Document:

exv10w1

 

Exhibit 10.1

PANERA BREAD COMPANY

2005 LONG-TERM INCENTIVE PROGRAM 

Section 1. Establishment.

Effective September 1, 2005, Panera Bread Company (the “Company”) hereby establishes the Long-Term
Incentive Program (the “LTIP”) as a sub-plan under the Company’s 1992 Equity Incentive Plan (the
“1992 Plan”) and, to the extent applicable, the Company’s 2001 Employee, Director and Consultant
Stock Option Plan (the “2001 Plan”). Notwithstanding anything to the contrary herein, except to the
extent permitted by the 1992 Plan and the 2001 Plan, the provisions of each of the 1992 Plan and
2001 Plan, as applicable, shall apply for purposes of the LTIP with respect to any awards under the
1992 Plan or the 2001 Plan, respectively.

Section 2. General Purpose of the Plan and Definitions.

The purpose of the LTIP is to provide eligible individuals with a meaningful stake in the Company’s
success through long-term incentive awards. In doing so, the Company hopes to motivate and reward
the attainment of longer-term profitable growth goals, support the recruitment and retention of
individuals critical to the long-term success of the Company and align individual participants’
interests with those of customers and shareholders.

Except to the extent required by the 1992 Plan or the 2001 Plan, whenever used in the LTIP, the
following terms shall have the meanings set forth in this Section 2. Capitalized terms not
otherwise defined herein shall have the meanings set forth in the 1992 Plan or 2001 Plan, as
applicable.

	 	a)	 	Cause. Cause shall include (and is not limited to) dishonesty with respect to
the Company or any Affiliate, insubordination, substantial malfeasance or
non-feasance of duty, unauthorized disclosure of confidential information, or
conduct substantially prejudicial to the business of the Company or any Affiliate
or any other circumstance which would constitute or be deemed “cause” pursuant to
any other agreement entered into between an LTIP Participant and the Company or an
Affiliate, as determined by the Committee or any officer designated by it, in its,
his or her sole discretion. The determination of the Committee or such designated
officer as to the existence of Cause will be conclusive on the LTIP Participant and
the Company.
	 
	 	b)	 	Change in Control. Any of the following events: (i) the purchase or other
acquisition by any person, entity or group of persons, within the meaning of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934 (the “Act”)
(excluding, for this purpose, the Company, its Affiliates and any employee benefit
plan (or related trust) of the Company or its Affiliates), of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Act) of 50% or more of the
combined voting power of the Company’s then-

 

 

	 	 	 	outstanding voting securities entitled
to vote generally in the election of directors in any transaction or series of
transactions; (ii) when individuals who, as of the effective date of the LTIP,
constitute the Board (the “Incumbent Board”) cease for any reason to constitute at
least a majority of the Board, provided that any person who becomes a director
subsequent to the effective date of the LTIP whose election, or nomination for
election by the Company’s shareholders, was approved in advance by a vote of at
least a majority of the directors then comprising the Incumbent Board excluding
members of its Incumbent Board who are no longer serving as directors shall be, for
purposes of this section, considered as though such person were a member of the
Incumbent Board; provided, however, the following persons shall not be considered
members of the Incumbent Board: (a) individuals whose initial assumption of office
is in connection with an actual or threatened election contest relating to the
election of directors of the Company, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Act and (b) individuals approved by the
Incumbent Board as a result of an agreement intended to avoid or settle an actual
or threatened contest; (iii) consummation of a reorganization, merger or
consolidation, except in each case following such reorganization, merger or
consolidation: (a) persons who were the shareholders of the Company immediately
prior to such reorganization, merger or consolidation immediately thereafter own
more than 50% of the combined voting power entitled to vote generally in the
election of directors of the reorganized, merged or consolidated corporation’s
then-outstanding voting securities, and (b) a majority of members of the board or
other governing body of such reorganized, merged or consolidated corporation were
members of the Incumbent Board at the time of the execution of the initial
agreement or the approval of the transaction by the Board; (iv) approval by
shareholders of a liquidation or dissolution of the Company (and the Company shall
commence such liquidation or dissolution), or consummation of the sale of all or
substantially all of the assets of the Company (in one transaction or a series of
transactions); or (v) any other event that a majority of the members of the
Incumbent Board, in their sole discretion, shall determine may constitute a Change
in Control.
	 
	 	c)	 	Choice Award. An award that provides designated LTIP Participants with the choice to
receive the award in a) Restricted Stock, b) Stock Options, or c) a combination of Restricted
Stock and Stock Options.
	 
	 	d)	 	Committee. The Compensation and Stock Option Committee of the Board of Directors of
the Company, or any successor committee designated by such Board to assume the
responsibilities for the administration of this LTIP.
	 
	 	e)	 	Deferred Annual Bonus Match Award. A deferred bonus that is awarded to designated
LTIP participants based on a percentage of the LTIP Participant’s earned annual bonus
as determined in accordance with Section 8(a.)
	 
	 	f)	 	Disability. Permanent and total disability as defined in Section 22(e)(3) of the
Code.
	 
	 	g)	 	Fair Market Value. With respect to Common Stock:

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	 	(i)	 	if the Common Stock is listed on a national securities
exchange or traded in the over-the counter market and sales prices are
regularly reported for the Common Stock, the closing or last price of the
Common Stock on the Composite Tape or other comparable reporting system on
the date of grant or determination;
	 
	 	(ii)	 	if the Common Stock is not traded on a national
securities exchange but is traded on the over-the-counter market, if sales
prices are not regularly reported for the Common Stock for the trading day
referred to in Section 2(g)(i), and if bid and asked prices for the Common
Stock are regularly reported, the mean between the bid and the asked price
for the Common Stock at the close of trading in the over-the-counter market
for the trading day on which Common Stock was traded on the date of grant
or determination; and
	 
	 	(iii)	 	if the Common Stock is neither listed on a national
securities exchange nor traded in the over-the-counter market, such value
as the Committee, in good faith, shall determine.

	 	g)	 	LTIP Award. Any Performance Award, Restricted Stock, Choice Award or Deferred Annual
Bonus Match awarded to an LTIP Participant in accordance with Section 5, 6, 7 or 8.
	 
	 	h)	 	LTIP Participant. A director, employee or consultant of the Company or any Affiliate
as designated in Section 4 for participation in one or more programs under the LTIP;
provided, however, that with respect to any awards under the 1992 Plan (e.g.,
Performance Awards or Restricted Stock) or the 2001 Plan (e.g., Choice Awards), only
those persons eligible for those awards under those respective plans may receive such
awards under the LTIP.
	 
	 	i)	 	Stock Option. A non-statutory stock option granted pursuant to an LTIP Participant’s
election of such option in accordance with Section 7.
	 
	 	j)	 	Performance Award. An award determined in accordance with Section 5(a) and payable
to designated LTIP Participants on the basis of the achievement of Performance Goals
for a Performance Period.
	 
	 	k)	 	Performance Goal. One or more goals, which may include financial and non-financial
measures, established by the Committee for a Performance Period.
	 
	 	l)	 	Performance Period. One or more periods of time, which may be varying and
overlapping durations, as the Committee may select, over which the attainment of one
or more Performance Goals will be measured for purposes of determining an LTIP
Participant’s right to and the payment of any Performance Awards.

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	 	m)	 	Restricted Stock Award. An award determined in accordance with Section 6.

Section 3. Administration of LTIP

The LTIP shall be administered by the Committee, and all interpretations and decisions with respect
to the application of LTIP shall be at the sole discretion of the Committee. The Committee shall
have the authority to determine the terms and conditions, including but not limited to any
restrictions and vesting conditions related to LTIP Awards or any required acknowledgments or
agreements for any awards, not inconsistent with the terms of the LTIP and 1992 Plan or 2001 Plan,
as applicable, and to approve the form of written instruments and the terms and conditions
evidencing LTIP Awards. The Committee may at any time adopt, alter and repeal such administrative
rules, guidelines and practices governing the operation of the LTIP as
it shall from time to time decide. To the extent permitted by applicable law and the 1992 Plan and
the 2001 Plan, the Committee, in its sole discretion, may delegate to the Chief Executive Officer
and/or other designated officers of the Company all or part of the Committee’s authority and duties
with respect to the granting of LTIP Awards.

All decisions and interpretations of the Committee shall be binding on all persons, including the
Company and LTIP Participants.

Section 4. Eligibility and Participation in LTIP.

Except as provided by law or in the 1992 Plan or 2001 Plan, the Chief Executive Officer and/or
other officers of the Company appointed by the Committee from time to time shall designate eligible
individuals for participation in the LTIP, and the LTIP Award(s) for which such individuals shall
be eligible, in his or their sole discretion, subject to the approval of the Committee; provided,
however, that the LTIP participation of the Chief Executive Officer shall be determined by the
Committee.

Section 5. Performance Award.

An LTIP Participant shall be eligible for Performance Awards, if so selected by the Committee or
its delegatee, in accordance with the following guidelines (which may be adjusted by the Committee
from time to time in its sole discretion with respect to one or more LTIP Participants and which
may not be uniform among LTIP Participants for each award):

	 	a)	 	Target Award. For each Performance Period, a designated LTIP Participant as
determined as of the first day of the Performance Period and to whom the Committee
determines, in its sole discretion, to grant a Performance Award under this Section
5(a) shall be granted a target Performance Award equal to a percentage of his or
her annualized base salary in effect as of the first day of the first fiscal year
in the Performance Period, or date of hire, if later, or such other date if so
determined by the Committee. To the extent required by the 1992 Plan, Performance
Awards shall be subject to the terms and conditions of the 1992 Plan.

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	 	 	 	Notwithstanding the foregoing, an individual who first becomes an LTIP Participant under
Section 4 after the beginning of a Performance Period and to whom the Committee determines,
in its sole discretion, to grant an LTIP Award under this Section 5(a) shall be awarded a
pro rata target Performance Award determined by the Committee on the basis of his or her
annualized base salary in effect upon being designated to receive a Performance Award and
the length of time since designation remaining in the Performance Period. For this purpose,
LTIP Participants hired prior to September 1, 2005, will be deemed to be designated LTIP
Participants at the beginning of the first Performance Period hereunder, or date of hire, if
hired after the beginning of the first Performance Period.
	 
	 	b)	 	Performance Goals. With respect to each Performance Award granted to designated LTIP
Participants, the Committee shall select, within the first 90 days or, if less, the
first 25% of a Performance Period (or within the first year in the case of the first
Performance Period selected hereunder by the Committee), the Performance Goals for
such Performance Award, and the achievement targets with respect to each Performance
Goal, and may select a threshold level of performance below which no amount will become payable with
respect to such Performance Award, and a maximum Performance Award. Each Performance
Award will specify the target amount payable, or the formula for determining the
amount payable, upon achievement of the various applicable Performance Goals. The
Performance Goals established by the Committee may be (but need not be) different for
each Performance Period. As soon as practicable following the end of the Performance
Period, the Committee shall determine the extent to which the Performance Goals have
been achieved, and the percentage of the target Performance Award payable based on the
level at which Performance Goals have been achieved.
	 
	 	c)	 	Form of Payment. Performance Awards shall be payable partly in cash and,
provided that sufficient shares of Common Stock are available under the 1992 Plan, with the
remainder payable in whole shares of Common Stock (with any fractional share paid in cash)
based on their Fair Market Value on the day the Committee has determined that the
Performance Goals have been achieved for the Performance Period, or any combination thereof
as determined by the Committee. Shares of Common Stock so issued shall be issued for no
consideration or such minimum consideration as may be required by applicable law. To the
extent that sufficient shares of Common Stock are not available, the portion of the
Performance Award otherwise payable in Common Stock shall be paid in cash.
	 
	 	d)	 	Payment of Performance Awards. Payment shall be made in a lump sum as soon as
practicable following the Committee’s determination regarding achievement of the
Performance Goals, but in no event later than two and one half months following the close
of the Performance Period. Except as provided in Section 10, an LTIP Participant must be
employed on the day of payout in order to receive payment of a Performance Award for such
Performance Period.
	 
	 	e)	 	Unfunded Liability. The Performance Award shall be unfunded and shall not
create (or be construed to create) a trust or separate fund. Likewise, the Performance
Award shall

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	 	 	 	not establish any fiduciary relationship between the Company and the LTIP
Participant. To the extent that any LTIP Participant holds any rights by virtue of a LTIP
Award, such rights shall be no greater than the rights of an unsecured general creditor of
the Company.

Section 6. Restricted Stock Award.

Subject to the provisions of the 1992 Plan, an LTIP Participant shall be eligible for one or more
grants of Restricted Stock, if so selected by the Committee or its delegatee, on such date(s) as
shall be determined by the Committee in accordance with the following guidelines (which may be
adjusted by the Committee from time to time in its sole discretion with respect to one or more LTIP
Participants and which may not be uniform among LTIP Participants for each award):

	 	a)	 	Target Award. LTIP Participants, as designated in accordance with Section 4,
shall be granted a target Restricted Stock Award equal to a number of shares of
Restricted Stock as determined by the Committee.
	 
	 	 	 	Shares of Restricted Stocks shall be issued for no consideration or such minimum
consideration as may be required by applicable law.
	 
	 	b)	 	Restrictions. A Restricted Stock Award entitles the recipient to
receive shares of Common Stock subject to such restrictions and conditions as the
Committee may determine at the time of grant. Conditions may be based on continuing
employment (or other service relationship) and/or achievement of pre-established
performance conditions, or such other conditions as the Committee may determine.
The grant of Restricted Stock is contingent on the grantee executing a Restricted
Stock Award agreement and such other acknowledgments or agreements as determined by
the Committee in its sole discretion. The terms and conditions of each Restricted
Stock Award agreement and such other acknowledgments and agreements shall be
determined by the Committee and such terms and conditions may differ among
individual awards and grantees.
	 
	 	 	 	Restricted Stock may not be sold, assigned, transferred, pledged or otherwise
encumbered or disposed of except as specifically provided herein or in the
Restricted Stock Award agreement and consistent with applicable Company policies.
	 
	 	 	 	Notwithstanding anything to the contrary herein, all of the terms of and conditions of
any Restricted Stock Award granted hereunder shall be subject to the terms and conditions of
the 1992 Plan.
	 
	 	c)	 	Vesting of Restricted Stock.  The Committee at the time of grant shall
specify the date or dates and/or the attainment of any pre-established performance
goals, objectives and other conditions on which the non-transferability of the
Restricted Stock or forfeiture shall lapse. Subsequent to such date or dates the
shares on which all restrictions have lapsed shall no longer be Restricted Stock
and shall be deemed “vested.” Except as may otherwise be provided by the Committee
either in the Restricted Stock Award agreement or in a subsequent writing after the
Restricted Stock Award agreement is issued, subject to Section 10 below, a
grantee’s rights in any shares of Restricted Stock that have not

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	 	 	 	vested shall automatically terminate upon the grantee’s termination of employment with the
Company or its Affiliates.

Section 7. Choice Award.

     Subject to the provisions of the 1992 Plan and 2001 Plan, as applicable, an LTIP Participant shall
be eligible for Choice Awards, if so selected by the Committee or its delegatee, in accordance with
the following guidelines (which may be adjusted by the Committee from time to time in its sole
discretion with respect to one or more LTIP Participants and which may not be uniform among LTIP
Participants for each award):

	 	a)	 	Target Award. LTIP Participants as designated in accordance with
Section 4, shall be eligible for a Choice Award under this Section 7 equal to a
percentage of his or her annualized base salary in effect as of the date the Choice
Award is determined.
	 
	 	b)	 	Participant Choice. The LTIP Participant may elect to receive the Award under
Section 7(a) in the form of Restricted Stock and/or in the form of Stock Options in such
proportions and on such terms and conditions as determined by the Committee in its sole
discretion.
	 
	 	 	 	If the LTIP Participant elects to receive some or all of the Award under this Section 7(b)
in the form of Restricted Stock, the Restricted Stock shall be subject to the terms and
conditions set forth in a Restricted Stock Award agreement approved by the Committee.
	 
	 	 	 	If the LTIP Participant elects to receive some or all of the Award under this Section 7(b)
in the form of Stock Options, such Stock Options shall be subject to the terms and
conditions set forth in a Stock Option Agreement, approved by the Committee.

Any Stock Option or Restricted Stock Award granted under the 2001 Plan or the 1992 Plan shall be
further subject to the terms and conditions of the 2001 Plan or the 1992 Plan, respectively, as
applicable.

Section 8. Deferred Annual Bonus Match Award.

An LTIP Participant shall be eligible for Deferred Annual Bonus Match Awards, if so selected by the
Committee or its delegatee, in accordance with the following guidelines (which may be
adjusted by the Committee from time to time in its sole discretion with respect to one or more LTIP
Participants and which may not be uniform among LTIP Participants for each award):

	 	a)	 	Deferred Award Amount. LTIP Participants, as designated in accordance with
Section 4, shall be granted a Deferred Annual Bonus Match Award under this Section 8 equal
to a predetermined percentage, as determined by the Committee, of his or her annual bonus
that is earned and paid by the Company or an Affiliate for a fiscal year. The payment of
any Deferred Annual Bonus Match is subject to the LTIP Participant’s continued employment,
and such other terms and conditions and the Committee shall establish, through the payment
date of any deferred award amounts. The Committee may, in its sole

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	 	 	 	discretion, increase or
decrease, at any time, the pre-determined percentage match for the Deferred Bonus for any
LTIP Participant based on such LTIP Participant’s individual performance.
	 
	 	 	 	Except as otherwise determined by the Committee, an individual who first becomes eligible
for a Deferred Annual Bonus Match as designated in Section 4 during a fiscal year shall
become eligible for such award in the first year that an annual bonus is earned by the
designated LTIP Participant subject to continued employment through the payment date of any
deferred amounts.
	 
	 	b)	 	Deferral Period. The Deferred Annual Bonus Match Award shall be deferred until
a date determined by the Committee for such award (the “Deferral Date”) and shall become
payable within two and one half months of the Deferral Date subject to continued employment
through the date of payment. Except as provided in section 10, if the LTIP Participant
terminates employment with the Company and all Affiliates for any reason prior to the
payment date such Deferred Annual Bonus Match shall be forfeited.
	 
	 	 	 	Payment of a Deferred Annual Bonus Match shall be made in a lump sum in cash as soon
as practicable following the Deferral Date, but in no event later than two and one
half
months following such date subject to continued employment through the payment date.
	 
	 	c)	 	Unfunded Liability. The Deferred Annual Bonus Match Award shall be unfunded and shall
not create (or be construed to create) a trust or separate fund. Likewise, the Deferred
Annual Bonus Match Award shall not establish any fiduciary relationship between the Company
and the LTIP Participant. To the extent that any LTIP Participant holds any rights by virtue
of a LTIP Award, such rights shall be no greater than the rights of an unsecured general
creditor of the Company.

Section 9. Performance Goals and/or Suspension Pending Investigation.

Notwithstanding anything herein to the contrary, the Committee may, in its sole discretion,

establish a minimum Performance Goals that must be satisfied in order to be eligible to receive an
LTIP Award, or defer the realization or payment of any outstanding LTIP Awards pending any
investigation(s) pertaining to the performance or termination for “Cause” of an LTIP Participant.

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Section 10. Effect of Termination of Service, Change in Control

Notwithstanding anything herein to the contrary, subject to the terms and conditions of the 1992
Plan or 2001 Plan, as applicable, and except as otherwise specified by the Committee in writing
delivered to a LTIP Participant, in the event of an LTIP Participant’s termination of employment or
a Change in Control:

	 	a)	 	General. The Committee shall determine the effect on a LTIP Award of the Disability,
death or other termination of employment of an LTIP Participant and the extent to which, and
the period during which, the LTIP Participant’s legal representative, guardian or Designated
Beneficiary may receive payment of an LTIP Award or exercise rights thereunder.
	 
	 	b)	 	Change in Control. In order to preserve a LTIP Participant’s rights under a LTIP
Award in the event of an anticipated Change in Control of the Company, the Committee in its
sole discretion may, at the time any LTIP Award is made or at any time thereafter, take one or
more of the following actions, with respect to any group of LTIP Participants: (i) provide
for the acceleration of vesting or payment for any time period relating to the realization of
any such LTIP Award, (ii) provide for the purchase of any such LTIP Award upon the
Participant’s request for an amount of cash or other property that could have been received
upon the exercise or realization of the LTIP Award had the LTIP Award been currently
exercisable, vested or payable, (iii) adjust the terms of any such LTIP Award in a manner
determined by the Committee to reflect the Change in Control, (iv) cause any such LTIP Award
to be assumed, or new rights substituted therefore, by another entity, or (v) make such other
provisions as the Committee may consider equitable and in the best interests of the Company.
	 
	 	c)	 	Termination for “Cause.” In the event the Committee, or any officer designated by
the Committee, shall determine in its (or his or her) sole discretion that an LTIP
Participant, or any other individual otherwise eligible for participation in the LTIP, shall
have engaged in conduct constituting Cause, then, in such event, (A) that individual will (i)
immediately forfeit his or her eligibility or any rights (if any) to receive any outstanding
LTIP Awards and (ii) lose any eligibility for consideration for future LTIP Awards and LTIP
Participation, (B) any and all Stock Options previously granted to such individual shall be
cancelled and any and all Restricted Stock awarded to such individual shall be forfeited, and
(C) the Company shall be entitled to recover from such individual any and all LTIP Awards and
any payments, Common Stock or other consideration delivered pursuant to an LTIP Award or Stock
Option under any such Award.

Section 11. Automatic Withholding

Unless otherwise determined by the Committee, concurrent with the vesting of, or lapsing of
restrictions on, any Restricted Stock awarded hereunder, the Company shall withhold a percentage of
shares of such Restricted Stock equal in Fair Market Value to the minimum

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statutory tax withholding
requirements as required by applicable tax regulations. Unless
otherwise determined by the Committee, upon exercise of a Stock Option, the Company shall withhold
a sufficient number of shares of Common Stock to satisfy any minimum statutory tax withholding
requirements as required by applicable tax regulations. Unless otherwise determined by the
Committee, all other LTIP Awards hereunder shall also be subject to any such applicable
withholding.

Section 12. Amendment and Termination.

The Committee may amend, suspend or terminate the LTIP or any portion thereof at any time. subject
to shareholder approval to the extent required under applicable tax or other laws or listing
standards, provided that the restrictions on amendment and termination in the 2001 Plan and the
1992 Plan shall apply to the extent applicable.

Section 13. Nontransferability.

Except as otherwise provided under or in accordance with the 1992 Plan or 2001 Plan, as applicable,
LTIP Awards may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated,
and shall not be subject to execution, attachment or similar process. Any such attempted transfer,
pledge, assignment or other alienation or hypothecation, or the levy of any such execution,
attachment or similar process, shall be null and void.

Section 14 Employment or Other Relationship.

Nothing in the LTIP shall prevent, interfere with or limit in any way the right of the Company or
an Affiliate to terminate any LTIP Participant’s employment, consultancy or director status at any
time, nor confer upon any LTIP Participant any right to continue in the employment or other service
of the Company or any Affiliate.

Section 15. Governing Law.

The LTIP shall be construed in accordance with and governed by the laws of the State of Delaware.

Section 16. Severability.

If any provision of this LTIP is held invalid or unenforceable by any court of competent
jurisdiction, the other provisions of this LTIP will remain in full force and effect. Any
provision of this LTIP held invalid or unenforceable only in part or degree will remain in full
force and effect to the extent not held invalid or unenforceable.

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Exhibit 10.3

PANERA BREAD COMPANY

1992 EQUITY INCENTIVE PLAN

Section 1. Purpose

     The purpose of the Panera Bread Company 1992 Equity Incentive Plan (the “Plan”) is to attract
and retain key employees and consultants, to provide an incentive for them and other persons having
a business relationship with the Company to assist the Company achieve long-range performance
goals, and to enable them to participate in the
long-term growth of the Company.

Section 2. Definitions

     “Affiliate” means any business entity in which the Company owns directly or indirectly 50% or
more of the total combined voting power or has a significant financial interest as determined by
the Committee.

     “Award” means any Option, Stock Appreciation Right, Performance Share, Restricted Stock or
Stock Unit awarded under the Plan.

     “Board” means the Board of Directors of the Company.

     “Code” means the Internal Revenue Code of 1986, as amended from time to time.

     “Committee” means a committee of not less than two members of the Board appointed by the Board
to administer the Plan, each of whom is a “disinterested person” within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934 or any successor provision. In the absence of appointment
of another Committee by the Board, the Compensation and Stock Option Committee of the Board shall
be the Committee.

     “Common Stock” or “Stock” means the Class A Common Stock, $0.0001 par value, of the Company.

     “Company” means Panera Bread Company.

     “Designated Beneficiary” means the beneficiary designated by a Participant, in a manner
determined by the Committee, to receive amounts due or exercise rights of the Participant in the
event of the Participant’s death. In the absence of an effective designation by a Participant,
Designated Beneficiary shall mean the Participant’s estate.

     “Fair Market Value” means, with respect to Common Stock or any other property, the fair market
value of such property as

 

 

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determined by the Committee in good faith or in the manner established by the Committee from time
to time.

     “Incentive Stock Option” means an option to purchase shares of Common Stock awarded to a
Participant under Section 6 which is intended to meet the requirements of Section 422 of the Code
or any successor provision.

     “Nonstatutory Stock Option” means an option to purchase shares of Common Stock awarded to a
Participant under Section 6 which is intended not to be an Incentive Stock Option.

     “Option” means an Incentive Stock Option or a Nonstatutory Stock Option.

     “Participant” means a person selected by the Committee to receive an Award under the Plan.

     “Performance Cycle” or “Cycle” means the period of time selected by the Committee during which
performance is measured for purpose of determining the extent to which an award of Performance
Shares has been earned.

     “Performance Shares” mean shares of Common Stock which may be earned by the achievement of
performance goals awarded to a Participant under Section 8.

     “Reporting Person” means a person subject to Section 16 of the Securities Exchange Act of 1934
or any successor provision.

     “Restricted Period” means the period of time selected by the Committee during which an award
of Restricted Stock may be forfeited to the Company.

     “Restricted Stock” means shares of Common Stock subject to forfeiture awarded to a Participant
under Section 9.

     “Stock Appreciation Right” or “SAR” means a right to receive any excess in value of shares of
Common Stock over the exercise price awarded to a Participant under Section 7.

     “Stock Unit” means an award of Common Stock or units that are valued in whole or in part by
reference to, or otherwise based on, the value of Common Stock, awarded to a Participant under
Section 10.

Section 3. Administration.

     The Plan shall be administrated by the Committee. The Committee shall have authority to adopt,
alter and repeal such administrative rules, guidelines and practices governing the operation of the
Plan as it shall from time to time consider advisable, and to interpret the provisions of the Plan.
The

 

 

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Committee’s decisions shall be final and binding. To the extent permitted by applicable law, the
Committee may delegate to one or more executive officers of the Company the power to make Awards to
Participants who are not Reporting Persons and all determinations under the Plan with respect
thereto, provided that the Committee shall fix the maximum amount of such Awards for the
Participants who are not Reporting Persons and a maximum for any one Participant.

Section 4. ELIGIBILITY

     All employees and consultants of, and other persons having a business relationship with, the
Company or any Affiliate capable of contributing significantly to the successful performance of the
Company, other than a person who has irrevocably elected not to be eligible, are eligible to be
Participants in the Plan. There is specifically excluded from the group of persons eligible to be
Participants in the Plan any and all members of the Board who are not employees of the Company or
any Affiliate. Incentive Stock Options may be awarded only to persons eligible to receive such
Options under the Code.

Section 5. STOCK AVAILABLE FOR AWARDS

     (a) Subject to adjustment under subsection (b), Awards may be made under the Plan for up to
8,600,000 shares of Common Stock, including all shares of Common Stock issuable upon the exercise
of all currently outstanding options granted by the Company under its Non-Qualified Incentive Stock
Option Plan For Employees and predecessor incentive stock option plan (the “Old Plan”). If any
Award in respect of shares of Common Stock or any currently outstanding option granted by the
Company under the Old Plan expires or is terminated unexercised or is forfeited for any reason or
settled in a manner that results in fewer shares outstanding than were initially awarded, including
without limitation, the surrender of shares in payment for the Award or such option, or any tax
obligation thereon, the shares subject to such Award or such option, or so surrendered, as the case
may be, to the extent of such expiration, termination, forfeiture or decrease, shall be available
for award under the Plan. Common Stock issued through the assumption or substitution of outstanding
grants from an acquired company shall not reduce the shares available for Awards under the Plan.
Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or
treasury shares.

     (b) In the event that the Committee determines that any stock dividend, extraordinary cash
dividend, creation of a class of equity securities, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination, exchange of shares, warrants or rights offering to
purchase Common Stock at a price substantially below fair market value,

 

 

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or other similar transaction affects the Common Stock such that an adjustment is required in order
to preserve the benefits or potential benefits intended to be made available under the Plan, then
the Committee, subject, in the case of Incentive Stock Options, to any limitation required under
the Code, shall equitably adjust any or all of (i) the number and kind of shares in respect of
which Awards may be made under the Plan, (ii) the number and kind of shares subject to outstanding
Awards, and (iii) the award, exercise or conversion price with respect to any of the foregoing, and
if considered appropriate, the Committee may make provision for a cash payment with respect to an
outstanding Award, provided that the number of shares subject to any Award shall always be a whole
number.

Section 6. Stock Options

     (a) Subject to the provisions of the Plan, the Committee may award Incentive Stock Options and
Nonstatutory Stock Options and determine the number of shares to be covered by each Option, the
option price therefor and the conditions and limitations applicable to the exercise of the Option.
The terms and conditions of Incentive Stock Options shall be subject to, and comply with, Section
422 of the Code or any successor provision, and any regulations thereunder.

     (b) The Committee shall establish the option price at the time each Option is awarded, which
price shall not be less than 100% of the Fair Market Value of the Common Stock on the date of award
with respect to Incentive Stock Options and not less than 50% of the Fair Market Value of the
Common Stock on the date of award with respect to Nonstatutory Stock Options.

     (c) Each Option shall be exercisable at such times and subject to such terms and conditions as
the Committee may specify in the applicable Award or thereafter. The Committee may impose such
conditions with respect to the exercise of Options, including conditions relating to applicable
federal or state securities laws, as it considers necessary or advisable.

     (d) No shares shall be delivered pursuant to any exercise of an Option until payment in full
of the option price therefor is received by the Company. Such payment may be made in whole or in
part in cash or, to the extent permitted by the Committee at or after the award of the Option, by
delivery of a note or shares of Common Stock owned by the optionee, including Restricted Stock,
valued at their Fair Market Value on the date of delivery, or such other lawful consideration as
the Committee may determine.

     (e) The Committee may provide for the automatic award of an Option upon the delivery of shares
to the Company

 

 

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in payment of an Option for up to the number of shares so delivered.

Section 7. Stock Appreciation Rights

     (a) Subject to the provisions of the Plan, the Committee may award SARs in tandem with an
Option (at or after the award of the Option), or alone and unrelated to an Option. SARs in tandem
with an Option shall terminate to the extent that the related Option is exercised, and the related
Option shall terminate to the extent that the tandem SARs are exercised. SARs shall have an
exercise price of not less than 50% of the Fair Market Value of the Common Stock on the date of
award, or in the case of SARs in tandem with Options, the exercise price of the related Option.

     (b) An SAR related to an Option which can only be exercised during limited periods following
a change in control of the Company, may entitle the Participant to receive an amount based upon the
highest price paid or offered for Common Stock in any transaction relating to the change in control
or paid during the thirty-day period immediately preceding the occurrence of the change in control
in any transaction reported in the stock market in which the Common Stock is normally traded.

Section 8. Performance Shares

     (a) Subject to the provisions of the Plan, the Committee may award Performance Shares and
determine the number of such shares for each Performance Cycle and the duration of each Performance
Cycle. There may be more than one Performance Cycle in existence at any one time, and the duration
of Performance Cycles may differ from each other. The payment value of Performance Shares shall be
equal to the Fair Market Value of the Common Stock on the date the Performance Shares are earned
or, in the discretion of the Committee, on the date the Committee determines that the Performance
Shares have been earned.

     (b) The Committee shall establish performance goals for each Cycle, for the purpose of
determining the extent to which Performance Shares awarded for such Cycle are earned, on the basis
of such criteria and to accomplish such objectives as the Committee may from time to time select.
During any Cycle, the Committee may adjust the performance goals for such Cycle as it deems
equitable in recognition of unusual or non-recurring events affecting the Company, changes in
applicable tax laws or accounting principles, or such other factors as the Committee may determine.

     (c) As soon as practicable after the end of a Performance Cycle, the Committee shall
determine the number of Performance Shares which have been earned on the basis of

 

 

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performance in relation to the established performance goals. The payment values of earned
Performance Shares shall be distributed to the Participant or, if the Participant has died, to the
Participant’s Designated Beneficiary, as soon as practicable thereafter. The Committee shall
determine, at or after the time of award, whether payment values will be settled in whole or in
part in cash or other property, including Common Stock or Awards.

Section 9. RESTRICTED STOCK

     (a) Subject to the provisions of the Plan, the Committee may award shares of Restricted Stock
and determine the duration of the Restricted Period during which, and the conditions under which,
the shares may be forfeited to the Company and the other terms and conditions of such Awards.
Shares of Restricted Stock shall be issued for no cash consideration or such minimum consideration
as may be required by applicable law.

     (b) Shares of Restricted Stock may not be sold, assigned, transferred, pledged or otherwise
encumbered, except as permitted by the Committee, during the Restricted Period. Shares of
Restricted Stock shall be evidenced in such manner as the Committee may determine. Any certificates
issued in respect of shares of Restricted Stock shall be registered in the name of the Participant
and unless otherwise determined by the Committee, deposited by the Participant, together with a
stock power endorsed in blank, with the Company. At the expiration of the Restricted Period, the
Company shall deliver such certificates to the Participant or if the Participant has died, to the
Participant’s Designated Beneficiary.

Section 10. STOCK UNITS

     (a) Subject to the provisions of the Plan, the Committee may award Stock Units subject to
such terms, restrictions, conditions, performance criteria, vesting requirements and payment rules
as the Committee shall determine.

     (b) Shares of Common Stock awarded in connection with a Stock Unit Award shall be issued for
no cash consideration or such minimum consideration as may be required by applicable law.

Section 11. GENERAL PROVISIONS APPLICABLE TO AWARDS

     (a) REPORTING PERSON LIMITATIONS. Any provision of the Plan to the contrary notwithstanding,
to the extent required to qualify for the exemption provided by Rule 16b-3 under the Securities
Exchange Act of 1934 and any successor provision, (i) any “equity security” (as that term is used
in said Rule 16b-3) granted under the Plan to a Reporting Person

 

 

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must be held for at least six months from the date of grant or, in the case of a “derivative
security, (as that term is defined in said Rule 16b-3), at least six months elapse from the date of
acquisition of the derivative security to the date of disposition of its underlying equity security
and (ii) any derivative security issued under the Plan to a Reporting Person shall not be
transferable other than by will, by the laws of descent and distribution or pursuant to a
“qualified domestic relations order” (as the term is used in said Rule 16b-3).

     (b) Documentation. Each Award under the Plan shall be evidenced by a writing delivered to the
Participant specifying the terms and conditions thereof and containing such other terms and
conditions not inconsistent with the provisions of the Plan as the Committee considers necessary or
advisable to achieve the purposes of the Plan or comply with applicable tax and regulatory laws and
accounting principles.

     (c) Committee Discretion. Each type of Award may be made alone, in addition to, or in
relation to any other type of Award. The terms of each type of Award need not be identical, and the
Committee need not treat Participants uniformly. Except as otherwise provided by the Plan or a
particular Award, any determination with respect to an Award may be made by the Committee at the
time of award or at any time thereafter.

     (d) Settlement. The Committee shall determine whether Awards are settled in whole or in part
in cash, Common Stock, other securities of the Company, Awards or other property. The Committee may
permit a Participant to defer all or any portion of a payment under the Plan, including the
crediting of interest on deferred amounts denominated in cash and dividend equivalents on amounts
denominated in Common Stock.

     (e) Dividends and Cash Awards. In the discretion of the Committee, any Award under the Plan
may provide the Participant with (i) dividends or dividend equivalents payable currently or
deferred with or without interest, and (ii) cash payments in lieu of or in addition to An Award.

     (f) Termination of Employment. The Committee shall determine the effect on an Award of the
disability, death, retirement or other termination of employment of a Participant and the extent to
which, and the period during which, the Participant’s legal representative, guardian or Designated
Beneficiary may receive payment of an Award or exercise rights thereunder.

     (g) Change in Control. In order to preserve a Participant’s rights under an Award in the
event of a change in control of the Company, the Committee in its discretion

 

 

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may, at the time an Award is made or at any time thereafter, take one or more of the following
actions: (i) provide for the acceleration of any time period relating to the exercise or
realization of the Award, (ii) provide for the purchase of the Award upon the Participant’s request
for an amount of cash or other property that could have been received upon the exercise or
realization of the Award had the Award been currently exercisable or payable, (iii) adjust the
terms of the Award in a manner determined by the Committee to reflect the change in control, (iv)
cause the Award to be assumed, or new rights substituted therefor, by another entity, or (v) make
such other provision as the Committee may consider equitable and in the best interests of the
Company.

     (h) WITHHOLDING. The Participant shall pay to the Company, or make provision satisfactory to
the Committee for payment of, any taxes required by law to be withheld in respect of Awards under
the Plan no later than the date of the event creating the tax liability. In the Committee’s
discretion, such tax obligations may be paid in whole or in part in shares of Common Stock,
including shares retained from the Award creating the tax obligation, valued at their Fair Market
Value on the date of delivery. The Company and its Affiliates may, to the extent permitted by law,
deduct any such tax obligations from any payment of any kind otherwise due to the Participant.

     (i) FOREIGN NATIONALS. Award may be made to Participants who are foreign nationals or
employed outside the United States on such terms and conditions different from those specified in
the Plan as the Committee considers necessary or advisable to achieve the purposes of the Plan or
comply with applicable laws.

     (j) AMENDMENT OF AWARD. The Committee may amend, modify or terminate any outstanding Award,
including substituting therefor another Award of the same or a different type, changing the date of
exercise or realization, or converting an Incentive Stock Option to a Nonstatutory Stock Option,
provided that the Participant’s consent to such action shall be required unless the Committee
determines that the action, taking into account any related action, would not materially and
adversely affect the Participant.

Section 12. MISCELLANEOUS

     (a) NO RIGHT TO EMPLOYMENT. No person shall have any claim or right to be granted an Award,
and the grant of an Award shall not be construed as giving a Participant the right to employment or
continued employment. The Company expressly reserves the right at any time to dismiss a Participant
free from any liability or claim under the Plan, except as expressly provided in the applicable
Award.

 

 

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     (b) No Rights As Shareholder. Subject to the provisions of the applicable Award, no
Participant or Designated Beneficiary shall have any rights as a shareholder with respect to any
shares of Common Stock to be distributed under the Plan until he or she becomes the holder thereof.
A Participant to whom Common Stock is awarded shall be considered the holder of the Stock at the
time of the Award except as otherwise provided in the applicable Award.

     (c) Effective Date. Subject to the approval of the shareholders of the Company, the Plan
shall be effective on January 1, 1992. Prior to such approval, Awards may be made under the Plan
expressly subject to such approval.

     (d) Amendment of Plan. The Board may amend, suspend or terminate the Plan or any portion
thereof at any time, provided that no amendment shall be made without shareholder approval if such
approval is necessary to comply with any applicable tax or regulatory requirement, including any
requirement for exemptive relief under Section 16(b) of the Securities Exchange Act of 1934 or any
successor provision.

     (e) Governing Law. The provisions of the Plan shall be governed by and interpreted in
accordance with the laws of the State of Delaware.

As Amended through September 1, 2005.

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