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M E M O R A N D U M
To: Sam Yong
From: Mariel Clark
Date: October 29, 1993
Re: Offer of Employment with Au Bon Pain Co., Inc.
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In order to summarize our several conversations regarding your potential
employment with Au Bon Pain Co., Inc. (the "Company"), what follows is the
Company's understanding of its agreement with you on the principal terms on
which you are to be offered employment with the Company:
Position.
You will be hired as an Executive Vice President, with responsibility for
international business development, new business development and such other
responsibilities as may be assigned to you from time to time by the Co-Chairmen.
You will report to Mr. Ronald M. Shaich, the Co-Chairman. Your anticipated
employment commencement date is February 1, 1994. As is the case with all of the
Company's senior management personnel, you will be treated as an at-will
employee, with contractual rights upon your employment being terminated at
certain times and under certain circumstances, as more particularly described
below. All other terms of your employment not specifically addressed herein will
be the same as similarly-situated senior management personnel of the Company.
Separation Agreement.
You will enter into a separation agreement with the Company. This agreement
will cover separation terms in the event that your employment is terminated
within the two (2) years following your employment commencement date (for
purposes hereof, such two (2)-year period is referred to as the "Covered
Period").
1. No separation payments will be owed or made to you if your employment is
terminated during the Covered Period by the Company for gross misconduct,
including gross dereliction of duties.
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2. No separation payments (other than those, if any, then customarily paid
by the Company to its senior managers under similar circumstances) will be owed
or made to you if your employment is terminated following the Covered Period by
the Company for any reason or for no reason.
3. If during the Covered Period, your employment with the Company is
terminated by the Company for any reason other than gross misconduct, then the
Company will pay to you your "Base Pay" (as defined below) for the remaining
portion of the Covered Period, as and when the same would have been paid to you
had your employment not been so terminated. For purposes hereof, "Base Pay"
shall mean your base salary and car allowance, determined as of the effective
date of your employment termination.
4. If during the Covered Period, you voluntarily terminate your employment
with the Company for any reason or for no reason, and in so doing you provide to
the Company no less than 120 days' prior written notice, then the Company will
pay to you your Base Pay for the 120-day period following the effective date of
an employment termination covered by this paragraph, as and when the same would
have been paid to you had your employment not been so terminated.
5. If during the Covered Period, you voluntarily terminate your employment
with the Company for any reason or for no reason, and in so doing you DO NOT
provide to the Company the at least 120 days' prior written notice, then no
separation payments will be owed or made to you.
6. In addition to the foregoing separation payment arrangements, if at any
time during the Covered Period and for one (1) year thereafter (the "3-Year
Period"), both Louis I. Kane and Ronald M. Shaich shall cease to serve as the
Co-Chairmen of the Company and thereafter, but before the expiration of the
3-Year Period, your employment with the Company is terminated by the Company for
any reason other than gross misconduct, then the Company will pay to you your
Base Pay for the remaining portion of the 3-Year Period, as and when the same
would have been paid to you had your employment not been so terminated.
A separation agreement has been attached to this memorandum, for your
review and consideration. When signed by you and the Company, the separation
agreement shall constitute our agreement regarding separation payment
arrangements for you and shall supersede this memorandum in all respects.
Stock Options.
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1. Upon hire, you will be granted a fully-vested option to purchase that
number of shares which equals $300,000 divided by the closing price of a share
of Class A common stock on the trading day immediately preceding the grant date.
This option will terminate to the extent not then exercised (i) ninety (90) days
following termination of your employment by the Company for any reason other
than cause, (ii) twelve (12) months following your death or termination of your
employment by reason of your disability, (iii) thirty (30) days following
voluntary termination by you of your employment by the Company, and (iv) in all
other cases, immediately following termination of your employment by the
Company.
2. Subject to your continuing employment with the Company, you will
participate in the Company's "Performance Based Option Program" along with
similarly-situated senior management personnel, whereby you will receive
additional incentive-based options to purchase shares of Class A common stock,
in amounts to be determined in conjunction with the Company's annual budget,
plan and incentive processes. These options will be subject to then-existing
plan provisions, including vesting schedules; currently, similar options contain
a 5-year vesting schedule, with options vesting 25% two years after grant and an
additional 25% three, four and five years after grant. In addition, these
options will be fully vested in the event that the Company is sold or if both of
the Co-Chairmen cease to hold their respective positions as such with the
Company. These options will contain termination provisions similar to those
described above.
3. Subject to your continuing employment with the Company, you will receive
additional options to purchase an aggregate of $300,000 worth of Class A common
stock. These options will be granted in twelve (12) quarterly traunches, in
arrears on the last day of each calendar quarter, commencing with the calendar
quarter which includes your employment commencement date and continuing for
twelve (12) consecutive calendar quarters, as follows:
Option
Date Value
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03/31/94 $25,000
06/30/94 $25,000
09/30/94 $25,000
12/31/94 $25,000
03/31/95 $25,000
06/30/95 $25,000
09/30/95 $25,000
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12/31/95 $25,000
03/31/96 $25,000
06/30/96 $25,000
09/30/96 $25,000
12/31/96 $25,000
Termination of your employment, for any reason or for no reason, will cause
these options to cease being granted, but will not affect your rights with
respect to previously granted options. Each option will represent the right to
purchase that number of shares which equals $25,000 divided by the closing price
of a share of Class A common stock on the trading day immediately preceding the
grant date. These options will be subject to then-existing terms, including
vesting schedules, applicable to options granted under the Company's
"Performance Based Option Program." These options will contain termination
provisions similar to those described above.
4. If the Company achieves $300,000,000 in annual sales (defined as sales
from Company-operated bakery/cafes plus development fees and franchise fees paid
to and received by the Company, excluding franchise royalty fees, and sales from
franchised cafes determined by the year-end audited financial statements of the
Company)and you are then employed by the Company, then you will be granted a
fully-vested option to purchase that number of shares which equals $600,000
divided by the closing price of a share of Class A common stock on the
immediately preceding trading day. In the event that prior to the Company
achieving $300,000,000 in annual sales (as defined above), the Company is sold
or if both of the Co-Chairmen cease to hold their respective positions as such
with the Company, then you will receive a portion of these options, as follows:
(a) If the event occurs within one (1) year following your employment
commencement date, then you will receive a fully-vested option to purchase
that number of shares which equals $200,000 divided by the closing price of
a share of Class A common stock on the immediately preceding trading day;
and
(b) If the event occurs between one (1) year and two (2) years
following your employment commencement date, then you will receive a
fully-vested option to purchase that number of shares which equals $400,000
divided by the closing price of a share of Class A common stock on the
immediately preceding trading day; and
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(c) If the event occurs between two (2) years and three (3) years
following your employment commencement date, then you will receive a
fully-vested option to purchase that number of shares which equals $600,000
divided by the closing price of a share of Class A common stock on the
immediately preceding trading day.
These options will contain termination provisions similar to those
described above.
Forms of the option agreements to be used for the foregoing stock options
have been attached to this memorandum, for your review and consideration.
Miscellaneous.
1. Your initial annual base salary will be $160,000. This will be subject
to review annually together with review of all management salaries, in
accordance with Company policy, based on (among other things) your performance
and the Company's profitability.
2. Your initial incentive compensation will be based upon thirty percent
(30%) of your annual base salary; the actual incentive compensation will depend
upon achieving an agreed set of plan objectives. Continuing incentive
compensation will be subject to review annually together with review of all
management incentive programs, in accordance with Company policy.
3. You will receive an annual car allowance, initially set at $5,000.
4. The Company will pay you $40,000 toward your expenses for relocation to
Boston.
5. As a member of the Company's senior management, you will be subject to
Company policy regarding the purchase and sale of Company stock. Currently,
these policies include:
(a) No more than 25% of your aggregate stock holdings and options may
be sold in one year in any single transaction or related series of
transactions.
(b) No transaction in the Company's stock may be effected other than
during the ten (10)-day "window" following the release of the Company's
quarterly earnings statement.
(c) You will be subject to the reporting obligations and short-swing
profit restrictions of section 16
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of the Securities Exchange Act of 1934. Essentially, you will be required
to report all transactions in Company stock, either monthly or at the end
of each year; and if you buy and sell, or sell and buy, Company stock for a
profit within any six (6)-month period, then the profit must be paid over
to the Company.
6. Nothing herein will be construed to obligate the Company to employ you
or, if the Company so chooses to employ you and you agree to such employment, to
continue your employment for any period of time.
/s/ Sam Yong 11/2/93
/s/ Mariel Clark 11/2/93