Document:

H&R Block, Inc.

Table of Contents

Exhibit 10.3

H&R BLOCK

DEFERRED COMPENSATION PLAN

FOR EXECUTIVES,

AS AMENDED AND RESTATED

 

 

July 1, 2002

 

TABLE OF CONTENTS

									
	ARTICLE 1 DEFERRED COMPENSATION ACCOUNT
		Section 1.1 Establishment of Account
		Section 1.2 Property of Company and Participating Affiliates
	ARTICLE 2 DEFINITIONS, GENDER, AND NUMBER
		Section 2.1 Definitions
		Section 2.2 Gender and Number
	ARTICLE 3 PARTICIPATION
		Section 3.1 Who May Participate
		Section 3.2 Time and Conditions of Participation
		Section 3.3 Termination of Participation
		Section 3.4 Missing Persons
		Section 3.5 Relationship to Other Plans
		Section 3.6 Changes in Employment Status
		Section 3.7 Participation upon Reemployment
	ARTICLE 4 ENTRIES TO THE ACCOUNT
		Section 4.1 Contributions
		Section 4.2 Crediting Rate
		Section 4.3 Crediting Rate Upon Retirement, Disability, Continued Employment After Reaching the Age of 75, Death or Termination of Employment with all Affiliates as a Result of a Change in Control
		Section 4.4 Crediting Rate Upon Resignation or Discharge
	ARTICLE 5 VESTING
		Section 5.1 Participant Deferrals and Vesting Schedule for Company Contributions
		Section 5.2 Exceptions to Vesting Schedule
		Section 5.3 Forfeiture of Nonvested Amounts
	ARTICLE 6 DISTRIBUTION OF BENEFITS
		Section 6.1 Payments After Termination of Employment
		Section 6.2 Payments During Employment
		Section 6.3 Form of Benefits Upon Retirement, Disability or Continued Employment After Reaching the Age of 75
		Section 6.4 Form of Benefits Upon Resignation or Discharge, or Termination of Employment with all Affiliates as a Result of a Change in Control
		Section 6.5 Amount of Benefit
		Section 6.6 Time of Payment
		Section 6.7 Death Benefits
		Section 6.8 Hardships
		Section 6.9 Claims Procedure
		Section 6.10 Alternate Forms of Benefit Distribution
		Section 6.11 Distributions on Plan Termination
		Section 6.12 Cessation of Payments upon Reemployment
	ARTICLE 7 FUNDING
		Section 7.1 Source of Benefits
		Section 7.2 No Claim on Specific Assets
	ARTICLE 8 ADMINISTRATION AND FINANCES
		Section 8.1 Administration
		Section 8.2 Powers of the Compensation Committee
		Section 8.3 Actions of the Compensation Committee
		Section 8.4 Delegation
		Section 8.5 Reports and Records
	ARTICLE 9 AMENDMENTS AND TERMINATION
		Section 9.1 Amendments
		Section 9.2 Termination
		Section 9.3 Accelerated Vesting
	ARTICLE 10 ACCELERATED VESTING
		Section 10.1 Accelerated Vesting
		Section 10.2 Change in Control
	ARTICLE 11 MISCELLANEOUS
		Section 11.1 No Guarantee of Employment
		Section 11.2 Individual Account Plan
		Section 11.3 Release
		Section 11.4 Notices
		Section 11.5 Non-Alienation
		Section 11.6 Tax Liability
		Section 11.7 Captions
		Section 11.8 Applicable Law
	EX-10.2 Deferred Compensation Plan for Directors
	EX-10.3 Deferred Compensation Plan for Executives
	EX-10.9 First Amendment to Executive Survivor Plan
	EX-12 Computation of Ratio of Earnings
	EX-13 Portion of the Annual Report
	EX-21 Subsidiaries of the Company
	EX-23 Consent of PricewaterhouseCoopers LLP

Table of Contents

H&R BLOCK

DEFERRED COMPENSATION PLAN

FOR EXECUTIVES,

AS AMENDED AND RESTATED

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
	 	 	 	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	 	Section 2.1
	Definitions	 	 	 	2	 
	 	Section 2.2
	Gender and Number	 	 	 	8	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 3 PARTICIPATION
	 	 	 	 	 	8	 
	 
	 	 	 	 	 	 	 	 
	 	Section 3.1
	Who May Participate	 	 	 	8	 
	 	Section 3.2
	Time and Conditions of Participation	 	 	 	8	 
	 	Section 3.3
	Termination of Participation	 	 	 	9	 
	 	Section 3.4
	Missing Persons	 	 	 	9	 
	 	Section 3.5
	Relationship to Other Plans	 	 	 	9	 
	 	Section 3.6
	Changes in Employment Status	 	 	 	9	 
	 	Section 3.7
	Participation upon Reemployment	 	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 4 ENTRIES TO THE ACCOUNT
	 	 	 	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	 	Section 4.1
	Contributions	 	 	 	9	 
	 	Section 4.2
	Crediting Rate	 	 	 	11	 
	 	Section 4.3
	Crediting Rate Upon Retirement, Disability,
Continued Employment After Reaching the Age of 75, Death or Termination of Employment with
all Affiliates as a Result of a Change in Control	 	 	 	12	 
	 	Section 4.4
	Crediting Rate Upon Resignation or Discharge	 	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 5 VESTING
	 	 	 	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	 	Section 5.1
	Participant Deferrals and Vesting Schedule for Company Contributions	 	 	 	13	 
	 	Section 5.2
	Exceptions to Vesting Schedule	 	 	 	14	 
	 	Section 5.3
	Forfeiture of Nonvested Amounts	 	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 6 DISTRIBUTION OF BENEFITS
	 	 	 	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	 	Section 6.1
	Payments After Termination of Employment	 	 	 	14	 
	 	Section 6.2
	Payments During Employment	 	 	 	14	 
	 	Section 6.3
	Form of Benefits Upon Retirement, Disability or Continued Employment After
Reaching the Age of 75	 	 	 	15	 
	 	Section 6.4
	Form of Benefits Upon Resignation or Discharge, or
Termination of Employment with all Affiliates as Result of a Change in
Control	 	 	 	16	 

 

Table of Contents

	 	 	 	 	 	 	 	 	 	 
	 	Section 6.5
	Amount of Benefit	 	 	 	18	 
	 	Section 6.6
	Time of Payment	 	 	 	19	 
	 	Section 6.7
	Death Benefits	 	 	 	20	 
	 	Section 6.8
	Hardships	 	 	 	21	 
	 	Section 6.9
	Claims Procedure	 	 	 	22	 
	 	Section 6.10
	Alternate Forms of Benefit Distribution	 	 	 	22	 
	 	Section 6.11
	Distributions on Plan Termination	 	 	 	23	 
	 	Section 6.12
	Cessation of Payments upon Reemployment	 	 	 	23	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 7 FUNDING
	 	 	 	 	 	23	 
	 
	 	 	 	 	 	 	 	 
	 	Section 7.1
	Source of Benefits	 	 	 	23	 
	 	Section 7.2
	No Claim on Specific Assets	 	 	 	23	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 8 ADMINISTRATION AND FINANCES
	 	 	 	 	 	23	 
	 
	 	 	 	 	 	 	 	 
	 	Section 8.1
	Administration	 	 	 	23	 
	 	Section 8.2
	Powers of the Compensation Committee	 	 	 	23	 
	 	Section 8.3
	Actions of the Compensation Committee	 	 	 	24	 
	 	Section 8.4
	Delegation	 	 	 	24	 
	 	Section 8.5
	Reports and Records	 	 	 	24	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 9 AMENDMENTS AND TERMINATION
	 	 	 	 	 	24	 
	 
	 	 	 	 	 	 	 	 
	 	Section 9.1
	Amendments	 	 	 	24	 
	 	Section 9.2
	Termination	 	 	 	24	 
	 	Section 9.3
	Accelerated Vesting	 	 	 	25	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 10 ACCELERATED VESTING
	 	 	 	 	 	25	 
	 
	 	 	 	 	 	 	 	 
	 	Section 10.1
	Accelerated Vesting	 	 	 	25	 
	 	Section 10.2
	Change in Control	 	 	 	25	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 11 MISCELLANEOUS
	 	 	 	 	 	25	 
	 
	 	 	 	 	 	 	 	 
	 	Section 11.1
	No Guarantee of Employment	 	 	 	25	 
	 	Section 11.2
	Individual Account Plan	 	 	 	26	 
	 	Section 11.3
	Release	 	 	 	26	 
	 	Section 11.4
	Notices	 	 	 	26	 
	 	Section 11.5
	Non-Alienation	 	 	 	26	 
	 	Section 11.6
	Tax Liability	 	 	 	26	 
	 	Section 11.7
	Captions	 	 	 	26	 
	 	Section 11.8
	Applicable Law	 	 	 	26	 

 

Table of Contents

H&R BLOCK

DEFERRED COMPENSATION PLAN

FOR EXECUTIVES,

AS AMENDED AND RESTATED

     H&R Block, Inc. (the “Company”) established, effective August 1, 1987, a
nonqualified deferred compensation plan for the benefit of specified Executives
of the Company, and specified affiliates of the Company. This plan became known
as the H&R Block Deferred Compensation Plan for Executives (the “DCP”). The
Company amended the DCP by Amendment No. 1 effective December 15, 1990; by
Amendment No. 2 effective January 1, 1990; by Amendment No. 3 effective
September 1, 1991; by Amendment No. 4 effective January 1, 1994; by Amendment
No. 5 effective May 1, 1994; by Amendment No. 6 effective August 1, 1995; by
Amendment No. 7 effective December 11, 1996; by Amendment No. 8 effective
January 1, 1998; by Amendment No. 9 effective as of January 1, 1997; by
Amendment No. 10 effective in part March 1, 1998 and in part April 1, 1998; and
by Amendment No. 11 effective as of May 15, 1998.

     The Company adopted the H&R Block Supplemental Deferred Compensation Plan
for Executives (the “Supplemental Plan”) effective as of May 1, 1994. The
Company amended said Supplemental 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; by
Amendment No. 5 effective May 1, 1997; by Amendment No. 6 effective in part
March 1, 1998 and in part April 1, 1998; and by Amendment No. 7 effective as of
May 15, 1998.

     The Company combined the DCP and the Supplemental Plan into one plan known
as the H&R Block Deferred Compensation Plan for Executives, as Amended and
Restated (the “Plan”) and made other amendments to the Plan effective January
1, 1999. The Company amended the Plan by Amendment No. 1 effective January 1,
1999; by Amendment No. 2 effective January 1, 2000; by Amendment No. 3
effective September 8, 1999; by Amendment No. 4 effective December 31, 1999;
and by Amendment No. 5 effective January 1, 2001.

     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 by amending and restating the Plan. The Plan shall be amended and
restated effective as of July 1, 2002.

     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 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, except, and to the extent, of any assignment of such
assets to an irrevocable trust.

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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 “Accounting Firm” means an accounting firm in which the
Company has no direct or indirect ownership interest but with which an
Accounting Subsidiary has a contractual relationship in respect of one or
more employees who are employees of both such accounting firm and such
Accounting Subsidiary.
	 
	 	     2.1.3 “Accounting Subsidiary” means an indirect accounting firm
subsidiary of the Company that is involved in the provision of non-attest
accounting services, the management of one or more Accounting Firms,
and/or the ownership of one or more other accounting firm subsidiaries of
the Company.
	 
	 	     2.1.4 “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.)
	 
	 	     2.1.5 “Age” of a Participant means the number of whole years that
have elapsed since the date of the Participant’s birth.
	 
	 	     2.1.6 “Assumed Interest Rate” has the meaning specified in Section
6.5.3.
	 
	 	     2.1.7 “Base Salary” of an Executive for any Deferral Period means
the total salary and wages paid by all Affiliates to such individual
during that Deferral Period, 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 (cash or
noncash). The “Base Salary” of a Production Executive for any Deferral
Period means the total earnings and wages, including any and all
commissions, incentives and bonuses, paid by all Affiliates to such
individual during that Deferral Period, 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. In the case of an individual who is a

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	 	participant in a plan sponsored by an Affiliate which is described in
Section 401(k) of the Code (“401(k) plan”), 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 or
earnings and have the amount of the reduction contributed to the 401(k)
plan on his or her behalf.
	 
	 	     2.1.8 “Beneficiary” or “Beneficiaries” means the persons or trusts
designated by a Participant in writing pursuant to Section 6.7.2 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 6.7.3 of the Plan.
	 
	 	     2.1.9 “Board” means the Board of Directors of the Company as
constituted at the relevant time.
	 
	 	     2.1.10 “Bonus” or “Bonuses” of an Executive 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. For 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 a Production Executive.
	 
	 	     2.1.11 “Change in Control” has the meaning specified in Section 10.2
	 
	 	     2.1.12 “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 immediately preceding date for which a price is available.
	 
	 	     2.1.13 “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.
	 
	 	     2.1.14 “Common Stock” means the common stock of the Company.
	 
	 	     2.1.15 “Company” means H&R Block, Inc.
	 
	 	     2.1.16 “Company Contribution” or “Company Contributions” means the
sum of (i) the Company Matching Contributions described in Section 4.1.2,
and (ii) the additional Company contributions described in Section 4.1.3.
	 
	 	     2.1.17 “Compensation Committee” means the Compensation Committee of
the Board.
	 
	 	     2.1.18 “DCP” means the H&R Block Deferred Compensation Plan for
Executives

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	 	initially adopted by the Company effective as of August 1,
1987, as subsequently amended effective prior to January 1, 1999.
	 
	 	     2.1.19 “Deferral Amount” means (i) in the case of Base Salary, the
amount of Base Salary that a Participant elects to defer each Deferral
Period under a Permissible Deferral, and (ii) in the case of Bonus, the
amount of Bonus that a Participant elects to defer during the Enrollment
Period of October 1 through December 15, effective for the Deferral
Periods of the succeeding Plan Years, under a Permissible Deferral. The
amount of Base Salary included in the Deferral Amount shall be equal to a
percentage of the Participant’s Base Salary that is not less than three
percent (3%) and either (a) not greater than fifty percent (50%) for
Permissible Deferrals of persons who are employed by a Group 1
Participating Affiliate, or (b) not greater than twenty percent (20%) for
Permissible Deferrals of persons who are employed by a Group 2
Participating Affiliate. In the event a Participant who is employed by a
Group 2 Participating Affiliate has completed a Permissible Deferral
election to defer as of January 1, 2002, greater than twenty percent
(20%) of Base Salary and such Participant does not reduce his or her
Permissible Deferral election of Base Salary to twenty percent (20%) or
less during the Enrollment Period of May 15, 2002 through June 14, 2002,
the Participant’s Permissible Deferral election of Base Salary will
automatically be reduced to twenty percent (20%) of Base Salary effective
for the Deferral Period beginning July 1, 2002 and for all Deferral
Periods thereafter, unless the Participant (i) loses eligibility to make
deferrals under the Plan pursuant to Section 3.6, (ii) changes his or her
Permissible Deferral election to a percentage less than twenty percent
(20%) during a subsequent Enrollment Period, or (iii) terminates his or
her Permissible Deferral election pursuant to Section 6.8. The amount of
Bonus or Bonuses included in the Deferral Amount shall be equal to (i) a
flat dollar amount (not greater than the maximum percentage of the Bonus
specified in (ii), below), or (ii) a percentage of the Bonus or Bonuses
paid during the Plan Year that is not less than five percent (5%) and
either (A) not greater than fifty percent (50%) for Permissible Deferrals
of persons who are employed by a Group 1 Participating Affiliate, or (B)
not greater than twenty percent (20%) for Permissible Deferrals of
persons who are employed by a Group 2 Participating Affiliate. In the
event a Participant who is employed by a Group 2 Participating Affiliate
has completed a Permissible Deferral election to defer as of January 1,
2002, greater than twenty percent (20%) of Bonus, such election will
remain in effect for the remainder of the Plan Year that began January 1,
2002 (unless the Participant loses eligibility to make deferrals under
the Plan pursuant to Section 3.6 or terminates his or her Permissible
Deferral election pursuant to Section 6.8), after which Plan Year the
Participant’s Permissible Deferral election of Bonus will automatically
be reduced to twenty percent (20%) of Bonus for the 2003 Plan Year and
all Plan Years thereafter, unless the Participant changes his or her
Permissible Deferral election to a percentage less than twenty percent
(20%) during a subsequent October 1 through December 15 Enrollment
Period. In the case of a Participant who concurrently receives
remuneration from both an Accounting Subsidiary and an Accounting Firm
for providing services to each entity, the calculation of the amount of
the Deferral Amount that the Participant is permitted to elect shall be
made by taking into account the remuneration paid to such Participant by
the Accounting Firm, but the actual deferral under the Plan shall only be
made out of the Base Salary and/or Bonus or
Bonuses paid by the
Accounting Subsidiary and any other Affiliate.
	 
	 	     2.1.20 “Deferral Period” means a six-month period either (i)
beginning January 1 and ending June 30, or (ii) beginning July 1 and
ending December 31.

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	 	     2.1.21 “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.
	 
	 	     2.1.22 “Disabled” or “Disability” with respect to a Participant
shall have the same definition as in the then existing group long-term
disability insurance program sponsored by HRB Management, Inc.
	 
	 	     2.1.23 “Early Retirement Date” of a Participant means the first day
of the first calendar month commencing on or after the date on which (i)
the Participant has reached Age 55 while in the employ of an Affiliate
and (ii) the Participant has completed at least ten (10) “Years of
Service.”
	 
	 	     2.1.24 “Eligibility Committee” means the Chief Executive Officer of
the Company, the Chief Financial Officer of the Company, and the senior
officer of the Company responsible for human resources.
	 
	 	     2.1.25 “Enrollment Period” for a Deferral Period that begins January
1 means the immediately preceding period of October 1 through December
15, inclusive. “Enrollment Period” for a Deferral Period that begins July
1 means the immediately preceding period of May 1 through June 15,
inclusive; provided, however, that for the Deferral Period that begins
July 1, 2002, the Enrollment Period means the immediately preceding
period of May 15 through June 14, inclusive. At its sole and absolute
discretion, the Compensation Committee may grant to a person eligible to
participate in the Plan an “Enrollment Period” consisting of the 30-day
period immediately following the date on which such person is first
employed by a Participating Affiliate.
	 
	 	     2.1.26 “Executive” means a person other than a Production Executive
with substantial responsibility in the management of a Participating
Affiliate employed on a full-time basis by that Participating Affiliate.
	 
	 	     2.1.27 “5-year payout” has the meaning specified in Section 6.4.2.
	 
	 	     2.1.28 “Group A Participant” has the meaning specified in Section 3.1.1.
	 
	 	     2.1.29 “Group B Participant” has the meaning specified in Section 3.1.2.
	 
	 	     2.1.30 “Group 1 Participating Affiliate” means a Participating
Affiliate other than a Group 2 Participating Affiliate.
	 
	 	     2.1.31 “Group 2 Participating Affiliate” means RSM McGladrey, Inc.,
RSM EquiCo, Inc. and their respective U.S. subsidiaries, and such other
Participating Affiliates as may be designated as a Group 2 Participating
Affiliate by the Compensation Committee from time to time.
	 
	 	     2.1.32 “Hours of Service” means hours of service determined in
accordance with the provisions of the Qualified Plan.
	 
	 	     2.1.33 “Initial Payment Period” has the meaning specified in Section
6.5.2.

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	 	     2.1.34 “Matching Contributions” has the meaning specified in Section
4.1.2.
	 
	 	     2.1.35 “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.
	 
	 	     2.1.36 “Overall Payment Period” has the meaning specified in Section
6.5.1.
	 
	 	     2.1.37 “Participant” means an Executive or a Production Executive
who is eligible to participate in the Plan and (i) has elected to
participate in the Plan or (ii) has a Matching Contribution posted to his
or her Account pursuant to Section 2.1.37.
	 
	 	     2.1.38 “Participating Affiliate” or “Participating Affiliates” means
the Company and the following indirect subsidiaries of the Company, each
of which is an Affiliate: HRB Management, Inc., H&R Block Services, Inc.,
Block Financial Corporation, HRB Business Services, Inc., and the
majority-owned U.S. subsidiaries of such indirect subsidiaries; and such
other Affiliates as may be designated as a Participating Affiliate by the
Compensation Committee from time to time.
	 
	 	     2.1.39 “Permissible Deferral” means, with respect to a Deferral
Period, a deferral in that Deferral Period of a Deferral Amount. For all
Participants, the aggregate of all deferrals made under the Plan, the
DCP, and the Supplemental Plan may not exceed one million dollars
($1,000,000.00).
	 
	 	     In the case of a Participant who concurrently receives remuneration
from both an Accounting Subsidiary and an Accounting Firm for providing
services to each entity, the calculation of the amount of the Permissible
Deferral shall be made by taking into account the remuneration paid to
such Participant by the Accounting Firm, but the actual deferral under
the Plan shall only be made out of Base Salary and/or Bonus or Bonuses
paid by the Accounting Subsidiary and any other Affiliate.
	 
	 	     Deferrals may be made from Base Salary for a Deferral Period and/or
from a Bonus or Bonuses applicable to the Plan Year. Deferrals from Base
Salary during a Deferral Period are made in accordance with the most
recent election made by the Participant applicable to Base Salary during
an Enrollment Period. Deferrals from a Bonus or Bonuses are made in
accordance with the most recent election made by the Participant
applicable to Bonuses during an Enrollment Period of October 1 through
December 15 of a Plan Year. Deferral elections must specify (i) the
percentage (stated as an integer) of the deferral that is intended to be
deducted from the Base Salary and, (ii) in the case of a deferral
election made during an Enrollment Period of October 1 through December
15 of a prior Plan Year, the percentage (stated as an integer) or the
flat dollar amount of the deferral that is intended to be deducted from
the Bonus or Bonuses. Deferrals made from the Base Salary shall be made
in installments, as instructed and approved by the Compensation
Committee. Deferrals made from each Bonus shall be made at the time or
times during the applicable Plan Year that the Bonus would otherwise be
paid to the Participant (based upon the
deferral election in effect for the Plan Year when the Bonus was earned
without further contingency). Each installment of a deferral shall be
rounded to the nearest whole dollar amount.
	 
	 	     2.1.40 “Plan” means the “H&R Block Deferred Compensation Plan for
Executives, as Amended and Restated,” as set forth herein and as further
amended

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	 	and/or restated from time to time thereafter.
	 
	 	     2.1.41 “Plan Year” means the calendar year, except for (a)
Permissible Deferrals of Participants elected during the Enrollment
Period of the period between January 4, 1999 and January 31, 1999, (b)
Permissible Deferrals elected to commence on March 1, 1998, (c)
Permissible Deferrals elected during an Enrollment Period described in
Section 2.1.25, and (d) Permissible Deferrals of Group A Participants
elected to commence on or before May 1, 1990. For Permissible Deferrals
of Group A Participants elected to commence on or before May 1, 1990,
“Plan Year” means the 12-month period ending each April 30, through April
30, 1997, the period between May 1, 1997 and December 31, 1997,
inclusive, and the calendar year thereafter. For Permissible Deferrals of
Participants elected to commence on March 1, 1998, “Plan Year” means the
10-month period between March 1, 1998 and December 31, 1998, inclusive,
and the calendar year thereafter. If the Compensation Committee grants to
a person eligible to participate in the Plan a discretionary Enrollment
Period in accordance with Section 2.1.25 and such person submits to the
Company a Permissible Deferrable election during such Enrollment Period,
such Participant’s first “Plan Year” shall be the period (i) beginning on
the first day of the first calendar month commencing not less than 45
days after the date that such Participant is first employed by a
Participating Affiliate, and (ii) ending on December 31 of the calendar
year in which such calendar month falls. For Permissible Deferrals of
Participants elected during the Enrollment Period consisting of the
period between January 4, 1999 and January 31, 1999, inclusive, “Plan
Year” means the 10-month period between March 1, 1999 and December 31,
1999, inclusive, and the calendar year thereafter. Plan Years under the
DCP and Supplemental Plan shall constitute Plan Years under this Plan,
provided that, for all purposes hereunder, a Participant that
participated in both the DCP and the Supplemental Plan simultaneously
shall be considered to have participated in this Plan for only one Plan
Year for each Plan Year of simultaneous participation in the DCP and
Supplemental Plan.
	 
	 	     2.1.42 “Plan Year Payment Period” has the meaning specified in Section
6.5.2.
	 
	 	     2.1.43 “Production Executive” means a person who is employed on a
full-time basis by a Participating Affiliate, receives some part of his
or her compensation in the form of commissions, and is responsible for
managing, overseeing, directing or handling the accounts of clients of
the Participating Affiliate.
	 
	 	     2.1.44 “Qualified Plan” means the H&R Block Retirement Savings Plan
or any successor plan that is intended to satisfy the requirements of
section 401 of the Code.
	 
	 	     2.1.45 “Remainder Payment Period” has the meaning specified in
Section 6.5.2.
	 
	 	     2.1.46 “Standard Form of Benefit” as to any Participant means
semimonthly payments for a fifteen (15) year period.
	 
	 	     2.1.47 “Supplemental Plan” means the H&R Block Supplemental Deferred
Compensation Plan for Executives that was initially adopted by the
Company effective as of May 1, 1994, subsequently amended thereafter, and
combined with the DCP effective January 1, 1999.
	 
	 	     2.1.48 “10-year payout” has the meaning specified in Section 6.4.2.

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	 	     2.1.49 “3-year payout” has the meaning specified in Section 6.4.2.
	 
	 	     2.1.50 “Trust” means the H&R Block, Inc. Deferred Compensation Trust
Agreement.
	 
	 	     2.1.51 “Years of Service” means the number of Plan Years (including
years prior to August 1, 1987) 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 Participant” is an Executive (i) serving as a Vice
President or more senior officer of the Company, or (ii) who was eligible
to participate in the DCP as a “Group A Participant” as of December 31,
1998, as such term was defined in the DCP as of such date, and was a
participant in the DCP or Plan on or before January 1, 2001.
	 
	 	     3.1.2 “Group B Participant” is an Executive or Production Executive
who does not qualify as a Group A Participant, but who is designated by
the Compensation Committee or the Eligibility Committee as eligible to
participate in the Plan. The Eligibility Committee will report to the
Compensation Committee not less frequently than annually the individuals
whom the Eligibility Committee classifies as Group B Participants.

     Section 3.2 Time and Conditions of Participation. An eligible Executive or
Production Executive shall become a Participant only upon (i) (A) the
individual’s completion of a Permissible Deferral election for the succeeding
Deferral Period or Deferral Periods during an Enrollment Period, in accordance
with a form established by the Company from time to time, or (B) in the case of
an eligible Executive or Production Executive who has not completed a
Permissible Deferral election, the Company posting a Matching Contribution to
such individual’s Account, and (ii) compliance with such terms and conditions
as the Compensation Committee may from time to time establish for the
implementation of the Plan, including, but not limited to, any condition the
Compensation 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 Deferral Period during an Enrollment
Period provided the total Permissible Deferral elections do not exceed the
limitation set forth in Section 2.1.39. A Permissible Deferral election made
during an Enrollment Period for a succeeding Deferral Period shall remain in effect for
each Deferral Period subsequent to such succeeding Deferral Period unless (a)
the Participant changes his or her Permissible Deferral election during a
subsequent Enrollment Period (in which case such changed Permissible Deferral
election shall apply to the next succeeding Deferral Period and subsequent
Deferral Periods unless and until the Permissible Deferral election is properly
changed again), (b) the Compensation Committee permits the Participant to
terminate future deferrals or withdraw his or her total Account pursuant to
Section 6.8, (c) total Permissible Deferrals reach the limitation set forth in
Section 2.1.39, or (d) the Participant elects to receive a payment pursuant to
Section 6.2.1.

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     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 (i) payment in full of all benefits to which the Participant or Beneficiary
is entitled under the Plan (unless the Participant has elected to receive
payment in full pursuant to Section 6.2.1) or (ii) 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 or her 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
(i) the last date a payment of said benefit was made, if at least one such
payment was made, or (ii) 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.

     Section 3.6 Changes in Employment Status. If a Participant has a change
in his or her employment responsibilities, title, compensation, and/or
performance, such that the Participant would not qualify for initial
participation in the Plan as a Group A Participant or Group B Participant, as
determined by the Compensation Committee or the Eligibility Committee, (i) the
Participant shall continue to make deferrals in accordance with the
Participant’s Permissible Deferral election for the Deferral Period during
which the change in employment responsibilities, title, compensation, and/or
performance occurs, (ii) the Participant shall not be eligible to make
Permissible Deferrals in Deferral Periods following the Deferral Period during
which the change in employment responsibilities, title, compensation, and/or
performance occurs unless and until the Participant again qualifies for initial
participation as a Group A Participant or a Group B Participant, as determined
by the Compensation Committee or the Eligibility Committee, and (iii) the
Participant shall otherwise continue to participate in the Plan.

     Section 3.7 Participation upon Reemployment. If a Participant terminates
employment with all Affiliates and later becomes reemployed by an Affiliate,
(i) the Participant shall not be eligible to make Permissible Deferrals unless
and until the Participant again qualifies for initial participation as a Group
A Participant or a Group B Participant, as determined by the Compensation
Committee or the Eligibility Committee, and (ii) the Participant shall
otherwise continue to participate in the Plan.

ARTICLE 4 ENTRIES TO THE ACCOUNT

     Section 4.1 Contributions.

		
	 	     4.1.1 Deferrals. During each Deferral Period, if the Participant
elects the fixed rate and/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 dollar amount of Base Salary and
Bonuses to be deferred as designated by the Participant’s

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	 	Permissible
Deferral election in effect for that Deferral Period. Deferrals from Base
Salary each calendar month shall be posted as of the first day of such
month and deferrals from Bonuses shall be posted as of the first day of
the calendar month in which the Bonus would otherwise have been paid to
the Participant.
	 
	 	     During each Deferral Period, if the Participant elects the Common
Stock crediting rate option for measuring the performance 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 Deferral
Period. Deferrals from Base Salary each calendar month (and the
corresponding number of Deferred Compensation Units) shall be posted as
of the first day of such month and deferrals from Bonuses shall be posted
as of the first day of the calendar month in which 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 (i.e., a day on which the Common
Stock is traded on the New York Stock Exchange) of that month. A
Participant may elect to allocate no more than twenty-five percent (25%)
of his or her deferrals to the Common Stock crediting rate. In the event
a Participant has previously elected to allocate more than twenty-five
percent (25%) of his or her deferrals to the Common Stock crediting rate
and such election has not been changed on or before June 30, 2002,
effective July 1, 2002, the Participant’s allocation election will
automatically be changed to reduce such allocation of deferrals to the
Common Stock crediting rate to twenty-five percent (25%) and the amount
previously allocated to the Common Stock crediting rate that exceeds
twenty-five percent (25%) will automatically be allocated to the fixed
rate crediting option.
	 
	 	     4.1.2 Company Matching Contributions. Beginning January 1, 2003,
the Company shall post once each Plan Year to the Account of each
Participant (including an eligible Executive or Production Executive who
becomes a Participant by virtue of such posting) “Matching Contributions”
equal to one hundred percent (100%) of the first five percent (5%) of a
Participant’s Base Salary and Bonus deferred to the Qualified Plan, the
Option One Mortgage Corporation Retirement Plus Plan, or the Plan during
the immediately preceding Plan Year while employed by a Group 1
Participating Affiliate less any employer matching contribution made to
the Qualified Plan or the Option One Mortgage Corporation Retirement Plus
Plan during the immediately preceding Plan Year; provided, however, that
Matching Contributions posted in 2003 shall be determined by considering
only the Participant’s Base Salary and Bonus deferred to the Qualified
Plan, the Option One Mortgage Corporation Retirement Plus Plan, or the
Plan during the period of July 1, 2002 through December 31, 2002 less any
employer matching contribution made to the Qualified Plan or the
Option One Mortgage Corporation Retirement Plus Plan during the period of
July 1, 2002 through December 31, 2002.
	 
	 	     If the Participant elects the Common Stock crediting rate option for
measuring the performance of the Account under Section 4.2, the Company
shall post to the Account of such Participant for each calendar month a
number of Deferred Compensation Units equal to (i) the dollar amount of
Matching Contributions posted to the Account during such month; divided
by (ii) the Closing Price on the first business day of that month.
Deferred Compensation Units attributable to Matching

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	 	Contributions shall
be posted as of the same time as the corresponding Matching
Contributions.
	 
	 	     4.1.3 Additional Company Contributions. Prior to July 1, 2002, the
Company posted once each Plan Year to the Account of each Participant who
was also a participant in the Qualified Plan the difference, if any,
between (a) the amount for that Plan Year which would have been
contributed on behalf of the Participant to the Qualified Plan as an
employer discretionary profit sharing contribution if the Participant had
not made a Permissible Deferral election under the Plan; and (b) the
actual amount for that Plan Year that was contributed on behalf of the
Participant to the Qualified Plan as an employer discretionary profit
sharing contribution.
	 
	 	     4.1.4 Disability. During the first 90-day period in which a
Participant is Disabled, deferrals and Matching Contributions (and, if
applicable, the corresponding number of Deferred Compensation Units)
shall continue to be posted as described in Sections 4.1.1 and 4.1.2. If
a Participant continues to be Disabled after such 90-day period,
deferrals will cease but Matching Contributions will continue for the
balance of the Plan Year during which the Participant became Disabled as
if the Participant’s deferrals had continued. A Participant may resume
deferrals upon his or her return to work.

     Section 4.2 Crediting Rate. Gains or losses shall be posted to the
Account on a daily basis in accordance with the Participant’s election of
investment options which will be a reference for measuring the performance of
the Account, as modified, if applicable, by Section 4.3 or 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. Statements
of Account balances shall be provided no less frequently than on a quarterly
basis. The Participant shall elect from among 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 Participant may elect to allocate no more than twenty-five percent
(25%) of his or her deferrals or Account to the Common Stock crediting rate.
On a monthly basis, Participants may elect to reallocate all or any portion of
their Account balances among the available investment options, including those
funds selected by the Company for the variable rate investment option, provided
said reallocations are in whole number increments, and further provided that
said reallocations will not result in an allocation of more than twenty-five
percent (25%) of their Account balances to the Common Stock crediting rate. If
as of July 1, 2002, a Participant’s Account has an allocation of greater than
twenty-five percent (25%) of the Account to the Common Stock crediting rate,
the Participant will be given the opportunity to reallocate that portion of the
Account allocated to the Common Stock crediting rate that exceeds twenty-five
percent (25%) of the total Account balance to another crediting rate option as
of July 1, 2002. If the Participant does not elect to reallocate such excess,
such excess will automatically be reallocated to the fixed rate
crediting option as of July 1, 2002. If as of January 1, 2003, or any January
1 thereafter, a Participant’s Account has an allocation of greater than
twenty-five percent (25%) of the Account to the Common Stock crediting rate,
the portion of the Account allocated to the Common Stock crediting rate that
exceeds twenty-five percent (25%) of the total Account balance will
automatically be reallocated to the fixed rate crediting option as of the
January 1 of the year in which such reallocation was made.

     Participants may change their crediting rate elections during an
Enrollment Period or once each calendar month by giving the Company notice of
such change in accordance with a method and/or procedures approved by the
Company for that purpose. Upon receipt of such

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notice submitted with enrollment
materials during an Enrollment Period, the crediting rate change shall be made
as of the first day of the Deferral Period to which the Enrollment Period
relates. Upon receipt of such notice other than in connection with enrollment
materials, the Company will effect the change on the first day of the calendar
month immediately following the month in which such notice was received. Any
change in crediting rate made in accordance with such notice procedures will
govern the Participant’s Account balance and future deferrals occurring after
the effective date of such change.

		
	 	     4.2.1 Fixed Rate. If a Participant elects a fixed rate, the interest
will be compounded on a daily basis and posted to the Participant’s
Account daily at an effective annual yield equal to the rate of ten-year
United States Treasury notes in effect at the time as determined below.
The rate will be determined four times each Plan Year and for each Plan
Year quarter will be the rate in effect as of the last day of the
calendar quarter immediately prior to the calendar quarter to which it
applies, as published in the Wall Street Journal or as determined by the
Chief Financial Officer of the Company.
	 
	 	     Through July 1, 2002, for Permissible Deferrals elected under the
DCP and commencing prior to January 1, 1995, the effective annual yield
for the fixed rate crediting option was equal to one hundred twenty
percent (120%) of the ten-year rolling average rate of ten-year United
States Treasury notes. The ten-year rolling average rate was the rate in
effect as of September 30 of the Plan Year immediately prior to the Plan
Year to which it applied, as published in the Wall Street Journal or as
determined by the Chief Financial Officer of the Company. Effective July
1, 2002, such effective annual yield for the fixed rate crediting option
is eliminated and replaced with an effective annual yield equal to the
rate of ten-year United States Treasury notes, as determined in
accordance with the first paragraph of this Section 4.2.1.
	 
	 	     4.2.2 Variable Rate. 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. 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 whole number increments of
the Account.
	 
	 	     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 4.3 Crediting Rate Upon Retirement, Disability, Continued
Employment After Reaching the Age of 75, Death or Termination of Employment
with all Affiliates as a Result of a Change in Control. If a Participant (i)
terminates employment with all Affiliates at or after Normal Retirement Date or
Early Retirement Date, (ii) is Disabled, or (iii) continues

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employment after
reaching the Age of 75 and has completed ten (10) Years of Service, 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 with all
Affiliates, 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 in Control, gains and losses to that
Participant’s Accounts shall be credited as described in Section 4.2 up to, but
not after, the date of the Change in Control.

     Section 4.4 Crediting Rate Upon Resignation or Discharge.

		
	 	     4.4.1 For a Participant whose employment with all Affiliates
terminates on or after August 1, 1995, but before the Normal Retirement
Date or the Early Retirement Date, for reasons other than death,
Disability or a Change in Control, gains and losses shall be credited to
that Participant’s Account as described in Section 4.2 up to the date of
termination of employment, and the crediting shall continue after such
date for those Participants who elected a 10-year payout, a 5-year
payout, or a 3-year payout, as such terms are defined in Section 6.4.2.
If a Participant elected to be paid in a lump sum, there shall be no
further crediting to the Participant’s Account following the date of
termination of employment.
	 
	 	     4.4.2 For a Participant whose employment with all Affiliates
terminated prior to August 1, 1995, and before the Normal Retirement Date
or the Early Retirement Date, for reasons other than death, Disability or
a Change in Control, gains and losses to that Participant’s Accounts that
represent completed deferral cycles shall be credited as described in
Section 4.2 up to the date of termination of employment. Gains and losses
to that Participant’s Accounts that do not represent completed deferral
cycles and gains and losses after the date of termination of employment
shall be credited at an interest rate equal to the average of (i) the
interest rate set by the Chief Financial Officer of the Company in his or
her discretion for the Plan Year in which the termination of employment
occurs, 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, and (ii) the
respective interest rates so set by the Chief Financial Officer of the
Company for each of the two Plan Years immediately prior to the Plan Year
in which the termination of employment occurs.

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 interest in the Company Matching Contributions
under Section 4.1.2 and the Company Contributions described in Section 4.1.3
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%	

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	5
	 	 	 	 	50	%
	6
	 	 	 	 	60	%
	7
	 	 	 	 	70	%
	8
	 	 	 	 	80	%
	9
	 	 	 	 	90	%
	10
	 	 	 	 	100	%

For purposes of crediting Years of Service under the foregoing 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 in Control as defined in Section 10.2. Participants who have
attained Age 65 prior to the date on which they first became a Participant 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 a Participant in the Plan and who have
completed ten (10) Years of Service, vest according to the following formula:

Years of Service since initial Plan participation date

65 minus Participant’s Age on initial Plan participation date.

     Section 5.3 Forfeiture of Nonvested Amounts. Upon a Participant’s
termination of employment with all Affiliates for any reason other than death,
the nonvested portion of the Participant’s Account shall be forfeited to the
Company. If such Participant becomes reemployed by an Affiliate, the forfeited
benefits shall not be reinstated.

ARTICLE 6 DISTRIBUTION OF BENEFITS

     Section 6.1 Payments After Termination of Employment. Generally, payments
of benefits to a Participant shall be made by the Company only upon
termination, voluntary or involuntary, of the Participant’s employment with all
Affiliates, except to the extent, (i) the provisions of Section 6.2.1 or
Section 6.2.2 apply, (ii) a Participant is disabled, (iii) the provisions of
Section 6.3.2 apply, or (iv) the provisions of Section 6.8 apply.

     Section 6.2 Payments During Employment.

		
	 	     6.2.1 On-Demand Payment. Prior to termination, voluntary or
involuntary, of a Participant’s employment with all Affiliates, the
Participant may elect, on a form provided by the Compensation Committee
and delivered by the Participant to the Company, to receive an immediate
lump-sum payment of all or a portion of the one hundred percent (100%)
vested balance of said Participant’s Account valued as of the day
immediately prior to the day such election is approved, reduced by a
penalty equal to ten percent (10%) of the elected payment amount, which
penalty shall be forfeited to the Company. If a Participant elects to
receive a payment under this Section 6.2.1, the Participant’s deferrals
of Base Salary and Bonus will cease immediately and the Participant may
not enter into a new Permissible Deferral election until the beginning of
the second Plan Year following the Plan Year in which such election was
made. Any payment elected under this Section 6.2.1 will be made to the
Participant in cash as soon as administratively practicable.

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	 	     6.2.2 In-Service Payments. A Participant as of January 1, 2001 may
elect during the Enrollment Period for the 2001 Plan Year, and an
individual who becomes a Participant as of any date after January 1, 2001
may elect during the Enrollment Period immediately prior to such
individual’s first day of participation in the Plan, to receive payment
on one or more selected future dates of all or a portion (stated in whole
number percentages or dollar amounts) of the one hundred percent (100%)
vested balance of such Participant’s Account attributable to deferrals
and Matching Contributions made after January 1, 2001. Any such payments
stated in whole number dollar amounts must be no less than $500. A
Participant may make an election under this Section 6.2.2 only on a form
provided by the Compensation Committee and delivered by the Participant
to the Company. Any such future payment(s) may begin no earlier than
during the fourth Plan Year after the Plan Year during which the election
was made, and only one such payment may be made in any Plan Year. A
Participant may cancel or postpone a scheduled payment elected under this
Section 6.2.2 provided that such cancellation or postponement is made on
a form provided by the Compensation Committee and delivered by the
Participant to the Company and is made no later than the end of the
second Plan Year prior to the Plan Year during which such payment is
scheduled to be made. A scheduled payment under this Section 6.2.2 may
be postponed only one time. A scheduled payment that is postponed may
subsequently be cancelled in accordance with this Section 6.2.2. The
actual distribution amount of any payment under this Section 6.2.2 shall
be determined as of the first day of the month preceding or coincident
with the applicable payment date and shall be paid to the Participant in
cash as soon as administratively practicable after such determination.
The actual distribution amount of a payment elected under this Section
6.2.2 may be less than the amount elected. An election under this
Section 6.2.2 shall only be honored by the Compensation Committee while
the Participant is an active employee of the Company or its Affiliates
and shall not be reinstated upon the Participant’s reemployment by an
Affiliate after termination of employment with all Affiliates.

     Section 6.3 Form of Benefits Upon Retirement, Disability or Continued
Employment After Reaching the Age of 75.

		
	 	     6.3.1 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 12 months prior to such termination
of employment, the Participant may petition the Compensation Committee
for, and the Compensation Committee may approve at such time, an optional
form of benefit.
	 
	 	     6.3.2 Continued Employment After Reaching the Age of 75. If a
Participant reaches the Age of 75 while in the employ of an Affiliate,
and has completed ten (10) Years of Service, payment of benefits shall
commence in the first pay period of the first calendar quarter that
begins at least forty-five (45) days after the date on which the
Participant reaches the Age of 75. Payments from the Account shall be
made in accordance with the Standard Form of Benefit. However, no less
than 12 months prior to the date on which the Participant reaches the Age
of 75, the Participant may petition the Compensation Committee for, and
the Compensation Committee may approve at such time, an optional form of
benefit.

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	 	     6.3.3 Lump-Sum Payment. Notwithstanding any other provisions of the Plan,
a Participant who terminates employment on or after Normal Retirement
Date or Early Retirement Date, and a Participant who reaches the Age of
75 while in the employ of an Affiliate 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 aggregate of the balances of said
Participant’s Accounts 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 Compensation Committee under this Section 6.3. The
penalty shall be equal to ten percent (10%) of the aggregate of the
balances of such Accounts if the election is made before a Change in
Control and shall be equal to five percent (5%) of the aggregate of the
balances of such Accounts if the election is made after a Change in
Control. However, the penalty shall not apply if the Compensation
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 Compensation 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 Compensation 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 equal to the rate of one-year United States Treasury notes in
effect as of September 30 of the Plan Year immediately prior to the Plan
Year in which such refund is paid, as published in the Wall Street
Journal or as determined by the Chief Financial Officer of the Company.
The Compensation 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 6.4 Form of Benefits Upon Resignation or Discharge, or Termination
of Employment with all Affiliates as a Result of a Change in Control.

		
	 	     6.4.1 Upon a Participant’s termination of employment with all
Affiliates before Normal Retirement Date or Early Retirement Date, but
following a Change in Control, payments from the Account shall be paid in
a lump sum within forty-five (45) days after the date of the termination
of employment.
	 
	 	     6.4.2 If a Change in Control has not occurred, for Participants who
terminate employment with all Affiliates on or after August 1, 1995, but
before the Normal Retirement Date or the Early Retirement Date, for
reasons other than Disability or death, payment(s) from the Account shall
be in the form of (a) semimonthly payments over a three-year period (a
“3-year payout”), or (b) a lump sum, as elected by the Participant in
accordance with Section 6.4.4, provided that, for such Participants in
the Plan as of September 8, 1999, who (i) had elected to receive payments
from the Account in the form of (x) semimonthly payments over a 10-year
period (a “10-year payout”), or

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	 	(y) semimonthly payments over a five-year
period (a “5-year payout”), pursuant to Section 6.4.2 (as in effect
immediately prior to September 8, 1999), and (ii) do not make a different
election after September 8, 1999, pursuant to Section 6.4.4, payments
from the Account shall be in the form of such elected 10-year payout or
5-year payout, as the case may be.
	 
	 	     6.4.3 If a Change in Control has not occurred, for Participants who
terminated employment with all Affiliates prior to August 1, 1995, but
before the Normal Retirement Date or the Early Retirement Date, for
reasons other than Disability or death, payment(s) from the Account shall
be in the form of (a) semi-monthly payments over a three-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.
	 
	 	     6.4.4 An election under Section 6.4.2 for a 3-year payout or a
lump-sum payout shall be made by the Participant at the time of the
Participant’s first Permissible Deferral election, and may be changed by
the Participant no more than once in every 12-consecutive-month period
thereafter. If no election under Section 6.4.2 is made by a Participant
eligible to make such an election, payment from the Account shall be in
the form of a lump sum. If a Participant participated in the Plan prior
to September 8, 1999, and made an election for a 10-year payout or a
5-year payout pursuant to Section 6.4.2, as such Section existed prior to
September 8, 1999, such Participant may elect a 3-year payout or a
lump-sum payout during or after the first Enrollment Period commencing
after September 8, 1999, provided that any such Participant may not
change such election more than once in every 12-consecutive-month period
after such new election, and, provided further, that once any such
Participant has elected a 3-year payout or a lump-sum payout pursuant to
this Section 6.4.4, such Participant may not again elect a 10-year payout
or a 5-year payout. Upon termination of employment before the Normal
Retirement Date or the Early Retirement Date for reasons other than death
or disability, payouts from the Account (with respect to all Permissible
Deferral elections made by the Participant) shall be in accordance with
the most recent election made pursuant to this Section 6.4.4 (or, if
applicable, pursuant to Section 6.4.2, as such Section existed prior to
September 8, 1999) not less than 12 months prior to such termination of
employment.
	 
	 	     6.4.5 If an eligible Participant has elected a 10-year payout or a
5-year payout pursuant to Section 6.4.2 (as such Section 6.4.2 (then
Section 6.3.2) existed prior to September 8, 1999), or if an eligible
Participant has elected a 3-year payout pursuant to Section 6.4.4, and
the amount of each semimonthly installment, as initially calculated, is
less than $500 (such calculation to be accomplished by amortizing the
aggregate of the Participant’s Account balances over the payment period
using no crediting rate), the form of payment(s) for such Participant
shall be a 5-year payout in lieu of an elected 10-year payout (unless the
amount of each semimonthly installment under a 5-year payout, as so
calculated, is also less than $500, in which case the form of payment
will be a single lump sum), or a lump sum in lieu of an elected 5-year
payout, or a lump sum in lieu of an elected 3-year payout, as the case
may be.
	 
	 	     6.4.6 Notwithstanding any other provisions of the Plan, an eligible
Participant who (1) elects a 10-year payout, a 5-year payout, or a 3-year
payout, and any such payout is not automatically converted to a lump sum
pursuant to Section 6.4.5, and (2) terminates employment before the
Normal Retirement Date or the Early Retirement

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	 	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 aggregate of the balances of
said Participant’s Accounts reduced by a penalty, which shall be
forfeited to the Company, in lieu of payments in accordance with the
10-year payout or the 5-year payout, whichever is applicable. The penalty
shall be equal to ten percent (10%) of the aggregate of the balances of
such Accounts if the election is made before a Change in Control and
shall be equal to five percent (5%) of the aggregate of the balances of
such Accounts if the election is made after a Change in Control. However,
the penalty shall not apply if the Compensation 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
Compensation 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 Compensation
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 equal to the rate of one-year United
States Treasury notes in effect as of September 30 of the Plan Year
immediately prior to the Plan Year in which such refund is paid, as
published in the Wall Street Journal or as determined by the Chief
Financial Officer of the Company. The Compensation 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 6.5 Amount of Benefit.

		
	 	     6.5.1 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 “Overall Payment Period”).
	 
	 	     6.5.2 Except as provided in Section 6.5.4, the amount of each
installment payment shall be level during the portion of the Overall
Payment Period ending on December 31 of the Plan Year in which benefit
payments commence (the “Initial Payment Period”), during each complete
Plan Year of the Overall Payment Period thereafter (a “Plan Year Payment
Period”), and during any remaining period of the Overall Payment Period
following the last Plan Year Payment Period (the “Remainder Payment
Period”), but will vary from one such portion of the Overall Payment
Period to the next. If a Participant was receiving benefits pursuant to
Section 6.3 (then Section 6.2) as of August 1, 1995, payments due on and
after January 1, 1996 shall be made in accordance with this Section 6.5.2
and with Section 6.5.3.
	 
	 	     6.5.3 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

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	 	Period (a) using an assumed
interest rate equal to the rate of one-year United States Treasury notes
for each Participant receiving payments of benefits pursuant to Section
6.3 (then Section 6.2) prior to September 8, 1999, 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 in the Wall Street Journal or as determined by the
Chief Financial Officer of the Company (the “Assumed Interest Rate”), and
(b) using an assumed interest rate of zero percent (0%) for all other
Participants. 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 Plan Year immediately prior to such Plan Year Payment
Period, subtracting the benefit payments made during the portion of such
preceding Plan Year following November 30, and amortizing the difference
over the remaining Overall Payment Period (x) using the Assumed Interest
Rate for each Participant receiving payments of benefits pursuant to
Section 6.3 (then Section 6.2) prior to September 8, 1999, and (y) using
an assumed interest rate of zero percent (0%) for all other Participants.
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 Plan Year immediately prior to the Remainder Payment
Period, subtracting the benefit payments made during the portion of such
preceding Plan 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 in crediting rates shall be paid to the Participant
in a single payment within six months after the last day of the Remainder
Payment Period.
	 
	 	     6.5.4 If the Participant terminates employment with all Affiliates
prior to August 1, 1995, and receives benefits pursuant to Section 6.4.3,
semimonthly payments for Permissible Deferrals that satisfy a completed
deferral cycle shall be level during the entire Overall Payment Period
and shall be calculated using the balance in the Account at the
commencement of benefit payments, and amortizing such balance over three
years at the crediting rate determined in accordance with
Section 4.4.2.
	 
	 	     6.5.5 Generally, the Account shall continue to be credited during
the Overall Payment Period with gains and losses as provided in Section
4.3. However, if a Participant receives benefits pursuant to Section 6.4
(other than pursuant to Section 6.4.1), the Account shall be credited
with gains and losses as provided in Section 4.4. Except as provided
otherwise, if a Participant dies, Section 6.7 shall apply.
	 
	 	     6.5.6 Notwithstanding anything in this Plan to the contrary, the
Compensation Committee may, in its sole discretion, (i) increase or
reduce any assumed interest rate set forth in this Section 6.5 and any
such assumed interest rate, as so adjusted, shall be effective for
calculating level semimonthly installments for Participants whose benefit
payments commence after the date of such adjustment, and (ii) change the
date set forth in Section 6.5.3 on which the balance in the Participant’s
Account is to be determined for purposes of calculating the amount of
each level payment for each Plan Year Payment Period and each Remainder
Payment Period, and any such revised date shall be effective for
calculating level semimonthly installments for the Plan Year Payment
Period or the Remainder Payment Period beginning on or after the
effective date of such revision.

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     Section 6.6 Time of Payment. Generally, benefit payments to a Participant
shall commence in the first pay period of the calendar quarter that begins at
least forty-five (45) days after the date of termination of employment.
Notwithstanding the preceding sentence, if a Participant elected to be paid in
a lump sum, the benefit payment shall be made within forty-five (45) days after
the date of 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.

     With respect to Permissible Deferral elections made under the DCP prior to
January 1, 1997, a Participant was permitted to 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 made such an election and did not
revoke such election pursuant to a one-time opportunity during the Enrollment
Period prior to the Plan Year commencing January 1, 1998, the Participant shall
receive benefit payments in accordance with said election, provided that the
Compensation 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. No elections to defer
commencement of benefits shall be permitted under this Plan with respect to
Permissible Deferrals commencing on or after January 1, 1998.

     Section 6.7 Death Benefits. In the event a Participant dies after benefit
payments have commenced (other than payments made pursuant to Section 6.2 or
6.8), the remaining payments, if any, shall be paid to the Participant’s
Beneficiary in the same manner such benefits were being paid to the Participant
at the time of death and would have been paid to the Participant had the
Participant survived. In the event a Participant dies before benefit payments
have commenced (other than payments made pursuant to Section 6.2 or 6.8),
benefit payments shall be paid to the Participant’s Beneficiary in the same
manner described in Section 6.4.1, if a Change in Control occurred prior to the
Participant’s death, or in the
manner described in Section 6.4.2 (subject to Section 6.4.5), if a Change in
Control did not occur prior to the Participant’s death, in either case without
regard to the Age of the Participant at the time of death and the number of
Years of Service completed by the Participant at the time of death or whether
the Participant was Disabled at the time of death, and notwithstanding the
death of the Participant. The Account shall be credited from the Participant’s
date of death through the end of the Overall Payment Period at a 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 September 30 of the Plan
Year immediately prior to the Plan Year to which it applies, as published in
the Wall Street Journal or as determined by the Chief Financial Officer of the
Company. A Beneficiary may petition the Compensation Committee for an
alternative method of payment. 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 6.3.3 or
Section 6.4.6, whichever is applicable, 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 or she
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

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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 completion
of the benefits payable under the first paragraph of this Section 6.7.

		
	 	     6.7.1 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.
	 
	 	     6.7.2 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 Compensation Committee and
shall only be effective upon delivery to the Company. In the event a
Participant is married at the time he or she designates a beneficiary
other than his or her spouse, such designation will not be valid unless
the Participant’s spouse consents in writing to such designation. 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.
	 
	 	     6.7.3 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 6.7.1, 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 6.8 Hardships. Upon the application of any Participant, the
Compensation Committee, in accordance with its uniform, non-discriminatory
policy, may permit such Participant to terminate future deferrals or to
withdraw his or her vested 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 periodic (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 Compensation 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 Compensation
Committee in accordance with uniform rules. The term financial hardship shall
include the need for funds to:

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meet uninsured medical expenses for the
Participant or his or her dependents, meet a significant uninsured casualty
loss for the Participant or his or her dependents, and meet other catastrophes
of a “sudden and serious nature.”

     The Compensation 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
equal to the rate of one-year United States Treasury notes in effect as of
September 30 of the Plan Year immediately prior to the Plan Year in which
application for such withdrawal is made, as published in the Wall Street
Journal or as determined by the Chief Financial Officer of the Company.
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 after the date of the termination or withdrawal.

     Section 6.9 Claims Procedure. The Compensation Committee shall notify a
Participant in writing within ninety (90) days of the Participant’s written
application for benefits of his or her eligibility or non-eligibility for
benefits under the Plan. If the Compensation 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 or
her 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 or her claim reviewed.
If the Compensation Committee determines that
there are special circumstances requiring additional time to make a decision,
the Compensation 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 Compensation Committee to be not eligible for benefits, or if
the Participant believes that he or she is entitled to greater or different
benefits, he or she shall have the opportunity to have his or her claim
reviewed by the Compensation Committee by filing a petition for review with the
Compensation Committee within sixty (60) days after receipt by him or her of
the notice issued by the Compensation Committee. Said petition shall state the
specific reasons the Participant believes he or she is entitled to benefits or
greater or different benefits. Within sixty (60) days after receipt by the
Compensation Committee of said petition, the Compensation Committee shall
afford the Participant (and his or her counsel, if any) an opportunity to
present his or her position to the Compensation Committee orally or in writing,
and said Participant (or his or her counsel) shall have the right to review the
pertinent documents, and the Compensation 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 Compensation Committee,
but notice of this deferral shall be given to the Participant.

     Section 6.10 Alternate Forms of Benefit Distribution. Participants shall
have the right to petition the Compensation Committee to request methods of
benefit distribution other than those provided to Participants pursuant to this
Article 6.

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     Section 6.11 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.

     Section 6.12 Cessation of Payments upon Reemployment. If a Participant
who is receiving semi-monthly installment payments pursuant to Section 6.3.1 or
6.4 (or is due to receive a lump sum payment pursuant to Section 6.3.3 or 6.4)
becomes re-employed by an Affiliate, such semi-monthly installments shall cease
immediately (or such lump sum payment shall be cancelled) upon re-employment
and no payments shall restart until the next termination, voluntarily or
involuntarily, of the Participant’s employment with all Affiliates, except to
the extent, (i) the provisions of Section 6.2.1 or Section 6.2.2 apply, (ii) a
Participant is disabled, (iii) the provisions of Section 6.3.2 apply, or (iv)
the provisions of Section 6.8 apply. Upon the next termination, voluntarily or
involuntarily, of the Participant’s employment with all Affiliates, payments
shall begin again, not taking into account any period before re-employment
during which the Participant received payments for the purpose of determining
the Overall Payment Period.

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 or her 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
Compensation 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 the Compensation Committee. In addition to the other
powers granted under the Plan, the Compensation 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.

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Not in limitation, but in amplification of the foregoing and of the authority
conferred upon the Compensation Committee in Section 8.1, the Company
specifically intends that the Compensation 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 Compensation 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 Compensation Committee.

     Section 8.3 Actions of the Compensation Committee. Except as modified by
the Company, all determinations, interpretations, rules, and decisions of the
Compensation 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 Compensation Committee, or any officer
designated by the Compensation 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 Compensation 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 Compensation Committee and those to
whom the Compensation 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.
Notwithstanding anything in this Section 9.1 to the contrary, the Compensation
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
Compensation Committee may, in its discretion, (i) amend the Plan to reduce or
eliminate the penalty described in Section 6.3.3 and/or the penalty described
in Section 6.4.6, in accordance with the provisions of such Section 6.3.3
and/or such Section 6.4.6, (ii) amend the Plan to increase or reduce any
assumed interest rate set forth in Section 6.5, in accordance with the
provisions of Section 6.5.6, or (iii) amend the Plan to change the date set
forth in Section 6.5.3 on which the balance in the Participant’s Account is to
be determined for purposes of calculating the amount of each level payment for
each Plan Year Payment Period and each Remainder Payment Period, in accordance
with the provisions of Section 6.5.6.

     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

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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.

     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 Compensation
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
in 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 Participant 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

25

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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 or her 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 set forth in Section 9.3.

     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.

26

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	Dated:	June 10, 2002
	 	 	H&R BLOCK, INC.
	 	
	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	/s/ Mark A. Ernst
	 	 	 	 	 	 	

	 	 	 	 	 	 	Mark A. Ernst
	 	 	 	 	 	 	President and Chief Executive Officer

27H&R Block, Inc.

 

Exhibit 10.9

FIRST AMENDMENT

TO THE

H&R BLOCK, INC. EXECUTIVE SURVIVOR PLAN

     H&R Block, Inc. (the “Company”) adopted the amended and restated H&R
Block, Inc. Executive Survivor Plan (the “Plan”), effective as of January 1,
2001. Section 4.1 of the Plan provides that the Company may amend the Plan
from time to time. In accordance with the provisions of that Section,
effective July 1, 2002, the Plan is amended as follows:

     1.     The
following definition is added to Article 1 immediately after the
definition of “Designated Subsidiary” and immediately before the definition of
“Entry Date”:

     “Eligibility Committee. ‘Eligibility Committee’ means the Chief Executive
Officer of the Company, the Chief Financial Officer of the Company, and the
senior officer of the Company responsible for human resources.”

     2.     The definition of “Participant” in Article 1 is amended by (A) deleting
the words “or the Affiliate” in clause (i) thereof, and (B) inserting the words
“or the Eligibility Committee” immediately after the words “Board of Directors”
and immediately before the words “as eligible to” in clause (v) thereof.

     3.     Section 2.9.1 is amended by deleting clause (e) in its entirety and
replacing it with the following new clause (e):

     “(e) a change in the Participant’s employment responsibilities, title,
compensation, and/or performance such that he or she is no longer a
Participant, as defined in Article 1 of the Plan, or selected as eligible to
participate in the Plan by the Compensation Committee of the Company’s Board of
Directors or the Eligibility Committee,”.

     4.     Except as modified in this First Amendment, the Plan shall remain in
full force and effect, including the Company’s right to amend or terminate the
Plan as set forth in Section 4.1 of the Plan.

	 	 	 
	 	 	
H&R BLOCK, INC.
	 
	Dated:	June 10, 2002
	
By:  /s/ Mark A. Ernst
	 	
	

	 	 	Mark A. Ernst
	 	 	President and Chief Executive Officer

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