<PAGE>
As filed with the Securities and Exchange Commission on December 15, 1998.
Registration No. 333-65827
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________
POST EFFECTIVE AMENDMENT NO. 1 TO
FORM S-8
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
WADDELL & REED FINANCIAL, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 51-0261715
-------- ----------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
6300 Lamar Avenue
OVERLAND PARK, KANSAS
66202
(913) 236-2000
(Address of Principal Executive Offices, including Zip Code)
_______________________
1998 EXECUTIVE DEFERRED COMPENSATION STOCK OPTION PLAN,
1998 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN AND
1998 STOCK INCENTIVE PLAN
(Full Title of the Plans)
----------------------------
DANIEL C. SCHULTE COPY TO:
ASSISTANT SECRETARY ALAN J. BOGDANOW
WADDELL & REED FINANCIAL, INC. HUGHES & LUCE, L.L.P.
6300 LAMAR AVENUE 1717 MAIN STREET, SUITE 2800
OVERLAND PARK, KANSAS 66202 DALLAS, TEXAS 75201
(913) 236-2000 (214) 939-5500
(Name, Address, and Telephone Number,
including Area Code, of Agent for Service)
_______________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
TITLE OF EACH CLASS AMOUNT MAXIMUM MAXIMUM AMOUNT OF
OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common
Stock, $.01 par 16,300,000 $17.16 $279,708,000 $82,514(3)
value
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) This registration statement also covers an indeterminate additional amount
of shares of the Registrant's Class A Common Stock to be offered or sold
pursuant to the antidilution provisions of the 1998 Executive Deferred
Compensation Stock Option Plan, 1998 Non-Employee Director Stock Option
Plan and 1998 Stock Incentive Plan.
(2) Estimated solely for the purpose of calculating the registration fee on the
basis of the average of the high and low price paid per share of the Class
A Common Stock, as reported on the New York Stock Exchange on October 9,
1998, in accordance with Rules 457(c) and (h)(1) promulgated under the
Securities Act of 1933, as amended.
(3) Previously paid.
<PAGE>
PROSPECTUS
WADDELL & REED FINANCIAL, INC.
4,190,094 SHARES
CLASS A COMMON STOCK, $.01 PAR VALUE
ACQUIRED PURSUANT TO THE WADDELL & REED FINANCIAL, INC.
1998 EXECUTIVE DEFERRED COMPENSATION STOCK OPTION PLAN,
1998 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN AND
1998 STOCK INCENTIVE PLAN
Our stockholders identified below under the caption "Selling
Stockholders" may offer to sell up to 4,190,094 shares of our Class A common
stock.
We have already issued to the selling stockholders the shares being
offered by the selling stockholders, or we will issue the shares being offered
by the selling stockholders prior to the sale of the shares. This offering is
not part of the original issuance of the shares of Class A common stock. We
will not receive any of the proceeds from the selling stockholder's sale of
their shares. The selling stockholders may offer the shares in transactions on
the New York Stock Exchange, in negotiated transactions, or through a
combination of these methods. The selling stockholders may offer the shares at
prices relating to the prevailing market prices or at negotiated prices.
The Class A common stock is quoted on the NYSE under the symbol "WDR".
On December 11, 1998 the last sale price of the Class A common stock, as
reported on the NYSE, was $22.6875 per share.
____________________________________
INVESTING IN THE CLASS A COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU
SHOULD PURCHASE ONLY IF YOU CAN AFFORD A COMPLETE LOSS. SEE "RISK FACTORS"
BEGINNING ON PAGE 4.
____________________________________
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if the prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
____________________________________
You should rely only on the information contained in this document or
that we have referred you to. We have not authorized anyone to provide you with
information that is different from that contained in this Prospectus. The
selling stockholders may offer to sell, and seek offers to buy, shares of Class
A common stock only in jurisdictions where offers and sales are permitted. The
information contained in this Prospectus is accurate only as of the date of this
Prospectus, regardless of the time of delivery of this Prospectus or of any sale
of the Class A common stock.
This Prospectus is dated December 15, 1998.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports and other information with the Securities
and Exchange Commission (the "Commission"). Reports, proxy statements,
information statements, and other information may be inspected without charge at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549-1004
and at the following regional offices of the Commission: New York Regional
Office, Seven World Trade Center, Suite 1300, New York, New York 10048; and
Chicago Regional Office, Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60606. Copies of such material may be obtained
from the Public Reference Room of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Information on the operation of the
Public Reference Section is available by calling the Commission at 1-800-SEC-
0330. Reports, proxy statements, information statements and other information
can also be inspected at the offices of the NYSE, 20 Broad Street, New York, New
York 10005. The Commission maintains a Web site that contains information filed
with the Commission. The Commission's Web site address is http://www.sec.gov.
The Company intends to furnish its stockholders with annual reports
containing audited financial statements and such other periodic reports as it
may determine to furnish or as may be required by law.
The Company has filed with the Commission a Registration Statement on
Form S-8, (together with all exhibits thereto, the "Registration Statement")
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the shares of Class A common stock offered hereby. This Prospectus
does not contain all information set forth in the Registration Statement.
Certain parts of the Registration Statement have been omitted in accordance with
the rules and regulations of the Commission. For further information, reference
is made to the Registration Statement which can be inspected at the public
reference rooms at the offices of the Commission.
1
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, including any beneficial owner, upon the
written or oral request of such person, a copy of any or all of the documents
incorporated by reference herein (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference into the information
that this Prospectus incorporates). Requests should be directed to:
Waddell & Reed Financial, Inc.
6300 Lamar Avenue
Overland Park, Kansas 66202
Attn: Assistant Secretary
(913) 236-2000
The following documents previously filed with the Commission pursuant
to the Securities Act and the Exchange Act are incorporated herein by reference
and shall be deemed a part hereof:
(a) The Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998;
(b) The Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1998;
(c) The Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998;
(d) The description of the Registrant's Class A common stock contained
in the Registrant's Registration Statement on Form 8-A, (the "Form 8-A") filed
with the Commission on February 27, 1998, including any amendment or report
filed for the purpose of updating such description; and
(e) All reports filed by the Registrant pursuant to Sections 13(a) or
15(d) of the Exchange Act, since the filing of the Form 8-A.
All documents filed with the Commission by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of the offering relating to this
Prospectus will be deemed to be incorporated by reference into this Prospectus
and to be a part hereof from the date of filing of such documents. Any
statement incorporated or deemed to be incorporated by reference herein will be
deemed to be modified, replaced or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document that also is or is deemed to be incorporated by reference herein
modifies, replaces or supersedes such statement. Any such statement so
modified, replaced or superseded will be deemed, except as so modified, replaced
or superseded, to constitute a part of this Prospectus.
2
<PAGE>
THE COMPANY
We were founded in 1937 and are the third oldest mutual fund complex
in the United States, having introduced the United family of funds in 1940. We
focus on selling investment products to middle income Americans through our
sales force. We are the exclusive underwriter and distributor of 36 mutual fund
portfolios. Seventeen of these funds make up the United Group of Mutual Funds,
8 make up the Waddell & Reed Funds, Inc., and 11 make up the Target/United
Funds, Inc. We also distribute underwritten variable annuities and life
insurance products of Torchmark Corporation to our customers. We sell front-end
loaded and contingent deferred sales charge mutual fund products.
We are a Delaware corporation with our principal offices located at
6300 Lamar Avenue, Overland Park, Kansas 66202 (telephone number 913-236-2000).
RISK FACTORS
You should carefully consider the following risk factors and warnings
before making an investment decision. The risks described below are not the
only ones that we face. Additional risks that we do not yet know of or that we
currently think are immaterial may also impair our business operations. If any
of the following risks actually occur, our business, financial condition or
results of operations could be materially adversely affected. In such case, the
trading price of our Class A common stock could decline, and you may lose all or
part of your investment. You should also refer to the other information set
forth in this Prospectus.
This Prospectus contains forward-looking statements. These statements
refer to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as "may", "will",
"should", "expects", "anticipates", "plans", "believes", "estimates",
"predicts", "potential" or "continue" or the negative of such terms and other
comparable terminology. These statements are only predictions. Actual events
or results may differ materially. In evaluating these statements, you should
specifically consider various factors, including the risks outlined below.
These factors may cause our actual results to differ materially from any
forward-looking statement.
POTENTIAL ADVERSE EFFECTS ON OUR BUSINESS FROM A DECLINE IN SECURITIES MARKETS
Our results of operations are affected by certain economic factors,
including the level of the securities markets. The United States securities
markets performed well for the last five years and the first half of 1998. This
performance attracted a substantial increase in the investments in these
markets, which benefited us and the funds. The United States securities markets
have, however, been highly volatile. Most equity market indices have declined
significantly since July 1998. In recent months the United States mutual fund
industry experienced net redemptions for the first time in several years. If
there is (1) a further decline in the securities markets; (2) a failure of the
securities markets to return to prior levels or to sustain the levels of growth
achieved prior to July 1998; or (3) continued or additional short-term
3
<PAGE>
volatility in the securities markets, there could be an adverse effect on our
business. This could adversely and materially affect the market price of the
Class A common stock.
Because our revenues are largely based on the value of the assets that
we manage, a decline in the value of these assets would adversely affect our
revenues. Our growth is dependent to a significant degree upon the ability of
the funds to attract and retain mutual fund assets. This may be difficult if
there is an adverse economic environment. Our growth rate has varied from year
to year, and we cannot assure you that our recent growth rates will continue.
POTENTIAL ADVERSE EFFECTS ON OUR BUSINESS IF THE FUNDS' PERFORMANCE DECLINES
In order for us to succeed, the funds must have good investment
performance. Good performance generally leads to (1) selling more shares in our
funds, which results in higher revenues; (2) fewer owners of shares in the funds
redeeming those shares and (3) us obtaining additional private institutional
accounts, for which we may act as a subadvisor. If the funds have poor
investment performance, this generally leads to (1) selling less shares in our
funds; (2) more owners of shares in the funds redeeming those shares and (3)
private institutional accounts being withdrawn from us, with corresponding
decreases in our revenues. If the funds do not perform well, this could
adversely and materially affect the market price of the Class A common stock.
OUR CONTRACTS CONTAIN TERMINATION PROVISIONS AND RENEWALS RISKS
A substantial majority of our revenues are derived from investment
management agreements with the funds that are terminable on 60 days' notice. In
addition, the disinterested members of each fund's board or its shareholders
must annually approve and renew each investment management agreement. If the
board or shareholders of a significant number of the funds vote to terminate or
not renew the agreements, this could have a material adverse effect on our
business, financial condition and results of operations.
DIFFICULTIES IF WE CANNOT RECRUIT AND RETAIN KEY PERSONNEL AND SALES FORCE
Our future success depends to a substantial degree on our ability to
attract and retain qualified personnel to conduct our business. There is a
great deal of competition for qualified fund managers, investment analysts and
financial advisers, and this competition has increased in recent periods due to
the growth of the mutual fund management industry. We anticipate that it will
be necessary for us to add fund managers and investment analysts, and we have
adopted a strategy intended to attract and retain fund managers and investment
analysts. We cannot assure you, however, that we will be successful in our
efforts to recruit and retain the required personnel.
We are currently dependent on our sales force to sell our mutual fund
and other investment products. Our future growth will be directly affected by
the quality and quantity of financial advisers we are able to successfully
recruit and retain.
4
<PAGE>
WE HAVE COMPETITORS WITH GREATER RESOURCES
The mutual fund distribution and service and investment management
industries are very competitive and are undergoing substantial consolidations.
Many organizations in these industries are attempting to market to and service
the same clients as we are. These organizations offer mutual fund investments
and services and a wide range of other financial products and services. Many of
our competitors have more products and product lines, services and may also have
substantially greater assets under management and financial resources. Many
larger mutual fund complexes have developed relationships with brokerage houses
with large distribution networks, which may enable these fund complexes to reach
broader client bases.
WE MAY HAVE DIFFICULTIES IN EXECUTING OUR ACQUISITION STRATEGY
We have no history of finding, acquiring or integrating other
companies. We cannot assure you that we will (1) find suitable acquisition
candidates at acceptable prices; (2) have sufficient capital resources to
realize our acquisition strategy; (3) be successful in entering into definitive
agreements for desired acquisitions or (4) successfully integrate acquired
companies. We also cannot assure you that any such acquisitions, if
consummated, will be advantageous to us.
WE MAY NOT SUCCESSFULLY IMPLEMENT OUR NEW INFORMATION SYSTEMS
Some of our key information technology systems were developed solely
to handle our particular information technology infrastructure. We are in the
process of implementing new information technology and systems. We are
implementing these new systems both internally and through outsourcing the data
processing portion of our shareholder service functions. We believe that these
new systems could facilitate the acquisition and integration of other mutual
fund companies. We cannot, however, assure you that we will be successful in
implementing the new information technology and systems or that the
implementation of these systems will be completed in a timely manner or within
our budget.
RISKS RELATING TO YEAR 2000 PROBLEMS MAY ADVERSELY AFFECT OUR BUSINESS
Some computers, software, and other equipment include computer code in
which calendar year data is abbreviated to only two digits. As a result, some of
these systems will not operate correctly after 1999 because they may interpret
"00" to mean 1900, rather than 2000 - widely known as the "Year 2000 Problem".
These problems are likely to increase in frequency and severity as the year 2000
approaches. The Year 2000 Problem affects some of our computers, software and
other equipment. If we fail to properly recognize and address the Year 2000
Problem in our systems, our business, financial condition and results of
operations could be materially and adversely affected.
We believe that we have identified most of the major computers,
software and other equipment used in connection with our internal operations
that must be modified, upgraded or replaced to minimize the possibility of a
material disruption to our business. We have
5
<PAGE>
commenced the process of modifying, upgrading and replacing major systems that
have been assessed as adversely affected, and we expect to complete this process
before the occurrence of any material disruption of our business. We have
commenced the process of identifying other computers, software and other
equipment that may be affected by the Year 2000 Problem, and determining whether
remedial action is needed. We expect to complete this process by the third
quarter of 1999, and we estimate that the total costs of this effort will be
$4.2 million for the five year period ending June 30, 2000. Total costs incurred
to date are approximately $2.6 million.
The Year 2000 Problem also affects some of our customers and major suppliers
of computers, software, and other equipment. We have discussed the Year 2000
Problem with some of these customers and suppliers, but we cannot guarantee that
they will resolve any or all Year 2000 Problems. If our customers and suppliers
fail to resolve Year 2000 Problems, our business could be materially disrupted.
We are developing contingency plans to minimize the impact of any Year 2000
Problems. We expect to complete these contingency plans by the end of the third
quarter 1999.
OUR FINANCIAL ADVISERS COULD MISUSE MONEY AND INFORMATION
Our financial advisers handle a significant amount of money and financial and
personal information for people that invest in the funds and for people that
purchase other investment and insurance products from us. Although we have
implemented a system of controls to minimize the risk of misuse of such money
and information, we cannot assure you that these controls will be adequate. We
also cannot assure you that we can prevent taking or misuse of money or
information. In the event of any taking or misuse, we could have liability and
could also be subject to regulatory sanctions. Although we believe that we are
adequately insured against such risks, we cannot assure you that such insurance
will be maintained or that it will be adequate to meet any future liability.
POTENTIAL ADVERSE EFFECT ON CLASS A COMMON STOCK SHARE VALUE FROM DISPARATE
VOTING RIGHTS OF CLASS A COMMON STOCK AND CLASS B COMMON STOCK
The holders of our Class A common stock and the Class B common stock have
identical rights except that:
. holders of Class A common stock have one vote per share while holders of
Class B common stock have five votes per share;
. holders of Class A common stock cannot vote on any alteration of the
powers, preferences or special rights of the Class B common stock that
would not adversely affect the Class A common stock; and
. holders of Class B common stock cannot vote on any alteration of the
powers, preferences or special rights of the Class A common stock that
would not adversely affect the Class B common stock.
6
<PAGE>
For example, holders of one class of common stock could not vote on proposals
to:
. decrease the voting power of the other class of common stock;
. decrease the right of the other class of common stock to receive dividends;
or
. diminish the rights of the other class of common stock in liquidation.
Investors or any potential future purchaser of our shares could view the
superior voting rights of the Class B common stock to have value, which could
adversely affect the value of the Class A common stock. The existence of two
separate classes of common stock could result in less liquidity for either class
of common stock than if there were only one class of common stock.
WE MAY NOT PAY DIVIDENDS; OUR HOLDING COMPANY STRUCTURE MAY LIMIT OUR AVAILABLE
CASH FOR DISTRIBUTION
Our Board of Directors currently intends to declare quarterly dividends on
both the Class A common stock and the Class B common stock. Our Board of
Directors has discretion over declaring and paying dividends. Whether or not
the Board of Directors decides to pay dividends, and the amount of such
dividends, will depend on many factors, including:
. general economic and business conditions;
. our strategic plans;
. our financial results and condition;
. contractual, legal, and regulatory restrictions on the payment of dividends
by us or our subsidiaries; and
. such other factors as the Board of Directors may consider to be relevant.
We are a holding company, and, as such, our ability to pay dividends is
subject to the ability of our subsidiaries to provide us with cash. We cannot
assure you that our initial quarterly dividend level will be maintained or that
we will pay any dividends in any future period.
WE COULD BE ADVERSELY AFFECTED BY CHANGES IN REGULATION
Our investment management business is subject to extensive regulation in the
United States, primarily at the Federal level, including regulation by the
Commission. Changes in laws or regulations, or in governmental policies, could
materially and adversely affect our business and operations.
PROVISIONS IN OUR CERTIFICATE OF INCORPORATION, BYLAWS AND DELAWARE LAW COULD
DETER TAKEOVER ATTEMPTS
Our Board of Directors may issue shares of preferred stock and may determine
the price, rights, preferences, privileges and restrictions, including voting
and conversion rights, of these
7
<PAGE>
shares of preferred stock. These determinations may be made without any further
vote our action by our stockholders. The rights of the holders of Class A common
stock will be subject to, and may be adversely affected by, the rights of the
holders of any preferred stock that may be issued in the future. The issuance of
preferred stock may make it more difficult for a third party to acquire a
majority of our outstanding voting stock.
Some provisions in our Certificate of Incorporation and Bylaws and of Delaware
law could also delay, prevent or make more difficult a merger, tender offer, or
proxy contest involving our Company, including:
. With certain exceptions, Section 203 of the Delaware General Corporation
Law restricts certain mergers and other business combinations between us
and any holder of 15% or more of our voting stock;
. the prohibition of actions by stockholders without a meeting, unless our
Board of Directors otherwise approves;
. our Board of Directors is divided into three classes, each of which serves
for a staggered three-year term; and
. after Torchmark Corporation ceases to beneficially own at least a majority
of the voting power, incumbent directors may not be removed without cause.
8
<PAGE>
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Prospectus contains or incorporates by reference certain forward-looking
statements. These statements involve known and unknown risks, uncertainties and
other factors that may cause our or our industry's actual results, levels of
activity, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among others, those
listed under "Risk Factors" and elsewhere in this Prospectus.
In some cases, you can identify forward-looking statements by terminology such
as "may", "will", "should", "expects", "anticipates", "plans", "believes",
"estimates", "predicts", "potential" or "continue" or the negative of such terms
or other comparable terminology.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements.
Moreover, neither we nor any other person assumes responsibility for the
accuracy and completeness of any such forward-looking statements. We are under
no duty to update any of the forward-looking statements after the date of this
Prospectus to conform such statements to actual results.
9
<PAGE>
SELLING STOCKHOLDERS
The table below sets forth information with respect to the beneficial
ownership of the Class A common stock of Waddell & Reed Financial, Inc. (the
"Company") by the selling stockholders immediately prior to this offering and as
adjusted to reflect the sale of shares of Class A common stock pursuant to the
offering. Of the selling stockholders, only Keith A. Tucker, Henry J. Herrmann
and Robert L. Hechler own or have the right to acquire through exercise of stock
options, on the date hereof, in excess of one percent of the outstanding Class A
common stock. All information with respect to the beneficial ownership has been
furnished by the selling stockholders. The number of shares which may be sold by
each such selling stockholders from time to time will be updated in supplements
to this Prospectus, which will be filed with the Commission in accordance with
Rule 424(b) of the Securities Act.
<TABLE>
<CAPTION>
Class A common stock
Relationship with Owned as of Shares to
Name Company October 31, 1998 (1) Be Sold (2)
---- ----------------- ---------------------- -----------
<S> <C> <C> <C>
Keith A. Tucker Chairman of the Board, 1,436,370 180,000 (3)
Chief Executive Officer and 131,736 (4)
Director 135,496 (5)
416,911 (6)
270,992 (7)
340,808 (8)
465,689 (9)
Tucker KA Child Trust 64,204 64,204 (9)
Henry J. Herrmann President, Chief Investment 614,626 344,600 (3)
Officer, Treasurer and 32,934 (4)
Director 40,649 (5)
91,720 (6)
75,044 (7)
259,735 (9)
Robert L. Hechler Executive Vice President, 341,582 292,200 (3)
Chief Operating Officer and 32,934 (4)
Director 50,029 (6)
33,353 (7)
144,876 (9)
Harold T. McCormick Director 9,998 6,000 (10)
6,714 (11)
11,226 (12)
6,036 (13)
5,515 (23)
6,428 (9)
1,811 (14)
Louis T. Hagopian Director 25,060 6,000 (10)
6,234 (11)
11,519 (12)
5,457 (23)
20,703 (9)
1,811 (14)
</TABLE>
10
<PAGE>
<TABLE>
<S> <C> <C> <C>
R. K. Richey Director 156,327 6,000 (10)
14,481 (15)
21,126 (16)
90,540 (6)
60,360 (17)
Richey Capital Partners, LTD 189,519 94,814 (23)
94,705 (9)
Richey RK Child Trust 25,985 25,985 (9)
Joseph L. Lanier, Jr. Director 29,102 6,000 (10)
5,891 (11)
11,226 (12)
5,483 (18)
19,194 (9)
1,811 (14)
William L. Rogers Director 0 10,000 (19)
10,933 (12)
James M. Raines Director 0 10,000 (20)
12,307 (21)
George J. Records Director 8,761 6,000 (10)
5,873 (11)
11,226 (12)
6,036 (13)
5,515 (23)
5,191 (9)
1,811 (14)
David L. Boren Director 3,018 6,000 (10)
6,036 (13)
1,811 (14)
Joseph M. Farley Director 18,229 6,000 (10)
9,215 (12)
16,418 (9)
1,811 (14)
Michael D. Strohm Principal Accounting Officer 17,594 16,800 (3)
10,423 (6)
10,423 (7)
1,459 (9)
D. Tyler Towery Vice President 33,740 5,420 (6)
5,420 (7)
17,510 (9)
</TABLE>
11
<PAGE>
<TABLE>
<S> <C> <C> <C>
Sharon K. Pappas Former Secretary 13,207 16,800 (22)
8,338 (24)
8,338 (24)
</TABLE>
_________________________
(1) In each case, the indicated number of shares of Class A common stock
include both the number of shares held on the date indicated and the number
of shares issuable upon exercise of stock options held by the selling
stockholder within the next sixty days.
(2) Assumes all the shares of Class A common stock that may be offered are
sold.
(3) All such options were granted on March 4, 1998 pursuant to the 1998 Stock
Incentive Plan. The options are exercisable in three increments of 33.33%
each commencing on March 4, 2000 and on each of the two anniversaries
thereafter and expire ten years and two days from the date of grant.
(4) All such options were granted on March 4, 1998 pursuant to the 1998
Executive Deferred Compensation Stock Option Plan. The options are
exercisable in ten increments of 10% each commencing on March 4, 1999 and
on each of the nine anniversaries thereafter and expire eleven years from
the date of grant.
(5) All such options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in conjunction with the spin-off of the Company by
Torchmark, are immediately exercisable and expire on December 17, 2004.
(6) All such options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in conjunction with the spin-off of the Company by
Torchmark. The options are exercisable in two increments of 50% each on
December 20, 1997 and December 20, 1998 and expire on December 21, 2005.
(7) All such options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in conjunction with the spin-off of the Company by
Torchmark. The options are exercisable in two increments of 50% each on
December 16, 1998 and December 16, 1999 and expire on December 17, 2006.
(8) All such options were granted on November 6, 1998 pursuant to the 1998
Executive Deferred Compensation Plan in connection with the spin-off of the
Company by Torchmark. The options are exercisable in ten increments of 10%
each commencing on January 31, 1998 and on each of the nine anniversaries
thereafter and expire on January 30, 2008.
(9) All such options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in connection with the spin-off of the Company by
Torchmark. The options are immediately exercisable and expire on September
26, 2007.
(10) All such options were granted on March 4, 1998 pursuant to the 1998 Stock
Incentive Plan. The options are exercisable in three increments of 33.33%
each commencing on March 4, 2000 and on each of the two anniversaries
thereafter and expire ten years and two days from the date of grant.
(11) All such options were granted on March 4, 1998 pursuant to the 1998 Non-
Employee Director Stock Option Plan. The options are exercisable in ten
increments of 10% each commencing on March 4, 1999 and on each of the nine
anniversaries thereafter and expire eleven years from the date of grant.
(12) All such options were granted on April 23, 1998 pursuant to the 1998 Non-
Employee Director Stock Option Plan. The options are exercisable in ten
increments of 10% each commencing on March 4, 1999 and on each of the nine
anniversaries thereafter and expire eleven years from the date of grant.
(13) All such options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in conjunction with the spin-off of the Company by
Torchmark. The options are exercisable in ten increments of 10% each
commencing on December 18, 1997 and on each of the nine anniversaries
thereafter and expire on December 17, 2007.
(14) All such options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in conjunction with the spin-off of the Company by
Torchmark, are immediately exercisable and expire on January 3, 2008.
12
<PAGE>
(15) All such options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in conjunction with the spin-off of the Company by
Torchmark, are immediately exercisable and expire on December 8, 2002.
(16) All such options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in conjunction with the spin-off of the Company by
Torchmark, are immediately exercisable and expire on December 17, 2004.
(17) All such options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in conjunction with the spin-off of the Company by
Torchmark. The options are exercisable in two increments of 50% each on
December 16, 1998 and December 16, 1999 and expire on December 17, 2006.
(18) All such options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in conjunction with the spin-off of the Company by
Torchmark. The options are exercisable in ten increments of 10% each
commencing on January 2, 1998 and expire on January 1, 2009.
(19) All such options were granted on April 15, 1998 pursuant to the 1998 Stock
Incentive Plan. The options are exercisable in three increments of 33.33%
each commencing on March 4, 2000 and on each of the two anniversaries
thereafter and expire ten years and two days from the date of grant.
(20) All such options were granted on July 22, 1998 pursuant to the 1998 Stock
Incentive Plan. The options are exercisable in three increments of 33.33%
each commencing on March 4, 2000 and on each of the two anniversaries
thereafter and expire ten years and two days from the date of grant.
(21) All such options were granted on August 5, 1998 pursuant to the 1998 Non-
Employee Director Stock Option Plan. The options are exercisable in ten
increments of 10% each commencing on March 4, 1999 and on each of the nine
anniversaries thereafter and expire eleven years from the date of grant.
(22) All such options were granted on March 4, 1998 pursuant to the 1998 Stock
Incentive Plan. The options are immediately exercisable and expire on
October 31, 2001.
(23) All such options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in conjunction with the spin-off of the Company by
Torchmark. The options are immediately exercisable and expire on January
30, 2008.
(24) All such options were granted on November 6, 1998 pursuant to the 1998
Stock Incentive Plan in conjunction with the spin-off of the Company by
Torchmark. The options are immediately exercisable and expire on October
31, 2001.
PLAN OF DISTRIBUTION
The Class A common stock being offered by the selling stockholders pursuant
to this Prospectus may be sold from time to time by the selling stockholders, or
by pledgees, donees, transferees or other successors in interest, regardless of
whether such successors in interest are successors in interest with respect to
the shares. Such sales may be made on one or more exchanges or in the over-the-
counter market, or otherwise at prices and on terms then prevailing or at prices
related to the then-current market price of the Class A common stock, or in
negotiated transactions. In addition, any securities covered by this Prospectus
which qualify for sale pursuant to Rule 144 under the Act may be sold under
either of such rules rather than pursuant to this Prospectus.
In effecting sales, brokers or dealers engaged by the selling stockholders
may arrange for other brokers or dealers to participate. Brokers or dealers
will receive commissions or discounts from selling stockholders in amounts to be
negotiated immediately prior to the sale. The selling stockholders and agents
who execute orders on their behalf may be deemed to be underwriters as that term
is defined in Section 2(11) of the Act and a portion of any proceeds or sales
discounts, commissions or other compensation may be deemed to be underwriting
compensation for purposes of the Act.
13
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from this offering.
LEGAL MATTERS
The validity of the shares of Class A common stock offered hereby has
been passed upon for us by Hughes & Luce, L.L.P., Dallas, Texas.
EXPERTS
The Consolidated Financial Statements of the Company as of December
31, 1996 and 1997, and for each of the years in the three-year period ended
December 31, 1997 incorporated by reference into this Prospectus have been so
included in reliance on the report of KPMG Peat Marwick LLP, independent
certified public accountants, appearing elsewhere herein, and upon the authority
of said firm as experts in accounting and auditing.
INDEMNIFICATION
The Company's Certificate of Incorporation provides that each person
who was or is threatened to be made a party to or is involved in any action,
suit or proceeding by reason of the fact that he or she, or a person of whom he
or she is the legal representative, is or was a director or officer of the
Company or is or was serving at the request of the Company as a director or
officer of another company, partnership, joint venture, trust or other
enterprise, will be indemnified and held harmless by the Company to the fullest
extent authorized by the Delaware General Corporation Law as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Company to provide broader
indemnification rights than said law permitted the Company to provide prior to
such amendment), against all expense, liability and loss reasonably incurred or
suffered by such person in connection therewith and such indemnification shall
continue as to a person who has ceased to be a director or officer and shall
inure to the benefit of his or her heirs, executors and administrators.
The Delaware General Corporation Law permits Delaware corporations to
include in their certificates of incorporation a provision eliminating or
limiting director liability for monetary damages arising from breaches of their
fiduciary duty. The only limitations imposed under the statute are that the
provision may not eliminate or limit a director's liability (i) for breaches of
the director's duty of loyalty to the corporation or its stockholders; (ii) for
acts or omissions not in good faith or involving intentional misconduct or known
violations of law; (iii) for the payment of unlawful dividends or unlawful stock
purchases or redemptions; or (iv) for transactions in which
14
<PAGE>
the director received an improper personal benefit. In addition, directors and
officers are insured, at the Registrant's expense, against certain liabilities
which might arise out of their employment.
Under Section 145 of the Delaware General Corporation Law, a
corporation may indemnify a director, officer, employee or agent of the
corporation against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her if he
or she acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the corporation and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. In the case of an action brought by or in the right of a
corporation, the corporation may indemnify a director, officer, employee or
agent of the corporation against expenses (including attorneys' fees) actually
and reasonably incurred by him or her if he or she acted in good faith and in a
manner he or she reasonably believed to be in the best interests of the
corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless a court finds that, in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as the court shall deem proper.
15
<PAGE>
4,190,094 SHARES
WADDELL & REED FINANCIAL, INC.
CLASS A COMMON STOCK
--------------
PROSPECTUS
--------------
TABLE OF CONTENTS
Page
--
Available Information 1
Documents Incorporated by Reference 2
The Company 3
Risk Factors 3
Cautionary Statement Concerning 9
Forward-Looking Statements
Selling Stockholders 10
Plan of Distribution 13
Use of Proceeds 14
Legal Matters 14
Experts 14
Indemnification 14
December 15, 1998
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents heretofore filed with the Securities and Exchange
Commission (the "Commission") by Waddell & Reed Financial, Inc. (the
"Registrant" or the "Company") are incorporated by reference in this
Registration Statement:
(a) The Registrant's Rule 424(b) Prospectus, as filed under the Securities
Exchange Act of 1933, as amended (the "Securities Act"), Registration Statement
No. 333-43687;
(b) The Registrant's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998, as filed under Section 13(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act");
(c) The Registrant's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998, as filed under Section 13(a) of the Exchange Act;
(d) The Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998, as filed under Section 13(a) of the Exchange Act;
(e) The description of the Registrant's Class A common stock, par value
$.01 per share (the "Common Stock"), contained in the Registrant's Registration
Statement on Form 8-A, (the "Form 8-A") filed with the Commission on February
27, 1998, including any amendment or report filed for the purpose of updating
such description; and
(f) All reports filed by the Registrant pursuant to Sections 13(a) or 15(d)
of the Exchange Act, since the filing of the Form 8-A.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, after the date of the filing of
the initial Registration Statement and any amendments thereto and prior to the
filing of a post-effective amendment to this Registration Statement which
indicates that all of the shares of Common Stock offered have been sold or which
deregisters all of such shares then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be a part hereof
from the date of filing of such documents (such documents, and the documents
enumerated above, being hereinafter referred to as "Incorporated Documents").
Any statement contained in an Incorporated Document shall be deemed to be
modified, replaced or superseded for purposes of this Registration Statement to
the extent that a statement contained herein or in any other subsequently filed
Incorporated Document modifies, replaces or
II-1
<PAGE>
supersedes such statement. Any statement so modified, replaced or superseded
shall not be deemed, except as so modified, replaced or superseded, to
constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Certificate of Incorporation provides that each person
who was or is threatened to be made a party to or is involved in any action,
suit or proceeding by reason of the fact that he or she, or a person of whom he
or she is the legal representative, is or was a director or officer of the
Registrant or is or was serving at the request of the Registrant as a director
or officer of another company, partnership, joint venture, trust or other
enterprise, will be indemnified and held harmless by the Registrant to the
fullest extent authorized by the Delaware General Corporation Law as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Registrant to provide broader
indemnification rights than said law permitted the Registrant to provide prior
to such amendment), against all expense, liability and loss reasonably incurred
or suffered by such person in connection therewith and such indemnification
shall continue as to a person who has ceased to be a director or officer and
shall inure to the benefit of his or her heirs, executors and administrators.
The Delaware General Corporation Law permits Delaware corporations to
include in their certificates of incorporation a provision eliminating or
limiting director liability for monetary damages arising from breaches of their
fiduciary duty. The only limitations imposed under the statute are that the
provision may not eliminate or limit a director's liability (i) for breaches of
the director's duty of loyalty to the corporation or its stockholders; (ii) for
acts or omissions not in good faith or involving intentional misconduct or known
violations of law; (iii) for the payment of unlawful dividends or unlawful stock
purchases or redemptions; or (iv) for transactions in which the director
received an improper personal benefit. In addition, directors and officers are
insured, at the Registrant's expense, against certain liabilities which might
arise out of their employment.
Under Section 145 of the Delaware General Corporation Law, a corporation
may indemnify a director, officer, employee or agent of the corporation against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or her if he or she acted in
good faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of the corporation and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his or her conduct was
unlawful. In the case of an action brought by or in the right of a corporation,
the corporation may indemnify a director, officer, employee or agent of the
corporation against expenses
II-2
<PAGE>
(including attorneys' fees) actually and reasonably incurred by him or her if he
or she acted in good faith and in a manner he or she reasonably believed to be
in the best interests of the corporation, except that no indemnification shall
be made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless a court finds that, in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses as the court shall deem proper.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
4.1 Specimen of Stock Certificate (filed as Exhibit 4.1 to
the Company's Registration Statement on Form S-1
(Commission File No. 333-43687) and incorporated herein
by reference).
4.2 1998 Executive Deferred Compensation Stock Option Plan
(filed as Exhibit 10.10 to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1998
and incorporated herein by reference).
4.3 1998 Non-Employee Director Stock Option Plan (filed as
Exhibit 10.9 to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1998 and
incorporated herein by reference).
4.4* 1998 Stock Incentive Plan
4.5 Form of Option Exchange Mailing Documents (filed as
Exhibit 4.5 to the Company's Registration Statement on
Form S-8 (Commission File No. 333-65827) and
incorporated herein by reference).
4.6* First Amendment to 1998 Executive Deferred Compensation
Stock Option Plan.
5.1 Opinion of Hughes & Luce, L.L.P. (filed as Exhibit 5.1
to the Company's Registration Statement on Form S-8
(Commission File No. 333-65827) and incorporated herein
by reference).
23.1 Consent of Hughes & Luce, L.L.P. (contained in Exhibit
5.1 hereto).
23.2* Consent of KPMG Peat Marwick LLP.
24.1 Powers of Attorney (filed as Exhibit 24.1 to the
Company's Registration Statement on Form S-8 (Commission
File No. 333-65827) and incorporated herein by
reference).
______________________
* Filed herewith
ITEM 9. UNDERTAKINGS.
(a) The Registrant hereby undertakes:
II-3
<PAGE>
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
Act; (i) To include any prospectus required by Section 10(a)(3) of
the Securities
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X are not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
(d) Insofar as indemnification by the Registrant for liabilities arising
under the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant
II-4
<PAGE>
pursuant to the provisions described in Item 6, or otherwise, the Registrant has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Post
Effective Amendment No. 1 to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Overland
Park, State of Kansas, on December 15, 1998.
WADDELL & REED FINANCIAL, INC.
By: /s/ Keith A. Tucker
----------------------------------
Keith A. Tucker,
Chairman of the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Keith A. Tucker
- ----------------------------------- Chairman of the Board, Chief December 15, 1998
Keith A. Tucker Executive Officer and Director
(Principal Financial Officer)
/s/ Henry J. Herrmann
- ----------------------------------- President, Chief Investment December 15, 1998
Henry J. Herrmann Officer, Treasurer and Director
/s/ Robert L. Hechler
- ----------------------------------- Chief Operating Officer, Executive December 15, 1998
Robert L. Hechler Vice President and Director
/s/ Michael D. Strohm
- ----------------------------------- Principal Accounting Officer December 15, 1998
Michael D. Strohm
*
- ----------------------------------- Director December 15, 1998
Harold T. McCormick
*
- ----------------------------------- Director December 15, 1998
Louis T. Hagopian
*
- ----------------------------------- Director December 15, 1998
R. K. Richey
*
- ----------------------------------- Director December 15, 1998
Joseph L. Lanier, Jr.
</TABLE>
II-6
<PAGE>
<TABLE>
<S> <C> <C>
*
- ----------------------------------- Director December 15, 1998
William L. Rogers
*
- ----------------------------------- Director December 15, 1998
James M. Raines
*
- ----------------------------------- Director December 15, 1998
George J. Records
*
- ----------------------------------- Director December 15, 1998
David L. Boren
*
- ----------------------------------- Director December 15, 1998
Joseph M. Farley
*By: /s/ Daniel C. Schulte December 15, 1998
-------------------------------
Daniel C. Schulte
Attorney-in-fact
</TABLE>
II-7
<PAGE>
INDEX TO EXHIBITS
-----------------
4.1 Specimen of Stock Certificate (filed as Exhibit 4.1 to
the Company's Registration Statement on Form S-1
(Commission File No. 333-43687) and incorporated herein
by reference).
4.2 1998 Executive Deferred Compensation Stock Option Plan
(filed as Exhibit 10.10 to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1998
and incorporated herein by reference).
4.3 1998 Non-Employee Director Stock Option Plan (filed as
Exhibit 10.9 to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1998 and
incorporated herein by reference).
4.4* 1998 Stock Incentive Plan
4.5 Form of Option Exchange Mailing Documents (filed as
Exhibit 4.5 to the Company's Registration Statement on
Form S-8 (Commission File No. 333-65827) and
incorporated herein by reference).
4.6* First Amendment to 1998 Executive Deferred Compensation
Stock Option Plan.
5.1 Opinion of Hughes & Luce, L.L.P. (filed as Exhibit 5.1
to the Company's Registration Statement on Form S-8
(Commission File No. 333-65827) and incorporated herein
by reference).
23.1 Consent of Hughes & Luce, L.L.P. (contained in Exhibit
5.1 hereto).
23.2* Consent of KPMG Peat Marwick LLP.
24.1 Powers of Attorney (filed as Exhibit 24.1 to the
Company's Registration Statement on Form S-8 (Commission
File No. 333-65827) and incorporated herein by
reference).
--------------------------
*Filed herewith
<PAGE>
EXHIBIT 4.4
WADDELL & REED FINANCIAL, INC.
1998 STOCK INCENTIVE PLAN
SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.
The name of this plan is the Waddell & Reed Financial, Inc. 1998 Stock
Incentive Plan (the "Plan"). The purpose of the Plan is to enable Waddell &
Reed Financial, Inc. (the "Company") and its Subsidiaries 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 and
directors 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:
a. "Affiliate" means (i) 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 percent beneficial ownership interest, and
(ii) the Company's parent company or former parent company.
b. "Board" means the Board of Directors of the Company.
c. "Cause" means a participant's willful misconduct or dishonesty,
any of which is directly and materially harmful to the business or reputation of
the Company or any Subsidiary or Affiliate.
d. "Code" means the Internal Revenue Code of 1986, as amended, or any
successor thereto.
e. "Committee" means the Compensation Committee of the Board. 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.
f. "Commission" means the Securities and Exchange Commission.
g. "Company" means Waddell & Reed Financial, Inc., a corporation
organized under the laws of the State of Delaware (or any successor
corporation).
h. "Deferred Stock" means an award made pursuant to Section 9 below
of the right to receive Stock at the end of a specified deferral period.
<PAGE>
i. "Director Stock Option" means any option to purchase shares of
Stock granted pursuant to Section 6.
j. "Disability" means total and permanent disability as determined
under the Company's long term disability program. With respect to Director Stock
Options, "Disability" shall be determined as if the Director was covered under
the Company's long term disability program.
k. "Early Retirement" means retirement from active employment with
the Company, any Subsidiary, and any Affiliate pursuant to the early retirement
provisions of the applicable tax-qualified Company pension plan.
l. "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor thereto.
m. "Fair Market Value" means, as of the date of the initial public
offering, the initial public offering price for the stock, and thereafter the
closing price of the Stock on the New York Stock Exchange Composite Tape on the
date in question.
n. "Incentive Stock Option" means any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.
o. "Immediate Family" means the children, grandchildren or spouse of
any optionee.
p. "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
q. "Normal Retirement" means retirement from active employment with
the Company, any Subsidiary, and any Affiliate on or after the normal retirement
date specified in the applicable tax-qualified Company pension plan.
r. "Plan" means this 1998 Stock Incentive Plan.
s. "Restricted Stock" means an award of shares of Stock that are
subject to restrictions under Section 8.
t. "Retirement" means Normal or Early Retirement.
u. "Stock" means the Class A Common Stock of the Company, par value
$.01.
v. "Stock Appreciation Right" means a right granted under Section 7
below to surrender to the Company all or a portion of a Stock Option in exchange
for an amount equal to the difference between (i) the Fair Market Value, as of
the date such Stock Option or such
<PAGE>
portion thereof is surrendered, of the shares of Stock covered by such Stock
Option or such
portion thereof, and (ii) the aggregate exercise price of such Stock Option or
such portion thereof.
w. "Stock Option" means any option to purchase shares of Stock
granted to employees pursuant to Section 5.
x. "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.
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.
The Committee shall have the power and authority to grant to eligible
employees, pursuant to the terms of the Plan: (i) Stock Options; (ii) Stock
Appreciation Rights; (iii) Restricted Stock or (iv) Deferred Stock.
In particular, the Committee shall have the authority:
(i) 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 awards or a
combination of the foregoing from time to time will be granted hereunder;
(ii) to determine whether and to what extent Incentive Stock
Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted
Stock or Deferred Stock, or a combination of the foregoing, are to be granted
hereunder;
(iii) to determine the number of shares of Stock to be covered by
each such award granted hereunder;
(iv) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder (other than Director Stock
Options), including, but not limited to, any restriction on any Stock Option or
other award and/or the shares of Stock 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;
(v) to determine whether, to what extent and under what
circumstances Stock and other amounts payable with respect to an award under
this Plan shall be deferred either
<PAGE>
automatically or at the election of a participant, including providing for and
determining the amount (if any) of deemed earnings on any deferred amount during
any deferral period.
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 and any award issued under the Plan (and any 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.
SECTION 3. STOCK SUBJECT TO PLAN.
The total number of shares of Stock reserved and available for
distribution under the Plan shall be 13,000,000.
If any shares of Stock that have been optioned cease to be subject to
option, or if any shares subject to any Restricted Stock or Deferred Stock award
granted hereunder 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 Stock, 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 option price of shares subject to outstanding Stock Options and
Director Stock Options granted under the Plan, (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 employee
pursuant to Section 4(a), and (v) the number of Director Stock Options 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 option price
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, officers and other key employees of the Company, its
Subsidiaries or its Affiliates (but excluding members of the Committee and any
person who serves only as a director, except as provided in Section 6 below) 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 awards. Only employees of the Company and its Subsidiaries are
eligible to be granted Incentive Stock Options.
<PAGE>
Except as provided in Section 6, the optionees and participants under
the Plan 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, the number of shares covered by each award or grant; provided,
however, that no employee shall be granted Stock Options on more than 1,000,000
shares in any calendar year.
(b) Directors of the Company (other than directors who are also
officers or employees of the Company, its Subsidiaries or its Affiliates) are
eligible to receive Director Stock Options pursuant to Section 6 of the Plan.
SECTION 5. STOCK OPTIONS FOR 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
of Stock Option awards need not be the same with respect to each optionee.
The Stock Options granted under the Plan may be of two types: (i)
Incentive Stock Options and (ii) Non-Qualified Stock Options.
The Committee shall have the authority to grant any optionee Incentive
Stock Options, Non-Qualified Stock Options, or both types of Stock Options (in
each case with or without Stock Appreciation Rights) except that Incentive Stock
Options shall not be granted to employees of an Affiliate. To the extent that
any Stock Option does not qualify as an Incentive Stock Option, it shall
constitute a separate Non-Qualified Stock Option.
Except as provided in Section 5(1), no term of this Plan relating to
Incentive Stock Options shall be interpreted, amended or altered, nor shall any
discretion or authority granted under the Plan be so exercised, so as to
disqualify either the Plan or any Incentive Stock Option under Section 422 of
the Code. Notwithstanding the foregoing, in the event an optionee voluntarily
disqualifies an option as an Incentive Stock Option within the meaning of
Section 422 of the Code, the Committee may, but shall not be obligated to, make
such additional grants, awards or bonuses as the Committee shall deem
appropriate, to reflect the tax savings to the Company which results from such
disqualification.
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) Option Price. The option price per share of Stock purchasable
under a Stock Option shall be determined by the Committee at the time of grant
but shall be not less than 100% of the Fair Market Value of the Stock on the
date of the grant of the Stock Option.
<PAGE>
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten
years after the date such Incentive Stock Option is granted.
(c) Exercisability. Subject to paragraph (l) of this Section 5 with
respect to Incentive Stock Options, 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 Section 5(f),
5(g), 5(h) or 13, no Stock Option shall be exercisable prior to six months from
the date of the granting of the option. 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) Method of Exercise. Stock 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"). 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 or, in the case of
the exercise of a Non-Qualified Stock Option, Restricted Stock or Deferred Stock
subject to an award hereunder (based, in each case, on the Fair Market Value of
the Stock on the date the option is exercised, as determined by the Committee).
If payment of the option exercise price of a Non-Qualified Stock 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 Stock 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 the
Committee may direct 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
of unrestricted Stock shall be issued until full payment therefor has been made.
An optionee shall have the 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.
(e) Transferability of Options. A Stock Option agreement may permit
an optionee to transfer the 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 agreement setting forth such Stock Option expressly provides
that the Stock Option may be transferred only with the express written consent
of the Committee, and (ii) the optionee does not receive any consideration in
any form whatsoever for said 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 said Stock Option immediately prior to the
transfer thereof.
Any Stock Option not (i) granted pursuant to any agreement expressly
allowing the transfer of said Stock Option or (ii) amended expressly to permit
its transfer shall not be
<PAGE>
transferable by the optionee otherwise than by will or by the laws of descent
and distribution and such Stock Option thus shall be exercisable during the
optionee's lifetime only by the optionee.
(f) Termination by Death. Unless otherwise determined by the
Committee, if an optionee's employment with the Company, any Subsidiary, and any
Affiliate terminates by reason of death (or if an optionee dies following
termination of employment by reason of disability or Normal Retirement), any
Stock Option shall become immediately exercisable and 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
expiration of the stated term of such Stock Option or the first anniversary of
the optionee's death, whichever is later.
(g) Termination by Reason of Disability. Unless otherwise determined
by the Committee, if an optionee's employment with the Company, any Subsidiary
and 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. In the event of termination of employment by reason of Disability, if
an Incentive Stock Option is exercised after the expiration of the exercise
periods that apply for purposes of Section 422 of the Code, such Stock Option
will thereafter be treated as a Non-Qualified Stock Option.
(h) Termination by Reason of Retirement. Unless otherwise determined
by the Committee, if an optionee's employment with the Company, any Subsidiary
and any Affiliate terminates by reason of Normal Retirement, any Stock Option
held by such optionee shall become immediately exercisable. A Stock Option held
by an optionee whose employment has terminated by reason of Normal Retirement
shall expire at the end of the stated term of such Stock Option, unless
otherwise determined by the Committee.
If an optionee's employment with the Company, any Subsidiary and any
Affiliate terminates by reason of Early Retirement, any Stock Option 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 shorter, unless
otherwise determined by the Committee. 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 said Stock Option may only be
exercised to the extent it is or has become exercisable prior to termination of
the Stock Option.
In the event of termination of employment by reason of Retirement, if
an Incentive Stock Option is exercised after the exercise periods that apply for
purposes of Section 422 of the Code, such Stock Option will thereafter be
treated as a Non-Qualified Stock Option.
(i) Termination for Cause. If the optionee's employment with the
Company, any Subsidiary and any Affiliate is terminated for Cause, the Stock
Option shall immediately be forfeited to the Company upon the giving of notice
of termination of employment.
(j) Other Termination. If the optionee's employment with the Company,
any Subsidiary and any Affiliate is involuntarily terminated by the optionee's
employer without
<PAGE>
Cause, the Stock Option 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 shorter, unless otherwise determined by the Committee. If
an optionee's employment with the Company, any Subsidiary and any Affiliate is
voluntarily terminated for any reason, the Stock Option 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 shorter. In the event of
involuntary termination without Cause or voluntary termination for any reason,
there shall be no acceleration of vesting of the Stock Option unless otherwise
determined by the Committee and said 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) or the stated term of the Stock Option, if the
optionee's employment with the Company, any Subsidiary and any Affiliate is
involuntarily terminated by the optionee's employer without Cause by reason of
or within three months after a merger or other business combination resulting in
a "Change of Control" as defined in Section 13 of this Plan, the Stock Option
shall terminate upon the later of six months and one day after such merger or
business combination or 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.
(l) Limit on Value of Incentive Stock Option First Exercisable
Annually. The aggregate Fair Market Value (determined at the time of grant) of
the Stock for which "incentive stock options" within the meaning of Section 422
of the Code are exercisable for the first time by an optionee during any
calendar year under the Plan (and/or any other stock option plans of the
Company, any Subsidiary and any Affiliate) shall not exceed $100,000.
Notwithstanding the preceding sentence, the exercisability of such Stock Options
may be accelerated by the Committee and shall be accelerated as provided in
Sections 5(f), 5(g), 5(h), and 13, in which case Stock Options which exceed such
$100,000 limit shall be treated as Non-Qualified Stock Options. For this
purpose, options granted earliest shall be applied first to the $100,000 limit.
In the event that only a portion of the options granted at the same time can be
applied to the $100,000 limit, the Company shall issue separate share
certificates for such number of shares as does not exceed the $100,000 limit,
and shall designate such shares as ISO stock in its share transfer records.
SECTION 6. DIRECTOR STOCK OPTIONS.
Director Stock Options granted under the Plan shall be Non-Qualified
Stock Options. Such Director Stock Options may be granted pursuant to a pre-
established formula contained in the Plan or may, in the sole discretion of the
entire Board of Directors, be granted as to such number of shares and upon such
terms and conditions as shall be determined by said Board of Directors.
Director Stock Options granted under the Plan shall be evidenced by a
written agreement in such form as the Committee shall from time to time approve,
which agreements shall comply with and be subject to the following terms and
conditions:
<PAGE>
(a) Formula-based Director Stock Options. For 1998, 6,000 Director
Stock Options shall be granted automatically to each member of the Board who is
not an employee of the Company, its Subsidiaries or Affiliates ("Outside
Director"). For each calendar year thereafter, 3,000 Director Stock Options
shall be granted automatically on the first day of each calendar year on which
Stock is publicly traded on the New York Stock Exchange to each Outside
Director.
The option price per share of Stock purchasable under such Director
Stock Option 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, 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.
(b) Non-Formula Based Director Stock Options. Within its sole
discretion, the entire Board may award Director Stock Options on a non-formula
basis to all or such individual Outside Directors as it shall select. Such
Director Stock Options may be awarded at such times and for such number of
shares as the Board in its 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
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. All other terms and
conditions of such Director Stock Options shall be as established by the Board
in its sole discretion.
(c) 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"). Payment in
full or in part may also be made in the form of unrestricted Stock already owned
by the optionee (based on the Fair Market Value of the Stock on the date the
option is exercised). No shares of unrestricted Stock shall be issued until
full payment therefor has been made. An optionee shall have the 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.
(d) Transferability of Options. No Director Stock Option shall be
transferable by the optionee otherwise 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 that such transferability (i) does not result in accelerated taxation,
and (ii) is otherwise appropriate and desirable, taking into account any state
or federal securities laws applicable to transferable options.
<PAGE>
(e) Termination of Service. Upon an optionee's termination of status
as an Outside Director with the Company 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 of
Control" as defined in Section 13 of this Plan, the Director Stock Option 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, and (iii) the expiration
of the stated term of such Director Stock Option.
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. In the
case of a Non-Qualified Stock Option, such rights may be granted either at or
after the time of the grant of such Non-Qualified Stock Option. In the case of
an Incentive Stock Option, such rights may be granted only at the time of the
grant of such Incentive 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 paragraph (b) of this Section 7, 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 paragraph (b) of this Section 7. 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.
(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 Stock Options to which they relate
shall be exercisable in accordance with the provisions of Section 5 and this
Section 7 of the Plan; provided, however, that any Stock Appreciation Right
granted subsequent to the grant of the related Stock Option shall not be
<PAGE>
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 of Stock equal in value to the excess of the Fair Market Value of one
share of Stock over the option price per share specified in the related Stock
Option multiplied by the number of shares in respect of 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
paragraph (e) of Section 5 of the Plan.
(iv) Upon the exercise of a Stock Appreciation Right, the Stock
Option or part thereof to which such Stock Appreciation Right is related shall
be deemed to have been exercised for the purpose of the limitation set forth in
Section 3 of the Plan on the number of shares of Stock to be issued under the
Plan.
(v) A Stock Appreciation Right granted in connection with an
Incentive Stock Option may be exercised only if and when the market price of the
Stock subject to the Incentive Stock Option exceeds the exercise price of such
Stock Option.
(vi) In its sole discretion, the Committee may provide, at the
time of grant of a Stock Appreciation Right under this Section 7, that such
Stock Appreciation Right can be exercised only in the event of a "Change of
Control" and/or a "Potential Change of Control" (as defined in Section 13
below).
(vii) The Committee, in its sole discretion, may also provide that
in the event of a "Change of Control" and/or a "Potential Change of Control" (as
defined in Section 13 below) the amount to be paid upon the exercise of a Stock
Appreciation Right shall be based on the "Change of Control Price" (as defined
in Section 13 below).
SECTION 8. RESTRICTED STOCK.
(a) Administration. Shares of Restricted Stock may be issued either
alone or in addition to other awards granted under the Plan. The Committee
shall determine the officers and key employees 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 (subject to Section 8(b)
hereof), the time or times within which such awards may be subject to
forfeiture, and all other conditions of the awards. 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
<PAGE>
determine, in its sole discretion. The provisions of Restricted Stock awards
need not be the same with respect to each recipient.
(b) Awards and Certificates. 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 specified in the Restricted Stock Award Agreement. Each participant who
is awarded Restricted Stock shall be issued a stock certificate registered in
the name of the participant in respect of such shares of Restricted Stock. The
Committee shall specify that the certificate 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 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. The shares of Restricted Stock
awarded pursuant to this Section 8 shall be subject to the following
restrictions and conditions:
(i) Subject to the provisions of this Plan and the Restricted
Stock Award Agreements, 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, 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
<PAGE>
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 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.
(iii) Subject to the provisions of the Restricted Stock Award
Agreement and this Section 8, upon termination of employment for any reason
other than Normal Retirement or death during the Restriction Period, all shares
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.
SECTION 9. DEFERRED STOCK AWARDS.
(a) Administration. Deferred Stock may be awarded either alone or in
addition to other awards granted under the Plan. The Committee shall determine
the officers and key employees of the Company, its Subsidiaries and 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 participant, the
duration of the period (the "Deferral Period") during which, and the conditions
under which, receipt of the Stock will be deferred, and the terms and conditions
of the award in addition to those set forth in paragraph (b) of this Section 9.
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. The provisions of Deferred
Stock awards need not be the same with respect to each recipient.
(b) Terms and Conditions. The 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 this Plan and the award
agreement, Deferred Stock awards may not be sold, assigned, transferred, pledged
or otherwise encumbered during the Deferral Period. At the expiration of the
Deferral Period (or Elective Deferral Period, (as defined below) where
applicable), share certificates shall be delivered to the participant, 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 (or Elective Deferral Period) with respect to the number of
shares covered by a Deferred Stock award will be: (a) paid to the participant
currently; (b) deferred and deemed to be reinvested; or (c) that such
participant has no rights with respect thereto.
(iii) Subject to the provisions of the award agreement and this
Section 9, upon termination of employment for any reason during the Deferral
Period for a given award, the Deferred Stock in question shall be forfeited by
the participant.
<PAGE>
(iv) Based on performance and/or such other criteria as the
Committee may determine, the Committee may, at or after grant (including after
the participant'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.
(v) A participant may elect to defer further receipt of the
award for a specified period or until a specified event (the "Elective Deferral
Period"), subject in each case to the Committee's approval and to such terms as
are determined by the Committee, all in its sole discretion. Subject to any
exceptions adopted by the Committee, such election must generally be made at
least six months prior to completion of the Deferral Period for a Deferred Stock
award (or for an installment of such an award).
(vi) Each award shall be confirmed by, and subject to the terms
of, a Deferred Stock award agreement executed by the Company and the
participant.
SECTION 10. LOAN PROVISIONS.
With the consent of the Committee, the Company may make, or arrange
for, a loan or loans to an employee with respect to the exercise of any Stock
Option granted under the Plan and/or with respect to the payment of the purchase
price, if any, of any Restricted Stock awarded hereunder. The Committee shall
have full authority to decide whether to make a loan or loans hereunder and to
determine the amount, term and provisions of any such loan or loans, including
the interest rate to be charged in respect of any such loan or loans, whether
the loan or loans are to be with or without recourse against the borrower, the
terms on which the loan is to be repaid and the conditions, if any, under which
the loan or loans may be forgiven.
SECTION 11. AMENDMENTS AND TERMINATION.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made which would impair the right of an
optionee or participant under a Stock Option, Director Stock Option, Stock
Appreciation Right, Restricted Stock or Deferred Stock award theretofore
granted, without the optionee's or participant's consent.
Amendments may be made without stockholder approval except as required
to satisfy Rule 16b-3 under the Exchange Act, Section 162(m) of the Code, stock
exchange listing requirements, or other regulatory requirements.
The Committee may amend the terms of any award or option (other than
Director Stock Options) theretofore granted, prospectively or retroactively, but
no such amendment shall impair the rights of any holder without his consent.
The Committee may also substitute new Stock Options for previously granted Stock
Options including options granted under other plans applicable to the
participant and previously granted Stock Options having higher option prices.
<PAGE>
SECTION 12. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive
and deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing set forth herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize
the creation of trusts or other arrangements to meet the obligations created
under the Plan to deliver Stock or payments in lieu of or with respect to awards
hereunder, provided, however, that the existence of such trusts or other
arrangements is consistent with the unfunded status of the Plan.
SECTION 13. CHANGE OF CONTROL.
The following acceleration and valuation provisions shall apply in the
event of a "Change of Control" or "Potential Change of Control," as defined in
this Section 13, that occurs more than twelve months after the date of the
Company's initial public offering:
(a) In the event of a "Change of Control" as defined in paragraph (b)
of this Section 13, unless otherwise determined by the Committee in writing at
or after grant, but prior to the occurrence of such Change of Control, or, 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) in the event of a "Potential Change of Control," as
defined in paragraph (c) of this Section 13:
(i) any Stock Appreciation Rights and any Stock Options awarded
under the Plan not previously exercisable and vested shall become fully
exercisable and vested;
(ii) the restrictions and deferral limitations applicable to any
Restricted Stock and Deferred Stock awards under the Plan shall lapse and such
shares and awards shall be deemed fully vested; and
(iii) the value of all outstanding Stock Options, Director Stock
Options, Stock Appreciation Rights, 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 defined in paragraph (d) of
this Section 13) 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 or in
stock, as shall be necessary to effect the desired accounting treatment for the
transaction resulting in the Change of Control. In addition, any Stock Option,
Director Stock Option, and Stock Appreciation Right which has been outstanding
for less than six months shall be settled solely in stock.
<PAGE>
(b) For purposes of paragraph (a) of this Section 13, a "Change of
Control" means the happening 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 under the Exchange Act), directly or indirectly of securities of the
Company representing 20 percent or more of the combined voting power of the
Company's then outstanding securities;
(ii) the occurrence of any transaction or event relating to the
Company required to be described pursuant to the requirements of 6(e) of
Schedule 14A of Regulation 14A of the Commission under 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 occurrence 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) For purposes of paragraph (a) of this Section 13, a "Potential
Change of Control" means the happening of any of the following:
(i) the entering into an agreement by the Company, the consummation
of which would result in a Change of Control of the Company as defined in
paragraph (b) of this Section 13; or
(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
percent or more of the combined voting power of the Company's 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 this Plan.
(d) For purposes of this Section 13, "Change of Control Price" means the
highest price per share paid in any transaction reported on the New York Stock
Exchange Composite Tape, or paid or offered in any transaction related to a
potential or actual Change of Control of the Company at any time during the
preceding sixty day period as determined by the Committee, except that (i) in
the case of Incentive Stock Options and Stock Appreciation Rights relating to
Incentive Stock Options, such price shall be based only on transactions reported
for the date on which the Committee decides to cashout such options, and (ii) in
the case of Director Stock Options, the sixty day period shall be the period
immediately prior to the Change of Control.
<PAGE>
SECTION 14. LIMITATIONS ON PAYMENTS.
(a) Notwithstanding Section 13 above or any other provision of
this Plan or any other agreement, arrangement or plan, in no event shall
the Company pay or be obligated to pay any Plan participant an amount which
would be an Excess Parachute Payment except as provided in Section 14(f)
below and except as the Committee specifically provides otherwise in the
participant's grant agreement. For purposes of this Agreement, 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 13 above 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 13(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 14(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 he would have received as if
Sections 280G and 4999 of the Code had not been enacted.
(b) Subject to the provisions of Section 14(c), the amount of any
Gross-Up Payment and the assumptions to be utilized in arriving at such
amount, shall be determined 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 14(a),
shall be paid by the Company to the participant within five (5) days after
the receipt of the Accounting Firm's determination. Any determination by
the Accounting Firm shall be binding upon the Company and participant.
(c) Participant shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the
payment by Company of a Gross-Up Payment. Such notification shall be given
no later than ten (10) business days after 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. Participant shall not pay the
<PAGE>
claim prior to the expiration of the thirty (30) day period following the
date on which it gives notice to the Company. If the Company notifies
participant in writing prior to the expiration of the period that it
desires to contest such claim, participant shall:
(i) give the Company 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 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 14(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 in
respect of such claim and may, at its sole option, either direct
participant to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and 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 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
participant to pay any claim and sue for a refund, the Company shall
advance the amount of the payment to participant, on an interest-free
basis, and shall indemnify and hold participant harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to the advance or with respect
to any imputed income with respect to the advance.
(d) In the event that the Company exhausts its remedies pursuant
to Section 14(c) and 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 participant.
(e) If, after the receipt of participant of an amount advanced by
the Company pursuant to Section 14(c), participant becomes entitled to
receive any refund with respect to such claim, participant shall promptly
after receiving such refund pay to the Company
<PAGE>
the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by
participant of an amount advanced by the Company pursuant to Section 14(c),
a determination is made that participant shall not be entitled to any
refund with respect to such claim and the Company does not notify
participant in writing of its intent to contest such denial of refund prior
to the expiration of thirty (30) days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the
amount of such advance 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 14(a) shall not apply to a participant if in the opinion of Tax
Counsel or the Accounting Firm (i) 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 14(a)), reduced by the amount of excise tax imposed
on the participant under Code Section 4999 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 14(a), would exceed (ii) such total
amounts payable after application of the limitation of Section 14(a). No
Gross-Up Payment shall be made in such case.
SECTION 15. General Provisions.
(a) All certificates for shares of Stock 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 Stock is then listed, and any
applicable Federal or state securities law, and the Committee may cause a legend
or legends to be put on any such certificates to make appropriate reference to
such restrictions.
(b) Nothing set forth in this Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to stockholder approval
if such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases. 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, 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 the award. The obligations of the Company under the Plan shall
be conditional on such payment or arrangements.
<PAGE>
The Committee may permit or require, in its sole discretion, 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 said withholding tax obligations, of the number of shares
of Stock or amount of cash otherwise issuable or payable to said participants in
respect of 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 said participant.
(d) At the time of grant or purchase, the Committee may provide in
connection with any grant or purchase made under this Plan that the shares of
Stock 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 Stock, subject to the provisions of
Section 13 hereof 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 in respect of any such action, determination or interpretation.
SECTION 16. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on the date it is approved by a majority vote
of the Company's stockholders.
SECTION 17. TERM OF PLAN.
No Stock Option, Director Stock Option, Stock Appreciation Right,
Restricted Stock award or Deferred Stock award shall be granted pursuant to the
Plan on or after March 2, 2008, but awards theretofore granted may extend beyond
that date.
<PAGE>
EXHIBIT 4.6
FIRST AMENDMENT TO WADDELL & REED FINANCIAL, INC.
1998 EXECUTIVE DEFERRED COMPENSATION STOCK OPTION PLAN
WHEREAS, the Company adopted and implemented the Waddell & Reed
Financial, Inc. Executive Deferred Compensation Stock Option Plan as of March 3,
1998 (the "Executive Plan");
WHEREAS, the Company desires to amend certain provisions of the
Executive Plan;
WHEREAS, on October 21, 1998, the Compensation Committee of the Board
of Directors of the Company adopted a resolution authorizing the amendment of
the Executive Plan in accordance with the authority granted to them pursuant to
the Executive Plan.
NOW, THEREFORE, the Executive Plan is hereby amended as follows:
Section 6.1.(a) of the Executive Plan is hereby modified, altered,
amended and replaced in the following respect:
1. Section 6.1.(a) "Options Converted from Deferred Salary". During
the twelve-month period following the end of a calendar year with respect to
which a Participant deferred Salary into the Plan, the Participant shall have
the right to convert some or all of his or her Interest Account for Salary for
such previous year into Options pursuant to this Article 6 on a quarterly basis.
To make such election, the Participant must file with the plan administrator a
written irrevocable Secondary Election form for Salary to receive Options as of
the date of the filing of such Secondary Election Form (the "Option Grant
Date").
2. Exhibit C "Secondary Election Form for Salary". Exhibit C of the
Executive Plan is hereby replaced and superceded by the revised Exhibit C
attached hereto as Attachment "1".
3. Other Provisions and Terms. Except as expressly provided for
herein, all other terms, conditions, rights, powers and responsibilities
contained in the Executive Plan shall remain in full force and effect as the
same are prescribed for and provided by the terms and conditions of said
Executive Plan. Capitalized terms used but not defined herein shall have the
meaning given them in the Executive Plan.
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Waddell & Reed Financial, Inc.
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the Post-Effective
Amendment No. 1 to the Registration Statement on Form S-8.
KPMG PEAT MARWICK LLP
Kansas City, Missouri
December 15, 1998
