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                                                               Exhibit 10.26

                                 W&R FUNDS, INC.
                          DISTRIBUTION AND SERVICE PLAN
                               FOR CLASS A SHARES

                            (Adopted on May 17, 2000)

This Plan is adopted by W&R Funds, Inc. (the "Company"), pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended (the "Act") to provide for
payment by the Fund of certain expenses in connection with the distribution of
the Fund's Class A shares, provision of personal services to the Company's Class
A shareholders and the service and maintenance of Class A shareholder accounts.
Payments under the Plan are to be made to Waddell & Reed, Inc. ("W&R") which
serves as the principal underwriter for the Company under the terms of the
Underwriting Agreement (the "Agreement") pursuant to which it shall offer and
sell the Class A shares of each series (each a "Fund") of the Company at net
asset value.

DISTRIBUTION FEE AND SERVICE FEE

With respect to each Fund, the Company is authorized to pay to W&R an amount not
to exceed on an annual basis .25 of 1% of a Fund's average net assets of the
Class A shares as either (1) a "distribution fee" to finance the distribution of
the Fund's Class A shares, or (2) a "service fee" to finance shareholder
servicing by W&R, its affiliated companies, broker-dealers who may sell Class A
shares and other third-parties to encourage and foster the maintenance of Class
A shareholder accounts, or as a combination of the two fees. The amounts shall
be payable to W&R monthly or at such other intervals as the board of directors
may determine to reimburse W&R for costs and expenses incurred.

NASD DEFINITION

For purposes of this Plan, the "distribution fee" may be considered as a sales
charge that is deducted from the net assets of the Class A shares of each Fund
and does not include the service fee. The "service fee" may be considered a
payment made by the Company for personal service and/or maintenance of Class A
shareholder accounts, provided, however, if the National Association of
Securities Dealers, Inc. ("NASD"), adopts a definition of "service fee" for
purposes of Rule 2830 that differs from the definition of "service fee" as used
herein, or if the NASD adopts a related definition intended to define the same
concept, the

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definition of "service fee" as used herein shall be automatically amended to
conform to the NASD definition.

QUARTERLY REPORTS

W&R shall provide to the board of directors of the Company and the board of
directors shall review at least quarterly a written report of the amounts so
expended of the distribution fee and the service fee paid to it under this Plan
with respect to the Class A shares of each Fund and the purposes for which such
expenditures were made with respect to Class A shares of each Fund.

APPROVAL OF PLAN

This Plan shall not become effective as to a Fund until it has been approved by
a vote of at least a majority of the outstanding shares of that Fund (as defined
in the Act) affected by this Plan and by a vote of the board of directors of the
Company and by the directors who are not interested persons of the Company and
have no direct or indirect financial interest in the operation of the Plan or
any agreement related to this Plan (other than as directors or shareholders of a
Fund) ("independent directors") cast in person at a meeting called for the
purposes of voting on such Plan.

CONTINUANCE

This Plan shall continue in effect as to each Fund for a period of one (1) year
and thereafter from year to year only so long as such continuance is approved by
the directors, including the independent directors, as specified hereinabove for
the adoption of the Plan by the directors and independent directors.

DIRECTOR CONTINUATION

In considering whether to adopt, continue or implement this Plan, the directors
shall have a duty to request and evaluate, and W&R shall have a duty to furnish,
such information as may be reasonably necessary to an informed determination of
whether this Plan should be adopted, implemented or continued.

TERMINATION

This Plan may be terminated at any time by a vote of a majority of the
independent directors as to the Company or by a vote of the majority of the
outstanding Class A shares

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of a Fund without penalty. On termination, the payment of all distribution and
service fees shall cease, and the Company shall have no obligation to W&R to
reimburse it for any expenditure it has made or may make to distribute Fund
Class A shares or service Class A shareholder accounts.

AMENDMENTS

This Plan may not be amended to increase materially the amount to be spent for
distribution or services without approval by the Class A shareholders of the
affected Fund, and all material amendments of this Plan must be approved in the
manner prescribed for the adoption of the Plan as provided hereinabove. The
distribution and service fees may be reduced by action of the board of directors
without shareholder approval.

DIRECTORS

While this Plan is in effect, the selection and nomination of the directors who
are not interested persons of the Company shall be committed to the discretion
of the directors who are not interested persons of the Company.

RECORDS

Copies of this Plan, agreements and reports made pursuant to this Plan shall be
preserved as provided in Rule 12b-1(f) under the Act.

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                                                               Exhibit 10.27

                          DISTRIBUTION AND SERVICE PLAN
                               FOR CLASS B SHARES

                         (Adopted on February 10, 1999)

This Plan is adopted by ____________________ (the "Fund"), pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended (the "Act") to
provide for payment by the Fund of certain expenses in connection with the
distribution of the Fund's Class B shares, provision of personal services to the
Fund's Class B shareholders and/or maintenance of its Class B shareholder
accounts. Payments under the Plan are to be made to Waddell & Reed, Inc. ("W&R")
which serves as the principal underwriter for the Fund under the terms of the
Underwriting Agreement pursuant to which W&R offers and sells the shares of the
Fund.

DISTRIBUTION FEE
The Fund is authorized to pay to W&R an amount not to exceed on an annual basis
 .75 of 1% of the Fund's average net assets of its Class B shares as a
"distribution fee" to finance the distribution of the Fund's Class B shares
payable to W&R daily or at such other intervals as the board of directors may
determine.

SERVICE FEE
The Fund is authorized to pay to W&R an amount not to exceed on an annual basis
 .25 of 1% of the Fund's average net assets of its Class B shares as a "service
fee" to finance shareholder servicing by W&R or its affiliated companies to
encourage and foster the maintenance of shareholder accounts of the Fund's Class
B shares. The amounts shall be payable to W&R daily or at such other intervals
as the board of directors may determine.

NASD DEFINITION
For purposes of this Plan, the "distribution fee" may be considered as a sales
charge that is deducted from the Class B net assets of the Fund and does not
include the service fee. The "service fee" shall be considered a payment made by
the Fund for personal service and/or maintenance of Class B shareholder
accounts, as such is now defined by the National Association of Securities
Dealers, Inc. ("NASD"), provided, however, if the NASD adopts a definition of
"service fee" for purposes of Rule 2830 of the NASD Conduct Rules that differs
from the definition of "service fee" as presently used, or if the NASD adopts a
related definition intended to define the same concept, the definition of
"service fee" as used herein shall be automatically amended to conform to the
NASD definition.

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QUARTERLY REPORTS
W&R shall provide to the board of directors of the Fund and the board of
directors shall review at least quarterly a written report of the amounts so
expended of the distribution fee and/or service fee paid or payable to it under
this Plan and the purposes for which such expenditures were made.

APPROVAL OF PLAN
This Plan shall become effective when it has been approved by a vote of the
board of directors of the Fund and of the directors who are not interested
persons of the Fund and have no direct or indirect financial interest in the
operation of the Plan or any agreement related to this Plan (other than as
directors or shareholders of the Fund) ("independent directors") cast in person
at a meeting called for the purposes of voting on such Plan.

CONTINUANCE
This Plan shall continue in effect for a period of one (1) year and thereafter
from year to year only so long as such continuance is approved by the directors,
including the independent directors, as specified hereinabove for the adoption
of the Plan by the directors and independent directors.

DIRECTOR CONTINUATION
In considering whether to adopt, continue or implement this Plan, the directors
shall have a duty to request and evaluate, and W&R shall have a duty to furnish,
such information as may be reasonably necessary to an informed determination of
whether this Plan should be adopted, implemented or continued.

TERMINATION
This Plan may be terminated at any time by a vote of a majority of the
independent directors of the Fund or by a vote of the majority of the
outstanding Class B voting securities of the Fund without penalty. On
termination, the payment of all distribution fees and service fees shall cease,
and the Fund shall have no obligation to W&R to reimburse it for any cost or
expenditure it has made or may make to distribute the Class B shares or service
Class B shareholder accounts.

AMENDMENTS
This Plan may not be amended to increase materially the amount to be spent for
distribution of Class B shares, personal service and/or maintenance of
shareholder accounts without approval of the Class B shareholders, and all
material amendments of this Plan must be approved in the manner prescribed for
the adoption of the Plan as provided hereinabove. The distribution and service
fees may be

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reduced by action of the board of directors without shareholder approval.

DIRECTORS
While this Plan is in effect, the selection and nomination of the directors who
are not interested persons of the Fund shall be committed to the discretion of
the directors who are not interested persons of the Fund.

RECORDS
Copies of this Plan, the Underwriting Agreement and reports made pursuant to
this Plan shall be preserved as provided in Rule 12b-1(f) under the Act.

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