Pain Co., Inc. dated as of March 23, 1998. Incorporated by reference to Exhibit 10.10 to the Company's Annual Report on Form 10-K for the year ended December 27, 1997. 10.11 Executive Employment Agreement between the Company and Sam Yong dated June 16, 1998. Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended July 11, 1998.+ 21 Registrant's Subsidiaries.* 23.1 Consent of PricewaterhouseCoopers L.L.P.* 27 Financial Data Schedule.*
- ----------- * Filed April 10, 2000, with the Commission on Form 10-K. ** Filed herewith. + Management contract or compensatory plan required to be filed as an exhibit to this Form 10-K pursuant to Item 14(c). -15- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. PANERA BREAD COMPANY By: /s/ RONALD M. SHAICH ----------------------------------------- Ronald M. Shaich, Chairman of the Board and Chief Executive Officer Date: April 24, 2000 Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this amendment has been duly signed by the following persons on behalf of the registrant and in the capacities and on the date indicated: /s/ RONALD M. SHAICH - -------------------------------------------- Ronald M. Shaich, Chairman of the Board and Chief Executive Officer /s/ WILLIAM W. MORETON - -------------------------------------------- William W. Moreton, Senior Vice President and Chief Financial Officer /s/ GEORGE E. KANE - -------------------------------------------- George E. Kane, Director /s/ HENRY J. NASELLA - -------------------------------------------- Henry J. Nasella, Director /s/ DOMENIC COLASACCO - -------------------------------------------- Domenic Colasacco, Director All dated: April 24, 2000 -16- EX-10.6-8 2 EXHIBIT 10.6.8 Exhibit 10.6.8 EXECUTIVE EMPLOYMENT AGREEMENT This EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made this thirteenth day of December, 1996, by and between Thomas Howley ("Employee") and Au Bon Pain, Co., Inc., a Delaware corporation with a principal place of business in Boston, Massachusetts (the "Company"). WHEREAS, the Company wishes to employ and engage the services of the Employee in an executive capacity for the Company, upon the terms, conditions, and provisions of this Agreement; and WHEREAS, the Employee desires to provide services to the Company in accordance with the terms, conditions, and provisions of this Agreement; NOW, THEREFORE, in consideration of the mutual covenants set forth herein, and other good and valuable consideration, the receipt of which is hereby acknowledged, the Company and Employee hereby agree as follows: 1. DEFINITIONS For all purposes of this Agreement, the following terms shall have the meanings specified in this Section 1 unless the context clearly requires otherwise: (a) "BASE SALARY" means the Employee's annualized base salary set forth in Section 3 of this Agreement, and such increases thereto as may be established by the Company from time to time. In no event, however, shall Employee's Base Salary be less than the amount set forth in Section 3 of this Agreement. "Base Salary" shall not include any bonus, incentive compensation or employee benefits; (b) "BENEFITS" means all employee benefits provided to the Employee by the Company, including medical, dental, long-term disability, life insurance, and such other benefits as may be provided from time to time by the Company generally to its employees; (c) "INCENTIVE COMPENSATION" means additional compensation provided to the Employee by the Company during the term of this Agreement, if any, other than Base Salary and Benefits; (d) "SEVERANCE" means payments by the Company to the Employee after termination of employment, pursuant to this Agreement, at the rate of the Employee's annualized Base Salary (and car allowance, if any) as of the date of Employee's termination. Severance is payable on a weekly basis in substantially equal installments following Employee's termination, in such increments and for such period(s) of time designated in this Agreement ("Severance Period"). Severance shall not include any bonuses or other Incentive Compensation. Except as set forth in the immediately preceding sentence, Severance shall also include the continuation of Employee's Benefits existing at the time of Employee's termination for the Severance Period. Employee shall be responsible for making all required contributions to continue Benefits during the Severance Period on the same basis as existed at the time of the Employee's termination. Severance shall be reduced (dollar for dollar) by any compensation and benefits Employee receives or earns during the Severance Period from any source other than the Company including, without limitation, salary, employee benefits, consulting fees, income from self-employment or otherwise. 2. EMPLOYMENT The Company agrees to employ the Employee to render services to the Company in an executive capacity. Effective as of the date hereof, Employee hereby accepts such employment subject to the terms and conditions set forth herein. Employee agrees to devote his full attention, best talents and abilities to the job and to perform faithfully his duties and responsibilities hereunder. 3. COMPENSATION The Company shall pay Employee a Base Salary at the rate of $109,200 annualized, Incentive Compensation, and Benefits, subject to federal and state withholdings and customary payroll deductions. 4. TERM Unless terminated as provided in Section 5, or as otherwise provided in this Agreement, this Agreement shall continue for a two-year period from the commencement of Employee's employment with the Company or the effective date of this Agreement, whichever is later; thereafter, this Agreement shall automatically renew for additional one-year periods, unless either party notifies the other in writing of its intent not to renew this Agreement at least twenty-six (26) weeks prior to its expiration. In the event that either party gives notice of intent not to renew this Agreement, the Employee shall not be entitled to Severance. 5. TERMINATION (a) TERMINATION FOR CAUSE The Company may terminate Employee's employment at any time for cause, upon written notice specifying the reasons. As used herein, the term "cause" shall mean: (i) The commission by Employee of any act of embezzlement, fraud, larceny, theft, or other willful misconduct or gross negligence in connection with the performance of Employee's duties which adversely affects the affairs of the Company; (ii) Employee's conviction of a felony, or conviction of a misdemeanor involving moral turpitude; (iii) A material breach of the terms of this Agreement which continues for fifteen (15) days after the Company has given written notice to the Employee specifying in reasonable detail the material breach. (b) TERMINATION WITHOUT CAUSE Notwithstanding any other provision of this Agreement, the Company may terminate Employee's employment, without cause, at any time, for any reason, effective upon thirty (30) days' written notice to the Employee. In the event of a termination without cause, the Employee shall be entitled to twenty-six (26) weeks' Severance. (c) RESIGNATION The Employee may at any time during the term of this Agreement resign employment, effective upon ninety (90) days' written notice to the Company. Upon such resignation, the Employee shall not be entitled to any Severance, and, except as otherwise specifically set forth herein, the obligations of the Company to the Employee under this Agreement shall terminate upon the effective date of such resignation. Employee agrees to continue to perform his duties hereunder, and otherwise assist the Company in an orderly transition, during such ninety-day period. (d) DISABILITY The Company may terminate Employee's employment if, at any time during the term of this Agreement, the Employee shall become disabled so that he is unable to perform the Employee's regular duties of employment, with reasonable accommodation, for a period of ninety (90) days in the aggregate during any 180-day period. The determination of the Employee's disability for purposes of this Section 5(d) shall be made by a qualified physician acceptable to both parties. In the event that the Company and the Employee are unable to agree upon a qualified physician, each party shall select a qualified physician, and in the even those two physicians are unable to agree upon a determination as to Employee's disability, a third neutral physician ("Neutral Physician") acceptable to the parties shall be selected. The determination of disability by the Neutral Physician shall be final and binding for purposes of this Agreement. In the event this Agreement is terminated pursuant to this Section 5(d), the Employee shall be entitled to twenty-six (26) weeks' Severance. Such Severance shall be offset dollar for dollar by any payments made in the aggregate to the Employee under the Company's existing Salary Continuation and Long-Term Disability Plan(s). (e) DEATH This Agreement and all obligations of the Company hereunder shall terminate upon the death of the Employee. In the event of a termination upon the death of the Employee, monies or compensation owed by the Company to the Employee up to the date of termination shall be paid to the Employee's estate or designee. 6. CONFIDENTIAL NATURE OF THIS AGREEMENT Employee agrees to keep confidential the terms of this Agreement. A violation of this provision shall entitle the Company to terminate this Agreement immediately, for cause, as set forth in Section 5 (a)(iii). Notwithstanding the above, the Employee may disclose the terms of this Agreement to his immediate family, bankers, accountants, attorneys, and other financial advisers, the Internal Revenue Service, the Massachusetts Department of Revenue, in the event that disclosure is necessary in litigation or arbitration involving this Agreement, or in the event that such disclosures shall be compelled by law. 7. CONFIDENTIAL AND PROPRIETARY INFORMATION (a) The Employee understands and acknowledges that in the course of employment with the Company, Employee will have access to confidential and proprietary information of the Company and its affiliates (which shall mean entities controlling, controlled by or under common control with the Company, including without limitation, Saint Louis Bread Company, Inc. and its Affiliates) which constitute valuable, special and unique assets of the Company and its Affiliates. For purposes of this Agreement, such confidential and proprietary information shall include, without limitation, the following: trade secrets; operating techniques; procedures and methods; product specifications; customer lists; account information; price lists; discount schedules; correspondence with customers, vendors, employees, partners, or others; drawings; software; leads from suppliers; marketing techniques; procedures and methods; employee lists; internal financial reports of the Company and its Affiliates; sourcing lists; and recruiting lists (collectively, "Confidential Information"). (b) The Employee agrees that during the term of this Agreement and at any time thereafter, Employee will not, without the authorization of the Company: (I) disclose any Confidential Information to any person or entity for any purpose whatsoever; or (ii) make use of any Confidential Information for Employee's own purposes or for the benefit of any other person or entity, other than the Company and its Affiliates. (c) The Employee agrees that upon the request of the Company or upon termination of employment, Employee shall return to the Company all documents or other materials, including electronic or computerized data, containing or relating to Confidential Information, along with all other Company property. 8. RESTRICTIVE COVENANT During the term of this Agreement, and for one year after its termination, for whatever reason, the Employee shall not, directly or indirectly, either as an individual, employee, partner, officer, owner, director, shareholder, advisor or consultant, or in any other capacity whatsoever, on behalf of any person, firm, corporation, partnership or entity: (a) be employed by or retained as a consultant or advisor to a competitive entity in the bakery/coffee/deli business. For purposes of this Agreement, "competitive entity" includes, without limitation, the following companies doing business as: WALL STREET DELI; PARADISE BAKERY, INC.; STARBUCKS; VIE DE FRANCE; JAVA CITY; BRUEGGER'S BAGEL BAKERY; FINAGEL-A-BAGEL; LE BOULANGERIE; GREAT HARVEST; EINSTEIN'S/NOAH'S; PEET'S; CORNER BAKERY; BIG SKY, and their respective parents, subsidiaries, franchisees, affiliates, successors, or assigns. Additionally, "competitive entity" shall include, without limitation, any company which generates in the aggregate more than 25% of its revenues from the sale of baked goods and coffee, and their respective parents, subsidiaries, franchisees, affiliates, successors or assigns. Notwithstanding the above, the direct or indirect ownership of one percent (1%) or less of the stock of a competitive entity whose shares are listed on a national securities exchange or are quoted on the National Association of Securities Dealers Automated Quotation System or so-called Bulletin Board shall not, in and of itself, be deemed to be a violation of this Section 8(a); (b) recruit, solicit, hire, or assist any other person or party in recruiting, soliciting, or hiring any employee of the Company or any of its Affiliates or any of their respective franchises. The Company may, in its sole discretion, waive enforcement of the provisions of this Section 8, which waiver shall be evidenced solely by the execution and delivery to the Employee of a written document setting forth the terms of such waiver, executed by an authorized representative of the Company. 9. ENFORCEMENT Employee agrees and acknowledges that a violation of Sections 7 or 8 of this Agreement shall entitle the company to terminate this Agreement immediately, which termination shall be conclusively deemed to be a termination for cause, as set forth in Section 5(a) hereunder. In the event of a violation of Sections 7 or 8 of this Agreement, any further Severance, salary continuation, Benefits or other future compensation otherwise owed pursuant hereto shall be forfeited, and any Severance already paid or provided to the Employee shall likewise be forfeited and shall be immediately returned to the Company. The Employee acknowledges and agrees that the Company's remedies at law for a breach of Sections 7 or 8 of this Agreement are inadequate and that the harm caused thereby is irreparable. The Employee expressly agrees that in the event of a violation of Sections 7 or 8 of this Agreement, the Company shall be entitled to equitable relief enforcing the terms of this Agreement, including without limitation, specific performance, a temporary restraining order, preliminary injunction or permanent injunction to prevent any breach or attempted breach thereof. The provisions of Sections 7, 8, and 9 shall survive the termination of this Agreement, in addition to any other which may survive pursuant to the terms of this Agreement. 10. SEVERABILITY If any provision of this Agreement including, without limitation, Sections 7, 8, or 9 hereof, is declared or found to be illegal, unenforceable, void, overbroad, or unreasonable in scope, territory, or duration, in whole or in part, then both parties will be relieved of all obligations arising under such provision, but only to the extent it is illegal, unenforceable, void, overbroad, or unreasonable in scope, territory or duration. The intent and agreement of the parties to this Agreement is that this Agreement will be deemed amended by modifying any such illegal, unenforceable, void, overbroad or unreasonable provision to the extent necessary to make it legal and enforceable while preserving its intent, or if such is not possible, by substituting therefor another provision that is legal and enforceable and achieves the same objectives. The foregoing notwithstanding, if the remainder of this Agreement will not be affected by such declaration or finding and is capable of substantial performance, then each provision not so affected will be enforced to the extent permitted by law. 11. ARBITRATION Any controversy or claim arising out of or relating to this Agreement or Employee's employment with the Company, except for claims of violation by the Employee of Sections 7 and 8 hereof which may be enforced by the Company in a court of competent jurisdiction pursuant to Section 9 hereof, shall be settled exclusively by binding arbitration before a single arbitrator in the City of Boston, in accordance with the Commercial Arbitration Rules of the American Arbitration Association. The provisions hereof shall be a complete bar and defense to any suit, action or proceeding instituted by the Employee in any federal, state or local court or before any administrative tribunal with respect to any matter which is arbitrable as herein set forth. This Section shall survive the termination or expiration of this Agreement. Nothing herein contained shall be deemed to give any arbitrator any authority, power, or right to alter, change, amend, modify, add to, or subtract from any provisions of this agreement. The arbitrator shall have no authority to award punitive damages or attorney's fees to any party. The decision of the arbitrator shall be final and conclusive. Judgment on an award rendered by the arbitrator may be entered in any court of competent jurisdiction. 12. NO CONFLICTING AGREEMENT Employee hereby represents and warrants that neither the entry into this Agreement nor its performance by Employee will conflict with or result in a breach of the terms, conditions or provisions of any other agreement or other obligation of any nature to which Employee is a party, or by which he is otherwise bound, including, without limitation, any other employment agreement, non-competition agreement, or confidentiality agreement. 13. GOVERNING LAW The terms hereof shall be governed by, and construed and interpreted in accordance with, the laws of the Commonwealth of Massachusetts, without giving effect to its conflict of laws rules which may otherwise require the application of the law of another jurisdiction. 14. SUCCESSORS AND ASSIGNS This Agreement shall be binding upon and inure to the benefit of the Company and the Employee and their respective successors, assigns, heirs, legal representatives, executors and administrators. 15. NOTICES (i) All notices to the Employee shall be addressed to Employee at: or to other such place(s) as may be designated by written notice to the Company. (ii) All notices to the Company shall be addressed to the Company at: 19 Fid Kennedy Avenue Boston, MA 02210 Attn: C.E.O. With copies to: Walter D. Wekstein, Esq. Gadsby & Hannah LLP 125 Summer Street Boston, MA 02110 or to such other place(s) as may be designated by written notice to Employee. (iii)Notice shall be sufficient if given by hand or by certified mail, postage prepaid, return receipt requested, addressed to the party at its address described above. Unless otherwise notified in writing, each party shall direct all sums payable to the other party at its address for notice purposes. 16. HEADINGS The captions and headings in this Agreement are for convenience and reference only, and they shall in no way be held or deemed to define, modify or add to the meaning, scope or intent of any provision of this Agreement. 17. ENTIRE AGREEMENT This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, written or oral on the subject matter hereof including, but not limited to, offer letters, employment letters, and agreements concerning severance pay. 18. AMENDMENTS This Agreement may be modified only by written agreement signed by both the Employee and the Company. 19. WAIVER The failure of any part at any time to require the performance of any provision(s) hereof shall in no manner affect the right(s) of such party at a later time to require the performance of said provision(s), and shall not be deemed a waiver of any obligations hereunder. IN WITNESS WHEREOF, the parties to this Agreement have executed this Agreement under seal, as of the date first above written. AU BON PAIN CO., INC. By:/s/Ronald M. Shaich Date: December 13, 1996 ---------------------------------- --------------------- Witness:/s/Deborah L. Emery Date: December 13, 1996 ---------------------------- --------------------- THOMAS HOWLEY /s/Thomas R. Howley Date: January 17, 1997 - ------------------------------------ --------------------- Witness:/s/Jodi L. Benedetto Date: January 17, 1997 ---------------------------- --------------------- EX-10.6-8-1 3 EXHIBIT 10.6.8.1 Exhibit 10.6.8.1 AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT This AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT ("Amendment") is made this 17th day of November, 1999, by and between Thomas R. Howley ("Employee") and Panera Bread Company (formerly known as Au Bon Pain, Co., Inc.), a Delaware Corporation with a principle place of business in Boston, Massachusetts (the "Company"). WHEREAS, the Company and Employee wish to amend the Executive Employment Agreement between the Employee and the Company dated December 13, 1996 ("Agreement"); and WHEREAS, Employee desires to provide further services to the Company in accordance with the terms, conditions and provisions of this Amendment and the Agreement; NOW, THEREFORE, in consideration of the mutual covenants set forth herein, and other good and valuable consideration, the receipt of which is hereby acknowledged, the Company and Employee hereby agree as follows: 1. DEFINITIONS. For all purposes of this Amendment, the terms and definitions herein shall have the same meanings specified in Section 1 of the Agreement, unless the context clearly requires otherwise. 2. OPTIONS. All of Employee's nonqualified stock options held on May 15, 1999, the effective date of the sale of the Company's Au Bon Pain division to an affiliate of Bruckmann, Rosser, Sherrill & Co., Inc. (the "Options"), shall be vested and immediately exercisable, subject to approval of the Company's Board of Directors, if not done already, which approval shall be sought as soon as reasonably practicable. The Options are listed on EXHIBIT "A" to this Agreement. If Employee is still employed at the Company at the end of the exercise period of the Options, the Company will make best efforts to replace the Options with new options priced at the Price/Share the Options as shown in Exhibit A were exercised at. The foregoing notwithstanding, Employee will be eligible to participate in the Company's incentive stock option program, subject to necessary corporate approvals. 3. BASE SALARY. Effective July 1, 1999, Employee's base salary shall be at the rate of One Hundred Fifty Thousand Dollars ($150,000) annualized. Base Salary does not include any bonus, incentive compensation, car allowance, or other employee benefits, as set forth in the Agreement. 4. BONUS, CAR ALLOWANCE AND EMPLOYEE BENEFITS. Employee will be eligible for participation in the Company's performance bonus compensation program as may be provided from time to time generally by the Company to its employees and pursuant to the Agreement. Employee will continue to receive an annual car allowance of Five Thousand Dollars ($5,000) payable in weekly installments and shall receive such other benefits as may be provided from time to time generally by the Company to its employees and pursuant to the Agreement. 5. SEVERANCE. The Company may terminate Employee's employment with the Company effective as of the date specified by not less than thirty (30) days' written notice to Employee. Employee may terminate his employment with the Company effective as of the date specified by not less than one hundred eighty (180) days' written notice (the "Employee's Notice Period") to the Company. During the Employee's Notice Period, Employee agrees to work full time and to use his best efforts to assist the Company in the transition. a. TERMINATION AT THE COMPANY'S ELECTION. In the event that the Company terminates Employee's employment, without Cause, the Company shall pay Employee Severance for fifty-two (52) weeks, calculated as of the effective date of Employee's termination. Without limitation of the Company's obligation to pay Severance for fifty-two (52) weeks as described above, the Company may, in its sole discretion, shorten or eliminate the notice period contained in the Company's notice of termination, and terminate Employee's employment at an earlier date. Employee may be asked to work full time, at the Company's prerogative, during the first six months (26 weeks) of the severance period. b. TERMINATION AT EMPLOYEE'S ELECTION. In the event that Employee resigns (including, without limitation any resignation given under Section 7 below), he shall not be entitled to any Severance and, the obligations of the Company under the Amendment shall terminate. The Company may, in its sole discretion, shorten or eliminate the notice period contained in Employee's notice of termination, and terminate Employee's employment at an earlier date. Provided, however, that in the event the Company shortens or eliminates the Employee's Notice Period, the Company shall pay Employee compensation in lieu of notice equal to the balance he would have received during Employee's Notice Period, plus car allowance c. MITIGATION BY EMPLOYMENT. By way of confirmation and not limitation or modification of the terms contained in the Agreement regarding Severance, Employee acknowledges that Severance shall be reduced dollar for dollar by any compensation and benefits Employee receives or earns during the Severance period from any source other than the Company, including, without limitation, salary, employee benefits, consulting fees, income from self employment or otherwise. d. COMPETITIVE ENTITY. Employee acknowledges and agrees that the term "competitive entity" as used in the Agreement shall be deemed to include, 2 without limitation, ABP Corporation and its parent, subsidiaries, franchisees, affiliates, successors or assigns. 6. GENERAL COUNSEL AND VICE PRESIDENT OF CONSTRUCTION RESPONSIBILITIES. Although Employee's duties and responsibilities may change from time to time in the discretion of the Company, it is expected that Employee will provide leadership on business, legal, construction, development, and cultural issues, and participate in strategic business discussions as a member of Leavening Team or other executive committee with President, CFO, Chief Retail Operating Officer and other Vice Presidents. IN WITNESS WHEREOF, the parties to this Amendment have executed this [SIGNATURE PAGE IMMEDIATELY FOLLOWS] 3 Amendment under seal, as of the date first above written. PANERA BREAD COMPANY By:/s/Ronald M. Shaich Date: NOVEMBER 17, 1999 ---------------------------- ----------------- THOMAS R.HOWLEY /s/THOMAS R. HOWLEY Date: NOVEMBER 17, 1999 - ------------------------------- ----------------- 4 EXHIBIT "A"
OPTIONS HELD AS OF MAY 15, 1999 OPTION OPTION NUMBER DATE PLAN/TYPE SHARES PRICE/SHARE 001167 11/02/92 1992/NQ 5,284 $ 7.25 001168 02/23/93 1992/NQ 3,154 $ 7.25 001169 06/01/94 1992/NQ 3,378 $ 7.25 020114 06/01/95 1992/NQ 4,056 $ 7.25 020218 05/31/96 1992/NQ 4,423 $ 8.73 020563 06/12/97 1992/NQ 5,000 $ 7.50 020606 06/25/98 1992/NQ 7,000 $ 10.94
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