<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-K/A
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AMENDMENT TO
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 26, 1998
COMMISSION FILE NUMBER 0-19253
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AU BON PAIN CO., INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 04-2723701
----------------- ------------
(State or other jurisdiction (I.R.S. employer
of incorporation or identification No.)
organization)
19 FID KENNEDY AVENUE, BOSTON, MASSACHUSETTS 02210
- ------------------------------------------- -------
(Address of principal executive offices) (Zip Code)
(617) 423-2100
----------------
(Registrant's telephone number, including area code)
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report for the fiscal year
ended December 26, 1998 on Form 10-K as set forth in the pages attached hereto:
1. Part III: Item 10 - Directors and Executive Officers of the Registrant.
2. Part III: Item 11 - Executive Compensation.
3. Part III: Item 12 - Security Ownership of Certain Beneficial Owners and
Management.
4. Part III: Item 13 - Certain Relationships and Related Transactions.
5. Part IV: Item 14 - Exhibits, Financial Statement Schedules and Reports
on Form 8 K; Section 3.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
BACKGROUND INFORMATION REGARDING DIRECTORS AND EXECUTIVE OFFICERS
The following table and biographical descriptions set forth information
regarding the principal occupation, other affiliations, committee memberships
and age, for each Director in office and the executive officers of the Company
who are not Directors, based on information furnished to the Company by each
director and officer. The following information is as of April 1, 1999 unless
otherwise noted.
<TABLE>
<CAPTION>
Term as a
Name Age Position With Company Director Ends
---- --- --------------------- -------------
<S> <C> <C> <C>
Henry J. Nasella(1)(2)........ 52 Director 2001
George E. Kane(3)............. 94 Director 2001
Louis I. Kane.................. 68 Co-Chairman, Director 2000
James R. McManus(1)(2)........ 65 Director 2000
Ronald M. Shaich............... 45 Co-Chairman, Director, 1999
Chief Executive Officer
Francis W. Hatch(1)(2)(3)..... 73 Director 1999
</TABLE>
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(1) Member of the Compensation and Stock Option Committee.
(2) Member of the Committee on Nominations.
(3) Member of the Audit Committee.
GEORGE E. KANE, Director since November 1988. Mr. Kane was a Director
of the Company from March 1981 to December 1985 and a Director Emeritus from
December 1985 to November 1988. Mr. Kane retired in 1970 as President of Garden
City Trust Company (now University Trust Company). Mr. Kane is an Honorary
Director of USTrust. Mr. Kane is the father of Louis I. Kane.
HENRY J. NASELLA, Director since June 1995. Mr. Nasella has been the
President, Chief Executive Officer and Chairman of Star Markets Company, Inc.
from September 1994. From January 1994 to September 1994, he was a principal of
Phillips-Smith Specialty Venture Capital. From 1988 to July 1993, Mr. Nasella
served as the President and Chief Operating Officer of Staples, Inc. Mr. Nasella
served as President and Chief Executive Officer of Staples USA (Domestic) from
1992 to July 1993. Mr. Nasella currently is a member of the Board of Visitors of
Northeastern University School of Business and a member of the Board of Trustees
of Northeastern University Corporation.
FRANCIS W. HATCH, Director since February 1983. Mr. Hatch is a trustee
of certain private trusts, and also serves as a director of various
corporations.
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<PAGE>
LOUIS I. KANE, Director since 1981, co-founder of the Company and
Co-Chairman of the Board since January 1988. From January 1988 to May 1994, Mr.
Kane served as Co-Chief Executive Officer of the Company. From March 1981 to
January 1988, Mr. Kane served as Chairman and Chief Executive Officer of the
Company. Beginning in August 1978, Mr. Kane was Chief Executive Officer of Au
Bon Pain Corporation, an operator of French bakeries and a predecessor of the
Company.
JAMES R. MCMANUS, Director since October 1987. Since 1971, Mr. McManus
has been Chairman, Chief Executive Officer and founder of Marketing Corporation
of America, Westport, Connecticut, a marketing consulting and marketing services
firm. On February 1, 1994, Mr. McManus resigned as President and Chief Executive
Officer of Business Express, Inc., a regional airline operating in the
northeastern United States. On January 22, 1996, a petition for Chapter XI
Bankruptcy Protection was filed against Business Express, Inc. in federal
Bankruptcy Court in Manchester, New Hampshire by Saab Aircraft of America and
two of its operating subsidiaries.
RONALD M. SHAICH, Director since 1981, co-founder of the Company,
Co-Chairman of the Board since January 1988 and Chief Executive Officer since
May 1994. From January 1988 to May 25, 1994, Mr. Shaich served as Co-Chief
Executive Officer of the Company. Mr. Shaich is Chairman of the Board of
Trustees of Clark University.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
MAXWELL T. ABBOTT, 52, Senior Vice President Technical Services since
June 1995. Prior to that time since 1991, Mr. Abbott was Senior Vice President -
Research and Development of Long John Silver's, Inc.
MARK A. BORLAND, 46, Executive Vice President since January 1993 and
Chief Operating Officer of the Au Bon Pain Business Unit since June 1998.
President, Manufacturing Services Division from January 1995 until June 1998.
Prior to January 1995 and from May 1992, Mr. Borland served as Executive Vice
President of Au Bon Pain Retail Operations and Manufacturing Operations. Prior
to May 1992, Mr. Borland served as Vice President Manufacturing Operations of
the Company.
ANTHONY J. CARROLL, 47, Senior Vice President and Chief Financial
Officer since November 1988. Mr. Carroll has also served as Treasurer of the
Company since 1992.
MARIEL CLARK, 42, Senior Vice President Corporate Human Resources since
July 1994. Prior to that and since January 1993, Ms. Clark served as Vice
President Human Resources.
THOMAS R. HOWLEY, 48, Vice President, General Counsel and Assistant
Secretary since January 1993. Prior to that time and for the five years
preceding December 28, 1996, Mr. Howley was an attorney with the law firm of
Rackemann, Sawyer & Brewster.
WILLIAM N. MORETON, 39, Executive Vice President, and Chief
Financial Officer of the Saint Louis Bread Business Unit since November 1998.
Prior to that time since April 1997, Mr. Moreton served as Executive Vice
President and Chief Financial Officer of Quality Dining, Inc. Prior to that
time and since October 1992, Mr. Moreton served as Executive Vice President
and Chief Financial Officer of Houlihan's Restaurants Inc.
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<PAGE>
RICHARD C. POSTLE, 50, Executive Vice President and President, Saint
Louis Bread Company, Inc. since August 1995. From August 1994 through August
1995, Mr. Postle was President and Chief Operating Officer of Checkers Drive-In
Restaurants, Inc. From January 1992 through August 1994, Mr. Postle was Senior
Vice President, Operations of KFC-USA. From 1988 through December 1991, Mr.
Postle was Chief Operating Executive of Brice Foods Inc.
SAMUEL H. YONG, 49, Executive Vice President and President Au Bon Pain
Business Unit since June 1998. Mr. Yong was Executive Vice President and
President, International and Trade Channels Business Unit between January 1994
and June 1998. From April 1989 to December 1993, Mr. Yong served as Managing
Director for Burger King Asia Pacific Private, Ltd.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and Directors, and persons who own more than 10% of the
Company's outstanding shares of Common Stock to file reports of ownership and
changes in ownership with the Securities and Exchange Commission (the "SEC") and
Nasdaq. Officers, Directors and greater than 10% stockholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
In accordance with the provisions of Item 405 of Regulation S-K, to the
Company's knowledge, based solely on review of the copies of such reports
furnished to the Company and written representations that no other reports were
required during the fiscal year ended December 26, 1998, all Section 16(a)
filing requirements applicable to its executive officers, Directors and greater
than 10% beneficial owners were satisfied, except that Anthony J. Carroll
filed a late Form 4 in respect of his exercise of options to purchase 12,500
shares of Class B Common Stock and will file a late Form 5 in respect of the
grant to him of options to purchase 22,500 shares of Class A Common Stock.
ITEM 11. EXECUTIVE COMPENSATION.
COMPENSATION TABLES
The following tables set forth information concerning the compensation
paid or accrued by the Company during the fiscal years ended December 28, 1996,
December 27, 1997 and December 26, 1998, to or for the Company's Chief Executive
Officer and its four other most highly compensated executive officers whose
salary and bonus combined exceeded $100,000 for fiscal year 1998 (hereinafter
referred to as the "named executive officers").
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<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-term
Annual Compensation
Compensation Options/sars All Other
Name and ------------ Salary Bonus Other Annual ------------ Compensation
Principal Position Year ($) ($) Comp.($) (#) ($)
------------------ ---- --- --- --------- --- ---
<S> <C> <C> <C> <C> <C> <C>
Ronald M. Shaich 1998 254,807 -- 1,428 -- --
Co-Chairman and Chief 1997 250,000 -- 1,428 400,000 (a) --
Executive Officer 1996 249,519 -- 1,428 -- --
Louis I. Kane 1998 254,807 -- 17,640 -- --
Co-Chairman 1997 250,000 -- 17,640 400,000 (a) --
1996 249,519 -- 17,640 -- --
Richard C. Postle 1998 316,067 -- 5,096 100,000 --
President, Saint 1997 295,192 75,000 8,846 10,000 --
Louis/Panera 1996 250,000 75,000 7,436 35,000 (b) --
Bread Business Unit
Mark A. Borland 1998 214,275 150,000 6,759 25,000 --
Chief Operating Officer, 1997 194,205 -- 5,516 15,000 --
Au Bon Pain Business 1996 188,370 -- 5,939 -- --
Unit
Anthony J. Carroll 1998 167,450 125,000 6,487 42,500 --
Senior Vice President, 1997 144,816 -- 5,528 10,000 --
Treasurer and Chief 1996 139,819 18,200 6,392 2,212 --
Financial Officer
</TABLE>
(a) Consists of a ten-year option, vesting equally over a five year period
beginning June 12, 1997 subject to continued employment.
(b) Includes an option for 5,000 shares granted in fiscal 1997 in order to
reflect compensation earned for performance in fiscal 1996.
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<PAGE>
AGGREGATED OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
---------------------------
Percent of Potential Realizable
Number of Total Annual Rates of Stock
Securities Options/ Valued At Assumed Price
Underlying Sars Appreciation
Options/ Granted to Prices for Option Term
Sars Employees Exercise or ($)*
Granted in Fiscal Base Price Expiration -------------------------
Name (#) Year (%) ($/Sh) Date 5% 10%
---- --- -------- ------ ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Ronald M. Shaich -0- N/A N/A N/A N/A N/A
Louis I. Kane -0- N/A N/A N/A N/A N/A
Richard C. Postle 100,000 11.9 6.38 6/25/08 401,235 1,016,808
Mark A. Borland 25,000 3.0 10.94 6/25/08 172,003 435,889
Anthony J. Carroll 22,500 2.7 6.38 11/19/08 90,278 228,782
20,000 2.4 10.94 6/25/08 137,602 348,711
</TABLE>
* The dollar amounts in this table are the result of calculations at stock
appreciation rates specified by the Securities and Exchange Commission and are
not intended to forecast actual future appreciation rates of the Company's stock
price.
AGGREGATED OPTIONS/SAR EXERCISES IN
LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Shares Number of Securities Value of Unexercised
Acquired Underlying Unexercised In-the-Money Options/SARs
on Value Options / Sars At Fy-end (#) At Fiscal Year End ($)
Exercise Realized ---------------------------- ---------------------------
Name (#) ($) Exercisable / Unexercisable Exercisable / Unexercisable
---- -------- -------- ---------------------------- ---------------------------
<S> <C>
Ronald M. Shaich....... -- -- 357,330/320,000 0/0
Louis I. Kane.......... -- -- 357,330/320,000 0/0
Richard C. Postle...... -- -- 30,912/160,910 1,875/5,625
Mark A. Borland........ -- -- 36,757/40,661 6,560/0
Anthony J. Carroll..... 12,500 2,562 20,431/59,270 1,235/0
</TABLE>
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<PAGE>
TEN YEAR OPTION/SAR REPRICINGS
As discussed in the Report of the Compensation and Stock Option
Committee on Executive Compensation, in November 1998 the Company cancelled and
reissued options issued in June 1998 to certain individuals including Richard C.
Postle a named executive officer. The repricing was based on the market price of
the Class A Common Stock on November 19, 1998. The new options were for the same
number of shares and retained the original vesting and expiration dates of the
old stock options; the new options did not accelerate or extend the time for
exercise of any old options. The table below sets forth information with respect
to Mr. Postle's options and with respect to all former or current executive
officers of the Company concerning their participation in other option repricing
programs implemented by the Company during the last ten fiscal years.
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<PAGE>
TEN-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
Number of
Securities Length of Original
Underlying Option Term
Options/sars Market Price of Exercise Price New Remaining At
Repriced or Stock At Time At Time of Exercise Date
Amended of Repricing or Repricing or Price of Repricing or
Name Date (1) (1)(#) Amendment($) Amendments($) ($) Amendment
---- -------- ------ ------------ ------------- --- ---------
<S> <C> <C> <C> <C> <C> <C>
Ronald M. Shaich..........October 9, 1995 2,448 $7.25 $20.00 $7.25 6.5
October 9, 1995 45,536 $7.25 $23.75 $7.25 7.3
October 9, 1995 1,961 $7.25 $23.75 $7.25 7.5
October 9, 1995 55,092 $7.25 $24.00 $7.25 8.3
October 9, 1995 72,293 $7.25 $15.50 $7.25 9.3
Louis I. Kane.............October 9, 1995 2,448 $7.25 $20.00 $7.25 6.5
October 9, 1995 45,536 $7.25 $23.75 $7.25 7.3
October 9, 1995 1,961 $7.25 $23.75 $7.25 7.5
October 9, 1995 55,092 $7.25 $24.00 $7.25 8.3
October 9, 1995 72,293 $7.25 $15.50 $7.25 9.3
Samuel H. Yong............October 9, 1995 5,808 $7.25 $25.00 $7.25 8.3
October 9, 1995 717 $7.25 $20.25 $7.25 8.5
October 9, 1995 744 $7.25 $20.00 $7.25 8.7
October 9, 1995 1,024 $7.25 $16.69 $7.25 9.0
October 9, 1995 1,105 $7.25 $16.00 $7.25 9.2
October 9, 1995 1,433 $7.25 $13.63 $7.25 9.5
October 9, 1995 12,698 $7.25 $11.88 $7.25 9.6
October 9, 1995 1,717 $7.25 $12.13 $7.25 9.7
October 9, 1995 3,156 $7.25 $7.75 $7.25 10.0
Mark A. Borland...........October 9, 1995 12,837 $7.25 $12.50 $7.25 6.0
October 9, 1995 4,937 $7.25 $19.78 $7.25 7.4
October 9, 1995 2,644 $7.25 $20.00 $7.25 8.6
John P. Billingsley.......October 9, 1995 3,154 $7.25 $19.78 $7.25 7.4
October 9, 1995 5,067 $7.25 $20.00 $7.25 8.6
October 9, 1995 2,638 $7.25 $16.63 $7.25 8.8
October 9, 1995 4,056 $7.25 $11.88 $7.25 9.6
Mariel Clark..............October 9, 1995 6,732 $7.25 $17.00 $7.25 6.6
October 9, 1995 3,154 $7.25 $19.78 $7.25 7.4
October 9, 1995 4,223 $7.25 $20.00 $7.25 8.6
October 9, 1995 5,297 $7.25 $15.38 $7.25 8.9
October 9, 1995 8,112 $7.25 $11.88 $7.25 9.6
David J. Peterman.........October 9, 1995 16,510 $7.25 $15.50 $7.25 9.0
Maxwell T. Abbott.........October 9, 1995 15,741 $7.25 $12.13 $7.25 9.6
Richard C. Postle.........Nov. 19, 1998 100,000 $6.38 $10.94 $6.38 9.6
October 9, 1995 46,822 $7.25 $9.25 $7.25 9.9
Peter E. McNally..........October 9, 1995 16,504 $7.25 $15.50 $7.25 8.9
Anthony J. Carroll........October 9, 1995 3,154 $7.25 $19.78 $7.25 7.4
October 9, 1995 4,223 $7.25 $20.00 $7.25 8.6
October 9, 1995 8,112 $7.25 $11.88 $7.25 9.6
Thomas R. Howley..........October 9, 1995 5,284 $7.25 $19.75 $7.25 7.0
October 9, 1995 3,154 $7.25 $19.78 $7.25 7.4
October 9, 1995 3,378 $7.25 $20.00 $7.25 8.6
October 9, 1995 4,056 $7.25 $11.88 $7.25 9.6
</TABLE>
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<PAGE>
In connection with the 1995 repricing program, the number of options
held was also reduced. The following chart shows the number of options
outstanding prior to the 1995 repricing, and the number outstanding after such
repricing:
<TABLE>
<CAPTION>
Number of Number of
Securities Securities
Underlying Underlying
Options/sars Options/sars
Outstanding Prior to Outstanding
Name Repricing After Repricing
---- --------- ---------------
<S> <C> <C>
Ronald M. Shaich.............................................. 5,000 2,448
100,000 45,536
4,211 1,961
110,000 55,092
100,000 72,293
Louis I. Kane................................................. 5,000 2,448
100,000 45,536
4,211 1,961
110,000 55,092
100,000 72,293
Samuel H. Yong................................................ 12,000 5,808
1,234 717
1,250 744
1,498 1,024
1,563 1,105
1,835 1,433
15,152 12,698
2,062 1,717
3,226 3,156
Mark A. Borland............................................... 18,000 12,837
9,100 4,937
4,500 2,644
John P. Billingsley........................................... 5,814 3,154
8,625 5,067
3,909 2,638
4,840 4,056
Mariel Clark.................................................. 11,765 6,732
5,814 3,154
7,188 4,223
7,421 5,297
9,680 8,112
David J. Peterman............................................. 23,226 16,510
Maxwell T. Abbott............................................. 18,961 15,741
Richard C. Postle............................................. 50,000 46,822
Peter E. McNally.............................................. 23,226 16,504
Anthony J. Carroll............................................ 5,814 3,154
7,188 4,223
9,680 8,112
Thomas R. Howley.............................................. 10,127 5,284
5,814 3,154
5,750 3,378
4,840 4,056
</TABLE>
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<PAGE>
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Company's Board of Directors held 13 meetings, including 7 actions
by written consent, during fiscal year 1998. The Board of Directors has
established an Audit Committee, a Compensation and Stock Option Committee and a
Committee on Nominations.
The Audit Committee, which held one meeting in fiscal year 1998, meets
with the Company's auditors and principal financial personnel to review the
results of the annual audit. The Audit Committee also reviews the scope of, and
establishes fees for, audit and non-audit services performed by the independent
accountants, reviews the independence of the independent accountants and the
adequacy and effectiveness of the Company's internal accounting controls. The
Audit Committee consists of two members, currently Messrs. George E. Kane and
Francis W. Hatch, and is reconstituted annually.
The Compensation and Stock Option Committee ("Compensation Committee"),
which held 3 meetings in fiscal year 1998, establishes the compensation,
including stock options and other incentive arrangements, of the Company's
Co-Chairmen and Chief Executive Officer. It also administers the Company's 1992
Equity Incentive Plan and 1992 Employee Stock Purchase Plan. The Compensation
Committee consists of three members, currently Messrs. Francis W. Hatch, James
R. McManus and Henry J. Nasella, and is reconstituted annually.
The Committee on Nominations was established in November 1995 and held
one meeting in 1998. The Committee on Nominations consists of three members,
currently Messrs. Francis W. Hatch, James R. McManus and Henry J. Nasella, and
is reconstituted annually. The Committee on Nominations selects nominees for
election as Directors and will consider written recommendations from any
stockholder of record with respect to nominees for Directors of the Company.
All Directors attended at least 75% of the meetings of the Board and of
the committees of which they are members in fiscal 1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee has interlocking or
other relationships with other boards or with the Company that would call into
question his independence as a Committee member.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive a quarterly fee
ranging from $3,000 to $3,500 for serving on the Board, plus reimbursement of
out-of-pocket expenses for attendance at each Board or committee meeting.
Under a formula-based stock option plan for independent directors (the
"Directors' Plan"), as amended by the stockholders at the 1995 Annual Meeting of
Stockholders, each current Director who is not an employee or principal
stockholder of the Company ("Independent Director") first elected after the
effective date of the Directors' Plan will receive, upon his or her election to
the board, a one-time grant of an option to purchase 5,000 shares of Class A
Common stock. All Independent Directors who serve as such at the end of each of
the Company's fiscal years will receive an option to purchase 5,000 shares of
Class A Common Stock. All such options will have an exercise price per share
equal to the fair
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<PAGE>
market value of a share of Class A Common Stock as of the close of the market
the trading day immediately preceding the grant date, will be fully vested when
granted, and will be exercisable for a period of 10 years.
REPORT OF THE COMPENSATION COMMITTEE
This report is made by the Compensation and Stock Option Committee (the
"Compensation Committee") of the Board of Directors, the committee which is
responsible for establishing the compensation, including base salary and
incentive compensation, for the Company's Co-Chairman of the Board, Louis I.
Kane and its Co-Chairman and Chief Executive Officer, Ronald M. Shaich.
PHILOSOPHY
The Compensation Committee seeks to set the compensation of the
Company's Chief Executive Officer and Co-Chairmen at levels which are
competitive with companies of similar size in the Company's industry. Messrs.
Kane and Shaich share the overall responsibilities of Chairman of the Board of
Directors. Mr. Shaich also has the overall responsibilities of Chief Executive
and Chief Operating Officer. In addition to his responsibilities as Co-Chairman,
Mr. Kane is actively involved in a number of areas of the Company, including
real estate development, finance and international franchise development. The
Compensation Committee examined compensation structures for the chief executive
and chief operating officers of companies in the restaurant industry using
generally available source material from business periodicals and other sources,
and sought to structure the Chief Executive Officer's and Co-Chairmen's
compensation at a competitive level appropriate to the comparable companies'
group. The companies examined for purposes of evaluating and setting
compensation of the Chief Executive Officer and Co-Chairmen are not necessarily
included in the "Standard & Poor's 400 - MidCap Restaurant Index" used in the
Stock Performance Graph set forth under "Stock Performance" below.
COMPENSATION STRUCTURE
The compensation of the Chief Executive Officer and Co-Chairmen is
structured to be competitive within the Company's industry and is based upon the
general performance of the Company, and is reviewed annually by the Committee.
COMPONENTS OF COMPENSATION
SALARY. The salary shown in the Summary Compensation Table represents
the fixed portion of compensation for the Chief Executive Officer and
Co-Chairmen for the year. Changes in salary depend upon overall Company
performance as well as levels of base salary paid by companies of similar size
in the Company's industry.
BONUS. The cash bonus is the principal incentive-based compensation
paid annually to the Chief Executive Officer and Co-Chairmen. The Chief
Executive Officer and Co-Chairmen will receive a bonus in a predetermined amount
if the Company achieves its net income objective for the fiscal year. A higher
bonus is paid if the Company exceeds the net income objective by a predetermined
percentage. In determining the bonus amount, the Compensation Committee seeks to
create an overall compensation package for the Chief Executive Officer and
Co-Chairmen which is at the mid-point for comparable companies in the restaurant
industry. For 1998, the Company did not achieve the net income objective and,
therefore, no cash bonuses were paid to the Chief Executive Officer and
Co-Chairmen.
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<PAGE>
The Chief Executive Officer and Co-Chairmen may elect to take their
respective bonuses in the form of 10-year, fully vested stock options for that
number of shares of the Company's Class A Common Stock that could be purchased
with an amount equal to two times the cash value of his bonus. The exercise
price of the option equals the fair market value of the Company's Class A Common
Stock on the date of grant.
STOCK OPTIONS. Neither Mr. Kane nor Mr. Shaich participates in either
the Performance-Based Option Program under the Company's 1992 Equity Incentive
Plan or the 1992 Employee Stock Purchase Plan. In order to provide what the
Compensation Committee believes to be appropriate and continuing long-term
incentives to its Chief Executive Officer and Co-Chairmen, and in order to align
more fully the interests of the stockholders and the Chief Executive Officer and
Co-Chairmen, the Compensation Committee on June 12, 1997 granted, to each of
Messrs. Kane and Shaich a 10-year option, vesting equally over a five-year
period (subject to continued employment), to purchase 400,000 shares of the
Company's Class A Common Stock at an exercise price equal to the fair market
value of a share of the Class A Common Stock calculated immediately preceding
the date of grant. These grants were made in order to retain the services of
Messrs. Kane and Shaich over the next five years, at a minimum. As these options
have exercise prices equal to the market value of the Company's Class A Common
Stock on the grant date, they provide incentive for the creation of stockholder
value over the long term since their full benefit cannot be realized unless
there occurs over time an appreciation in the price of the Company's Class A
Common Stock. The Compensation Committee considers the number of shares to be an
appropriate incentive for the Chief Executive officer and Co-Chairmen to
continue to focus on building stockholder value. The Compensation Committee has
not determined whether any ongoing program of long-term incentive compensation
should or will be adopted with respect to its Chief Executive Officer and
Co-Chairmen.
In November 1998 the Compensation Committee determined that it was
desirable to provide an additional incentive to certain employees who had been
granted options in June 1998. The options granted in June 1998 had an exercise
price of $10.94, the market price for the shares of Class A Common Stock on the
grant date. Following the option issuances, the stock price declined, such that
by November 1998 the price was in the $6.25 to $7.00 range (per reported closing
prices). The Compensation Committee determined that the services of Richard
Postle were of great importance to the success of the Saint Louis/Panera Bread
Business Unit. Therefore, taking into account the significant change in stock
price closely following the June grant, the Committee determined that it was
appropriate, and in the Company's best interests, to cancel the June option
grant to Mr. Postle for 100,000 shares and to reissue the option at the market
price of $6.38 as of the date of grant (November 19, 1998).
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<PAGE>
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Compensation Committee has reviewed the potential consequences for
the Company of Section 162(m) of the Code which imposes a limit on tax
deductions for annual compensation in excess of one million dollars paid to any
of the five most highly compensated executive officers. Based on such review,
the Compensation Committee believes that the limitation will have no effect on
the Company in 1999.
Respectfully submitted,
JAMES R. MCMANUS
Chairman, FRANCIS W. HATCH, HENRY J. NASELLA
REPORT OF THE CHIEF EXECUTIVE OFFICER
This report is made by the Company's Chief Executive Officer, who is
responsible for establishing the compensation, including salary, bonus and
incentive compensation, for all of the Company's executive officers other than
the Chief Executive Officer and Co-Chairmen of the Board.
PHILOSOPHY
In compensating its executive officers, the Chief Executive Officer
seeks to structure a salary, bonus and incentive compensation package that will
help attract and retain talented individuals and align the interests of the
executive officers with the interests of the Company's stockholders.
COMPONENTS OF COMPENSATION
There are two components to the compensation of the Company's executive
officers: annual cash compensation (consisting of salary and bonus incentives)
and long-term incentives.
CASH COMPENSATION. The Company participates annually in an
industry-specific survey of executive officers, which serves as the basis for
determining total target cash compensation packages, which are crafted
individually for each executive officer. The individual's compensation consists
of a base salary and contingent compensation based on actual performance against
agreed-to expectations of performance. The individual compensation packages are
structured so that, if the executive officer attains the expected level of
achievement of each performance goal, the cash compensation of the executive
officer will be approximately at the 75th percentile of the compensation of
individuals occupying similar positions in the industry, using generally
available surveys of executive compensation within the retail industry for
companies with comparable revenues.
At the beginning of each fiscal year, the Chief Executive Officer and
each executive officer establish a series of individual performance goals which
are specific to the executive's responsibilities. These goals seek to measure
performance of each executive officer's job responsibilities: for executive
officers whose responsibilities are operational in nature, attainment of
operating group goals and objectives is stressed, and for corporate staff
officers, overall Company performance measured by earnings-per share growth is
utilized. Currently, the maximum potential cash bonus for the Company's
executive officers, as a percentage of base salary, ranges from 20% to 60%.
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<PAGE>
Thus, the Company's cash compensation practices seek to motivate
executives by requiring excellent performance measured against both internal
goals and competitive performance.
LONG-TERM INCENTIVE COMPENSATION. The second element of executive
compensation, long-term incentive compensation, currently takes the form of
stock options granted under the Company's 1992 Equity Incentive Plan. Currently,
stock options are granted under the Performance-Based Option program, which
consists of a series of guidelines which provide for the periodic granting of
specific amounts of stock options, denominated in dollars rather than in numbers
of shares, depending upon the executive's position within the Company. Existing
holdings of stock or stock options are not a factor in determining the dollar
value of an individual executive officer's award.
As is the case with short-term incentive compensation, at the beginning
of each fiscal year, the Chief Executive Officer and each executive officer
establish a series of individual performance goals specifically related to the
executive's responsibilities and designed to measure execution of these
responsibilities. In addition, a Company-wide performance goal measured in
earnings-per-share growth is established. Further consideration is given to each
executive officer's accountability and/or level of responsibility for managing
one or more aspects of the Company's overall business. These factors are
weighted for each executive officer, with greater emphasis and value being
placed on those factors which could have a greater impact on the Company's
long-term profitability. An individual executive officer's performance against
each of these criteria is then graded at one of five levels: significantly less
than expected, less than expected, as expected, exceeds expectation, and
significantly exceeds expectation. Awards of options are then made based upon a
dollar value, which increases as the executive officer achieves higher grades
for overall performance.
As often as seems appropriate, but at least annually, the Chief
Executive Officer reviews the Company's executive compensation program to judge
its consistency with the Company's compensation philosophy, whether it supports
the Company's strategic and financial objectives, and whether it is competitive
within the Company's industry.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Chief Executive Officer has reviewed the potential consequences for
the Company of Section 162(m) of the Code which imposes a limit on tax
deductions for annual compensation in excess of one million dollars paid to any
of the five most highly compensated executive officers. Based on such review,
the Chief Executive Officer believes that the limitation will have no effect on
the Company in 1998.
Respectfully submitted,
RONALD M. SHAICH
Chief Executive Officer
EMPLOYMENT RELATED AGREEMENTS
The Company and Anthony J. Carroll are party to an Executive Employment
Agreement dated July 9, 1998 pursuant to which Mr. Carroll currently earns a
base salary of $200,000. The Agreement is for a two year term and automatically
renews unless either party gives notice of his or its intent not to renew the
Agreement 30 days prior to its expiration. In the event the Company gives notice
of its intent not to renew the Agreement or terminates Mr. Carroll without
cause during the term of the Agreement, Mr. Carroll
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<PAGE>
will be entitled to his base salary, car allowance (if any) and other benefits
for one year, such payments to be reduced dollar for dollar by any compensation
and benefits received by Mr. Carroll from other sources.
The Company and Mark A. Borland are party to an Executive Employment
Agreement dated August 27, 1997 pursuant to which Mr. Borland currently earns
a base salary of $238,370, $18,370 of which is deferred per the terms of a
Deferred Compensation Agreement. The Agreement is for a two year term and
automatically renews unless either party gives notice of his or its intent
not to renew the Agreement 30 days prior to its expiration. In the event that
the Company gives notice of its intent not to renew the Agreement or
terminates Mr. Borland without cause during the term of the Agreement, Mr.
Borland will be entitled to his base salary, car allowance (if any) and other
benefits for one year and a lump sum payment of $18,370, such payments to be
reduced dollar for dollar by any compensation and benefits received by Mr.
Borland from other sources.
The Company and Richard C. Postle are party to an Executive Employment
Agreement dated September 1, 1995, which provides Mr. Postle with a base
salary of $300,000 for a two year period. The Agreement automatically renews
unless either party gives notice of his or its intent not to renew the Agreement
at least twenty-six weeks prior to its expiration. In the event that the Company
gives notice of its intent not to renew the Agreement or terminates Mr.
Postle without cause during the term of the Agreement, Mr. Postle will be
entitled to his base salary, car allowance (if any) and other benefits for
twenty-six weeks, such payments to be reduced dollar for dollar by any
compensation and benefits received by Mr. Borland from other sources.
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<PAGE>
TOTAL RETURN TO STOCKHOLDERS
(ASSUMES $100 INVESTMENT ON DECEMBER 31, 1992)
The following graph and chart compare the cumulative annual stockholder
return on the Company's Class A Common Stock over the period commencing December
31, 1993 through December 31, 1998 to that of the total return index for the
NASDAQ Stock Market (U.S. Companies) and the Standard & Poor's 400 - MidCap
Restaurant Index, assuming the investment of $100 on December 31, 1993. In
calculating total annual stockholder return, reinvestment of dividends is
assumed. The stock performance graph and chart below are not necessarily
indicative of future price performance.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN ANALYSIS
12/31/93 12/31/94 12/29/95 12/30/96 12/31/97 12/31/98
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Au Bon Pain $100.00 $70.33 $ 36.26 $ 28.57 $ 33.24 $ 26.67
- ----------------------------------------------------------------------------------------------------------------------
S&P MidCap $100.00 $68.74 $ 67.92 $ 65.15 $ 71.42 $ 87.40
Restaurants
- ----------------------------------------------------------------------------------------------------------------------
Nasdaq Composite $100.00 $96.79 $136.45 $167.88 $205.06 $297.02
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
OWNERSHIP OF AU BON PAIN COMMON STOCK
The following table sets forth certain information as of March 31,
1999, with respect to the Company's Class A and Class B Common Stock owned by
(1) each director of the Company, (2) the executive officers named in the
Summary Compensation Table, (3) all directors and executive officers of the
Company as a group, and (4) each person who is known by the Company to
beneficially own more than five percent of the Company's capital stock. Unless
otherwise indicated in the footnotes to the table, all stock is owned of record
and beneficially by the persons listed in the table. +
<TABLE>
<CAPTION>
Class A Common Class B Common
Name and, with respect to owner ------------------------ ------------------------- Combined Voting
of More Than 5%, Address Number Percent (1) Number Percent (2) Percentage (3)
- ------------------------------ ------ ----------- ------ ----------- --------------
<S> <C> <C> <C> <C> <C>
Ronald M. Shaich............................ 420,865(4) 3.9% 1,272,540 80.7% 27.2%
Co-Chairman, Director and
Chief Executive Officer
c/o Au Bon Pain Co., Inc.
19 Fid Kennedy Avenue
Boston, MA 02210
Louis I. Kane............................... 373,580(5) 3.4 53,406 3.4 3.4
Co-Chairman and Director
c/o Au Bon Pain Co., Inc.
19 Fid Kennedy Avenue
Boston, MA 02210
Francis W. Hatch............................ 28,542(6) * 64,351(7) 4.1% 1.5%
Director
George E. Kane.............................. 28,942(6) * 20,000 1.3% *
Director
James R. McManus............................ 28,542(6) * -- -- *
Director
Henry J. Nasella............................ 20,080(8) * -- -- *
Director
Richard C. Postle........................... 69,576(9) * -- -- *
President, Saint Louis/Panera
Bread Business Unit
Mark A. Borland............................. 37,727(10) * -- -- *
Chief Operating Officer,
Au Bon Pain Business Unit
Anthony J. Carroll.......................... 23,170(11) * 19,911 1.3% *
Senior Vice President,
Treasurer and Chief
Financial Officer
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Class A Common Class B Common
Name and, with respect to owner ------------------------ ------------------------- Combined Voting
of More Than 5%, Address Number Percent (1) Number Percent (2) Percentage (3)
- ------------------------------ ------ ----------- ------ ----------- --------------
<S> <C> <C> <C> <C> <C>
All Directors and officers as
a group (14 persons)...................... 1,160,025(12) 10.1% 1,310,070 83.0% 33.4%
Morgan Stanley Group Inc. .................. 1,332,385(13) 12.6% -- -- 8.7%
PG Investors, Inc.
Princes Gate Investors, L.P.
1251 Avenue of the Americas
New York, NY 10020
Brown Capital Management.................... 1,319,450(14) 12.5% -- -- 8.7%
809 Cathedral Street
Baltimore, MD 21201
Princeton Services, Inc.
Fund Asset Management, L.P.................. 1,166,800(15) 11.1% -- -- 7.7%
Merrill Lynch Special
Value Fund, Inc.
800 Scudders Mill Road
Plainsboro, NJ 08536
Dimensional Fund Advisors Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401 ................... 755,900(16) 7.2% - - 5.0%
</TABLE>
- ----------
* Less than one percent.
(1) Percentage ownership of Class A Common Stock is based on 10,560,051 shares
issued and outstanding plus shares subject to options exercisable within
sixty days of March 31, 1999 held by the stockholder or group.
(2) Percentage ownership of Class B Common Stock is based on 1,557,658 shares
issued and outstanding plus shares subject to options exercisable within
sixty days of March 31, 1999 held by the stockholder or group.
(3) This column represents voting power rather than percentage of equity
interest as each share of Class A Common Stock is entitled to one vote
while each share of Class B Common Stock is entitled to three votes.
(4) Includes options exercisable within 60 days for 357,330 shares.
(5) Consists of (a) 1,200 shares owned by Mr. Kane's spouse and as to which Mr.
Kane disclaims beneficial ownership; (b) 15,050 shares owned by Mr. Kane
and (c) options exercisable within 60 days for 357,330 shares.
(6) Includes options for 28,542 shares exercisable within sixty days of
March 31, 1999 pursuant to the Directors' Plan for independent directors.
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<PAGE>
(7) Includes 22,338 shares owned by Mr. Hatch's spouse and as to which Mr.
Hatch disclaims beneficial ownership.
(8) Consists of 1,000 shares jointly owned by Mr. Nasella and his spouse and
options for 24,080 shares exercisable within sixty days of March 31, 1999
pursuant to the Directors' Plan for independent directors.
(9) Includes options for 30,912 shares exercisable within 60 days of March 31,
1999.
(10) Includes options for 36,757 shares exercisable within 60 days of March 31,
1999.
(11) Includes options for 20,984 shares exercisable within sixty days of March
31, 1999.
(12) Includes options for 860,867 shares exercisable within sixty days of
March 31, 1999.
(13) Information included is based solely upon a Schedule 13D filed with the
Commission, jointly on behalf of Morgan Stanley Group Inc. ("MS Group"), PG
Investors, Inc. ("PGI") and Princes Gate Investors, L.P. ("Princes Gate
L.P."). PGI Investors, Inc. is a wholly-owned subsidiary of Morgan Stanley
Group Inc., and is the general partner of Princes Gate L.P. On December 22,
1993, the Company issued to several purchasers, including Princes Gate
L.P., $30,000,000 in aggregate principal amount of 4.75% Convertible
Subordinated Notes due 2001 (the "Notes"). The Notes are convertible into
fully paid and non-assessable shares of Class A Common Stock at a
conversion price (subject to adjustment) equal to $25.50 principal amount
for each share of Class A Common Stock, or currently 1,176,468 shares of
Class A Common Stock in the aggregate. The amount of shares disclosed
includes (a) 317 shares of Class A Common Stock owned by MS Group's
wholly-owned subsidiary, Morgan Stanley & Co. Incorporated ("MS & Co.") in
its capacity as a market-maker in the Company's Class A Common Stock, (b)
5,600 shares of Class A Common Stock over which MS & Co. exercises
discretionary authority on behalf of customers, and (c) since PGI exercises
investment management, voting and/or disposition control over all of the
Notes and the underlying shares of Class A Common Stock obtainable upon
conversion of the Notes, 1,176,468 shares of Class A Common Stock
obtainable upon conversion of the Notes. In connection with a financing
transaction consummated in July 1996, the number of shares also includes a
Class A Common Stock purchase warrant issued for 150,000 shares,
exercisable at $5.62 per share through July 24, 2001. (With respect to
Princes Gate, L.P., the total of 1,332,385 shares includes 881,504 shares
of Class A Common Stock obtainable upon conversion of the Notes, and, in
connection with the financing transaction consummated in July 1996,
includes a Class A Common Stock purchase warrant issued for 112,392 shares,
exercisable at $5.62 per share through July 24, 2001).
(14) Information included is based solely upon a Schedule 13G dated January 8,
1999.
(15) Princeton Services, Inc. ("PSI") is a parent holding company in accordance
with the Securities and Exchange Act of 1934 and is the corporate managing
general partner of Fund Asset Management, L.P. Fund Asset Management, L.P.
d/b/a Fund Asset Management ("FAM") is an investment adviser registered
under section 203 of the Investment Advisers Act of 1940 (the "Advisers
Act"). Merrill Lynch Special Value Fund, Inc. (the "Fund") is an investment
company registered under Section 8 of the Investment Company Act of 1940
(the "Investment Company Act"). FAM acts as an investment adviser to
investment companies registered under Section 8 of the Investment Company
Act and private accounts. With respect to securities held by those
investment companies and private accounts, several persons have the right
to receive, or the power to direct the receipt of dividends from or the
proceeds from the sale of such securities. The Fund, a reporting person for
which FAM serves as investment adviser, has an interest that relates to
more than 5% of the class of the class of securities reported herein. No
other person has an interest that relates to more than 5% of the class of
securities reported herein. PSI is deemed to be the beneficial owner of,
and has shared voting and dispositive power with respect to 1,166,800
shares, and FAM and the Fund are deemed to be the beneficial owners of, and
have shared voting and dispositive power with respect to 1,140,200 shares.
Information regarding beneficial
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<PAGE>
ownership of the shares has been obtained solely from the joint Schedule
13G of PSI, FAM and the Fund filed with the Commission on February 3, 1998.
(16) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 755,900 shares, all of
which shares are held in portfolios of DFA Investment Dimensions Group
Inc., a registered open-end investment company, or in series of the DFA
Investment Trust Company, a Delaware business trust, or the DFA Group Trust
and DFA Participation Group Trust, investment vehicles for qualified
employee benefit plans, all of which Dimensional serves as investment
manager. Dimensional disclaims beneficial ownership of all such shares.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There are no Certain Relationships or Related Transactions during the
fiscal year ended December 26, 1998 to report.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
3. EXHIBITS. The following exhibits are added to the list:
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
10.6.5 Executive Employment Agreement between the Registrant and Mark A.
Borland dated August 27, 1997 and Deferred Compensation Agreement
between Mr. Borland and the Registrant.+
10.6.6 Executive Employment Agreement between the Registrant and
Anthony J. Carroll dated July 9, 1998.+
10.6.7 Executive Employment Agreement between the Registrant and Richard C.
Postle dated September 1, 1995.+
</TABLE>
- ----------
+ Management contract or compensatory plan required to be filed as an exhibit to
this Form 10-K pursuant to Item 14(c).
-20-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this amendment to be signed on its
behalf by the undersigned, thereunto duly authorized.
AU BON PAIN CO., INC.
By:/s/ Louis I. Kane
---------------------------------------
Louis I. Kane, Co-Chairman of the Board
Date: April 26, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this amendment has been duly signed by the following persons on behalf
of the registrant and in the capacities and on the date indicated:
/s/ Louis I. Kane /s/ Ronald M. Shaich
- ----------------------------- -------------------------------------
Louis I. Kane, Co-Chairman of Ronald M. Shaich, Co-Chairman of
the Board and Director the Board and Chief Executive Officer
/s/ Anthony J. Carroll /s/ Francis W. Hatch
- ----------------------------- -------------------------------------
Anthony J. Carroll, Chief Francis W. Hatch, Director
Financial Officer
/s/ George E. Kane /s/ Henry J. Nasella
- ----------------------------- -------------------------------------
George E. Kane, Director Henry J. Nasella, Director
/s/ James R. McManus
- -----------------------------
James R. McManus, Director
All dated: April 26, 1999
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<PAGE>
EXHIBIT 10.6.5
MARK BORLAND - ABP
DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT is made this day of January, 1996 by and between
Au Bon Pain Co., Inc., a corporation organized under the laws of the State
of Delaware (the "Corporation"), and MARK BORLAND, an individual residing at
284 Center Street, Pembroke, Massachusetts 02359 (the "Employee").
WITNESSETH THAT:
WHEREAS, the Corporation currently employs the Employee; and
WHEREAS, the Corporation and the Employee wish to defer immediate
payment of some compensation as it otherwise would accrue and be payable to the
Employee; and
WHEREAS, the Corporation will retain such accrued but unpaid amounts
for the benefit of the Employee, subject to the claims of the Corporation's
creditors in the event of the Corporation's insolvency; and
WHEREAS, it is the intention of the parties that this Agreement shall
constitute an unfunded arrangement maintained for the purpose of providing
deferred compensation to the Employee as a member of the management of the
Corporation for purposes of Title I of the Employee Retirement Income Security
Act of 1974.
NOW, THEREFORE, in consideration of the agreements hereinafter
contained, the parties hereby agree as follows:
1. WITHHOLDING. During the term of the Corporation's employment of
the Employee after the date hereof, the Corporation shall withhold from
compensation otherwise accrued and payable to the Employee the sum of $18,370.00
per annum, to be accrued and retained ratably on a weekly basis. In addition,
during the term of the Corporation's employment of the Employee for one year
after the date hereof, the Corporation shall accrue and withhold an additional
amount of $25,000.00, to be accrued and retained ratably on a weekly basis
during such one year term.
2. DEFERRED COMPENSATION ACCOUNT.
(a) The Corporation shall credit the amounts described in the
preceding paragraph to a book reserve (the "Deferred Compensation Account")
established for this purpose.
(b) All funds credited to the Deferred Compensation Account may be
kept in cash or invested and reinvested in mutual funds, stocks, bonds,
securities or any other assets as may be selected by the Corporation in its
discretion until the
<PAGE>
Employee provides to the Corporation written direction of investment. The
Employee may provide such written direction no more frequently than
quarter-annually; provided, however, that the Employee may not direct the
Corporation to invest Deferred Compensation Account amounts in the debt or
equity of the Corporation or in any assets in which the Corporation, in the
opinion of counsel, reasonably may not invest. In the exercise of the foregoing
discretionary investment powers, the Corporation may engage investment counsel
and, if it so desires, may delegate to such counsel full or limited authority to
select the assets in which the Deferred Compensation Account funds are to be
invested.
(c) All appreciation, depreciation, income, loss and expenses on
the Deferred Compensation Account shall increase or decrease, as appropriate,
such Deferred Compensation Account. The Corporation shall account at least
annually to the Employee to reflect all activity in the Deferred Compensation
Account for the preceding period.
(d) The Employee assumes all risk in connection with any
investment of the Deferred Compensation Account.
(e) Title to and beneficial ownership of all assets held in the
Deferred Compensation Account shall at all times remain in the Corporation and
the Employee shall not have any property interest whatsoever in the Deferred
Compensation Account.
3. PAYMENT OF DEFERRED AMOUNTS. The Corporation shall pay the
following benefits as deferred compensation to the Employee (unless they are
forfeited by the occurrence of any of the events of forfeiture specified in
paragraph 3(b) below) as follows:
(a) If the Employee's employment with the Corporation is
terminated for any reason on or after the Employee shall have reached the age of
sixty (60), the Corporation shall pay to him in a lump sum or in ten (10) annual
installments an amount equal to the fair market value of the assets in the
Deferred Compensation Account as of such date. The method of payment shall be
determined by the Employee by written direction to the Corporation at the time
of such termination and, absent such written direction, the Corporation shall
pay such amount in a lump sum. If the Employee directs the Corporation to pay
such amount over ten (10) annual installments, the total amount payable to the
Employee shall be appropriately increased or decreased, as the case may be, to
reflect the appreciation or depreciation in value and the net income or loss and
expenses on the funds which remain invested in the Deferred Compensation
Account. The above notwithstanding, if the Employee should die on or after his
sixtieth (60) birthday and before all payments are made hereunder, the unpaid
balance will continue to be paid in
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<PAGE>
installments for the unexpired portion of such ten year period to his designated
beneficiary (as described below) in the same manner as set forth above.
(b) If the Employee's employment with the Corporation is
terminated for any reason other than death and disability but before the
Employee shall have reached the age of sixty (60), the Corporation shall pay the
fair market value of the assets in the Deferred Compensation Account as of such
date or dates as provided in paragraph (a) above or at such earlier date or
dates as shall be selected by the Corporation in its sole discretion, unless the
Employee terminates his employment with the Corporation without providing at
least six months prior notice of such termination, in which event all rights of
the Employee and his successors and assigns (including his personal
representatives) to receive payments hereunder shall be forfeited.
(c) If the Employee's employment with the Corporation is
terminated because of death or disability before he has reached the age of sixty
(60), the Corporation shall make payments to the Employee (in the event of his
disability) or his designated beneficiary (in the event of his death) in the
same manner and to the same extent as provided in paragraph 3(a), above.
(d) The designated beneficiary may be designated or changed by the
Employee (without the consent of any prior beneficiary) by written direction
delivered to the Corporation at any time before the death of the Employee.
(e) If both the Employee and his designated beneficiary should die
before all payments due under this Agreement are made by the Corporation, then
the remaining value of the Deferred Compensation Account shall be determined and
shall be paid as promptly as possible in a lump sum to the estate of such
designated beneficiary if such designated beneficiary had survived the Employee.
If no such beneficiary shall have been designated upon the death of the
Employee, or if the designated beneficiary does not survive the Employee, then
the remaining value of the Deferred Compensation Account shall be determined and
shall be paid as promptly as possible in a lump sum to the estate of the
Employee.
(f) For the purpose of this Agreement, the term "Cause" shall mean
the conviction of the Employee of a crime involving fraud or moral turpitude
involving the Corporation. For purposes of this Agreement, the term "disability"
shall mean that, as a result of the Employee's incapacity due to physical or
mental illness, the Employee is unable substantially to perform his employment
duties on a full-time basis for one hundred eighty (180) consecutive days or one
hundred eighty (180) days in the aggregate in any consecutive two hundred
seventy (270) day period.
-3-
<PAGE>
(g) Installment payments to be made to the Employee under
paragraphs 3(a) and 3(c) above shall commence on the first day of the month next
following the date of the termination of his employment, and the installment
payments to be made to the Employee under paragraph 3(b) above shall commence on
the first day of the month next following the date on which the Employee shall
have reached the age of sixty (60) unless the Corporation selects an earlier
date or dates in its sole discretion. The installment payments to be made to the
designated beneficiary under the provisions of this paragraph 3 shall commence
on a date to be selected by the Corporation but within six months from the date
of death of the Employee.
4. NO TRUST CREATED. Nothing contained in this Agreement and no
action taken pursuant to the provisions of this Agreement shall create or be
construed to create a trust of any kind or a fiduciary relationship between the
Corporation and the Employee, his designated beneficiary or any other person.
Any funds which may be invested under the provisions of this Agreement shall
continue for all purposes to be a part of the general funds of the Corporation
and no person other than the Corporation shall, by virtue of the provisions of
this Agreement, have any interest in such funds. To the extent that any person
acquires a right to receive payments from the Corporation under this Agreement,
such rights shall be no greater than the right of any unsecured general creditor
of the Corporation.
5. NO ASSIGNMENT. The right of the Employee or any other person to
the payment of deferred compensation or other benefits under this Agreement may
not be assigned, transferred, pledged or encumbered except by the Employee's
designation of a designated beneficiary, by will or by the laws of descent and
distribution.
6. NO EMPLOYMENT ASSURANCE. Nothing contained herein shall be
construed as conferring upon the Employee the right to continue in the
employment of the Corporation as an executive or in any other capacity.
7. PAYMENT IN KIND: WITHHOLDING. The Corporation may pay amounts due
hereunder in cash or in kind as it may choose in its sole discretion. The
Corporation will withhold all necessary taxes from such amounts.
8. SEVERABILITY. If any provision of this Agreement is declared or
found to be illegal, unenforceable or void, in whole or in part, then both
parties will be relieved of all obligations arising under such provision, but
only to the extent it is illegal, unenforceable or void. The intent and
agreement of the parties to this Agreement is that this Agreement will be deemed
amended by modifying any such illegal, unenforceable or void provision to the
extent
-4-
<PAGE>
necessary to make it legal and enforceable while preserving its intent, or if
such is not possible, by substituting therefor another provision that is legal
and enforceable and achieves the same objectives. The foregoing notwithstanding,
if the remainder of this Agreement will not be affected by such declaration or
finding and is capable of substantial performance, then each provision not so
affected will be enforced to the extent permitted by law.
9. WAIVER. Any delay or omission by either party to this Agreement
in exercising any right or power under the Agreement will not impair such right
or power or be construed as a waiver thereof. A waiver by either party to this
Agreement of any of the covenants to be performed by the other or any breach
thereof will not be construed to be a waiver of any succeeding breach thereof or
of any other covenant contained in this Agreement. All remedies provided for in
this Agreement will be cumulative and in addition to and not in lieu of any
other remedies available to either party at law, in equity, or otherwise.
10. GOVERNING LAW. This Agreement shall be governed by and construed
and interpreted in accordance with the laws of the Commonwealth of Massachusetts
applicable to contracts made and to be performed therein and without giving
effect to any principle of conflict-of-laws that would require the application
of the law of any other jurisdiction.
11. NOTICES. Any notice to a party hereto shall be in writing, and such
notice shall be given by delivery in hand; by telecopy (if available) with
original posted first class mail, postage prepaid, within two (2) business days
thereafter; by certified mail, postage prepaid, return receipt requested; or by
private courier requesting evidence of receipt as a part of its service,
addressed as follows:
If to the Company:
19 Fid Kennedy Avenue
Boston, MA 02210
Attn: Chief Executive Officer
with a copy to:
Robert J. Foley, Esq.
Gadsby & Hannah LLP
125 Summer Street
Boston, MA 02110
If to the Employee:
284 Center Street
Pembroke, MA 02359
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<PAGE>
or to such other address as may be designated in writing by either party from
time to time in accordance herewith, and shall be deemed delivered upon the
earliest to occur of delivery by hand, when so telecopied, when so placed in the
mails or when so delivered to such delivery service as aforesaid.
12. ARBITRATION. Any controversy or claim arising out of or relating
to this Agreement; or the breach thereof, shall be settled by arbitration in
Boston, Massachusetts in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, and judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.
13. ENTIRE AGREEMENT: AMENDMENT. This Agreement constitutes the entire
agreement between the parties to this Agreement with respect to the subject
matter of this Agreement and there are no understandings or agreements relative
to this Agreement which are not fully expressed in this Agreement. All prior
agreements with respect to the subject matter of this Agreement are expressly
superseded by this Agreement. No amendment to, or waiver or discharge of, this
Agreement will be valid unless in writing and signed by the party to be charged.
14. DESCRIPTIVE HEADINGS. All descriptive headings of this Agreement
are inserted for convenience only, and shall not affect the construction or
interpretation hereof.
15. POWER TO INTERPRET. The Corporation shall have full power and
authority to interpret, construe, and administer this Agreement and the
Corporation's reasonable interpretations and construction thereof, and actions
thereunder, including any valuation of the Deferred Compensation Account, or the
amount or recipient of the payments to be made therefrom, shall be binding and
conclusive on all persons for all purposes. Neither the Corporation nor any
director, officer, employee or agent of the Corporation shall be liable to any
person for any action taken or omitted in connection with the interpretation and
administration of this Agreement unless attributable to willful misconduct or
lack of good faith.
16. BINDING AGREEMENT. This Agreement shall be binding upon and inure
to the benefit of the Corporation, its successors and assigns, and the Employee
and his designated beneficiaries, heirs, executors, administrators, and legal
representatives.
-6-
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by its duly authorized employee and Employee has hereunto set his hand
and seal as of the date first above written.
AU BON PAIN CO., INC.
By: /s/ Mariel Clark
----------------------------
Mariel Clark, Vice President
/s/ Mark Borland
----------------------------
MARK BORLAND
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<PAGE>
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made this 27th day
of August, 1997, by and between Mark Borland ("Employee") and Au Bon Pain, Co.,
Inc., a Delaware corporation with a principal place of business in Boston,
Massachusetts (the "Company").
WHEREAS, the Company wishes to employ and engage the services of the
Employee in an executive capacity for the Company, upon the terms, conditions
and provisions of this Agreement; and
WHEREAS, the Employee desires to provide services to the Company in
accordance with the terms, conditions and provisions of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, and other good and valuable consideration, the receipt of which is
hereby acknowledged, the Company and Employee hereby agree as follows:
1. DEFINITIONS
For all purposes of this Agreement, the following terms shall have the
meanings specified in this Section I unless the context clearly requires
otherwise:
(a) "BASE SALARY" means the Employee's annualized base salary set
forth in Section 3 of this Agreement, and such increases thereto as may be
established by the Company from time to time. In no event, however, shall
Employee's Base Salary be less than the amount set forth in Section 3 of this
Agreement. "Base Salary" shall not include any bonus, incentive compensation or
employee benefits;
(b) "BENEFITS" means all employee benefits provided to the Employee by
the Company, including medical, dental, long-term disability, life insurance,
and such other benefits as may be provided from time- to time by the Company
generally to its employees;
(c) "INCENTIVE COMPENSATION" means additional compensation provided to
the Employee by the Company during the term of this Agreement, if any, other
than Base Salary and Benefits;
(d) "SEVERANCE" means payments made by the Company to the Employee
after termination of employment, pursuant to this Agreement, at the rate of the
Employee's annualized Base Salary (and car allowance, if any) as of the date of
Employee's termination and an additional lump sum payment of $18,370.00.
Severance is payable, commencing after the last day of active employment with
the Company, on a weekly basis in substantially equal installments following
Employee's termination, in such increments and for such period(s) of time
designated in this Agreement ("Severance Period"). Severance shall not include
any bonuses or other Incentive Compensation. Except as set forth in the
immediately preceding sentence, Severance shall also include the continuation of
Employee's Benefits existing at the time of Employee's termination for the
Severance Period. Employee shall be responsible for making all required
contributions to continue Benefits during the Severance Period on the same basis
as existed at the time of the Employee's termination. Severance shall be reduced
(dollar for dollar) by any compensation and benefits Employee receives or earns
during the Severance Period from any source other than the Company including,
without limitation, salary, employee benefits, consulting fees, income from
self-employment or otherwise;
<PAGE>
2. EMPLOYMENT
The Company agrees to employ the Employee to render services to the
Company in an executive capacity, consistent with the typical duties and
responsibilities of an Executive Vice President with the Company, and to
maintain the Employee's title as Executive Vice President. Employee understands
and agrees that Employee's duties and responsibilities may change from time to
time, in the sole discretion of the Company. Effective as of the date hereof,
Employee hereby accepts such employment subject to the terms and conditions set
forth herein. Employee agrees to devote his full attention, best talents and
abilities to the job and to perform faithfully his duties and responsibilities
hereunder.
3. COMPENSATION
The Company shall pay Employee a Base Salary at the rate of $175,950.00
annualized, Incentive Compensation, and Benefits, subject to federal and state
withholdings and customary payroll deductions.
4. TERM
Unless terminated as provided in Section 5, or as otherwise provided in
this Agreement, this Agreement shall continue for a two-year period from the
commencement of Employee's employment with the Company or the effective date of
this Agreement, whichever is later; thereafter, this Agreement shall
automatically renew for additional one-year periods, unless either party
notifies the other in writing of its intent not to renew this Agreement at least
thirty (30) days prior to its expiration. In the event the Employee gives notice
of intent not to renew this Agreement, the Employee shall not be entitled to
Severance. In the event the Company gives notice of intent not to renew this
Agreement, at the expiration of the Agreement the Employee shall be entitled to
fifty-two (52) weeks' Severance.
5. TERMINATION
(a) TERMINATION FOR CAUSE
The Company may terminate Employee's employment at any time for cause,
upon written notice specifying the reasons. As used herein, the term "cause"
shall mean:
(i) The commission by Employee of any act of embezzlement, fraud,
larceny, theft, or other willful misconduct or gross
negligence in connection with the performance of Employee's
duties which adversely, affects the affairs of the Company;
(ii) Employee's conviction of a felony, or conviction of a
misdemeanor involving moral turpitude;
(iii) A material breach of the terms of this Agreement which
continues for fifteen (15) days after the Company has given
written notice to the Employee specifying in reasonable detail
the material breach.
(b) TERMINATION WITHOUT CAUSE
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<PAGE>
Notwithstanding any other provision of this Agreement, the Company may terminate
Employee's employment, without cause, at any time, for any reason, effective
upon thirty (30) days' written notice to the Employee. In the event of a
termination without cause, the Employee shall be entitled to fifty-two (52)
weeks' Severance.
(c) RESIGNATION
The Employee may at any time during the term of this Agreement resign
employment, effective upon ninety (90) days' written notice to the Company, or
upon such shorter period of notice as the parties may agree in writing. Upon
such resignation, the Employee shall not be entitled to any Severance, and,
except as otherwise specifically set forth herein, the obligations of the
Company to the Employee under this Agreement shall terminate upon the effective
date of such resignation. Employee agrees to continue to perform his duties
hereunder, and otherwise assist the Company in an orderly transition, during
such ninety-day period.
(d) DISABILITY
The Company may terminate Employee's employment if, at any time during
the term of this Agreement, the Employee shall become disabled so that he is
unable to perform the Employee's regular duties of employment, with reasonable
accommodation, for a period of ninety (90) days in the aggregate during any
180-day period. The determination of the Employee's disability for purposes of
this Section 5(d) shall be made by a qualified physician acceptable to both
parties. In the event that the Company and the Employee are unable to agree upon
a qualified physician, each party shall select a qualified physician, and in the
event those two physicians are unable to agree upon a determination as to the
Employee's disability, a third neutral physician ("Neutral Physician")
acceptable to the parties shall be selected. The determination of disability by
the Neutral Physician shall be final and binding for purposes of this Agreement.
In the event this Agreement is terminated pursuant to this Section 5(d), the
Employee shall be entitled to fifty-two (52) weeks' Severance. Such Severance
shall be offset dollar for dollar by any payments made in the aggregate to the
Employee under the Company's existing Salary Continuation and Long-Term
Disability Plan(s).
(e) DEATH
This Agreement and all obligations of the Company hereunder shall terminate upon
the death of the Employee. In the event of a termination upon the death of the
Employee, monies or compensation owed by the Company to the Employee up to the
date of termination shall be paid to the Employee's estate or designee.
(f) ACCRUED VACATION
All accrued vacation owed by the Company to the Employee upon
termination of employment shall be included in the Employee's last paycheck
following active employment.
6. CONFIDENTIAL NATURE OF THIS AGREEMENT
Employee agrees to keep confidential the terms of this Agreement. A
violation of this provision shall entitle the Company to terminate this
Agreement immediately, for cause, as set forth in Section 5(a)(iii).
Notwithstanding the above, the Employee may disclose the terms of this Agreement
to his/her immediate family, bankers, accountants, attorneys, and
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<PAGE>
other financial advisers, the Internal Revenue Service, the Massachusetts
Department of Revenue, in the event such disclosure is necessary to prospective
employers or others to review the restrictive covenants contained herein, in the
event of litigation or arbitration involving this Agreement, or in the event
that such disclosures shall be compelled by law.
7. CONFIDENTIAL AND PROPRIETARY INFORMATION
(a) The Employee understands and acknowledges that in the course of
employment with the Company, Employee will have access to confidential and
proprietary information of the Company and its Affiliates (which shall mean
entities controlling, controlled by or under common control with the Company,
including without limitation, Saint Louis Bread Company, Inc. and its
Affiliates) which constitute valuable, special and unique assets of the Company
and its Affiliates. For purposes of this Agreement, such confidential and
proprietary information shall include, without limitation, the following: trade
secrets; operating techniques; procedures and methods; product specifications;
customer lists; account information; price lists; discount schedules;
correspondence with customers, vendors, employees, partners or others; drawings;
software; leads from suppliers; marketing techniques; procedures and methods;
employee lists; internal financial reports of the Company and its Affiliates;
sourcing lists; and recruiting lists (collectively, "Confidential Information"),
but shall not include any information which is commonly known or in the public
domain.
(b) The Employee agrees that during the term of this Agreement and at
any time thereafter, Employee will not, without the authorization of the
Company: (i) disclose any Confidential Information to any person or entity for
any purpose whatsoever; or (ii) make use of any Confidential Information for
Employee's own purposes or for the benefit of any other person or entity, other
than the Company and its Affiliates.
(c) The Employee agrees that upon the request of the Company or upon
termination of employment, Employee shall return to the Company all documents or
other materials, including electronic or computerized data, containing or
relating to Confidential Information, along with all other Company property.
8. RESTRICTIVE COVENANT
During the term of this Agreement, and, for (i) six (6) months after
its termination with respect to Section 8(a), and (ii) one (1) year after its
termination with respect to Section 8(b), for whatever reason, the Employee
shall not, directly or indirectly, either as an individual, employee, partner,
officer, owner, director, shareholder, advisor or consultant, or in any other
capacity whatsoever, on behalf of any person, firm, corporation, partnership or
entity:
(a) during the term of this Agreement, and for six (6) months after
its termination, for whatever reason, be employed by or retained as a consultant
or advisor to a competitive entity in the bakery/coffee/deli business. For
purposes of this Agreement, "competitive entity" includes, without limitation,
the following companies doing business as: PARADISE BAKERY, INC.; STARBUCKS;
BRUEGGER'S BAGEL BAKERY; FINAGLE-A-BAGEL; LE BOULANGERIE, GREAT HARVEST,
EINSTEIN'S/NOAH'S; CORNER BAKERY; BIG SKY; AFC ENTERPRISES, INC. and their
respective parents, subsidiaries, franchisees, affiliates, successors or
assigns. Additionally, "competitive entity" shall include, without limitation,
any company which generates in the aggregate more than 50% of its revenues from
the retail sales of baked
4
<PAGE>
goods and coffee, and their respective parents, subsidiaries, franchisees,
affiliates, successors or assigns. Notwithstanding the above, the direct or
indirect ownership of one percent (1%) or less of the stock of a competitive
entity whose shares are listed on a national securities exchange or are quoted
on the National Association of Securities Dealers Automated Quotation System or
so-called Bulletin Board shall not, in and of itself, be deemed to be a
violation of this Section 8(a);
(b) recruit, solicit, hire, or assist any other person or party in
recruiting, soliciting, or hiring any employee of the Company or any of its
Affiliates or any of their respective franchises.
The Company may, in its sole discretion, waive enforcement of any of
the provisions of this Section 8, which waiver shall be evidenced solely by the
execution and delivery to the Employee of a written document setting forth the
terms of such waiver, executed by an authorized representative of the Company.
9. ENFORCEMENT
Employee agrees and acknowledges that a violation of Sections 7 or 8 of
this Agreement shall entitle the Company to terminate this Agreement
immediately, which termination shall be conclusively deemed to be a termination
for cause, as set forth in Section 5(a) hereunder. In the event of a violation
of Sections 7 or 8 of this Agreement, any further Severance, salary
continuation, Benefits or other future compensation otherwise owed pursuant
hereto shall be forfeited.
The Employee acknowledges and agrees that the Company's remedies at law
for a breach of Sections 7 or 8 of this Agreement are inadequate and that the
harm caused thereby is irreparable. The Employee expressly agrees that in the
event of a violation of Sections 7 or 8 of this Agreement, the Company shall be
entitled to equitable relief enforcing the terms of this Agreement, including
without limitation, specific performance, a temporary restraining order,
preliminary injunction or permanent injunction to prevent any breach or
attempted broach thereof. The provisions of Sections 7, 8 and 9 shall survive
the termination of this Agreement, in addition to any others which may survive
pursuant to the terms of this Agreement.
10. SEVERABILITY
If any provision of this Agreement including, without limitation,
Sections 7, 8 or 9 hereof, is declared or found to be illegal, unenforceable,
void, overbroad, or unreasonable in scope, territory, or duration, in whole or
in part, then both parties will be relieved of all obligations arising under
such provisions, but only to the extent it is illegal, unenforceable, void,
overbroad, or unreasonable in scope, territory or duration. The intent and
agreement of the parties to this Agreement is that this Agreement will be deemed
amended by modifying any such illegal, unenforceable, void, overbroad or
unreasonable provision to the extent necessary to make it legal and enforceable
while preserving its intent, or if such is not possible, by substituting
therefor another provision that is legal and enforceable and achieves the same
objectives. The foregoing notwithstanding, if the remainder of this Agreement
will not be affected by such declaration or finding and is capable of
substantial performance, then each provision not so affected will be enforced to
the extent permitted by law.
11. ARBITRATION
Any controversy or claim arising out of or relating to this Agreement
or Employee's employment with the Company, except for claims of violation by the
Employee of Sections
5
<PAGE>
7 and 8 hereof which may be enforced by the Company in a court of competent
jurisdiction pursuant to Section 9 hereof, shall be settled exclusively by
binding arbitration before a single arbitrator in the City of Boston, in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The provisions hereof shall be a complete bar and defense to any
suit, action or proceeding instituted by the Employee in any federal, state or
local court or before any administrative tribunal with respect to any matter
which is arbitrable as herein set forth. This Section shall survive the
termination or expiration of this Agreement. Nothing herein contained shall be
deemed to give any arbitrator any authority, power, or right to alter, change,
amend, modify, add to, or subtract from any provisions of this Agreement. The
arbitrator shall have no authority to award punitive damages or attorney's fees
to any party. The decision of the arbitrator shall be final and conclusive.
Judgment on an award rendered by the arbitrator may be entered in any court of
competent jurisdiction.
12. NO CONFLICTING AGREEMENTS
Employee hereby represents and warrants that neither the entry into
this Agreement nor its performance by Employee will conflict with or result in a
breach of the terms, conditions or provisions of any other agreement or other
obligation of any nature to which Employee is a party, or by which he is
otherwise bound, including, without limitation, any other employment agreement,
non-competition agreement, or confidentiality agreement.
13. GOVERNING LAW
The- terms hereof shall be governed by, and construed and interpreted
in accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to its conflict of laws rules which may otherwise require the
application of the law of another jurisdiction.
14. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
Company and the Employee and their respective successors, assigns, heirs, legal
representatives, executors and administrators.
15. NOTICES
(i) All notices to the Employee shall be addressed to Employee at:
or to such other place(s) as may be designated by written notice to the
Company.:
(ii) All notices to the Company shall be addressed to the Company at:
19 Fid Kennedy Avenue
Boston, MA 02210
Attention: C. E. 0.
With copies to:
Walter D. Wekstein, Esq.
Gadsby & Hannah LLP
225 Franklin Street
Boston, MA 02110
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<PAGE>
or to such other place(s) as may be designated by written notice to Employee.
(iii) Notice shall be sufficient if given by hand or by certified mail,
postage prepaid, return receipt requested, addressed to the party at its address
described above. Unless otherwise notified in writing, each party shall direct
all sums payable to the other party at its address for notice purposes.
16. HEADINGS
The captions and headings in this Agreement are for convenience and
reference only, and they shall in no way be held or deemed to define, modify or
add to the meaning, scope or intent of any provision of this Agreement.
17. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties and
supersedes all prior agreements and understandings, written or oral on the
subject matter hereof including, but not limited to, offer letters, employment
letters, and agreements concerning severance pay, with the exception of the
Deferred Compensation Agreement between the parties dated January, 1996, a copy
of which is attached hereto as Exhibit "A", which shall remain in force until
terminated pursuant to its terms.
18. AMENDMENTS
This Agreement may be modified only by written agreement signed by both
the Employee and the Company.
19. WAIVER
The failure of any party at any time to require the performance of any
provision(s) hereof shall in no manner affect the right(s) of such party at a
later time to require the performance of said provision(s), and shall not be
deemed a waiver of any obligations hereunder.
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<PAGE>
IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement under seal, as of the date first above written.
AU BON PAIN CO., INC.
By: /s/ Ronald M. Shaich Date: 8/27/97
------------------------- -------------
Ronald M. Shaich,
Chief Executive Officer
Witness: /s/ Mariel Clark Date: 8/27/97
------------------------- -------------
MARK BORLAND
/s/ Mark C. Borland Date: 9/16/97
- ------------------------- -------------
Witness: Date:
------------------------- -------------
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<PAGE>
EXHIBIT 10.6.6
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made this 9th day of July,
1998, by and between Anthony J. Carroll ("Employee") and Au Bon Pain, Co., Inc.,
a Delaware corporation with a principal place of business in Boston,
Massachusetts (the "Company").
WHEREAS, the Company wishes to employ and engage the services of the
Employee in an executive capacity for the Company, upon the terms, conditions
and provisions of this Agreement; and
WHEREAS, the Employee desires to provide services to the Company in
accordance with the terms, conditions and provisions of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, and other good and valuable consideration, the receipt of which is
hereby acknowledged, the Company and Employee hereby agree as follows:
1. DEFINITIONS
For all purposes of this Agreement, the following terms shall have the
meanings specified in this Section 1 unless the context clearly requires
otherwise:
(a) "BASE SALARY" means the Employee's annualized base salary set
forth in Section 3 of this Agreement, and such increases thereto as may be
established by the Company from time to time. In no event, however, shall
Employee's Base Salary be less than the amount set forth in Section 3 of this
Agreement, "Base Salary" shall not include any bonus, incentive compensation or
employee benefits;
(b) "BENEFITS" means all employee benefits provided to the
Employee by the Company, including medical, dental, long-term disability, life
insurance, and such other benefits as may be provided from time to time by the
Company generally to its employees;
(c) "INCENTIVE COMPENSATION" means additional compensation
provided to the Employee by the Company during the term of this Agreement, if
any, other than Base Salary and Benefits;
(d) "SEVERANCE" means payments made by the Company to the
Employee after termination of employment, pursuant to this Agreement, at the
rate of the Employee's annualized Base Salary (and car allowance, if any) as of
the date of Employee's termination. Severance is payable, commencing after the
last day of active employment with the Company, on a weekly basis in
substantially equal installments following Employee's termination, in such
increments and for such period(s) of time designated in this Agreement
("Severance Period'). Severance shall not include any bonuses or other Incentive
<PAGE>
Compensation. Except as set forth in the immediately preceding sentence,
Severance shall also include the continuation of Employee's Benefits existing at
the time of Employee's termination for the Severance Period. Employee shall be
responsible for making all required contributions to continue Benefits during
the Severance Period on the same basis as existed at the time of the Employee's
termination. Severance shall be reduced (dollar for dollar) by any compensation
and benefits Employee receives or earns during the Severance Period from any
source other than the Company including, without limitation, salary, employee
benefits, consulting fees, income from self-employment or otherwise;
2. EMPLOYMENT
The Company agrees to employ the Employee to render services to the
Company in an executive capacity, consistent with the typical duties and
responsibilities of a Senior Vice President with the Company. Employee
understands and agrees that Employee's duties and responsibilities may change
from time to time, in the sole discretion of the Company. Effective as of the
date hereof, Employee hereby accepts such employment subject to the terms and
conditions set forth herein. Employee agrees to devote his full attention, best
talents and abilities to the job and to perform faithfully his duties and
responsibilities hereunder.
3. COMPENSATION
The Company shall pay Employee a Base Salary at the rare of $185,000.00
annualized, Incentive Compensation, and Benefits, subject to federal and state
withholdings and customary payroll deductions.
4. TERM
Unless terminated as provided in Section 5, or as otherwise provided in
this Agreement, this Agreement shall continue for a two-year period from the
effective date of this Agreement; thereafter, this Agreement shall automatically
renew for additional one-year periods, unless either party notifies the other in
writing of its intent not to renew this Agreement at least thirty (30) days
prior to its expiration. In the event the Employee gives notice of intent not to
renew this Agreement, the Employee shall not be entitled to Severance. In the
event the Company gives notice of intent not to renew this Agreement, at the
expiration of the Agreement the Employee shall be entitled to fifty-two (52)
weeks' Severance.
5. TERMINATION
(a) TERMINATION FOR CAUSE
The Company may terminate Employee's employment at any time for cause,
upon written notice specifying the reasons. As used herein, the term "cause"
shall mean:
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(i) The commission by Employee of (A) any act of embezzlement,
fraud, larceny, theft, or (B) other willful misconduct or
gross negligence in connection with the performance of
Employee's duties which adversely affects the affairs of the
Company;
(ii) Employee's conviction of a felony, or conviction of a
misdemeanor involving moral turpitude;
(iii) A material breach of the terms of this Agreement which
continues uncured for fifteen (15) days after the Company has
given written notice to the Employee specifying in reasonable
detail the material breach.
(b) TERMINATION WITHOUT CAUSE
Notwithstanding any other provision of this Agreement, the Company may
terminate Employee's employment, without cause, at any time, for any reason,
effective upon thirty (30) days' written notice to the Employee. In the event of
a termination without cause, the Employee shall be entitled to fifty-two (52)
weeks' Severance.
(c) RESIGNATION
The Employee may at any time during the term of this Agreement resign
employment, effective upon ninety (90) days' written notice to the Company, or
upon such shorter period of notice as the parties may agree in writing. Upon
such resignation, the Employee shall not be entitled to any Severance, and,
except as otherwise specifically set forth herein, the obligations of the
Company to the Employee under this Agreement shall terminate upon the effective
date of such resignation. Employee agrees to continue to perform his duties
hereunder, and otherwise assist the Company in an orderly transition, during
such ninety-day period.
(d) DISABILITY
The Company may terminate Employee's employment if, at any time during
the term of this Agreement, the Employee shall become disabled so that he is
unable to perform the Employee's regular duties of employment, with reasonable
accommodation, for a period of ninety (90) days in the aggregate during any
180-day period. The determination of the Employee's disability for purposes of
this Section 5(d) shall be made by a qualified physician acceptable to both
parties. In the event that the Company and the Employee are unable to agree upon
a qualified physician, each party shall select a qualified physician, and in the
event those two physicians are unable to agree upon a determination as to the
Employee's disability, a third neutral physician ("Neutral Physician")
acceptable to the parties shall be selected. The determination of disability by
the Neutral Physician shall be final and binding for purposes of this Agreement.
In the event this Agreement is terminated pursuant to this Section 5(d), the
Employee shall be entitled to fifty-two (52) weeks' Severance. Such Severance
shall be offset dollar for dollar by any payments made in the
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<PAGE>
aggregate to the Employee under the Company's existing Salary Continuation and
Long-Term Disability Plan(s).
(e) DEATH
This Agreement and all obligations of the Company hereunder shall
terminate upon the death of the Employee. In the event of a termination upon the
death of the Employee, monies or compensation owed by the Company to the
Employee up to the date of termination shall be paid to the Employee's estate or
designee.
(f) ACCRUED VACATION
All accrued vacation owed by the Company to the Employee upon
termination of employment shall be included in the Employee's last paycheck
following active employment.
6. CONFIDENTIAL NATURE OF THIS AGREEMENT
Employee agrees to keep confidential the terms of this Agreement. A
violation of this provision shall entitle the Company to terminate this
Agreement immediately, for cause, as set forth in Section 5(a)(iii).
Notwithstanding the above, the Employee may disclose the terms of this Agreement
to his/her immediate family, bankers, accountants, attorneys, and other
financial advisers, the Internal Revenue Service, the Massachusetts Department
of Revenue, in the event such disclosure is required by prospective employers or
others to review the restrictive covenants contained herein, in the event of
litigation or arbitration involving this Agreement, or in the event that such
disclosures shall be compelled by law.
7. CONFIDENTIAL AND PROPRIETARY INFORMATION
(a) The Employee understands and acknowledges that in the course
of employment with the Company, Employee will have access to confidential and
proprietary information of the Company and its Affiliates (which shall mean
entities controlling, controlled by or under common control with the Company,
including without limitation, Saint Louis Bread Company, Inc. and its
Affiliates) which constitute valuable, special and unique assets of the Company
and its Affiliates. For purposes of this Agreement, such confidential and
proprietary information shall include, without limitation, the following: trade
secrets; operating techniques; procedures and methods; product specifications;
customer lists; account information; price lists; discount schedules; budgets;
strategic plans; financial and other projections; correspondence with customers,
vendors, lenders, employees, partners or others; drawings; software, leads from
suppliers; marketing techniques; procedures and methods; employee lists;
internal financial reports of the Company and its Affiliates; sourcing lists;
and recruiting lists (collectively, "Confidential Information"), but shall not
include any information which is commonly known or in the public domain.
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<PAGE>
(b) The Employee agrees that during the term of this Agreement
and at any time thereafter, Employee will not, without the authorization of the
Company: (i) disclose any Confidential Information to any person or entity for
any purpose whatsoever; or (ii) make use of any Confidential Information for
Employee's own purposes or for the benefit of any other person or entity, other
than the Company and its Affiliates.
(c) The Employee agrees that upon the request of the Company or
upon termination of employment, Employee shall return to the Company all
documents or other materials, including electronic or computerized data,
containing or relating to Confidential Information, along with all other Company
property.
8. RESTRICTIVE COVENANT
The Employee shall not, other than in the course of employment with the
Company, directly or indirectly, either as an individual, employee, partner,
officer, owner, director, shareholder, advisor or consultant, or in any other
capacity whatsoever, on behalf of any person, firm, corporation, partnership or
entity:
(a) during the term of this Agreement, and for one (1) year after
its termination, for whatever reason, be employed by or retained as a consultant
or advisor to a competitive entity in the bakery/coffee/deli business. For
purposes of this Agreement, "competitive entity" includes, without limitation,
the following companies doing business as: PARADISE BAKERY, INC.; STARBUCKS;
BRUEGGER'S BAGEL BAKERY; FINAGLE-A-BAGEL; LE BOULANGERIE; GREAT HARVEST;
EINSTEIN'S/NOAH'S; CORNER BAKERY; BIG SKY, AFC ENTERPRISES, INC. and their
respective parents, subsidiaries, franchisees, affiliates, successors or
assigns. Additionally, "competitive entity" shall include, without limitation,
any company which generates in the aggregate more than 50% of its revenues from
the retail sales of baked goods and coffee, and their respective parents,
subsidiaries, franchisees, affiliates, successors or assigns. Notwithstanding
the above, the direct or indirect ownership of one percent (1%) or less of the
stock of a competitive entity whose shares are listed an a national securities
exchange or are quoted an the National Association of Securities Dealers
Automated Quotation System or so-called Bulletin Board shall not, in and of
itself, be deemed to be a violation of this Section 8(a);
(b) during the terms of this Agreement and for one (1) year after
its termination, for whatever reason, recruit, solicit, hire, or assist any
other person or party in recruiting, soliciting, or hiring any employee of the
Company or any of its Affiliates or any of their respective franchisee-
The Company may, in its sole discretion, waive enforcement of any of
the provisions of this Section 8, which waiver shall be evidenced solely by the
execution and delivery to the Employee of a written document setting forth the
terms of such waiver, executed by an authorized representative of the Company.
5
<PAGE>
9. ENFORCEMENT
Employee agrees and acknowledges that a violation of Sections 7 or 8 of
this Agreement shall entitle the Company to terminate this Agreement
immediately, which termination shall be conclusively deemed to be a termination
for cause, as set forth in Section 5(a) hereunder. In the event of a violation
of Sections 7 or 8 of this Agreement, any further Severance, salary
continuation, Benefits or other future compensation otherwise owed to the
Employee pursuant hereto shall be forfeited.
The Employee acknowledges and agrees that the Company's remedies at law
for a breach of Sections 7 or 8 of this Agreement are inadequate and that the
harm caused thereby is irreparable. The Employee expressly agrees that in the
event of a violation of Sections 7 or 8 of this Agreement, the Company shall be
entitled to equitable relief enforcing the terms of this Agreement, including
without limitation, specific performance, a temporary restraining order,
preliminary injunction or permanent injunction to prevent any breach or
attempted breach thereof. The provisions of Sections 7, 8 and 9 shall survive
the termination of this Agreement, in addition to any others which may survive
pursuant to the terms of this Agreement.
10. SEVERABILITY
If any provision of this Agreement including, without limitation,
Sections 7, 8 or 9 hereof, is declared or found to be illegal, unenforceable,
void, overbroad, or unreasonable in scope, territory, or duration, in whole or
in part, then both parties will be relieved of all obligations arising under
such provision, but only to the extent it is illegal, unenforceable, void,
overbroad, or unreasonable in scope, territory or duration. The intent and
agreement of the parties to this Agreement is that this Agreement will be deemed
amended by modifying any such illegal, unenforceable, void, overbroad or
unreasonable provision to the extent necessary to make it legal and enforceable
while preserving its intent, or if such is not possible, by substituting
therefor another provision that is legal, enforceable and achieves the same
objectives. The foregoing notwithstanding, if the remainder of this Agreement
will not be affected by such declaration or finding and is capable of
substantial performance, then each provision not so affected will be enforced to
the extent permitted by law.
11. ARBITRATION
Any controversy or claim arising out of or relating to this Agreement
or Employee's employment with the Company, except for claims of violation by the
Employee of Sections 7 and 8 hereof which may be enforced by the Company in a
court of competent jurisdiction pursuant to Section 9 hereof, shall be settled
exclusively by binding arbitration before a single arbitrator in the City of
Boston, in accordance with the Commercial Arbitration Rules of thc American
Arbitration Association. The provisions hereof shall be a complete bar and
defense to any suit, action or proceeding instituted by the Employee in any
federal, state or local court or before any administrative tribunal with respect
to any matter which is arbitrable as herein set forth. This Section shall
survive the termination or expiration of this
6
<PAGE>
Agreement. Nothing herein contained shall be deemed to give any arbitrator any
authority, power, or right to alter, change, amend, modify, add to, or subtract
from any provisions of this Agreement. The arbitrator shall have no authority to
award punitive damages or attorney's fees to any party. The decision of the
arbitrator shall be final and conclusive. Judgment on an award rendered by the
arbitrator may be entered in any court of competent jurisdiction.
14. NO CONFLICTING AGREEMENTS
Employee hereby represents and warrants that neither the entry into
this Agreement nor its performance by Employee will conflict with or result in a
breach of the terms, conditions or provisions of any other agreement or other
obligation of any nature to which Employee is a party, or by which he is
otherwise bound, including, without limitation, any other employment agreement,
non-competition agreement, or confidentiality agreement.
13. GOVERNING LAW
The terms hereof shall be governed by, and construed and interpreted in
accordance with, the laws of the Commonwealth of Massachusetts, without giving
effect to its conflict of laws rules which may otherwise require the application
of the law of another jurisdiction.
14. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
Company and the Employee and their respective successors, assigns, heirs, legal
representatives, executors and administrators.
15. NOTICES
(i) All notices to the Employee shall be addressed to Employee
at:
Anthony J. Carroll
88 Fearing Road
Hingham, MA 02043
or to such other place(s) as may be designated by written notice to the Company.
(ii) All notices to the Company shall be addressed to the Company
at:
19 Fid Kennedy Avenue
Boston, MA 02210
Attention: C.F.O.
7
<PAGE>
With copies to:
Walter D. Wekstein, Esq.
Gadsby & Hannah LLP
225 Franklin Street
Boston, MA 02110
or to such other place(s) as may be designated by written notice to Employee.
(iii) Notice shall be sufficient if given by hand or by certified
mail, postage prepaid, return receipt requested, addressed to the party at its
address described above. Unless otherwise notified in writing, each party shall
direct all sums payable to the other party at its address for notice purposes.
16. HEADINGS
The captions and headings in this Agreement are for convenience and
reference only, and they shall in no way be held or deemed to define, modify or
add to the meaning, scope or intent of any provision of this Agreement.
17. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties and
supersedes all prior agreements and understandings, written or oral on the
subject matter hereof including, but not limited to, offer letters, employment
letters, and agreements concerning severance pay.
18. AMENDMENTS
This Agreement may be modified only by written agreement signed by both
the Employee and the Company.
19. WAIVER
The failure of any party at any time to require the performance of any
provision(s) hereof shall in no manner affect the right(s) of such party at a
later time to require the performance of said provision(s), and shall not be
deemed a waiver of any obligation hereunder.
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<PAGE>
IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement under seal, as of the date first above written.
AU BON PAIN CO., INC.
By: /s/ Ronald M. Shaich Date: 7/9/98
----------------------------- --------------
Ronald M. Shaich, Co-Chairman
Witness: /s/ Deborah L. Emery Date: 7/9/98
------------------------- --------------
ANTHONY J. CARROLL
/s/ Anthony J. Carroll Date: 8/5/98
- ----------------------------- --------------
Anthony J. Carroll
Witness: /s/ Stephanie Shaw Date: 8/5/98
------------------------- --------------
9
<PAGE>
EXHIBIT 10.6.7
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made this 1st day
of September, 1995, by and between Richard Postle ("Employee") and Au Bon
Pain, Co., Inc., a Delaware corporation with a principal place of business in
Boston, Massachusetts (the "Company").
WHEREAS, the Company wishes to employ and engage the services of the
Employee in an executive capacity for the Company, upon the terms, conditions
and provisions of this Agreement; and
WHEREAS, the Employee desires to provide services to the Company in
accordance with the terms, conditions and provisions of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company and Employee hereby agree as follows:
1. DEFINITIONS
For all purposes of this Agreement, the following terms shall have the
meanings specified in this Section 1 unless the context clearly requires
otherwise:
(a) "BASE SALARY" means the Employee's annualized base salary set forth in
Section 3 of this Agreement, and such increases thereto as may be established by
the Company from time to time. In no event, however, shall Employee's Base
Salary be less than the amount set forth in Section 3 of this Agreement. "Base
Salary" shall not include any bonus, incentive compensation or employee
benefits;
(b) "BENEFITS" means all employee benefits provided to the Employee by the
Company, including medical, dental, long-term disability, life insurance, and
such other benefits as may be provided from time to time by the Company
generally to its employees;
(c) "INCENTIVE COMPENSATION" means additional compensation provided to the
Employee by the Company during the term of this Agreement, if any, other than
Base Salary and Benefits;
(d) "SEVERANCE" means payments made by the Company to the Employee after
termination of employment, pursuant to this Agreement, at the rate of the
Employee's annualized Base Salary (and car allowance, if any) as of the date of
Employee's termination. Severance is payable on a weekly basis in substantially
equal installments following Employee's termination, in such increments and for
such period(s) of time
<PAGE>
designated in this Agreement ("Severance Period"). Severance shall not include
any bonuses or other Incentive Compensation. Except as set forth in the
immediately preceding sentence, Severance shall also include the continuation of
Employee's Benefits existing at the time of Employee's termination for the
Severance Period. Employee shall be responsible for making all required
contributions to continue Benefits during the Severance Period on the same basis
as existed at the time of the Employee's termination. Severance shall be reduced
(dollar for dollar) by any compensation and benefits Employee receives or earns
during the Severance Period from any source other than the Company including,
without limitation, salary, employee benefits, consulting fees, income from
self-employment or otherwise.
2. EMPLOYMENT
The Company agrees to employ the Employee to render services to the Company
in an executive capacity. Effective as of the date hereof, Employee hereby
accepts such employment subject to the terms and conditions set forth herein.
Employee agrees to devote his full attention, best talents and abilities to the
job and to perform faithfully his duties and responsibilities hereunder.
3. COMPENSATION
The Company shall pay Employee a Base Salary at the rate of $300,000
annualized, Incentive Compensation, and Benefits, subject to federal and state
withholdings and customary payroll deductions.
4. TERM
Unless terminated as provided in Section 5, or as otherwise provided in
this Agreement, this Agreement shall continue for a two-year period from the
commencement of Employee's employment with the Company or the effective date of
this Agreement, whichever is later; thereafter, this Agreement shall
automatically renew for additional one-year periods, unless either party
notifies the other in writing of its intent not to renew this Agreement at least
twenty-six (26) weeks prior to its expiration. In the event the Employee gives
notice of intent not to renew this Agreement, the Employee shall not be entitled
to Severance. In the event the Company gives notice of intent not to renew this
Agreement, at the expiration of the Agreement the Employee shall be entitled to
twenty-six (26) weeks' Severance.
5. TERMINATION
(a) TERMINATION FOR CAUSE
The Company may terminate Employee's employment at any time for cause, upon
written notice specifying the reasons. As used herein, the term "cause" shall
mean:
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<PAGE>
(i) The commission by Employee of any act of embezzlement, fraud,
larceny, theft, or other willful misconduct or gross negligence in
connection with the performance of Employee's duties which
adversely affects the affairs of the Company;
(ii) Employee's conviction of a felony, or conviction of a misdemeanor
involving moral turpitude;
(iii) A material breach of the terms of this Agreement which continues
for fifteen (15) days after the Company has given written notice
to the Employee specifying in reasonable detail the material
breach.
(b) TERMINATION WITHOUT CAUSE
Notwithstanding any other provision of this Agreement, the Company may
terminate Employee's employment, without cause, at any time, for any reason,
effective upon thirty (30) days' written notice to the Employee. In the event of
a termination without cause, the Employee shall be entitled to fifty-two (52)
weeks' Severance.
(c) RESIGNATION
The Employee may at any time during the term of this Agreement resign
employment, effective upon ninety (90) days' written notice to the Company. Upon
such resignation, the Employee shall not be entitled to any Severance, and,
except as otherwise specifically set forth herein, the obligations of the
Company to the Employee under this Agreement shall terminate upon the effective
date of such resignation. Employee agrees to continue to perform his duties
hereunder, and otherwise assist the Company in an orderly transition, during
such ninety-day period.
(d) DISABILITY
The Company may terminate Employee's employment if, at any time during the
term of this Agreement, the Employee shall become disabled so that he is unable
to perform the Employee's regular duties of employment, with reasonable
accommodation, for a period of ninety (90) days in the aggregate during any
180-day period. The determination of the Employee's disability for purposes of
this Section 5(d) shall be made by a qualified physician acceptable to both
parties. In the event that the Company and the Employee are unable to agree upon
a qualified physician, each party shall select a qualified physician, and in the
event those two physicians are unable to agree upon a determination as to the
Employee's disability, a third neutral physician ("Neutral Physician")
acceptable to the parties shall be selected. The determination of disability by
the Neutral Physician shall be final and binding for purposes of this Agreement.
In the event this Agreement is terminated pursuant to this Section 5(d), the
Employee shall be
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<PAGE>
entitled to fifty-two (52) weeks' Severance. Such Severance shall be offset
dollar for dollar by any payments made in the aggregate to the Employee under
the Company's existing Salary Continuation and Long-Term Disability Plan(s).
(e) DEATH
This Agreement and all obligations of the Company hereunder shall terminate
upon the death of the Employee. In the event of a termination upon the death of
the Employee, monies or compensation owed by the Company to the Employee up to
the date of termination shall be paid to the Employee's estate or designee.
6. CONFIDENTIAL NATURE OF THIS AGREEMENT
Employee agrees to keep confidential the terms of this Agreement. A
violation of this provision shall entitle the Company to terminate this
Agreement immediately, for cause, as set forth in Section 5(a)(iii).
Notwithstanding the above, the Employee may disclose the terms of this Agreement
to his/her immediate family, bankers, accountants, attorneys, and other
financial advisers, the Internal Revenue Service, the Massachusetts Department
of Revenue, in the event that disclosure is necessary in litigation or
arbitration involving this Agreement, or in the event that such disclosures
shall be compelled by law.
7. CONFIDENTIAL AND PROPRIETARY INFORMATION
(a) The Employee understands and acknowledges that in the course of
employment with the Company, Employee will have access to confidential and
proprietary information of the Company and its Affiliates (which shall mean
entities controlling, controlled by or under common control with the Company,
including without limitation, Saint Louis Bread Company, Inc. and its
Affiliates) which constitute valuable, special and unique assets of the Company
and its Affiliates. For purposes of this Agreement, such confidential and
proprietary information shall include, without limitation, the following: trade
secrets; operating techniques; procedures and methods; product specifications;
customer lists; account information; price lists; discount schedules;
correspondence with customers, vendors, employees, partners or others; drawings;
software; leads from suppliers; marketing techniques; procedures and methods;
employee lists; internal financial reports of the Company and its Affiliates;
sourcing lists; and recruiting lists (collectively, "Confidential Information").
(b) The Employee agrees that during the term of this Agreement and at
any time thereafter, Employee will not, without the authorization of the
Company: (i) disclose any Confidential Information to any person or entity for
any purpose whatsoever; or (ii) make use of any Confidential Information for
Employee's own purposes or for the benefit of any other person or entity, other
than the Company and its Affiliates.
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<PAGE>
(c) The Employee agrees that upon the request of the Company or upon
termination of employment, Employee shall return to the Company all documents or
other materials, including electronic or computerized data, containing or
relating to Confidential Information, along with all other Company property.
8. RESTRICTIVE COVENANT
During the term of this Agreement, and for one year after its termination,
for whatever reason, the Employee shall not, directly or indirectly, either as
an individual, employee, partner, officer, owner, director, shareholder, advisor
or consultant, or in any other capacity whatsoever, on behalf of any person,
firm, corporation, partnership or entity:
(a) be employed by or retained as a consultant or advisor to a
competitive entity in the bakery/coffee/deli business. For purposes of this
Agreement, "competitive entity" includes, without limitation, the following
companies doing business as: WALL STREET DELI; PARADISE BAKERY, INC.; STARBUCKS;
VIE DE FRANCE; JAVA CITY; BRUEGGER'S BAGEL BAKERY; FINAGLE-A-BAGEL; LE
BOULANGERIE; GREAT HARVEST; EINSTEIN'S/NOAH'S; PEET'S; CORNER BAKERY; BIG SKY,
and their respective parents, subsidiaries, franchisees, affiliates, successors
or assigns. Additionally, "competitive entity" shall include, without
limitation, any company which generates in the aggregate more than 25% of its
revenues from the sale of baked goods and coffee, and their respective parents,
subsidiaries, franchisees, affiliates, successors or assigns. Notwithstanding
the above, the direct or indirect ownership of one percent (1%) or less of the
stock of a competitive entity whose shares are listed on a national securities
exchange or are quoted on the National Association of Securities Dealers
Automated Quotation System or so-called Bulletin Board shall not, in and of
itself, be deemed to be a violation of this Section 8(a);
(b) recruit, solicit, hire, or assist any other person or party in
recruiting, soliciting, or hiring any employee of the Company or any of its
Affiliates or any of their respective franchises.
The Company may, in its sole discretion, waive enforcement of the
provisions of this Section 8, which waiver shall be evidenced solely by the
execution and delivery to the Employee of a written document setting forth the
terms of such waiver, executed by an authorized representative of the Company.
- 5 -
<PAGE>
9. ENFORCEMENT
Employee agrees and acknowledges that a violation of Sections 7 or 8 of
this Agreement shall entitle the Company to terminate this Agreement
immediately, which termination shall be conclusively deemed to be a termination
for cause, as set forth in Section 5(a) hereunder. In the event of a violation
of Sections 7 or 8 of this Agreement, any further Severance, salary
continuation, Benefits or other future compensation otherwise owed pursuant
hereto shall be forfeited, and any Severance already paid or provided to the
Employee shall likewise be forfeited and shall be immediately returned to the
Company.
The Employee acknowledges and agrees that the Company's remedies at law for
a breach of Sections 7 or 8 of this Agreement are inadequate and that the harm
caused thereby is irreparable. The Employee expressly agrees that in the event
of a violation of Sections 7 or 8 of this Agreement, the Company shall be
entitled to equitable relief enforcing the terms of this Agreement, including
without limitation, specific performance, a temporary restraining order,
preliminary injunction or permanent injunction to prevent any breach or
attempted breach thereof. The provisions of Sections 7, 8 and 9 shall survive
the termination of this Agreement, in addition to any others which may survive
pursuant to the terms of this Agreement.
10. SEVERABILITY
If any provision of this Agreement including, without limitation, Sections
7, 8 or 9 hereof, is declared or found to be illegal, unenforceable, void,
overbroad, or unreasonable in scope, territory, or duration, in whole or in
part, then both parties will be relieved of all obligations arising under such
provision, but only to the extent it is illegal, unenforceable, void, overbroad,
or unreasonable in scope, territory or duration. The intent and agreement of the
parties to this Agreement is that this Agreement will be deemed amended by
modifying any such illegal, unenforceable, void, overbroad or unreasonable
provision to the extent necessary to make it legal and enforceable while
preserving its intent, or if such is not possible, by substituting therefor
another provision that is legal and enforceable and achieves the same
objectives. The foregoing notwithstanding, if the remainder of this Agreement
will not be affected by such declaration or finding and is capable of
substantial performance, then each provision not so affected will be enforced to
the extent permitted by law.
11. ARBITRATION
Any controversy or claim arising out of or relating to this Agreement or
Employee's employment with the Company, except for claims of violation by the
Employee of Sections 7 and 8 hereof which may be enforced by the Company in a
court of competent jurisdiction pursuant to Section 9 hereof, shall be settled
exclusively by
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<PAGE>
binding arbitration before a single arbitrator in the City of Boston, in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The provisions hereof shall be a complete bar and defense to any
suit, action or proceeding instituted by the Employee in any federal, state or
local court or before any administrative tribunal with respect to any matter
which is arbitrable as herein set forth. This Section shall survive the
termination or expiration of this Agreement. Nothing herein contained shall be
deemed to give any arbitrator any authority, power, or right to alter, change,
amend, modify, add to, or subtract from any provisions of this Agreement. The
arbitrator shall have no authority to award punitive damages or attorney's fees
to any party. The decision of the arbitrator shall be final and conclusive.
Judgment on an award rendered by the arbitrator may be entered in any court of
competent jurisdiction.
12. NO CONFLICTING AGREEMENTS
Employee hereby represents and warrants that neither the entry into this
Agreement nor its performance by Employee will conflict with or result in a
breach of the terms, conditions or provisions of any other agreement or other
obligation of any nature to which Employee is a party, or by which he is
otherwise bound, including, without limitation, any other employment agreement,
non-competition agreement, or confidentiality agreement.
13. GOVERNING LAW
The terms hereof shall be governed by, and construed and interpreted in
accordance with, the laws of the Commonwealth of Massachusetts, without giving
effect to its conflict of laws rules which may otherwise require the application
of the law of another jurisdiction.
14. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
Company and the Employee and their respective successors, assigns, heirs, legal
representatives, executors and administrators.
15. NOTICES
(i) All notices to the Employee shall be addressed to Employee at:
or to such other place(s) as may be designated by written notice to the Company.
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<PAGE>
(ii) All notices to the Company shall be addressed to the Company at:
19 Fid Kennedy Avenue
Boston, MA 02210
Attention: C.E.O.
With copies to:
Walter D. Wekstein, Esq.
Gadsby & Hannah LLP
125 Summer Street
Boston, MA 02110
or to such other place(s) as may be designated by written notice to Employee.
(iii) Notice shall be sufficient if given by hand or by certified mail,
postage prepaid, return receipt requested, addressed to the party at its address
described above. Unless otherwise notified in writing, each party shall direct
all sums payable to the other party at its address for notice purposes.
16. HEADINGS
The captions and headings in this Agreement are for convenience and
reference only, and they shall in no way be held or deemed to define, modify or
add to the meaning, scope or intent of any provision of this Agreement.
17. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties and
supersedes all prior agreements and understandings, written or oral on the
subject matter hereof including, but not limited to, offer letters, employment
letters, and agreements concerning severance pay.
18. AMENDMENTS
This Agreement may be modified only by written agreement signed by both the
Employee and the Company.
19. WAIVER
The failure of any party at any time to require the performance of any
provision(s) hereof shall in no manner affect the right(s) of such party at a
later time to require the
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<PAGE>
performance of said provision(s), and shall not be deemed a waiver of any
obligations hereunder.
IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement under seal, as of the date first above written.
AU BON PAIN CO., INC.
By: /s/ Ronald M. Shaich Date: 12/13/96
------------------------------- ----------------
Ronald M. Shaich, Co-Chairman
Witness: /s/ Deborah L. Emery Date: 12/13/96
--------------------------- ----------------
Richard Postle
/s/ Richard C. Postle Date: 3/28/97
- ----------------------------------- ----------------
Richard C. Postle
Witness: /s/ Iris K. Grote Date: 3/28/97
--------------------------- ----------------
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