TASTY BAKING COMPANY
--------------------
AWARD AGREEMENT FOR
GRANT OF OPTION ON COMMON STOCK TO
[NAME]
[DATE]
Tasty Baking Company (hereinafter called "Company") is a corporation
organized under the laws of the Commonwealth of Pennsylvania. [NAME]
(hereinafter called "Employee") is [TITLE] of Tasty Baking Company.
The Company, pursuant to the authority granted under the [LONG TERM
INCENTIVE PLAN] adopted by the Board of Directors of the Company on [DATE] and
approved by shareholders on [DATE] (hereinafter called the "Plan"), a copy of
which is attached hereto and the terms of which are incorporated herein by
reference, has determined that it is to the advantage and in the interests of
the Company and its shareholders to grant the option provided by this Agreement
to Employee, as an incentive for increasing the sales, profits and value of the
Company. Capitalized terms not defined herein shall have the meaning set forth
in the Plan.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto intending to be legally bound hereby, it is
agreed, as follows:
1. Grant of Option(s). The Company grants to Employee the following
option to purchase common stock of the Company, par value $0.50 per share, (the
"Stock") on the terms and conditions hereinafter set forth:
(a) Employee is hereby granted an option to purchase [NUMBER] shares (the
"Shares") of Stock at the purchase price of [PRICE] per share (being
not less than 100% of the fair market value per share of Stock on the
date of this grant) (the "Option").
(b) This Option shall be an incentive stock option as defined in Section
422 of the Internal Revenue Code of 1986, as amended; provided,
however, in the event the aggregate fair market value (determined as
of the date of grant) of the Shares that become exercisable for the
first time in any calendar year exceeds $100,000, the Option shall be
a non-qualified (non-statutory) stock option with respect to the
excess Shares.
2. Time of Exercise of Option and Retention Period.
------------------------------------------------
(a) The Option shall be exercisable prior to the expiration of ten years
from the date hereof and only as herein provided. No portion of this
Option shall be exercisable until the first anniversary of the date
hereof. The Option shall vest and become exercisable in three equal
installments, each in the amount of one-third (1/3) of the total
number of Shares, on the first, second
and third anniversaries of the date hereof, respectively. No exercise
may be for less than one hundred (100) full Shares.
(b) In the event that Employee exercises any portion of the Option within
five (5) years of the date hereof, then Employee shall retain, and
shall not sell, transfer or assign, the Shares purchased through the
Option exercise (less those Shares which may be withheld to pay
Employee's tax obligations pursuant to Section 3(b) hereof) until the
day after the fifth (5th) anniversary of the date hereof (the
"Retention Period"). Any transfer of Shares acquired pursuant to the
Option during the Retention Period in violation of this Section 2(b)
shall be null and void. The Company shall insert an appropriate legend
on any certificate for Shares issued to the Employee pursuant to the
Option during the Retention Period to reflect the foregoing.
(c) Upon the Employee's termination of employment with the Company for any
reason, including death, prior to attainment of his or her "Normal
Retirement Date," as defined in the Tasty Baking Company Pension Plan,
the portion of the Option which has not yet become exercisable
pursuant to Section 2(a) hereof shall expire immediately and shall not
become exercisable thereafter. Upon the Employee's termination of
employment with the Company on or after such Normal Retirement Date,
the date upon which any portion of the Option may be exercised shall
be accelerated and the Option shall become exercisable in full,
immediately.
(d) Unless otherwise expressly provided by the Board of Directors, the
Option may not be exercised during a leave of absence except to the
extent exercisable immediately prior to commencement of the leave of
absence.
3. Terms of Payment.
-----------------
(a) Full payment of the purchase price for any Shares with respect to
which the Option is exercised shall be due on the date notice of
exercise is given to the Company by Employee. Payment shall be made in
cash, except as provided in Section 3(b), below.
(b) The exercise price of the Option may be paid in previously-acquired
shares of Stock, except that a share of Stock acquired by exercise of
an Incentive Stock Option which has not been held for the requisite
holding period (the "Holding Period") cannot be tendered as part of
the exercise price. A share of Stock shall be deemed to have been held
for the requisite Holding Period if held for two years from the date
of the grant of the stock option pursuant to which it was acquired and
for one year after the issuance of such share to the Employee.
Notwithstanding the foregoing, at the request of the Employee, but
only with the consent of the Plan Committee, a sufficient number of
the Shares to be acquired upon exercise of the Option shall be
withheld to satisfy the minimum amount of the Federal, state and local
taxes which must be withheld by the Company on account of the exercise
of the Option. Any shares of Stock tendered or withheld hereunder
shall be valued at the fair market value on the day of exercise.
2
4. Termination of Option. Except as provided in Section 5, the Option,
to the extent exercisable but not theretofore exercised, shall forthwith expire
upon the earlier of the following dates:
(a) Three months following the date on which Employee shall cease to be an
employee of the Company for reasons other than death or Disability;
(b) Twelve months after the death of Employee while an employee of the
Company;
(c) Twelve months after the date on which the Employee shall cease to be
an employee of the Company on account of Disability;
(d) Upon the date on which Employee attempts to transfer any portion of
the Option in violation of the terms of Section 7; or
(e) Ten years from the date hereof.
5. Rights in the Event of Death. If Employee dies while in the employ
of the Company without having fully exercised the Option, his or her executors
or administrators, or the legatees or distributees of his or her estate, shall
have the right, following his or her death, during the period set forth in
Section 4(b), to exercise the Option to the extent exercisable prior to
Employee's death, upon the same terms and conditions as were applicable to
Employee during his or her lifetime.
6. Stock Certificates. Upon the exercise of the Option, appropriate
stock certificates shall forthwith be issued to Employee, or in the event of the
exercise of the Option under Section 5 after the death of Employee, to his or
her executors or administrators, or the legatees or distributees of his or her
estate, as the case may be. The issuance of such stock certificates shall vest
in the holder all the rights of owner of such certificates, subject, however, to
the provision that all certificates issued to Employee shall bear a legend
reciting that the sale or transfer of each such certificate shall be subject to
the terms and provisions of this Agreement.
7. Transfer of Options. The Option issued hereunder shall be
exercisable only by Employee during his or her lifetime, and after his or her
death only in accordance with Section 5. None of Employee's rights to exercise
the Option shall be subject to sale, transfer, assignment, or pledge except by
Will or the laws of descent and distribution.
8. Confidentiality.
---------------
(a) As further consideration for the grant of the Option, Employee agrees
to hold in a fiduciary capacity for the benefit of the Company all of
the Company's business secrets and confidential information, knowledge
and data relating to the Company or any of its affiliated companies
and their respective businesses, which shall have been obtained by the
Employee during his or her employment by the Company or any of its
affiliated companies, including without limitation, information
relating to such matters as finances, operations, processes, product
recipes, new products in development, sales methods, equipment,
techniques, plans, formulae, products,
3
methods and know-how, customer requirements and names of suppliers.
Employee's obligations under this Section 8 shall not be deemed
violated in the event that (i) Employee discloses any such information
pursuant to order of a court of competent jurisdiction, provided
Employee has notified the Company of such potential legal order and
provided the Company with the opportunity to challenge or limit the
scope of the disclosure, or (ii) such information becomes generally
available from a source other than the Company, any of its affiliates,
or any of their employees when such source is legally entitled, to the
best of Employee's knowledge, to make such information available.
(b) Employee agrees that if Employee breaches his or her duty of
confidentiality as set forth in Section 8(a) at any time during his or
her employment by the Company or thereafter, in addition to any other
remedies which the Company may have, upon written notice from the
Company: (i) the Option shall expire to the extent not then exercised,
and shall not thereafter become exercisable; and (ii) if the breach
occurs during the Retention Period, any Shares previously-acquired by
the Employee pursuant to the Option and then owned by the Employee
shall be forfeited and shall be redeemed by the Company in exchange
for the lesser of (A) the same consideration paid by the Employee to
exercise the Option with respect to such Shares, whether in cash or
through the exchange of previously-acquired shares of Stock, and (B)
the fair market value of such Shares at the time of such redemption.
Employee also agrees that in the event Employee breaches his or her
duty of confidentiality as set forth in Section 8(a), Company shall be
entitled to an injunction restraining Employee from violating the
provisions of Section 8(a), in addition to any other remedies
available under this Agreement or under the law or in equity. An
action for damages does not provide an adequate remedy for violation
of Section 8(a).
9. Notices. All notices hereunder shall be sent by registered mail,
addressed in the case of Company to its Secretary, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and to Employee at [ADRESS].
10. Binding Effect. This Agreement shall be binding upon the successors
and assigns of the Company and upon the executors, administrators, legatees and
heirs of Employee.
11. Tax Attributes. The Option is intended to qualify under Section 422
of the Internal Revenue Code and any provision hereof which would prevent the
options granted under this Agreement from qualifying is invalid and of no
effect. Employee will promptly give written notice to the Company of any sale,
exchange, gift, or other transfer of any shares acquired pursuant to the Option
which occurs within two years of the date hereof or within one year after the
issuance of any shares pursuant to the exercise of the Option.
12. Agreement Subject to Plan. No term or condition of this Agreement
shall be construed or interpreted in a manner contrary to the purposes and
provisions of the Plan.
4
IN WITNESS WHEREOF, Tasty Baking Company has caused this instrument to
be signed and the Employee has hereunto set his or her hand effective [DATE].
Attest: TASTY BAKING COMPANY
____________________________ By:_______________________________
[NAME]
Witness:
---------------------------- -------------------------------
[NAME]
