1. Measuring carefully, place water, butter, salt, flour, 1-1/4 cups grated Parmesan cheese, pepper, sugar and yeast in bread machine pan in order specified by owner’s manual. Program dough cycle setting; press start. (Do not use delay cycle.) Lightly grease baking sheet; set aside.
2. When cycle is complete, remove dough to lightly floured surface. If necessary, knead in additional bread flour to make dough easy to handle. Roll dough into 12-inch square; sprinkle with remaining 3/4 cup grated Parmesan cheese. Roll up tightly in jelly-roll fashion; pinch edge to seal.
3. Place loaf on prepared baking sheet. Make 3 diagonal slashes in top of loaf. Cover with clean towel; let rise in warm, draft-free place 45 minutes or until doubled in size. Brush lightly with water; sprinkle with shredded Parmesan cheese.
4. Preheat oven to 375°F. Bake loaf 30 to 35 minutes or until golden brown and loaf sounds hollow when tapped. Remove from baking sheet; cool on wire rack.
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