EXHIBIT 4.2
FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT
T. ROWE PRICE ASSOCIATES, INC.
DIRECTOR STOCK OPTION PLANS
STATEMENT OF ADDITIONAL TERMS AND CONDITIONS
REGARDING OPTION GRANTS
(INDEPENDENT DIRECTORS)
Effective ___________
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This Statement of Additional Terms and Conditions Regarding Option Grants
(the "Terms") shall be delivered with the "Notice of Grant of Stock Options and
Option Agreement" (the "Award Notice") which shall detail the specifics of the
applicable option award (the "Option"). Upon execution of the Award Notice by
the Director and by an authorized officer or agent of the Corporation, there
shall be created a binding and enforceable contract (the "Agreement") providing
for the issuance of the options subject to the terms and conditions of the Grant
Notice and the Terms.
1. Grant of Option. Subject to the Terms, the Company has granted to the
person identified in the Award Notice attached hereto (the "Optionee")
commencing on the Issuance Date set forth in the Award Notice and ending on the
Expiration Date of the option set forth on the Award Notice (the "Option
Period"), the option to purchase from the Company at the option price set forth
in the Award Notice up to but not exceeding in the aggregate number of shares of
the Company's Common Stock set forth under the caption "Shares" in the Award
Notice.
2. Exercise of Option. (a) The shares of stock subject to this Option shall
become exercisable in full on ____________.
(b) No less than 50 shares of Common Stock may be purchased upon any
one exercise of the option granted hereby unless the number of shares
purchased at such time is the total number of shares in respect of which
the option granted hereby is then exercisable.
(c) In no event shall any option granted hereby be exercisable for a
fractional share.
3. Method of Exercising Option and Payment of Option Price.
(a) The Option shall be exercised by the Optionee delivering to the
Secretary of the Company, from time to time, on any business day (the "Exercise
Date"), written notice specifying the number of shares the Optionee then desires
to purchase (the "Notice"), and either (i) cash, certified check, bank draft or
postal or express money order to the order of the Company for an amount in
United States dollars equal to the option price for the number of shares
specified in the Notice (the "Total Option Price"), such payment to be delivered
with the Notice, (ii) shares of Common Stock of the Company with a value
(determined in accordance with paragraph 3(c)) equal to or less than the Total
Option Price plus cash, certified check, bank draft or postal or express money
order to the order of the Company for an amount in United States dollars equal
to the amount, if any, by which the Total Option Price exceeds the value of such
shares of the Company's stock (determined in accordance with paragraph 3(c)), or
(iii) through such other means, acceptable to the Board of Directors in its sole
discretion, as may be provided by an independent third party to facilitate
exercise or payment. Such Company's stock and cash shall be delivered to the
Secretary of the Company not later than the end of the first business day after
the Exercise Date. In the case of payment in shares, such payment shall be made
by delivery of the necessary share certificates, with executed stock powers
attached, or transfer instructions, in the case of shares held in street name by
a bank, broker, or other nominee, to the Secretary of the Company.
(b) Within five business days after the Exercise Date, the Company
shall, subject to the receipt of withholding tax to the extent required by the
Company, issue to the Optionee the number of shares with respect to which such
option shall be so exercised, and shall deliver to the Optionee a certificate
or certificates therefor or shall make such transfer to a bank, broker or
nominee as designated by the Optionee.
(c) For purposes of paragraph 3(a), the value of shares of
Common Stock tendered to exercise an option shall be the last reported sales
price of such shares on the Nasdaq National Market System on the Exercise Date,
or, if the Common Stock is not quoted on the Nasdaq National Market System, the
mean between the closing bid and asked prices of such shares on the Nasdaq
System on the Exercise Date, or, if the foregoing are inapplicable, as otherwise
determined by the Board of Directors.
(d) Until further action by the Board of Directors suspending or
limiting the issuance of replenishment options (as herein referred to), in
the event that Optionee exercises all or any part of this option through the
surrender of shares of Common Stock in full or partial payment of the exercise
price hereunder, the Optionee automatically will receive an option (a
"replenishment option") to purchase a number of shares equal to the number of
shares surrendered priced at the closing price of the Company's Common Stock on
the date of exercise and exercisable in full until the date of termination
provided for in Section 5 hereof. Upon the exercise of a replenishment option
with stock, the Optionee will not become entitled to receive an additional
replenishment option.
(e) In the sole discretion of the Board of Directors, the Company
may in lieu of requiring the exercise of an option and the payment of the Total
Option Price, authorize the payment of cash to the Optionee in an amount equal
to the market value of shares of Common Stock subject to an option less the
option price in exchange for the cancellation of the option.
4. Exercisability Upon the Occurrence of Certain Events.
(a) Notwithstanding any provisions limiting exercisability in whole
or in part, and unless the Board of Directors shall have otherwise
determined (within the limits specified in the last sentence of this paragraph)
to revoke or to limit, in its sole and conclusive discretion, the acceleration
provided for herein, the following shall apply: Stock options ("options") and
stock appreciation rights, if any, ("rights") granted to the Optionee by the
Company pursuant to this Agreement will be exercisable in full for a period of
one year (i) following the Effective Date (as hereinafter defined) or (ii)
commencing on the date (the "Approval Date") of the approval of the Company's
Board of Directors of an agreement providing for a merger, consolidation, sale
or disposition of all or substantially all of the assets of the Company, or
other form of extraordinary business combination as a result of the consummation
of which stockholders of the Company immediately before Approval Date will own
less than a majority of the outstanding voting stock of the resulting
organization. After the expiration of any such one year period, the options and
rights shall remain exercisable only to the extent, if any, provided in the
applicable option or rights agreement without taking into consideration the
effect of this paragraph. The Board of Directors' discretion to revoke or limit
the acceleration contemplated by this paragraph may be exercised at any time
before or within 20 business days after the Effective Date or the Approval Date
referred to in the foregoing clauses (i) or (ii). In the event the Approval Date
and an Effective Date arise from substantially identical facts and circumstances
(as determined by the Board of Directors in its sole discretion) and unless the
Board of Directors shall have determined to limit the effect of this sentence,
such one year period (and the 20 day period referred to in the immediately
preceding sentence) shall commence only once and upon the first to occur of the
Approval Date or the Effective Date.
(b) For purposes of the foregoing paragraph, the following terms have
the meanings indicated:
(i) "Effective Date" shall mean the date on which a "Change of
Control" as hereinafter defined occurs. Anything in these Terms to the
contrary notwithstanding, if a Change of Control occurs, and if the
Optionee's employment with the Company had terminated prior to the
date on which the Change of Control occurred, and if it is reasonably
demonstrated by the Optionee that such termination of employment
either was at the request of a third party who had taken steps
reasonably calculated to effect the Change of Control or otherwise
arose in connection with or in anticipation of the Change of Control,
then, for all purposes of this Agreement, the term "Effective Date"
shall mean the date immediately prior to the date of such termination
of employment.
(ii) A "Change of Control" shall be deemed to have taken place on
the date of the earlier to occur of either of the following events: a)
a third party, including a "group" as defined in Section 13(d)(3) of
the Securities Exchange Act of 1934, becomes the beneficial owner of
25% or more of the Company's outstanding Common Stock, or b) as the
result of, or in connection with, any cash tender or exchange offer,
merge, consolidation or other business combination, sale or
disposition of all or substantially all of the Company's assets, or
contested election, or any combination of the foregoing transactions
(a "Transaction"), the persons who were directors of the Company
immediately before the Transaction shall cease to constitute a
majority of the Board of Directors of the Company or any successor to
the Company or the persons who were stockholders of the Company
immediately before the Transaction shall cease to own at least a
majority of the outstanding voting stock of the Company or any
successor to the Company.
5. Termination.
The option granted hereby shall terminate and be of no force or effect
upon the first occurrence of any one of the following events:
(a) The expiration date set forth in the Award Notice; or
(b) Five years after the date the Optionee ceases to be a director of
the Company for any reason, during which period any installments which first
become exercisable may thereafter be exercisable.
6. Optionee.
Whenever the word "Optionee" is used in any provision of this
Agreement under circumstances where the provision should logically be construed
to apply to the estate, personal representative, or beneficiary to whom this
option may be transferred by will, by the laws of descent and distribution or
otherwise pursuant to the terms of this Agreement, it shall be deemed to include
such person.
7. Assignability.
This option is not transferable by the Optionee otherwise than by will
or the laws of descent and distribution and is exercisable during the
Optionee's lifetime only by the Optionee except that with the consent of the
Board of Directors, an option may be transferred to a family member or a trust,
partnership or the like for the benefit of Optionee or such family member. No
assignment or transfer of this option, or of the rights represented thereby,
whether voluntary or involuntary, by operation of law or otherwise, except by
will or the laws of descent and distribution, shall vest in the assignee or
transferee any interest or right herein whatsoever, but immediately upon any
attempt to assign or transfer this option the same shall terminate and be of no
force or effect.
8. The Company's Rights.
The existence of this option shall not affect in any way the right or
power of the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or other stocks with
preference ahead of or convertible into, or otherwise affecting the Common Stock
or the rights thereof, or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of its assets or business or any other
corporate act or proceeding, whether of a similar character or otherwise.
9. Recapitalization.
The shares with respect to which this option is granted are shares of
the Common Stock of the Company as constituted on the date of this Agreement,
but if, and whenever, prior to the delivery by the Company of all of the shares
of Common Stock with respect to which this option is granted, the Company
shall effect a subdivision or consolidation of shares, or other capital
readjustment, or the payment of a stock dividend, or other increase or decrease
in the number of shares of Common Stock outstanding, without receiving
compensation therefor in money, services or property, then (a) in the event of
any increase in the number of such shares outstanding, the number of shares of
Common Stock then remaining subject to option hereunder shall be proportionately
increased (except that any fraction of a share resulting from any such
adjustment shall be excluded from the operation of this Agreement), and the cash
consideration payable per share shall be proportionately reduced, and (b) in the
event of a reduction in the number of such shares outstanding, the number of
shares of Common Stock then remaining subject to option hereunder shall be
proportionately reduced (except that any fractional share resulting from any
such adjustment shall be excluded from the operation of this Agreement), and the
cash consideration payable per share shall be proportionately increased.
10. Merger and Consolidation.
After a merger of one or more corporations into the Company, or after a
consolidation of the Company and one or more corporations in which the Company
shall be the surviving or resulting corporation, the Optionee shall, at no
additional cost, be entitled upon any exercise of this option, to receive
(subject to any required action by stockholders) in lieu of the number of shares
as to which this option shall then be so exercised, the number and class of
shares of stock or other securities to which the Optionee would have been
entitled pursuant to the terms of the agreement of merger or consolidation, if,
immediately prior to such merger or consolidation, the Optionee had been the
holder of record of a number of shares of Common Stock of the Company equal to
the number of shares as to which such option shall be so exercised; provided,
that anything herein contained to the contrary notwithstanding, upon the
dissolution or liquidation of the Company, or upon any merger or consolidation,
in which the Company is not the surviving or resulting corporation, this option
shall terminate and be of no force or effect, except to the extent that such
surviving or resulting corporation may issue a substituted option.
11. Preemption of Applicable Laws or Regulations.
Anything in this Agreement to the contrary notwithstanding, if, at any
time specified herein for the issue of shares to the Optionee, any law,
regulation or requirements of any governmental authority having
jurisdiction in the premises shall require either the Company or the Optionee to
take any action in connection with the shares then to be issued, the issue of
such shares shall be deferred until such action shall have been taken.
12. Resolution of Disputes.
Any dispute or disagreement which shall arise under, or as a result of,
or pursuant to, this Agreement shall be determined by the Board of Directors
in its absolute and uncontrolled discretion, and any such determination or
any other determination by the Board of Directors under or pursuant to this
Agreement and any interpretation by the Board of Directors of the terms of this
Agreement, shall be final, binding and conclusive on all persons affected
thereby.
13. Notice.
Any notice which either party hereto may be required or permitted
to give to the other shall be in writing, and may be delivered personally
or by mail, postage prepaid, addressed as follows: to the Secretary of the
Company, or to the Company (attention of the Secretary), at 100 East
Pratt Street, Baltimore, Maryland 21202, or at such other address as the
Company, by notice to the Optionee, may designate in writing from time to time
to the Optionee at the Optionee's address as shown on the records of the
Company, or at such other address as the Optionee, by notice to the Secretary of
the Company, may designate in writing from time to time.
14. Construction.
This Agreement has been entered into in accordance with the terms of
the Plan and wherever a conflict may arise between the terms of this Agreement
and the terms of the Plan, the terms of the Plan shall control.
15. The option created by this Agreement shall not be treated as an
incentive stock option.