SEPARATION AND RELEASE AGREEMENT
Exhibit 10.32
This SEPARATION AND RELEASE AGREEMENT (the “Agreement”) is entered into as of the ___day of
November, 2006, by and between HRB Management, Inc., a Missouri corporation (“HRB”) and Xxxxxxxx X.
Xxxxxx (“Xx. Xxxxxx”).
WHEREAS Xx. Xxxxxx and HRB agree to terminate his employment with HRB,
WHEREAS Xx. Xxxxxx and HRB intend the terms and conditions of this Agreement to govern all
issues related to Xx. Xxxxxx’x employment and separation from HRB,
NOW, THEREFORE, in consideration of the covenants and mutual promises contained in this
Agreement, Xx. Xxxxxx and HRB agree as follows:
1. Termination Date. HRB and Xx. Xxxxxx are parties to an Employment Agreement dated
February 2, 2004 (the “Employment Agreement”). The parties agree to terminate Xx. Xxxxxx’x
employment pursuant to Section 1.07(b) of the Employment Agreement. The parties further agree to
treat Xx. Xxxxxx’x termination of employment as a “Qualifying Termination,” as defined in the
Employment Agreement, for purposes of determining Xx. Xxxxxx’x xxxxxxxxx compensation and benefits
as set forth in Section 2 of this Agreement. The parties also agree that the termination is not
the result of the elimination of the position of Senior Vice President, Chief Legal Officer of HRB.
Block shall continue to employ Xx. Xxxxxx on active payroll and be paid his current salary at
HRB’s regular pay intervals until January 2, 2007, upon which date Xx. Xxxxxx’x employment under
the Employment Agreement will terminate (the “Termination Date”). Xx. Xxxxxx will continue to work
full-time until November 10, 2006. After that date and until the Termination Date, Xx. Xxxxxx is
expected to be available for consultation with respect to matters within the scope of his
employment. From the date of this Agreement through the Termination Date, Xx. Xxxxxx will
appropriately respond to and cooperate with HRB management. The parties agree to waive
any notice of termination required by the Employment Agreement.
2. Severance Benefits. HRB agrees to provide Xx. Xxxxxx with compensation and
benefits under the H&R Block Severance Plan (“Severance Plan”) as follows:
a. Release Agreement. Xx. Xxxxxx and HRB agree that this Agreement
constitutes the release agreement required under the Severance Plan.
x. Xxxxxxxxx Pay. Subject to the terms of the Severance Plan, HRB will pay to
Xx. Xxxxxx $659,200.00 (which amount represents an aggregate of Xx. Xxxxxx’x (A) annual base
salary of $412,000.00 and (B) target short-term incentive compensation for HRB’s fiscal year
2007 of $247,200.00, each determined as of the date of this Agreement) over the 12-month
period beginning on the Termination Date in semi-monthly equal installments of $27,466.66
(less required tax withholdings and elected benefit withholdings).
c. Employee Benefits. Xx. Xxxxxx will remain eligible to participate in the
various health and welfare benefit plans maintained by HRB in accordance with the terms
of the Severance Plan. After his severance benefits cease, Xx. Xxxxxx may be eligible
to continue coverage of group health plan benefits under COBRA. Conversion privileges may
also be available for other benefit plans.
d. Stock Options. Those portions of any outstanding incentive stock options
(“ISO Stock Options”) and nonqualified stock options (“NQ Stock Options”) to purchase shares
of HRB’s common stock granted to Xx. Xxxxxx by HRB that are scheduled to vest between the
Termination Date and July 2, 2008 (based solely on the time-specific vesting schedule
included in the applicable stock option agreement) shall vest and become exercisable as of
the Termination Date. A list of the ISO Stock Options and NQ Stock Options vested as of the
date of this Agreement and to become vested pursuant to this Section is attached as Exhibit
A. No later than the Termination Date, Xx. Xxxxxx will complete an election form on which
he will elect the time period during which he may exercise his ISO and NQ Stock Options.
Xx. Xxxxxx acknowledges and agrees that he is solely responsible for the income tax
treatment of his ISO and NQ Stock Options election, and that HRB has not provided him any
personal tax advice about this election. HRB encourages Xx. Xxxxxx to seek independent tax
advice regarding this election.
e. Restricted Shares. All restrictions on any shares of HRB’s common stock
awarded to Xx. Xxxxxx by HRB (“Restricted Shares”) that would have lapsed absent a
termination of employment in accordance with their terms by reason of time between the
Termination Date and July 2, 2008 shall terminate (and shall be fully vested) as of the
Termination Date. Any shares unaffected by the operation of this Section shall be forfeited
to HRB on the Termination Date. A list of the Restricted Shares vested as of the date of
this Agreement and to become vested pursuant to this Section is attached as Exhibit B.
f. Performance Shares. On the Termination Date, Xx. Xxxxxx shall forfeit to
HRB all Performance Shares because HRB awarded him those Performance Shares pursuant to a
cycle which is less than one year old.
g. Outplacement Services. HRB will pay directly to Right Management Services
for twelve (12) months of outplacement services to be provided to Xx. Xxxxxx.
h. Forfeiture. Xx. Xxxxxx agrees that the compensation and benefits described
in this Section will cease and no further compensation and benefits will be provided to him
if he violates any of the post-employment obligations under Section 7 of this Agreement, or
Articles Two and Three of the Employment Agreement.
3. Vacation. HRB will pay Xx. Xxxxxx for his accrued, unused 2007 vacation within 21
days of the Termination Date. Xx. Xxxxxx will not receive any other payment for vacation or
holidays.
4. Xx. Xxxxxx Representations. Xx. Xxxxxx represents and acknowledges to HRB that (a)
HRB has advised him to consult with an attorney of his choosing; (b) he has had twenty-one (21)
days to consider the waiver of his rights under the Age Discrimination in Employment Act of 1967,
as amended (“ADEA”) prior to signing this Agreement; (c) he has disclosed to HRB any information in
his possession concerning any conduct involving HRB or its subsidiaries or affiliates
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(“Affiliates”) that he has any reason to believe involves any false claims to any governmental
agency, or is or may be unlawful, or violates HRB policy in any respect; (d) the consideration
provided him under this Agreement is sufficient to support the releases provided by him under this
Agreement; and (e) he has not filed any charges, claims or lawsuits against HRB involving any
aspect of his employment which have not been terminated as of the date of this Agreement. Xx.
Xxxxxx understands that HRB regards the representations made by him as material and that HRB is
relying on these representations in entering into this Agreement.
5. Effective Date of this Agreement. Xx. Xxxxxx shall have seven (7) days from the
date he signs this Agreement to revoke his consent to the waiver of his rights under the ADEA in
writing addressed and delivered to the HRB official executing this Agreement on behalf of HRB which
action shall revoke this Agreement. If Xx. Xxxxxx revokes this Agreement, all of its provisions
shall be void and unenforceable. If Xx. Xxxxxx does not revoke his consent, this Agreement will
take effect on the day after the end of this revocation period (the “Effective Date”).
6. Resignation as an Officer. As of November 10, 2006, Xx. Xxxxxx will resign (a) as
Senior Vice President, Chief Legal Officer of HRB and (b) from any other officer and director
positions held with HRB and any Affiliates. Xx. Xxxxxx will execute the resignations attached as
Exhibit C on minute book paper contemporaneously with his execution of this Agreement.
7. Surviving Employment Agreement Obligations. Xx. Xxxxxx and HRB agree that the
termination of Xx. Xxxxxx’x employment will not affect the following provisions of the Employment
Agreement which impose continuing obligations on him following termination of the Employment
Agreement: (a) Article Two, “Confidentiality” — Sections 2.01, 2.02; (b) Article Three,
“Non-Hiring; Non-Solicitation; No Conflicts; Non-Competition” — Sections 3.01, 3.02, 3.03, 3.05,
3.06; and (c) Article Four, “Miscellaneous” — Section 4.03. Xx. Xxxxxx acknowledges and agrees
that he will fully comply with these obligations. HRB may agree to waive any of Xx. Xxxxxx’x
surviving post-employment obligations under the Employment Agreement. Any such waiver must be in
writing and signed by Xx. Xxxxxx and the Chief Executive Officer of HRB. Any payments made to Xx.
Xxxxxx under this Agreement will immediately cease upon any such waiver.
8. Business Expenses and Commitments. Until the Termination Date, HRB will promptly
pay directly, or reimburse Xx. Xxxxxx for, all business expenses to the extent such expenses are
paid or incurred by Xx. Xxxxxx in accordance with HRB’s travel policy. As of the Termination Date,
Xx. Xxxxxx agrees that he will have submitted required documentation for all outstanding expenses
on his HRB corporate credit card. Xx. Xxxxxx agrees that he will not initiate, make, renew,
confirm or ratify any contracts or commitments for or on behalf of HRB or any Affiliate, nor will
he incur any expenses on behalf of HRB or any Affiliate without HRB’s prior written consent.
9. Xx. Xxxxxx Release. Xx. Xxxxxx and his heirs, assigns, and agents release, waive,
and discharge HRB and Released Parties as defined below from each and every claim, action, or right
of any sort, known or unknown, arising on or before the Effective Date.
a. The foregoing release includes, but is not limited to, any claim of discrimination
on the basis of race, sex, pregnancy, religion, marital status, sexual orientation, national
origin, handicap or disability, age, veteran status, special disabled veteran status, or
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citizenship status or any other category protected by law; any other claim based on a
statutory prohibition or requirement; any claim arising out of or related to an express or
implied employment contract, any other contract affecting terms and conditions of
employment, or a covenant of good faith and fair dealing; any tort claims, any personal gain
with respect to any claim arising under the qui tam provisions of the False Claims Act, 31
U.S.C. 3730, and any claims to attorney fees or expenses. Xx. Xxxxxx acknowledges and
agrees that this release does not prohibit him from filing a charge of discrimination with
the Equal Employment Opportunity Commission. HRB and Xx. Xxxxxx agree that the foregoing
release does not include and Xx. Xxxxxx is not releasing any indemnification rights that he
may be entitled to as an officer and/or director of HRB and its Affiliates as applicable.
b. Xx. Xxxxxx represents that he understands the foregoing release, that rights and
claims under the Age Discrimination in Employment Act of 1967, as amended, are among the
rights and claims against HRB he is releasing, and that he understands that he is not
releasing any rights or claims arising after the Effective Date.
c. Xx. Xxxxxx further agrees never to xxx HRB or cause HRB to be sued regarding any
matter within the scope of the above release. If Xx. Xxxxxx violates this release by suing
HRB or causing HRB to be sued, Xx. Xxxxxx agrees to pay all costs and expenses of defending
against the suit incurred by HRB, including reasonable attorney fees except to the extent
that paying such costs and expenses is prohibited by law or would result in the invalidation
of the foregoing release.
d. Released Parties are HRB, all current and former parents, subsidiaries, related
companies, partnerships or joint ventures, and, with respect to each of them, their
predecessors and successors; and, with respect to each such entity, all of its past,
present, and future employees, officers, directors, stockholders, owners, representatives,
assigns, attorneys, agents, insurers, employee benefit programs (and the trustees,
administrators, fiduciaries and insurers of such programs), and any other person acting by,
through, under or in concert with any of the persons or entities listed in this paragraph,
and their successors.
10. HRB Release. HRB and the Released Parties release, waive, and discharge
Xx. Xxxxxx and his heirs, assigns, and agents from each and every known claim, action, or right of
any sort arising on or before the Effective Date. This release includes any and all known claims
which arise as a result of Xx. Xxxxxx’x employment relationship with HRB.
11. Breach by Xx. Xxxxxx. HRB’s obligations to Xx. Xxxxxx after the
Effective Date are contingent on his obligations under this Agreement. Any material breach of this
Agreement by Xx. Xxxxxx will result in the immediate cancellation of HRB’s obligations under this
Agreement and of any benefits that have been granted to Xx. Xxxxxx by the terms of this Agreement
except to the extent that such cancellation is prohibited by law or would result in the
invalidation of the foregoing release.
12. Xx. Xxxxxx Availability. Xx. Xxxxxx agrees to make himself reasonably available to
HRB to respond to requests by HRB for information pertaining to or relating to the Company and/or
its Affiliates, agents, officers, directors or employees that may be within the knowledge of Mr.
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Xxxxxx. Xx. Xxxxxx will cooperate fully with HRB in connection with any and all existing or
future litigation or investigations brought by or against HRB or any of its Affiliates, agents,
officers, directors or employees, whether administrative, civil or criminal in nature, in which and
to the extent HRB deems Xx. Xxxxxx’x cooperation necessary. HRB will reimburse Xx. Xxxxxx for
reasonable out-of pocket expenses incurred as a result of such cooperation. Nothing herein shall
prevent Xx. Xxxxxx from communicating with or participating in any government investigation.
13. Non-Disparagement. Xx. Xxxxxx agrees, subject to any obligations he may have
under applicable law, that he will not make or cause to be made any statements that disparage, are
inimical to, or damage the reputation of HRB or any of its Affiliates, agents, officers, directors,
or employees. In the event such a communication is made to anyone, including but not limited to
the media, public interest groups and publishing companies, it will be considered a material breach
of the terms of this Agreement and Xx. Xxxxxx will be required to reimburse HRB for any and all
compensation and benefits (other than those already vested) paid under the terms of this Agreement
and all commitments to make additional payments to Xx. Xxxxxx will be null and void. HRB President
and Chief Executive Officer Xxxx X. Xxxxx agrees, during the time he is employed by HRB and subject
to any obligations he may have under applicable law, that he will not make or cause to be made any
statements that disparage, are inimical to, or damage the reputation of Xx. Xxxxxx.
14. Return of Company Property. Xx. Xxxxxx agrees that as of the Termination Date he
will have returned to HRB any and all HRB property or equipment in his possession, including but
not limited to, any computer, printer, fax, phone, credit card, badge, Blackberry, and telephone
card assigned to him.
15. Severability of Provisions. In the event that any provision in this Agreement is
determined to be legally invalid or unenforceable by any court of competent jurisdiction, and
cannot be modified to be enforceable, the affected provision shall be stricken from the Agreement,
and the remaining terms of the Agreement and its enforceability shall remain unaffected.
16. Entire Agreement. This Agreement sets forth the entire agreement and
understanding between the parties and may be changed only with the written consent of both parties
and only if both parties make express reference to this Agreement. The parties have not relied on
any oral statements that are not included in this Agreement. This Agreement supersedes all prior
agreements and understandings concerning the subject matter of this Agreement. Any modifications
to this Agreement must be in writing and signed by Xx. Xxxxxx and the Chief Executive Officer of
HRB. Failure of HRB to insist upon strict compliance with any of the terms, covenants, or
conditions of this Agreement will not be deemed a waiver of such terms, covenants, or conditions.
17. Applicable Law. This Agreement shall be construed, interpreted, and applied in
accordance with the law of the State of Missouri.
18. Successors and Assigns. This Agreement and each of its provisions will be binding
upon Xx. Xxxxxx and his executors, successors, and administrators, and will inure to the benefit of
HRB and its successors and assigns. Xx. Xxxxxx may not assign or transfer to others the obligation
to perform his duties hereunder.
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19. Specific Performance by Xx. Xxxxxx. The parties acknowledge that money damages
alone will not adequately compensate HRB for Xx. Xxxxxx’x breach of any of the covenants and
agreements herein and, therefore, in the event of the breach or threatened breach of any such
covenant or agreement by Xx. Xxxxxx, in addition to all other remedies available at law, in equity
or otherwise, HRB will be entitled to injunctive relief compelling Xx. Xxxxxx’x specific
performance of (or other compliance with) the terms hereof.
20. Counterparts. This Agreement may be signed in counterparts and delivered by
facsimile transmission confirmed promptly thereafter by actual delivery of executed counterparts.
21. Additional Release. Xx. Xxxxxx agrees that on or within ten (10) days after the
Termination Date, he will execute an additional release covering the period from the Effective Date
to the last day of employment. Xx. Xxxxxx agrees that all HRB covenants that relate to its
obligations beyond the last day of employment will be contingent on Xx. Xxxxxx’x execution of the
additional release. The additional release is attached as Exhibit D to this Agreement.
| XXXXXXXX X. XXXXXX: | ||||||
Dated: |
||||||
| Xxxxxxxx X. Xxxxxx | ||||||
Accepted and Agreed:
HRB Management, Inc.
a Missouri corporation
a Missouri corporation
By: |
||||||
| President and Chief Executive Officer of HRB Management, Inc. | ||||||
Dated:
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EXHIBIT A
STOCK OPTION SUMMARY
| Date of | Strike | Vested | Unvested | Options vesting under | ||||||||||||||||||||
| Grant | Option Type | Options Granted | Price | Options | Options | Separation Agreement | ||||||||||||||||||
02/02/2004 |
ISO | 10,380 | $ | 28.89 | 6,920 | 3,460 | 3,460 | |||||||||||||||||
02/02/2004 |
NQ | 389,620 | $ | 28.89 | 259,746 | 129,874 | 129,874 | |||||||||||||||||
06/30/2004 |
NQ | 70,000 | $ | 23.84 | 46,667 | 23,333 | 23,333 | |||||||||||||||||
06/30/2005 |
ISO | 3,410 | $ | 29.175 | 0 | 3,410 | 3,410 | |||||||||||||||||
06/30/2005 |
NQ | 46,590 | $ | 29.175 | 16,666 | 29,924 | 29,924 | |||||||||||||||||
06/30/2006 |
ISO | 4,179 | $ | 23.86 | 0 | 4,179 | 2 | |||||||||||||||||
06/30/2006 |
NQ | 50,821 | $ | 23.86 | 0 | 50,821 | 33,880 | |||||||||||||||||
EXHIBIT B
RESTRICTED SHARES SUMMARY
| Date of | Vested | Unvested | Shares Vesting Under | |||||||||||||
| Grant | Shares Granted | Shares | Shares | Separation Agreement | ||||||||||||
02/02/2004 |
40,000 | 13,333 | 26,667 | 26,667 | ||||||||||||
06/30/2004 |
10,000 | 6,667 | 3,333 | 3,333 | ||||||||||||
06/30/2005 |
10,000 | 3,333 | 6,667 | 6,667 | ||||||||||||
EXHIBIT C
OFFICER RESIGNATION
Effective November 10, 2006, I hereby resign from my officer position as Senior Vice
President, Chief Legal Officer, of the following companies:
Dated: November ___, 2006
EXHIBIT C
DIRECTOR RESIGNATION
Effective November 10, 2006, I hereby resign as a Director of H&R Block (India) Private
Limited, an Indian corporation.
Dated: November ___, 2006
EXHIBIT D
SUPPLEMENTAL RELEASE
This supplemental release given to the HRB Management, Inc. (“HRB”) by Xxxxxxxx X. Xxxxxx
(“Xx. Xxxxxx”) is executed in consideration for the covenants made by
the Company in a Separation Agreement and Release signed by Xx. Xxxxxx.
Xx. Xxxxxx and his heirs, assigns, and agents release, waive, and discharge HRB, its directors,
officers, employees, subsidiaries, affiliates, and agents from each and every claim, action or
right of any sort, known or unknown, arising on or before the date of this Supplemental Release.
1. The foregoing release includes, but is not limited to, any claim of discrimination on the
basis of race, sex, religion, marital status, sexual orientation, national origin, handicap or
disability, age, veteran status, special disabled veteran status, citizenship status; any other
claim based on a statutory prohibition; any claim arising out of or related to an express or
implied employment contract, any other contract affecting terms and conditions of employment, or a
covenant of good faith and fair dealing; any tort claims and any personal gain with respect to any
claim arising under the qui tam provisions of the False Claims Act, 31 U.S.C. 3730, and any claim
to attorney’s fees. This release does not prohibit Xx. Xxxxxx from filing a charge of
discrimination with the Equal Employment Opportunity Commission. This release also does not
include and Xx. Xxxxxx is not releasing any indemnification rights that he may be entitled to as
an officer and/or director of HRB and its Affiliates as applicable.
2. Xx. Xxxxxx represents that he understands the foregoing release, that rights and claims
under the Age Discrimination in Employment Act of 1967, as amended, are among the rights and
claims against HRB that he is releasing, and that he understands that he is not releasing any
rights or claims arising after the date of this Supplemental Release.
| XXXXXXXX X. XXXXXX | ||||
| DATE: |
