Document:

Exhibit 10.6

 

WADDELL & REED
FINANCIAL, INC.

1998 STOCK INCENTIVE PLAN

As Amended and Restated

 

Waddell & Reed
Financial, Inc., previously established the Waddell & Reed
Financial, Inc. 1998 Stock Incentive Plan, as Amended and Restated, as
amended effective December 12, 2002 and as further amended effective on
each of January 16, 2003 (which January 16, 2003 amendment was
submitted to and approved by the Company’s stockholders at the Company’s 2003
Annual Meeting of Stockholders), January 1, 2004, October 14, 2004, October 15,
2005, April 11, 2007 (which April 11, 2007 amendment was submitted to
and approved by the Company’s stockholders at the Company’s 2007 Annual Meeting
of Stockholders) (as amended and restated, the “Original Plan”) and September 12,
2008.  Pursuant to the powers reserved in
Section 11 of the Original Plan, the Original Plan is amended
effective January 1, 2009 as follows (the Original Plan as amended and
restated hereby, the “Plan”).

 

SECTION 1.  Purposes of the Plan; Definitions.

 

The purposes of the Plan
are to enable the Company, its Subsidiaries and Affiliates to attract and
retain employees, directors and consultants who contribute to the Company’s
success by their ability, ingenuity and industry, and to enable such employees,
directors and consultants to participate in the long-term success and growth of
the Company through an equity interest in the Company.

 

For purposes of the Plan,
the following terms shall be defined as set forth below:

 

“Accounting Firm” has the meaning assigned to such
term in Section 12(b).

 

“Affiliate” means (a) any
corporation (other than a Subsidiary), partnership, joint venture or any other
entity in which the Company owns, directly or indirectly, at least a 10%
beneficial ownership interest, and (b) the Company’s parent company, if
any.

 

“Annual SORP Exercise Date” has the meaning assigned
to such term in Section 5(m).

 

“Award Agreement”
means a written agreement by and between the Company and an awardee evidencing
an award of Stock Options, Director Stock Options, Stock Appreciation Rights,
Restricted Stock, Director Restricted Stock or Deferred Stock, as applicable,
under the Plan.

 

“Board” means the Board
of Directors of the Company.

 

“Business Day” means a
day on which the New York Stock Exchange or other national securities exchange
or over-the-counter market on which the Shares are then traded is open for
business.

 

 

“Cause” means a participant’s willful misconduct or
dishonesty, either of which is directly and materially harmful to the business
or reputation of the Company or any Subsidiary or Affiliate; provided, however,
that in the case where there is an employment or consulting agreement between a
participant and the Company or any Subsidiary or Affiliate at the time of grant
which defines “cause” (or words of like import), it shall have the meaning
ascribed to such term (or words of like import) under such agreement.

 

“Change of Control” has the meaning assigned to such
term in Section 11(b).

 

“Change of Control Price” has the meaning assigned to such
term in Section 11(d).

 

“Code” means the Internal Revenue Code of 1986, as
amended, and any successor thereto.

 

“Committee” means the Compensation Committee of the
Board.

 

“Commission” means the United States Securities and
Exchange Commission.

 

“Company” means Waddell & Reed Financial, Inc.,
a Delaware corporation, and its successors.

 

“Covered Employee” means (a) the chief executive
officer of the Company, and (b) a person designated by the Committee, at
the time of grant of Performance Awards, whom the Committee believes is likely
to be a “covered employee” (within the meaning of Section 162(m)(3) of
the Code) with respect to the fiscal year during which the Performance Award is
granted or in the foreseeable future.

 

“Deferral Period” means the period of time during
which the receipt of Shares underlying a Deferred Stock award is deferred.

 

“Deferred Stock” means an award of the right to
receive Shares at the end of a specified Deferral Period granted pursuant to Section 9.

 

“Director Restricted Stock” means any Shares of
Restricted Stock granted pursuant to Section 6 to an Outside
Director.

 

“Director Stock Option” means any option to purchase
Shares granted pursuant to Section 6 to an Outside Director.

 

“Disability” means total and permanent disability as
determined under the Company’s long-term disability program, whether or not the
participant is covered under such program. 
If no such program is in effect, the Disability of a director shall be
determined in good faith by the Board (excluding such director).

 

2

 

“Early Retirement” means retirement from active
employment with the Company, any Subsidiary, or any Affiliate pursuant to the
early retirement provisions of the applicable tax-qualified Company pension
plan.

 

“Excess Parachute Payment” has the meaning assigned to
such term in Section 12(a).

 

“Exchange Act” means the Securities Exchange Act of
1934, as amended, and any successor thereto.

 

“Fair Market Value” means, unless otherwise determined
in good faith by the Committee or required by applicable law, as of any given
date, the closing sale price of a Share on such date on the New York Stock
Exchange or other principal national securities exchange or over-the-counter
market on which the Shares are then traded or, if there is no sale on that day,
then on the last previous Business Day on which a sale was reported.

 

“Gross-Up Payment” has the meaning assigned to such
term in Section 12(a).

 

“Immediate Family” means the children, grandchildren
or spouse of any optionee.

 

“Normal Retirement” means retirement from active
employment with the Company, any Subsidiary, or any Affiliate pursuant to the
normal retirement provisions specified in the applicable tax-qualified Company
pension plan.

 

“Outside Director” means any director of the Company
who is not an officer or employee of the Company, any Subsidiary or any
Affiliate.

 

“Performance Award” means any Stock Option, Stock
Appreciation Right, or Restricted Stock or Deferred Stock award to a Covered
Employee that the Committee intends to be “performance-based compensation”
under Section 162(m)(4)(C) of the Code.

 

“Plan” means the Waddell & Reed Financial, Inc.
1998 Stock Incentive Plan, as Amended and Restated, as set forth herein and as
may be amended, modified or supplemented from time to time.

 

“Potential Change of Control” has the meaning assigned
to such term in Section 11(c).

 

“Restricted Stock” means Shares that are subject to
certain restrictions and/or a risk of forfeiture granted pursuant to Section 8.

 

“SAR/Option Performance Award” means any Performance
Award that is a Stock Option or Stock Appreciation Right.

 

“Shares” means the Company’s Class A common
stock, par value $.01.

 

3

 

“SORP” has the meaning assigned to such term in Section 5(m).

 

“SORP Option” has the meaning assigned to such term in
Section 5(m).

 

“Stock Appreciation Right” means a right to surrender
to the Company all or a portion of a Stock Option in exchange for an amount in
cash or Shares as determined in the manner prescribed in Section 7(b)(ii),
granted pursuant to Section 7.

 

“Stock Option” means an option to purchase Shares
granted pursuant to Section 5 that is not intended to be, nor
designated as, an “incentive stock option” within the meaning of Section 422
of the Code.

 

“Stock Performance Award” means any Performance Award
other than a SAR/Option Performance Award.

 

“Subsidiary” means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if
each of the corporations (other than the last corporation in the unbroken
chain) owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in the chain.

 

“Tax Counsel” has the meaning assigned to such term in
Section 12(a).

 

SECTION 2. 
Administration.

 

The Plan shall be
administered by the Committee which shall at all times comply with any
applicable requirements of Rule 16b-3 of the Exchange Act. All members of
the Committee shall also be “outside directors” within the meaning of Section 162(m) of
the Code.  If at any time no Committee
shall be in office, then the functions of the Committee specified in the Plan
shall be exercised by the Board.

 

The Board shall have the
power and authority to determine all terms, conditions and provisions of
Director Stock Option and Director Restricted Stock awards pursuant to Section 6.

 

The Committee shall have
the power and authority to grant to eligible persons, pursuant to the terms of the
Plan: (i) Stock Options; (ii) Stock Appreciation Rights; (iii) Restricted
Stock and/or (iv) Deferred Stock. 
In particular, the Committee shall have the authority:

 

(a)           to select the consultants, officers
and other key employees of the Company, its Subsidiaries, and its Affiliates to
whom Stock Options, Stock Appreciation Rights, Restricted Stock or Deferred
Stock, or a combination of the foregoing, from time to time will be granted
hereunder;

 

(b)           to determine whether and to what
extent Stock Options, Stock Appreciation Rights, Restricted Stock or Deferred
Stock, or a combination of the foregoing, are to be granted hereunder;

 

4

 

(c)           to determine the number of Shares to
be covered by each such award granted hereunder; and

 

(d)           to determine the terms and
conditions, not inconsistent with the terms of the Plan, of any award granted
hereunder, including, but not limited to, any restriction on any award and/or
the Shares relating thereto based on performance and/or such other factors as
the Committee may determine, in its sole discretion, and any vesting
acceleration features based on performance and/or such other factors as the
Committee may determine, in its sole discretion.

 

The Committee shall have
the authority to adopt, alter and repeal such administrative rules, guidelines
and practices governing the Plan as it shall, from time to time, deem
advisable; to interpret the terms and provisions of the Plan, any award issued
thereunder, and any Award Agreements relating thereto; and to otherwise
supervise the administration of the Plan.

 

All decisions made by the
Committee pursuant to the provisions of the Plan shall be final and binding on
all persons, including the Company and Plan participants.

 

Each
award granted under the Plan shall be evidenced by, and subject to terms of, an
Award Agreement, in such form as the Committee shall from time to time approve,
which shall be executed by an authorized officer of the Company and the
awardee.  Director Stock Options and Director Restricted Stock under the
Plan shall be evidenced by an Award Agreement, in such form as the Committee
shall from time to time approve, in conformity with the terms and conditions
the Board has specified with respect to such awards and the terms of Section 6
and the Plan.  The Award Agreement shall
contain provisions regarding (i) the number of Shares subject to the
award, (ii) the exercise price per Share, if any, of the award and the
means of payment therefor, (iii) the term of the award, and (iv) such
other terms and conditions not inconsistent with the Plan as may be determined
from time to time by the Committee.  A prospective awardee shall not have
any rights with respect to any such award, unless and until such awardee has
executed an Award Agreement evidencing the award, has delivered a fully
executed copy thereof to the Company, and has otherwise complied with the then
applicable terms and conditions.

 

SECTION 3. 
Shares Subject to Plan.

 

Subject
to adjustment as provided in this Section 3, the total number of Shares reserved and
available for issuance in connection with awards under the Plan shall not
exceed 30,000,000 Shares.

 

If any Shares subject to
any award granted pursuant to the Plan are forfeited or such award otherwise
terminates, such Shares shall again be available for distribution in connection
with future awards under the Plan.

 

In the event of any
merger, reorganization, consolidation, recapitalization, stock dividend, or
other change in corporate structure affecting the Shares, an equitable
substitution or adjustment shall be made in (i) the aggregate number of
Shares reserved for issuance under the Plan, (ii) the number and exercise
price of Shares subject to outstanding Stock Options granted under the Plan,

 

5

 

(iii) the number of
Shares subject to Restricted Stock or Deferred Stock awards granted under the
Plan, (iv) the aggregate number of Shares available for issuance to any
participant pursuant to Section 4A(a), and (v) the number and
exercise price, if any, of Shares subject to Director Stock Option and Director
Restricted Stock awards to be granted each year pursuant to Section 6,
as may be determined to be appropriate by the Committee, in its sole
discretion, provided that the number of Shares subject to any award shall
always be a whole number. Such adjusted number and exercise price of Shares
shall also be used to determine the amount payable by the Company upon the
exercise of any Stock Appreciation Right associated with any Stock Option.

 

SECTION 4.       Eligibility.

 

(a)           Consultants
and Employees. 
Consultants, officers and other key employees of the Company, its
Subsidiaries or its Affiliates who are responsible for or contribute to the
management, growth and/or profitability of the business of the Company, its
Subsidiaries, or its Affiliates are eligible to be granted Stock Options, Stock
Appreciation Rights, Restricted Stock or Deferred Stock.  Except as provided in Section 6,
Plan participants shall be selected from time to time by the Committee, in its
sole discretion, from among those eligible, and the Committee shall determine,
in its sole discretion and subject to Section 4A(a), the number of
Shares covered by each award.

 

(b)           Outside
Directors.  Each Outside
Director is eligible to receive Director Stock Option and/or Director
Restricted Stock awards pursuant to Section 6.

 

SECTION 4A.    Performance Awards and Award Limit.

 

(a)           Individual Award Limitations.  The Committee may grant awards to a Covered
Employee that are either Performance Awards or not Performance Awards.  In any calendar year during any part of which
the Plan is in effect, a participant (whether or not a Covered Employee) may
not be granted awards under the Plan (Performance Awards or otherwise) that have,
in the aggregate, more than 3,750,000 “points,” with each Stock Appreciation
Right and Stock Option having one “point” for each Share granted with respect
thereto, and each Restricted Stock and Deferred Stock award having three “points”
with respect to each Share granted with respect thereto.  For illustrative purposes, a grant of a Stock
Option for 10 Shares has 10 “points,” and a grant of 10 Shares of Restricted
Stock has 30 “points.”  If an award is
canceled, such award continues to be counted against the maximum number of
Shares for which awards may be granted to the participant under the Plan, as
set forth in this Section 4A(a).

 

(b)           Performance Goals for Performance Awards.  Each Performance Award shall be structured so
as to qualify as “performance-based compensation” under Section 162(m)(4)(C) of
the Code, as described below.

 

(i)            SAR/Option
Performance Awards.  The
exercise price (in the case of a Stock Option) or the base price (in the case
of a Stock Appreciation Right) of a SAR/Option Performance Award shall not be
less than 100% of the Fair Market Value of the Shares on the date of grant of
such SAR/Option Performance Award.

 

6

 

(ii)           Stock
Performance Awards.  The
grant, vesting and/or settlement of a Stock Performance Award shall be
contingent upon achievement of pre-established performance goals and other
terms set forth in this Section 4A(b)(ii).

 

(A)          Performance Goals Generally.  The performance goals for such Performance
Awards shall consist of one or more business criteria and a targeted level or
levels of performance with respect to each such criteria, as specified by the
Committee consistent with this Section 4A(b)(ii).  Performance goals shall be objective and
shall otherwise meet the requirements of Section 162(m) of the Code,
including the requirement that the level or levels of performance targeted by
the Committee result in the achievement of such performance goals being “substantially
uncertain.”  The Committee may condition
the grant, vesting, exercise and/or settlement of any Performance Award upon
achievement of any one or more performance goals.  Performance goals may differ for Performance
Awards granted to any one awardee or to different awardees.

 

(B)           Business Criteria.  One or more of the following business
criteria (including or excluding extraordinary and/or non-recurring items to be
determined by the Committee in advance) for the Company, on a consolidated
basis, and/or for specified Subsidiaries or business or geographical units of
the Company (except with respect to the total stockholder return and earnings
per share criteria), shall be used by the Committee in establishing performance
goals for Performance Awards:  (1) earnings
per share; (2) increase in revenues; (3) increase in cash flow; (4) increase
in cash flow return; (5) return on net assets; (6) return on assets; (7) return
on investment; (8) return on capital; (9) return on equity; (10) economic
value added; (11) operating margin; (12) contribution margin;
(13) net income; (14) pre-tax earnings; (15) pre-tax earnings before
interest, depreciation and amortization; (16) pre-tax operating earnings
after interest expense and before incentives, service fees, and extraordinary
or special items; (17) operating income; (18) total stockholder
return; (19) debt reduction; and (20) any of the above goals determined on
an absolute or relative basis, or as adjusted in any manner which may be
determined in the discretion of the Committee, or as compared to the
performance of a published or special index deemed applicable by the Committee
including, but not limited to, the Standard & Poor’s 500 Stock Index
or a group of competitor companies, including the group selected by the Company
for purposes of the stock performance graph contained in the proxy statement
for the Company’s most recent annual meeting of stockholders.

 

7

 

(C)           Performance Period; Timing for
Establishing Performance Goals. 
Achievement of performance goals shall be measured over a performance
period of up to ten years, as specified by the Committee.  Performance goals shall be established not
later than 90 days (or, for performance periods of less than 1 year, the
passage of 25% of the performance period) after the beginning of any
performance period applicable to such Performance Award, or at such other date
as may be required or permitted for “performance-based compensation” under Section 162(m) of
the Code.

 

(D)          Settlement of Performance Awards; Other
Terms.  After the end of
each performance period, the Committee shall determine the amount, if any, of
such Performance Award payable to a Covered Employee.  Settlement of such Performance Awards shall
be in cash, Shares, or other awards or property, as determined in the sole
discretion of the Committee.  The
Committee may, in its discretion, reduce the amount of any Performance Award to
be settled upon achievement of the associated performance goal or goals, but
may not exercise discretion to increase any such amount payable to a Covered
Employee with respect to such Performance Award.

 

(c)           General.  The Committee shall retain full power and
discretion to accelerate, waive or modify, at any time, any term or condition
of a Performance Award that is not mandatory under the Plan; provided, however,
that notwithstanding any other provision of the Plan, the Committee shall not
have any discretion to accelerate, waive or modify any term or condition of an
award that is intended to qualify as “performance-based compensation” for purposes
of Section 162(m) of the Code if such discretion would cause such
Performance Award not to so qualify.

 

(d)           Written Determinations.  The Committee may not delegate any
responsibility relating to Performance Awards. 
All determinations by the Committee as to the establishment of
performance goals, the amount of any potential individual Performance Award,
and the achievement of performance goals relating to Stock Performance Awards
shall be made in writing in the case of any award intended to qualify as “performance-based
compensation” under Section 162(m) of the Code.  The determination as to whether any
performance goal, with respect to any Performance Award, has been satisfied
shall be made prior to the payment of any compensation relating to a Performance
Award.

 

(e)           Performance Awards under Section 162(m) of
the Code.  It is
the intent of the Company that Performance Awards granted to persons who are or
likely will become “covered employees” within the meaning of Section 162(m) of
the Code shall constitute “performance-based compensation” within such Section of
the Code.  Accordingly, the terms of this
Section 4A, including the definitions of “Covered Employee” and
other terms used herein, shall be interpreted in a manner consistent with Section 162(m) of
the Code.  If any provision of the Plan
as in effect on the date of adoption thereof or as of the 

 

8

 

date of any Award Agreements relating to Performance
Awards intended to comply with Section 162(m) of the Code does not
comply or is inconsistent with the requirements of such Section of the
Code, then such provision shall be construed or deemed amended to the extent
necessary to conform to such requirements.

 

(f)            Conflicts
Among Plan Provisions.  To
the extent this Section 4A conflicts with any other provision of
the Plan, this Section 4A shall control.

 

SECTION 5.  Stock Options for Consultants and Employees.

 

Stock Options may be
granted either alone or in addition to other awards granted under the Plan. Any
Stock Option granted under the Plan shall be in such form as the Committee may
from time to time approve, and the provisions thereof need not be the same with
respect to each optionee.

 

The Committee shall have
the authority to grant any consultant, officer or key employee Stock Options
(with or without Stock Appreciation Rights). 
Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions,
not inconsistent with the terms of the Plan, as the Committee shall deem
desirable:

 

(a)           Exercise Price.  The exercise price per Share of any Stock
Option shall be determined by the Committee at the time of grant but shall not
be less than 100% of the Fair Market Value of the Shares on the date of grant,
and shall be indicated in the Award Agreement.

 

(b)           Option Term.  The term of each Stock Option shall be fixed
by the Committee.

 

(c)           Exercisability.  Stock Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be determined
by the Committee; provided, however, that except as provided in Sections 5(f),
5(g), 5(h) or 11, no Stock Option shall be
exercisable prior to six months from the date of grant.  Notwithstanding the limitations set forth in
the preceding sentence, the Committee may accelerate the exercisability of any
Stock Option, at any time in whole or in part, based on performance and/or such
other factors as the Committee may determine in its sole discretion.

 

(d)           Exercise of Stock Options.  A Stock Option, or portion thereof, may be
exercised in whole or in part only with respect to whole Shares.  Stock Options may be exercised in whole or in
part at any time during the exercise period by giving written notice of
exercise to the Company specifying the number of Shares to be purchased,
accompanied by payment in full of the exercise price, in cash, by check or such
other instrument as may be acceptable to the Committee (including instruments
providing for “cashless exercise”).  To the
extent provided by the Committee, payment in full or in part may also be made
in the form of unrestricted Shares already owned by the optionee (based on the
Fair Market Value of the Shares on the date the Stock Option is exercised).  An optionee shall have rights to 

 

9

 

dividends and other stockholder rights with respect to
Shares subject to a Stock Option only after the optionee has given written
notice of exercise and has paid in full for such Shares.

 

(e)           Transferability of Options.  A Stock Option Award Agreement may permit an
optionee to transfer such Stock Option to members of his or her Immediate
Family, to one or more trusts for the benefit of such Immediate Family members,
or to one or more partnerships where such Immediate Family members are the only
partners if (i) the Award Agreement setting forth such Stock Option
expressly provides for the transfer thereof with the express written consent of
the Committee, and (ii) the optionee does not receive any consideration in
any form whatsoever for such transfer. 
Any Stock Option so transferred shall continue to be subject to the same
terms and conditions in the hands of the transferee as were applicable to such
Stock Option immediately prior to the transfer thereof.  Any Stock Option (A) not granted
pursuant to an Award Agreement expressly allowing the transfer of such Stock
Option, or (B) that the Award Agreement for which has not been amended
expressly to permit its transfer shall not be transferable by the optionee
other than by will or by the laws of descent and distribution.

 

(f)            Termination by Death.  Unless otherwise determined by the Committee,
if an optionee’s employment with the Company, any Subsidiary, or any Affiliate
terminates by reason of death, any Stock Option held by such optionee shall
become immediately exercisable, and thereupon (or if an optionee dies following
termination of employment by reason of Disability or Early or Normal
Retirement), such Stock Option may thereafter be exercised by the legal
representative of the estate or by the legatee of the optionee under the will
of the optionee during the period ending on the first anniversary of the
optionee’s death.

 

(g)           Termination by Reason of
Disability.  Unless
otherwise determined by the Committee, if an optionee’s employment with the
Company, any Subsidiary or any Affiliate terminates by reason of Disability,
any Stock Option held by such optionee shall be immediately exercisable and may
thereafter be exercised during the period ending on the expiration of the
stated term of such Stock Option.

 

(h)           Termination by Reason of
Retirement.  Unless
otherwise determined by the Committee, if an optionee’s employment with the
Company, any Subsidiary or any Affiliate terminates by reason of (i) Normal
Retirement, any Stock Option held by such optionee shall become immediately
exercisable and shall expire at the end of the stated term of such Stock
Option, or (ii) Early Retirement, any Stock Option held by such optionee
shall terminate three years from the date of such Early Retirement or upon the
expiration of the stated term of the Stock Option, whichever is earlier.  In the event of Early Retirement, there shall
be no acceleration of vesting of the Stock Option, unless otherwise determined
by the Committee at or after grant, and such Stock Option may only be exercised
to the extent it is or has become exercisable prior to termination of the Stock
Option.

 

(i)            Termination for Cause.  If the optionee’s employment with the
Company, any Subsidiary or any Affiliate is terminated for Cause, any Stock
Option held by such optionee shall immediately be terminated upon the giving of
notice of termination of employment.

 

10

 

(j)                                     Other Termination.  Unless otherwise determined by the
Committee, if the optionee’s employment with the Company, any Subsidiary or any
Affiliate is (i) involuntarily terminated by the optionee’s employer
without Cause, any Stock Option held by such optionee shall terminate three
months from the date of termination of employment or upon the expiration of the
stated term of the Stock Option, whichever is earlier, or (ii) voluntarily
terminated for any reason, any Stock Option held by such optionee shall terminate
one month from the date of termination of employment or upon the expiration of
the stated term of the Stock Option, whichever is earlier.  In either event, there shall be no
acceleration of vesting of the Stock Option unless otherwise determined by the
Committee and such Stock Option may only be exercised to the extent it is or
has become exercisable prior to termination of the Stock Option.

 

(k)                                  Termination upon Change of
Control.  Notwithstanding the provisions of Section 5(j),
but subject to Section 11, if the optionee’s employment with the
Company, any Subsidiary or any Affiliate is involuntarily terminated by the
optionee’s employer without Cause by reason of, or within three months after, a
Change of Control, any Stock Option held by such optionee shall terminate six
months and one day after such Change of Control.

 

(l)                                     For purposes of the Plan, all references
to termination of employment shall be construed to mean termination of all
service relationships with the Company and its Subsidiaries and Affiliates,
including employees, independent contractors or consultants; provided, however,
that nothing in the Plan shall be construed to create or continue a common law
employment relationship with any individual characterized by the Company, a Subsidiary
or an Affiliate as an independent contractor or consultant.  For purposes of clarity, if a common law
employee ceases to perform services for the Company, its Subsidiaries or their
Affiliates as a common law employee but continues to perform services for the
Company, its Subsidiaries or their Affiliates as a consultant or independent
contractor, then the transition from employee to consultant or independent
contractor will not be deemed to be a termination of employment of the
individual for purposes of the Plan; provided, however, that nothing in the
Plan shall be construed to create or continue a common law employment
relationship with any individual characterized by the Company, a Subsidiary or
an Affiliate as an independent contractor or consultant.

 

(m)                               The Committee, in its discretion, may
include in any Stock Option Award Agreement, a “stock option restoration
program” (“SORP”) provision. Such provision shall provide, without limitation,
that, if payment on exercise of a Stock Option is made in the form of Shares,
and the exercise occurs on the Annual SORP Exercise Date, an additional Stock
Option to purchase Shares (a “SORP Option”) will automatically be granted to
the optionee effective as of the Annual SORP Exercise Date.  A SORP Option shall (i) have an exercise
price equal to 100% of the Fair Market Value of the Shares on the Annual SORP
Exercise Date, (ii) have a term equal to that of the originally exercised
Stock Option giving rise to the SORP Option, not to exceed a maximum term of
10 years and two days from the issuance date of the SORP Option (subject
to any forfeiture provision or shorter limitation on exercise required under
the Plan), (iii) have an initial vesting date no earlier than six months
after the date of its issuance, and (iv) cover a number of Shares equal to
the number 

 

11

 

of
Shares used to pay the exercise price of the originally exercised Stock Option,
plus the number of Shares (if any) withheld or sold to cover income and
employment taxes (plus any selling commissions) with respect to such original
exercise.  “Annual SORP Exercise Date”
shall mean August 1, or if August 1 is not a Business Day, “Annual
SORP Exercise Date” shall mean the next succeeding Business Day. Notwithstanding
the foregoing, the Committee may delay the Annual SORP Exercise Date to the
extent it determines necessary to comply with regulatory or administrative
requirements.

 

SECTION 6. 
Director Stock Options and Director Restricted Stock.

 

(a)                                  Awards.  For each calendar year, either (i) Director
Stock Options, or (ii) an award of Shares of Director Restricted Stock shall be
automatically granted to each Outside Director on the first Business Day of
each calendar year, such number of Director Stock Options or Shares as the
Board in its sole discretion determines. 
The determination as to whether an award is made pursuant to clause (i)
or (ii) of this Section 6(a) shall be made in the sole discretion
of the Board.  The exercise price per
Share of any Director Stock Option granted pursuant to this Section 6(a)
shall be 100% of the Fair Market Value per Share on the date of grant.  Subject to Sections 6(d) and 11,
(A) Director Stock Options granted pursuant to this Section 6(a) shall
become exercisable six months from the date of grant for a term of ten years
and two days from the date of grant, and (B) the price, if any, to be paid, and
the time or times within which Director Restricted Stock may be subject to
forfeiture, or may be nontransferable, will be determined by the Board in its
sole discretion.  Except to the extent
otherwise provided in this Section 6 and Section 11, all terms
and conditions of Director Stock Option and Director Restricted Stock awards
shall be established by the Board in its sole discretion including, without
limitation, the nontransferability thereof and the time or times within which
such Restricted Stock may be subject to forfeiture.  Director Restricted Stock shall be subject to
the provisions of Sections 8(b) and 8(c).

 

(b)                                 Exercise of Director Stock
Options.  Any Director Stock Option, or portion
thereof, granted pursuant to the Plan may be exercised in whole or in part only
with respect to whole Shares.  Director
Stock Options may be exercised in whole or in part at any time during the
exercise period by giving written notice of exercise to the Company specifying
the number of Shares to be purchased, accompanied by payment in full of the
exercise price, in cash, by check or such other instrument as may be acceptable
to the Committee (including instruments providing for “cashless
exercise”).  As determined by the
Committee, in its sole discretion, payment in full or in part may also be made
in the form of unrestricted Shares already owned by the optionee (based on the
Fair Market Value of the Shares on the date the Director Stock Option is
exercised).  An optionee shall have
rights to dividends and other stockholder rights with respect to Shares subject
to a Director Stock Option only after the optionee has given written notice of exercise
and has paid in full for such Shares.

 

(c)                                  Transferability. 
No Director Stock Option shall be transferable by the optionee other
than by will or by the laws of descent and distribution, and all Director Stock
Options shall be exercisable, during the optionee’s lifetime, only by the
optionee; 

 

12

 

provided, however,
that the Committee may (but need not) permit other transfers where the
Committee concludes, in its sole discretion, that such transferability (i) does
not result in accelerated taxation, and (ii) is otherwise appropriate and
desirable, taking into account any factors considered relevant by the
Committee, including, without limitation, any state or Federal securities laws
applicable to transferable options.

 

(d)                                 Termination of Service. 
Upon an optionee’s termination of status as an Outside Director for any
reason, any Director Stock Options held by such optionee shall become
immediately exercisable and may thereafter be exercised during the period
ending on the expiration of the stated term of such Director Stock Option or,
upon such optionee’s death, during the period ending on the first anniversary
thereof.  Notwithstanding the foregoing
sentence, but subject to Section 11, if the optionee’s status as an
Outside Director terminates by reason of or within three months after a Change
of Control, each Director Stock Option held by such optionee shall terminate
upon the latest of (i) six months and one day after the Change in Control, or
(ii) the expiration of the stated term of such Director Stock Option.  Upon the termination of an awardee’s status
as an Outside Director by reason of death or Disability, all restrictions,
including restrictions regarding forfeiture and nontransferability, placed upon
any Director Restricted Stock held by such awardee shall immediately lapse and
such shares shall be deemed fully vested and nonforfeitable.  Upon the termination of an awardee’s status
as an Outside Director for any reason other than death or Disability, all
Shares of Director Restricted Stock granted pursuant to this Section 6
still subject to restriction shall be forfeited by such Outside Director, and
the Outside Director shall only receive the amount, if any, paid by the Outside
Director for such forfeited Director Restricted Stock.

 

SECTION 7. 
Stock Appreciation Rights.

 

(a)                                  Grant and Exercise. 
Stock Appreciation Rights may be granted in conjunction with all or part
of any Stock Option granted under the Plan either at or after the time of the grant
of such Stock Option.

 

A Stock Appreciation Right, or applicable portion
thereof, granted with respect to a given Stock Option shall terminate and no
longer be exercisable
upon the termination or exercise of the related Stock Option, except that, unless
otherwise provided by the Committee at the time of grant, a Stock Appreciation
Right granted with respect to less than the full number of Shares covered by a
related Stock Option shall only be reduced if and to the extent that the number
of Shares covered by the exercise or termination of the related Stock Option
exceeds the number of Shares not covered by the Stock Appreciation Right.

 

A Stock Appreciation Right may be exercised by an
optionee in accordance with Section 7(b), by surrendering the
applicable portion of the related Stock Option. Upon such exercise and
surrender, the optionee shall be entitled to receive an amount determined in
the manner prescribed in Section 7(b).  Stock Options which have been so surrendered,
in whole or in part, shall no longer be exercisable to the extent the related
Stock Appreciation Rights have been exercised.

 

13

 

 

(b)                                 Terms and Conditions.  Stock
Appreciation Rights shall be subject to such terms and conditions, not inconsistent
with the provisions of the Plan, as shall be determined from time to time by
the Committee, including the following:

 

(i)                                     Stock Appreciation Rights shall be
exercisable only at such time or times and to the extent that the related Stock
Options shall be exercisable in accordance with the provisions of Section 5
and this Section 7; provided, however, that any Stock Appreciation
Right granted subsequent to the grant of the related Stock Option shall not be
exercisable during the first six months of the term of the Stock Appreciation
Right, except that this additional limitation shall not apply in the event of
death or Disability of the optionee prior to the expiration of the six-month
period.

 

(ii)                                  Upon the exercise of a Stock Appreciation
Right, an optionee shall be entitled to receive up to, but not more than, an
amount in cash or Shares equal in value to the excess of the Fair Market Value
of one Share over the exercise price per Share specified in the related Stock
Option Award Agreement multiplied by the number of Shares with respect to which
the Stock Appreciation Right shall have been exercised, with the Committee
having the right to determine the form of payment.

 

(iii)                               Stock Appreciation Rights shall be transferable only
when and to the extent that the underlying Stock Option would be transferable
under Section 5(e) of the Plan.

 

(iv)                              Upon the exercise of a Stock Appreciation
Right, the related Stock Option or part thereof shall be deemed to have been
exercised for the purpose of the limitation set forth in Section 3
on the number of Shares to be issued under the Plan.

 

(v)                                 In its sole discretion, the Committee may
provide, at the time of grant of a Stock Appreciation Right, that such Stock
Appreciation Right can be exercised only in the event of a Change of Control
and/or a Potential Change of Control and that upon such event, the amount to be
paid upon the exercise of a Stock Appreciation Right shall be based on the
Change of Control Price.

 

SECTION 8. 
Restricted Stock.

 

(a)                                  Administration.  Shares of
Restricted Stock may be granted either alone or in addition to other awards
granted under the Plan.  Any Restricted
Stock award granted under the Plan shall be in such form as the Committee may
from time to time approve, and the provisions thereof need not be the same with
respect to each awardee.  The Committee
shall determine the consultants, officers, and key employees of the Company and
its Subsidiaries and Affiliates to whom, and the time or times at which,
Restricted Stock will be awarded; the number of Shares of Restricted Stock to
be awarded to any awardee; the price, if any, to 

 

14

 

be
paid by the awardee; the time or times within which such awards may be subject
to forfeiture and nontransferability; and all other terms and conditions of the
awards (subject to this Section 8 and Section 11). The
Committee may also condition the grant and/or vesting of Restricted Stock upon
the attainment of one or more specified performance goals, or such other
criteria as the Committee may determine, in its sole discretion.

 

(b)                                 Restrictions and Conditions.  Shares of
Restricted Stock awarded shall be subject to the following restrictions and
conditions:

 

(i)                                     Subject to the provisions of the Plan and
the applicable Award Agreement, during such period as may be set by the
Committee commencing on the grant date, Restricted Stock awarded pursuant to
the Plan shall not be sold, assigned, transferred, pledged or otherwise
encumbered.  The Committee may, in its
sole discretion, provide for the lapse 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 employment, based on performance and/or such other
factors as the Committee may determine, in its sole discretion.

 

(ii)                                  Except as provided in clause (i) above,
the awardee shall have, with respect to the Shares of Restricted Stock, all of
the rights of a stockholder of the Company, including the right to receive any
dividends. Dividends paid in stock of the Company or stock received in
connection with a stock split with respect to Restricted Stock shall be subject
to the same restrictions as on such Restricted Stock.  Certificates, if issued, for unrestricted
Shares, shall be delivered to the awardee promptly after, and only after, the
period of forfeiture shall expire without forfeiture with respect to such
Shares of Restricted Stock.

 

(c)                                  Book-Entry Accounts; Certificates
for Restricted Stock.  An account for each awardee shall be opened
with the Company’s transfer agent or such other administrator designated by the
Committee for the deposit of the Shares of Restricted Stock subject to the
award, or, in the sole discretion of the Committee, each awardee may be issued
a stock certificate registered in the name of the awardee evidencing such
Shares of Restricted Stock. The Committee shall specify that any such
certificate bear a legend, as provided in clause (i) below,
and/or be held in custody by the Company, as provided in clause (ii) below.

 

(i)                                     Any certificate evidencing Restricted
Stock shall bear an appropriate legend referring to the terms, conditions and
restrictions applicable to such Restricted Stock, substantially in the
following form:

 

“The transferability of this certificate
and the shares of stock represented hereby are subject to the terms and
conditions (including forfeiture) of the Waddell & Reed Financial, Inc.
1998 Stock Incentive Plan, as Amended and Restated (the “Plan”) and a
Restricted Stock Award Agreement entered into between the registered owner and
Waddell & Reed Financial, Inc. (the “Agreement”).  Copies of the Plan and

 

15

 

Agreement are on file in the
offices of Waddell & Reed Financial, Inc., 6300 Lamar Avenue,
Overland Park, Kansas 66202.”

 

(ii)                                  The Committee shall require that stock
certificates evidencing such Restricted Stock be held in custody by the Company
or the transfer agent or such other administrator designated by the Committee
until the restrictions thereon shall have lapsed, and that, as a condition of
any Restricted Stock award, the awardee shall have delivered to the Company a
stock power, endorsed in blank, relating to the Shares covered by such award.

 

(d)                                 Termination. 
Subject to the provisions of the Award Agreement and this Section 8,
upon termination of employment by reason of death or Disability, the
restrictions upon any Restricted Stock granted pursuant to Section 8(a) held
by the awardee shall immediately lapse and such shares shall become fully
vested and nonforfeitable.  Upon
termination of employment for any reason other than death or Disability, all
Shares of Restricted Stock granted pursuant to Section 8(a) still
subject to restriction shall be forfeited by the awardee, and the awardee shall
only receive the amount, if any, paid by the awardee for such forfeited
Restricted Stock.

 

SECTION 9. 
Deferred Stock Awards.

 

(a)                                  Administration.  Deferred Stock
may be granted either alone or in addition to other awards granted under the
Plan.  Any Deferred Stock granted under
the Plan shall be in such form as the Committee may from time to time approve,
and the provisions thereof need not be the same with respect to each awardee.  The Committee shall determine the
consultants, officers and key employees of the Company, its Subsidiaries or
Affiliates to whom, and the time or times at which, Deferred Stock shall be
awarded; the number of Shares of Deferred Stock to be awarded to any awardee;
the Deferral Period during which, and the conditions under which, receipt of
the Shares will be deferred; and all other terms and conditions of the award
(subject to this Section 9 and Section 11).  The Committee may also condition the grant
and/or vesting of Deferred Stock upon the attainment of specified performance
goals, or such other criteria as the Committee shall determine, in its sole
discretion.

 

(b)                                 Terms and Conditions.  Shares of
Deferred Stock awarded pursuant to this Section 9 shall be subject
to the following terms and conditions:

 

(i)                                     Subject to the provisions of the Plan and
the applicable Award Agreement, during the Deferral Period, Deferred Stock
awarded pursuant to the Plan may not be sold, assigned, transferred, pledged or
otherwise encumbered.  At the expiration
of the Deferral Period, stock certificates shall be delivered to the awardee,
or his legal representative, in a number equal to the Shares covered by the
Deferred Stock award.

 

(ii)                                  At the time of the award, the Committee
may, in its sole discretion, determine that amounts equal to any dividends
declared during the Deferral Period 

 

16

 

with
respect to the number of Shares covered by a Deferred Stock award will be paid
to the awardee currently, deferred and deemed to be reinvested, or that such
awardee has no rights with respect thereto.

 

(iii)                               Subject to the provisions of the applicable Award
Agreement and this Section 9, upon termination of employment for
any reason during the Deferral Period, the Deferred Stock held by such awardee
shall be forfeited by the awardee.

 

(iv)                              Based on performance and/or such other
criteria as the Committee may determine, the Committee may, at or after grant
(including after the awardee’s termination of employment), accelerate the
vesting of all or any part of any Deferred Stock award and/or waive the
deferral limitations for all or any part of such award.

 

SECTION 10. 
Amendments and Termination.

 

The Board may amend, alter, or discontinue the Plan,
but no such amendment, alteration, or discontinuation shall be made which would
impair the right of an optionee or awardee under a Stock Option, Director Stock
Option, Stock Appreciation Right, Restricted Stock, Director Restricted Stock
or Deferred Stock award granted prior thereto, without the optionee’s or awardee’s
consent.

 

Amendments may be made without stockholder approval
except as required to satisfy Sections 162(m) of the Code, stock
exchange listing requirements, or other applicable law or regulatory
requirements.

 

The Committee may amend the terms of any Stock Option,
Stock Appreciation Right, Restricted Stock or Deferred Stock award granted, and
the Board may amend the terms of any Director Stock Option or Director Restricted Stock award,
prospectively or retroactively, but no such amendment shall be made which would
impair the rights of an optionee or awardee without the optionee’s or awardee’s
consent.

 

SECTION 11. 
Change of Control.

 

The following acceleration and valuation provisions
shall apply in the event of a Change of Control or Potential Change of Control:

 

(a)                                  In the event of (1) a Change of
Control, unless otherwise determined by the Committee in writing at or after
grant, but prior to the occurrence of such Change of Control, or (2) a
Potential Change of Control, only 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):

 

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

 

17

 

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

 

(iii)          the value of all outstanding Stock
Option, Director Stock Option, Stock Appreciation Right, Restricted Stock, Director 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 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 Shares, such Shares will be deemed to have been distributed under
the Plan.

 

(b)           A “Change of Control” means the
occurrence 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 of the Exchange Act),
directly or indirectly, of securities of the Company representing 20% 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 Item 6(e) of Schedule 14A of 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)           A “Potential Change of Control” means
the occurrence of any of the following:

 

(i)            the entering into of an agreement by
the Company, the consummation of which would result in a Change of Control; or

 

18

 

(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% or more of the combined voting power of the
Company’s then 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 the Plan.

 

(d)           “Change of Control Price” means the
highest price per Share paid in any transaction reported on the New York Stock
Exchange or other national securities exchange or over-the-counter market on
which the Shares are then traded, or paid or offered in any transaction related
to a potential or actual Change of Control at any time during the preceding
60-day period as determined by the Committee, except that in the case of
Director Stock Options and Director Restricted Stock, the 60-day period shall be
the period immediately prior to a potential or actual Change of Control.

 

SECTION 12.  Limitations on Payments.

 

(a)           Notwithstanding any other provision
of the Plan or any other agreement, arrangement or plan, in no event shall the
Company pay or be obligated to pay any participant an amount which would be an
Excess Parachute Payment, except as provided in Section 12(f) and
except as the Committee specifically provides otherwise in the participant’s
Award Agreement.  For purposes of the
Plan, the term “Excess Parachute Payment” shall mean any payment or any portion
thereof which would be an “excess parachute payment” within the meaning of Section 280G(b)(1) of
the Code, and would result in the imposition of an excise tax under Section 4999
of the Code, in the opinion of tax counsel selected by the Company (“Tax
Counsel”).  In the event it is determined
that an Excess Parachute Payment would result if the full acceleration of
vesting and exercisability provided in Section 11 were made (when
added to any other payments or benefits contingent on a change of control under
any other agreement, arrangement or plan), the payments due under Section 11(a) shall
be reduced to the minimum extent necessary to prevent an Excess Parachute
Payment; then, if necessary to prevent an Excess Parachute Payment, benefits or
payments under any other plan, agreement or arrangement shall be reduced. If it
is established pursuant to a final determination of a court or an Internal
Revenue Service administrative appeals proceeding that, notwithstanding the
good faith of the participant and the Company in applying the terms of this Section 12(a),
a payment (or portion thereof) made is an Excess Parachute Payment, then, the
Company shall pay to the participant an additional amount in cash (a “Gross-Up
Payment”) equal to the amount necessary to cause the amount of the aggregate
after-tax compensation and benefits received by the participant hereunder
(after payment of the excise tax under Section 4999 of the Code with
respect to any Excess Parachute Payment, and any state and Federal income taxes
with respect to the Gross-Up Payment) to be equal to the aggregate after-tax
compensation and benefits the participant would have received as if Sections
280G and 4999 of the Code had not been enacted.

 

(b)           Subject to the provisions of Section
12(c), the amount of any Gross-Up Payment and the assumptions to be
utilized in arriving at such amount shall be determined

 

19

 

by a nationally recognized certified public accounting
firm designated by the Company (the “Accounting Firm”). All fees and expenses
of the Accounting Firm shall be borne solely by the Company. Any Gross-Up
Payment, as determined pursuant to Section 12(a), shall be paid by
the Company to the participant within five Business Days after the receipt of
the Accounting Firm’s determination. Any determination by the Accounting Firm
shall be binding upon the Company and the participant.

 

(c)           A participant shall notify the
Company in writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of a Gross-Up Payment.
Such notification shall be given no later than ten Business Days after the
participant is informed in writing of such claim and shall apprise the Company
of the nature of the claim and the date of requested payment.  A participant shall not pay the claim prior
to the expiration of the 30-day period following the date on which it gives
notice to the Company. If the Company notifies such participant in writing
prior to the expiration of the 30-day period that it desires to contest such
claim, the participant shall:

 

(i)            provide the Company with any
information reasonably requested by the Company relating to such claim;

 

(ii)           take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney selected by the Company and reasonably
acceptable to the participant;

 

(iii)          cooperate with the Company in good
faith in order to effectively contest such claim; and

 

(iv)          permit the Company to participate in
any proceedings relating to such claim.

 

Without limitation on the
foregoing provisions of this Section 12(c), the Company shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority with respect to such claim
and may, at its sole option, either direct the participant to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner,
and the participant agrees to prosecute such contest to a determination before
any administration tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; provided, however, that
the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold the participant harmless, on an after-tax basis, for
any excise tax or income tax (including interest and penalties with respect
thereto) imposed as a result of the contest; provided, further, that if the
Company directs the participant to pay any claim and sue for a refund, the
Company shall advance the amount of the payment to the participant, on an
interest-free basis, and shall indemnify and hold the participant harmless, on an
after-tax basis, from any excise tax or income tax (including interest or
penalties with respect 

 

20

 

thereto) imposed with respect to the advance or with respect to any
imputed income with respect to the advance.

 

(d)           In the event the Company exhausts its
remedies pursuant to Section 12(c) and the participant
thereafter is required to make a payment of any excise tax, the Accounting Firm
shall determine the amount of the Gross-Up Payment required and such payment
shall be promptly paid by the Company to or for the benefit of such
participant.

 

(e)           If, after the receipt by the
participant of an amount advanced by the Company pursuant to Section 12(c),
the participant becomes entitled to receive any refund with respect to such
claim, the participant shall promptly, after receiving such refund, pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). 
If, after the receipt by the participant of an amount paid by the
Company pursuant to Section 12(c), a determination is made that the
participant shall not be entitled to any refund with respect to such claim and
the Company does not notify the participant in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such payment shall be forgiven and shall not be required to
be repaid and the amount of such payment shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.

 

(f)            Notwithstanding the foregoing, the
limitation set forth in Section 12(a) shall not apply to a
participant if, in the opinion of Tax Counsel or the Accounting Firm, the total
amounts payable to the participant hereunder and under any other agreement,
arrangement or plan as a result of a change of control (calculated without
regard to the limitation of Section 12(a)), reduced by the amount
of excise tax imposed on the participant under Section 4999 of the Code
with respect to all such amounts and reduced by the state and Federal income
taxes on amounts paid in excess of the limitation set forth in Section 12(a),
would exceed such total amounts payable after application of the limitation of Section 12(a).
No Gross-Up Payment shall be made in such case.

 

SECTION 13.  General Provisions.

 

(a)           All certificates for Shares delivered
under the Plan shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations,
and other requirements of the Commission, any stock exchange upon which the
Shares are then listed, and any applicable Federal or state securities law, and
the Committee may cause a legend or legends to be placed on any such
certificates to make appropriate reference thereto.

 

(b)           Nothing set forth in the Plan shall
prevent the Board from adopting other or additional compensation arrangements,
subject to stockholder approval if such approval is required.  The adoption of the Plan shall not confer
upon any employee or director of the Company, any Subsidiary or any Affiliate,
any right to continued employment (or, in the case of a director, continued
retention as a director) with the Company, a Subsidiary or an Affiliate, as the
case may be, nor shall it interfere in any way with the right of the Company,

 

21

 

a Subsidiary or an Affiliate to terminate the employment of any of its
employees at any time.

 

(c)           Each participant shall, no later than
the date as of which the value of an award first becomes includible in the
gross income of the participant for Federal income tax purposes, pay to the
Company, or make arrangements satisfactory to the Committee, in its sole
discretion, regarding payment of, any Federal, FICA, state, or local taxes of
any kind required by law to be withheld with respect to such award.  The obligations of the Company under the Plan
shall be conditional on such payment or arrangements.  The Committee may permit participants to
elect to satisfy their Federal, and where applicable, FICA, state and local tax
withholding obligations with respect to all awards, other than Stock Options
which have related Stock Appreciation Rights, by the reduction, in an amount
necessary to pay all such withholding tax obligations, of the number of Shares
or amount of cash otherwise issuable or payable to such participants with
respect to an award. The Company and, where applicable, its Subsidiaries and
Affiliates shall, to the extent permitted by law, have the right to deduct any such
taxes owed hereunder by a participant from any payment of any kind otherwise
due to such participant.

 

(d)           At the time of grant or purchase, the
Committee may provide, in connection with any grant or purchase made under the
Plan, that the Shares received as a result of such grant or purchase shall be
subject to a right of first refusal, pursuant to which the participant shall be
required to offer to the Company any Shares that the participant wishes to
sell, with the price being the then Fair Market Value of the Shares, subject to
the provisions of Section 11 and to such other terms and conditions
as the Committee may specify at the time of grant.

 

(e)           No member of the Board or the
Committee, nor any officer or employee of the Company acting on behalf of the
Board or the Committee, shall be personally liable for any action,
determination, or interpretation taken or made in good faith with respect to
the Plan, 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 with
respect to any such action, determination or interpretation.

 

(f)            The Plan is not intended to be a “non-qualified
deferred compensation plan” under Section 409A of the Code and shall not
be construed or administered accordingly. 
If any term or provision contained herein would otherwise cause the Plan
to be characterized as a “nonqualified deferred compensation plan” under Section 409A
of the Code, then, without further action by the Company, such term or
provision shall automatically be modified to the extent necessary to avoid such
characterization.

 

SECTION 14.  Effective Date of Plan.

 

The Plan became
effective on March 3, 1998, the date it was originally approved by a
majority vote of the Company’s stockholders.

 

22Exhibit 10.11

 

 

WADDELL & REED FINANCIAL, INC.

 

 

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

 

 

 

As Amended and Restated Effective as of January 1,
2005

 

 

WADDELL & REED FINANCIAL, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

As Amended and Restated Effective January 1, 2005

 

 

PURPOSE

 

The purpose of the Waddell & Reed
Financial, Inc. Supplemental Executive Retirement Plan is to provide
deferred compensation that otherwise would be paid currently to a select group
of management or highly compensated employees of the Company (as defined below)
and any subsidiaries or affiliates of the Company that may adopt this Plan (as
defined below) with the consent of the Board of Directors of the Company.  This Plan is designed to constitute a
nonqualified deferred compensation arrangement. 
This amendment and restatement, effective January 1, 2005, is
intended to bring the Plan into compliance with section 409A of the Code (as
defined below) and guidance issued pursuant thereto.

 

ARTICLE I

DEFINITION OF TERMS

 

The following words and phrases when used
herein, unless the context clearly requires otherwise, will have the following
respective meanings:

 

1.1                               “Administrator” means the Compensation Committee.

 

1.2                               “Approved Domestic
Relations Order”
means a Domestic Relations Order that is determined by the Administrator, in
its sole discretion, to be an Approved Domestic Relations Order in accordance
with the provisions of Section 6.2.

 

1.3                               “Aggregate
Contribution Amount” means the amount, if any, determined by the Compensation Committee
in its sole discretion, to be credited as a Supplemental Executive Retirement
Benefit among Participants’ Deferred Compensation Accounts for a Plan Year in
accordance with the provisions of Section 4.2(b).

 

1.4                               “Base Pay” means a Participant’s base salary
for a Plan Year, excluding extraordinary pay such as bonuses, commissions,
incentive payments, benefits, expense allowances, expense reimbursements, or
income from restricted stock or stock option awards, as designated by the
Compensation Committee in its sole discretion.

 

1.5                               “Claim for Benefits” has the meaning specified in Section 6.6(a).

 

1.6                               “Code” means the Internal Revenue Code of
1986, as amended.

 

1.7                               “Company” means Waddell & Reed
Financial, Inc., a Delaware corporation.

 

1.8                               “Compensation Committee” means the Compensation Committee of
the Board of Directors of Waddell & Reed Financial, Inc.

 

 

1

 

1.9                               “Deferred
Compensation Account” means the memorandum account established pursuant to Section 4.1
and maintained for each Participant on the Company’s books and records.

 

1.10                        “Domestic Relations
Order” means
a final judgment, decree, order, or property settlement agreement made pursuant
to a state domestic relations law.

 

1.11                        “Effective Date” means January 1, 2005.  The Plan was originally effective December 10,
1998 and was subsequently amended and restated effective July 14, 2004.

 

1.12                        “Employee” means a common-law employee of the
Company or a Participating Employer who is a member of a select group of
management or highly compensated employees.

 

1.13                        “ERISA” means the Employee Retirement
Income Security Act of 1974, as amended.

 

1.14                        “Notice of Denial” has the meaning specified in Section 6.6(b).

 

1.15                        “401(k) Plan” means the Waddell & Reed
Financial, Inc. 401(k) and Thrift Plan, as such plan may be amended
from time to time, or any similar plan in which a Participating Employer
participates.

 

1.16                        “Participant” means an Employee who has satisfied
the requirements for eligibility under Article III and is participating in
the Plan.

 

1.17                        “Participating
Employer”
means a subsidiary or affiliate of the Company that adopts this Plan by a
properly executed document evidencing such intent with the consent of the Board
of Directors of the Company.

 

1.18                        “Plan” means the Waddell & Reed
Financial, Inc. Supplemental Retirement Benefit Plan, as may be amended,
modified or supplemented from time to time.

 

1.19                        “Plan Year” means the period commencing January 1
and ending December 31.

 

1.20                        “Request for Review” has the meaning specified in Section 6.6(d).

 

1.21                        “Separation
from Service” has the definition of the same term in Treasury Regulation
Section 1.409A-1(h), and will be determined by analyzing all of the facts and
circumstances surrounding the separation, but in no event, however, shall a
Participant be considered to have separated from service if the amount of
services provided to the Company (or a Participating Employer) has not
decreased to 20% or less of the services the Participant was providing to the Company
(or a Participating Employer) during the previous 36-month period (or the full
period of services provided to the Company (or a Participating Employer) in the
event that the Participant has not been employed for 36 months).  The Participant shall not be considered to
have separated from service if the amount of services that Participant is still
providing to the Company (or a Participating Employer) is 50% or more of the
services the Participant was providing to the Company (or a Participating
Employer) during the previous 36-month period (or the full period of services
provided to the Company (or a Participating 

 

 

2

 

Employer) in the event that the Participant
has not been employed for 36 months). In the event that the Participant is
providing services to the Company (or a Participating Employer) in the amount
of 21% to 49% of the services the Participant was providing to the Company (or
a Participating Employer) during the previous 36-month period (or the full
period of services provided to the Company (or a Participating Employer) in the
event that the Participant has not been employed for 36 months), the
Administrator shall retain the sole discretion to determine whether or not all
of the facts and circumstances surrounding the decrease in services constitute
a separation from service in accordance with Treasury Regulation Section 1.409A-1(h).

 

1.22                        “Supplemental
Executive Retirement Benefit” means the allocations, if any, made pursuant to Section 4.2(b).

 

1.23                        “Total Disability” means a Participant is, by reason
of any medically determinable physical or mental impairment which can be
expected to last for a continuous period of not less than twelve months,
receiving long-term disability benefits under the Company’s (or his or her
Participating Employer’s) long-term disability insurance plan.

 

1.24                        “Valuation Date” means December 31 and such
other or additional dates as provided herein or otherwise designated by the
Administrator as Valuation Dates for the purpose of making valuation
adjustments to the Deferred Compensation Accounts in accordance with Section 4.2(c).

 

ARTICLE II

ADMINISTRATION

 

The Plan will be administered by the
Administrator and benefits under the Plan will be paid only if the Administrator
decides, in its sole discretion, that a Participant is entitled to them.  The decision of a majority of the members of
the Compensation Committee will control; provided, however, that a member will
not be entitled to participate in discretionary decisions directly related to
such person’s own participation in the Plan.

 

The Administrator will have full power and
authority to adopt rules, regulations, and practices governing the
administration of the Plan, to interpret and apply the provisions of the Plan in
its sole discretion, to alter, amend, or revoke any rules and regulations
so adopted, to enter into contracts on behalf of the Company with respect to
the Plan, and to make discretionary decisions under the Plan, except where that
authority is retained by the Company under the Plan.  The Administrator will administer this Plan
and render decisions in a uniform and consistent manner so that all
Participants in similar circumstances are generally treated similarly.  The Administrator’s decision as to all aspects
of Plan operations, including but not limited to, the eligibility of persons to
participate in this Plan, the benefits payable under this Plan, and the
interpretation of this Plan, cannot be overturned unless it has no foundation.

 

ARTICLE III

ELIGIBILITY

 

An Employee who has been designated by the
Administrator as eligible for participation in the Plan will be eligible for
participation beginning in the Plan Year with respect to which the designation
is made.  A Participant will continue to
participate in the Plan until he or she ceases 

 

 

3

 

to be a member of a select
group of management or highly compensated employees, or until the Administrator
in its sole discretion determines otherwise.

 

ARTICLE IV

DEFERRED COMPENSATION ACCOUNTS

 

4.1                               Establishment of
Deferred Compensation Accounts.  At the time
an Employee becomes a Participant in the Plan, the Company will establish a
Deferred Compensation Account for the Participant on its books.

 

4.2                               Additions to Deferred
Compensation Accounts.

 

(a)                                  401(k) Plan Benefit Restoration.  For each Plan Year, the Administrator will
credit the Deferred Compensation Account of each Participant with an amount
equal to four percent (4%) of his or her Base Pay, less the amount of the
maximum employer matching contribution that could be made pursuant to the terms
of the 401(k) Plan on the Participant’s behalf under the 401(k) Plan with
respect to that Plan Year.

 

(b)                                 Supplemental Executive Retirement Benefit.  For each Plan Year, the Compensation
Committee will credit the Aggregate Contribution Amount among the Deferred
Compensation Accounts of Participants in proportion to their Base Pay for the
Plan Year.

 

(c)                                  Valuation and Adjustments. 
As of each Valuation Date, the Administrator will also credit (or
charge) the Participant’s Deferred Compensation Account with valuation
adjustments determined in accordance with this Section 4.2(c).  The valuation adjustment to be credited (or
charged) to the Participant’s Deferred Compensation Account as of any Valuation
Date will be an amount equal to the performance of certain hypothetical
investments or investment vehicles since the last preceding Valuation Date as
described below.  The performance of such
hypothetical investments or investment vehicles taken into account for purposes
of this Section 4.2(c) will include, but not be limited to, in the sole
discretion of the Administrator, interest, expenses, and realized and
unrealized gains and losses.  The
crediting (or charging) of amounts under this Section 4.2(c) will occur so long
as there is a balance in the Participant’s Deferred Compensation Account;
provided, however, the crediting (or charging) of amounts under this Section
4.2(c) will cease as close as reasonably practicable (as determined by the
Administrator in its sole discretion) prior to the date a complete distribution
of a Participant’s benefit under this Plan is made.  The value of the Participant’s Deferred
Compensation Account as of the relevant Valuation Date will be determined as if
the balance of the Deferred Compensation Account as of the preceding Valuation
Date, together with any amounts subsequently credited to (less any amounts
distributed from) such Deferred Compensation Account, had been invested since
the preceding Valuation Date or the date credited to the Deferred Compensation
Account, as the case may be, in the hypothetical investments or investment
vehicles specified for the Participant’s Deferred Compensation Account.

 

 

4

 

(d)                                 Investments. 
Each Participant, in a manner prescribed by the Administrator, may
designate the hypothetical investments or investment vehicles in which his or
her Deferred Compensation Account is to be deemed invested under the investment
options permitted by the Administrator. 
Notwithstanding any other provision of this Plan, a Participant may not
designate the hypothetical investment of his or her Deferred Compensation
Account in stock or other securities of the Company or a Participating Employer.  The Administrator (or trustee of a grantor
trust if a grantor trust is used in connection with this Plan), in its sole
discretion, may determine whether any Deferred Compensation Accounts will, in
fact, be invested according to the hypothetical investments or investment
vehicles or will be invested otherwise. 
Such hypothetical investment designations may be made up to two times
per calendar year for each Participant by making an election with the
Administrator, in a manner prescribed by the Administrator.  The designation will continue until changed
by the submission of a new designation, which change will be effective as soon
as administratively feasible.

 

4.3                               Forfeiture. 
All amounts credited to, and not withdrawn from, a Participant’s
Deferred Compensation Account are nonforfeitable, except as otherwise provided
in this Section 4.3 and Sections 6.1 and 6.4.

 

Notwithstanding any other provision of this
Plan, a Participant’s Deferred Compensation Account will be forfeited in its
entirety if the Administrator determines that the Participant has engaged in
any activity that is (a) illegal and involves fraud, dishonesty, or theft,
or (b) intentionally detrimental to the Company, a Participating Employer,
or any subsidiary or affiliate thereof.

 

ARTICLE V

DISTRIBUTION OF BENEFITS

 

5.1                               Distribution on
Termination of Employment.  Subject to
the limitations described in Section 5.5 and unless otherwise elected
pursuant to Section 5.4, amounts credited to, and not withdrawn from, a
Participant’s Deferred Compensation Account (less applicable tax and other
withholdings pursuant to Section 5.6) will be distributed in a single lump
sum payment in cash, other property, or both, in the Administrator’s sole
discretion, within 90 days after the Participant’s Separation from Service with
the Company or, if applicable, the Participating Employer.

 

5.2                               Distribution on
Total Disability.  Unless otherwise elected pursuant to Section 5.4,
amounts credited to, and not withdrawn from, a Participant’s Deferred
Compensation Account (less applicable tax and other withholdings pursuant to Section 5.6)
as of the date the Participant has sustained a Total Disability will be
distributed in a single lump sum payment in cash, other property, or both, in
the Administrator’s sole discretion, within 90 days after such determination.

 

5.3                               Distribution on
Death.  Unless otherwise elected pursuant to Section 5.4,
payment of the amounts credited to, and not withdrawn from, a Participant’s
Deferred Compensation Account (less applicable tax and other withholdings
pursuant to Section 5.6) as of the date of the Participant’s death will be
distributed in a single lump sum payment in cash, other 

 

 

5

 

property, or both, in the Administrator’s
sole discretion, within 90 days after the Participant’s death, to the
Participant’s designated beneficiary in accordance with the last such
designation received by the Administrator, or if none, to the Participant’s
surviving spouse, or if there is no surviving spouse, to the personal
representative of the Participant’s estate.

 

A Participant will have the right, at any
time prior to his or her death, to submit, in a manner prescribed by the
Administrator, a written designation of primary and secondary beneficiaries to
whom payment under this Plan will be made in the event of his or her death
prior to complete distribution of the benefits due and payable to the
Participant under this Plan.  Each
beneficiary designation will become effective only when received by the Administrator.

 

5.4                             Form and
Timing of Benefit Distribution.  A Participant
or beneficiary, in a manner prescribed by the Administrator, may elect, or
elect to change, the form and timing, subject to the Administrator’s approval,
of distribution of his or her benefits pursuant to this Section 5.4, by
delivering such election to the Administrator, in accordance with procedures
established by the Administrator.

 

(a)                                Initial Election.  On or before December 31, 2006,
a Participant may elect the time and/or form of distribution of his or her
Deferred Compensation Account; provided, however, that such election, to the
extent made in calendar year 2006, will apply only to amounts that are not
otherwise payable in 2006 and may not cause a payment to be made in 2006 that
would not otherwise be payable in 2006. 
In the case of the first year in which a Participant becomes a
Participant, such Participant will be entitled to deliver his or her election,
with respect to amounts credited to his or her Deferred Compensation Account
for services to be performed subsequent to the election, within 30 days after
the date the Participant has been designated by the Administrator as eligible
for participation in the Plan.

 

(b)                               Time of Payment. 
A Participant may elect, pursuant to an initial election under Section 5.4(a) or
a subsequent election under Section 5.4(d), to receive, within 90 days of
the distribution time or event, the amounts credited to, and not withdrawn
from, the Participant’s Deferred Compensation Account (less applicable tax and
other withholdings pursuant to Section 5.6) in the form elected or
specified in Section 5.4(c) upon the earlier of death (which amount
will be payable pursuant to Section 5.3) or the following:

 

(1)                                  The Participant’s Separation from
Service with the Company or, if applicable, the Participating Employer;

 

(2)                                  The determination by the
Administrator that the Participant has sustained a Total Disability; or

 

(3)                                  January 1 of a calendar year
specified by the Participant, which calendar year may be specified as a number
of years following a Participant’s Separation from Service with the Company or,
if applicable, the Participating Employer.

 

 

6

 

(c)                                Form of Payment.  A Participant may
elect, pursuant to an initial election under Section 5.4(a) or a
subsequent election under Section 5.4(d), distribution of benefits under
the Plan in one of the following forms:

 

(1)                                  Lump Sum
— a single payment of the entire balance in the Participant’s Deferred
Compensation Account (less applicable tax and other withholdings pursuant to Section 5.6).

 

(2)                                  Installments
— periodic payments over a specified period of time (less applicable tax and
other withholdings pursuant to Section 5.6), beginning as of the date
specified in the Participant’s election, which time period may not extend
beyond the life expectancy of the Participant (or the Participant’s designated
beneficiary) as determined under the 1983 Group Annuity Mortality Table or such
other mortality table prescribed by the Internal Revenue Service as the
prevailing commissioners’ standard table described in Code section
807(d)(5)(A), as determined by the Administrator in its sole discretion.

 

(d)                                 Change in Form and Timing of Benefit
Distribution.  A
Participant may change the time and/or form of settlement elected pursuant to a
“Distribution Election Form” with respect to his or her Deferred Compensation
Account by delivering a subsequent “Distribution Election Form” in accordance
with procedures set forth by the Administrator; provided, that, such election
may not result in the acceleration of the time or schedule of any payment.   For purposes of this Section 5.4(d),
installment payments will be treated as a single payment.  In addition, any change in the form or timing
of benefits may not:

 

(1)           take
effect for at least 12 months after the date on which the election is made;

 

(2)           in
the case of an election related to a payment described in Sections 5.1, or 5.4(c) or
(d), the first payment with respect to which the new election is made must be
deferred for a period of not less than five years from the date the payment
would otherwise have been made; and

 

(3)           any
election to delay a payment previously elected pursuant to this Section 5.4
may not be made less than 12 months prior to the date of the first scheduled
payment under the prior election.

 

5.5                               Specified Employees.  If the Company is
publicly traded on an established securities market or otherwise on the date of
the Participant’s Separation from Service, any distribution pursuant to Section 5.1
shall not be distributed prior to the date that is six months following the
Participant’s Separation from Service if Participant is deemed a “specified
employee” as defined in Treasury Regulation Section 1.409A-1(i).  Any payments delayed pursuant to this
provision will be paid in a lump sum on the date that is six months following
the date of the Participant’s Separation from Service (or, if earlier, the date
of death of the “specified employee”).

 

 

7

 

5.6                               Incapacity.  In the event of the Participant’s incapacity
(as determined by the Administrator), payment pursuant to Sections 5.1 through
5.4 will be made to the Participant, to the legal guardian or conservator of
the Participant, or to an adult with whom the Participant maintains his or her
residence, as the Administrator in its sole discretion will determine.  Such payment to a legal guardian,
conservator, or adult will fully discharge the Administrator, the Company, each
Participating Employer, and this Plan from further liability on account
thereof.

 

5.7                               Withholding.  The Company may withhold or cause to be
withheld from, or with respect to, any benefit under this Plan any federal,
state, or local taxes required by law to be withheld with respect to such
benefit and such sum as the Company may reasonably estimate as necessary to
cover any taxes for which the Company may be liable and which may be assessed
with regard to such payment.

 

ARTICLE VI

GENERAL PROVISIONS

 

6.1                               Non-Transferability of Interests.  Notwithstanding any
other provision of this Plan, all Deferred Compensation Accounts maintained by
the Company will be general assets of the Company and will be subject to the
claims of such Employer’s general creditors.

 

Except as provided in Section 6.2,
benefits payable to Participants under this Plan may not in any manner be
anticipated, assigned (either at law or in equity), alienated, sold,
transferred, pledged, encumbered, or subjected to attachment, garnishment,
levy, execution, or other legal or equitable process by creditors of the
Participant.

 

6.2                               Domestic Relations Orders.

 

(a)                                  The Administrator shall establish written procedures to
determine whether any Domestic Relations Order directed to this Plan is an
Approved Domestic Relations Order in its sole discretion.  To the extent required under an Approved
Domestic Relations Order, any portion of a Participant’s Deferred Compensation
Account may be paid or set aside for payment to a spouse, former spouse, or
child of the Participant in cash, other property, or both, in the Administrator’s
sole discretion.

 

(b)                                 Where necessary to carry out the terms of an Approved
Domestic Relations Order, a separate account may be established with respect to
the spouse, former spouse, or child.  Any
amount so set aside for a spouse, former spouse, or child shall be paid out in
a single lump sum payment in cash, other property, or both, in the
Administrator’s sole discretion, at the earliest date that benefits may be paid
to the Participant, unless the Domestic Relations Order directs a different
form of payment.  Nothing in this Section 6.2
shall be construed to authorize any amount to be distributed under this Plan at
a time or in a form that is not permitted under the Plan or the Code.

 

(c)                                  A Participant’s right to receive benefits under this Plan
will be reduced to the extent that any portion of a Participant’s Deferred
Compensation Account has been paid or set side for payment to a spouse, former
spouse, or child pursuant to an Approved Domestic Relations Order or to the
extent that the Company, a Participating Employer, or the Plan is otherwise
subject to a binding Domestic Relations Order for the attachment, 

 

 

8

 

garnishment, or execution of any portion of the
Participant’s Deferred Compensation Account or of any distributions
therefrom.  The Participant shall be
deemed to have released the Company, each Participating Employer, the Administrator,
and the Plan from any claim with respect to such amounts in any case in which (1) the
Company, a Participating Employer, the Plan, or any Plan representative has
been served with legal process or otherwise joined in a proceeding relating to such
amounts, (2) the Participant has been notified of the pendency of such
proceeding in the manner prescribed by the law of the jurisdiction in which the
proceeding is pending for service of process or by mail from the Company, a
Participating Employer, the Plan, or a Plan representative to the Participant’s
last known mailing address, and (3) the Participant fails to obtain an
order of the court in the proceeding relieving the Company, each Participating
Employer, the Administrator, or this Plan from the obligation to comply with
the Domestic Relations Order.

 

(d)                                 Neither the Company, any Participating Employer, the Plan,
nor any Plan representative will be obligated to incur any cost to defend
against or set aside any Domestic Relations Order relating to the division,
attachment, garnishment, or execution of the Participant’s Deferred
Compensation Account or of any distribution therefrom.  Notwithstanding the foregoing, if the
Company, a Participating Employer, the Plan, or a Plan representative is joined
in any such proceeding, a Plan representative will take such steps as it deems
necessary and appropriate to protect the terms of the Plan.

 

6.3                               Amendment, Suspension, and Termination.  The Company, in its
sole discretion, at any time may amend, suspend, or terminate this Plan or any
portion thereof in any manner and to any extent.  Such amendment, suspension, or termination of
the Plan will be final and binding on each Participating Employer.  No amendment, suspension, or termination will
alter or impair any then existing Deferred Compensation Accounts without the
consent of the affected Participant. 
Upon termination of the Plan, but only if and to the extent allowed by
section 409A of the Code and guidance published thereunder, amounts credited to
each Participant’s Deferred Compensation Account will be distributed at the
Administrator’s election (provided such election applies uniformly to all such
Participants) in a single lump sum payment (in cash, other property, or both,
at the Administrator’s election) either (a) at any time after 30 days
following the termination of the Plan, or (b) at such time and in such
event as are otherwise provided under the Plan.

 

6.4                               Unfunded Obligation.  This Plan is
intended to be, and will be operated and administered so as to be, a plan that
is unfunded and maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated
employees.  Neither the Company nor any
Participating Employer will make any provision for funding or insuring the
Deferred Compensation Accounts that would cause the Plan to be (a) a “funded”
plan for purposes of Section 404(a)(5) of the Code or Title I of
ERISA, or (b) other than an “unfunded and unsecured promise to pay money
or property in the future” under Treasury Regulations Section 1.83-3(e).  A Participant will be treated as a general,
unsecured creditor of the Company and, if applicable, his or her Participating
Employer at all times under the Plan. 
This Plan constitutes a mere promise by the Company to make the benefit
payments as provided in the future.  It
is the intention of the Company that the Deferred Compensation Accounts be
unfunded for tax purposes and for purposes of Title I of ERISA.

 

 

9

 

The foregoing notwithstanding, the Company
may establish a grantor trust described in Treasury Regulation Sections
1.677(a)-(d) to accumulate assets to pay the Deferred Compensation
Accounts, provided that the trust assets will be subject to the claims of the
Company’s general creditors and will be required to be used to satisfy the
claims of the Company’s general creditors in the event the Company or a
Participating Employer is “insolvent” under the terms of such trust.

 

6.5                               No Right to Employment or Other Benefits.  Nothing contained
herein will be construed as conferring upon any Participant the right to
continue in the employ of the Company or any Participating Employer.  Any compensation deferred and any benefits
paid under this Plan will be disregarded in computing benefits under any
employee benefit plan of the Company or any Participating Employer.

 

6.6                               Claims Procedures.

 

(a)                                  In the event benefits provided under this Plan are not timely
paid, any Participant or, if the Participant is deceased, the Participant’s
designated beneficiary, may file a claim requesting benefits under this Plan by
submitting to the Administrator (or such officer or agent of the Company as the
Administrator may designate for such purpose) a written statement setting out
the general nature of the claim (the “Claim for Benefits”).

 

(b)                                 If a duly submitted Claim for Benefits has not been granted
within 90 days of the submission of the claim, the Claim for Benefits will be
deemed denied for the purposes hereof. 
If a duly submitted Claim for Benefits is wholly or partly denied,
written notice of the denial (the “Notice of Denial”)
will be furnished as provided in Section 6.6(c) hereunder to the
Participant within 90 days after receipt of the Claim for Benefits by the Administrator.

 

(c)                                  Any Notice of Denial provided to a Participant shall set
forth in a manner reasonably calculated to be understood by the Participant:

 

(1)                                  The specific reason or reasons for the denial;

 

(2)                                  Reference to the specific Plan provisions on which the denial
is based;

 

(3)                                  A description of any additional material or information
necessary for the Participant to perfect the Claim for Benefits and an
explanation of why such material or information is necessary; and

 

(4)                                  A description of the Plan’s review procedures and the time
limits applicable to such procedures, including a statement of the Participant’s
right to bring a civil action under section 502(a) of ERISA following
denial of the Claim for Benefits or Request for Review (as defined below).

 

 

10

 

(d)                                 Within 60 days after receipt of any Notice of Denial as
herein provided, the Participant may request review of the denied Claim for
Benefits by submitting a written request therefor to the Administrator (the “Request
for Review”).

 

(e)                                  Upon submission of the Request for Review, and before
issuance of the decision on review, the Participant will be provided, upon
request and free of charge, reasonable access to, and copies of, all documents,
records, and other information relevant, in the Administrator’s sole
discretion, to the Participant’s Claim for Benefits.

 

(f)                                    Within 30 days after submission of the Request for Review,
the Participant may submit written comments, documents, records, and other
information relating to the Claim for Benefits to the Administrator.  In addition, upon request of the Participant,
or upon its own motion, the Administrator may, but will not be required to,
provide the Participant an opportunity for a hearing before the Administrator.

 

(g)                                 Within 60 days after receipt of a Request for Review, the
Administrator will render its decision unless special circumstances (such as
the need to hold a hearing) require an extension of time for processing the
Request for Review and the Administrator furnishes written notice of the
extension to the Participant, in which case a decision will be rendered as soon
as possible, but in no event later than 120 days after receipt of the Request
for Review.

 

(h)                                 The decision on review will be in writing and will include:

 

(1)                                  Specific reasons for the decision, written in a manner
reasonably calculated to be understood by the Participant;

 

(2)                                  Reference to the specific Plan provisions on which the
decision is based;

 

(3)                                  A statement that the Participant is entitled to receive, upon
request and free of charge, reasonable access to, and copies of, all documents,
records, and other information relevant to the Participant’s Claim for
Benefits; and

 

(4)                                  A statement of the Participant’s right to bring an action
under section 502(a) of ERISA.

 

6.7                               Inurement.  This Plan will be binding upon and inure to
the benefit of the Company, each Participating Employer, their successors and
assigns, the Participant, and his or her heirs, executors, personal
representatives, administrators and beneficiaries.

 

6.8                               Notice.  Any notice, consent, or demand required or
permitted to be given under the provisions of this Plan will be in writing, and
will be signed by the party giving or making the same.  If such notice, consent, or demand is mailed
to a party pursuant hereto, it will be sent by United States certified mail,
postage prepaid, addressed to such party’s last known address as shown in the
records of the Company.  The date of such
mailing will be deemed the date of notice, consent, or demand.  Either party may change the address to which
notice is to be sent by giving notice of change of address in the manner
aforesaid.

 

 

11

 

6.9                               Governing Law.  This Plan, and the rights of the parties
hereunder, will be governed by and construed in accordance with the laws of the
State of Kansas, without reference to the principles of conflict of laws.

 

6.10                        Taxation.  This Plan is intended to provide tax-deferred
benefits under certain provisions of the Code, including section 409A of the
Code and the guidance promulgated thereunder. 
To the extent the Plan fails to satisfy the requirements of section 409A
of the Code and related guidance, the Company may, but shall not be required
to, modify the Plan, in its sole discretion, to the limited extent necessary to
satisfy section 409A of the Code and related guidance without the consent of
any Participant.  Upon any Internal
Revenue Service finding that compensation intended to be deferred for federal
income tax purposes pursuant to this Plan is immediately taxable to a
Participant for such purposes, the Company may, but shall not be required to,
amend this Plan to comply with the Internal Revenue Service requirements
necessary to achieve the desired federal income tax benefits relating to this
Plan without the consent of any Participant. 
Notwithstanding the foregoing, each Participant agrees to be liable for
any tax that may be imposed by the Internal Revenue Service or any other taxing
entity with respect to any benefits provided pursuant to this Plan (including,
without limitation, any and all withholding taxes), irrespective of whether
such tax consequences were intended pursuant to this Plan.

 

 

12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00154-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00154-of-00352.parquet"}]]