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Exhibit 10.4    
  

 
 

FIRST AMENDMENT TO THE
  WADDELL & REED FINANCIAL, INC.
  1998 STOCK INCENTIVE PLAN    
  

        Waddell & Reed Financial, Inc., a Delaware corporation (the "Company") previously established the Waddell & Reed Financial, Inc. 1998
Stock Incentive Plan (the "Plan"). Pursuant to Section 11 of the Plan, the board of directors (the "Board") of the Company reserves the right to amend the Plan. Pursuant to the powers reserved
in the Plan, the Plan is hereby amended by action of the Board, effective December 12, 2002 (the "Effective Date"). 

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

i.    "Director
Stock Option" means any option to purchase shares of Stock granted to an Outside Director. 

	2.
	The
following definitions are hereby added to Section 1 of the Plan to read as follows: 

"Director
Restricted Stock" means any shares of Restricted Stock granted to an Outside Director. 

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

	3.
	Section 2
of the Plan is amended by (a) adding the following parenthetical at the end of each of clauses (ii) and (iii) of the third paragraph of
Section 2: "(other than with respect to Director Stock Options and Director Restricted Stock)"; and (b) adding "and Director Restricted Stock" immediately after "other than Director
Stock Options" in clause (iv) of the third paragraph of Section 2.

	4.
	Section 4(b)
of the Plan is amended in its entirety to read as follows: 

        (b)  Each
Outside Director is eligible to receive awards of Director Stock Options and/or Director Restricted Stock pursuant to Section 6 of the Plan. 

	5.
	Section 6
of the Plan is amended in its entirety to read as follows: 

SECTION 6.    Director Stock Options and Director Restricted Stock.

        (a)  Awards.    Except to the extent otherwise provided in Section 6, all terms and conditions of Director
Stock Options or Director Restricted Stock shall be established by the Board in its sole discretion (including, without limitation, the nontransferability and the time or times within which such
Restricted Stock may be subject to forfeiture (subject to Section 13 and paragraph (e) of this section)). Director Stock Options awarded under the Plan shall be Non-Qualified
Stock Options. Director Restricted Stock shall be subject to the provisions of Sections 8(b) and 8(c). Director Stock Options and Director Restricted Stock under the Plan shall be evidenced by a
written 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. 

        (1)  Formula-based Director Stock Options or Director Restricted Stock.    For each calendar year, either
(i) 4,500 Director Stock Options or (ii) an award of 1,500 shares of Restricted Stock shall be automatically granted to each Outside Director on the first day of each calendar year on
which Stock is publicly traded on the New York Stock Exchange. The determination as to whether an award is made pursuant to clause (i) or (ii) of this Section 6(a)(1) shall be
made in the sole discretion of the Board. 

        The
option price per share of Stock purchasable under a Director Stock Option granted hereunder shall be 100% of the Fair Market Value of the Stock on the date of the grant of the
Director Stock Option. Except as provided in Section 13, (a) said Director Stock Options shall become exercisable in full six months from the date of the grant of the option and shall
remain exercisable for a term of ten years and two days from the date such Director Stock 

 

Option is granted, and (b) the restrictions upon said Director Restricted Stock shall lapse in one-third increments on each of the second, third and fourth anniversaries of the
Grant Date. 

        (2)  Non-Formula Based Director Stock Options or Director Restricted Stock.    In its sole discretion,
the Board may, from time to time, award Director Stock Options and/or Director Restricted Stock hereunder on a non-formula basis to all or such individual Outside Directors as it shall
select. Such Director Stock Options or Director Restricted Stock may be awarded at such times and for such number of shares as the Board in its sole discretion determines. The price of such Director
Stock Options may be fixed by the Board at a discount not to exceed 25% of the Fair Market Value of the Stock on the date of grant or may be the Fair Market Value of the Stock on the grant date. Such
Director Stock Options shall become first exercisable and have an option term as determined by the Board in its sole discretion; provided, however, that except as described in Section 13 and in
paragraph (e) of this section, no such Director Stock Option shall be first exercisable until six months from the date of grant. Except as described in Section 13 and in
paragraph (e) of this section, the restrictions upon such Director Restricted Stock shall lapse in one-third increments on each of the second, third and fourth anniversaries of the
Grant Date. 

        (b)  Method of Exercise.    Any Director Stock Option granted pursuant to the Plan may be exercised in whole or in
part at any time during the option 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 purchase 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, at or
after grant, payment in full or in part may also be made in the form of unrestricted Stock already owned by the optionee (based, in each case, on the Fair Market Value of the Stock on the date the
option is exercised, as determined by the Committee). An optionee shall have rights to dividends or other stockholder rights with respect to shares subject to the option when 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; 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. 

        (e)  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
Options or the first anniversary of the optionee's death, whichever is later. Notwithstanding the foregoing sentence, if the optionee's status as an Outside Director terminates by reason of or within
three months after a merger or other business combination resulting in a "Change in Control" as defined in Section 13, each Director Stock Option held by such optionee shall terminate upon the
latest of (i) six months and one day after the merger or business combination, (ii) ten business days following the expiration of the period during which publication of financial results
covering at least thirty days of post-merger combined operations has occurred, or (iii) the expiration of the stated term of such Director Stock Option. Upon the termination of a
participant's status as an Outside Director for any reason, all restrictions, including restrictions regarding forfeiture and nontransferability, placed upon any Director Restricted Stock held by such
participant shall lapse;
provided, however, that the Board may, in its sole discretion, provide for the lapse of such restrictions in installments and may 

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accelerate or waive such restrictions in whole or in part, before or after the participant's termination of employment, based on such factors as the Board may determine, in its sole discretion. 

	6.
	Section 8
of the Plan is amended in its entirety to read as follows: 

SECTION 8.    Restricted Stock.

        (a)  Administration.    The Committee shall determine the officers, key employees and consultants of the Company and
its Subsidiaries and Affiliates to whom, and the time or times at which, grants of Restricted Stock will be made, the number of shares to be awarded, the price, if any, to be paid by the recipient of
Restricted Stock, 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 Sections 8(b), (c), (d),
and 13). The Committee may also condition the grant and/or vesting of Restricted Stock upon the attainment of specified performance goals, or such other criteria as the Committee may determine, in its
sole discretion. The provisions of Restricted Stock awards need not be the same with respect to each recipient. Shares of Restricted Stock may be issued either alone or in addition to other awards
granted under the Plan. 

        (b)  Awards.    The prospective recipient of an award of shares of Restricted Stock shall not have any rights with
respect to such award, unless and until such recipient has executed an agreement evidencing the award (a "Restricted Stock Award Agreement"), has delivered a fully executed copy thereof to the
Company, and has otherwise complied with the then applicable terms and conditions. Awards of Restricted Stock must be accepted within a period of 60 days (or such shorter period as the
Committee may specify) after the award date by executing a Restricted Stock Award Agreement and paying the price, if any, specified in the Restricted Stock Award Agreement. An account for each
participant who is awarded Restricted Stock 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 participant may be issued a stock certificate registered in the name of the participant with respect to such shares of
Restricted Stock. The Committee shall specify that the certificate, if any, shall 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)  The
certificate shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such award, 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 and a Restricted Stock Award Agreement entered into between the registered owner and
Waddell & Reed Financial, Inc. Copies of such plan and 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 the stock certificates evidencing such shares 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 participant shall have delivered a stock power, endorsed in
blank, relating to the Stock covered by such award. 

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

          (i)  Subject
to the provisions of this Plan and the relevant Restricted Stock Award Agreement, during such period as may be set by the Committee commencing on the grant date
(the "Restriction Period"), the participant shall not be permitted to sell, transfer, 

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pledge or assign shares of Restricted Stock awarded under the Plan. 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 participant'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 paragraph (c)(i) of this Section 8, the participant 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 pursuant to Section (b) hereof, for shares of unrestricted Stock shall be
delivered to the participant promptly after, and only after, the period of forfeiture shall expire without forfeiture in respect of such shares of Restricted Stock. 

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

	7.
	Except
as hereby amended, the Plan shall remain in full force and effect. 

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Exhibit 10.4

FIRST AMENDMENT TO THE WADDELL & REED FINANCIAL, INC. 1998 STOCK INCENTIVE PLANQuickLinks
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Exhibit 10.7    
  

SECOND AMENDMENT TO THE

WADDELL & REED FINANCIAL, INC.

1998 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN  

        Waddell &
Reed Financial, Inc., a Delaware corporation (the "Company") previously established the Waddell & Reed Financial, Inc. 1998 Non-Employee
Director Stock Option Plan (the "Plan"). Pursuant to Section 8 of the Plan, the Board of Directors of the Company reserves the right to amend the Plan. Pursuant to the powers reserved in the
Plan, the Plan is hereby amended effective December 12, 2002 (the "Effective Date"). 

1.    The
Plan shall be renamed the "Waddell & Reed Financial, Inc. 1998 Non-Employee Director Stock Award Plan" and all references in the Plan to the
"Waddell & Reed Financial, Inc. 1998 Non-Employee Director Stock Option Plan" are hereby amended to read the "Waddell & Reed Financial, Inc.
Non-Employee Director Stock Award Plan." 

2.    The
following definitions are hereby added to Section 2.1 of the Plan to read as follows: 

        "Award"
means the grant of an Option or Restricted Stock to an Awardee pursuant to the terms, conditions and limitations that the Committee may establish in order to fulfill the
objectives of the Plan. 

        "Awardee"
means a Non-Employee Director to whom an outstanding Award has been granted or, in the event of such Non-Employee Director's death prior to the
expiration of an Option or the lapse of restrictions encumbering Restricted Stock, such Non-Employee Director's Beneficiary. 

        "Award
Notice" means a written award notice to a Non-Employee Director from the Company evidencing an Option or a Restricted Stock Award, as applicable. 

        "Restricted
Stock" means Shares granted to a Participant under Article 6 hereof, that is subject to certain restrictions and/or to a risk of forfeiture. 

3.    Except
as provided in this Second Amendment, the occurrences within the Plan of the defined term "Option" or "Options" shall be replaced with the defined term "Award" or "Awards," the
occurrences within the Plan of the defined term "Stock Option Award Notice" shall be replaced with the defined term "Award Notice," and the occurrences within the Plan of the defined term "Optionee"
shall be replaced with the defined term "Awardee;" provided, however, that the definitions of "Option" and "Optionee" in Section 2.1 of the Plan shall remain unchanged. 

4.    Article 6
of the Plan is amended in its entirety to read as follows: 

ARTICLE 6

Elective Awards  

        Each
Non-Employee Director shall be granted Awards subject to the following terms and conditions: 

                Section 6.1    Election to Receive An Award.    At any time, but
only one time, during the calendar year immediately
following the filing of a Primary Election Form under Article 5, a Participant shall have the right to convert into an Award pursuant to this Article 6 the then-current
balance (as of the date of such election to receive an Award) in his or her Interest Account for the calendar year to which the Primary Election Form relates. For example, if a Primary Election Form
is filed in December 1998 to defer Annual Compensation to be earned in 1999, the director may elect at any time in 1999 to convert such deferred amount to an Award. To make such election, the
Participant must file with the Plan Administrator a written irrevocable Secondary Election Form to receive an Award as of the date of the election (the "Award Grant Date"). 

 

        Effective
January 1, 2003, a Participant shall have the right to convert the then-current balance (as of the date of such election to receive an Award) in his or her
Interest Account for the 2003 calendar year into either Options or Restricted Stock. Notwithstanding the foregoing provisions of this Section 6.1, effective January 1, 2004, a
Participant will only be entitled to convert the then-current balance (as of the date of such election to receive an Award) in his or her Interest Account for the calendar year to which
the Primary Election Form relates into Restricted Stock and/or Options as determined by the Committee. 

        The
exercise price per Share, if any, under each Award granted pursuant to this Article 6 shall be indicated in the Award Notice. The exercise price per Share under any Option
granted pursuant to this Article 6 shall, at the election of the Optionee as indicated on the Secondary Election Form, be either 100% of the Fair Market Value per Share on the Award Grant Date
or a lesser percentage (but not less than 75%) of the Fair Market Value per Share on the Award Grant Date, such lesser percentage to be determined by the Committee from time to time. Such Secondary
Election Form shall indicate the percentage of such Options to be granted at each Exercise Price, which choice may affect the number of Options to be received pursuant to Section 6.2. 

         Section 6.2    Number of Shares Subject to Awards.  

        (a)  Number of Options.    The number of Shares subject to an Option granted pursuant to this Article 6 shall
be the number of whole Shares equal to A divided by B, where: 

	A=
	the
dollar amount which the Non-Employee Director has elected to convert to Options pursuant to Section 6.1; and

	B=
	the
per share value of an Option on the Award Grant Date, as determined by the Committee using an option valuation model selected by the Committee in its discretion (such value to be
expressed as a percentage of the Fair Market Value per Share on the Award Grant Date). 

        In
determining the number of Shares subject to an Option, (i) the Committee may designate the assumptions to be used in the selected option valuation model, and (ii) any
fraction of a Share will be rounded down to the next whole number of Shares. 

        (b)  Number of Shares of Restricted Stock.    The number of Shares subject to an Award of Restricted Stock granted
pursuant to this Article 6 shall be the number of whole Shares equal to A divided by B, where: 

	A=
	the
dollar amount which the Non-Employee Director has elected to convert to Restricted Stock pursuant to Section 6.1; and

	B=
	the
Fair Market Value of a Share on the Award Grant Date. 

        In
determining the number of Shares subject to an Award of Restricted Stock, any fraction of a Share will be rounded down to the next whole number of Shares. 

         Section 6.3    Term of Awards.  

        (a)  Exercise of Options.    All Options shall be fully nonforfeitable, but shall be exercisable only at the time
provided in this Section 6.3 and Section 6.4 below. Each Option shall be first exercisable, cumulatively, as to 10% commencing on each of the first through tenth anniversaries of the
Award Grant Date. An Optionee's death, Disability, retirement or other termination of directorship or failure to be reelected as a director shall not shorten the term of any outstanding Option. In no
event shall the period of time over which the Option may be exercised exceed eleven years from the Award Grant Date. An Option, or portion thereof, may be exercised in 

2

 

whole or in part only with respect to whole Shares. Options may be exercised in whole or in part at any time during the option 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 purchase price, in cash, by check or such other instrument as may be acceptable to the Committee (including instruments
providing for "cashless exercise"). Payment in full or in part may also be made in the form of unrestricted Shares already owned by the Optionee (based, in each case, on the Fair Market Value of the
Shares on the date the Option is exercised, as determined by the Committee). If payment of the exercise price of an Option is made in whole or in part in the form of Shares that are restricted, the
Shares received upon the exercise of such Option shall be restricted in accordance with the original term of the restricted stock award in question, except that such restrictions shall apply to only
the number of Shares equal to the number of restricted stock surrendered upon the exercise of such Option. No Shares shall be issued until full payment therefor has been made. An Optionee shall have
rights to dividends or other rights of a stockholder with respect to Shares subject to the Option when the Optionee has given written notice of exercise and has paid in full for such Shares. 

        (b)  Terms of Restricted Stock Awards.

          (i)  Grant and Restrictions.    Restricted Stock shall be subject to such restrictions on transferability, risk of
forfeiture and other restrictions, if any, as the Committee may impose, which restrictions may lapse separately or in combination at such times, under such circumstances (including based on
achievement of performance goals and/or future service requirements), in such installments or otherwise, as the Committee may determine at the Award Grant Date or thereafter. Except to the extent
restricted under the terms of the Plan and any Award Notice relating to the Restricted Stock, a Participant granted Restricted Stock shall have all of the rights of a stockholder, including the right
to vote the Restricted Stock and the right to receive cash dividends thereon. During the restricted period applicable to the Restricted Stock, subject to Section 6.6 below, the Restricted Stock
may not be sold, transferred, pledged, hypothecated, margined or otherwise encumbered by the Participant. 

        (ii)  Forfeiture.    Except as otherwise determined by the Committee, upon termination of service during the
applicable restriction period, Restricted Stock that is at that time subject to restrictions shall be forfeited and reacquired by the Company. 

        (iii)  Book-Entry Accounts; Certificates for Stock.    An account for each Participant who is awarded
Restricted Stock 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 Participant may be issued a stock certificate registered in the name of the Participant with respect to such shares of Restricted Stock. The Committee
shall specify that such certificates bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Stock, that the Company or a transfer agent retain
physical possession of the certificates, and that the Participant deliver a stock power to the Company or transfer agent, as applicable, endorsed in blank, relating to the Restricted Stock. Such
legend shall be 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 Non-Employee Director Stock Award Plan and a Restricted Stock Award Agreement entered into between the registered owner and Waddell & Reed Financial, Inc. Copies of the
Plan and Agreement are on file in the offices of Waddell & Reed Financial, Inc., 6300 Lamar Avenue, Overland Park, Kansas 66202." 

3

 

        (iv)  Dividends and Splits.    Unless otherwise determined by the Committee, Shares distributed in connection with a
stock split or stock dividend, and other property distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock with respect to which
such Shares or other property has been distributed. 

                Section 6.4    Accelerated Exercisability and Lapse of Restrictions.    Notwithstanding the normal exercisability
schedule and forfeiture provisions set forth in Sections 6.3(a) and 6.3(b)(ii) hereof, any and all outstanding Options shall become immediately exercisable and restrictions on any Award of
Restricted Stock shall lapse and the shares subject to such Award shall become nonforfeitable upon the first to occur of (a) the death of the Awardee, (b) the Disability of the Awardee,
(c) the occurrence of a Change in Control, (d) the unanimous determination by the Committee that a particular Option, Options, or Restricted Stock Award, in whole or in part, shall
become fully exercisable and nonforfeitable, or (e) as otherwise provided by the Committee by rule or regulation or in any Award agreement, or as determined in any individual case, that
restrictions or forfeiture conditions relating to Restricted Stock shall be waived in whole or in part in the event of terminations resulting from specified causes. Upon acceleration, an Option will
remain exercisable for the remainder of its original term. 

                 Section 6.5    Award Notice.    Each Award granted under the Plan
shall be evidenced by an Award Notice which shall be
executed by an authorized officer of the Company. Such Award Notice shall contain provisions regarding (a) the number of Shares subject to the Award, (b) the exercise price per Share, if
any, of the Award and the means of payment therefor, (c) the term of the Award, and (d) such other terms and conditions not inconsistent with the Plan as may be determined from time to
time by the Committee. The Committee, in its discretion, may include in the grant of any Option under the Plan, a "stock option restoration program" ("SORP") provision. Such provision shall provide,
without limitation, that, if payment on exercise of an Option is made in the form of Shares, and the exercise occurs on the Annual SORP Exercise Date, an additional Option ("SORP Option") will
automatically be granted to the Optionee as of the date of exercise, having an exercise price equal to 100% of the Fair Market Value of the Shares on the date of exercise of the prior Option, having a
term equal to that of the original option period for the exercised Option giving rise to the grant of the SORP option, not to exceed a maximum term of 10 years and two days from such date of
exercise (subject to any forfeiture provision or shorter limitation on exercise required under the Plan), having an initial exercise date no earlier than six months after the date of such exercise,
and covering a number of shares equal to the number of Shares used to pay the exercise price of the Stock Option, plus the number of shares (if any) withheld to cover income taxes and employment taxes
(plus any selling commissions) on the exercise. "Annual SORP Exercise Date" shall mean August 1, or if August 1 is not a trading day on the New York Stock Exchange, "Annual SORP Exercise
Date" shall mean the next succeeding trading date. 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 6.6    Transferability of Awards.    No Award shall be
assignable or transferable by the Awardee; provided,
however, that an Award Notice may provide that Options are transferable by will or the laws of descent and distribution; and provided, further, that the Committee may (but need not) permit other
transfers of an Award where the Committee concludes that such transferability (a) does not result in accelerated taxation, and (b) is otherwise appropriate and desirable, taking into
account any state or federal securities laws applicable to transferable Awards and the purposes of the Plan. 

4

 

	5.
	Article 7
of the Plan is amended in its entirety to read as follows: 

ARTICLE 7

Shares Subject to the Plan  

                Section 7.1    Shares Subject to the Plan.    Subject to
adjustment as provided in Article 9, the total number of
Shares reserved and available for delivery in connection with Awards under the Plan shall not exceed 1,200,000 Shares. Shares delivered under the Plan may be newly issued Shares or previously issued
and reacquired Shares, and there are hereby reserved for issuance under the Plan 1,200,000 Shares. To the extent that Shares subject to an outstanding Award are not issued or delivered by reason of
the expiration, termination, cancellation or forfeiture of such Award or by reason of the delivery of Shares to pay all or a portion of the exercise price of an Award, then such Shares shall again be
available under the Plan. 

        In
the case of Options exercised with payment in Shares under the "stock option restoration program", the number of Shares transferred by the Optionee in payment of the exercise price
plus the number of shares withheld to cover income and employment taxes (plus any selling commissions) on such exercise will be netted against the number of Shares issued to the Optionee in the
exercise, and only the net number shall be charged against the 1,200,000 limitation set forth above. 

	6.
	Article 9
of the Plan is amended in its entirety to read as follows: 

ARTICLE 9

Adjustment Provisions  

                 Section 9.1    Change in Corporate Structure Affecting Shares.    If the Company shall at any time change the number of
issued Shares without new consideration to the Company (such as by stock dividend, stock split, recapitalization, reorganization, exchange of shares, liquidation, combination or other change in
corporate structure affecting the Shares) or make a distribution of cash or property which has a substantial impact on the value of issued Shares, the total number of shares reserved for issuance
under the Plan shall be appropriately adjusted and the number of Shares covered by each outstanding Award and the exercise price per Share under each outstanding Award and the number of shares
underlying Awards shall be adjusted so that the aggregate consideration payable to the Company and the value of each such Award shall not be changed. Adjustments pursuant to this Section 9.1
shall not be made to the extent the Plan as been amended to reflect any adjustment contemplated in this Section 9.1. 

                 Section 9.2    Certain Reorganizations.    Notwithstanding any
other provision of the Plan, and without affecting the
number of Shares reserved or available hereunder, the Committee shall authorize the issuance, continuation or assumption of outstanding Awards or provide for other equitable adjustments after changes
in the Shares resulting from any merger, consolidation, sale of assets, acquisition of property or stock, recapitalization, reorganization or similar occurrence in which the Company is the continuing
or surviving corporation, upon such terms and conditions as it may deem necessary to preserve Awardees' rights under the Plan. 

                 Section 9.3    Acquisitions.    In the case of any sale of assets,
 merger, consolidation or combination of the Company
with or into another corporation other than a transaction in which the Company is the continuing or surviving corporation and which does not result in the outstanding Shares being converted into or
exchanged for different securities, cash or other property, or any combination thereof (an "Acquisition"), any Awardee who holds an outstanding Award shall have the right (subject to the provisions of
the Plan and any limitation applicable to 

5

 

the Award) thereafter and during the term of the Award, to receive upon exercise or vesting, in the case of Restricted Stock, thereof the Acquisition Consideration (as defined below) receivable upon
the Acquisition by an Awardee of the number of Shares which would have been obtained upon exercise of the Option or portion thereof or vesting of all or a portion of the Restricted Stock Award in
question, as the case may be, immediately prior to the Acquisition. The term "Acquisition Consideration" shall mean the kind and amount of shares of the surviving or new corporation, cash, securities,
evidence of indebtedness, other property or any combination thereof receivable in respect of one Share of the Company upon consummation of an Acquisition. 

	7.
	Except
as hereby amended, the Plan shall remain in full force and effect. 

6

QuickLinks

Exhibit 10.7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00048-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00048-of-00352.parquet"}]]