Document:

exv10w9

 

Exhibit 10.09

T. ROWE PRICE GROUP, INC.

OUTSIDE DIRECTORS DEFERRED COMPENSATION PLAN

ARTICLE 1. ESTABLISHMENT, OBJECTIVES AND DURATION

     1.1 ESTABLISHMENT OF THE PLAN. T. Rowe Price Group, Inc., a Maryland corporation (“Price
Group”), hereby establishes this deferred compensation plan for non-employee directors known as the
“T. Rowe Price Group, Inc. Outside Directors Deferred Compensation Plan” (hereinafter referred to
as the “Plan”), as set forth in this document. The Plan is effective as of January 1, 2005 (the
“Effective Date”) and will remain in effect as provided in Section 1.3 hereof.

     1.2 PLAN OBJECTIVES. The objective of the Plan is to enable Outside Directors to elect to
have their cash fees for services on the Board of Directors accumulated and paid in a single sum
payment immediately following the close of the calendar year during which such fees are earned.

     1.3 DURATION OF THE PLAN. The Plan commences on January 1, 2005 and will remain in effect
until the Board of Directors terminates it pursuant to Section 7.1.

ARTICLE 2. DEFINITIONS

     Whenever used in the Plan, the following terms will have the meanings set forth below, and
when the meaning is intended, the initial letter of the word will be capitalized:

     “ACCOUNT” means a bookkeeping reserve account to which an Outside Director’s Fees are credited
under this Plan.

     “AFFILIATES” means, with respect to any person, any other person that, directly or indirectly,
is in control of, is controlled by, or is under common control with, the first person.

     “BOARD” or “BOARD OF DIRECTORS” means the Board of Directors of Price Group.

     “CODE” means the Internal Revenue Code of 1986, as amended from time to time, or any successor
to it.

     “DEFERRAL ELECTION” has the meaning ascribed to it in Section 6.1.

     “DIRECTOR” means any individual who is a member of the Board of Directors.

     “FEES” means the Retainers and Meeting Fees earned by an Outside Director during a Plan Year.

 

 

     “MEETING FEE” means the cash fee established by the Board and paid to an Outside Director for
each attendance at a meeting of the Board of Directors or of a Board committee (including
telephonic meetings but excluding execution of unanimous written consents).

     “OUTSIDE DIRECTOR” means a Director who, at the time in question, is not an employee of Price
Group or any of its Affiliates.

     “PLAN” has the meaning ascribed to it in Section 1.1.

     “PLAN YEAR” means the 12-month period beginning on January 1 and ending on the next following
December 31.

     “RETAINER” means the cash retainer fee established by the Board and paid to an Outside
Director, for a Plan Year or for a portion of such year, for services performed as a member of the
Board of Directors or of a committee of the Board of Directors.

ARTICLE 3. ADMINISTRATION

     3.1 THE BOARD OF DIRECTORS. The Plan will be administered by the Board of Directors. The
Board of Directors will act by a majority of its members at the time in office and eligible to vote
on any particular matter, and may act either by a vote at a meeting or in writing without a
meeting.

     3.2 AUTHORITY OF THE BOARD OF DIRECTORS. Except as limited by law and subject to the
provisions herein, the Board of Directors has full power to: construe and interpret the Plan and
any agreement or instrument entered into under the Plan; establish, amend or waive rules and
regulations for the Plan’s administration; and amend the terms and conditions of the Plan.
Further, the Board of Directors will make all other determinations which may be necessary or
advisable for the administration of the Plan. As permitted by law and consistent with Section 3.1,
the Board of Directors may delegate some or all of its authority under this Plan.

     3.3 DECISIONS BINDING. All determinations and decisions made by the Board of Directors
pursuant to the provisions of the Plan will be final, conclusive and binding on all persons,
including Price Group, its stockholders, all Affiliates, Outside Directors and their estates and
beneficiaries.

ARTICLE 4. ELIGIBILITY

     Each Director who is an Outside Director during a Plan Year will be eligible to participate in
the Plan for that year.

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ARTICLE 5. RETAINERS AND MEETING FEES

     Unless the Outside Director has made a Deferral Election with respect to them, all Retainers
and Meeting Fees earned by an Outside Director during a Plan Year will be paid to the Outside
Director at such times during the Plan Year as may be determined by the Board.

ARTICLE 6. DEFERRAL

     6.1 DEFERRAL ELECTION. Any Outside Director may elect to defer all, but not less than all,
of his or her Fees payable to him or her for a Plan Year by filing with the Secretary of Price
Group a written notice to that effect on the Deferral Election Form attached hereto as Exhibit
A (a “Deferral Election”) in accordance with the following rules. An Outside Director without
a Deferral Election in effect may elect to defer all, but not less than all, of his or her Fees:
(a) with respect to any Fees payable for any Plan Year, by filing a Deferral Election on or before
the December 31st preceding the Plan Year; and (b) with respect to any Fees for any
portion of a Plan Year following the date on which the Director first becomes an Outside Director,
by filing a Deferral Election within thirty days following that date. A Deferral Election may not
be revoked or modified with respect to Fees payable for any Plan Year for which it is effective and
the Deferral Election, unless terminated or modified as described below, will apply to Fees payable
with respect to each subsequent Plan Year. An Outside Director may terminate or modify his or her
current Deferral Election for any subsequent Plan Year by filing a new Deferral Election on or
before December 31st of the then-current Plan Year. An effective Deferral Election will
also terminate on the date a Director ceases to be an Outside Director.

     6.2 ACCOUNT. The Fees the Outside Director elects to defer will be credited to an Account as
of the date the compensation would otherwise have been payable to the Outside Director. No
interest or other earnings will be allocated or credited to the Account.

     6.3 DISTRIBUTIONS. The aggregate amount credited to an Outside Director’s Account each Plan
Year will be distributed, in a single sum cash payment, to him or her on or as soon as practicable
after the first business day of the Plan Year immediately following the Plan Year in which the Fees
were earned. If an Outside Director dies before he or she has received payment of all amounts due
hereunder, the balance remaining in the Outside Director’s Account shall be distributed to his or
her estate in a single sum cash payment as soon as practicable following the Outside Director’s
death. To the extent necessary to comply with Code section 409A, the Board or its Compensation
Committee may specify such additional rules regarding distributions and elections as it deems
appropriate.

ARTICLE 7. MISCELLANEOUS

     7.1 MODIFICATION AND TERMINATION. The Board may at any time and from time to time, alter,
amend, modify or terminate the Plan in whole or in part.

     7.2 INDEMNIFICATION. Each person who is or has been a member of the Board will be
indemnified and held harmless by Price Group against and from any loss, cost, liability, or

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expense that may be imposed upon or reasonably incurred by that person in connection with or
resulting from any claim, action, suit, or proceeding to which that person may be a party or in
which that person may be involved by reason of any action taken or failure to act under the Plan
and against and from any and all amounts paid by that person in a settlement approved by Price
Group, or paid by that person in satisfaction of any judgment in any such action, suit, or
proceeding against that person, provided he or she gives Price Group an opportunity, at its own
expense, to handle and defend the action, suit or proceeding before that person undertakes to
handle and defend it. The foregoing right of indemnification will not be exclusive of any other
rights of indemnification to which an individual may be entitled under Price Group’s Certificate of
Incorporation or By-Laws, as a matter of law, or otherwise, or any power that Price Group may have
to indemnify him or her or hold him or her harmless.

     7.3 SUCCESSORS. All obligations of Price Group under the Plan with respect to a given Plan
Year will be binding on any successor to Price Group, whether the existence of the successor is the
result of a direct or indirect purchase of all or substantially all of the business and/or assets
of Price Group, or a merger, consolidation, or otherwise.

     7.4 RESERVATION OF RIGHTS. Nothing in this Plan or in any award agreement granted hereunder
will be construed to limit in any way the Board’s right to remove an Outside Director from the
Board of Directors.

ARTICLE 8. LEGAL CONSTRUCTION

     8.1 GENDER AND NUMBER. Except where otherwise indicated by the context, any masculine term
used herein will also include the feminine; the plural will include the singular and the singular
will include the plural.

     8.2 SEVERABILITY. If any provision of the Plan is held illegal or invalid for any reason,
the illegality or invalidity will not affect the remaining parts of the Plan, and the Plan will be
construed and enforced as if the illegal or invalid provision had not been included.

     8.3 REQUIREMENTS OF LAW. The issuance of payments under the Plan will be subject to all
applicable laws, rules, and regulations.

     8.4 SECURITIES LAW AND TAX LAW COMPLIANCE. To the extent any provision of the Plan or action
by the Board would subject any Outside Director to liability for interest or additional taxes under
Code section 409A, it will be deemed null and void, to the extent permitted by law and deemed
advisable by the Board.

     8.5 UNFUNDED STATUS OF THE PLAN. The Plan is intended to constitute an “unfunded” plan.
With respect to any payments not yet made to an Outside Director by Price Group, nothing contained
herein will give any rights to an Outside Director that are greater than those of a general
creditor of Price Group.

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     8.6 GOVERNING LAW. The Plan will be construed in accordance with and governed by the laws of
the State of Maryland, determined without regard to its conflict of law rules.

     8.7 NONTRANSFERABILITY. An Outside Director’s Account may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and
distribution, or pursuant to a domestic relations order (as defined in Code section 414(p)). All
rights with respect to an Account will be available during the Outside Director’s lifetime only to
the Outside Director or the Outside Director’s guardian or legal representative. The Board of
Directors may, in its discretion, require an Outside Director’s guardian or legal representative to
supply it with evidence the Board of Directors deems necessary to establish the authority of the
guardian or legal representative to act on behalf of the Outside Director.

* * * * *

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EXHIBIT A

T. ROWE PRICE GROUP, INC.

OUTSIDE DIRECTORS DEFERRED COMPENSATION PLAN

DEFERRAL ELECTION

     As of                                         , 20                    , the individual whose name appears below, who is an Outside
Director of T. Rowe Price Group, Inc. (“Price Group”), hereby elects to defer, under the terms of
the T. Rowe Price Group, Inc. Outside Directors Deferred Compensation Plan (the “Plan”), all of the
cash compensation payable to him or her in connection with the individual’s services on the Board
of Directors of Price Group or a committee of such Board of Directors. This Deferral Election will
become effective as of the date it is accepted by the Secretary of Price Group and shall remain in
full force and effect until the earlier of the date the Outside Director modifies or terminates it
in accordance with the terms of the Plan and the date the Director ceases to be an Outside Director
of Price Group. Any term capitalized herein but not defined will have the meaning set forth in the
Plan.

     IN WITNESS WHEREOF, the Outside Director has duly executed this Deferral Election as of the
date first written above.

	 	 	 	 	 
	

	 	 	 	 
	

	 	Outside Director’s Signature
	 	 

	 	 	 	 	 
	

	 	 	 	 
	

	 	Outside Director’s Name (please print)
	 	 

	 	 	 	 	 
	 	

Received by T. Rowe Price Group, Inc. 

 	 
	 	By:  	____________________________
 	 
	 	Title: Secretary

 	 
	 	

Date:____________________________exv10w16

 

Exhibit 10.16

Forms of option agreements

available for

awards and replenishment options

issued under the

T. Rowe Price Group, Inc.

2001 and 2004

Stock Incentive Plans

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T. ROWE PRICE GROUP, INC.

[2001][2004] STOCK INCENTIVE PLAN

STATEMENT OF ADDITIONAL TERMS AND CONDITIONS

REGARDING OPTION GRANTS (INCENTIVE STOCK OPTIONS)

Effective: ____________

     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 recipient and by an authorized officer or agent of T. Rowe Price Group,
Inc. (the “Company”), there shall be created a binding and enforceable contract (the “Agreement”)
respecting 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 in the Award
Notice (the “Option Period”), the option to purchase from the Company at the option price set forth
in the Award Notice (the “Option Price”) up to, but not exceeding in the aggregate, the 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 installments set
forth in the Award Notice.

          (b) The Executive Compensation Committee of the Board of Directors of the Company (the
“Committee”) may in its discretion place limitations on the extent to which shares of Common Stock
of the Company may be tendered by the Optionee as payment upon exercise of the Option pursuant to
paragraph 3(a) hereof. In no event shall a replenishment option be granted upon the exercise of
the Option by tender of shares of Common Stock.

          (c) To the extent that the Option is not immediately exercisable in full, the Committee may in
its discretion accelerate the time at which the Option may be exercised.

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          (d) To the extent not exercised, installments shall accumulate and be exercisable by the
Optionee, in whole or in part, in any subsequent year included in the Option Period but not later
than the expiration of the Option Period.

          (e) No less than 50 shares of Common Stock may be purchased upon any one exercise of the
Option unless the number of shares purchased at such time is the total number of shares in respect
of which the Option is then exercisable.

          (f) In no event shall the Option 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 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 paying the Option Price for the shares
specified in the Notice. The Option Price may be paid (i) by cash, check, wire transfer, 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, such payment to
be delivered with the Notice, (ii) unless Iimited by the Committee, by tender of shares of Common
Stock of the Company with a value (determined in accordance with paragraph 3(c)) equal to or less
than the Option Price plus cash, check, wire transfer, 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 aggregate Option Price exceeds the value of such shares of the Company’s stock
(determined in accordance with paragraph 3(c)), (iii) by broker-assisted cashless exercise
procedures satisfactory to the Committee, or (iv) by a combination thereof. Such Company’s stock
and cash shall be delivered to the Company no 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 Company or by
attestation of ownership in a form satisfactory to the Company.

          (b) Within three business days after the Exercise Date, the Company shall, subject to the
receipt of the aggregate Option Price and withholding taxes, to the extent required by the Company,
issue to the Optionee the number of shares with respect to which the 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), unless determined otherwise by the Committee in accordance
with the Plan, the value of shares of Common Stock tendered to exercise the Option shall be the
last-reported sale 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 Committee.

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          (d) In the sole discretion of the Committee, the Company may in lieu of requiring the exercise
of an Option and the payment of the 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 the Option less the Option Price in exchange for the cancellation of the Option.

     4. Exercisability Upon the Occurrence of Certain Events.

[See provisions of Section 7(c)(ii) of applicable plan]

     5. Termination.

          The Option 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;

          (b) The expiration of 30 days after termination of the Optionee’s employment with the Company,
except in the case of the Optionee’s death or retirement with the consent of the Company; provided,
however, that any day on which the Company has restricted employee securities transactions under
then-applicable securities transactions policies and procedures shall not be included in
determining such 30-day period. During such period, the Optionee shall have the right to exercise
the Option only to the extent exercisable on the date of termination;

          (c) The expiration of thirteen months after the date of the Optionee’s retirement with the
consent of the Company. During such thirteen-month period the Optionee shall have the right to
exercise the Option to the extent the right to exercise the same has accrued prior to such
retirement but has not been exercised prior to such retirement, subject, in addition, however, to
acceleration by the Committee pursuant to paragraph 2(c); or

          (d) The expiration of seven months after the date of death of the Optionee if said death
occurs while (i) the Optionee is in the employ of the Company or (ii) within the period of time
after retirement with the consent of the Company during which the Optionee was entitled to exercise
the Option. During such seven-month period the Optionee’s estate, personal representative or
beneficiary shall have the right to exercise the Option in full.

          Retirement at the Optionee’s normal retirement date or at an optional retirement date in
accordance with the provisions of a retirement plan of the Company under which the Optionee is then
covered shall constitute a retirement with the consent of the Company for the purposes of this
Agreement. The Committee shall have absolute and uncontrolled discretion to determine whether any
other termination of Optionee’s employment is to be considered as retirement with the consent of
the Company for the purposes of this Agreement and whether an authorized leave of absence or
absence on military or government service or otherwise shall constitute a termination of employment
for the purposes of this Agreement. Employment by the Company shall be deemed to include
employment of the Optionee by, and to continue during any

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period in which Optionee is in the employ
of, an “Affiliate” of the Company as that term is defined in the Plan. Unless determined otherwise
by the Committee, if the Affiliate with which the Optionee is employed ceases to be an entity in
which the Company maintains a proprietary interest by reason of stock ownership or otherwise, the
Optionee will be considered to have had a
termination of employment for purposes of this Agreement upon such cessation. Any
determination made by the Committee with respect to any matter referred to in this paragraph 5
shall, subject to the provisions of paragraph 13 hereof, be final and conclusive on all persons
affected thereby.

     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. 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

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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 this Option 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
this Option 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.

          Subject to the provisions of paragraph 13 hereof, any dispute or disagreement which shall
arise under, or as a result of, or pursuant to, this Agreement shall be determined by the Committee
in its absolute and uncontrolled discretion, and any such determination or any other determination
by the Committee under or pursuant to this Agreement and any interpretation by the Committee of the
terms of this Agreement, shall be final, binding and conclusive on all persons affected thereby.

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     13. Amendments.

          The Committee shall have the right, in its absolute and uncontrolled discretion, to alter or
amend this Agreement, from time to time in any manner for the purpose of promoting the objectives
of the Plan but only if all agreements granting options to purchase shares of the Company’s Common
Stock pursuant to the Plan which is in effect and not wholly exercised at
the time of such alteration or amendment shall also be similarly altered or amended with
substantially the same effect, and any alteration or amendment of this Agreement by the Committee
shall, upon adoption thereof by the Committee, become and be binding and conclusive on all persons
affected thereby without requirement for consent or other action with respect thereto by any such
person. The Company shall give written notice to the Optionee of any such alteration or amendment
of this Agreement by the Committee as promptly as practical after the adoption thereof. The
foregoing shall not restrict the ability of the Optionee and the Company by mutual consent to alter
or amend this Agreement in any manner which is consistent with the Plan and approved by the
Committee.

     14. 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.

     15. Construction.

          This Agreement has been entered into in accordance with the terms of the Plan specified in the
Award Notice (the “Plan”), which is incorporated herein by reference.

     16. Provisions Concerning Incentive Stock Options.

          (a) Qualified Nature of the Option. This Option is intended to qualify as an
incentive stock option within the meaning of Code section 422 (“Incentive Stock Option”), to the
fullest extent permitted under Code section 422, and this Agreement shall be so construed. The
aggregate fair market value (determined as of the effective date of this grant) of shares of stock
with respect to which all Incentive Stock Options first become exercisable by the Optionee in any
calendar year under the Plan or any other plan of the Company (and its parent and subsidiary
corporations, as may exist from time to time) may not exceed $100,000 or such other amount as may
be permitted from time to time under Code section 422. To the extent that such aggregate fair
market value shall exceed $100,000 or other applicable amount in any calendar year, such stock
options shall be treated as nonstatutory stock options with respect to the amount of aggregate fair
market value thereof that exceeds the Code section 422 limit. For this purpose, the

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Incentive
Stock Options will be taken into account in the order in which they were granted. In such case,
the Company may designate the shares of stock that are to be treated as stock acquired pursuant to
the exercise of an Incentive Stock Option and the shares of stock that are to be treated as stock
acquired pursuant to a nonstatutory stock option by issuing separate certificates for such shares
and identifying the certificates as such in the stock transfer records of the Company.

          Except with respect to exercise after the death or disability of the Optionee, at all times
during the period beginning with the date of the granting of an Incentive Stock Option and ending
on the day three months before the date of such exercise, the Optionee must be an employee of the
Company or a subsidiary, as that term is defined in Code section 424(f), in order for such option
to qualify as an Incentive Stock Option. Therefore, in the event that the Optionee retires with
the consent of the Company, as provided in paragraph 5 hereof, any part of the Incentive Stock
Option which is not exercised within three months of such termination will be exercisable as a
nonstatutory stock option for the remainder of the thirteen-month exercise period. Similarly, if
the entity with which the Optionee is employed ceases to be a subsidiary of the Company, as that
term is defined in Code section 424(f), then the Option will be treated as a nonstatutory stock
option unless exercised within three months of such cessation.

          (b) Notice of Disqualifying Disposition. If the Optionee makes a disposition (as that
term is defined in Code section 424(c)) of any shares of stock acquired pursuant to this Option
within two years of the Grant Date or within one year after the shares of Stock are transferred to
the Optionee, the Optionee shall notify the Company of such disposition in writing within 30 days
of the disposition.

     17. Withholding of Taxes.

          At the time the Option is exercised, in whole or in part, or at any time thereafter as
requested by the Company, the Optionee hereby authorizes withholding from payroll or any other
payment of any kind due the Optionee and otherwise agrees to make adequate provision for foreign,
federal, state and local taxes required by law to be withheld, if any, which arise in connection
with the Option. The Company may require the Optionee to make a cash payment to cover any
withholding tax obligation as a condition of exercise of the Option. If the Optionee does not make
such payment when requested, the Company may refuse to issue any stock certificate under the Plan
until arrangements satisfactory to the Company for such payment have been made.

          The Company may, in its sole discretion, permit the Optionee to satisfy, in whole or in part,
any withholding tax obligation which may arise in connection with the Option either by electing to
have the Company withhold from the shares to be issued upon exercise that number of shares, or by
electing to deliver to the Company already-owned shares, in either case having a fair market value
equal to the amount necessary to satisfy the statutory minimum withholding amount due.

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T. ROWE PRICE GROUP, INC.

[2001][2004] STOCK INCENTIVE PLAN

STATEMENT OF ADDITIONAL TERMS AND CONDITIONS

REGARDING OPTION GRANTS (NON-QUALIFIED OPTIONS)

Effective: ____________

     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 recipient and by an authorized officer or agent of T. Rowe Price Group,
Inc. (the “Company”), there shall be created a binding and enforceable contract (the “Agreement”)
respecting 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 in the Award
Notice (the “Option Period”), the option to purchase from the Company at the option price set forth
in the Award Notice (the “Option Price”) up to, but not exceeding in the aggregate, the 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 installments set
forth in the Award Notice.

          (b) The Executive Compensation Committee of the Board of Directors of the Company (the
“Committee”) may in its discretion place limitations on the extent to which shares of Common Stock
of the Company may be tendered by the Optionee as payment of the Option Price pursuant to paragraph
3(a) hereof.

          (c) To the extent the Option is not immediately exercisable in full, the Committee may in its
discretion accelerate the time at which the Option may be exercised.

          (d) To the extent not exercised, installments shall accumulate and be exercisable by the
Optionee, in whole or in part, in any subsequent year included in the Option Period but not later
than the expiration of the Option Period.

- 1 -

 

          (e) No less than 50 shares of Common Stock may be purchased upon any one exercise of the
Option unless the number of shares purchased at such time is the total number of shares in respect
of which the Option is then exercisable.

          (f) In no event shall the Option 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 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 paying the Option Price for the shares
specified in the Notice. The Option Price may be paid (i) by cash, check, wire transfer, 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, such payment to
be delivered with the Notice, (ii) unless Iimited by the Committee, by tender of shares of Common
Stock of the Company with a value (determined in accordance with paragraph 3(c)) equal to or less
than the Option Price plus cash, check, wire transfer, 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 aggregate Option Price exceeds the value of such shares of the Company’s stock
(determined in accordance with paragraph 3(c)), (iii) by broker-assisted cashless exercise
procedures satisfactory to the Committee, or (iv) by a combination thereof. Such Company’s stock
and cash shall be delivered to 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 Company or by
attestation of ownership in a form satisfactory to the Company.

          (b) Within three business days after the Exercise Date, the Company shall, subject to the
receipt of the aggregate Option Price and withholding taxes, to the extent required by the Company,
issue to the Optionee the number of shares with respect to which the 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), unless determined otherwise by the Committee in accordance
with the Plan, the value of shares of Common Stock tendered to exercise the Option shall be the
last-reported sale 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 Committee.

          (d) In the sole discretion of the Committee, the Company may in lieu of requiring the exercise
of the Option and the payment of the Option Price, authorize the payment

- 2 -

 

of cash to the Optionee in
an amount equal to the market value of shares of Common Stock subject to the Option less the Option
Price in exchange for the cancellation of the Option.

     4. Exercisability Upon the Occurrence of Certain Events.

[See provisions of Section 7(c)(ii) of applicable plan]

     5. Termination.

          The Option 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;

          (b) The expiration of 30 days after termination of the Optionee’s employment with the Company,
except in the case of the Optionee’s death or retirement with the consent of the Company; provided,
however, that any day on which the Company has restricted employee securities transactions under
then-applicable securities transactions policies and procedures shall not be included in
determining such 30-day period. During such period, the Optionee shall have the right to exercise
the Option only to the extent exercisable on the date of termination;

          (c) The expiration of thirteen months after the date of the Optionee’s retirement with the
consent of the Company. During such thirteen-month period the Optionee shall have the right to
exercise the Option to the extent the right to exercise the same has accrued prior to such
retirement but has not been exercised prior to such retirement, subject, in addition, however, to
acceleration by the Committee pursuant to paragraph 2(c); or

          (d) The expiration of seven months after the date of death of the Optionee if said death
occurs while (i) the Optionee is in the employ of the Company or (ii) within the period of time
after retirement with the consent of the Company during which the Optionee was entitled to exercise
the Option. During such seven-month period the Optionee’s estate, personal representative or
beneficiary shall have the right to exercise the Option in full.

          Retirement at the Optionee’s normal retirement date or at an optional retirement date in
accordance with the provisions of a retirement plan of the Company under which the Optionee is then
covered shall constitute a retirement with the consent of the Company for the purposes of this
Agreement. The Committee shall have absolute and uncontrolled discretion to determine whether any
other termination of Optionee’s employment is to be considered as retirement with the consent of
the Company for the purposes of this Agreement and whether an authorized leave of absence or
absence on military or government service or otherwise shall constitute a termination of employment
for the purposes of this Agreement. Employment by the Company shall be deemed to include
employment of the Optionee by, and to continue during any period in which Optionee is in the employ
of, an “Affiliate” of the Company as that term is defined in the Plan. Unless determined otherwise
by the Committee, if the Affiliate with which the Optionee is employed ceases to be an entity in
which the Company maintains a proprietary

- 3 -

 

interest by reason of stock ownership or otherwise, the
Optionee will be considered to have had a termination of employment for purposes of this Agreement
upon such cessation. Any determination made by the Committee with respect to any matter referred
to in this paragraph 5
shall, subject to the provisions of paragraph 13 hereof, be final and conclusive on all
persons affected thereby.

     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. 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.]

          [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 Committee, 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, the laws of descent and distribution or by consent
of the Committee, 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.

- 4 -

 

     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 this Option 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 this Option
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.

- 5 -

 

     12. Resolution of Disputes.

          Subject to the provisions of paragraph 13 hereof, any dispute or disagreement which shall
arise under, or as a result of, or pursuant to, this Agreement shall be determined by the Committee
in its absolute and uncontrolled discretion, and any such determination or any other determination
by the Committee under or pursuant to this Agreement and any
interpretation by the Committee of the terms of this Agreement, shall be final, binding and
conclusive on all persons affected thereby.

     13. Amendments.

          The Committee shall have the right, in its absolute and uncontrolled discretion, to alter or
amend this Agreement, from time to time in any manner for the purpose of promoting the objectives
of the Plan but only if all agreements granting options to purchase shares of the Company’s Common
Stock pursuant to the Plan which is in effect and not wholly exercised at the time of such
alteration or amendment shall also be similarly altered or amended with substantially the same
effect, and any alteration or amendment of this Agreement by the Committee shall, upon adoption
thereof by the Committee, become and be binding and conclusive on all persons affected thereby
without requirement for consent or other action with respect thereto by any such person. The
Company shall give written notice to the Optionee of any such alteration or amendment of this
Agreement by the Committee as promptly as practical after the adoption thereof. The foregoing
shall not restrict the ability of the Optionee and the Company by mutual consent to alter or amend
this Agreement in any manner which is consistent with the Plan and approved by the Committee.

     14. 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.

     15. Construction.

          This Agreement has been entered into in accordance with the terms of the Plan specified in the
Award Notice (the “Plan”), which is incorporated herein by reference.

     16. Non-Qualified Nature of the Option.

          The Option created by this Agreement shall not be treated as an incentive stock option within
the meaning of Internal Revenue Code section 422.

- 6 -

 

     17. Withholding of Taxes.

          At the time the Option is exercised, in whole or in part, or at any time thereafter as
requested by the Company, the Optionee hereby authorizes withholding from payroll or any other
payment of any kind due the Optionee and otherwise agrees to make adequate provision for foreign,
federal, state and local taxes required by law to be withheld, if any, which arise in
connection with the Option. The Company may require the Optionee to make a cash payment to
cover any withholding tax obligation as a condition of exercise of the Option. If the Optionee
does not make such payment when requested, the Company may refuse to issue any stock certificate
under the Plan until arrangements satisfactory to the Company for such payment have been made.

          The Company may, in its sole discretion, permit the Optionee to satisfy, in whole or in part,
any withholding tax obligation which may arise in connection with the Option either by electing to
have the Company withhold from the shares to be issued upon exercise that number of shares, or by
electing to deliver to the Company already-owned shares, in either case having a fair market value
equal to the amount necessary to satisfy the statutory minimum withholding amount due.

- 7 -

 

T. ROWE PRICE GROUP, INC.

[2001][2004] STOCK INCENTIVE PLAN

STATEMENT OF ADDITIONAL TERMS AND CONDITIONS

REGARDING OPTION GRANTS

(NON-QUALIFIED STOCK OPTION AGREEMENT)

(REPLENISHED OPTIONS)

     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 Employee and by an authorized officer or agent of T. Rowe Price Group, Inc.
(the “Company”), there shall be created a binding and enforceable contract (the “Agreement”)
respecting the Option 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 set forth in the Award Notice (the “Option Period”), the option to
purchase from the Company at the option price set forth in the Award Notice (the “Option Price”) up
to, but not exceeding in the aggregate, the number of shares of the Company’s Common Stock set
forth under the caption “Shares” in the Award Notice.

2. Exercise of Option.

          (a) This Option is immediately exercisable in full and may be exercised in whole or in part
from time to time during the Option Period, subject to the Terms.

          (b) The Executive Compensation Committee of the Board of Directors of the Company (the
“Committee”) may in its discretion place limitations on the extent to which shares of Common Stock
of the Company may be tendered by the Optionee as payment of the Option Price pursuant to paragraph
3(a) hereof.

          (c) No less than 50 shares of Common Stock may be purchased upon any one exercise of the
Option unless the number of shares purchased at such time is the total number of shares in respect
of which the Option is then exercisable.

- 1 -

 

          (d) In no event shall the Option be exercisable for a fractional share.

          (e) In no event shall any additional replenishment option be granted upon the exercise of this
Option.

3. Method of Exercising Option and Payment of Option Price.

          (a) The Option shall be exercised by the Optionee delivering to 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 paying the Option Price for the shares
specified in the Notice. The Option Price may be paid:

	 	(i)  	by cash, check, wire transfer, 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,
such payment to be delivered with the Notice,
	 
	 	(ii)  	unless limited by the Committee, by
tender of shares of Common Stock of the Company with a value
(determined in accordance with paragraph 3(c)) equal to or less
than the Option Price plus cash, check, wire transfer, 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 aggregate Option Price exceeds the
value of such shares of the Company’s stock (determined in
accordance with paragraph 3(c)),
	 
	 	(iii)  	by broker-assisted cashless exercise
procedures satisfactory to the Committee, or
	 
	 	(iv)  	by a combination thereof.

Such Company’s stock and cash shall be delivered to 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
Company or by attestation of ownership in a form satisfactory to the Company.

          (b) Within three business days after the Company receives the aggregate Option Price and
withholding taxes to the extent required by the Company, the Company will issue to the Optionee the
number of shares with respect to which the Option shall be so

- 2 -

 

exercised, and will deliver to the Optionee a certificate or certificates therefor, or will
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
the 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 Committee.

          (d) In the sole discretion of the Committee, the Company may in lieu of requiring the exercise
of the Option and the payment of the 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 the Option less the Option
Price in exchange for the cancellation of the Option.

     4. Termination.

          The Option 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;

          (b) The expiration of 30 days after termination of the Optionee’s employment with the Company,
except in the case of the Optionee’s death or retirement with the consent of the Company; provided,
however, that any day on which the Company has restricted employee securities transactions under
then-applicable securities transactions policies and procedures shall not be included in
determining such 30-day period. During such period, the Optionee shall have the right to exercise
the Option only to the extent exercisable on the date of termination;

          (c) The expiration of [seven][thirteen] months after the date of the Optionee’s retirement
with the consent of the Company; provided, however, that any day on which the Company has
restricted employee securities transactions under then-applicable securities transaction policies
and procedures shall not be included in determining such [seven-month][thirteen-month] period.
During such [seven-month][thirteen-month] period, the Optionee shall have the right to exercise the
Option only to the extent exercisable on the date of retirement.

          (d) The expiration of seven months after the date of death of the Optionee if said death
occurs while (i) the Optionee is in the employ of the Company or (ii) within the period of time
after retirement with the consent of the Company during which the Optionee was entitled to exercise
the Option. During such seven-month period the Optionee’s estate, personal representative or
beneficiary shall have the right to exercise the Option in full.

- 3 -

 

          Retirement at the Optionee’s normal retirement date or at an optional retirement date in
accordance with the provisions of a retirement plan of the Company under which the Optionee is then
covered shall constitute a retirement with the consent of the Company for the purposes of this
Agreement. The Committee shall have absolute and uncontrolled discretion to determine whether any
other termination of Optionee’s employment is to be considered as retirement with the consent of
the Company for the purposes of this Agreement and whether an authorized leave of absence or
absence on military or government service or otherwise shall constitute a termination of employment
for the purposes of this Agreement. Any determination made by the Committee with respect to any
matter referred to in this paragraph 4 shall, subject to the provisions of paragraph 13 hereof, be
final and conclusive on all persons affected thereby. Employment by the Company shall be deemed to
include employment of Optionee by, and to continue during any period in which Optionee is in the
employ of, an “Affiliate” of the Company as that term is defined in the Plan. Unless determined
otherwise by the Committee, if the Affiliate with which the Optionee is employed ceases to be an
entity in which the Company maintains a proprietary interest by reason of stock ownership or
otherwise, the Optionee will be considered to have had a termination of employment for purposes of
this Agreement upon such cessation.

     5. 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.

     6. 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. 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.]

          [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 Committee, this Option may be transferred to a family member or a
trust, partnership or the like for the benefit of the Optionee or such family members. 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, the laws of descent and distribution
or by consent of the Committee, shall vest in the assignee or transferee any interest

- 4 -

 

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.]

     7. Rights as a Stockholder.

          The Optionee shall not be deemed for any purpose to be a stockholder of the Company with
respect to any shares as to which this Option shall not have been exercised and payment and issue
made as herein provided.

     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 this Option 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 this Option 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.

- 5 -

 

     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.

          Subject to the provisions of paragraph 13 hereof, any dispute or disagreement which shall
arise under, or as a result of, or pursuant to, this Agreement shall be determined by the Committee
in its absolute and uncontrolled discretion, and any such determination or any other determination
by the Committee under or pursuant to this Agreement and any interpretation by the Committee of the
terms of this Agreement, shall be final, binding and conclusive on all persons affected thereby.

     13. Amendments.

          The Committee shall have the right, in its absolute and uncontrolled discretion, to alter or
amend this Agreement, from time to time in any manner for the purpose of promoting the objectives
of the Plan but only if all agreements granting options to purchase shares of the Company’s Common
Stock pursuant to the Plan which is in effect and not wholly exercised at the time of such
alteration or amendment shall also be similarly altered or amended with

- 6 -

 

substantially the same effect, and any alteration or amendment of this Agreement by the
Committee shall, upon adoption thereof by the Committee, become and be binding and conclusive on
all persons affected thereby without requirement for consent or other action with respect thereto
by any such person. The Company shall give written notice to the Optionee of any such alteration
or amendment of this Agreement by the Committee as promptly as practical after the adoption
thereof. The foregoing shall not restrict the ability of the Optionee and the Company by mutual
consent to alter or amend this Agreement in any manner which is consistent with the Plan and
approved by the Committee.

     14. 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.

     15. Construction.

          This Agreement has been entered into in accordance with the terms of the 2004 Stock Incentive
Plan, which is incorporated herein by reference.

     16. Non-Qualified Nature of the Option.

          The Option shall not be treated as an incentive stock option within the meaning of Internal
Revenue Code section 422.

     17. Withholding of Taxes.

          At the time the Option is exercised, in whole or in part, or at any time thereafter as
requested by the Company, the Optionee hereby authorizes withholding from payroll or any other
payment of any kind due the Optionee and otherwise agrees to make adequate provision for foreign,
federal, state and local taxes required by law to be withheld, if any, which arise in connection
with the Option. The Company may require the Optionee to make a cash payment to cover any
withholding tax obligation as a condition of exercise of the Option. If the Optionee does not make
such payment when requested, the Company may refuse to issue any stock certificate under the Plan
until arrangements satisfactory to the Company for such payment have been made.

- 7 -

 

          The Company may, in its sole discretion, permit the Optionee to satisfy, in whole or in part,
any withholding tax obligation which may arise in connection with the Option either by electing to
have the Company withhold from the shares to be issued upon exercise that number of shares, or by
electing to deliver to the Company already-owned shares, in either case having a fair market value
equal to the amount necessary to satisfy the statutory minimum withholding amount due.

- 8 -

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