EXHIBIT 10(f)
H&R BLOCK
SUPPLEMENTAL DEFERRED COMPENSATION PLAN
FOR EXECUTIVES
H&R BLOCK
SUPPLEMENTAL DEFERRED COMPENSATION PLAN
FOR EXECUTIVES
TABLE OF CONTENTS
Page
ARTICLE 1 DEFERRED COMPENSATION ACCOUNT . . . . . . . . . . 1
Section 1.1 Establishment of Account . . . . . . . . 1
Section 1.2 Property of Company and Participating
Affiliates . . . . . . . . . . . . . . . 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 . . 6
Section 3.3 Termination of Participation . . . . . . 6
Section 3.4 Missing Persons . . . . . . . . . . . . . 6
Section 3.5 Relationship to Other Plans . . . . . . . 7
ARTICLE 4 ACCOUNTS . . . . . . . . . . . . . . . . . . . . . 7
Section 4.1 Contributions . . . . . . . . . . . . . . 7
Section 4.2 Valuation of Accounts . . . . . . . . . . 8
Section 4.3 Valuation Upon Retirement, Death, Disability
or Termination of Employment with all
Affiliates as a Result of a Change in
Control . . . . . . . . . . . . . . . . . 8
Section 4.4 Valuation Upon Resignation or Discharge . 8
ARTICLE 5 VESTING . . . . . . . . . . . . . . . . . . . . . 9
Section 5.1 Vesting in Participant Deferrals . . . . 9
Section 5.2 Vesting in Company Contributions . . . . 9
ARTICLE 6 DISTRIBUTION OF BENEFITS . . . . . . . . . . . . . 9
Section 6.1 Payments After Termination of Employment 9
Section 6.2 Form of Benefits Upon Retirement or
Disability . . . . . . . . . . . . . . . 9
Section 6.3 Form of Benefits Upon Resignation or
Discharge, or Termination of Employment with
all Affiliates as a Result of Change in
Control . . . . . . . . . . . . . . . . . 10
Section 6.4 Amount of Benefit . . . . . . . . . . . . 11
Section 6.5 Time of Payment . . . . . . . . . . . . . 11
Section 6.6 Death Benefits . . . . . . . . . . . . . 11
Section 6.7 Hardships . . . . . . . . . . . . . . . . 13
Section 6.8 Claims Procedure . . . . . . . . . . . . 14
Section 6.9 Alternate Forms of Benefit Distribution . 15
Section 6.10 Distributions on Plan Termination . . . . 15
ARTICLE 7 FUNDING . . . . . . . . . . . . . . . . . . . . . 15
Section 7.1 Source of Benefits . . . . . . . . . . . 15
Section 7.2 No Claim on Specific Assets . . . . . . . 15
ARTICLE 8 ADMINISTRATION AND FINANCES . . . . . . . . . . . 16
Section 8.1 Administration . . . . . . . . . . . . . 16
Section 8.2 Powers of Committee . . . . . . . . . . . 16
Section 8.3 Actions of the Committee . . . . . . . . 16
Section 8.4 Delegation . . . . . . . . . . . . . . . 16
Section 8.5 Reports and Records . . . . . . . . . . . 16
ARTICLE 9 AMENDMENTS AND TERMINATION . . . . . . . . . . . . 17
Section 9.1 Amendments . . . . . . . . . . . . . . . 17
Section 9.2 Termination . . . . . . . . . . . . . . . 17
ARTICLE 10 MISCELLANEOUS . . . . . . . . . . . . . . . . . . 18
Section 10.1 No Guarantee of Employment . . . . . . . 18
Section 10.2 Individual Account Plan . . . . . . . . . 18
Section 10.3 Release . . . . . . . . . . . . . . . . . 18
Section 10.4 Notices . . . . . . . . . . . . . . . . . 18
Section 10.5 Non-Alienation . . . . . . . . . . . . . 18
Section 10.6 Tax Liability . . . . . . . . . . . . . . 18
Section 10.7 Captions . . . . . . . . . . . . . . . . 19
Section 10.8 Applicable Law . . . . . . . . . . . . . 19
H&R BLOCK
SUPPLEMENTAL DEFERRED COMPENSATION PLAN
FOR EXECUTIVES
H&R Block, Inc. (the "Company") hereby establishes,
effective May 1, 1994, a nonqualified deferred compensation plan
for the benefit of specified Executives of the Company, and of
the following indirect subsidiaries of the Company: HRB
Management, Inc., H&R Block Tax Services, Inc., CompuServe
Incorporated, Block Financial Corporation, MECA Software, Inc.,
and the U.S. subsidiaries of such indirect subsidiaries; 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 Supplemental
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 established under
Section 1.1 and 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
greater than 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 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 or her salary and have the amount of
the reduction contributed to the 401(k) plan on his or her
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.
2.1.9 "Change in Control" means a "Change in
Control" (as defined in Section 1.01-2 of the Trust
Agreement) of the Participating Affiliate by whom the
Participant is employed.
2.1.10 "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.
2.1.11 "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.
2.1.12 "Committee" means the Compensation Committee
of the Company's Board.
2.1.13 "Common Stock" means the common stock of the
Company.
2.1.14 "Company" means H&R Block, Inc., a Missouri
corporation.
2.1.15 "Completed Deferral Cycle" means total
deferrals made and completed as specified by the Participant
in his or her Permissible Deferral election for four (4),
five (5), six (6), seven (7) or eight (8) consecutive Plan
Years.
2.1.16 "Deferred Compensation Unit" means a unit
equal in value to one share of Common Stock and posted to a
Participant's Account for the purpose of measuring the
benefits payable under the Plan.
2.1.17 "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.
2.1.18 "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.
2.1.19 "Effective Date" means the date on which this
Plan became effective, i.e., May 1, 1994.
2.1.20 "Enrollment Period" for a Plan Year
commencing on January 1 means the immediately preceding
period of October 1 through December 15. For the Plan Year
beginning May 1, 1994, "Enrollment Period" means the period
from April 4 through April 29, 1994.
2.1.21 "Executive" means a person with substantial
responsibility in the management of a Participating
Affiliate employed on a full-time basis by that
Participating Affiliate.
2.1.22 "Hours of Service" means hours of service
determined in accordance with the provisions of the then
existing H&R Block Profit Sharing Retirement Plan.
2.1.23 "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.
2.1.24 "Participant" means an Executive who is
eligible to participate in the Plan and has elected to
participate in the Plan.
2.1.25 "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, 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.
2.1.26 "Permissible Deferral" means, with respect to
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 under this Plan may not exceed
two hundred eighty percent (280%) of Base Salary.
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. Deferral elections
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.
2.1.27 "Plan" means the "H&R Block Supplemental
Deferred Compensation Plan for Executives" as set forth
herein and as amended or restated from time to time.
2.1.28 "Plan Year" means the calendar year;
provided, however, that the initial Plan Year shall begin
May 1, 1994, and end December 31, 1994.
2.1.29 "Primary Plan" means the "H&R Block Deferred
Compensation Plan for Executives" established August 1,
1987, as such plan may be amended from time to time.
2.1.30 "Standard Form of Benefit" as to any
Participant means semimonthly cash payments for a fifteen
(15) year period.
2.1.31 "Trust" means the trust established pursuant
to the Trust Agreement.
2.1.32 "Trust Agreement" means the H&R Block, Inc.
Deferred Compensation Trust Agreement effective December 13,
1988, as it may be amended from time to time.
2.1.33 "Years of Service" means the number of
consecutive Plan Years (including calendar 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 Executives who are Participants in the Primary Plan
and whose aggregate deferrals under the Primary Plan have been
completed during a prior Plan Year.
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 limitations set
forth in Section 2.1.26.
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. 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 ACCOUNTS
Section 4.1 Contributions.
Section 4.1.1 Deferrals. The Company shall post to
the Account of each 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
each 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 during each calendar month shall
be calculated by dividing: (a) the dollar amount deferred
during that month; by (b) the Closing Price on the first
business day of the following calendar month.
Section 4.1.2 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
such Plan Year that would have been contributed on behalf of
the Participant to any profit sharing plan that 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 4.1.3 Disability. During the first 90-day
period in which a Participant is Disabled, deferrals shall
continue to be posted as described in Section 4.1.1. If a
Participant continues to be Disabled after such 90-day
period, posting of deferrals will be suspended. A
Participant may resume deferrals upon his or her return to
work.
Section 4.2 Valuation of Accounts. A 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 4.3 Valuation Upon Retirement, Death, Disability or
Termination of Employment with all Affiliates as a Result of a
Change in Control. If a Participant terminates employment at or
after Normal Retirement Date or Early Retirement Date, or is
Disabled, his or her Account shall be valued as described in
Section 4.2. If a Participant dies prior to termination of
employment, his or her Account shall be valued as of date of
death, as described in Section 4.2. If a Participant terminates
employment with all Affiliates before Normal Retirement Date or
Early Retirement Date as a result of a Change in Control, the
Participant's Account, regardless of whether or not such Accounts
represent Completed Deferral Cycles, shall be valued as described
in Section 4.2 up to the date of the Change in Control and
earnings on such Accounts after the date of the Change in Control
shall be credited 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 Valuation 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 in
Control, the portion of the Participant's Account that
represents Completed Deferral Cycles shall be valued as
described in Section 4.2 up to the date of termination of
employment. Earnings after the date of posting for the
portion of the Account that does not represent Completed
Deferral Cycles and earnings after the date of termination
of employment for the portion of the Account that represents
Completed Deferral Cycles shall be credited 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 Permissible Deferrals 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 Vesting in Participant Deferrals. Participant
deferrals pursuant to Section 4.1.1 are fully vested immediately.
Section 5.2 Vesting in Company Contributions. A
Participant's interest in any Company contributions described in
Section 4.1.2 shall vest according to the vesting schedule
contained in the profit sharing plan to which such Company
contributions relate.
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 a Participant who terminates
employment on or after his or her 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, elect to receive an immediate lump-
sum cash payment of the value 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 value of such Account
if the election is made before a Change in Control and shall be
equal to five percent (5%) of the value 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 filing 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,
or Termination of Employment with all Affiliates as a Result of
Change in Control. Upon a Participant's termination of
employment with all Affiliates following a Change in Control,
payments from the Account shall be made in a lump-sum cash
payment within ninety (90) days after date of the termination of
employment. If a Change in 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 cash payments over a
three (3) year period for Permissible Deferrals that satisfy a
Completed Deferral Cycle, or (b) a lump sum for 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. 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 benefit 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
payment 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 valued during
the payment period as provided in Section 4.3; provided, however,
that if a Participant receives benefits pursuant to Section 6.3,
the Account shall be valued as provided in Section 4.4.1. Except
as provided otherwise, if a Participant dies, Section 6.6 shall
apply.
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 valued 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 in Control, the Account shall
continue to be valued as provided in Section 4.3. If such
benefits were payable pursuant to Section 6.2, earnings on
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,
N.A., Kansas City, Missouri, 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.
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 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 of
Kansas City, N.A., Kansas City, Missouri, or any successor
thereto.
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),
earnings on 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, N.A., Kansas City, Missouri 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 predeceased 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
withdrawal. 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
hardship 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,
earnings on a Participant's deferrals shall be valued at the
lesser of (a) the amount as described in Section 4.2; or (b) an
amount calculated using 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, N.A.,
Kansas City, Missouri, 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.
Notwithstanding 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 affected
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 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 written 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 Agreement, 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 Article 5 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.
ARTICLE 10 MISCELLANEOUS
Section 10.1 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 10.2 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.
Section 10.3 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 10.4 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 10.5 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 10.6 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 10.6 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 10.6.
Section 10.7 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 10.8 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.
H&R BLOCK, INC.
Date: April 29, 1994 By/s/ Thomas M. Bloch
----------------------------
Thomas M. Bloch
Its President and
Chief Executive Officer