Exhibit 10.1
CONSULTING
AGREEMENT
This Consulting Agreement (this
“Agreement”) is made to be effective as of May 25,
2005 (the “Effective Date”) by and between
Waddell & Reed Financial, Inc., a Delaware
corporation (the “Company”), and Keith A. Tucker
(“Consultant”).
WHEREAS, Consultant has served as a
Chief Executive Officer and as Chairman of the Board of Directors
of the Company and has substantial knowledge and expertise
concerning the business and affairs of the Company;
WHEREAS, Consultant’s
employment with the Company terminated effective May 25,
2005;
WHEREAS, the Company desires to
engage Consultant as an independent consultant to assist with the
daily business and affairs of the Company and Consultant desires to
provide such consulting services to the Company and its
Affiliates;
NOW, THEREFORE, in consideration of
the agreements set forth below and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties, the Company and the Consultant agree
as follows:
1.
Consulting
Services .
(a)
The Company
hereby engages Consultant, and Consultant hereby agrees to be
engaged by the Company, as an independent business consultant on
the terms set forth herein. Consultant will provide the
Company and its Affiliates (as defined below) with managerial and
advisory services, including, without limitation, managerial and
advisory services in the mutual fund, mutual fund underwriting and
distribution and investment advisor financial planning areas
(collectively, the “Services”). Consultant shall
provide Services only at the request and under the direction of the
Company’s board of directors. Consultant will provide
the Services at mutually agreeable times and at mutually agreed
locations; provided, however, that in no event shall Consultant be
required to provide Services in excess of (i) an aggregate of
325 hours during the first year of the term of this Agreement,
(ii) an aggregate of 250 hours during the second year of the
term of this Agreement, and (iii) an aggregate of 200 hours
during each following year during the term of this Agreement.
In the event that the Consultant’s cooperation is requested
pursuant to Section 8 of this Agreement, then each hour
that the Consultant spends cooperating pursuant to
Section 8 shall reduce the aggregate number of hours
that Consultant is required to provide Services for the year in
which the cooperation is requested; provided, however, that
Consultant’s obligations under Section 8 of this
Agreement are not limited by the aggregate limits on hours for the
Services set forth in this Section 1 , nor shall there
be any additional payments for cooperation pursuant to
Section 8 of this Agreement. As used herein,
“Affiliates” means any other person or entity
controlling, controlled by or under common control with the
Company.
(b)
Consultant may
accept engagements by or employment with a third party during the
term of this Agreement as long as Consultant continues to
provide
the Services as
requested by the Company and otherwise complies with the terms and
conditions of this Agreement.
2.
Term . The term of this
Agreement is eight (8) successive years beginning on the
Effective Date, unless terminated earlier as set forth in this
Section 2 . Consultant may terminate this
Agreement voluntarily at any time upon no less than thirty (30)
days prior written notice to the Company. This Agreement
shall terminate automatically with no action on the part of either
party upon the occurrence of any of the following:
(a)
Consultant
dies;
(b)
Consultant
becomes disabled and unable to perform his duties under this
Agreement for an aggregate of one hundred fifty (150) days within
any one hundred eighty (180) day period (exclusive of the period
referred to in the first sentence of the following
paragraph);
(c)
the
Company’s Board of Directors terminates this Agreement for
Cause; or
(d)
Consultant
terminates this Agreement due to the Company’s material
breach of this Agreement that is not cured within 15 days of
receipt of written notice thereof from the Consultant.
For purposes of this Agreement,
Consultant will be “disabled and unable to perform his duties
under this Agreement” only if the events described in clause
(b) of Section 2 have occurred and the Company’s
Board of Directors determines, in good faith, based on medical
evidence reasonably acceptable to it, that Consultant has become
physically or mentally disabled for an additional period of one
hundred twenty (120) days in the subsequent one hundred eighty
(180) day period.
For purposes of this Agreement,
“Cause”‘ is defined to mean any of:
(1) an act of fraud, dishonesty or embezzlement by Consultant
against the Company; (2) the Consultant’s willful
commission of an act intending to cause, and causing, material
damage to the Company; (3) Consultant’s willful refusal
to perform his duties under this Agreement which continues for a
period of ten days after written notice thereof; (4) the
conviction of the Consultant for a felony crime involving moral
turpitude; or (5) Consultant’s material violation of
Sections 5, 6, 7 or 8 hereof that is not cured within 15 days of
receipt of written notice thereof from the Company.
3.
Payments, Fees
and Expenses .
(a)
On the business
day immediately after the expiration of the Consultant’s
unexercised right to revoke the General Release (the
“Revocation Expiration Date”), Consultant shall be paid
a lump sum cash amount of (i) $3,000,000 plus (ii) his
base salary as an employee of the Company through the date hereof,
accrued vacation pay and $470,137, representing his pro rata target
bonus for 2005.
(b)
From the
Effective Date until this Agreement terminates, Consultant will be
paid fees for the Services (collectively, the “Consulting
Fees”) of
2
$375,000 per
year, payable monthly in arrears. In the event of a
termination pursuant to clause (d) of Section 2 ,
all amounts that would thereafter have been paid during the full
term of this Agreement shall be immediately paid in cash lump sum,
and health insurance benefits shall continue per
Section 4(a) hereof (but office/support staff benefits
per Section 4(b) shall be terminated).
(c)
If the Company
requests Consultant to incur any out-of-pocket business expenses in
connection with providing the Services, the Company shall reimburse
Consultant for such documented expenses. Upon the termination
of this Agreement, and except for the obligation to pay consulting
fees and health insurance benefits in the event of a termination
pursuant to clause (d) of Section 2 as provided in
Section 3(b), the Company shall have no obligation to pay
Consultant for any Services or reimburse any expenses of Consultant
hereunder, except for the payment of Consulting Fees for Services
rendered or reasonable out-of-pocket expenses incurred through the
effective date of such termination.
(d)
The payments and
Consulting Fees paid pursuant to this Agreement shall be made
without any withholdings or deductions, including without
limitation, deductions or withholdings for social security,
Medicare or income taxes, unless otherwise required by law.
Consultant will be responsible for and will pay any and all taxes
owing in respect of the payments and Consulting Fees paid hereunder
and will indemnify, defend and hold harmless the Company against
all such taxes and will comply with all governmental regulations
with respect thereto, including the filing of all necessary returns
and reports:
4.
Other
Rights .
(a)
Beginning on the
Effective Date, Company agrees to provide health insurance
coverage, on terms no less favorable than are in effect for senior
executives of the Company, for Consultant and his spouse, if any,
during the term of this Agreement and, unless this Agreement is
terminated for Cause, thereafter until the death of Consultant and
his spouse, if any; provided, however, that in no event shall the
Company be responsible for health insurance coverage in excess of
what it pays for senior executives of the Company generally per
year.
(b)
During the term
of the Agreement, Company agrees to provide an office and support
staff in a mutually agreeable location; provided, however, that in
no event shall the Company be responsible for office, equipment,
supplies, computer, cell phone and support staff costs in excess of
$100,000 per year. In the event that Consultant’s
assistant prior to the date of this Agreement is still employed by
the Company at such time and is willing to act in such capacity,
such assistant shall be available to Consultant on a priority basis
for the three month period beginning the Effective Date, with the
compensation and out of pocket costs of such assistant during such
time being deducted from the $100,000 allowance provided in the
first year of this Agreement.
3
(c)
The parties
acknowledge that in connection with the termination of
Consultant’s employment and in consideration of
Consultant’s agreements hereunder and other good and valuable
consideration, the Company has agreed to, and has previously
approved, effective on the Revocation Expiration Date, (i) the
retention by Consultant of 198,189 shares of unvested restricted
Company Class A common stock granted to Consultant pursuant to
the Company 1998 Stock Incentive Plan, as amended and restated or
the Company 1998 Executive Deferred Compensation Stock Award Plan,
as amended and restated (which represents all shares of outstanding
unvested restricted Company Class A common stock granted to
Consultant in connection with his employment by the Company), the
vesting of which shall be on the same schedule as Consultant
had prior to termination of employment but subject to the
continuing performance by Consultant of services to the Company as
set forth in this Agreement during such vesting schedule,
(ii) the participation by Consultant in the Company’s
Stock Option Restoration Program for 2005, and (iii) that
Consultant’s termination of employment shall be considered to
be an “Early Retirement” (for such options as such
concept is relevant) for purposes of all outstanding options
held by him prior to his termination. The parties acknowledge
that, upon the Effective Date, Consultant is fully vested in his
account Company’s Supplemental Executive Retirement Plan (the
“SERP”) and is entitled to receive the distribution of
the accrued balance of $2,595,239.66 in such account in accordance
with all available elections, as provided in the SERP.
5.
Confidential
Information .
(a)
As used herein,
“Confidential Information” means all confidential or
proprietary information, whether oral or written, now or hereafter
developed, acquired or used by the Company and relating to the
Company’s business, or that of its Affiliates, that is not
generally known to others in the Company’s area of business,
including, without limitation (to the extent confidential):
(1) any trade secrets, work product, processes, analyses,
know-how or other intellectual property of the Company;
(2) the Company’s advertising, product development,
strategic and business plans and information; (3) the prices
at which the Company has sold or offered to sell its products or
services; and (4) the Company’s financial statements and
other financial information.
(b)
In the course of
performing services for the Company prior to the date hereof as an
employee of the Com
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