Document:

exv10w2

 

Exhibit 10.2

As amended, May 25, 2006

PANERA BREAD COMPANY

2005 LONG-TERM INCENTIVE PROGRAM

(Sub-plan under 2006 Stock Incentive Plan)

Section 1. Establishment.

Effective September 1, 2005, Panera Bread Company (the “Company”) established the Long-Term
Incentive Program (the “LTIP”) as a sub-plan under the Company’s 1992 Equity Incentive Plan (the
“1992 Plan”) and the Company’s 2001 Employee, Director and Consultant Stock Option Plan (the “2001
Plan”). Effective May 25, 2006, the Company will not grant any further awards under the 1992 Plan
or the 2001 Plan. Effective May 25, 2006, the LTIP will be a sub-plan under the Company’s 2006
Stock Incentive Plan (the “2006 Plan”). Notwithstanding anything to the contrary herein, except to
the extent permitted by the 2006 Plan, the provisions of the 2006 Plan shall apply for purposes of
the LTIP with respect to any awards under the 2006 Plan.

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 stockholders.

Except to the extent required by the 2006 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 2006 Plan.

	 	a)	 	Cause. Cause shall include (and is not limited to) dishonesty with respect to
the Company or any affiliate of the Company, 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 of the Company 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 of the
Company, 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-

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	 	 	 	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 stockholders, 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
stockholders 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 stockholders 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:

	 	(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;

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	 	(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 of the Company 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 2006
Plan, 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.
	 
	 	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 2006 Plan, 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 2006 Plan, the Committee, in its sole discretion, may delegate
to the Chief Executive Officer and/or other

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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 2006 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 2006 Plan, Performance Awards shall be subject to the terms
and conditions of the 2006 Plan.
	 
	 	 	 	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.
	 
	 	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

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	 	 	 	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 2006 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 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 2006 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

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	 	 	 	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
2006 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 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 2006 Plan, 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 2006 Plan shall be further subject to
the terms and conditions of the 2006 Plan.

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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 of the Company 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 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 of the Company 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 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 2006
Plan 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 an 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 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

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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 stockholder approval to the extent required under applicable tax or other laws or listing
standards, provided that the restrictions on amendment and termination in the 2006 Plan shall apply
to the extent applicable.

Section 13. Nontransferability.

Except as
otherwise provided under or in accordance with the 2006 Plan 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 of the Company to terminate any LTIP Participant’s employment, consultancy or
director, officer or advisor 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 of the Company.

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

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

3

 

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.

4

 

     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:

5

 

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.

6

 

     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]

7

 

     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»

8

 

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

9

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