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Exhibit 10.29
CONSULTING AGREEMENT
This Consulting Agreement (this "Agreement") is made to be effective as of
January 1, 2002 (the "Effective Date") by and between Waddell & Reed, Inc., a
Delaware corporation (the "Company"), and Robert L. Hechler ("Consultant").
WHEREAS, Consultant has served as a President and a Director of the Company
and has substantial knowledge and expertise concerning the business and affairs
of the Company;
WHEREAS, Consultant retired from his employment with the Company effective
December 28th, 2001;
WHEREAS, the Company desires to engage Consultant as an independent
consultant to assist with the daily business and affairs of the Company and
Consultant desires to provide such consulting services to the Company and its
Affiliates;
NOW, THEREFORE, in consideration of the agreements set forth below and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties, the Company and the Consultant agree as
follows:
1. CONSULTING SERVICES.
(a) The Company hereby engages Consultant, and Consultant hereby agrees to
be engaged by the Company, as an independent business consultant on the terms
set forth herein. Consultant will provide the Company and its Affiliates (as
defined below) with managerial and advisory services in the mutual fund, mutual
fund underwriting and distribution and investment advisor financial planning
areas (collectively, the "Services"). Consultant will provide the Services by
telephone, telefacsimile, electronic mail or in person on an as-needed basis
during regular business hours of the Company to the reasonable and good faith
satisfaction of the senior management of the Company; provided that in no event
shall Consultant be required to provide Services in excess of an aggregate of
500 hours during any single calendar year during the term of this Agreement. As
used herein, "Affiliates" means any other person or entity controlling,
controlled by or under common control with the Company.
(b) Consultant expressly warrants and agrees to comply with the policies,
procedures and guidelines established by the Company from time to time, to
perform the Services faithfully and loyally and to the best of his abilities,
and shall use his best efforts to promote the business of the Company.
Consultant will perform the Services with the highest integrity and professional
manner and will expend all reasonable efforts necessary to accomplish the
Services diligently and in a timely manner. Consultant may accept employment
with a third party during the term of this Agreement as long as Consultant
continues to provide the Services as requested by the Company and otherwise
complies with the terms and conditions of this Agreement.
(c) In addition to providing the Services, Consultant intends to continue
to serve as a member of Waddell & Reed Financial Inc.'s (an Affiliate of the
Company) Board of Directors until the due election and qualification of his
successor at the annual meeting of Waddell & Reed
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Financial, Inc.'s stockholders held in 2003, which is the scheduled termination
of his term as a Director of Waddell & Reed Financial, Inc. Moreover, as
additional consideration for entering into this Agreement, Consultant will work
with the Chairman of the Board of the Waddell & Reed Advisors Funds, W & R
Target Funds, Inc., Waddell & Reed InvestEd Portfolio, Inc. and W & R Funds,
Inc. to ensure an orderly transition off of the respective Boards of Directors
of these Fund companies. This agreement will be evidenced by a letter from the
Consultant to the Chairman of the Fund companies of even date herewith.
2. TERM. The term of this Agreement is five (5) successive years
beginning on the Effective Date, unless terminated earlier as set forth in this
SECTION 2. Consultant voluntarily may terminate this Agreement at any time upon
no less than thirty (30) days prior written notice to the Company. This
Agreement shall terminate automatically with no action on the part of either
party upon the occurrence of any of the following:
(a) Consultant dies;
(b) Consultant becomes disabled and unable to perform his duties
under this Agreement for an aggregate of ninety (90) days; or
(c) the Company's Board of Directors terminates this Agreement for
Cause.
For purposes of this Agreement, "Cause" is defined to mean any of: (1) an
act of fraud, dishonesty or embezzlement by Consultant against the Company; (2)
misappropriation of the Company's assets by Consultant for personal use; (3)
Consultant's gross negligence or willful misconduct in performing the Services
hereunder; (4) Consultant's refusal to perform his duties under this Agreement
which continues for a period of ten days after written notice thereof; (5) a
material violation of Company policy by Consultant which violation is not cured
within ten days after notice thereof; or (6) any other breach of any term or
provision of this Agreement which breach is not cured within ten days after
written notice thereof.
3. CONSULTING FEES AND EXPENSES.
(a) From the Effective Date until this Agreement terminates, Consultant
will be paid fees for the Services (collectively, the "Consulting Fees") of
$250,000 per year, payable biweekly or semi-monthly in accordance with the
payroll practices of the Company in effect from time to time.
(b) If the Company requests Consultant to incur any out-of-pocket business
expenses in connection with providing the Services, the Company shall reimburse
Consultant for such expenses that are documented in accordance with the policies
of the Company in effect from time to time. Upon the termination of this
Agreement, the Company shall have no obligation to pay Consultant for any
Services or reimburse any expenses of Consultant hereunder, except for the
payment of Consulting Fees for Services rendered or reasonable out-of-pocket
expenses incurred through the effective date of such termination.
(c) The Consulting Fees shall be made without any withholdings or
deductions, including without limitation, deductions or withholdings for social
security, Medicare or income taxes, unless otherwise required by law. Consultant
will be responsible for and will promptly
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pay any and all taxes owing in respect of the Consulting Fees paid hereunder and
will indemnify, defend and hold harmless the Company against all such taxes and
will comply with all governmental regulations with respect thereto, including
the filing of all necessary returns and reports.
4. RIGHT TO PURCHASE COMPANY VEHICLE. Consultant may purchase the vehicle
that Company had provided for his business use while he was an employee at a
price to be negotiated by the parties (the "Purchase Price"). Consultant may
exercise such right by paying the Purchase Price to the Company on or before the
Effective Date. Consultant and Company understand and agree that the vehicle is
being sold on an "as is" basis and Company does not, and has not, made any
warranties, representations or covenants whatsoever, either express or implied,
with respect to the vehicle, including, but not limited to, warranties,
representations or covenants relating to the workmanship, design, capacity,
quality, condition, merchantability or fitness for any purpose. Consultant shall
be solely responsible for the payment of any and all applicable taxes relating
to the purchase and sale of the vehicle, including, but not limited to, any and
all sales, compensating use and registration taxes.
5. CONFIDENTIAL INFORMATION.
(a) As used herein, "Confidential Information" means all confidential or
proprietary information, whether oral or written, now or hereafter developed,
acquired or used by the Company and relating to the Company's business, or that
of its Affiliates, that is not generally known to others in the Company's area
of business, including, without limitation (to the extent confidential); (1) any
trade secrets, work product, processes, analyses, know-how or other intellectual
property of the Company; (2) the Company's advertising, product development,
strategic and business plans and information; (3) the prices at which the
Company has sold or offered to sell its products or services; and (4) the
Company's financial statements and other financial information.
(b) In the course of performing services for the Company prior to the date
hereof as an employee of the Company and subsequent to the date hereof under
this Agreement, Consultant has received or may receive or have access to
commercially valuable Confidential Information. Consultant acknowledges and
agrees that the Confidential Information (to the extent it can be owned) is and
will be the Company's sole and exclusive property. Consultant will not use any
Confidential Information for his own benefit or disclose any Confidential
Information to any third party (except in the course of performing the Services
under this Agreement), either during or subsequent to the term of this
Agreement. When this Agreement terminates, Consultant will promptly deliver to
the Company all documents, computer disks and other computer storage devices,
and other papers and materials (including all copies thereof in whatever form)
containing or incorporating any Confidential Information or otherwise relating
to in any way to the Company's business, or that of its Affiliates, that are in
his possession or under his control.
6. COVENANT NOT TO COMPETE.
(a) In consideration of the Company's agreement to engage Consultant
pursuant to this Agreement and Consultant's receipt of Confidential Information,
Consultant hereby agrees that, during the period beginning on the Effective Date
and ending one year after termination of this Agreement, he will not (except in
the course of performing his authorized duties for the
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Company under this Agreement), directly or indirectly, on his own behalf or as
an officer, director, employee, consultant or other agent of, or as a
stockholder, partner or other investor in, any person or entity (other than the
Company or its Affiliates):
(1) engage in the mutual fund or financial planning industry (a
"Competing Business") within the United States of America (the "Territory");
(2) directly or indirectly influence or attempt to influence any
customer or potential customer (which for purposes of this Agreement, shall mean
any person or entity to which the Company or any of its Affiliates marketed its
products or services during the six month period prior to any date of
determination) located within the Territory to purchase goods, services or
products related to a Competing Business from any individual, corporation,
partnership, or other entity other than the Company or its Affiliates; or
(3) employ, attempt to employ or solicit for employment in any
position related to the conduct of a Competing Business in the Territory any
individual who is an employee of the Company or any of its Affiliates at such
time or was an employee of the Company or any of its Affiliates during the six
months prior to any date of determination;
provided that the foregoing will not apply to any investment in publicly traded
securities constituting less than ten percent (10%) of the outstanding
securities in such class.
(b) Consultant represents to the Company that he is willing and able to
engage in businesses other than a Competing Business within the Territory and
that enforcement of the restrictions set forth in this SECTION 6 are not be
unduly burdensome to Consultant. Consultant acknowledges and agrees that the
restrictions set forth in this SECTION 6 are reasonable as to time, geographic
area and scope of activity and do not impose a greater restraint than is
necessary to protect the goodwill and other business interests of the Company,
and Consultant agrees that the Company is justified in believing the foregoing.
(c) If the provisions of this SECTION 6 are found by a court of competent
jurisdiction to contain unreasonable or unnecessary limitations as to time,
geographical area or scope of activity, then such court is hereby directed to
reform such provisions to the minimum extent necessary to cause the limitations
contained therein as to time, geographical area and scope of activity to be
reasonable and enforceable.
7. COVENANT OF NONDISPARAGEMENT. In consideration of the Company's
agreement to engage Consultant pursuant to this Agreement and Consultant's
receipt of Confidential Information, Consultant agrees and promises that, during
the term of and after the termination of this Agreement (regardless of whether
the Agreement is terminated for Cause, voluntarily by Consultant or otherwise),
not to make any libelous, disparaging or otherwise injurious statements about or
concerning the Company or any of its Affiliates, their officers, employees or
representatives. Such prohibited statements include any statement that is
injurious to the business or business reputation of any of the Company, its
Affiliates or their employees or representatives, but does not include
reasonable statements of disagreement that Consultant makes for the purpose of
protecting or enforcing any of his rights or interests hereunder or
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defending against any claim or claims of the Company or its Affiliates, so long
as such statements are not slanderous or libelous and are delivered in terms as
would ordinarily be considered customary and appropriate.
8. CONSULTANT'S COOPERATION.
(a) In consideration of the Company's agreement to engage Consultant
pursuant to this Agreement and Consultant's receipt of Confidential
Information, Consultant agrees and promises that, during the term of and
after the termination of this Agreement (regardless of whether the
Agreement is terminated for Cause, voluntarily by Consultant or otherwise),
Consultant shall fully cooperate with the Company from time to time as
reasonably requested by the Company concerning Consultant's information and
knowledge with respect to the Company's business and with respect to legal
proceedings or legal issues involving the Company or its Affiliates,
including, without limitation, making himself available for depositions and
trial as necessary in the opinion of the Company counsel. The Company will
reimburse all reasonable travel or other expenses as may be incurred by
Consultant in assisting the Company with respect to legal proceedings or
legal issues involving the Company or its Affiliates. For purposes of this
paragraph, Consultant agrees to make himself available to the Company on at
least five (5) days' prior written notice.
(b) Consultant further agrees that in the event he is subpoenaed or
served with any legal process to produce or divulge, directly or
indirectly, any testimony, documents or other information regarding the
Company or any of its affiliates in any formal or informal judicial,
administrative, or arbitration proceeding (including any interview,
deposition, hearing and/or trial), Consultant will immediately notify the
Company in writing at the address provided in Section 15 below, and deliver
a copy of the subpoena or process to that address.
9. RELATIONSHIP OF PARTIES. Consultant will perform the Services as an
independent contractor. Consultant will not act or attempt to act or represent
himself directly or by implication as an agent of the Company or any of its
Affiliates or in any manner assume or create, or attempt to create, any
obligation on behalf of, or in the name of the Company or its Affiliates.
Consultant acknowledges and agrees that no employer-employee relationship exists
or is intended to be created between Consultant and the Company. Consultant will
indemnify, defend and hold harmless the Company and its Affiliates and its
employees and agents, from and against any and all liabilities, claims, costs or
expenses arising out of or in connection with any personal injury, death or
property damage caused by or arising from any acts or omissions of Consultant or
his agents while performing the Services. Consultant hereby expressly waives for
himself, his dependents, heirs and legal representatives, any and all claims to
receive any benefit under any employee benefit plan or program of the Company or
its Affiliates, except for such benefits that Consultant or any such person is
entitled to receive in connection with Consultant's former employment
relationship or current directorship with the Company or its Affiliates.
10. STOCK REPURCHASES. During the term of this Agreement, upon the prior
written request of Consultant, the Company will repurchase for cash shares of
Waddell & Reed Financial, Inc. Class A common stock (the "Common Stock") owned
by Consultant at Fair
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Market Value on the date of purchase, or at a price agreed to by both parties,
in a private transaction. As used herein, "Fair Market Value" means the per
share closing price of the Common Stock on the New York Stock Exchange or such
other national exchange on which the Common Stock is then traded. Consultant
will cooperate and provide the Company with any and all documents,
representations and information in connection with such repurchase as the
Company may reasonably request. Consultant agrees to comply at all times with
all federal and state securities laws and regulations.
11. STOCK OPTION RESTORATION PROGRAM. During the term of this Agreement,
Consultant will remain eligible to participate in the Company's Stock Option
Restoration Program (the "SORP"), administered annually on August 1st or the
next successive business day, pursuant to, and upon satisfaction of, the terms
of the SORP as contained in the Company's stock option plans or participant
forms.
12. INJUNCTIVE RELIEF. Notwithstanding the provisions of SECTION 20,
Consultant acknowledges and agrees that the Company would be irreparably harmed
by any violation of Consultant's obligations under SECTION 5, 6, 7 or 8 and
that, in addition to all other rights or remedies available at law or in equity,
the Company will be entitled to seek injunctive and other equitable relief to
prevent or enjoin any such violation, in aid of arbitration. In connection
therewith, Consultant agrees to submit to the personal jurisdiction of the
courts of the State of Kansas for any injunction proceeding initiated by the
Company. Employee further acknowledges that venue is proper in courts sitting in
Johnson County, Kansas for this purpose.
13. SEVERABILITY. In addition to SECTION 6(C) hereof, any provision or
portion of a provision of this Agreement that is held to be invalid or
unenforceable will be severable, and this Agreement will be construed and
enforced as if such provision, or portion thereof, did not comprise a part
hereof, and the remaining provisions or portions of provisions will remain in
full force and effect. In lieu of each invalid or unenforceable provision there
will be added automatically as part of this Agreement a provision as similar in
terms to such invalid or unenforceable provision as may be possible and be
legal, valid, and enforceable.
14. GOVERNING LAW. This Agreement will be governed by and construed and
interpreted in accordance with the substantive laws of the State of Kansas,
without giving effect to any conflict-of-laws, rule or principle that might
require the application of the laws of another jurisdiction.
15. NOTICE. Any notice required or permitted under this Agreement must be
in writing and will be deemed to have been given when delivered personally, by
facsimile or by overnight courier service or three (3) business days after being
sent by mail, postage prepaid, to the parties at the following addresses (or to
the attention of another person or address as a party may provide by notice in
accordance with this SECTION 15)
IF TO THE COMPANY:
Waddell & Reed Financial, Inc.
6300 Lamar Avenue
Overland Park, KS 66202
Facsimile: (913) 236-2379
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Attn: General Counsel
IF TO CONSULTANT:
Robert L. Hechler
6027 Lockton Lane
Fairway, KS 66205
16. ASSIGNMENT. The Services to be performed hereunder are personal to
Consultant and may not be assigned by any act or omission by Consultant, by
operation of law or otherwise. Without the consent or prior knowledge of
Consultant, the Company may assign this Agreement to any Affiliate or to any
person or entity acquiring all or substantially all of the Company's assets, its
Affiliate's assets, its business or any of its Affiliate's business, whether by
merger, acquisition or otherwise.
17. MULTIPLE ORIGINALS. This Agreement may be executed by the parties in
separate counterparts, each of which when executed and delivered is an original.
All counterparts together constitute one instrument.
18. HEADINGS. The headings of this Agreement are for reference only, and
do not affect the interpretation of this Agreement.
19. ATTORNEYS' FEES. If any party brings an action to enforce this
Agreement, the prevailing party will be entitled to recover, in addition to
other damages it may be entitled to, its reasonable attorneys' fees, costs, and
necessary disbursements in addition to any other relief to which that party may
be entitled. A party shall be considered the prevailing party if (a) it
initiated the action and substantially obtains the relief it sought, either
through a judgment or arbitration award or the losing party's voluntary action
before arbitration, trial or judgment, (b) the other party withdraws its action
without substantially obtaining the relief it sought, or (c) such party did not
initiate the action and judgment is entered into for any party, but without
substantially granting the relief sought by the initiating party or granting
more substantial relief to the non-initiating party with respect to any
counterclaim asserted by the non-initiating party in connection with such
action.
20. ARBITRATION. SUBJECT TO SECTION 12, TO THE EXTENT THAT THE PARTIES
HERETO ARE UNABLE TO RESOLVE THEIR DISPUTES OR CONTROVERSIES ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR THE PERFORMANCE, BREACH, VALIDITY, INTERPRETATION
OR ENFORCEMENT OF THIS AGREEMENT, CONSULTANT'S SERVICES AND/OR TERMINATION,
INCLUDING, WITHOUT LIMITATION, ANY AND ALL CLAIMS OR CAUSES OF ACTION WHICH MAY
ARISE OR BE ASSERTED UNDER FEDERAL, STATE OR LOCAL REGULATORY, STATUTORY OR
COMMON LAW, WRONGFUL DISCHARGE, AND TORT (SUCH AS INTENTIONAL INFLICTION OF
EMOTIONAL DISTRESS, LIBEL, SLANDER, INVASION OF PRIVACY OR PERSONAL INJURY),
THROUGH DISCUSSION AND NEGOTIATION, ALL SUCH DISPUTES AND CONTROVERSIES WILL BE
RESOLVED BY BINDING ARBITRATION IN ACCORDANCE WITH TITLE 9 OF THE U.S. CODE
(UNITED STATES ARBITRATION ACT) AND THE COMMERCIAL ARBITRATION RULES OF THE
AMERICAN ARBITRATION ASSOCIATION (THE "AAA"), AND JUDGMENT UPON THE AWARD
RENDERED BY THE ARBITRATOR MAY BE ENTERED IN ANY COURT HAVING JURISDICTION
THEREOF. A PARTY HERETO MAY INITIATE ARBITRATION BY SENDING WRITTEN NOTICE OF
ITS INTENTION TO ARBITRATE TO THE OTHER PARTIES HERETO AND TO THE AAA OFFICE
LOCATED IN CHICAGO, ILLINOIS. SUCH WRITTEN NOTICE WILL CONTAIN A DESCRIPTION OF
THE DISPUTE AND THE REMEDY SOUGHT. THE ARBITRATION WILL BE CONDUCTED AT THE
OFFICES OF THE
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AAA IN CHICAGO, ILLINOIS BEFORE AN INDEPENDENT AND IMPARTIAL ARBITRATOR
ACCEPTABLE TO THE PARTIES HERETO. IN THE EVENT THAT THE PARTIES HAVE NOT
MUTUALLY AGREED ON AN ACCEPTABLE ARBITRATOR WITHIN THIRTY (30) DAYS AFTER THE
DEMAND FOR ARBITRATION IS FILED, THE ARBITRATOR SHALL BE APPOINTED IN THE MANNER
PROVIDED BY SECTION 13 OF THE COMMERCIAL ARBITRATION RULES OF THE AAA. THE
DECISION OF THE ARBITRATOR WILL BE FINAL AND BINDING ON THE PARTIES HERETO AND
THEIR SUCCESSORS AND ASSIGNEES. THE PARTIES HERETO INTEND THAT THIS AGREEMENT TO
ARBITRATE BE IRREVOCABLE.
IN PROVIDING A REMEDY UNDER THIS SECTION 20, THE PARTIES AGREE THAT THE
ARBITRATOR SHALL NOT AWARD PUNITIVE DAMAGES AGAINST ANY PARTY, AND THE PARTIES
HEREBY MUTUALLY WAIVE ANY CLAIM FOR PUNITIVE DAMAGES, WHICH MAY BE AWARDED IN
CONNECTION WITH ANY DISPUTE SUBJECT TO ARBITRATION UNDER THIS AGREEMENT.
21. ENTIRE AGREEMENT. This Agreement embodies the complete agreement of
the parties with respect to the subject matter hereof and supersedes any prior
written, or prior and contemporaneous oral understandings or agreements between
the parties that are related in any way to the subject matter hereof. This
Agreement may be amended only in writing executed by the Company and Consultant.
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IN WITNESS WHEREOF, Consultant and the Company have each placed their
signatures as of December 28th, 2001.
WADDELL & REED, INC.
By: /s/ John E. Sundeen, Jr.
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John E. Sundeen, Jr.
Senior Vice President & Treasurer
CONSULTANT:
/s/ ROBERT L. HECHLER
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Robert L. Hechler
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