EXHIBIT 10(e)
H&R BLOCK
DEFERRED COMPENSATION PLAN
FOR EXECUTIVES
[As Amended Through March 9, 1994]
[Incorporating Amendments 1 through 5]
TABLE OF CONTENTS
H & R BLOCK
DEFERRED COMPENSATION PLAN
FOR EXECUTIVES
Page
ARTICLE 1 DEFERRED COMPENSATION ACCOUNT . . . . . . . . . . 1
Section 1.1 Establishment of Account . . . . . . . . 1
Section 1.2 Property of Company . . . . . . . . . . . 1
ARTICLE 2 DEFINITIONS, GENDER, AND NUMBER . . . . . . . . . 1
Section 2.1 Definitions . . . . . . . . . . . . . . . 1
Section 2.2 Gender and Number . . . . . . . . . . . . 6
ARTICLE 3 PARTICIPATION . . . . . . . . . . . . . . . . . . 6
Section 3.1 Who May Participate . . . . . . . . . . . 6
Section 3.2 Time and Conditions of Participation . . 7
Section 3.3 Termination of Participation . . . . . . 7
Section 3.4 Missing Persons . . . . . . . . . . . . . 7
Section 3.5 Relationship to Other Plans . . . . . . . 7
ARTICLE 4 ENTRIES TO THE ACCOUNT . . . . . . . . . . . . . . 8
Section 4.1 Contributions . . . . . . . . . . . . . . 8
Section 4.2 Crediting Rate . . . . . . . . . . . . . 9
Section 4.3 Crediting Rate Upon Retirement, Death,
Disability or Termination of Employment
with all Affiliates as a Result of a
Change of Control . . . . . . . . . . . . 11
Section 4.4 Crediting Rate Upon Resignation or
Discharge . . . . . . . . . . . . . . . . 11
ARTICLE 5 VESTING . . . . . . . . . . . . . . . . . . . . . 12
Section 5.1 Participant Deferrals and Vesting
Schedule for Company Contributions . . . 12
Section 5.2 Exceptions to Vesting Schedule . . . . . 12
ARTICLE 6 DISTRIBUTION OF BENEFITS . . . . . . . . . . . . . 13
Section 6.1 Payments After Termination of Employment. 13
Section 6.2 Form of Benefits Upon Retirement or
Disability . . . . . . . . . . . . . . . 13
Section 6.3 Form of Benefits Upon Resignation or
Discharge . . . . . . . . . . . . . . . . 14
Section 6.4 Amount of Benefit . . . . . . . . . . . . 14
Section 6.5 Time of Payment . . . . . . . . . . . . . 15
Section 6.6 Death Benefits . . . . . . . . . . . . . 16
Section 6.7 Hardships . . . . . . . . . . . . . . . . 18
Section 6.8 Claims Procedure . . . . . . . . . . . . 19
Section 6.9 Alternate Forms of Benefit Distribution . 20
Section 6.10 Distributions on Plan Termination . . . . 20
ARTICLE 7 FUNDING . . . . . . . . . . . . . . . . . . . . . 20
Section 7.1 Source of Benefits . . . . . . . . . . . 20
Section 7.2 No Claim on Specific Assets . . . . . . . 20
ARTICLE 8 ADMINISTRATION AND FINANCES . . . . . . . . . . . 20
Section 8.1 Administration . . . . . . . . . . . . . 20
Section 8.2 Powers of Committee . . . . . . . . . . . 21
Section 8.3 Actions of the Committee . . . . . . . . 21
Section 8.4 Delegation . . . . . . . . . . . . . . . 21
Section 8.5 Reports and Records . . . . . . . . . . . 21
ARTICLE 9 AMENDMENTS AND TERMINATION . . . . . . . . . . . . 22
Section 9.1 Amendments . . . . . . . . . . . . . . . 22
Section 9.2 Termination . . . . . . . . . . . . . . . 22
Section 9.3 Accelerated Vesting. . . . . . . . . . . 23
ARTICLE 10 ACCELERATED VESTING . . . . . . . . . . . . . . . 23
Section 10.1 Accelerated Vesting . . . . . . . . . . . 23
Section 10.2 Change in Control . . . . . . . . . . . . 23
ARTICLE 11 MISCELLANEOUS . . . . . . . . . . . . . . . . . . 23
Section 11.1 No Guarantee of Employment . . . . . . . 23
Section 11.2 Individual Account Plan . . . . . . . . . 23
Section 11.3 Release . . . . . . . . . . . . . . . . . 24
Section 11.4 Notices . . . . . . . . . . . . . . . . . 24
Section 11.5 Non-Alienation . . . . . . . . . . . . . 24
Section 11.6 Tax Liability . . . . . . . . . . . . . . 24
Section 11.7 Captions . . . . . . . . . . . . . . . . 24
Section 11.8 Applicable Law . . . . . . . . . . . . . 24
SCHEDULE A - MINIMUM ANNUAL DEFERRAL . . . . . . . . . . 25
SCHEDULE B - ANNUAL ADMINISTRATIVE CHARGES . . . . . . . 26
H&R BLOCK
DEFERRED COMPENSATION PLAN
FOR EXECUTIVES
H&R Block, Inc. (the "Company") hereby establishes,
effective August 1, 1987, a nonqualified deferred compensation
plan for the benefit of specified Executives of the Company, and
of the following affiliates of the Company: CompuServe
Incorporated, Personnel Pool of America, Inc., Path Management
Industries, Inc. and such other entities as may be designated by
the Company from time to time. This plan shall be known as the
H&R Block Deferred Compensation Plan for Executives (the "Plan").
The Plan is intended to be an unfunded plan maintained primarily
for the purpose of providing deferred compensation for a select
group of management or highly compensated employees as described
in Sections 201(2), 301 (a)(3) and 401(a)(1) of the Employee
Retirement Income Security Act of 1974 ("ERISA").
ARTICLE 1 DEFERRED COMPENSATION ACCOUNT
Section 1.1 Establishment of Account. The Company shall
establish an account ("Account") for each Participant which shall
be utilized solely as a device to measure and determine the
amount of deferred compensation to be paid under the Plan.
Section 1.2 Property of Company and Participating
Affiliates. Any amounts so set aside for benefits payable under
the Plan are the property of the Company and its participating
affiliates ("Participating Affiliates"), except, and to the
extent, of any assignment of such assets to an irrevocable trust.
ARTICLE 2 DEFINITIONS, GENDER, AND NUMBER
Section 2.1 Definitions. Whenever used in the Plan, the
following words and phrases shall have the meanings set forth
below unless the context plainly requires a different meaning,
and when a defined meaning is intended, the term is capitalized.
2.1.1 "Account" means the device used to measure and
determine the amount of deferred compensation to be paid to
a Participant or Beneficiary under the Plan, and may refer
to the separate Accounts that represent amounts deferred by
a Participant under separate Permissible Deferral elections
or by the Company pursuant to Section 4.1.
2.1.2 "Affiliates" or "Affiliate" means a group of
entities, including the Company, which constitutes a
controlled group of corporations (as defined in section
414(b) of the Code), a group of trades or businesses
(whether or not incorporated) under common control (as
defined in section 414(c) of the Code), and members of an
affiliated service group (within the meaning of section
414(m) of the Code.)
2.1.3 "Age" of a Participant means the number of whole
calendar years that have elapsed since the date of the
Participant's birth.
2.1.4 "Annual Deferral Amount" means the amount a
Participant elects to defer each Plan Year under a
Permissible Deferral. The Annual Deferral Amount is equal
to an amount or percentage of Base Salary that is not less
than the "minimum annual deferral" determined from Schedule
A attached hereto (and as it may be amended from time to
time by the Company) and not greater than the "maximum
deferral amount" which shall be 35% of the Participant's
Base Salary.
2.1.5 "Base Salary" of a Participant for any Plan Year
means the total annual salary and wages paid by all
Affiliates to such individual, as determined as of the later
of July 1, 1987 or the date on which the Participant first
becomes eligible to participate in the Plan, including any
amount which would be included in the definition of Base
Salary, but for the individual's election to defer some of
his or her salary pursuant to this Plan or some other
deferred compensation plan established by an Affiliate; but
excluding any other remuneration paid by Affiliates, such as
overtime, net commissions, bonuses, stock options,
distributions of compensation previously deferred,
restricted stock, allowances for expenses (including moving,
travel expenses, and automobile allowances), and fringe
benefits payable in a form other than cash. In the case of
an individual who is a participant in a plan sponsored by an
Affiliate which is described in Section 401(k) of the Code,
the term Base Salary shall include any amount which would be
included in the definition of Base Salary, but for the
individual's election to reduce his salary and have the
amount of the reduction contributed to the 401(k) plan on
his behalf.
2.1.6 "Beneficiary" or "Beneficiaries" means the
persons or trusts designated by a Participant in writing
pursuant to Section 6.6.4 of the Plan as being entitled to
receive any benefit payable under the Plan by reason of the
death of a Participant, or, in the absence of such
designation, the persons specified in Section 6.6.5 of the
Plan.
2.1.7 "Board" means the Board of Directors of the
Company as constituted at the relevant time.
2.1.8 "Bonus" or "Bonuses" of a Participant for any
Plan Year means the total remuneration paid under the
various annual management bonus programs ("annual bonuses")
by Affiliates to such individual for that Plan Year
including any amount which would be included in the
definition of Bonus, but for the individual's election to
defer some or all of his or her annual bonus pursuant to
this Plan or some other deferred compensation plan
established by an Affiliate; but excluding any other
remuneration paid by Affiliates, such as Base Salary,
overtime, net commissions, stock options, distributions of
compensation previously deferred, restricted stock,
allowances for expenses (including moving, travel expenses,
and automobile allowances), and fringe benefits payable in a
form other than cash.
2.1.8a "Closing Price" means the closing price of the
Company's Common Stock on the New York Stock Exchange as of
the applicable date; provided, however, that if no closing
price is available for such date, "Closing Price" means the
closing price of the Company's Common Stock as of the next
most recent date for which a price is available.
2.1.9 "Code" means the Internal Revenue Code of 1986,
as amended from time to time and any successor statute.
References to a Code section shall be deemed to be to that
section or to any successor to that section.
2.1.10 "Committee" means the Compensation Committee of
the Company's Board.
2.1.10a "Common Stock" means the common stock of the
Company.
2.1.11 "Company" means H&R Block, Inc.
2.1.12 "Company Contribution" or "Company
Contributions" means the sum of (a) the Company Matching
Contributions described in Section 4.1.2, and (b) the
additional Company contributions described in Section 4.1.3.
2.1.13 "Completed Deferral Cycle" means total
deferrals made and completed as specified by the Participant
in his or her Permissible Deferral election either for four
(4) or eight (8) consecutive Plan Years, if pursuant to
Section 2.1.23(a), or for four (4), five (5), six (6), seven
(7) or eight (8) consecutive Plan Years if pursuant to
Section 2.1.23(b).
2.1.13a "Deferred Compensation Unit" means a unit
equal in value to one share of Common Stock and posted to a
Partici-pant's Account for the purpose of measuring the
benefits payable under the Plan.
2.1.14 "Disabled" or "Disability" with respect to a
Participant shall have the same definition as in the
Company's then existing long term group disability insurance
program.
2.1.15 "Early Retirement Date" of a Participant means
the first day of the first calendar month commencing on or
after the date on which (a) the Participant has reached Age
55 while in the employ of an Affiliate; (b) the Participant
has completed at least ten (10) Years of Service; and (c)
the Participant has a Completed Deferral Cycle.
2.1.16 "Effective Date" means the date on which this
Plan became effective, i.e., August 1, 1987.
2.1.17 "Enrollment Period" for a Plan Year commencing
on January 1 means the immediate preceding period of October
1 through December 15. For the Plan Year for Group A
Participants commencing May 1, 1990, the "Enrollment Period"
means the period from February 15, 1990 to April 15, 1990.
2.1.18 "Executive" means a person with substantial
responsibility in the management of a Participating
Affiliate employed on a full-time basis by that
Participating Affiliate.
2.1.19 "Hours of Service" means hours of service
determined in accordance with the provisions of the then
existing H&R Block, Inc. Employee Profit Sharing Retirement
Plan.
2.1.20 "Normal Retirement Date" of a Participant means
the last day of the calendar month in which the Participant
reaches the Age of 65 while in the employ of an Affiliate
and has a Completed Deferral Cycle.
2.1.21 "Participant" means an Executive who is
eligible to participate in the Plan and has elected to
participate in the Plan.
2.1.22 "Participating Affiliate" or "Participating
Affiliates" means the Company and the following indirect
subsidiaries of the Company: HRB Management, Inc., H&R
Block Tax Services, Inc., CompuServe Incorporated, Block
Financial Corporation, and MECA Software, Inc., and the U.S.
subsidiaries of such indirect subsidiaries; and such other
entities as may be designated as such by the Company from
time to time.
2.1.23 "Permissible Deferral" means one of the
following options as selected by the Participant:
(a) for Participants under Age 55 as of the
first day of a Plan Year, a deferral in that Plan
Year and each of the next three (3) or seven (7)
consecutive Plan Years of an Annual Deferral
Amount.
(b) for Participants Age 55 or older as of
the first day of a Plan Year, a deferral in that
Plan Year and each of the next three (3), four
(4), five (5), six (6), or seven (7) consecutive
Plan Years of an Annual Deferral Amount.
The aggregate of all deferrals may not exceed two
hundred eighty percent (280%) of Base Salary. All deferrals
must be completed by the Plan Year in which the Participant
attains Age 70.
In general, deferrals are made from Base Salary.
However, if a Participant has elected to make deferrals from
Base Salary, he or she may use Bonuses to "prepay" Annual
Deferral Amounts as described below. Deferrals under this
section must specify the percentages (stated as integers) or
dollar amounts of the deferral that are intended to be
deducted from Base Salary and Bonus, respectively.
Deferrals made from Base Salary shall be made in
installments, as instructed by the Participant and approved
by the Committee, and shall be applied to the Annual
Deferral Amount for the Plan Year in which the deferrals are
made. Deferrals made from Bonuses shall be made in a single
sum deferral at the time that the Bonus would otherwise be
paid to the Participant and shall be applied to Annual
Deferral Amounts such that the amounts designated to be
deferred last from Base Salary under a Permissible Deferral
election are paid first by the deferred Bonus. For example,
if a Participant elects a four-year Permissible Deferral,
Bonuses deferred in year one are applied first towards the
Annual Deferral Amount for year four and the excess, if any,
to the annual Deferral Amount for year three, then to year
two, and so on. If, in our example, the Participant's Bonus
deferral in year one was not sufficient to pay the entire
Annual Deferral Amount for year four, and the Participant
again elected to defer some or all of a Bonus in year two,
the amounts deferred would be applied first to any amount
remaining in the Annual Deferral Amount for year four, and
any excess would be applied toward the Annual Deferral
Amount for year three. Each installment of a deferral shall
be rounded to the nearest whole dollar amount. Deferrals
from Base Salary will be adjusted for any year in which a
Bonus deferral has prepaid a portion of that year's Annual
Deferral Amount. Elections to defer from Bonuses shall be
made annually during the Enrollment Period prior to the Plan
Year during which the Bonus would otherwise be paid to the
Participant.
2.1.24 "Plan" means the "H&R Block Deferred
Compensation Plan for Executives" as set forth herein and as
amended or restated from time to time.
2.1.25 "Plan Year" means the calendar year (i) for all
Permissible Deferrals elected by Group B Participants, and
(ii) for Permissible Deferrals of Group A Participants
elected to commence January 1, 1991 or later. For
Permissible Deferrals of Group A Participants elected to
commence on or before May 1, 1990, "Plan Year" means the
twelve month period ending each April 30.
2.1.26 "Smoker" or "Smokers" with respect to any
Permissible Deferral election means any individual who has
smoked at least one cigarette within a twelve (12) month
period ending on the date on which such individual makes the
Permissible Deferral election.
2.1.27 "Standard Form of Benefit" as to any
Participant means semimonthly payments for a fifteen (15)
year period.
2.1.28 "Trust" means the H&R Block, Inc. Deferred
Compensation Trust Agreement.
2.1.29 "Years of Service" means the number of
consecutive Plan Years (including years prior to the
Effective Date of this Plan) for which the Participant had
at least 1,000 Hours of Service.
Section 2.2 Gender and Number. Except as otherwise
indicated by context, masculine terminology used herein also
includes the feminine and neuter, and terms used in the singular
may also include the plural.
ARTICLE 3 PARTICIPATION
Section 3.1 Who May Participate. Participation in the Plan
is limited to Group A and Group B Participants, described as
follows:
3.1.1 "Group A Participants" are Executives of the
Company at Grade 26 and above, or with the title of
Director, employed at Corporate Headquarters or Tax
Operations, and Executives of Participating Affiliates,
other than the Company, at comparable levels as determined
by the Committee.
3.1.2 "Group B Participants" are Executives who do not
qualify as Group A Participants, but who are designated by
the Committee as eligible to participate in the Plan.
Section 3.2 Time and Conditions of Participation. An
eligible Executive shall become a Participant only upon (a) the
individual's completion of a Permissible Deferral election for
the succeeding Plan Year or Plan Years during an Enrollment
Period, in accordance with a form established by the Company from
time to time, and (b) compliance with such terms and conditions
as the Committee may from time to time establish for the
implementation of the Plan, including, but not limited to, any
condition the Committee may deem necessary or appropriate for the
Company to meet its obligations under the Plan. An individual
may make a Permissible Deferral election for any succeeding Plan
Year or Years during an Enrollment Period provided the total
Permissible Deferral elections do not exceed the limitation set
forth in Section 2.1.23.
Section 3.3 Termination of Participation. Once an
individual has become a Participant in the Plan, participation
shall continue until the first to occur of (a) payment in full of
all benefits to which the Participant or Beneficiary is entitled
under the Plan, or (b) the occurrence of an event specified in
Section 3.4 which results in loss of benefits, or (c) for a Group
B Participant, having an Annual Deferral Amount that causes the
Participant's Base Salary and Bonus for the Plan Year, after
reduction for the Annual Deferral Amount, to be less than ninety-
nine percent (99%) of the United States Social Security
Contribution and Benefit Base determined under Section 230 of the
Social Security Act for such Plan Year. A Group B Participant
whose participation in the Plan is terminated under clause (c) of
the preceding sentence shall be deemed for purposes of all Plan
provisions (including Section 4.4, Section 5.1 and Section 6.3)
to have voluntarily terminated employment with the Company as of
the date the Participant's Plan participation is terminated.
Such a Participant may then reenter the Plan during the following
Enrollment Period, assuming the Participant continues to be
eligible to participate in the Plan as provided in Section 3.1.
Except as otherwise specified in the Plan, the Company may not
terminate an individual's participation in the Plan.
Section 3.4 Missing Persons. If the Company is unable to
locate the Participant or his Beneficiary for purposes of making
a distribution, the amount of a Participant's benefits under this
Plan that would otherwise be considered as non-forfeitable shall
be forfeited effective four (4) years after (a) the last date a
payment of said benefit was made, if at least one such payment
was made, or (b) the first date a payment of said benefit was
directed to be made by the Company pursuant to the terms of the
Plan, if no payments had been made. If such person is located
after the date of such forfeiture, the benefits for such
Participant or Beneficiary shall not be reinstated hereunder.
Section 3.5 Relationship to Other Plans. Participation in
the Plan shall not preclude participation of the Participant in
any other fringe benefit program or plan sponsored by an
Affiliate for which such Participant would otherwise be eligible.
ARTICLE 4 ENTRIES TO THE ACCOUNT
Section 4.1 Contributions.
Section 4.1.1 Deferrals. During each Plan Year, if
the Participant elects the fixed or variable crediting rate
option for measuring the performance of the Account under
Section 4.2, the Company shall post to the Account of such
Participant the amount of Base Salary and Bonuses to be
deferred as designated by the Participant's Permissible
Deferral election in effect for that Plan Year. Deferrals
from Base Salary shall be posted by pay period and deferrals
from Bonuses shall be posted annually at the time the Bonus
would otherwise have been paid to the Participant.
During each Plan Year, if the Participant elects the
Common Stock crediting rate option for measuring the perfor-
mance of the Account under Section 4.2, the Company shall
post to the Account of such Participant a number of Deferred
Compensation Units equivalent to the amount of Base Salary
and Bonuses to be deferred as designated by the
Participant's Permissible Deferral election in effect for
that Plan Year. Deferrals from Base Salary (and the
corresponding number of Deferred Compensation Units) shall
be posted by pay period and deferrals from Bonuses (and the
corresponding number of Deferred Compensation Units) shall
be posted annually at the time the Bonus would otherwise
have been paid to the Participant. The number of Deferred
Compensation Units posted for each calendar month shall be
calculated by dividing: (i) the dollar amount deferred
during that month; by (ii) the Closing Price on the first
business day of the following calendar month.
Section 4.1.2 Company Matching Contributions. The
Company shall post Matching Contributions to the Account of
each participant as follows. For each $1.00 of Base Salary
or Bonus deferred pursuant to Section 4.1.1, the Company
shall post an additional .50 to the Participant's Account,
provided, however, that the total of all Matching
Contributions made pursuant to this Section 4.1.2 shall not
exceed one hundred forty percent (140%) of Base Salary.
Matching Contributions shall be posted at the same time as
the deferrals for which the Matching Contributions are made.
Section 4.1.3 Additional Company Contributions. The
Company shall also post to the Account of each Participant
once each Plan Year the difference, if any, between (a) the
amount for that Plan Year which would have been contributed
on behalf of the Participant to any profit sharing plan
which is deemed to be a "qualified plan" under the Code if
the Participant had not made a Permissible Deferral election
under the Plan; and (b) the amount for that Plan Year
contributed on behalf of the Participant to such a plan.
Section 4.1.4 Disability. During the first 90-day
period in which a Participant is Disabled, deferrals and
Company Contributions shall continue to be posted as
described in Sections 4.1.1, 4.1.2 and 4.1.3. If a
Participant continues to be Disabled after such 90-day
period, deferrals will cease but Company Contributions will
continue for the balance of the Participant's Permissible
Deferral period as if the Participant's deferrals had
continued. A Participant may resume deferrals upon his or
her return to work.
Section 4.1.5 Special 1987 Election. A Participant
may elect to adjust his or her salary deferrals so that all
salary deferrals which would have been made during the first
Plan Year are made in the calendar year ending December 31,
1987. If a Participant makes this election, no deferrals
from Base Salary or Bonuses will be made for the period
beginning January 1, 1988 and ending April 30, 1988.
Section 4.2 Crediting Rate. Gains or losses shall be
posted to the Account in accordance with the Participant's
irrevocable election of an investment option which will be a
reference for measuring the performance of the Account, as
modified, if applicable, by Section 4.4. The Company intends to
measure the performance of the Account in accordance with the
Participant's election but reserves the right to do otherwise.
The election shall be made concurrently with the Permissible
Deferral election. The Participant shall elect one of the
following investment options: (i) a fixed rate as described in
4.2.1, (ii) a variable rate as described in 4.2.2, or (iii) a
Common Stock crediting rate as described in 4.2.3. A separate
irrevocable election shall be made for each Permissible Deferral
election.
Section 4.2.1. Fixed Rate. Except as specified in
Section 4.2.4, if a Participant elects a fixed rate, the
interest will be compounded on a daily basis and posted to
the Participant's Account per each pay period at an
effective annual yield equal to the rate of ten-year United
States Treasury notes. The rate will be determined once
each Plan Year and will be the rate in effect as of April 30
of the year prior to the Plan Year to which it applies, as
published by Salomon Brothers Inc., or any successor
thereto, or as determined by the Chief Financial Officer of
the Company.
Section 4.2.2 Variable Rate. Except as specified in
Section 4.2.4, if a Participant elects a variable rate, the
Participant's Account will be credited or debited as if the
Account balance were invested in one or more funds selected
by the Company in the proportions elected by the
Participant. Statements will be provided on a quarterly
basis. Initially the funds will be from the Pruco Variable
Appreciable Life Insurance Contracts and include the Common
Stock Portfolio, the Aggressively Managed Flexible
Portfolio, the Conservatively Managed Flexible Portfolio,
the Money Market Portfolio, the Bond Portfolio, the High
Yield Bond Portfolio and the Real Property Account.
Participants may elect to have their Accounts treated as if
they were invested in one or more of the funds selected,
provided the election is in at least ten percent (10%)
increments of the Account. Participants may change their
measuring fund elections up to four (4) times in any
calendar year by giving the Committee written notice of such
change on a form provided by the Company for that purpose.
Upon receipt of such notice, the Committee will effect the
change within two (2) business weeks. The Participant's
Account will be reduced by the annual administrative charge
set forth on Schedule B attached hereto, which may be
amended from time to time by the Committee.
Section 4.2.3. Common Stock Crediting Rate. If a
Participant elects the Common Stock crediting rate, the
Participant's Account will be valued as if his or her
Account were invested in shares of Common Stock equal to the
number of Deferred Compensation Units posted to his or her
Account. The value of a Participant's Account will vary
with the value of the Company's Common Stock. The
Participant's Account will be credited, as of the applicable
dividend payment date, with additional Deferred Compensation
Units equal in value to any dividends declared on the
Company's Common Stock based on the number of Deferred
Compensation Units posted to the Participant's Account as of
the record date with respect to the declaration of such
dividend. As of any date of valuation, the value of a
Participant's Account will be equal to the value (at the
Closing Price on such date) of the number of shares of
Common Stock represented by the Deferred Compensation Units
credited to the Account as of that date.
Section 4.2.4 Crediting for Smokers. The crediting
rate under Sections 4.2.1 and 4.2.2 for Smokers shall be
reduced by four tenths of one percent (.4%) annually. The
Committee may, in its discretion, waive the reduction
required by this Section 4.2.4 for an individual classified
as a Smoker with respect to a Permissible Deferral election
if the Committee receives a request for such a waiver, on a
form provided by the Company for that purpose, from such
individual which certifies that he or she has not smoked a
cigarette within a twelve (12) month period ending on the
date the request is submitted. Such a request may be
submitted no sooner than twelve (12) months following the
date on which the Permissible Deferral election is made.
Section 4.3 Crediting Rate Upon Retirement, Death,
Disability or Termination of Employment with all Affiliates as a
Result of a Change of Control. If a Participant terminates
employment at or after Normal Retirement Date or Early Retirement
Date, or is Disabled, gains and losses shall be credited as
described in Section 4.2 to that Participant's Accounts. If a
Participant dies prior to termination of employment, gains and
losses shall be credited, to date of death, as described in
Section 4.2 to that Participant's Accounts. If a Participant
terminates employment with all Affiliates before Normal
Retirement Date or Early Retirement Date as a result of a Change
of Control, gains and losses to all of that Participant's
Accounts, regardless of whether or not such Accounts represent
Completed Deferral Cycles, shall be credited as described in
Section 4.2 up to the date of the Change of Control and crediting
for such Accounts after the date of the Change of Control shall
be at an interest rate set annually by the Chief Financial
Officer of the Company in his discretion, which shall not be less
than the rate then payable on Investment Savings Accounts of
$1,000 or less at Commerce Bank of Kansas City, N.A., Kansas
City, Missouri, or any successor thereto.
Section 4.4 Crediting Rate Upon Resignation or Discharge.
Section 4.4.1 Except as described in Section 4.4.2, if
a Participant terminates employment with all Affiliates
before Normal Retirement Date or Early Retirement Date for
reasons other than death, Disability or a Change of Control,
gains and losses shall be credited as described in Section
4.2 up to the date of termination of employment to that
Participant's Accounts that represent Completed Deferral
Cycles. Crediting for Accounts that do not represent
Completed Deferral Cycles and crediting after the date of
termination of employment for Accounts that represent
Completed Deferral Cycles shall be at an interest rate set
annually by the Chief Financial Officer of the Company in
his discretion, which shall not be less than the rate then
payable on Investment Savings Accounts of $1,000 or less at
Commerce Bank of Kansas City, N.A., Kansas City, Missouri,
or any successor thereto.
Section 4.4.2 If a Participant terminates employment
on or after Age 55 having completed at least ten (10) Years
of Service, but all Permissible Deferrals do not satisfy a
Completed Deferral Cycle, the Participant will be deemed to
have a Completed Deferral Cycle for all Permissible
Deferrals if the Participant elects either:
(a) in compliance with terms and conditions
as established from time to time by the Committee
to defer sufficient additional Base Salary and/or
Bonuses (to be earned prior to termination and
subsequent to such election) to complete the
deferral elected under Section 3.2; or
(b) to have the such Permissible Deferrals
constitute a reduced Completed Deferral Cycle,
provided such Permissible Deferrals satisfy a
minimum amount, as determined by the Committee.
A Participant must make the election described in (b) of
this paragraph no later than thirty (30) days following
termination of employment. In the event the Participant
fails to make either election described in this Section
4.4.2, his or her Account will be credited in the manner
described in Section 4.4.1.
ARTICLE 5 VESTING
Section 5.1 Participant Deferrals and Vesting Schedule for
Company Contributions. Participant deferrals pursuant to Section
4.1.1 are fully vested immediately. The Participant's interests
in any Company Contributions described in Section 4.1.3 shall
vest according to the vesting schedule contained in the profit
sharing plan to which such Company Contributions relate. The
Participant's interests in the Company Matching Contributions
under Section 4.1.2 shall vest according to the following
schedule:
Percentage of
Company Contributions
Years of Service Vested
---------------- ---------------
Less than 2 None
2 20%
3 30%
4 40%
5 50%
6 60%
7 70%
8 80%
9 90%
10 100%
For purposes of crediting Years of Service under the Schedule,
Participants will be credited with Years of Service beginning
with the year in which the Participant began participation in the
Plan. A Disabled Participant will be credited with any Hours of
Service with which he or she would have been credited but for the
Disability.
Section 5.2 Exceptions to Vesting Schedule. Company
Contributions are fully vested upon a Participant's death prior
to termination of employment, and upon a Change of Control as
defined in Section 10.2. Participants who have attained Age 65
prior to the date on which they first became eligible to
participate in the Plan and who have completed ten (10) Years of
Service are fully vested. Participants who have attained Age 55
(but are less than Age 65) prior to the date on which they first
became eligible to participate in the Plan and who have completed
ten (10) Years of Service, vest according to the following
formula:
Years of Service since initial Plan eligibility date
---------------------------------------------------------------
65 minus Participant's Age on initial Plan eligibility date
ARTICLE 6 DISTRIBUTION OF BENEFITS
Section 6.1 Payments After Termination of Employment.
Payment of benefits to a Participant shall be made by the Company
only upon the termination, voluntary or involuntary, of the
Participant's employment with all Affiliates, except where a
Participant is Disabled, or as provided by Section 6.7.
Section 6.2 Form of Benefits Upon Retirement or Disability.
Payments from the Account shall be made in accordance with the
Standard Form of Benefit for Participants who terminate
employment on or after Normal Retirement Date or Early Retirement
Date or are Disabled. However, no less than 13 months prior to
such termination of employment, the Participant may petition the
Committee for, and the Committee may approve at such time, an
optional form of benefit.
Notwithstanding any other provisions of the Plan, a
Participant who terminates employment on or after Normal
Retirement Date or Early Retirement Date may, at any time before
or after a Change in Control, as defined in Section 10.2, elect
to receive an immediate lump-sum payment of the balance of said
Participant's Account reduced by a penalty, which shall be
forfeited to the Company, in lieu of payments in accordance with
the Standard Form of Benefit or such optional form of benefit as
may have previously been approved by the Committee under this
Section 6.2. The penalty shall be equal to ten percent (10%) of
the balance of such Account if the election is made before a
Change in Control and shall be equal to five percent (5%) of the
balance of such Account if the election is made after a Change in
Control. However, the penalty shall not apply if the Committee
determines, based on advice of counsel or a final determination
or ruling by the Internal Revenue Service or any court of
competent jurisdiction, that by reason of the provisions of this
paragraph any Participant has recognized or will recognize gross
income for federal income tax purposes under this Plan in advance
of payment to the Participant of Plan benefits. The Company
shall notify all Participants of any such determination by the
Committee and shall thereafter refund all penalties which were
imposed hereunder in connection with any lump-sum payments made
at any time during or after the first year to which the
Committee's determination applies (i.e., the first year for
which, by reasons of the provisions of this paragraph, gross
income under this Plan is recognized for federal income tax
purposes in advance of payment of benefits). Interest compounded
annually shall be paid by the Company to the Participant (or the
Participant's Beneficiary if the Participant is deceased) on any
such refund from the date of the Company's payment of the lump
sum at an annual rate set at the time of the refund by the Chief
Financial Officer of the Company in his discretion, which rate
shall not be less than the rate then payable on Investment
Savings Accounts of $1,000 or less at Commerce Bank of Kansas
City, N.A., Kansas City, Missouri, or any successor thereto. The
Committee may also reduce or eliminate the penalty if it
determines that the right to elect an immediate lump-sum payment
under this paragraph, with the reduced penalty or with no
penalty, as the case may be, will not cause any Participant to
recognize gross income for federal income tax purposes under this
Plan in advance of payment to the Participant of Plan benefits.
Section 6.3 Form of Benefits Upon Resignation or Discharge.
Upon a Participant's termination of employment with all
Affiliates following a Change of Control, payments from the
account shall be paid in a lump sum within ninety (90) days after
date of the ter-mination of employment. If a Change of Control
has not occurred, for Participants who terminate employment with
all Affiliates before the Normal Retirement Date or the Early
Retirement Date for reasons other than Disability or death,
payments from the Account shall be in the form of (a) semimonthly
payments over a three (3) year period for all Permissible
Deferrals that satisfy a Completed Deferral Cycle, or (b) a lump
sum for all Permissible Deferrals that do not satisfy a Completed
Deferral Cycle.
Section 6.4. Amount of Benefit. Except for distributions
in the form of a lump sum, benefit payments shall be in the form
of semimonthly cash installments paid during the applicable
payment period. If the Participant elected the Common Stock
crediting rate option for measuring the performance of the
Account under Section 4.2 and such Participant receives benefits
pursuant to Section 6.3, or if the Participant elected the fixed
or variable crediting rate option for measuring the performance
of the Account under Section 4.2, such installments shall be
computed at the commencement of benefit payments based upon the
balance in the Account at such time, together with an estimate of
the gains to be credited to the Account during the payment
period. Such estimated gains shall be calculated using an
assumed interest rate equal to (a) nine percent (9%) per annum if
the Participant elected the fixed rate investment option pursuant
to Section 4.2; (b) five percent (5%) per annum if the
Participant elected the variable rate investment option pursu-ant
to Section 4.2; or (c) the annual interest rate set by the Chief
Financial Officer of the Company in accordance with Section 4.4.1
if the Participant receives benefits pursuant to Section 6.3. If
the Participant is not receiving benefits pursuant to Section 6.3
and has elected different crediting rates (fixed or variable) for
separate Permissible Deferral elections, the estimated gains
shall be calculated separately for each separate Account
applicable to each such separate Permissible Deferral election.
If benefit payments are computed in accordance with the
immediately preceding paragraph and, at the end of 12 consecutive
months after the date that benefit payments commence, or at the
end of any subsequent 12-consecutive-month period, the actual
crediting rate for such period is more than the assumed interest
rate, the additional gain resulting from the difference shall be
paid to the Participant in a single payment on or before the next
December 31 following the end of such period. If, at the end of
any such 12-consecutive-month period, the actual crediting rate
for such period is less than the assumed interest rate, the
amount of the reduced gain resulting from the difference shall be
deducted from succeeding payments due to the Participant in such
manner as the Committee shall determine.
If the Participant elected the Common Stock crediting rate
option for measuring the performance of the Account under Section
4.2 and such Participant does not receive benefits pursuant to
Section 6.3, the amount of each installment payment will be level
during each 12-month period of the payment period, but will vary
from year to year. The amount of each level payment for each 12-
month period will be calculated using the balance in the Account
at the beginning of the 12-month period and dividing it by the
total periods remaining in the entire payment period. The
benefit pay-ment shall be adjusted each subsequent 12-month
period to reflect the value of the Account as of such time.
Generally, the Account shall continue to be credited during
the payment period with gains and losses as provided in Section
4.3. However, if a Participant receives benefits pursuant to
Section 6.3, the Account shall be credited with gains and losses
as provided in Section 4.4.1. Except as provided otherwise, if a
Participant dies, Section 6.6 shall apply.
Notwithstanding anything in this Plan to the contrary, the
Committee may, in its sole discretion, increase or reduce any
assumed interest rate set forth in this Section 6.4 and any such
assumed interest rate, as so adjusted, shall be effective for
calculating equal semimonthly installments for Participants whose
benefit payments commence after the date of such adjustment.
Section 6.5 Time of Payment. Generally, benefit payments
to a Participant shall begin no later than six (6) months after
termination of employment. In the case of a Disabled
Participant, benefits shall commence no later than six (6) months
after the Participant's Early Retirement Date.
A Participant may elect at the time of each Permissible
Deferral election to defer commencement of the payment of
benefits after termination of employment with respect to such
Permissible Deferral election until the earlier of: (a) five (5)
years after termination of employment; or (b) Age 70. If the
Participant has made such an election, the Committee upon written
petition of the Participant may begin benefit payments at an
earlier time after termination if it determines that compelling
reasons exist for such earlier payments.
Section 6.6 Death Benefits.
6.6.1 Death After Benefit Commencement. In the event
a Participant dies after benefit payments have commenced
(other than payments made pursuant to Section 6.7), the
remaining benefit payments, if any, shall be paid to the
Participant's Beneficiary in the same manner such benefits
would have been paid to the Participant had the Participant
survived. A Beneficiary may petition the Committee for an
alternative method of payment. If such benefits were
payable pursuant to Section 6.3, the Account shall continue
to be credited during the payout period as provided in
Section 4.4, except that, if such benefits were payable
because of the Participant's termination of employment with
all Affiliates following a Change of Control, the Account
shall continue to be credited as provided in Section 4.3.
If such benefits were payable pursuant to Section 6.2, the
Account shall be credited from the date of the Participant's
death at a rate set by the Chief Financial Officer of the
Company in his discretion, which shall not be less than the
rate then payable on Investment Savings Accounts of $1,000
or less at Commerce Bank of Kansas City, Missouri, N.A., or
any successor thereto. If such benefits were payable
pursuant to Section 6.2 to a Participant whose employment
terminated on or after Normal Retirement Date or Early
Retirement Date, the Participant's Beneficiary may make the
election to receive an immediate lump-sum payment of the
balance of said Participant's Account in accordance with the
provisions of Section 6.2 and all provisions set forth
therein relating to penalties shall apply to any such
election.
In addition, if a Participant dies on or after such
Participant's Normal Retirement Date or Early Retirement
Date after having retired, or after benefits have commenced
because of the Participant's Disability, an annuity shall be
paid to the Participant's surviving spouse, if any (to whom
he has been married at least one (1) year prior to the date
of death). The annuity shall be for the life of the
Participant's surviving spouse with each semimonthly payment
equal to fifty percent (50%) of the average amount which
would have been payable to the Participant and his or her
Beneficiary if, on the date benefits commenced, the
Participant had received the Standard Form of Benefit
payment. If the Participant's surviving spouse is more than
thirty-six (36) months younger than the Participant, the
survivor life annuity payable to such spouse shall be
reduced by one-half of one percent (.5%) for each month the
spouse is more than thirty-six (36) months younger than the
Participant. Payment shall commence on the first day of the
month following the later of (a) the Participant's death,
(b) the completion of the death benefits under the first
paragraph of this Section 6.6.1, or (c) fifteen (15) years
from the date benefits commenced or would have commenced to
the Participant.
6.6.2 Death Prior to Benefit Commencement. In the
event a Participant dies before benefit payments have
commenced, the Company shall pay a pre-retirement death
benefit to the Participant's Beneficiary. The amount of
such pre-retirement death benefit is the greater of:
(a) the Participant's Account as of the
date of the Participant's death annuitized
over a ten-year period at an interest rate
set by the Chief Financial Officer of the
Company in his discretion, which shall not be
less than the rate then payable on Investment
Savings Accounts of $1,000 or less at
Commerce Bank at Kansas City, Missouri, N.A.;
or any successor thereto; or
(b) an annual benefit of twenty-five per-
cent (25%) of the total deferrals and Company
Contributions made as of the date of the Parti-
cipant's death.
The pre-retirement death benefit shall be paid semimonthly
for a ten-year period. The Beneficiary may petition the
Committee for an alternative method of payment. If the pre-
retirement death benefit is computed pursuant to 6.6.2(a),
the Account shall continue to be credited during the payment
period at an interest rate set by the Chief Financial
Officer of the Company in his discretion. which shall not be
less than the rate then payable on Investment Savings
Accounts of $1,000 or less at Commerce Bank of Kansas City,
Missouri, N.A., or any successor thereto. Commencement of
benefits under this Section 6.6.2 shall begin no later than
six (6) months following the death of the Participant
notwithstanding any election which the Participant may have
made to defer benefits pursuant to Section 6.5.
6.6.3 Marital Deduction. Any benefits which become
payable under this Article 6 to the surviving spouse of a
Participant shall be paid in a manner which will qualify
such benefits for a marital deduction in the estate of a
deceased Participant under the terms of Section 2056 of the
Code, and unless specifically directed by a Participant to
the contrary pursuant to an effective beneficiary
designation, any portion of a Participant's death benefit
payable to a surviving spouse which remains unpaid at the
death of such spouse shall be paid to the spouse's estate.
6.6.4 Designation by Participant. Each Participant
has the right to designate primary and contingent
Beneficiaries for death benefits payable under the Plan.
Such Beneficiaries may be individuals or trusts for the
benefit of individuals. A beneficiary designation by a
Participant shall be in writing on a form acceptable to the
Committee and shall only be effective upon delivery to the
Company. A beneficiary designation may be revoked by a
Participant at any time by delivering to the Company either
written notice of revocation or a new beneficiary
designation form. The beneficiary designation form last
delivered to the Company prior to the death of a Participant
shall control.
6.6.5 Failure to Designate Beneficiary. In the event
there is no beneficiary designation on file with the
Company, or all Beneficiaries designated by a Participant
have prede-ceased the Participant, the benefits payable by
reason of the death of the Participant shall be paid to the
Participant's spouse, if living; if the Participant does not
leave a surviving spouse, to the Participant's issue by
right of representation; or, if there are no such issue then
living, to the Participant's estate. In the event there are
benefits remaining unpaid at the death of a sole Beneficiary
and no successor Beneficiary has been designated, either by
the Participant or the Participant's spouse pursuant to
6.6.3, the remaining balance of such benefit shall be paid
to the deceased Beneficiary's estate; or, if the deceased
Beneficiary is one of multiple concurrent Beneficiaries,
such remaining benefits shall be paid proportionally to the
surviving Beneficiaries.
Section 6.7 Hardships. Upon the application of any
Participant, the Committee, in accordance with its uniform, non-
discriminatory policy, may permit such Participant to terminate
future deferrals or to withdraw his total Account. A Participant
must give a written petition of the termination of his or her
Permissible Deferral election at least thirty (30) days prior to
the next monthly (for Base Salary) or single sum (for Bonuses)
deferral. A Participant must give a written petition of the
intent to withdraw the Account at least sixty (60) days (or such
shorter time as permitted by the Committee) prior to the date of
with-drawal. No termination or withdrawal shall be made under
the provisions of this Section except for the purpose of enabling
a Participant to meet immediate needs created by a financial
hard-ship for which the Participant does not have other
reasonably available sources of funds as determined by the
Committee in accordance with uniform rules. The term financial
hardship shall include the need for funds to: meet uninsured
medical expenses for the Participant or his dependents, meet a
significant uninsured casualty loss for the Participant or his
dependents, and meet other catastrophes of a "sudden and serious
nature."
If the Committee permits a termination of a Participant's
Permissible Deferral election, the Participant shall be entitled
to have the deferrals made pursuant to the Permissible Deferral
election constitute a reduced Completed Deferral Cycle, provided
the deferrals satisfy a minimum amount, as determined by the
Committee. If the deferrals do not satisfy such a minimum
amount, no termination of a Participant's Deferral election will
be allowed without a withdrawal. The Committee may permit a
withdrawal of any deferrals. If a withdrawal is permitted, a
Participant's deferrals shall be credited at the lesser of (a)
the amount as described in Section 4.2; or (b) an interest rate
set by the Chief Financial Officer of the Company in his
discretion, which shall not be less than the rate then payable on
Investment Savings Accounts of $1,000 or less at Commerce Bank of
Kansas City, Missouri, N.A., or any successor thereto.
Withdrawals shall be distributed in the form of a lump sum as
soon as is reasonably convenient.
If a termination of deferrals or a withdrawal is made under
this Section, the Participant may not enter into a new
Permissible Deferral election for two (2) complete Plan Years
from the date of the termination or withdrawal.
Section 6.8 Claims Procedure. The Committee shall notify a
Participant in writing within ninety (90) days of the
Participant's written application for benefits of his eligibility
or non-eligibility for benefits under the Plan. If the Committee
determines that a Participant is not eligible for benefits or
full benefits, the notice shall set forth (a) the specific
reasons for such denial, (b) a specific reference to the
provision of the Plan on which the denial is based, (c) a
description of any additional information or material necessary
for the claimant to perfect his claim, and a description of why
it is needed, and (d) an explanation of the Plan's claims review
procedure and other appropriate information as to the steps to be
taken if the Participant wishes to have his claim reviewed. If
the Committee determines that there are special circumstances
requiring additional time to make a decision, the Committee shall
notify the Participant of the special circumstances and the date
by which a decision is expected to be made, and may extend the
time for up to an additional 90-day period. If a Participant is
determined by the Committee to be not eligible for benefits, or
if the Participant believes that he is entitled to greater or
different benefits, he shall have the opportunity to have his
claim reviewed by the Committee by filing a petition for review
with the Committee within sixty (60) days after receipt by him of
the notice issued by the Committee. Said petition shall state
the specific reasons the Participant believes he is entitled to
benefits or greater or different benefits. Within sixty (60)
days after receipt by the Committee of said petition, the
Committee shall afford the Participant (and his counsel, if any)
an opportunity to present his position to the Committee orally or
in writing, and said Participant (or his counsel) shall have the
right to review the pertinent documents, and the Committee shall
notify the Participant of its decision in writing within said
sixty (60) day period, stating specifically the basis of said
decision written in a manner calculated to be understood by the
Participant and the specific provisions of the Plan on which the
decision is based. If, because of the need for a hearing, the
sixty (60) day period is not sufficient, the decision may be
deferred for up to another sixty (60) day period at the election
of the Committee, but notice of this deferral shall be given to
the Participant.
Section 6.9 Alternate Forms of Benefit Distribution.
Participants shall have the right to petition the Committee to
request methods of benefit distribution other than those provided
to Participants pursuant to this Article 6.
Section 6.10 Distributions on Plan Termination. Notwith-
standing anything in this Article 6 to the contrary, if the Plan
is terminated, distributions shall be made in accordance with
Section 9.2.
ARTICLE 7 FUNDING
Section 7.1 Source of Benefits. All benefits under the
Plan shall be paid when due by the Company out of its assets or
from an irrevocable trust established by the Company for that
purpose. The Company may, but shall have no obligations to, make
such advance provision for the payment of such benefit as the
Board may from time to time consider appropriate.
Section 7.2 No Claim on Specific Assets. No Participant
shall be deemed to have, by virtue of being a Participant in the
Plan, any claim on any specific assets of the Company such that
the Participant would be subject to income taxation on his
benefits under the Plan prior to distribution and the rights of
Participants and Beneficiaries to benefits to which they are
otherwise entitled under the Plan shall be those of an unsecured
general creditor of the Company.
ARTICLE 8 ADMINISTRATION AND FINANCES
Section 8.1 Administration. The Plan shall be administered
by the Committee. The Company shall bear all administrative
costs of the Plan other than those specifically charged to a
Participant or Beneficiary.
Section 8.2 Powers of Committee. In addition to the other
powers granted under the Plan, the Committee shall have all
powers necessary to administer the Plan, including, without
limitation, powers:
(a) to interpret the provisions of the Plan;
(b) to establish and revise the method of
accounting for the Plan and to maintain the Accounts;
and
(c) to establish rules for the administration of
the Plan and to prescribe any forms required to
administer the Plan.
Not in limitation, but in amplification of the foregoing and of
the authority conferred upon the Committee in Section 8.1, the
Company specifically intends that the Committee have the greatest
permissible discretion to construe the terms of the Plan and to
determine all questions concerning eligibility, participation and
benefits. Any such decision made by the Committee is intended to
be subject to the most deferential standard of judicial review.
Such standard of review is not to be effected by any real or
alleged conflict of interest on the part of the Company or any
member of the Committee.
Section 8.3 Actions of the Committee. Except as modified
by the Company, all determinations, interpretations, rules, and
decisions of the Committee shall be conclusive and binding upon
all persons having or claiming to have any interest or right
under the Plan.
Section 8.4 Delegation. The Committee, or any officer
designated by the Committee, shall have the power to delegate
specific duties and responsibilities to officers or other
employees of the Company or other individuals or entities. Any
delegation may be rescinded by the Committee at any time. Each
person or entity to whom a duty or responsibility has been
delegated shall be responsible for the exercise of such duty or
responsibility and shall not be responsible for any act or
failure to act of any other person or entity.
Section 8.5 Reports and Records. The Committee and those
to whom the Committee has delegated duties under the Plan shall
keep records of all their proceedings and actions and shall
maintain books of account, records, and other data as shall be
necessary for the proper administration of the Plan and for
compliance with applicable law.
ARTICLE 9 AMENDMENTS AND TERMINATION
Section 9.1 Amendments. The Company, by action of the
Board, may amend the Plan, in whole or in part, at any time and
from time to time. Any such amendment shall be filed with the
Plan documents. No amendment, however, may be effective to
eliminate or reduce the benefits of any retired Participant or
the Beneficiary of any deceased Participant then eligible for
benefits or the vested portion of the benefits, if any, in any
active Participant's Account immediately before the effective
date of such amendment, and each such Account will be credited to
the date of such amendment in accordance with Section 4.2,
whether or not such Account represents a Completed Deferral
Cycle. Notwithstanding anything in this Section 9.1 to the
contrary, the Committee may, in its discretion, amend the Plan to
reduce the rates set forth in Section 4.2 effective for crediting
of Accounts from the date of any such amendment. Notwithstanding
anything in this Section 9.1 to the contrary, the Committee may,
in its discretion, amend the Plan to reduce or eliminate the
penalty described in Section 6.2 in accordance with the
provisions of such Section 6.2, and amend the Plan to increase or
reduce any assumed interest rate set forth in Section 6.4, in
accordance with the provisions of such Section 6.4.
Section 9.2 Termination. The Company expects the Plan to
be permanent, but necessarily must, and hereby does, reserve the
right to terminate the Plan at any time by action of the Board.
In all events, the Plan will be terminated if the existence of a
trust causes a federal court to hold that the Plan is "funded"
for ERISA purposes, as defined in Section 2.02-4 of the Trust and
appeals from that holding are no longer timely or have been
exhausted, and the trust is therefore terminated with respect to
the Plan. Upon termination of the Plan, all deferrals and
Company Contributions will cease and no future deferrals or
Company Contributions will be made. Termination of the Plan
shall not operate to eliminate or reduce benefits of any retired
Participant or the Beneficiary of any deceased Participant then
eligible for benefits. Active Participants shall become vested
in their accrued benefits to the extent and in the manner
provided in Section 9.3 as of the effective date of such
termination and each account of an active Participant shall be
credited, to the date of distribution of all benefits in each
such Account, in accordance with Section 4.2., as it may be
amended from time to time pursuant to Section 9.1, whether or not
it represents a Completed Deferral Cycle.
If the Plan is terminated, payments from the Accounts of all
Participants and Beneficiaries shall be made as soon as
administratively convenient in the form of monthly payments over
a five (5) year period; however, the Committee in its sole
discretion may pay the benefits in a lump sum. Notwithstanding
the preceding sentence, if the termination occurs because the
Plan is held to be "funded" as described in the first paragraph
of this Section 9.2, the distribution will be paid in a lump sum
not later than ninety (90) days after such termination.
Section 9.3 Accelerated Vesting. Notwithstanding Article
5, upon termination of the Plan a Participant shall vest in
Company Contributions according to the following schedule:
Percentage of Company
Years of Service Contributions Vested
---------------- -----------
Less than 1 None
1 20%
2 40%
3 60%
4 80%
5 or more 100%
Years of Service shall be credited in accordance with Section
5.1.
ARTICLE 10 ACCELERATED VESTING
Section 10.1 Accelerated Vesting. Notwithstanding Article
5, upon a Change of Control as defined in Section 10.2, a
Participant shall be fully vested in Company Contributions.
Section 10.2 Change in Control. A Change in Control for
any Participant shall occur if there is a Change in Control of
the Company as defined in Section 1.01-2 of the Trust or there is
a Change in Control of a Participating Subsidiary, as defined in
Section 1.01-2 of the Trust, of the Participating Affiliate by
whom the Participant is employed.
ARTICLE 11 MISCELLANEOUS
Section 11.1 No Guarantee of Employment. Neither the
adoption and maintenance of the Plan nor the execution by the
Company of a Permissible Deferral agreement with any Executive
shall be deemed to be a contract of employment between the
Company and any Participant. Nothing contained herein shall give
any Participant the right to be retained in the employ of the
Company or to interfere with the right of the Company to
discharge any Participant at any time, nor shall it give the
Company the right to require any Participant to remain in its
employ or to interfere with the Participant's right to terminate
his employment at any time.
Section 11.2 Individual Account Plan. If it is determined
that the Plan is not an unfunded deferred compensation plan
maintained primarily for a select group of management or highly
compensated employees as described in Sections 201(2), 301(a)(3)
and 401(a)(1) of ERISA, then the Plan is intended to be an
individual account plan (other than a money purchase plan) as
described in Section 301(a)(8) of ERISA and the vesting schedule
set forth in Article 5 shall be replaced by the vesting schedule
in the then current H&R Block, Inc. Employee Profit Sharing
Plan.
Section 11.3 Release. Any payment of benefits to or for
the benefit of a Participant or a Participant's Beneficiaries
that is made in good faith by the Company in accordance with the
Company's interpretation of its obligations hereunder, shall be
in full satisfaction of all claims against the Company for
benefits under this Plan to the extent of such payment.
Section 11.4 Notices. Any notice permitted or required
under the Plan shall be in writing and shall be hand delivered or
sent, postage prepaid, certified or registered mail with return
receipt requested, to the principal office of the Company, if to
the Company, or to the address last shown on the records of the
Company, if to a Participant or Beneficiary. Any such notice
shall be effective as of the date of hand delivery or mailing.
Section 11.5 Non-Alienation. No benefit payable at any
time under this Plan shall be subject in any manner to
alienation, sale, transfer, assignment, pledge, levy, attachment,
or encumbrance of any kind.
Section 11.6 Tax Liability. The Company may direct the
trustee of the Trust to withhold from any payment of benefits
under the Plan such amounts as the Company determines are
reasonably necessary to pay any taxes (and interest thereon)
required to be withheld or for which the trustee of the Trust may
become liable under applicable law. The Company may also direct
the trustee of the Trust to forward to the appropriate taxing
authority any amounts required to be paid by the Company or the
Trust under the preceding sentence. Any amounts withheld
pursuant to this Section 11.6 in excess of the amount of taxes
due (and interest thereon) shall be paid to the Participant or
Beneficiary upon final determination, as determined by the
Company, of such amount. No interest shall be payable by the
Company to any Participant or Beneficiary by reason of any
amounts withheld pursuant to this Section 11.6.
Section 11.7 Captions. Article and section headings and
captions are provided for purposes of reference and convenience
only and shall not be relied upon in any way to construe, define,
modify, limit, or extend the scope of any provision of the Plan.
Section 11.8 Applicable Law. The Plan and all rights
hereunder shall be governed by and construed according to the
laws of the State of Missouri, except to the extent such laws are
preempted by the laws of the United States of America.
SCHEDULE A - MINIMUM ANNUAL DEFERRAL
Fixed
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Minimum Annual Deferral
All ages $3,000
Variable
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Age Minimum Annual Deferral
Up to 40 $3,000
41 - 50 3,900
51 - 60 5,500
60 - 65 6,400
66 - 70 7,300
SCHEDULE B - ANNUAL ADMINISTRATIVE CHARGES
Annual Administrative
Portfolio Gross Crediting Rate Charge
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Up to 9.99% 1.40%
10.00% to 11.99% 1.00%
12.00% and above 0.00%