exv10w3



 







Exhibit 10.3




PANERA BREAD COMPANY




2005 LONG-TERM INCENTIVE PROGRAM

[FORM OF]

NON-QUALIFIED STOCK OPTION AGREEMENT

(Granted Under 2006 Stock Incentive Plan)

(Employee)




     AGREEMENT
(the “Agreement”) made as of the ___ day of ___, 2005 (the “Grant Date”),
between Panera Bread Company (the “Company”), a Delaware corporation having a principal place of
business in Richmond Heights, Missouri, and <<First_Name>>
<<Last_Name>> (the “Participant”).



     WHEREAS, pursuant to the 2005 Long-Term Incentive Program (the “LTIP”), the Company desires to
grant to the Participant an Option to purchase shares of its Class A Common Stock, $.0001 par value
per share (the “Shares”), under and for the purposes set forth in the Company’s 2006 Stock
Incentive Plan (the “Plan”) and the LTIP;



     WHEREAS, the Company and the Participant understand and agree that any terms used and not
defined herein have the same meanings as in the Plan or the LTIP, as applicable; and



     WHEREAS, the Company and the Participant each intend that the option granted herein shall be a
Non-Qualified Option.



     NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other
good and valuable consideration, the parties hereto agree as follows:



     1. GRANT OF OPTION.



     The Company hereby grants to
the Participant the right and option (the “Option”) to purchase
all or any part of an aggregate of <<Proposed_Grant>> Shares, subject to adjustment, as provided in Section 8 of the
Plan, in the event of a stock dividend, stock split, reverse stock split or other events affecting
the holders of Shares, and on the terms and conditions and subject to all the limitations set forth
herein and in the Plan and the LTIP, which are incorporated herein by reference and copies of which
are furnished to the Participant with this Agreement.



     It is intended that the Option evidenced by this Agreement shall not be an incentive stock
option as defined in Section 422 of the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder (the “Code”). Except as otherwise indicated by the context, the
term “Participant”, as used in this Option, shall be deemed to include any person who acquires the
right to exercise this Option validly under its terms.



     2. PURCHASE PRICE.



     The purchase price of the Shares covered by
the Option shall be <<Grant_Price>> per Share, subject to
adjustment, as provided in Section 8 of the Plan, in the event of a stock dividend, stock



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split, reverse stock split or other events affecting the holders of Shares. Payment shall be
made in accordance with Section 5(h) of the Plan.



     3. EXERCISABILITY OF OPTION.



     Subject to the terms and conditions set forth in this Agreement, the Plan and the LTIP, the
Option granted hereby shall become exercisable as follows:



	 	 	 
	On the second anniversary of the date of
this Agreement

	 	25% of the Shares
	 
	 	 
	On the third anniversary of the date of
this Agreement

	 	an additional 25% of the Shares
	 
	 	 
	On the fourth anniversary of the date of
this Agreement

	 	an additional 25% of the Shares
	 
	 	 
	On the fifth anniversary of the date of
this Agreement

	 	an additional 25% of the Shares






     The foregoing rights are (i) cumulative so that to the extent the Option is not exercised in
any period to the maximum extent permissible, it shall continue to be exercisable, in whole or in
part, with respect to all Shares for which it is vested until the earlier of the Final Exercise
Date (as defined below) or the termination of this Option under Section 4 hereof, the Plan or the
LTIP and (ii) are subject to the other terms and conditions of this Agreement, the Plan and the
LTIP.



     4. TERM OF OPTION.



     The Option shall expire at 5:00 p.m., Central Time, on the date six (6) years from the Grant
Date (the “Final Exercise Date”), but shall be subject to earlier termination as provided herein or
in the Plan or the LTIP; provided, however that termination or expiration of the Plan or the LTIP
shall not affect the Option or the rights of the Participant under this Agreement.



     If the Participant ceases to be an employee of the Company or of an affiliate of the Company
for any reason other than the death or Disability of the Participant or termination of the
Participant for Cause, the Option may be exercised, if it has not previously terminated, within
three (3) months after the date the Participant ceases to be an employee of the Company or an
affiliate of the Company, or within the originally prescribed term of the Option, whichever is
earlier, but in no event may the Option be exercised after the Final Exercise Date. In such event,
the Option shall be exercisable only to the extent that the Option has become exercisable and is in
effect at the date of such cessation of employment.



     Notwithstanding the foregoing, in the event of the Participant’s Disability or death within
three (3) months after the termination of employment, the Participant or the Participant’s
survivors may exercise the Option within one (1) year after the date of the Participant’s
termination of employment, but in no event after the Final Exercise Date.



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     In the event the Participant’s employment is terminated by the Company or an affiliate of the
Company for Cause, the Participant’s right to exercise any unexercised portion of this Option shall
cease as of such termination, and this Option shall thereupon terminate. Notwithstanding anything
herein to the contrary, if subsequent to the Participant’s termination, but prior to the exercise
of the Option, the Administrator of the Plan determines that, either prior or subsequent to the
Participant’s termination, the Participant engaged in conduct which would constitute Cause, then
the Participant shall immediately cease to have any right to exercise the Option and this Option
shall thereupon terminate and the Company shall be entitled to recover from the Participant any and
all Shares which were previously acquired through exercise of this Option.



     In the event of the Disability of the Participant while an employee of the Company or an
affiliate of the Company, the Option shall be exercisable within one (1) year after the
Participant’s termination of employment or, if earlier, within the term originally prescribed by
the Option. In such event, the Option shall be exercisable:




	 	(a)	 	to the extent exercisable but not exercised as of the date of Disability; and
	 
	 	(b)	 	to the extent of a pro rata portion of any additional rights to exercise the
Option as would have accrued had the Participant not become Disabled prior to the end
of the accrual period which next ends following the date of Disability. The proration
shall be based upon the number of days during the accrual period prior to the date of
Disability.





     In the event of the death of the Participant while an employee of the Company or of an
affiliate of the Company, the Option shall be exercisable by the Participant’s survivors within one
(1) year after the date of death of the Participant or, if earlier, within the originally
prescribed term of the Option. In such event, the Option shall be exercisable:




	 	(x)	 	to the extent exercisable but not exercised as of the date of death; and
	 
	 	(y)	 	to the extent of a pro rata portion of any additional rights to exercise the
Option as would have accrued had the Participant not died prior to the end of the
accrual period which next ends following the date of death. The proration shall be
based upon the number of days during the accrual period prior to the Participant’s
death.





     5. METHOD OF EXERCISING OPTION.



     Subject to the terms and conditions of this Agreement, the Option (or any part or installment)
may be exercised by written notice signed by the Participant and delivered to the Company at its
principal executive office, in substantially the form of Exhibit A attached hereto or other
form approved by the Company, accompanied by payment in full in the manner provided in Section 5(h)
of the Plan. Such notice shall state the number of Shares with respect to which the Option is
being exercised and shall be signed by the person exercising the Option. The Company shall deliver
a certificate or certificates representing such Shares, or issue the Shares in electronic form or
book-entry credit, as applicable, as soon as practicable after the



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notice shall be received; provided, however, that the Company may delay issuance of such
Shares until completion of any action or obtaining of any consent, which the Company deems
necessary under any applicable law (including, without limitation, state securities or “blue sky”
laws). The Shares as to which the Option shall have been so exercised shall be registered in the
name of the person or persons so exercising the Option (or, if the Option shall be exercised by the
Participant and if the Participant shall so request in the notice exercising the Option, shall be
registered in the name of the Participant and another person jointly, with right of survivorship)
and shall be delivered as provided above to or upon the written order of the person or persons
exercising the Option. In the event the Option shall be exercised, pursuant to Section 4 hereof,
by any person or persons other than the Participant, such notice shall be accompanied by
appropriate proof of the right of such person or persons to exercise the Option. All Shares that
shall be purchased upon the exercise of the Option as provided herein shall be fully paid and
nonassessable.



     6. PARTIAL EXERCISE.



     The Participant may purchase less than the number of Shares covered by this Option at any time
and from time to time, provided that no partial exercise of this Option may be for any fractional
share.



     7. NON-TRANSFERABILITY.



     This Option may not be sold, assigned, transferred, pledged or otherwise encumbered by the
Participant, either voluntarily or by operation of law, except by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order and, during the lifetime of the
Participant, this Option shall be exercisable only by the Participant. References to a
Participant, to the extent relevant in the context, shall include references to authorized
transferees.



     8. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE.



     The Participant shall have no rights as a stockholder with respect to Shares subject to this
Agreement until registration of the Shares in the Company’s share register in the name of the
Participant. Except as is expressly provided in the Plan with respect to certain changes in the
capitalization of the Company, no adjustment shall be made for dividends or similar rights for
which the record date is prior to the date of such registration.



     9. CAPITAL CHANGES AND BUSINESS SUCCESSIONS.



     The Plan and the LTIP contain provisions covering the treatment of Options in a number of
contingencies such as stock splits and mergers. Provisions in the Plan and the LTIP for adjustment
with respect to stock subject to Options and the related provisions with respect to successors to
the business of the Company are hereby made applicable hereunder and are incorporated herein by
reference.



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     10. TAXES.



     The Participant acknowledges that upon exercise of the Option the Participant will be deemed
to have taxable income measured by the difference between the then fair market value of the Shares
received upon exercise and the price paid for such Shares pursuant to this Agreement. The
Participant acknowledges that any income or other taxes due from him or her with respect to this
Option or the Shares issuable pursuant to this Option shall be the Participant’s responsibility.



     The Participant agrees that the Company shall be entitled to withhold from the Participant’s
remuneration, if any, the minimum statutory amount of federal, state and local withholding taxes
attributable to such amount that is considered compensation includable in the Participant’s gross
income. At the Company’s discretion, the amount required to be withheld may be withheld in cash
from such remuneration, or in kind from the Shares otherwise deliverable to the Participant on
exercise of the Option. The Participant further agrees that, if the Company does not withhold an
amount from the Participant’s remuneration sufficient to satisfy the Company’s income tax
withholding obligation, the Participant will reimburse the Company on demand, in cash, for the
amount under-withheld.



     11. RESTRICTIONS ON TRANSFER OF SHARES.



     11.1 If, in connection with a registration statement filed by the Company pursuant to the 1933
Act, the Company or its underwriter so requests, the Participant will agree not to sell any Shares
for a period not to exceed 180 days following the effectiveness of such registration.



     11.2 The Participant acknowledges and agrees that neither the Company, its stockholders nor
its directors and officers, has any duty or obligation to disclose to the Participant any material
information regarding the business of the Company or affecting the value of the Shares before, at
the time of, or following a termination of the employment of the Participant by the Company,
including, without limitation, any information concerning plans for the Company to make a public
offering of its securities or to be acquired by or merged with or into another firm or entity.



     12. NO OBLIGATION TO MAINTAIN RELATIONSHIP.



     The Company is not by this Agreement, the LTIP or the Plan granting the Participant any right
to continued employment or any other relationship with the Company. The Company expressly reserves
the right at any time to dismiss or otherwise terminate its relationship with the Participant free
from any liability or claim under this Agreement, the LTIP or the Plan.



     13. NOTICES.



     Any notices required or permitted by the terms of this Agreement or the Plan shall be given by
recognized courier service, facsimile, registered or certified mail, return receipt requested,
addressed as follows:



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If to the Company:


Panera Bread Company

6710 Clayton Road

Richmond Heights, MO 63117

ATTN: Director, Compensation & Benefits

Facsimile: (314) 633-7220



If to the Participant:




	 	 	 	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 	 	 




or to such other address or addresses of which notice in the same manner has previously been given.
Any such notice shall be deemed to have been given upon the earlier of receipt, one (1) business
day following delivery to a recognized courier service or three (3) business days following mailing
by registered or certified mail.




     14. GOVERNING LAW.



     This Agreement shall be governed by and interpreted in accordance with the laws of the State
of Delaware, excluding choice-of-law principles of the law of such state that would require the
application of the laws of a jurisdiction other than such state.



     15. BENEFIT OF AGREEMENT.



     Subject to the provisions of the Plan and the other provisions hereof, this Agreement shall be
for the benefit of and shall be binding upon the heirs, executors, administrators, successors and
assigns of the parties hereto.



     16. ENTIRE AGREEMENT.



     This Agreement, and the grant made hereby, is subject to the terms and conditions of each of
the Plan and LTIP, which are incorporated herein by reference. This Agreement, together with the
Plan and the LTIP, embodies the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersedes all prior oral or written agreements and
understandings relating to the subject matter hereof. No statement, representation, warranty,
covenant or agreement not expressly set forth in this Agreement shall affect or be used to
interpret, change or restrict, the express terms and provisions of this Agreement, provided,
however, in any event, this Agreement shall be subject to and governed by the Plan and the LTIP.



     17. MODIFICATIONS AND AMENDMENTS.



     The terms and provisions of this Agreement may be modified or amended as provided in the Plan
or the LTIP.



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     18. WAIVERS AND CONSENTS.



     Except as provided in the Plan, the terms and provisions of this Agreement may be waived, or
consent for the departure therefrom granted, only by a written document executed by the party
entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to
be or shall constitute a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be effective only in the
specific instance and for the purpose for which it was given, and shall not constitute a continuing
waiver or consent.



     19. ACKNOWLEDGMENT.



     By executing this Agreement, the Participant acknowledges (a) he or she has been provided
access to a copy of the Plan and the LTIP, and that all decisions, determinations and
interpretations of the Administrator in respect of the Plan, the LTIP, this Agreement and the
Option shall be final and conclusive, and (b) his or her obligations under the Confidentiality and
Proprietary Information and Non-Competition Agreement with Panera, LLC, and any other
confidentiality and non-competition agreement with Panera, LLC or the Company.



     20. SECURITIES LAWS.



     Notwithstanding anything to the contrary herein, no part of this Option shall be exercisable
at any time that such exercise would violate any federal or state securities laws.



[Signature Page Follows]




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     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized officer, and the Participant has hereunto set his or her hand, all as of the day and
year first above written.



	 	 	 	 	 
	 	 	PANERA BREAD COMPANY
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	PARTICIPANT:
	 
	 	 	 	 
	 	 	 
	 	 	«First_Name» «Last_Name»






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Exhibit A




	 	 	 
	 

	 	
	THOMAS C. COCHRAN III
	 	 
	ADAMS, HARKNESS & HILL, INC.

	 	Panera Bread Company
	60 STATE STREET, 12TH FLOOR

	 	6710 Clayton Rd.
	BOSTON, MA 02109

	 	Richmond Heights, MO 63117
	(800) 225-6201

	 	(314) 633-7100
	(617) 371-3741

	 	 
	FAX (617) 371-3796
	 	 






NOTICE OF STOCK OPTION EXERCISE – EXHIBIT A



1. I elect to purchase:




	 	 	 	 	 	 	 
	 	 	 	 	Number of Shares	 	Exercise Price
	Grant Number	 	Grant Date	 	To Exercise	 	Per Share
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 




2. I elect to use the “cashless exercise” program of Adams, Harkness & Hill, Inc.
(AH&H) to purchase the Shares as follows:




	 	 	 
	                    

	 	a. Number of
Shares to be sold by AH&H


I hereby authorize and direct AH&H to sell a sufficient number of shares in
order to pay for the stock option price and required taxes.
	 
	 	 
	 

	 	Shares which are not required to be sold pursuant to the above paragraph will
be credited to my account at AH&H which is directed to have the Shares:
	 
	 	 
	 

	 	                                    Held in my account by AH&H in street name.
	 

	 	                                    Mailed to me according to account standing instructions.
	 

	 	                                    Other:                                                             
	 
	 	 
	                    

	 	I hereby authorize and direct AH&H to sell all my Shares. Proceeds from the sale
of the Shares after payment of the stock option exercise price and required taxes are to
be:
	 

	 	                                    Mailed to me.
	 

	 	                                    Held in my account at AH&H.
	 
	 	 
	 

	 	b. Sale Price
	 

	 	AH&H is authorized to sell my Shares no lower than:
	 

	 	                                    The market price when this form is received by AH&H.
	 

	 	                                    The following minimum price: $                    .
	 
	 	 
	 

	 	c. AH&H Account Number:                                          





AH&H is authorized to pay the stock option exercise price and withholding taxes, if
applicable, to Panera Bread Company and to provide to PNRA a duplicate confirmation of sale.



Upon the sale of my stock option shares through AH&H, my authorization and direction to
deliver those Shares to my account at AH&H is irrevocable.




	 	 	 
	Employee Signature

	 	Position at Panera Bread Company
	 
	 	 
	Print Name

	 	Daytime Telephone Number
	 
	 	 
	Street Address

	 	Social Security Number
	 
	 	 
	City, State, Zip Code

	 	Company Authorization







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