SEPARATION AND RELEASE AGREEMENT
Exhibit 10.1
This SEPARATION AND RELEASE AGREEMENT (the “Agreement”) is entered into
as of the day of July, 2009, by and between, HRB Tax Group, Inc., a Missouri corporation
(“Block”), and Xxxxxxx X. Xxxxx (“Executive”).
WHEREAS, Executive and Block are parties to an Employment Agreement dated June 28,
2004 (the “Employment Agreement”),
WHEREAS, Executive and Block agree to end Executive’s employment,
WHEREAS, Executive and Block intend the terms and conditions of this Agreement to
govern all issues related to Executive’s employment and separation,
NOW, THEREFORE, in consideration of the covenants and mutual promises contained in
this Agreement, Executive and Block agree as follows:
1. Termination of Employment. The parties agree that Executive’s employment
with Block will end on August 31, 2009 (“Separation Date”). Until the Separation
Date, the
Executive will remain on active payroll and be paid his current salary in accordance
with Block’s
regular payroll practices. Until the Separation Date, Executive agrees that he will
only perform
transition work as specifically agreed by Block Chief Executive Officer (“CEO”) Xxxx
Xxxxx
and Executive. Executive further agrees that he will timely respond to questions
and provide
guidance as requested by Block CEO Xxxx Xxxxx. On or after the Separation Date,
Executive
acknowledges and agrees that he will not represent himself as being an employee,
officer,
director, trustee, member, partner, agent, or representative of Block for any
purpose, and will not
make any public statements on behalf of Block. Executive further acknowledges and
agrees that
he has received proper notice under Section 1.07(b) of his Employment Agreement to
terminate
it.
2. Resignation. Executive agrees that as of the Separation Date, he resigns
from all
offices, directorships, trusteeships, committee memberships, and fiduciary capacities
held with,
or on behalf of, Block or its parents, subsidiaries, or affiliates (collectively as
“Affiliates”), or
any benefit plans of Block or its Affiliates. Executive will execute the
resignations attached as
Exhibit A on minute book paper contemporaneously with his execution of this
Agreement.
3. Severance Benefits. The parties agree to treat Executive’s separation of
employment as a termination without “cause” and a “Qualifying Termination” (as defined in
Section 1.07 of the Employment Agreement) for purposes of Executive’s eligibility for
severance compensation and benefits as set forth in this Section. Subject to the terms
and conditions of this Agreement, including Executive’s executing this Agreement and the
Supplemental General Release, Executive acknowledges and agrees that he will not be
eligible
for any compensation or benefits after the Separation Date except for the following:
x. Xxxxxxxxx Pay. Subject to the terms of the H&R Block Severance
Plan (“Severance Plan”), Block will pay to Executive $833,340.00, less required
tax
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withholdings, in a lump sum payment within 30 days from the later of the Separation
Date or the Effective Date of this Agreement.
b. Employee Benefits. Executive will remain eligible to participate in
the various
health and welfare benefit plans maintained by Block until the
Separation Date.
After the
Separation Date, Block will pay Executive a lump sum payment of $10,008, lass
applicable tax withholdings, which represents Executive’s monthly
post-employment
premium for health and welfare benefits under COBRA for twelve (12) months less
the
amount Executive paid for such benefits as an active employee. To be eligible
for the
payment described in this subsection, Executive must be enrolled in Block’s
health and
welfare plans on the Terminate Date. If Executive qualifies for this payment,
Block will
pay Executive this payment within 30 days from the later of the Separation Date
or the
Effective Date of this Agreement. Conversion privileges may also be available
for other
benefit plans.
c. Stock Options. Those portions of any outstanding incentive
stock options
(“ISO Stock Options”) and nonqualified stock options (“NQ Stock Options”) to
purchase shares of Block’s common stock Block granted to Executive that are scheduled to
vest
between the Separation Date and 18 months thereafter (based solely on the
time-specific
vesting schedule included in the applicable stock option agreement) shall vest
and
become exercisable as of the Separation Date. A list of the stock options
vested as of the
date of this Agreement and to become vested pursuant to this Section is
attached as
Exhibit B. Any stock options unaffected by the operation of this Section
shall be
forfeited to Block on the Separation Date. No later than the
Separation Date,
Executive
will complete an election form on which he will elect the time period during
which he
may exercise his ISO and NQ Stock Options. Executive acknowledges and agrees
that he
is solely responsible for the income tax treatment of his ISO and NQ Stock
Options
election, and that Block has not provided him any personal tax advice about
this election.
Block encourages Executive to seek independent tax advice regarding this
election.
d. Restricted Shares, All restrictions on any shares of Block’s
common stock
Block awarded to Executive (“Restricted Shares”) that would have lapsed absent
a
termination of employment in accordance with their terms by reason of time
between the
Separation Date and 18 months thereafter shall terminate (and shall be fully
vested) as of
the Separation Date. Executive shall forfeit on the Separation Date any shares
unaffected
by the operation of this Section. A list of the Restricted Shares outstanding
as of the date
of this Agreement and to become vested pursuant to this Section is attached as
Exhibit C.
e. Performance Shares. The number of performance shares Executive
will
receive at the end of each applicable performance period will be determined
based upon
(1) Executive’s pro-rata length of service during the performance period, and
(2) the
achievement of the performance goals at the end of the performance period.
Block will
pay any performance shares due Executive to him at the time payments are
generally
made to other individuals who received a similar award of performance shares.
On the
Separation Date, Executive shall forfeit to Block any Performance Shares Block
awarded
him pursuant to a cycle which is less than one year old. A list of the
Performance Shares
eligible to become payable pursuant to this subsection is attached as Exhibit
D.
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f. Outplacement Services. Block will pay directly to Right Management
Services
for twelve (12) months of outplacement services to be provided to Executive.
Executive
must elect these outplacement services on or before August 31, 2009 in writing
to the
Block Senior Vice-President, Human Resources. Executive waives these
outplacement
services if he fails to provide such written notification on or before August
31, 2009.
g. Deferred Compensation. Executive will receive his vested account
balance
and payment in accordance with Executive’s payment elections under the H&R
Block
Deferred Compensation Plan for Executives, as amended.
h. Forfeiture. Executive 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.
4. Vacation. Block will pay Executive for his accrued, unused paid time off
which
includes vacation, floating holidays, and personal days (but excludes sick leave as
set forth in the
Company’s policies) within 30 days of the Separation Date (the “PTO Payout”).
Executive
agrees that his PTO Payout will be $60,332.31, less applicable withholdings.
Executive will not
receive any other payment for vacation or holidays.
5. Executive’s Representations. Executive represents and acknowledges to Block
that
(a) Block 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
Block any
information in his possession concerning any conduct involving Block or its Affiliates
that he has
any reason to believe involves any false claims to any governmental agency, or is or
may be
unlawful, or violates Block 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 Block involving any aspect of
his employment
which have not been terminated as of the date of this Agreement. Executive understands
that Block
regards the representations made by him as material and that Block is relying on these
representations in entering into this Agreement.
6. Effective Date of this Agreement. Executive 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 CEO Xxxx Xxxxx which action shall revoke this
Agreement. If
Executive revokes this Agreement, all of its provisions shall be void and
unenforceable. If
Executive does not revoke his consent, this Agreement will take effect on the day
after the end of
this revocation period (the “Effective Date”).
7. Surviving Employment Agreement Obligations. Executive and Block agree that
the termination of Executive’s employment will not affect the following provisions of
the
Employment Agreement which, by their express terms, impose continuing obligations on
one or
more of the parties 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, 3.07; and (c) Article
Four,
“Specific Performance” — Section 4.03. Executive acknowledges and agrees that he will
fully
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comply with these obligations. Block may agree to waive any of Executive’s surviving
post-employment obligations under the Employment Agreement. Any such waiver must be in
writing and signed by Executive and the Block CEO. Unless otherwise agreed by the parties
in writing, any payments made to Executive under this Agreement will immediately cease
upon any such waiver.
8.Indemnification. Block and Executive agree that Executive will
receive, as applicable, the indemnification set forth in Paragraph 4.06 of the Employment
Agreement.
9. Business Expenses and Commitments. As of the Separation Date, Executive
agrees that he will have submitted required documentation for all outstanding expenses
on his
corporate credit card and he will have fully paid off all such outstanding expenses.
As of the
Effective Date, Executive further agrees that he will not initiate, make, renew,
confirm or ratify
any contracts or commitments for or on behalf of Block or any Affiliate, nor will he
incur any
expenses on behalf of Block or any Affiliate without Block’s prior written consent.
10. Release. Executive and his heirs, assigns, and agents forever release,
waive, and
discharge Block, Affiliates, 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, (1) any claim of
retaliation
or 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 citizenship status or any other category protected by law;
(2) any other
claim based on a statutory prohibition or requirement such as the Age
Discrimination in
Employment Act, Title VII of the Civil Rights Act, the Americans With
Disabilities Act, the
Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974,
the
Missouri Human Rights Act, the Missouri Service Letter Statute, and the Civil
Rights
Ordinance of Kansas City, Missouri; (3) 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; (4) any tort claims
such as
wrongful discharge, detrimental reliance, defamation, emotional distress, or
compensatory
or punitive damages; (5) 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 (6) any claims to
attorney fees,
expenses, costs, disbursements, and the like.
b. Executive 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 the Released Parties he is releasing, and that he
understands
that he is not releasing any rights or claims arising after the Effective Date.
c. Executive further agrees never to xxx the Released Parties or cause the
Released
Parties to be sued regarding any matter within the scope of the above release.
If Executive
violates this release by suing the Released Parties or causing the Released
Parties to be sued,
Executive agrees to pay all costs and expenses of defending against the suit
incurred by the
Released Parties, including reasonable attorneys’ 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.
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d. “Released Parties” for purposes of this Agreement are Block, 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.
11. Breach by Executive. Block’s obligations to Executive after the Effective
Date are contingent on his obligations under this Agreement. Any material breach of this
Agreement by Executive will result in the immediate cancellation of Block’s obligations
under this Agreement and of any benefits that have been granted to Executive 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. Executive Availability. Executive agrees to make himself reasonably
available to Block and/or Affiliates to respond to requests for
information pertaining to
or relating to Block and/or its Affiliates, agents, officers, directors, or employees.
Executive will cooperate fully with Block and/or Affiliates in connection with any and all
existing or future litigation or investigations brought by or against Block or any of its
Affiliates, agents, officers, directors or employees, whether administrative, civil or
criminal in nature, in which and to the extent Block and/or Affiliates deem Executive’s
cooperation necessary. Block will reimburse Executive for reasonable out-of pocket
expenses incurred as a result of such cooperation. Nothing herein shall prevent Executive
from communicating with or participating in any government investigation.
13. Non-Disparagement. Executive 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 Block 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 Executive will be required to reimburse Block 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 Executive will be null and void. Block
likewise agrees, subject to any obligations that it may have under applicable law, that
the following individuals during their Block employment will not make or cause to be made
any statements that disparage, are inimical to, or damage the reputation of Executive:
Xxxx Xxxxx, Xxxxx Xxxxxxx, Xxxxx Xxxxxx, Xxxxxxx Xxxxxx, Xxxx Xxxxxxx, and Xxx Treat.
14. Return of Company Property. Executive agrees that as of the Separation
Date he
will have returned to Block any and all Block and/or Affiliates’ 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
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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 Executive and the
Block CEO.
Failure of Block 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 Executive and his executors, successors, and administrators, and will
inure to the
benefit of Block and its successors and assigns. Executive may not assign or transfer
to others
the obligation to perform his duties hereunder.
19. Specific Performance by Executive. The parties acknowledge that money
damages alone will not adequately compensate Block for Executive 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 Executive, in addition to all other remedies
available at
law, in equity or otherwise, Block will be entitled to injunctive relief compelling
Executive’s
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. Supplemental Release. Executive agrees that within 21 days after the
Separation
Date, he will execute an additional release covering the period from the Effective
Date to the
Separation Date. Executive agrees that all Block covenants that relate to its
obligations beyond
the last day of employment will be contingent on Executive’s execution of the
supplemental
release. The supplemental release will be in the form of Exhibit E to this Agreement.
22. 409A Representations. Because the requirements of Section 409A of
the Internal
Revenue Code are still being developed and interpreted by government agencies, certain
issues
under Section 409A remain unclear as of the Effective Date. Block has made a good
faith effort
to comply with current guidance under Section 409A. Notwithstanding the foregoing or
any
provision in this Agreement to the contrary, Block does not warrant or promise
compliance with
Section 409A, and Executive understands and agrees that he shall not have any claim
against
Block or any Affiliate for any good faith effort taken by them to comply with Section
409A.
EXECUTIVE:
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| /s/ Xxxxxxx X. Xxxxx | ||||
| Xxxxxxx X. Xxxxx | ||||
Dated: 7-26-09
Accepted and Agreed:
| HRB Tax Group, Inc. |
||||
| By: | /s/ Xxxxxxx X. Xxxxx | |||
| Xxxxxxx X. Xxxxx President and Director |
||||
Dated: 7/28/09
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EXHIBIT A
RESIGNATION
To Whom It May Concern:
Effective May 8, 2009, I hereby resign from the following director and officer positions:
| Business Entity | Title | |
Financial Stop Inc.
|
Director | |
H&R Block (Nova Scotia), Incorporated
|
Director | |
H&R Block Canada Financial Services, Inc.
|
Director | |
H&R Block Canada Financial Services, Inc.
|
Chairman of the Board | |
H&R Block Canada, Inc.
|
Director | |
H&R Block Canada, Inc.
|
President | |
H&R Block Eastern Enterprises, Inc.
|
Director | |
H&R Block Eastern Enterprises, Inc.
|
President | |
H&R Block Enterprises LLC
|
President | |
H&R Block Global Solutions (Hong Kong) Limited
|
Director | |
H&R Block Limited
|
Director | |
H&R Block Tax and Business Services, Inc.
|
Director | |
H&R Block Tax Services LLC
|
President | |
HRB Tax Group, Inc.
|
Director | |
HRB Tax Group, Inc.
|
President | |
Vantive Partners LLC
|
President |
| Dated: 7-26-09 | /s/ Xxxxxxx X. Xxxxx | |||
| Xxxxxxx X. Xxxxx | ||||
A-1
EXHIBIT B
STOCK OPTION SUMMARY
| Grant | Shares | |||||||||||||||
| Grant Date | Price | Granted | Vested | Accelerated | ||||||||||||
6/28/2004 |
$ | 24.235 | 100,000 | 100,000 | 0 | |||||||||||
6/30/2005 |
$ | 29.175 | 100,000 | 100,000 | 0 | |||||||||||
6/30/2006 |
$ | 23.86 | 125,000 | 125,000 | 0 | |||||||||||
6/30/2007 |
$ | 23.37 | 125,000 | 83,333 | 41,667 | |||||||||||
7/3/2008 |
$ | 21.81 | 173,522 | 57,840 | 57,840 | * | ||||||||||
10/1/2008 |
$ | 23.76 | 179,855 | 0 | 179,855 | |||||||||||
Total |
466,173 | 279,362 | ||||||||||||||
| * | Executive forfeits 57,842 stock options from the July 3, 2008 grant. |
A-2
EXHIBIT C
RESTRICTED SHARES SUMMARY
| Grant | Shares | |||||||||||||||
| Grant Date | Price | Granted | Vested | Accelerated | ||||||||||||
7/3/2008 |
$ | 21.81 | 290 | 96 | 97 | * | ||||||||||
10/1/2008 |
$ | 23.76 | 10,520 | 0 | 10,520 | |||||||||||
Total |
96 | 10,617 | ||||||||||||||
| * | Executive forfeits 97 shares from the July 3, 2008 grant. |
A-3
EXHIBIT D
PERFORMANCE SHARES SUMMARY
| Grant | Shares | |||||||||||||||
| Grant Date | Price | Granted | Vested | Accelerated | ||||||||||||
6/30/2006 |
$ | 0.00 | 15,000 | * | ||||||||||||
6/30/2007 |
$ | 0.00 | 15,000 | * | ||||||||||||
7/3/2008 |
$ | 0.00 | 9,834 | * | ||||||||||||
| * | The number of shares actually awarded will be determined at the end of the applicable 3-year performance cycle based upon actual performance results. |
Award will be prorated based upon the number of days worked by Executive during the
applicable three year performance cycle.
A-4
