HR Block 2006 Annual Report Download - page 41

modify, supplement, suspend or terminate the Seasonal Plan, amount equal to the excess of the fair market value of the shares
provided that no amendment, supplement, modification, on the exercise date over the option price of the shares. The
suspension or termination in any manner affects any stock Company generally will be entitled to a deduction for purposes of
options theretofore granted thereunder without the consent of determining its corporate income tax obligations in an amount
the recipient thereof. The Seasonal Plan may not be amended to equal to the total amount of ordinary income recognized by the
(i) increase the aggregate number of shares of Common Stock optionee. Upon disposition of the shares by the seasonal
that may be issued (unless such increase is a result of a change in employee, the optionee will recognize long-term or short-term
the capital structure of the Company), (ii) materially modify the capital gain or loss, as the case may be, equal to the difference
requirements as to eligibility for participation in the Seasonal between the amount realized on such disposition and the basis
Plan, or (iii) materially increase the benefits accruing to for such shares, which basis includes the amount previously
participants under the Seasonal Plan. Unless the amendment is recognized by the optionee as ordinary income.
approved, the Seasonal Plan will terminate on December 31, 2006, EFFECTIVE DATE AND VOTE REQUIRED –The amendment
if not terminated earlier by the Board of Directors. shall become effective immediately upon the date of its approval
FEDERAL INCOME TAX CONSEQUENCES –Federal income by the shareholders. If the amendment is not approved, the
tax consequences of the Seasonal Plan and the options granted Seasonal Plan will expire according to its terms on
thereunder are as described below. The following information is December 31, 2006.
not a definitive explanation of the tax consequences of the The affirmative vote of the holders of a majority of the shares
options. Recipients should consult their own tax advisors with of Common Stock represented and entitled to vote on this
respect to the tax consequences inherent in the ownership and/or proposal at the annual meeting of shareholders will constitute
exercise of the options, and the ownership and disposition of the approval of the amendment to the Seasonal Plan.
underlying securities. THE BOARD OF DIRECTORS RECOMMENDS A VOTE
The recipient of a stock option under the Seasonal Plan is not ‘‘FOR’’ THE APPROVAL OF THE AMENDMENT TO THE 1999
deemed to have received any income at the time the option is STOCK OPTION PLAN FOR SEASONAL EMPLOYEES, AND
granted; however, the recipient will recognize taxable ordinary PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED
income in the year any part of the option is exercised in an IN THE ABSENCE OF INSTRUCTIONS TO THE CONTRARY.
H&R BLOCK 2006 Proxy Statement
13