Exhibit 10.1

EXECUTION COPY

EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”) is effective as of
August 25, 2010, by and between JACKSON HEWITT TAX SERVICE INC. (the “Company”)
and PHILIP H. SANFORD (the “Executive”).

WHEREAS, the Company desires to employ the Executive as its Executive Vice
President – Strategy and Performance Measurement, and the Executive desires to
serve the Company in such capacity, effective as of the date hereof.

NOW THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:

SECTION I

EMPLOYMENT

The Company agrees to employ the Executive, and the Executive agrees to be
employed by the Company, for the Period of Employment (as defined in Section
III) and upon the terms and conditions provided in this Agreement.

SECTION II

POSITION AND RESPONSIBILITIES

A. During the Period of Employment, the Executive will serve as the Executive
Vice President – Strategy and Performance Measurement of the Company and,
subject to the lawful direction of the Company’s Chief Executive Officer and the
Board of Directors of the Company (the “Board”), will perform such duties and
exercise such supervision with regard to the business of the Company as are
customary and appropriate for such position, as well as perform such additional
duties as may be prescribed from time to time by the Company’s Chief Executive
Officer or by the Board, so long as such duties are customary and reasonable for
an Executive Vice President – Strategy and Performance Measurement. Without
limiting the generality of the foregoing, the Executive’s duties as the
Executive Vice President – Strategy and Performance Measurement of the Company
will include reviewing and monitoring the Company’s performance of the business
plan adopted by the Board and managing the Company’s marketing, information
technology, retail and on-line departments or operations.

B. The Executive will, during the Period of Employment, devote substantially all
of his time and attention during normal business hours to the performance of
services for the Company, except during customary vacation and holiday periods
and periods of illness. The Executive will maintain a primary office and conduct
his business in Parsippany, New Jersey, except for normal and reasonable
business travel in connection with his duties hereunder, but the Executive shall
not be required to move his principal residence to such location or any other
location without the Executive’s prior consent, which consent may be withheld in
the Executive’s sole discretion. Nothing contained in this Agreement will
prevent the Executive from serving on civic and charitable boards or from
conducting his personal affairs and investments.

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C. The Executive will, in accordance with the Company’s policy and procedures
and applicable law, give appropriate certifications with respect to the accuracy
of the Company’s publicly-filed financial statements, as applicable.

SECTION III

PERIOD OF EMPLOYMENT

The period of the Executive’s employment under this Agreement (the “Period of
Employment”) will begin on the date of this Agreement and end on the first
anniversary of such date, subject to termination as provided in this Agreement.

SECTION IV

COMPENSATION AND BENEFITS

For all services rendered by the Executive pursuant to this Agreement during the
Period of Employment, including services as an officer, director or committee
member of the Company or any subsidiary or affiliate thereof, the Executive will
be compensated as follows:

(i) Base Salary. The Company will pay the Executive a fixed base salary of
$430,000.00 per year (the “Base Salary”). Executive’s Base Salary will not be
reduced, as the same may be increased during the Period of Employment. The Base
Salary will be payable according to the customary payroll practices of the
Company for similarly situated executives, but in no event less frequently than
once each month.

(ii) Annual Incentive Awards. The Executive will be eligible for discretionary
annual incentive compensation awards. The Executive will be eligible to receive
an annual bonus opportunity in respect of each fiscal year of the Company during
the Period of Employment based upon a target bonus equal to no less than 80% of
the Executive’s then-current Base Salary during such fiscal year (the “Target
Level”); provided, however, that such bonus will be subject to the attainment by
the Company of applicable performance targets reasonably established and
certified by the Board or the Compensation Committee of the Board (the
“Committee”). The performance targets may relate to such financial and/or
business criteria of the Company and its subsidiaries or business units, as well
as the Executive’s personal performance, as determined by the Board or the
Committee in its sole discretion (each such annual bonus, an “Incentive
Compensation Award”).

(iii) Long-Term Incentive Awards. At such times as the Board or the Committee
determines to conduct annual or periodic grants of long term incentive awards to
employees and officers of the Company, the Executive will be eligible to receive
such grants, subject to the sole and complete discretion of the Board or the
Committee, and upon such terms and conditions as determined by the Board or the
Committee for similarly situated executives.

(iv) Additional Benefits.

(a) Other Compensation. The Executive and/or members of the Executive’s
immediate family, as the case may be, will be entitled to participate in all
other compensation and employee benefit plans or programs offered generally to
employees of the Company and will generally receive all perquisites offered to
similarly situated employees of the

 

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Company. The Executive and/or Executive’s family, as the case may be, will
participate to the extent permissible under the terms and provisions of such
plans or programs and in accordance with the terms of such plans and programs.
In addition, the Executive, subject to the terms of the applicable plan, shall
be eligible to participate in the equity incentive plan(s) maintained by the
Company from time to time on the same basis as other similarly situated
executives.

(b) Signing Bonus. The Company will pay the Executive a signing bonus of
$223,600.00 payable as follows: (1) a cash payment equal to $111,800.00, less
applicable withholding taxes, promptly upon the execution of this Agreement by
both parties hereto, but no later than the Company’s customary payroll date
which is on or immediately follows such execution date; and (2) a cash payment
equal to $111,800.00, less applicable withholding taxes, no later than ten
(10) business days after November 25, 2010; provided, however, that, except as
provided in Sections VIII(A)(iii) and VIII(B)(iii), the Company is obligated to
make the payment referenced in subclause (2) of this paragraph only if the
Executive continues to be employed by the Company pursuant to this Agreement on
November 25, 2010.

(c) Vacation, Holidays and Sick Leave. During the Period of Employment, the
Executive will be entitled to paid vacation and paid holidays and sick leave in
accordance with the Company’s standard policies for its officers.

SECTION V

BUSINESS EXPENSES

The Company will promptly reimburse the Executive for all reasonable travel and
other expenses incurred by the Executive in connection with the performance of
his duties and obligations under this Agreement. The Executive will comply with
such limitations and reporting requirements with respect to expenses as may be
established by the Company from time to time and will promptly provide all
appropriate and reasonably requested documentation in connection with such
expenses.

SECTION VI

DISABILITY

If the Executive becomes Disabled (as defined below) during the Period of
Employment, the Period of Employment may be terminated at the option of the
Executive upon written notice of resignation to the Company, or at the option of
the Company upon thirty (30) days’ advance written notice of termination to the
Executive. The Company’s obligation to make payments to the Executive under this
Agreement will cease as of such date of such termination, except for the payment
of: (i) Base Salary and Incentive Compensation Awards earned but unpaid as of
the date of such termination and (ii) a pro rata portion of the Incentive
Compensation Award in respect of the fiscal year in which such termination
occurs (paid at the Target Level), provided that all performance targets
relating to such Incentive Compensation Award are attained, with such pro rata
portion to be paid at such time or times as incentive compensation awards in
respect of such fiscal year are payable by the Company to its other executive
officers. In addition, upon such event, all of the Executive’s outstanding and
unvested stock options and any other equity awards or other incentives or
compensation that is subject to vesting will become

 

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immediately and fully vested and exercisable and all such options, awards,
incentives and compensation shall remain exercisable in accordance with the
terms of the respective plans and/or agreements. For purposes of this Agreement,
“Disabled” means the Executive’s inability to perform, with or without
reasonable accommodations, the essential functions of the Executive’s position
hereunder as a result of serious physical or mental incapacity, illness or
injury for a period of no less than sixty consecutive (60) days, together with a
determination by an independent medical authority that the Executive is
currently unable to perform such duties. Such medical authority shall be
mutually and reasonably agreed upon by the Company and the Executive and such
opinion shall be binding on the Company and the Executive.

SECTION VII

DEATH

In the event of the death of the Executive during the Period of Employment, the
Period of Employment will end and the Company’s obligation to make payments
under this Agreement will cease as of the date of death, except for the payment
of: (i) Base Salary and Incentive Compensation Awards earned but unpaid through
the date of death and (ii) a pro rata portion of the Incentive Compensation
Award in respect of the fiscal year in which death occurs (paid at the Target
Level), provided that all performance targets relating to such Incentive
Compensation Award are attained, with such pro rata portion to be paid at such
time or times as incentive compensation awards in respect of such fiscal year
are payable by the Company to its other executive officers. In addition, upon
such event, all of the Executive’s outstanding and unvested stock options and
any other equity awards or other incentives or compensation that is subject to
vesting will become immediately and fully vested and exercisable and all such
options, awards, incentives and compensation shall remain exercisable in
accordance with the terms of the respective plans and/or agreements.
Furthermore, upon such event, any and all benefits owed to the Executive or the
Executive’s beneficiary under the Company’s employee benefit plans and programs,
including any retirement and/or life insurance benefits, will be paid and
administered in accordance with the terms of such plans and programs. All such
amounts will be paid to the Executive’s surviving spouse, estate or personal
representative, as applicable.

SECTION VIII

EFFECT OF TERMINATION OF EMPLOYMENT

A. Without Cause Termination; Constructive Discharge. If the Executive’s
employment terminates due to either a Without Cause Termination or a
Constructive Discharge (each as defined below), then the Company will pay the
Executive (or the Executive’s surviving spouse, estate or personal
representative, as applicable): (i) a lump sum cash payment equal to the
aggregate Monthly Base Salary (as defined below) for the months remaining in the
Period of Employment (the “Continuation Period”); (ii) any and all Base Salary
and Incentive Compensation Awards earned but unpaid through the date of such
termination; (iii) any unpaid amounts pursuant to Section IV(iv)(b)(2); and
(iv) a pro rata portion of the Incentive Compensation Award in respect of the
fiscal year in which such Without Cause Termination or Constructive Discharge
occurs (paid at the Target Level), provided that all the performance targets
relating to such Incentive Compensation Award have been attained. The amounts
payable to the Executive by the Company pursuant to this Section VIII(A) shall
be paid: (1) with respect to amounts set forth in Section VIII(A)(i), (ii), and
(iii), no later than thirty (30) days after the

 

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Without Cause Termination or Constructive Discharge occurs and (2) with respect
to amounts set forth in Section VIII(A)(iv), at such time or times as incentive
compensation awards in respect of the fiscal year in which the Without Cause
Termination or Constructive Discharge occurs are payable by the Company to its
other similarly situated executive officers. In addition, upon such event, all
of the Executive’s outstanding and unvested stock options and any other equity
awards or other incentives or compensation that is subject to vesting will
immediately terminate. Furthermore, upon such event, the Executive shall be
entitled to continue coverage under all health and welfare plans for the
Executive and members of the Executive’s immediate family, including medical and
dental benefits, during the twelve (12)-month period immediately following such
termination, with the Executive’s cost being no greater than the cost applicable
to the Executive had the Executive been an active, full-time employee of the
Company during such period. Following the expiration of such twelve (12)-month
period, Executive and members of the Executive’s immediate family, will be
permitted to continue coverage under the Company’s medical, prescription and
dental plan for any remaining continuation period required under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”)
(treating such twelve (12)-month period as part of the continuation period
required by COBRA), at the applicable premium rate for similarly situated
participants.

B. Termination After a Change in Control. Notwithstanding anything herein to the
contrary, if the Executive’s employment terminates due to either a Without Cause
Termination or a Constructive Discharge following a Change in Control (as
defined below), then the Company will pay the Executive (or the Executive’s
surviving spouse, estate or personal representative, as applicable), no later
than thirty (30) days after such Without Cause Termination or Constructive
Discharge, (i) a lump sum cash payment equal to the aggregate Monthly Base
Salary for the Continuation Period, (ii) any and all Base Salary and Incentive
Compensation Awards earned but unpaid through the date of such termination,
(iii) any unpaid amounts pursuant to Section IV(iv)(b)(2), and (iv) a pro rata
portion of the Incentive Compensation Award in respect of the fiscal year in
which Executive’s employment terminates due to either a Without Cause
Termination or a Constructive Discharge following a Change in Control (paid at
the Target Level), provided that all the performance targets relating to such
Incentive Compensation Award have been attained. In addition, upon such event,
all of the Executive’s outstanding and unvested stock options and any other
equity awards or other incentives or compensation that is subject to vesting
will become immediately and fully vested and exercisable, and all outstanding
options, awards, incentives and compensation shall be extended and remain
exercisable in accordance with the plan under which they were granted or
awarded. Furthermore, upon such event, the Executive shall be entitled to
continue coverage under all health and welfare plans for the Executive and
members of the Executive’s immediate family, including medical and dental
benefits, during the twelve (12)-month period immediately following such
termination, with the Executive’s cost being no greater than the cost applicable
to the Executive had the Executive been an active, full-time employee of the
Company during such period. Following the expiration of such twelve (12)-month
period, Executive and members of the Executive’s immediate family, shall be
permitted to continue coverage under the Company’s medical, prescription and
dental plan for any remaining continuation period required under COBRA (treating
such twelve (12)-month period as part of the continuation period required by
COBRA), at the applicable premium rate for similarly situated participants. The
payments to be made, and the benefits to be provided, by the Company to the
Executive pursuant to this Section VIII(B) are in lieu of any payments, benefits
or compensation the Executive may otherwise be entitled to receive pursuant to
Section VIII(A).

 

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C. Termination for Cause; Resignation. If the Executive’s employment terminates
due to a Termination for Cause or a Resignation, Base Salary earned but unpaid
as of the date of such termination will be paid to the Executive. Except as
provided in this paragraph, the Company will have no further obligations to the
Executive hereunder.

D. Certain Definitions. For purposes of this Agreement, the following terms have
the following meanings:

(i) “Change in Control” means a “Change in Control” as defined from time to time
in the Company’s Amended and Restated 2004 Equity and Incentive Plan, as may be
amended; provided, however, that the filing by the Company of a petition for
relief under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy
Code”), which petition includes a plan of reorganization that has been accepted
prior to such filing by the holders of claims or interests against or in the
Company in requisite number and amount in accordance with Section 1126(b) of the
Bankruptcy Code, shall constitute a Change in Control for purposes of this
Agreement.

(ii) “Constructive Discharge” means one or more of the following events: (a) any
material failure of the Company to fulfill its obligations under this Agreement
(including, without limitation, any reduction of the Base Salary, as the same
may be increased during the Period of Employment, or other element of
compensation); (b) any failure by the Company to timely pay the Executive’s Base
Salary, signing bonus, or earned bonus; (c) a material and adverse change to the
Executive’s titles, positions, duties, scope of authority, direct reporting
relationships, and responsibilities to the Company; or (d) the Company fails to
cause this Agreement to be assumed by any successor to the business of the
Company pursuant to Section XIV. The Executive will provide the Company a
written notice which describes the circumstances being relied on for the
Constructive Discharge with respect to this Agreement within thirty (30) days
after the event giving rise to the notice. The Company will have thirty
(30) days after receipt of such notice to fully remedy the situation prior to
the effectiveness of termination for Constructive Discharge.

(iii) “Monthly Base Salary” means, at any given time, the quotient obtained by
dividing the Executive’s then-current Base Salary by twelve (12).

(iv) “Resignation” means a termination of the Executive’s employment by the
Executive, other than in connection with a Constructive Discharge.

(v) “Termination for Cause” means: (a) the Executive’s willful failure to
substantially perform the Executive’s material duties as an employee of the
Company or any subsidiary thereof under Section II (other than any such failure
resulting from incapacity due to physical or mental illness); (b) any act of
fraud, misappropriation, embezzlement or similar conduct, in each case against
the Company or any subsidiary; (c) any act of material dishonesty against the
Company or any subsidiary; (d) the Executive’s conviction of a felony or any
crime involving moral turpitude (which conviction, due to the passage of time or
otherwise, is not

 

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subject to further appeal); (e) the Executive’s gross negligence in the
performance of the Executive’s duties; (f) the Executive makes (or has been
found to have made) a false certification to the Company pertaining to its
financial statements; or (g) if, in the sole determination of the Board, the
Executive fails to perform the Executive’s duties in a competent manner and,
after written notice from the Board to the Executive of the specific areas of
performance that are in need of improvement, the Executive has not made such
improvements, within sixty (60) days after receipt of such notice, to the
reasonable satisfaction of the Board. The Company will provide the Executive a
written notice which describes the circumstances being relied on for the
termination with respect to this paragraph. With respect to each of subclauses
(a), (b), (c), (d), (e) and (f) of this paragraph, the Executive will have ten
(10) days after receipt of such notice to remedy such situation prior to the
effectiveness of the Termination for Cause with respect thereto, unless the
Company reasonably and in good faith determines that such situation is
incurable. With respect to the situation described in subclause (g) of this
paragraph, the effectiveness of the Termination for Cause with respect to such
situation shall become effective immediately upon the end of the sixty (60) day
period stated in such subclause (g), unless the Company reasonably and in good
faith determines that such situation is incurable.

(vi) “Without Cause Termination” or “Terminated Without Cause” means termination
of the Executive’s employment by the Company other than due to death,
disability, or Termination for Cause.

E. Conditions to Payment and Acceleration. All payments due to the Executive
under this Section VIII shall be made subject to the terms of this Agreement;
provided, however, that such payments, shall be subject to, and contingent upon,
the execution by the Executive (or the Executive’s beneficiary or estate), and
the continued effectiveness, of a release of any and all claims against the
Company and its affiliates substantially in the form attached to this Agreement
as Exhibit A. The payments due to the Executive under this Section VIII shall be
in lieu of any other severance benefits otherwise payable to the Executive under
any severance plan of the Company or its affiliates and/or any other agreement
or arrangement. Nothing herein shall be construed as limiting the Executive’s
entitlement to any other vested accrued benefits to which the Executive (or the
Executive’s estate if applicable) is then entitled under the Company’s
applicable employee benefit plans, including, without limitation, any disability
or death benefits which may become payable.

F. Resignations. The Executive agrees that, in connection with any termination,
and as a condition to receiving any payments under this Section VIII, the
Executive shall resign from all directorships and committees of the Board of the
Company and its subsidiaries on which he serves (if any) if so requested by the
Board.

SECTION IX

OTHER DUTIES OF THE EXECUTIVE

DURING AND AFTER THE PERIOD OF EMPLOYMENT

A. The Executive will, with reasonable notice during or after the Period of
Employment, furnish information as may be in the Executive’s possession and
fully cooperate with the Company and its affiliates as may be requested in
connection with any claims or legal action in which the Company or any of its
affiliates is or may become a party. The Company

 

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will reimburse Executive for any and all reasonable out-of-pocket costs and
expenses incurred in connection with the performance of any actions taken by the
Executive pursuant to this paragraph at the request of the Company (i.e.,
attorneys fees and costs, travel, copying charges, long-distance, etc.).
Furthermore, to the extent the Executive is required to spend any material time
and effort to perform any actions requested by the Company pursuant to this
paragraph following the Period of Employment, the Company will pay reasonable
compensation to the Executive for such time and effort at a rate to be mutually
agreed upon by the Company and the Executive. The foregoing shall not
unreasonably interfere with the Executive’s duties to any successor employer.

B. (i) The Executive recognizes and acknowledges that all information pertaining
to this Agreement or to the affairs; business; results of operations; accounting
methods, practices and procedures; members; acquisition candidates; financial
condition; clients; customers or other relationships of the Company or its
affiliates (“Information”) is confidential and is a unique and valuable asset of
the Company or any of its affiliates. Access to and knowledge of certain of the
Information is essential to the performance of the Executive’s duties under this
Agreement. The Executive will not, during the Period of Employment or
thereafter, except to the extent reasonably necessary in performance of the
Executive’s duties under this Agreement, give to any person, firm, association,
corporation, or governmental agency any Information, except as may be required
by law. The Executive will not make use of the Information for the Executive’s
own purposes or for the benefit of any person or organization other than the
Company or any of its affiliates. The Executive will also use the Executive’s
best efforts to prevent the disclosure of this Information by others. All
records, memoranda, etc. relating to the business of the Company or its
affiliates, whether made by the Executive or otherwise coming into the
Executive’s possession, are confidential and will remain the property of the
Company or its affiliates.

(ii) Notwithstanding anything herein to the contrary, Executive may disclose to
any and all persons, without limitation of any kind, the U.S. federal income tax
treatment and tax structure of the transactions contemplated in this Agreement
and all materials of any kind (including opinions and other tax analyses) that
are provided to Executive relating to such tax treatment and tax structure. For
this purpose, “tax structure” is limited to facts relevant to the U.S. federal
income tax treatment of the transactions contemplated in this Agreement and does
not include information relating to the identity of the parties hereto.

C. During the one (1) year period following the date of this Agreement, without
regard to earlier termination of employment by the Company or the Executive (the
“Restricted Period”), the Executive will not use the Executive’s status with the
Company or any of its affiliates to obtain loans, goods or services from another
organization on preferential terms that would not be available to the Executive
in the absence of the Executive’s relationship to the Company or any of its
affiliates.

D. (i) During the Restricted Period, the Executive will not make any statements
or perform any acts intended to advance the interest of any existing or
prospective competitors of the Company or any of its affiliates or in any way
injure the interests of the Company or any of its affiliates. During the
Restricted Period, the Executive, without prior express written approval by the
Company, will not engage in, or directly or indirectly (whether for compensation
or

 

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otherwise), own or hold proprietary interest in, manage, operate, or control, or
join or participate in the ownership, management, operation or control of, or
furnish any capital to or be connected in any manner with, any party which
competes in any way or manner with the business of the Company or any of its
affiliates, as such business or businesses may be conducted from time to time,
either as a general or limited partner, proprietor, common or preferred
shareholder, officer, director, agent, employee, consultant, trustee, affiliate,
or otherwise. The Executive acknowledges that the Company’s and its affiliates’
businesses are conducted nationally and agrees that the provisions in the
foregoing sentence will operate throughout the United States.

(ii) During the Restricted Period, the Executive, without express prior written
approval from the Company, will not solicit any then-current clients of the
Company or any of its affiliates for any existing business of the Company or any
of its affiliates or discuss with any employee of the Company or any of its
affiliates information or operation of any business intended to compete with the
Company or any of its affiliates.

(iii) During the Restricted Period, the Executive will not interfere with the
employees or affairs of the Company or any of its affiliates or solicit or
induce any person who is an employee of the Company or any of its affiliates to
terminate any relationship such person may have with the Company or any of its
affiliates, nor will the Executive during such period directly or indirectly
engage, employ or compensate, or cause or permit any person with which the
Executive may be affiliated, to engage, employ or compensate, any employee of
the Company or any of its affiliates. The Executive hereby represents and
warrants that the Executive has not entered into any agreement, understanding or
arrangement with any employee of the Company or any of its affiliates pertaining
to any business in which the Executive has participated or plans to participate,
or to the employment, engagement or compensation of any such employee.

(iv) For the purposes of this Agreement, proprietary interest means legal or
equitable ownership, whether through stock holding or otherwise, of an equity
interest in a business, firm or entity or ownership of more than five percent
(5%) of any class of equity interest in a publicly-held company (domestic or
foreign) and the term “affiliate” will include without limitation all
subsidiaries and licensees of the Company. For the purpose of avoiding doubt,
proprietary interests held by the Executive which are five percent (5%) or less
of any class of equity interest in a publicly-held company (domestic or foreign)
will not be subject to the requirements of this Section IX.

E. The Executive hereby acknowledges that damages at law may be an insufficient
remedy to the Company if the Executive violates the terms of this Agreement and
that the Company will be entitled, upon making the requisite showing, to
preliminary and/or permanent injunctive relief in any court of competent
jurisdiction to restrain the breach of or otherwise to specifically enforce any
of the covenants contained in this Section IX without the necessity of showing
any actual damage or that monetary damages would not provide an adequate remedy.
Such right to an injunction will be in addition to, and not in limitation of,
any other rights or remedies the Company may have. Without limiting the
generality of the foregoing, neither party will oppose any motion the other
party may make for any expedited discovery or hearing in connection with any
alleged breach of this Section IX.

 

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F. The period of time during which the provisions of this Section IX will be in
effect will be extended by the length of time during which the Executive is in
breach of the terms hereof as determined by any court of competent jurisdiction
on the Company’s application for injunctive relief.

G. The Executive agrees that the restrictions contained in this Section IX are
an essential element of the compensation the Executive is granted hereunder and
but for the Executive’s agreement to comply with such restrictions, the Company
would not have entered into this Agreement.

SECTION X

INDEMNIFICATION

The Company will indemnify and hold harmless the Executive to the fullest extent
permitted by the laws of the state of the Company’s incorporation in effect at
that time, or the certificate of incorporation and by-laws of the Company,
whichever affords the greater protection to the Executive. If applicable, the
Company will, at the Company’s sole cost and expense, maintain directors and
officers liability insurance for the Executive on commercially reasonable basis
and coverage amounts, and on terms which are no less favorable than it maintains
for other similarly situated officers of the Company.

SECTION XI

MITIGATION

The Executive will not be required to mitigate the amount of any payment
provided for hereunder by seeking other employment or otherwise, nor will the
amount of any such payment be reduced by any compensation earned by the
Executive as the result of employment by another employer after the date the
Executive’s employment hereunder terminates or by offset against any amount
claimed to be owed by the Executive to the Company, or otherwise.

SECTION XII

EXCISE TAXES; WITHHOLDING TAXES

A. Certain Reductions in Agreement Payments. Anything in this Agreement to the
contrary notwithstanding, in the event a nationally recognized independent
accounting firm designated by the Company and reasonably acceptable to the
Executive (the “Accounting Firm”) shall determine that receipt of all payments
or distributions by the Company and its affiliates in the nature of compensation
to or for the Executive’s benefit, whether paid or payable pursuant to this
Agreement or otherwise (a “Payment”), would subject the Executive to the excise
tax under Section 4999 of the Internal Revenue Code of 1986, as amended (the
“Code”), the Accounting Firm shall determine as required below in this Section
XII(A) whether to reduce any of the Payments paid or payable pursuant to this
Agreement (the “Agreement Payments”) to the Reduced Amount (as defined below).
The Agreement Payments shall be reduced to the Reduced Amount only if the
Accounting Firm determines that the Executive would have a greater Net After-Tax
Receipt (as defined below) of aggregate Payments if the Executive’s Agreement
Payments were so reduced. If the Accounting Firm determines that the Executive
would not have a greater Net After-Tax Receipt of aggregate Payments if the
Executive’s Agreement Payments were so reduced, then the Executive shall receive
all Agreement Payments to which the Executive is entitled.

 

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B. Accounting Firm Determinations. If the Accounting Firm determines that
aggregate Agreement Payments should be reduced to the Reduced Amount, the
Company shall promptly give the Executive notice to that effect and a copy of
the detailed calculation thereof. All determinations made by the Accounting Firm
under this Section XII shall be binding upon the Company and the Executive and
shall be made as soon as reasonably practicable and in no event later than
fifteen (15) days following the date of termination. For purposes of reducing
the Agreement Payments to the Reduced Amount, only amounts payable under this
Agreement (and no other Payments) shall be reduced. The reduction of the amounts
payable hereunder, if applicable, shall be made by reducing the payments and
benefits under the following sections in the following order: first from Section
VIII(A)(i) or VIII(B)(i), as applicable, then from Section VIII(A)(iii), then
from amounts under Section VIII(A) or VIII(B), as applicable, relating to stock
options, equity awards or other incentives or compensation subject to vesting,
and lastly from amounts under Section VIII(A) or VIII(B), as applicable,
relating to continuation of coverage under health and welfare plans. All fees
and expenses of the Accounting Firm shall be borne solely by the Company.

C. Overpayments; Underpayments. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that amounts will have been
paid or distributed by the Company to or for the benefit of the Executive
pursuant to this Agreement which should not have been so paid or distributed (an
“Overpayment”) or that additional amounts which will have not been paid or
distributed by the Company to or for the benefit of the Executive pursuant to
this Agreement which should have been so paid or distributed (an
“Underpayment”), in each case consistent with the calculation of the Reduced
Amount hereunder. In the event that the Accounting Firm, based upon the
assertion of a deficiency by the Internal Revenue Service against either the
Company or the Executive which the Accounting Firm believes has a high
probability of success determines that an Overpayment has been made, the
Executive shall pay any such Overpayment to the Company together with interest
at the applicable federal rate provided for in Section 7872(f)(2) of the Code;
provided, however, that no amount shall be payable by the Executive to the
Company if and to the extent such payment would not either reduce the amount on
which the Executive is subject to tax under Section 1 and Section 4999 of the
Code or generate a refund of such taxes. In the event that the Accounting Firm,
based upon controlling precedent or substantial authority, determines that an
Underpayment has occurred, any such Underpayment shall be paid promptly (and in
no event later than sixty (60) days following the date on which the Underpayment
is determined) by the Company to or for the benefit of the Executive together
with interest at the applicable federal rate provided for in Section 7872(f)(2)
of the Code.

D. Definitions. The following terms shall have the following meanings for
purposes of this Section VII:

(i) “Reduced Amount” shall mean the greatest amount of Agreement Payments that
can be paid that would not result in the imposition of the excise tax under
Section 4999 of the Code if the Accounting Firm determines to reduce Agreement
Payments pursuant to Section XII(A).

 

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(ii) “Net After-Tax Receipt” shall mean the present value (as determined in
accordance with Sections 280G(b)(2)(A)(ii) and 280G(d)(4) of the Code) of a
Payment net of all taxes imposed on the Executive with respect thereto under
Sections 1 and 4999 of the Code and under applicable state and local laws,
determined by applying the highest marginal rate under Section 1 of the Code and
under state and local laws which applied to the Executive’s taxable income for
the immediately preceding taxable year, or such other rate(s) as the Accounting
Firm determined to be likely to apply to the Executive in the relevant taxable
year(s).

E. Withholding Taxes. The Executive acknowledges and agrees that the Company may
directly or indirectly withhold from any payments under this Agreement all
federal, state, city or other taxes that will be required pursuant to any law or
governmental regulation.

SECTION XIII

EFFECT OF PRIOR AGREEMENTS

This Agreement constitutes the entire agreement between the parties hereto and
supersedes all prior employment agreements, understandings and arrangements
(oral or written) between the parties hereto.

SECTION XIV

CONSOLIDATION, MERGER OR SALE OF ASSETS

Nothing in this Agreement will preclude the Company from consolidating or
merging into or with, or transferring all or substantially all of its assets to,
another corporation or entity which assumes this Agreement and all obligations
and undertakings of the Company hereunder. Upon such a consolidation, merger or
sale of assets the term “the Company” will mean the other corporation or entity
and this Agreement will continue in full force and effect. In addition to the
obligations imposed by law upon any successor to the Company, the Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation, sale of assets or otherwise) to all or substantially all of the
business and/or assets of the Company, by written agreement in form and
substance reasonably satisfactory to the Executive, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place. Failure of the Company to obtain such agreement prior to the
effectiveness of such succession shall be a breach of this Agreement and shall
entitle the Executive to compensation from the Company in the same amount and on
the same terms as the Executive would be entitled to hereunder if the
Executive’s employment were to terminate in a Without Cause Termination provided
in Section VIII(B) hereof, except that the date on which any such succession
becomes effective shall be deemed the date of the Executive’s termination of
employment. In the event the Company should enter into a court supervised
process, the Company agrees to file the proper motions in the case to retain
Executive in the same role and on the same terms as provided in this Agreement.
This Agreement shall inure to the benefit and be enforceable by Executive’s
personal and legal representatives, executors, administrators, heirs,
distributees, devisees and legatees.

 

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SECTION XV

MODIFICATION; WAIVER

This Agreement may not be modified or amended except in writing signed by the
parties. No term or condition of this Agreement will be deemed to have been
waived except in writing by the party charged with waiver. A waiver will operate
only as to the specific term or condition waived and will not constitute a
waiver for the future or act on anything other than that which is specifically
waived. This Agreement may be amended or modified only by a written instrument
signed by the Executive and by an expressly authorized representative of the
Company.

SECTION XVI

GOVERNING LAW

This Agreement has been executed and delivered in the State of New Jersey and
its validity, interpretation, performance and enforcement will be governed by
the internal laws of that state.

SECTION XVII

ARBITRATION

A. Any controversy, dispute or claim arising out of or relating to this
Agreement or the breach hereof which cannot be settled by mutual agreement
(other than with respect to the matters covered by Section IX for which the
Company may, but will not be required to, seek injunctive relief) will be
finally settled by binding arbitration in accordance with the Federal
Arbitration Act (or if not applicable, the applicable state arbitration law) as
follows: Any party who is aggrieved will deliver a notice to the other party
setting forth the specific points in dispute. Any points remaining in dispute
twenty (20) days after the giving of such notice may be submitted to arbitration
in Parsippany, New Jersey, to the American Arbitration Association, before a
single arbitrator appointed in accordance with the arbitration rules of the
American Arbitration Association, modified only as herein expressly provided.
After the aforesaid twenty (20) days, either party, upon ten (10) days notice to
the other, may so submit the points in dispute to arbitration. The arbitrator
may enter a default decision against any party who fails to participate in the
arbitration proceedings.

B. The decision of the arbitrator on the points in dispute will be final,
unappealable and binding, and judgment on the award may be entered in any court
having jurisdiction thereof.

C. Except as otherwise provided in this Agreement, the arbitrator will be
authorized to apportion its fees and expenses and the reasonable attorneys’ fees
and expenses of any such party as the arbitrator deems appropriate. In the
absence of any such apportionment, the fees and expenses of the arbitrator will
be borne equally by each party, and each party will bear the fees and expenses
of its own attorney.

D. The parties agree that this Section XVII has been included to rapidly and
inexpensively resolve any disputes between them with respect to this Agreement,
and that this Section XVII will be grounds for dismissal of any court action
commenced by either party with respect to this Agreement, other than
post-arbitration actions seeking to enforce an arbitration award. In the event
that any court determines that this arbitration procedure is not binding, or
otherwise allows any litigation regarding a dispute, claim, or controversy
covered by this Agreement to proceed, the parties hereto hereby waive any and
all right to a trial by jury in or with respect to such litigation.

 

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E. The parties will keep confidential, and will not disclose to any person,
except as may be required by law, the existence of any controversy hereunder,
the referral of any such controversy to arbitration or the status or resolution
thereof.

SECTION XVIII

SURVIVAL

Sections VIII, IX, X, XI, XII, XIII, XIV, XV, XVI, XVII, XVIII, XIX and XX will
continue in full force in accordance with their respective terms notwithstanding
any termination of the Period of Employment.

SECTION XIX

SECTION 409A COMPLIANCE

A. This Agreement shall be interpreted to avoid any penalty sanctions under
Section 409A of the Code (“Section 409A”). If any payment or benefit cannot be
provided or made at the time specified herein without incurring sanctions under
Section 409A, then such benefit or payment shall be provided in full no later
than two and one-half (2 1/2) months after the end of the later of the fiscal
year or the calendar year in which the payment or reimbursement is no longer
subject to a substantial risk of forfeiture. For purposes of Section 409A,
(i) all payments to be made upon a termination of employment under this
Agreement may only be made upon a “separation from service” within the meaning
of such term under Section 409A, (ii) each payment made under this Agreement
shall be treated as a separate payment and (iii) the right to a series of
installment payments under this Agreement is to be treated as a right to a
series of separate payments. In no event shall the Executive, directly or
indirectly, designate the calendar year of payment.

B. All reimbursements and in-kind benefits provided under this Agreement shall
be made or provided in accordance with the requirements of Section 409A,
including, where applicable, the requirements that (i) any reimbursement is for
expenses incurred during the Executive’s lifetime (or during a shorter period of
time specified in this Agreement), (ii) the amount of expenses eligible for
reimbursement, or in-kind benefits provided, during a calendar year may not
affect the expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other calendar year, (iii) the reimbursement of an eligible
expense will be made on or before the last day of the calendar year following
the year in which the expense is incurred and (iv) the right to reimbursement or
in-kind benefits is not subject to liquidation or exchange for another benefit.

C. Notwithstanding any provision in this Agreement to the contrary, if, at the
time of the Executive’s separation from service with the Company, the Company
has securities which are publicly traded on an established securities market,
the Executive is a “specified employee” (as defined in Section 409A) and it is
necessary to postpone the commencement of any severance payments otherwise
payable pursuant to this Agreement as a result of such separation from

 

14

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service to prevent any accelerated or additional tax under Section 409A, then
the Company will postpone the commencement of the payment of any such payments
or benefits hereunder (without any reduction in such payments or benefits
ultimately paid or provided to the Executive) that are not otherwise exempt from
Section 409A until the first payroll date that occurs after the date that is six
(6) months following the Executive’s separation from service with the Company
(as determined under Section 409A). If any payments are postponed pursuant to
this Section XIX(C), then such postponed amounts will be paid in a lump sum to
the Executive on the first payroll date that occurs after the date that is six
(6) months following the Executive’s separation from service with the Company.
If the Executive dies during the postponement period prior to the payment of any
postponed amount, such amount shall be paid to the personal representative of
Executive’s estate within sixty (60) days after the date of the Executive’s
death.

SECTION XX

SEPARABILITY

All provisions of this Agreement are intended to be severable. In the event any
provision or restriction contained herein is held to be invalid or unenforceable
in any respect, in whole or in part, such finding will in no way affect the
validity or enforceability of any other provision of this Agreement. The parties
hereto further agree that any such invalid or unenforceable provision will be
deemed modified so that it will be enforced to the greatest extent permissible
under law, and to the extent that any court of competent jurisdiction determines
any restriction herein to be unreasonable in any respect, such court may limit
this Agreement to render it reasonable in the light of the circumstances in
which it was entered into and specifically enforce this Agreement as limited.

[Signature page follows.]

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.

 

JACKSON HEWITT TAX SERVICE INC. By:  

 

Name:  

 

Title:  

 

 

PHILIP H. SANFORD

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EXHIBIT A

TO EXECUTIVE EMPLOYMENT AGREEMENT FOR

PHILIP H. SANFORD

FORM OF RELEASE

FORM OF RELEASE

(to be executed by the Company and the Executive)

In exchange for the consideration provided by the Company pursuant to that
certain Executive Employment Agreement dated as of August 25, 2010 between the
Company and the Executive (the “Employment Agreement”), the Executive hereby
releases, acquits, withdraws, retracts and forever discharges any and all
claims, manner of actions, causes of action (in law or in equity), suits,
judgments, debts, liens, contracts, agreements, promises, liabilities, demands,
damages, losses, costs, expenses or disputes, known or unknown, fixed or
contingent, directly or indirectly, personally or in a representative capacity,
against the Company and its agents, attorneys, assigns, employees, successors,
predecessors, officers, directors, shareholders, and parent, subsidiary or
related companies (hereinafter the “Released Parties”), by reason of any act,
omission, matter, cause or thing whatsoever, from the beginning of time up to
and including the date of execution of this Release to the extent that such a
release is permitted as a matter of law; provided, however, nothing herein shall
release the Company or the Released Parties from their respective obligations
under this Release or under the Employment Agreement to the extent the
provisions thereof survive the termination of the Executive thereunder. The
Executive’s general release set forth in this Release includes, but is not
limited to, all claims, manner of actions, causes of action (in law or in
equity), suits or requests for attorneys’ fees and/or costs: (i) arising or
relating to income, payroll or excise taxes in connection with the Executive’s
employment or (ii) under the Employee Retirement Income Security Act of 1974;
Title VII of the Civil Rights Act of 1964, as amended; the Americans with
Disabilities Act, as amended by the Americans with Disabilities Amendments Act
of 2008; the Rehabilitation Act of 1973; the Family and Medical Leave Act; the
anti-retaliation provisions of the Fair Labor Standards Act; the Equal Pay Act;
the Pregnancy Discrimination Act; the Consolidated Omnibus Budget Reconciliation
Act (“COBRA”); the Age Discrimination in Employment Act of 1967 (the “ADEA”);
the Older Worker’s Benefits Protection Act (the “OWBPA”); the Occupational
Safety and Health Act; the National Labor Relations Act; the Genetic Information
Nondiscrimination Act of 2008; 42 U.S.C. §§ 1981 through 1988; any federal,
state or local law regarding retaliation for protected activity or interference
with protected rights; and any state or local law, including, but not limited
to, the New Jersey Law Against Discrimination, N.J. Stat. Ann. § 10:5-1 et seq.;
New Jersey’s law regarding Equal Pay, N.J. Stat. Ann. § 34:11-56.1 et seq.; the
New Jersey Smokers’ Rights Law, N.J. Stat. Ann § 34:6B-1 et seq.; the
Conscientious Employee Protection Act; the Georgia AIDS Confidentiality Act;
Georgia’s Law Regarding Equal Pay, O.C.G.A. § 34-5-1 et seq.; the Georgia Equal
Employment for Persons with Disabilities Code; Georgia’s Law Regarding Age
Discrimination, O.C.G.A. § 34-1-2; the New Jersey or Georgia Constitutions; and
all claims under New Jersey or Georgia public policy or common law, including,
but not limited to, common law claims of outrageous conduct, intentional or
negligent infliction of emotional distress, negligent hiring, breach of
contract, breach of the covenant of good faith and fair dealing, promissory
estoppel, negligence, wrongful termination of employment, interference with

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employment relationship, civil rights, fraud and deceit and all other claims of
any type or nature, including all claims for damages, wages, compensation,
vacation, reinstatement, medical expenses, punitive damages, and claims for
attorney’s fees. The Executive and the Company intend that the Executive’s
general release set forth in this Release shall discharge all claims against the
Company and all other Released Parties to the full and maximum extent permitted
by law. The Executive and the Company further agree that to the extent that
federal or state law prohibits the waiving of certain claims as a matter of law,
this Release is not intended to waive any such claims.

The Executive represents that he has not filed or permitted to be filed against
the Company or any of the Released Parties, individually or collectively, any
lawsuits, charges or proceedings (including any arbitrations). Except as
necessary to enforce the terms of this Release, the Executive covenants and
agrees not to sue the Company or any of the Released Parties concerning any of
the matters covered by this Release.

The Executive acknowledges and agrees that, in regard to the Executive’s release
and waiver of claims under the ADEA and the OWBPA, as set forth in this Release,
the Executive was informed that the Executive does not waive any such rights or
claims that may arise after the date this Release is executed and that the
Executive has twenty-one (21) days after receiving this Release within which to
consider this Release. If the Executive executes this Release before the end of
such twenty-one (21) day period, then the Executive acknowledges that the
Executive’s decision to do so was knowing, voluntary and not induced by fraud,
misrepresentation or a threat to withdraw, alter or provide different terms
prior to the expiration of such twenty-one (21) day period. The Executive
further acknowledges that this Release is effective and enforceable against the
Executive upon the Executive’s execution hereof, subject to the Executive’s
valid and timely revocation of this Release. The Executive further understands
and acknowledges that this Release is not enforceable or effective until the
period stated in the penultimate paragraph of this Release has expired and that
if the Executive revokes this Release, the Executive will lose all benefits
under this Release.

The Executive understands that the Executive has seven (7) days following the
Executive’s execution of this Release to revoke this Release. The Executive
further understands that, if the Executive elects to revoke this Release, the
Executive must provide notice to the Company in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
prepaid overnight courier (providing proof of delivery) or by registered or
certified mail (postage prepaid, return receipt requested) at the following
address:

Jackson Hewitt Tax Service Inc.

3 Sylvan Way

Parsippany, NJ 07054

Attn: President

The Executive shall return promptly all Company Property to the Company. For
purposes hereof, “Company Property” includes, but is not limited to, all
information and material belonging to the Company, including automobiles, office
keys and equipment, documents, policy or practice manuals, records, files,
electronic information, software, computers, computer disks, drives or other
storage media, handheld computer devices such as Blackberries, mobile phones,
corporate credit cards, and all other Company Property in the Executive’s
possession, including any reproductions or copies thereof.

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Subject to the effectiveness of the Executive’s general release set forth in
this Release, the Company releases the Executive of any claims against the
Executive that it is aware of at the time of this Release, except for any claim
relating to fraud, criminal matters or accounting irregularities; provided,
however, nothing herein shall release the Executive from his obligations under
this Release or under the Employment Agreement to extent the provisions thereof
survive the termination of the Executive thereunder.

The Executive agrees that he shall not disparage the Company nor the Company’s
business, nor any of its officers, directors or employees. The Company, on
behalf of its directors and executives officers, agrees not to disparage the
Executive.

The release set forth herein is intended to constitute the release contemplated
by Section VIII (E) of the Employment Agreement.