Document:

Exhibit
10.5

 

WADDELL & REED FINANCIAL, INC.

 

RESTRICTED STOCK AWARD
AGREEMENT

 

WADDELL & REED FINANCIAL, INC., a
corporation organized and existing under the laws of the state of Delaware (or
any successor corporation) (the “Company”), does hereby grant and give unto ______________
(the “Awardee”), an award of restricted shares of Stock (the “Restricted Stock”)
upon the terms and conditions hereinafter set forth (the “Award”).

 

AUTHORITY FOR GRANT

 

1.                                       Non-Employee
Director Stock Award Plan.  The
Restricted Stock is granted under the provisions of the Waddell & Reed
Financial, Inc. 1998 Non-Employee Director Stock Award Plan, as amended (the “Plan”),
and is subject to the terms and conditions set forth in this Restricted Stock
Award Agreement (the “Agreement”) and not inconsistent with the Plan.  Capitalized terms used but not defined herein
shall have the meaning given them in the Plan, which is incorporated by
reference herein.

 

TERMS OF AWARD

 

2.                                       Number of
Shares.  Pursuant to his Secondary
Election Form dated ______________, the Awardee is hereby granted ________________
shares of Restricted Stock (the “Shares”) of the Company’s Class A common
stock, par value $.01 on ________________, 20___ (the “Grant Date”), subject to
repurchase of a portion thereof by the Company pursuant to Section 12.

 

3.                                       Restrictions;
Forfeiture

 

.  The Restricted Stock may not
be sold, transferred, pledged, assigned or otherwise alienated or hypothecated
until its restrictions are removed or expire. 
The Restricted Stock may be forfeited to the Company, at which time the
Company shall have the right to instruct the Company’s transfer agent to
transfer the Restricted Stock to the Company to be held by the Company in
treasury or by any designee of the Company. 
Notwithstanding the preceding sentences, the Compensation Committee of
the Board of Directors of the Company (the “Committee”) may, in its sole
discretion, provide for the expiration of such restrictions in installments and
may accelerate or waive such restrictions in whole or in part, before or after
the Awardee’s termination of service on the Board, based on such factors as the
Committee may determine, in its sole discretion.

 

4.                                       Expiration of
Restrictions and Risk of Forfeiture

 

.  The restrictions and risk of
forfeiture for the Restricted Stock will expire as set forth in this Section 4,
as of the vesting dates set forth in this Section 4, provided that the
restrictions and risk of forfeiture have not previously expired pursuant to
this Agreement.

 

	
  Percentage of Shares Vesting

  	
   

  	
  Vest Date

  	
   

  
	
  331/3%

  	
   

  	
  ______________,
  20___

  	
   

  
	
  331/3%

  	
   

  	
  ______________,
  20___

  	
   

  
	
  331/3%

  	
   

  	
  ______________,
  20___

  	
   

  

 

 

TERMINATION OF AWARD

 

5.                                       Termination
of Service on the Board.  If an
Awardee’s service on the Board terminates for any reason, the restrictions and
risk of forfeiture with respect to the Restricted Stock which have not expired
shall immediately expire and all shares of the Restricted Stock shall be fully
vested.

 

6.                                       Change in Control or Potential
Change in Control of the Company. 
In the event of a Change in Control, unless otherwise determined by the
Committee in writing after the Grant Date, but prior to the occurrence of such
Change in Control, or, in the event of a Potential Change in Control, if and to
the extent so determined by the Committee in writing after the Grant Date
(subject to any right of approval expressly reserved by the Committee at the
time of such determination): (a) the restrictions with respect to the
Restricted Stock shall expire and such shares shall be deemed fully vested; and
(b) the value of the outstanding Stock previously subject to restrictions,
shall, to the extent determined by the Committee at or after the Grant Date, be
settled on the basis of the Change in Control Price as of the date the Change
in Control occurs or Potential Change in Control is determined to have
occurred, or such other date as the Committee may determine prior to the Change
in Control or Potential Change in Control. 
In the sole discretion of the Committee, such settlements may be made in
cash or in stock, as shall be necessary to effect the desired accounting
treatment for the transaction resulting in the Change in Control or Potential
Change of Control.

 

7.                                       No Limitation
on Excess Parachute Payments.  The
provisions of Section 14 of the Plan regarding the payment of any “Excess
Parachute Payment” within the meaning of Section 280G(b)(1) of the
Internal Revenue Code of 1986, as amended, shall not apply to this Agreement.

 

GENERAL TERMS
AND PROVISIONS

 

8.                                       Administration
of Award.  The Restricted Stock shall
be maintained in a book-entry account (the “Account”) by and at the Company’s
transfer agent until the restrictions associated with such Restricted Stock
expire pursuant to Sections 4, 5 or 6. 
The Awardee shall execute and deliver to the transfer agent one or more
stock powers in blank for the Restricted Stock. 
The Awardee hereby agrees that the transfer agent shall maintain such
Account and the related stock power(s) pursuant to the terms of this Agreement
until such restrictions expire pursuant to Sections 4, 5 or 6.

 

9.                                       Ownership of
Restricted Stock.  From and after the
time that the Account representing the Restricted Stock has been activated and
prior to forfeiture, the Awardee will be entitled to all the rights of absolute
ownership of the Restricted Stock, including the right to vote those shares and
to receive dividends thereon if, as, and when declared by the Board, subject,
however, to the terms, conditions and restrictions set forth in this
Agreement.  Dividends paid in stock of
the Company or stock received in connection with a Stock split with respect to
the Restricted Stock shall be subject to the same restrictions as on such
Restricted Stock.  The shares 

 

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of Restricted
Stock subject to this Award are not eligible to be enrolled in any dividend
re-investment program until the restrictions thereon expire.

 

10.                                 Adjustment
of Shares for Recapitalization, Etc. 
In the event there is any change in the outstanding Stock of the Company
by reason of any reorganization, recapitalization, stock split, stock dividend,
combination of shares or otherwise, there shall be substituted for or added to
each share of Stock theretofore appropriated or thereafter subject, or which
may become subject, to this Award, the number and kind of shares of stock or
other securities into which each outstanding share of Stock shall be so changed
or for which each such share shall be exchanged, or to which each such share
shall be entitled, as the case may be. 
Adjustment under the preceding provisions of this Section 10 will occur
automatically upon any such change in the outstanding Stock of the
Company.  No fractional interest will be
issued under the Plan on account of any such adjustment.

 

11.                                 Conditions to Delivery
of Stock and Registration.  Nothing
herein shall require the Company to issue or the transfer agent to deliver any
shares with respect to the Award if (a) that issuance would, in the
opinion of counsel for the Company, constitute a violation of the Securities
Act of 1933, as amended, or any similar or superseding statute or statutes, any
other applicable statute or regulation, or the rules of any applicable
securities exchange or securities association, as then in effect.  From time to time, the Board and appropriate
officers of the Company are authorized to and shall take whatever actions are
necessary to file required documents with governmental authorities, stock
exchanges, and other appropriate persons to make shares of Stock available for
issuance.

 

12.                                 Payment of Taxes.  The delivery of shares of Stock pursuant to
this Award is conditioned upon satisfaction of any withholding obligation
described in this Section 12.  The
Awardee may be required, from time to time, in the Company’s discretion, to pay
to the Company (or any Subsidiary or Affiliate as applicable), the amount that
the Company deems necessary to satisfy the Company’s or its Subsidiary’s or
Affiliate’s current or future obligation to withhold federal, state or local
income or other taxes incurred by the Awardee as a result of the Award.  With respect to any required tax withholding,
the Awardee may (a) upon election at the time and in the manner prescribed
by the Company, direct the Company to purchase from the Awardee the number of
shares of Restricted Stock to be issued upon vesting equal in value to the
amount of such obligation, based on the shares’ Fair Market Value at the time
such obligation is incurred; (b) deliver to the Company sufficient shares
of Stock to satisfy such obligations, based on the shares’ Fair Market Value at
the time such obligation is incurred; or (c) deliver sufficient cash to
the Company to satisfy such obligations. 
The Company may, in its sole discretion, deny any request to satisfy
withholding obligations through Stock instead of cash.  In the event the Company subsequently
determines that the aggregate Fair Market Value of any shares of Stock withheld
as payment of any tax withholding obligation is insufficient to discharge that
tax withholding obligation, then the Awardee shall pay to the Company,
immediately upon the Company’s request, the amount of that deficiency in cash.

 

13.                                 Company Records.  Records of the Company or its Subsidiaries or
Affiliates regarding any period(s) of service on the Board, termination of
service and the reason therefor,

 

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and other matters
shall be conclusive for all purposes hereunder, unless determined by the
Company to be incorrect.

 

14.                                 No Liability for
Good Faith Determinations.  The
members of the Board and the Committee shall not be liable for any act,
omission, interpretation or determination taken or made in good faith with
respect to this Agreement or the Restricted Stock granted hereunder and all
members of the Board or the Committee and each and any officer or employee of
the Company acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company in respect of any such action,
determination or interpretation.

 

15.                                 Severability.  If any provision of this Agreement is held to
be illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining provisions hereof, but such provision shall be fully
severable and this Agreement shall be construed and enforced as if the illegal
or invalid provision had never been included herein.

 

16.                                 Successors.  This Agreement shall be binding upon the
Awardee, their legal representatives, heirs, legatees and distributees, and
upon the Company, its successors and assigns.

 

17.                                 Notices.  Any notices required by or permitted to be
given to the Company under this Agreement shall be made in writing and
addressed to the Secretary of the Company in care of the Company’s Legal
Department, 6300 Lamar Avenue, Overland Park, Kansas 66202.  Any such notice shall be deemed to have been
given when received by the Company.

 

18.                                 Headings.  The titles and headings herein are included
for convenience of reference only, do not constitute a part of this Agreement
and shall not be deemed to limit or affect any of the provisions hereof.

 

19.                                 Rules of
Construction.  This Agreement has
been executed and delivered by the Company in Kansas and shall be construed and
enforced in accordance with the laws of said State, other than any choice of
law rules calling for the application of laws of another jurisdiction.  Should there be any inconsistency or
discrepancy between the provisions of this Agreement and the terms and
conditions of the Plan under which this Award is granted, the provisions in the
Plan shall govern and prevail.

 

20.                                 Amendment.  This Agreement may be amended by the
Committee; provided, however, that no amendment may decrease rights inherent in
this Award prior to such amendment without the express written consent of the
parties hereto.  Notwithstanding the
provisions of this Section 20, this Agreement may be amended by the
Committee to the extent necessary to comply with applicable laws and
regulations and to conform the provisions of this
Agreement to any changes thereto.

 

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21.                                 Effective Date.  This Agreement has been executed this ____
day of ____________, 20___, effective as of __________________, 20___.

 

 

	
   

  	
  WADDELL & REED FINANCIAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Daniel P. Connealy, Senior Vice President

  and Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Company”

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [Name]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Awardee”

  	
   

  
					

 

4

 

STOCK
POWER

 

FOR VALUE RECEIVED, __________________ does hereby assign and transfer unto Waddell & Reed Financial, Inc. (51-0261715) _________  shares of Class A common stock of Waddell & Reed
Financial, Inc., a Delaware corporation, granted on _____________________, 20___,
as evidenced by the Restricted Stock Award Agreement of even date herewith and
standing in the name of the undersigned on the books of Waddell & Reed
Financial, Inc.  The undersigned does
hereby appoint EquiServe Trust Company, N.A. as attorney-in-fact to transfer
the said stock on the books of Waddell & Reed Financial, Inc. with full
power of substitution in the premises.

 

Dated as of
this ___ day of _____________, 20___.

 

	
   

  	
   

  	
   

  
	
   

  	
  [Name]Exhibit
10.6

 

A.                                    Performance
Criteria for Incentive Plan Awards for Year 2005 Pursuant to the 2003 Executive
Incentive Plan

 

1.                                       The
aggregate incentive plan cash award for all participants (the “Incentive Plan
Cash Award”) shall equal four percent of the Adjusted 2005 Operating Income
(defined below).  The Compensation
Committee, in its discretion, will designate the executive officers of the
Company that are eligible to receive cash incentive awards, as well as set the
percentage of the aggregate Incentive Plan Cash Award each participant is
eligible to earn upon achievement of the performance goals (for each
participant, the “Individual Cash Incentive Award”). Notwithstanding the
foregoing, the Compensation Committee may, in its sole discretion, elect to award
any participant an amount that is less than the actual Individual Cash
Incentive Award the participant is eligible to earn as determined by the
participant’s designated percentage, provided that any such decrease in the
Individual Cash Incentive Award for any one participant shall not increase the
award for any other participant.

 

2.                                       The
term “Adjusted 2005 Operating Income” means the operating income of the
Company for its fiscal year ending December 31, 2005 (the “2005 Year”),
determined pursuant to generally accepted accounting principles, adjusted as
follows:  (i) such amount shall be
increased by the Company’s interest expense for the 2005 Year; (ii) such amount
shall be increased by the Company’s federal, state and local income taxes for
the 2005 Year; (iii) such amount shall be increased by bonuses paid under
Company executive compensation and deferred compensation plans for the 2005
Year; (iv) such amount shall be increased by losses from publicly-disclosed
transactions entered into during the 2005 Year that the Compensation Committee
considers to be extraordinary or non-recurring; (v) such amount shall be
decreased by gains from publicly-disclosed transactions entered into during the
2005 Year that the Compensation Committee considers to be extraordinary or
non-recurring; (vi) such amount shall be increased by any net losses during the
2005 Year from entities, trades or businesses and lines of businesses acquired
from unrelated parties (“2005 Acquisitions”); and (vii) such amount
shall be decreased by any net profits during the 2005 Year from entities,
trades or businesses and lines of businesses acquired pursuant to 2005
Acquisitions.

 

B.                                    Performance
Criteria for Restricted Stock Awards for Year 2005 Pursuant to the 1998 Stock
Incentive Plan

 

1.                                       The
aggregate incentive plan restricted stock award for all participants (the “Incentive
Plan Restricted Stock Award”) shall equal 420,000 shares of Company common
stock, provided that no award shall be made unless the Threshold Condition
(defined below) is met. The Compensation 

 

 

Committee, in its discretion, will designate
the executive officers of the Company that are eligible to receive restricted
stock incentive awards, as well as set the percentage of the aggregate
Incentive Plan Restricted Stock Award each participant is eligible to earn upon
the achievement of the performance goals (for each participant, the “Individual
Restricted Stock Incentive Award”). 
Notwithstanding the foregoing, the Compensation Committee may, in its
sole discretion, elect to award any participant a number of shares of
restricted stock that is less than the actual Individual Restricted Stock
Incentive Award the participant is eligible to earn as determined by the
participant’s designated percentage, provided that any such decrease in the
Individual Restricted Stock Incentive Award for any one participant shall not
increase the award for any other participant. 
These awards, if any, are to be granted as of the close of business on
the first calendar day of the second quarter of 2006 on which the New York
Stock Exchange is open for business.

 

2.                                       The
term “Threshold Condition” means that the quotient of (i) Adjusted 2005 Operating  Income
(defined in Section A), divided by (ii) Adjusted 2005 Equity (defined
below), equals or exceeds 0.40.

 

3.                                       The
term “Adjusted 2005 Equity” means the quotient of (i) the sum of Beginning 2004
Equity (defined below) plus Adjusted Ending 2005 Equity (defined below),
divided by (ii) 2.0.

 

4.                                       The
term “Beginning 2005 Equity” means the shareholders equity of the Company as of
January 1, 2005, determined pursuant to generally accepted accounting
principles.

 

5.                                       The
term “Adjusted Ending 2005 Equity” means the shareholders equity of the Company
as of December 31, 2005, determined pursuant to generally accepted
accounting principles, adjusted as follows: 
(i) such amount shall be increased by bonuses paid under Company
executive compensation and deferred compensation plans for the 2005 Year; (ii)
such amount shall be increased by losses from publicly-disclosed transactions
entered into during the 2005 Year that the Compensation Committee considers
extraordinary or non-recurring; (iii) such amount shall be decreased by gains
from publicly-disclosed transactions entered into during the 2005 Year that the
Compensation Committee considers to be extraordinary or non-recurring; (iv)
such amount shall be increased by any net losses during the 2005 Year from
entities, trades or businesses and lines of businesses acquired pursuant to
2005 Acquisitions; and (v) such amount shall be decreased by any net profits
during the 2005 Year from entities, trades or businesses and lines of
businesses acquired pursuant to 2004 Acquisitions.

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