Exhibit 10.26
SECOND AMENDMENT TO THE
WADDELL & REED FINANCIAL, INC.
1998 EXECUTIVE DEFERRED COMPENSATION STOCK OPTION PLAN
Waddell & Reed Financial, Inc., a Delaware corporation (the "Company")
previously established the Waddell & Reed Financial, Inc. 1998 Executive
Deferred Compensation 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. The Board of Directors of the Company authorized the amendment set forth
below. Pursuant to the powers reserved in the Plan, the Plan is hereby amended,
effective April 28, 1999.
1. Article 6 of the Plan is hereby amended by deleting the first sentence of
Section 6.3 and replacing it with the following language:
Each Option shall be first exercisable, cumulatively, as to 10%
commencing on each of the first through tenth anniversaries of the
Option Grant Date. Notwithstanding the foregoing, the exercisability
of any Option held by a Covered Employee shall be deferred to the
extent that the Committee, in its discretion, determines that current
exercise of the Option would cause loss of the Company's tax deduction
pursuant to Section 162(m) of the Internal Revenue Code. In no event
shall such deferral continue beyond the first day of the calendar year
after the Optionee ceases to be a Covered Employee.
2. Article 6 of the Plan is further amended by deleting the last sentence of
Section 6.3 and adding the following new language:
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 or shares of
the Company's Class B Common Stock, par value $.01 ("Class B Shares")
already owned by the optionee or Restricted Stock or Deferred Stock
subject to an award under the Waddell & Reed Financial, Inc. 1998
Stock Incentive Plan (based, in each case, on the Fair Market Value of
the Shares or Class B Shares on the date the Option is exercised, as
determined by the Committee). If payment of the option exercise price
of an Option is made in whole or in part in the form of Restricted
Stock or Deferred Stock, the Shares received upon the exercise of such
Option shall be restricted or deferred, as the case may be, in
accordance with the original term of the Restricted Stock award or
Deferred Stock award in question, except that such restrictions or
deferral provisions shall apply to only the number of such Shares
equal to the number of shares of Restricted Stock or Deferred 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.
3. Article 6 of the Plan is amended by adding new language at the end of
Section 6.5 to read as follows:
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 or
Class B 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 of no more than 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 and/or Class B 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.
4. Article 7 of the Plan is amended by adding the following language at the
end of Section 7.1:
In the case of Options exercised with payment in Shares under the
"stock option restoration program" described in section 6.5 above, 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
2,500,000 limitation set forth above.
5. Except as hereby amended, the Plan shall remain in full force and effect.