Exhibit 10.1


 


FOURTH AMENDMENT TO THE


WADDELL & REED FINANCIAL, INC.


1998 STOCK INCENTIVE PLAN


 


Waddell & Reed
Financial, Inc., a Delaware corporation (the “Company”), previously established
the Waddell & Reed Financial, Inc. 1998 Stock Incentive Plan, as amended
and restated (the “Plan”).  Pursuant to
Section 11 of the Plan, the Board of Directors of the Company reserves the
right to amend the Plan.  Pursuant to the
powers reserved in the Plan, the Plan is amended effective as of October 14,
2004 as follows.


 


1.             Section 13 of the Plan is amended
in its entirety to read as follows:


 


“SECTION 13.       Change of Control.


 


The following acceleration and valuation provisions
shall apply in the event of a “Change of Control” or “Potential Change of
Control,” as defined in this Section 13:


 


(a)  In the
event of a ‘Change of Control’ as defined in paragraph (b) of this Section 13,
unless otherwise determined by the Committee in writing at or after the grant,
but prior to the occurrence of such Change of Control, or, if and to the extent
so determined by the Committee in writing at or after grant (subject to any
right of approval expressly reserved by the Committee at the time of such
determination) in the event of a ‘Potential Change of Control,’ as defined in
paragraph (c) of this Section 13:


 


(i) any Stock Appreciation Rights and any Stock
Options awarded under the Plan not previously exercisable and vested shall
become fully exercisable and vested;


 


(ii) the restrictions and deferral limitations
applicable to any Restricted Stock and Deferred Stock awards under the Plan
shall lapse and such shares and awards shall be deemed fully vested; and


 


(iii) the value of all outstanding Stock Options,
Director Stock Options, Stock Appreciation Rights, Restricted Stock and Deferred
Stock Awards, shall, to the extent determined by the Committee at or after
grant, be settled on the basis of the ‘Change of Control Price’ (as defined in
paragraph (d) of this Section 13) as of the date the Change of Control occurs
or Potential Change of Control is determined to have occurred, or such other
date as the Committee may determine prior to the Change of Control or Potential
Change of Control.  In the sole
discretion of the Committee, such settlements may be made in cash, stock or
other property, or any combination thereof; provided, however, to the extent
any such settlement is made in stock, such shares of stock will be deemed to
have been distributed under the Plan.


 





















 


(b)  For
purposes of paragraph (a) of this Section 13, a ‘Change of Control’ means the
happening of any of the following:


 


(i)  when any
‘person’, as such term is used in Sections 13(d) and 14(d) of the Exchange Act
(other than the Company or a Subsidiary or any Company employee benefit plan),
is or becomes the ‘beneficial owner’ (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly of securities of the Company representing
20 percent or more of the combined voting power of the Company’s then
outstanding securities;


 


(ii)  the
effective date of any transaction or event relating to the Company required to
be described pursuant to the requirements of 6(e) of Schedule 14A of Regulation
14A of the Commission under the Exchange Act;


 


(iii)  when,
during any period of two consecutive years during the existence of the Plan,
the individuals who, at the beginning of such period, constitute the Board
cease, for any reason other than death, to constitute at least a majority
thereof, unless each director who was not a director at the beginning of such
period was elected by, or on the recommendation of, at least two-thirds of the
directors at the beginning of such period; or


 


(iv)  the
effective date of a transaction requiring stockholder approval for the
acquisition of the Company by an entity other than the Company or a Subsidiary
through purchase of assets, or by merger, or otherwise.


 


(c)  For
purposes of paragraph (a) of this Section 13, a ‘Potential Change of Control’
means the happening of any of the following:


 


(i)  the
entering into an agreement by the Company, the consummation of which would
result in a Change of Control of the Company as defined in paragraph (b) of
this Section 13; or


 


(ii)  the
acquisition of beneficial ownership, directly or indirectly, by any entity,
person or group (other than the Company or a Subsidiary or any Company employee
benefit plan) of securities of the Company representing 5 percent or more of
the combined voting power of the Company’s outstanding securities and the
adoption by the Board of Directors of a resolution to the effect that a
Potential Change of Control of the Company has occurred for purposes of this
Plan.


 


(d)  For purposes of this Section 13, ‘Change of
Control Price’ means the highest price per share paid in any transaction
reported on the New York Stock Exchange Composite Tape, or paid or offered in
any transaction related to a potential or actual Change of Control of the
Company at any time during the preceding sixty day period as determined by the
Committee, except that (i) in the case of Incentive Stock Options and Stock
Appreciation Rights relating to 


 





















 


Incentive Stock Options, such price shall be based only on transactions
reported for the date on which the Committee decides to cashout such options,
and (ii) in the case of Director Stock Options, the sixty day period shall be
the period immediately prior to the Change of Control.”


 


2.             Except as hereby amended, the Plan shall
remain in full force and effect.