1
EXHIBIT 10(B)
AMENDMENT NO. 6
TO THE
H&R BLOCK SUPPLEMENTAL
DEFERRED COMPENSATION PLAN FOR EXECUTIVES
H&R BLOCK, INC. (the "Company") adopted the H&R Block Supplemental
Deferred Compensation Plan for Executives (the "Plan") effective as of May 1,
1994. The Company amended said Plan by Amendment No. 1 effective September 7,
1994; by Amendment No. 2 effective August 1, 1995; by Amendment No. 3 effective
December 11, 1996; by Amendment No. 4, effective January 1, 1998; and by
Amendment No. 5, effective January 1, 1997. The Company continues to retain
the right to amend the Plan, pursuant to action by the Company's Board of
Directors. The Company hereby exercises that right. This Amendment No. 6 is
effective as of March 1, 1998, except for the provisions of Paragraphs 16, 17 ,
which are effective as of April 1, 1998.
AMENDMENT
1. The first sentence of the introductory paragraph of the Plan is
replaced with the following new sentence:
"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 the following indirect subsidiaries of the Company: HRB
Management, Inc., H&R Block Tax Services, Inc., Block
Financial Corporation, Option One Mortgage Corporation, and
the U.S. subsidiaries of such indirect subsidiaries; and
such other entities as may be designated by the Company from
time to time."
2. The following new Section 2.1.1a is added to the Plan immediately
after Section 2.1.1 and before Section 2.1.2:
"2.1.1a 'Account Executive' means a person who has the
title of Account Executive, is employed on a full-time basis
by a Participating Affiliate, and is responsible for
managing, overseeing, directing or handling the accounts of
clients of the Participating Affiliate."
3. Section 2.1.4 of the Plan, as previously amended, is further
amended by replacing said Section 2.1.4 with the following new Section 2.1.4:
"2.1.4 'Annual Deferral Amount' means the amount of
Base Salary, and/or Bonus that a Participant elects to defer
each Plan Year under a Permissible Deferral. For those
individuals first eligible to participate in the Plan prior
to March 1, 1998, the amount of Base Salary included in the
Annual Deferral Amount shall be equal to a percentage of the
Participant's Base Salary that is not less than three
percent (3%) and not greater than thirty-five percent (35%),
and the amount of Bonus or Bonuses included in the Annual
Deferral Amount shall be equal to (i) a flat dollar amount,
expressed in one thousand dollar ($1,000) increments, or
(ii) a percentage of the Bonus or Bonuses paid during the
Plan Year that is not less than five
1
2
percent (5%) and not greater than one hundred percent (100%),
expressed in five percent (5%) increments. For those individuals
first eligible to participate in the Plan on or after March 1,
1998, the amount of Base Salary included in the Annual Deferral
Amount shall be equal to a percentage within such parameters as are
established by the Committee in its sole and absolute discretion,
and the amount of Bonus or Bonuses included in the Annual Deferral
Amount shall be equal to a percentage or flat dollar amount within
such parameters as are established by the Committee.
4. Section 2.1.5 of the Plan, as previously amended, is further amended
(i) by replacing the words "a Participant" in the first sentence with the words
"an Executive"; (ii) by inserting the following sentence after the first
sentence thereof:
"The 'Base Salary' of an Account Executive for any Plan Year
means the total earnings and wages, including any and all
commissions, incentives and bonuses, paid by all Affiliates
to such individual during that Plan Year, 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 earnings 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, 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.";
and (iii) by inserting the phrase "or earnings" after the phrase "reduce his or
her salary" in the last sentence of said Section.
5. Section 2.1.8 of the Plan is amended (i) by replacing the words "a
Participant" in the first sentence with the words "an Executive"; and (ii) by
adding the following new sentence to the end of this Section:
"For the purposes of this Plan, the terms Bonus and Bonuses
specifically exclude any and all types of commissions,
incentives or bonuses paid by any Affiliate to an Account
Executive."
6. Section 2.1.19 of the Plan is amended by adding the following new
sentence to the end of said Section:
"For the Plan Year commencing on March 1, 1998, 'Enrollment
Period' means the immediately preceding period of January 1
through February 20, 1998."
7. Section 2.1.23 of the Plan is replaced with the following new
Section 2.1.23:
"2.1.23 'Participant' means an Executive or an Account
Executive who is eligible to participate in the Plan and has
elected to participate in the Plan."
2
3
8. Section 2.1.24 of the Plan is replaced with the following new Section
2.1.24:
"2.1.24 '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., Block Financial Corporation,
Option One Mortgage Corporation, 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."
9. Section 2.1.25 of the Plan, as previously amended, is further amended
by replacing the second and third sentences of the first paragraph thereof with
the following new sentences:
"For Executives, the aggregate of all deferrals may not
exceed two hundred eighty percent (280%) of the Executive's
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 Executive first became eligible to
participate in the Plan. For Account Executives, the
aggregate of all deferrals may not exceed two hundred eighty
percent (280%) of the Account Executive's aggregate earnings
and wages paid by all Affiliates to such individual during
the twelve-month period ending on September 30 of the
calendar year immediately preceding the Plan Year in which
the Account Executive first becomes eligible to participate
in the Plan. For purposes of the two immediately preceding
sentences, such annual salary and wages and such annual
earnings and wages shall include and exclude the same items
of remuneration as are included or excluded from annual
salary and wages and annual earnings and wages in the
definition of Base Salary.";
10. Section 2.1.27 of the Plan is amended by inserting the following
sentence after the second sentence thereof:
"For Permissible Deferrals elected to commence on March 1,
1998, 'Plan Year' means the ten-month period between March
1, 1998 and December 31, 1998, inclusive, and the calendar year
thereafter."
11. Section 3.1 of the Plan is amended by inserting the words "or
Account Executives" after the word "Executives" therein.
12. Section 3.2 of the Plan, as previously amended, is further amended
(i) by inserting the words "or Account Executive" after the word "Executive";
and (ii) by deleting the comma and phrase ", and subject to the provisions of
Sections 3.6 and 3.7" from the last sentence of said Section.
13. Section 3.3 of the Plan, as previously amended, is further amended
(i) by inserting the word "or" in between subsections (a) and (b) thereof;
(ii) by replacing the comma at the end of subsection (b) with a period; (iii) by
deleting the word "or" in between subsections (b) and (c) hereof; and (iv) by
deleting subsection (c) thereof.
3
4
14. Section 3.6 of the Plan is amended by replacing it with the
following new Section 3.6:
"Section 3.6 Changes in Employment Status. If a
Participant has a change in his or her employment
responsibilities, title and/or compensation, such that the
Participant would not qualify for initial participation in
the Plan, (i) the Participant shall continue to make
deferrals in accordance with the Participant's Permissible
Deferral election for the Plan Year during which the change
in employment responsibilities, title or compensation
occurs, (ii) the Participant shall not be eligible to make
Permissible Deferrals in Plan Years following the Plan Year
during which the change in employment responsibilities,
title and/or compensation occurs unless and until the
Participant again qualifies for initial participation in the
Plan, and (iii) the Participant shall otherwise continue to
participate in the Plan."
15. Section 3.7 of the Plan is deleted therefrom in its entirety.
16. Section 4.1.1 of the Plan, as previously amended, is further amended
by replacing the phrase "of the following calendar month" in the last sentence
thereof with the phrase "that month".
17. Section 4.1.2 of the Plan, as previously amended, is further amended
by replacing the phrase "of the following calendar month" in the first sentence
of the second paragraph thereof with the phrase "that month".
18. Section 4.3.1 of the Plan, as previously amended, is further amended
(i) by deleting the phrase "which immediately follows the calendar month" in
the first sentence thereof; (ii) by deleting the phrase "the first calendar
month that immediately follows" in the second sentence thereof; and (iii) by
replacing the last sentence thereof with the following new sentence:
"Except for distributions in the form of a lump sum and
distributions pursuant to Section 6.6.2, a Participant's
Account shall be valued for each payment period specified in
Section 6.4 that follows the Plan Year in which benefit
payments commence as of November 30 of the calendar year
immediately preceding each such payment period, as described
in Section 6.4.2."
19. Section 4.3.2 of the Plan is amended by deleting the phrase "which
immediately follows the calendar month" from the first sentence thereof and by
adding the following new sentence at the end thereof:
"Except for distributions in the form of a lump sum, a
Participant's Account shall be valued for each payment
period specified in Section 6.4 that follows the Plan Year
in which benefit payments commence as of November 30 of the
calendar year immediately preceding each such payment
period, as described in Section 6.4.2."
20. Section 6.4.2 of the Plan is amended by replacing it with the
following new Section 6.4.2:
4
5
"6.4.2 The amount of each level payment for the Initial
Payment Period, if any, shall be calculated using the
balance in the Account as of the beginning of the Initial
Payment Period and amortizing such balance over the
remaining Overall Payment Period using an assumed interest
rate equal to the rate of one-year United States Treasury
notes, said rate to be determined once each Plan Year and to
be the rate in effect as of the September 30 immediately
preceding the payment period to which it applies, as
published by Solomon Brothers, Inc., or any successor
thereto, or as determined by the Chief Financial Officer of
the Company (the "Assumed Interest Rate"). The amount of
each level payment for each Plan Year Payment Period shall
be calculated by taking the balance in the Account as of
November 30 of the calendar year immediately prior to such
Plan Year Payment Period, subtracting the benefit payments
made during the portion of such calendar year following
November 30, and amortizing the difference over the
remaining Overall Payment Period using the Assumed Interest
Rate. The amount of each level payment for the Remainder
Payment Period, if any, shall be calculated by taking the
balance in the Account as of November 30 of the calendar
year immediately prior to the Remainder Payment Period,
subtracting the benefit payments made during the portion of
such calendar year following November 30, and amortizing the
difference over the Remainder Payment Period using an assumed
interest rate of zero percent (0%) per annum. If the actual
crediting rate for the Remainder Payment Period is more than
zero percent, the additional gain resulting from the
difference shall be paid to the Participant in a single
payment within six months after the last day of the
Remainder Payment Period."
21. Section 6.4.3 of the Plan is deleted therefrom in its entirety and
Section 6.4.4 is redesignated as Section 6.4.3.
22. Except as modified in this Amendment No. 6, the Plan, as previously
amended, shall remain in full force and effect, including the Company's right
to amend or terminate the Plan as set forth in Article 9 of the Plan.
H&R BLOCK, INC.
By: /s/ Frank L. Salizzoni
------------------------------------------
Its: President and Chief Executive Officer
------------------------------------------
5