Exhibit 10.1
H&R BLOCK, INC.
2003 LONG-TERM EXECUTIVE COMPENSATION PLAN
(Amended and Restated effective July 27, 2010)
     1. Purposes. The purposes of this 2003 Long-Term Executive Compensation
Plan are to provide incentives and rewards to those employees and persons
largely responsible for the success and growth of H&R Block, Inc. and its
subsidiary corporations, and to assist all such corporations in attracting and
retaining executives and other key employees and persons with experience and
ability.
     2. Definitions.
     (a) Award means one or more of the following: shares of Common Stock,
Restricted Shares, Stock Options, Incentive Stock Options, Stock Appreciation
Rights, Performance Shares, Performance Units and any other rights which may be
granted to a Recipient under the Plan.
     (b) Committee means the Compensation Committee described in Section 3.
     (c) Common Stock means the Common Stock, without par value, of the Company.
     (d) Company means H&R Block, Inc., a Missouri corporation, and, unless the
context otherwise requires, includes its “subsidiary corporations” (as defined
in Section 424(f) of the Internal Revenue Code) and their respective divisions,
departments and subsidiaries and the respective divisions, departments and
subsidiaries of such subsidiaries.
     (e) Incentive Stock Option means a Stock Option which meets all of the
requirements of an “incentive stock option” as defined in Section 422(b) of the
Internal Revenue Code.
     (f) Internal Revenue Code means the Internal Revenue Code of 1986, as now
in effect or hereafter amended.
     (g) Performance Period means that period of time specified by the Committee
during which a Recipient must satisfy any designated performance goals in order
to receive an Award.
     (h) Performance Share means the right to receive, upon satisfying
designated performance goals within a Performance Period, shares of Common
Stock, cash, or a combination of cash and shares of Common Stock, based on the
market value of shares of Common Stock covered by such Performance Shares at the
close of the Performance Period.

 

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     (i) Performance Unit means the right to receive, upon satisfying designated
performance goals within a Performance Period, shares of Common Stock, cash, or
a combination of cash and shares of Common Stock.
     (j) Plan means this 2003 Long-Term Executive Compensation Plan, as the same
may be amended from time to time
     (k) Recipient means an employee of the Company or other person who has been
granted an Award under the Plan.
     (l) Restricted Share means a share of Common Stock issued to a Recipient
hereunder subject to such terms and conditions, including, without limitation,
forfeiture or resale to the Company, and to such restrictions against sale,
transfer or other disposition, as the Committee may determine at the time of
issuance.
     (m) Stock Appreciation Right means the right to receive, upon exercise of a
stock appreciation right granted under this Plan, shares of Common Stock, cash,
or a combination of cash and shares of Common Stock, based on the increase in
the market value of the shares of Common Stock covered by such stock
appreciation right from the initial day of the Performance Period for such stock
appreciation right to the date of exercise.
     (n) Stock Option means the right to purchase, upon exercise of a stock
option granted under this Plan, shares of the Company’s Common Stock.
     3. Administration of the Plan. The Plan shall be administered by the
Committee which shall consist of directors of the Company, to be appointed by
and to serve at the pleasure of the Board of Directors of the Company. A
majority of the Committee members shall constitute a quorum and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by a majority of the Committee, shall be valid acts of
the Committee, however designated, or the Board of Directors of the Company if
the Board has not appointed a Committee.
     The Committee shall have full power and authority to construe, interpret
and administer the Plan and, subject to the powers herein specifically reserved
to the Board of Directors and subject to the other provisions of this Plan, to
make determinations which shall be final, conclusive and binding upon all
persons including, without limitation, the Company, the shareholders of the
Company, the Board of Directors, the Recipients and any persons having any
interest in any Awards which may be granted under the Plan. The Committee shall
impose such additional conditions upon the grant and exercise of Awards under
this Plan as may from time to time be deemed necessary or advisable, in the
opinion of counsel to the Company, to comply with applicable laws and
regulations. The Committee from time to time may adopt rules and regulations for
carrying out the Plan and written policies for implementation of the Plan. Such
policies may include, but need not be limited to, the type, size and terms of
Awards to be made to Recipients and the conditions for payment of such Awards.
     4. Absolute Discretion. The Committee may, in its sole and absolute
discretion (subject to the Committee’s power to delegate certain authority in
accordance with the second

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paragraph of this Section 4), at any time and from time to time during the
continuance of the Plan, (i) determine which Recipients shall be granted Awards
under the Plan, (ii) grant to any Recipient so selected such an Award,
(iii) determine the type, size and terms of Awards to be granted (subject to
Sections 6, 10 and 11 hereof), (iv) establish objectives and conditions for
receipt of Awards, (v) place conditions or restrictions on the payment or
exercise of Awards, and (vi) do all other things necessary and proper to carry
out the intentions of this Plan; provided, however, that, in each and every
case, those Awards which are Incentive Stock Options shall contain and be
subject to those requirements specified in Section 422 of the Internal Revenue
Code and shall be granted only to those persons eligible thereunder to receive
the same.
     The Committee may at any time and from time to time delegate to the Chief
Executive Officer of the Company authority to take any or all of the actions
that may be taken by the Committee as specified in this Section 4 or in other
sections of the Plan in connection with the determination of Recipients, types,
sizes, terms and conditions of Awards under the Plan and the grant of any such
Awards, provided that any authority so delegated (a) shall apply only to Awards
to employees of the Company that are not officers of Company under
Regulation Section 240.16a-1(f) promulgated pursuant to Section 16 of the
Securities Exchange Act of 1934, and (b) shall be exercised only in accordance
with the Plan and such rules, regulations, guidelines, and limitations as the
Committee shall prescribe.
     5. Eligibility. Awards may be granted to any employee of the Company or to
the non- executive Chairman of the Board of the Company. No member of the
Committee (other than any ex officio member or the non-executive Chairman of the
Board of the Company) shall be eligible for grants of Awards under the Plan. A
Recipient may be granted multiple forms of Awards under the Plan. Incentive
Stock Options may be granted under the Plan to a Recipient during any calendar
year only if the aggregate fair market value (determined as of the date the
Incentive Stock Option is granted) of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by such Recipient
during any calendar year under the Plan and any other “incentive stock option
plans” (as defined in the Internal Revenue Code) maintained by the Company does
not exceed the sum of $100,000.
     6. Stock Subject to the Plan. The total number of shares of Common Stock
issuable under this Plan may not at any time exceed 14,000,000 shares, subject
to adjustment as provided herein. All of such shares may be issued or issuable
in connection with the exercise of Incentive Stock Options. Shares of Common
Stock not actually issued pursuant to an Award shall be available for future
Awards. Shares of common Stock to be delivered or purchased under the Plan may
be either authorized but unissued Common Stock or treasury shares. The total
number of shares of Common Stock that may be subject to one or more Awards
granted to any one Recipient during a calendar year may not exceed 1,000,000,
subject to adjustment as provided in Section 16 of the Plan.
     7. Awards.
     (a) Awards under the Plan may include, but need not be limited to, shares
of Common Stock, Restricted Shares, Stock Options, Incentive Stock Options,
Stock Appreciation Rights, Performance Shares and Performance Units. The amount
of each Award may be based upon the market value of a share of Common Stock. The

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Committee may make any other type of Award which it shall determine is
consistent with the objectives and limitations of the Plan.
     (b) The Committee may establish performance goals to be achieved within
such Performance Periods as may be selected by it using such measures of the
performance of the Company as it may select as a condition to the receipt of any
Award.
     8. Vesting Requirements. The Committee may determine that all or a portion
of an Award or a payment to a Recipient pursuant to an Award, in any form
whatsoever, shall be vested at such times and upon such terms as may be selected
by it.
     9. Deferred Payments and Dividend and Interest Equivalents.
     (a) The Committee may determine that the receipt of all or a portion of an
Award or a payment to a Recipient pursuant to an Award, in any form whatsoever,
shall be deferred. Deferrals shall be for such periods and upon such terms as
the Committee may determine.
     (b) Unless the Committee provides otherwise in an Award agreement,
dividends and dividend equivalents will not be paid with respect to any Award,
except for dividends with respect to which the dividend record date is on or
after the date of issuance of unrestricted vested shares of Common Stock with
respect to such Award. The Committee may provide, in its sole and absolute
discretion, that a Recipient to whom an Award is payable in whole or in part at
a future time in shares of Common Stock shall be entitled to receive an amount
per share equal in value to the cash dividends paid per share on issued and
outstanding shares as of the dividend record dates occurring during the period
from the date of the Award to the date of delivery of such share to the
Recipient. The Committee may also authorize, in its sole and absolute
discretion, payment of an amount which a Recipient would have received in
interest on (i) any Award payable at a future time in cash during the period
from the date of the Award to the date of payment, and (ii) any cash dividends
paid on issued and outstanding shares as of the dividend record dates occurring
during the period from the date of an Award to the date of delivery of shares
pursuant to the Award. Any amounts provided under this subsection shall be
payable in such manner, at such time or times, and subject to such terms and
conditions as the Committee may determine in its sole and absolute discretion.
     10. Stock Option Price. The purchase price per share of Common Stock under
each Stock Option shall be determined by the Committee, but shall not be less
than market value (as determined by the Committee) of one share of Common Stock
on the date the Stock Option or Incentive Stock Option is granted. Payment for
exercise of any Stock Option granted hereunder shall be made (a) in cash, or
(b) by delivery of Common Stock having a market value equal to the aggregate
option price, or (c) by a combination of payment of cash and delivery of Common
Stock in amounts such that the amount of cash plus the market value of the
Common Stock equals the aggregate option price.

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     11. Stock Appreciation Right Value. The base value per share of Common
Stock covered by an Award in the form of a Stock Appreciation Right shall be the
market value of one share of Common Stock on the date the Award is granted.
     12. Continuation of Employment. The Committee shall require that a
Recipient be an employee or director of the Company at the time an Award is paid
or exercised. The Committee may provide for the termination of an outstanding
Award if a Recipient ceases to be an employee or director of the Company and may
establish such other provisions with respect to the termination or disposition
of an Award on the death or retirement of a Recipient (or not being re-elected
to the Board of Directors) as it, in its sole discretion, deems advisable. The
Committee shall have the sole power to determine the date of any circumstances
which shall constitute a cessation of employment or term as a director and to
determine whether such cessation is the result of retirement, death or any other
reason.
     13. Registration of Stock. Each Award shall be subject to the requirement
that if at any time the Committee shall determine that qualification or
registration under any state or federal law of the shares of Common Stock,
Restricted Shares, Stock Options, Incentive Stock Options, or other securities
thereby covered or the consent or approval of any governmental regulatory body
is necessary or desirable as a condition of or in connection with the granting
of such Award or the purchase of shares thereunder, the Award may not be paid or
exercised in whole or in part unless and until such qualification, registration,
consent or approval shall have been effected or obtained free of any conditions
the Committee, in its discretion, deems unacceptable.
     14. Employment Status. No Award shall be construed as imposing upon the
company the obligation to continue the employment or term of a Recipient. No
employee or other person shall have any claim or right to be granted an Award
under the Plan.
     15. Assignability. No Award granted pursuant to the Plan shall be
transferable or assignable by the Recipient other than by will or the laws of
descent and distribution and during the lifetime of the Recipient shall be
exercisable or payable only by or to him or her; provided, however, that a
Recipient who was granted an Award in consideration for serving as the Company’s
non-executive Chairman of the Board may transfer or assign an Award to an entity
that is or was a shareholder of the Company at any time during which the
Recipient served as the Company’s non-executive Chairman of the Board (a
“Shareholder Entity”) if (i) the Recipient is affiliated with the manager of the
investments made by such Shareholder Entity or otherwise serves on the Company’s
Board of Directors at the Shareholder Entity’s direction or request, and
(ii) pursuant to the Shareholder Entity’s governance documents or any
regulatory, contractual or other requirement, any consideration the Recipient
may receive as compensation for serving as a director of the Company must be
transferred, assigned, surrendered or otherwise paid to the Shareholder Entity.
     16. Dilution or Other Adjustments. In the event of any changes in the
capital structure of the Company, including but not limited to a change
resulting from a stock dividend or split-up, or combination or reclassification
of shares, the Board of Directors shall make such equitable adjustments with
respect to Awards or any provisions of this Plan as it deems necessary and
appropriate, including, if necessary, any adjustment in the maximum number of

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shares of Common Stock subject to the Plan, the maximum number of shares that
may be subject to one or more Awards granted to any one Recipient during a
calendar year, or the number of shares of Common Stock subject to an outstanding
Award.
     17. Merger, Consolidation, Reorganization, Liquidation, Etc. If the Company
shall become a party to any corporate merger, consolidation, major acquisition
of property for stock, reorganization, or liquidation, the Board of Directors
shall make such arrangements it deems advisable with respect to outstanding
Awards, which shall be binding upon the Recipients of outstanding Awards,
including, but not limited to, the substitution of new Awards for any Awards
then outstanding, the assumption of any such Awards and the termination of or
payment for such Awards.
     18. Withholding Taxes. The Company shall have the right to deduct from all
Awards hereunder paid in cash any federal, state, local or foreign taxes
required by law to be withheld with respect to such Awards and, with respect to
Awards paid in other than cash, to require the payment (through withholding from
the Recipient’s salary or otherwise) of any such taxes. Subject to such
conditions as the Committee may establish, Awards payable in shares of Common
Stock, or in the form of an Incentive Stock Option or Stock Option, may provide
that the Recipients thereof may elect, in accordance with any applicable
regulations, to satisfy all or any part of the tax required to be withheld by
the Company in connection with such Award, or the exercise of such Incentive
Stock Option or Stock Option, by electing to have the Company withhold a number
of shares of Common Stock awarded, or purchased pursuant to such exercise,
having a fair market value on the date the tax withholding is required to be
made equal to or less than the amount required to be withheld.
     19. Costs and Expenses. The cost and expenses of administering the Plan
shall be borne by the Company and not charged to any Award or to any Recipient.
     20. Funding of Plan. The Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of any Award under the Plan.
     21. Award Contracts. The Committee shall have the power to specify the form
of Award contracts to be granted from time to time pursuant to and in accordance
with the provisions of the Plan and such contracts shall be final, conclusive
and binding upon the Company, the shareholders of the Company and the
Recipients. No Recipient shall have or acquire any rights under the Plan except
such as are evidenced by a duly executed contract in the form thus specified. No
Recipient shall have any rights as a holder of Common Stock with respect to
Awards hereunder unless and until certificates for shares of Common Stock or
Restricted Shares are issued to the Recipient.
     22. Guidelines. The Board of Directors of the Company shall have the power
to provide guidelines for administration of the Plan by the Committee and to
make any changes in such guidelines as from time to time the Board deems
necessary.
     23. Amendment and Discontinuance. The Board of Directors of the Company
shall have the right at any time during the continuance of the Plan to amend,
modify, supplement,

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suspend or terminate the Plan, provided that in the absence of the approval of
the holders of a majority of the shares of Common Stock of the Company present
in person or by proxy at a duly constituted meeting of shareholders of the
Company, no such amendment, modification or supplement shall (i) increase the
aggregate number of shares which may be issued under the Plan, unless such
increase is by reason of any change in capital structure referred to in
Section 16 hereof, (ii) change the termination date of the Plan provided in
Section 24, (iii) delete or amend the market value restrictions contained in
Sections 10 and 11 hereof, (iv) materially modify the requirements as to
eligibility for participation in the Plan, or (v) materially increase the
benefits accruing to participants under the Plan, and provided further, that no
amendment, modification or termination of the Plan shall in any manner affect
any Award of any kind theretofore granted under the Plan without the consent of
the Recipient of the Award, unless such amendment, modification or termination
is by reason of any change in capital structure referred to in Section 16 hereof
or unless the same is by reason of the matters referred to in Section 17 hereof.
     24. Termination. The Committee may grant Awards at any time prior to
July 1, 2013, on which date this Plan will terminate except as to Awards then
outstanding hereunder, which Awards shall remain in effect until they have
expired according to their terms or until July 1, 2023, whichever first occurs.
No Incentive Stock Option shall be exercisable later than 10 years following the
date it is granted.
     25. Approval. This Plan shall take effect July 1, 2003, contingent upon
prior approval by the shareholders of the Company.

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H&R BLOCK, INC.
2003 LONG-TERM EXECUTIVE COMPENSATION PLAN
GRANT AGREEMENT
     This Grant Agreement is entered into by and between H&R Block, Inc., a
Missouri corporation (the “Company”), and [Participant Name] (“Participant”).
     WHEREAS, the Company provides certain incentive awards to key employees of
subsidiaries of the Company under the H&R Block, Inc. 2003 Long-Term Executive
Compensation Plan (the “Plan”);
     WHEREAS, receipt of such Awards under the Plan are conditioned upon a
Participant’s execution of a Grant Agreement within 180 days of [Grant Date],
wherein Participant agrees to abide by certain terms and conditions authorized
by the Compensation Committee of the Board of Directors;
     WHEREAS, the Participant has been selected by the Compensation Committee or
the Chief Executive Officer of the Company as a key employee of one of the
subsidiaries of the Company and is eligible to receive Awards under the Plan.
     NOW THEREFORE, in consideration of the parties promises and agreements set
forth in this Grant Agreement, the sufficiency of which the parties hereby
acknowledge,
IT IS AGREED AS FOLLOWS:
1. Definitions. Whenever a term is used in this Grant Agreement (“Agreement”),
the following words and phrases shall have the meanings set forth below unless
the context plainly requires a different meaning, and when a defined meaning is
intended, the term is capitalized.
1.1 Amount of Gain Realized. The Amount of Gain Realized shall be equal to the
number of shares of Common Stock purchased pursuant to such exercise multiplied
by the difference between the FMV of one Share of the Company’s Common Stock on
the date of exercise and the Option Price.
1.2 Change of Control means the occurrence of one or more of the following
events:
(a) Any one person, or more than one person acting as a group, acquires
ownership of stock of the Company that, together with stock held by such person
or group, constitutes more than 50 percent of the total fair market value or
total voting power of the stock of the Company. If any one person, or more than
one person acting as a group, is considered to own more than 50 percent of the
total fair market value or total voting power of the stock of the Company, the
acquisition of additional stock by the same person or persons shall not be
considered to cause a change in the ownership of the corporation. An increase in
the percentage of stock owned by any one person, or persons acting as a group,
as a result of a transaction in which the Company acquires its stock in exchange
for

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property will be treated as an acquisition of stock for purposes of this Section
1.2(a).
(b) Any one person, or more than one person acting as a group, acquires (or has
acquired during the 12-month period ending on the date of the most recent
acquisition by such person or persons) ownership of stock of the Company
possessing 35 percent or more of the total voting power of the stock of the
Company. If any one person, or more than one person acting as a group, is
considered to effectively control a corporation within the meaning of Treasury
Regulation §1.409A-3(i)(5)(vi), the acquisition of additional control of the
corporation by the same person or persons is not considered to cause a change in
the effective control of the corporation.
(c) A majority of members of the Company’s Board of Directors (the “Board”) is
replaced during any 12-month period by directors whose appointment or election
is not endorsed by two-thirds (2/3) of the members of the Board before the date
of such appointment or election.
(d) Any one person, or more than one person acting as a group, acquires (or has
acquired during the 12-month period ending on the date of the most recent
acquisition by such person or persons) assets from the Company that have a total
gross fair market value equal to or more than 50 percent of the total gross fair
market value of all of the assets of the Company immediately before such
acquisition or acquisitions. For this purpose, gross fair market value means the
value of the assets of the Company, or the value of the assets being disposed
of, determined without regard to any liabilities associated with such assets.
Notwithstanding the foregoing, there is no Change in Control event under this
Section 1.2(d) when there is a transfer to an entity that is controlled by the
shareholders of the Company immediately after the transfer. A transfer of assets
by the Company is not treated as a change in the ownership of such assets if the
assets are transferred to: (i) a shareholder of the Company (immediately before
the asset transfer) in exchange for or with respect to its stock; (ii) an
entity, 50 percent or more of the total value or voting power of which is owned,
directly or indirectly, by the Company; (iii) a person, or more than one person
acting as a group, that owns, directly or indirectly, 50 percent or more of the
total value or voting power of all the outstanding stock of the Company; or
(iv) an entity, at least 50 percent of the total value or voting power of which
is owned, directly or indirectly, by a person described in (iii) above.
For purposes of the foregoing, persons will be considered acting as a group in
accordance with Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of
1934, as amended, and Section 409A of the Code.
1.3 Code. Code means the Internal Revenue Code of 1986, as amended.
1.4 Committee. Committee means the Compensation Committee of the Board of
Directors for H&R Block, Inc.

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1.5 Common Stock. Common Stock means the common stock, without par value, of the
Company.
1.6 Company. Company means H&R Block, Inc., a Missouri corporation, and, unless
the context otherwise requires, includes its “subsidiary corporations” (as
defined in Section 424(f) of the Internal Revenue Code) and their respective
divisions, departments and subsidiaries and the respective divisions,
departments and subsidiaries of such subsidiaries.
1.7 Closing Price. Closing Price shall mean the last reported market price for
one share of Common Stock, regular way, on the New York Stock Exchange (or any
successor exchange or stock market on which such last reported market price is
reported) on the day in question. In the event the exchange is closed on the day
on which Closing Price is to be determined or if there were no sales reported on
such date, Closing Price shall be computed as of the last date preceding such
date on which the exchange was open and a sale was reported.
1.8 Disability. Disability or disabled shall be as defined in the employment
practices or policies of the applicable subsidiary of the Company in effect from
time to time during the term hereof or, absent such definition, then as defined
in the H&R Block Retirement Savings Plan or any successor plan thereto.
1.9 Early Retirement. Early Retirement means the Participant’s voluntary
termination of employment with the Company and each of its subsidiaries at or
after the date the Participant has both reached age 55 but has not yet reached
age 65, and completed at least ten (10) years of service with the company or its
subsidiaries.
1.10 Fair Market Value. Fair Market Value (“FMV”) means the Closing Price for
one share of H&R Block, Inc. Stock.
1.11 Last Day of Employment. Last Day of Employment means the date the
Participant ceases for whatever reason to be an employee and is not immediately
thereafter and continuously employed as a regular active employee by any other
direct or indirect subsidiary of the Company
1.12 Line of Business. Line of Business of the Company means any line of
business of the subsidiary of the Company by which Participant was employed as
of the Last Day of Employment, as well as any one or more lines of business of
any other subsidiary of the Company by which Participant was employed during the
two-year period preceding the Last Day of Employment, provided that, if
Participant’s employment was, as of the Last Day of Employment or during the
two-year period immediately prior to the Last Day of Employment, with H&R Block
Management, LLC or any successor entity thereto, “Line of Business of the
Company” shall mean any lines of business of the Company and all of its
subsidiaries.
1.13 Qualifying Termination. Qualifying Termination shall mean Participant’s
termination of employment which meets the definition of a “Qualifying
Termination” under a severance plan sponsored by the Company or a subsidiary of
the Company. In the

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event that no formal severance plan exists for the Participant’s subsidiary, the
definition of “Qualifying Termination” contained in any applicable severance
plan for the Company will govern.
1.14 Retirement. Retirement means the Participant’s voluntary termination of
employment with the Company and each of its subsidiaries, at or after attaining
age 65.
1.15 Stock Option. Stock Option means the right to purchase, upon exercise of a
stock option granted under the Plan, shares of the Company’s Common Stock. A
Stock Option may be an Incentive Stock Option which meets the requirements of
Code Section 422(b) or a Nonqualified Stock Option. The right and option to
purchase shares of Common Stock identified as subject to Nonqualified Stock
Option shall not constitute and shall not be treated for any purpose as an
“incentive stock option,” as such term is defined in the Code.
2. Stock Option.
2.1 Grant of Stock Option. As of [Grant Date] (the “Grant Date”), the Company
grants the Participant the right and option to purchase [Number of Shares
Granted] shares of Common Stock (this “Stock Option”) identified as [Grant
Type].
2.2 Option Price. The Price per share of Common Stock subject to this Stock
Option is [Grant Price], which is the Closing Price on [Grant Date].
2.3 Vesting. This Stock Option shall vest and become exercisable in
installments, which shall be cumulative, with regard to the percentage of the
number of shares of Common Stock subject to this Stock Option indicated next to
each vesting date set forth in the table below provided that the Participant
remains continuously employed by the Company through such date:

              Percent of Shares Subject to this     Stock Option Vesting on Such
Vesting Date   Vesting Date  
First Anniversary of the Grant Date
    25 %
Second Anniversary of the Grant Date
    25 %
Third Anniversary of the Grant Date
    25 %
Fourth Anniversary of the Grant Date
    25 %

(Note: If the percentage of the aggregate number of shares of Common Stock
subject to this Stock Option scheduled to vest on a vesting date is not a whole
number of shares, then the amount vesting shall be rounded down to the nearest
whole number of shares for each vesting date, except that the amount vesting on
the final vesting date shall be such that 100% of the aggregate number of shares
of Common Stock subject to this Stock Option shall be cumulatively vested as of
the final vesting date.)

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2.4 Acceleration of Vesting. Notwithstanding Section 2.3, the Participant shall
become vested in all or a portion of the Stock Options awarded under this Grant
Agreement on the occurrence of any of the following events:
(a) Change of Control. In the event the Participant incurs a Qualifying
Termination in the 24 months immediately following a Change of Control, as
defined in Section 1.2, such Participant shall become 100% vested in all
outstanding stock options granted under this Grant Agreement. The Participant
may exercise such options until the earlier of: (i) ninety (90) days following
the Participant’s Last Day of Employment unless the Participant elects in
writing to extend this time period through the severance period as defined by
the applicable severance plan or (ii) the last day the stock options would have
been exercisable if the Participant had not incurred a termination of
employment. Receipt of this award may be conditioned on the execution of a
separation agreement.
(b) Retirement. The Participant may purchase 100% of the total Stock Options
granted under this Stock Option provided that the Participant retires more than
one year after the Grant Date. Receipt of this award may be conditioned upon
Participant’s execution of a separation agreement.
(c) Qualifying Termination. The Participant experiences a Qualifying
Termination, all or a portion of the then outstanding Stock Options granted
under this Stock Option shall vest according to any applicable severance plan
and Participant may purchase 100% of such vested Stock Options. Receipt of this
award may be conditioned upon Participant’s execution of a separation agreement.
(d) Employment Agreement. The Participant may purchase all or a portion of the
total vested Stock Options granted under this Stock Option upon the occurrence
of certain events specified in the Participant’s employment agreement.
If application of this Section 2.4 results in the acceleration of vesting of all
or any portion of the Stock Options, shares of Common Stock then subject to
Stock Options shall be allocated such that the number of shares subject to
Incentive Stock Option shall be the maximum number of shares that may be subject
to Incentive Stock Option under Section 422 of the Code for the calendar year in
which the acceleration of vesting results.
2.5 Term of Option. No Stock Option granted under this Grant Agreement may be
exercised after [Expiration Date]. Except as provided in this Section 2.5 and
Section 2.6, all Stock Options shall terminate when the Participant ceases, for
whatever reason, to be an employee of any of the subsidiaries of the Company. In
the event the Participant ceases to be an employee of any of the subsidiaries of
the Company because of Retirement, Early Retirement or Disability, Participant
may exercise any vested Stock Options up to twelve months after employment
ceases. In the event the Participant experiences a Qualifying Termination, this
Stock Option may be eligible for an extension of the exercise period pursuant to
an applicable severance plan.

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2.6 Participant’s Death. In the event the Participant ceases to be an employee
of any of the subsidiaries of the Company because of Death, the person or
persons to whom the Participant’s rights under the Stock Option shall pass by
the Participant’s will or laws of descent and distribution may exercise any
vested Stock Options for a period up to twelve months after the date of death.
2.7 Exercise of Stock Option. The Stock Option granted under the Plan shall be
exercisable from time to time by the Participant by giving notice of exercise to
the Company, in the manner specified by the Company, specifying the number of
whole shares to be purchased, and accompanied by full payment of the purchase
price. The right to purchase shall be cumulative, so that the full number of
shares of Common Stock that become purchasable at any time need not be purchased
at such time, but may be purchased at any time or from time to time thereafter
(but prior to the termination of the Stock Option).
2.8 Payment of the Option Price. Full payment of the Option Price for shares
purchased shall be made at the time the Participant exercises the Stock Option.
Payment of the aggregate Option Price may be made in (a) cash, (b) by delivery
of Common Stock (with a value equal to the Closing Price of Common Stock on the
last trading date preceding the date on which the Stock Option is exercised), or
(c) a combination thereof. Payment shall be made only in cash unless at least
six months have elapsed between the date of Participant’s acquisition of each
share of Common Stock delivered by Participant in full or partial payment of the
aggregate Option Price and the date on which the Stock Option is exercised.
2.9 No Shareholder Privileges. Neither the Participant nor any person claiming
under or through him or her shall be, or have any of the rights or privileges
of, a shareholder of the Company with respect to any of the Common Stock
issuable upon the exercise of this Stock Option, unless and until certificates
evidencing such shares of Common Stock shall have been duly issued and
delivered.
3. Covenants.
3.1 Consideration for Award under the Plan. Participant acknowledges that
Participant’s agreement to this Section 3 is a key consideration for any Award
under the Plan. Participant hereby agrees to abide by the Covenants set forth in
Sections 3.2, 3.3, and 3.4.
3.2 Covenant Against Competition. During the period of Participant’s employment
and for two (2) years after his/her Last Day of Employment, Participant
acknowledges and agrees he/she will not engage in, or own or control any
interest in, or act as an officer, director or employee of, or consultant,
advisor or lender to, any entity that engages in any business that is
competitive with the primary business activities of the Company’s Tax Services
business which are tax preparation, accounting, and small business services.

6

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3.3 Covenant Against Hiring. Participant acknowledges and agrees the he/she will
not directly or indirectly recruit, solicit, or hire any Company employee or
otherwise induce any such employee to leave the Company’s employment during the
period of Participant’s employment and for one (1) year after his/her Last Day
of Employment.
3.4 Covenant Against Solicitation. During the period of Participant’s employment
and for two (2) years after his/her Last Day of Employment, Participant
acknowledges and agrees that he/she will not directly or indirectly solicit or
enter into any business transaction of the nature performed by the Company with
any Company client for which Participant personally performed services or
acquired material information.
3.5 Forfeiture of Rights. Notwithstanding anything herein to the contrary, if
Participant violates any provisions of this Section 3, Participant shall forfeit
all rights to payments or benefits under the Plan. All Stock Options outstanding
on such date shall terminate.
3.6 Remedies. Notwithstanding anything herein to the contrary, if Participant
violates any provisions of this Section 3, whether prior to, on or after any
Settlement of an Award under the Plan, then Participant shall promptly pay to
Company an amount equal to the aggregate Amount of Gain Realized by the
Participant on all Stock Options exercised after a date commencing one year
prior to Participant’s Last Day of Employment. The Participant shall pay Company
within three (3) business days after the date of any written demand by the
Company to the Participant.
3.7 Remedies payable in Company’s Common Stock or Cash. The Participant shall
pay the amounts described in Section 3.6 in the Company’s Common Stock or cash.
3.8 Remedies without Prejudice. The remedies provided in this Section 3 shall be
without prejudice to the rights of the Company and/or the rights of any one or
more of its subsidiaries to recover any losses resulting from the applicable
conduct of the Participant and shall be in addition to any other remedies the
Company and/or any one or more subsidiaries may have, at law or in equity,
resulting from such conduct.
3.9 Survival. Participant’s obligations in this Section 3 shall survive and
continue beyond settlement of all Awards under the Plan and any termination or
expiration of this Agreement for any reason.
4. Non-Transferability of Awards. Any Stock Option (including all rights,
privileges and benefits conferred under such Award) shall not be transferred,
assigned, pledged, or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to sale under execution, attachment or
similar process. Upon any attempt to transfer, assign, pledge, hypothecate, or
otherwise dispose of any Stock Option, or of any right or privilege conferred
hereby, contrary to the provisions hereof, or upon any attempted sale under any
execution, attachment, or similar process upon the rights and privileges hereby
granted, then and in any such event such Award and the rights and privileges
hereby granted shall immediately become null and void.

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5. Miscellaneous.
5.1 No Employment Contract. This Agreement does not confer on the Participant
any right to continued employment for any period of time, is not an employment
contract, and shall not in any manner modify any effective contract of
employment between the Participant and any subsidiary of the Company.
5.2 Clawback for Negligence or Misconduct. If the Committee determines that the
Participant has engaged in negligence or intentional misconduct that results in
a significant restatement of the Company’s financial results and a resulting
overpayment in compensation or Awards under this Plan, the Committee may seek
reimbursement of any portion of the Amount of Gain Realized from such Awards
where such Awards were greater than the Awards would have been if calculated on
the restated financial results.
5.3 Adjustment of Shares. If there shall be any change in the capital structure
of the Company, including but not limited to a change in the number or kind of
the outstanding shares of the Common Stock resulting from a stock dividend or
split-up, or combination or reclassification of such shares (or of any stock or
other securities into which shares shall have been changed, or for which they
shall have been exchanged), then the Board of Directors of the Company shall
make such equitable adjustments with respect to the Stock Option, or any other
provisions of the Plan, as it deems necessary or appropriate to prevent dilution
or enlargement of the Stock Option rights hereunder or of the shares subject to
this Stock Option.
5.4 Merger, Consolidation, Reorganization, Liquidation, etc. If the Company
shall become a party to any corporate merger, consolidation, major acquisition
of property for stock, reorganization, or liquidation, the Board of Directors
shall, acting in its absolute and sole discretion, make such arrangements, which
shall be binding upon the Participant of outstanding Awards, including but not
limited to, the substitution of new Awards or for any Awards then outstanding,
the assumption of any such Awards and the termination of or payment for such
Awards.
5.5 Interpretation and Regulations. The Board of Directors of the Company shall
have the power to provide regulations for administration of the Plan by the
Committee and to make any changes in such guidelines as from time to time the
Board may deem necessary. The Committee shall have the sole power to determine,
solely for purposes of the Plan and this Agreement, the date of and
circumstances which shall constitute a cessation or termination of employment
and whether such cessation or termination is the result of retirement, death,
disability or termination without cause or any other reason, and further to
determine, solely for purposes of the Plan and this Agreement, what constitutes
continuous employment with respect to the exercise of Stock Option or delivery
of Shares under the Plan (except that leaves of absence approved by the
Committee or transfers of employment among the subsidiaries of the Company shall
not be considered an interruption of continuous employment for any purpose under
the Plan).
5.6 Reservation of Rights. If at any time counsel for the Company determines
that qualification of the Shares under any state or federal securities law, or
the consent or

8

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approval of any governmental regulatory authority, is necessary or desirable as
a condition of the executing an Award or benefit under the Plan, then such
action may not be taken, in whole or in part, unless and until such
qualification, registration, consent or approval shall have been effected or
obtained free of any conditions such counsel deems unacceptable.
5.7 Reasonableness of Restrictions, Severability and Court Modification.
Participant and the Company agree that, the restrictions contained in this
Agreement are reasonable, but, should any provision of this Agreement be
determined by a court of competent jurisdiction to be invalid, illegal or
otherwise unenforceable or unreasonable in scope, the validity, legality and
enforceability of the other provisions of this Agreement will not be affected
thereby, and the provision found invalid, illegal, or otherwise unenforceable or
unreasonable will be considered by the Company and Participant to be amended as
to scope of protection, time or geographic area (or any one of them, as the case
may be) in whatever manner is considered reasonable by that court, and, as so
amended will be enforced.
5.8 Withholding of Taxes. To the extent that the Company is required to withhold
taxes in compliance with any federal, state, local or foreign law in connection
with any payment made or benefit realized by a Participant or other person under
this Plan, it shall be a condition to the receipt of such payment or the
realization of such benefit that the Participant or such other person make
arrangements satisfactory to the Company for the payment of all such taxes
required to be withheld. At the discretion of the Committee, such arrangements
may include relinquishment of a portion of such benefit. In the event the
Participant has not made arrangements, the Company shall withhold the amount of
such tax obligations from such dividend payment or instruct the Participant’s
employer to withhold such amount from the Participant’s next payment(s) of
wages. The Participant authorizes the Company to so instruct the Participant’s
employer and authorizes the Participant’s employer to make such withholdings
from payment(s) of wages.
5.9 Waiver. The failure of the Company to enforce at any time any terms,
covenants or conditions of this Agreement shall not be construed to be a waiver
of such terms, covenants or conditions or of any other provision. Any waiver or
modification of the terms, covenants or conditions of this Agreement shall only
be effective if reduced to writing and signed by both Participant and an officer
of the Company.
5.10 Incorporation. The terms and conditions of this Grant Agreement are
authorized by the Compensation Committee of the Board of Directors of H&R Block,
Inc. The terms and conditions of this Grant Agreement are deemed to be
incorporated into and form a part of every Award under the H&R Block, Inc. 1993
Long-Term Executive Compensation Plan and H&R Block, Inc. 2003 Long-Term
Executive Compensation Plan unless the Award Certificate relating to a specific
grant or award provides otherwise. If the Participant has previously executed a
Grant Agreement, such Grant Agreement shall only cover those Awards subject to
such specific Grant Agreement.
5.11 Notices. Any notice to be given to the Company or election to be made under
the terms of this Agreement shall be addressed to the Company (Attention:
Long-Term

9

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Incentive Department) at One H&R Block Way, Kansas City Missouri 64105 or at
such other address as the Company may hereafter designate in writing to the
Participant. Any notice to be given to the Participant shall be addressed to the
Participant at the last address of record with the Company or at such other
address as the Participant may hereafter designate in writing to the Company.
Any such notice shall be deemed to have been duly given when deposited in the
United States mail via regular or certified mail, addressed as aforesaid,
postage prepaid.
5.12 Choice of Law. This Grant Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Missouri without reference
to principles of conflicts of laws.
5.13 Choice of Forum and Jurisdiction. Participant and Company agree that any
proceedings to enforce the obligations and rights under this Grant Agreement
must be brought in Missouri District Court located in Jackson County, Missouri,
or in the United States District Court for the Western District of Missouri in
Kansas City, Missouri. Participant agrees and submits to personal jurisdiction
in either court. Participant and Company further agree that this Choice of Forum
and Jurisdiction is binding on all matters related to Awards under the Plan and
may not be altered or amended by any other arrangement or agreement (including
an employment agreement) without the express written consent of Participant and
H&R Block, Inc.
5.14 Attorneys Fees. Participant and Company agree that in the event of
litigation to enforce the terms and obligations under this Grant Agreement, the
party prevailing in any such cause of action will be entitled to reimbursement
of reasonable attorney fees.
5.15 Relationship of the Parties. Participant acknowledges that this Grant
Agreement is between H&R Block, Inc. and Participant. Participant further
acknowledges that H&R Block, Inc. is a holding company and that Participant is
not an employee of H&R Block, Inc.
5.16 Headings. The section headings herein are for convenience only and shall
not be considered in construing this Agreement.
5.17 Amendment. No amendment, supplement, or waiver to this Agreement is valid
or binding unless in writing and signed by both parties.
5.18 Execution of Agreement. This Agreement shall not be enforceable by either
party, and Participant shall have no rights with respect to the Long Term
Incentive Award, unless and until it has been (1) signed by Participant and on
behalf of the Company by an officer of the Company, provided that the signature
by such officer of the Company on behalf of the Company may be a facsimile or
stamped signature, and (2) returned to the Company.
In consideration of said Award and the mutual covenants contained herein, the
parties agree to the terms set forth above.

10

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The parties hereto have executed this Grant Agreement.

     
Associate Name:
  [Participant Name]
 
   
Date Signed:
  [Acceptance Date]
H&R BLOCK, INC.
   
By:
   

President and Chief Executive Officer

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H&R BLOCK, INC.
2003 LONG-TERM EXECUTIVE COMPENSATION PLAN
GRANT AGREEMENT
     This Grant Agreement is entered into by and between H&R Block, Inc., a
Missouri corporation (the “Company”), and [Participant Name] (“Participant”).
     WHEREAS, the Company provides certain incentive awards to key employees of
subsidiaries of the Company under the H&R Block, Inc. 2003 Long-Term Executive
Compensation Plan (the “Plan”);
     WHEREAS, receipt of such Awards under the Plan are conditioned upon a
Participant’s execution of a Grant Agreement within 180 days of [Grant Date],
wherein Participant agrees to abide by certain terms and conditions authorized
by the Compensation Committee of the Board of Directors;
     WHEREAS, the Participant has been selected by the Compensation Committee or
the Chief Executive Officer of the Company as a key employee of one of the
subsidiaries of the Company and is eligible to receive Awards under the Plan.
     NOW THEREFORE, in consideration of the parties promises and agreements set
forth in this Grant Agreement, the sufficiency of which the parties hereby
acknowledge,
     IT IS AGREED AS FOLLOWS:
1. Definitions. Whenever a term is used in this Agreement or an Award
Certificate issued under the Plan, the following words and phrases shall have
the meanings set forth below unless the context plainly requires a different
meaning, and when a defined meaning is intended, the term is capitalized.
1.1 Amount of Gain Realized. The Amount of Gain Realized shall be equal to the
number of Shares delivered to the Participant multiplied by the Fair Market
Value (FMV) of one Share of the Company’s Common Stock on the date the Shares
were no longer considered to be held by the Company.
1.2 Change of Control means the occurrence of one or more of the following
events:
(a) Any one person, or more than one person acting as a group, acquires
ownership of stock of the Company that, together with stock held by such person
or group, constitutes more than 50 percent of the total fair market value or
total voting power of the stock of the Company. If any one person, or more than
one person acting as a group, is considered to own more than 50 percent of the
total fair market value or total voting power of the stock of the Company, the
acquisition of additional stock by the same person or persons shall not be
considered to cause a change in the ownership of the corporation. An increase in
the percentage of stock owned by any one person, or persons acting as a group,
as

 

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a result of a transaction in which the Company acquires its stock in exchange
for property will be treated as an acquisition of stock for purposes of this
Section 1.2(a).
(b) Any one person, or more than one person acting as a group, acquires (or has
acquired during the 12-month period ending on the date of the most recent
acquisition by such person or persons) ownership of stock of the Company
possessing 35 percent or more of the total voting power of the stock of the
Company. If any one person, or more than one person acting as a group, is
considered to effectively control a corporation within the meaning of Treasury
Regulation §1.409A-3(i)(5)(vi), the acquisition of additional control of the
corporation by the same person or persons is not considered to cause a change in
the effective control of the corporation.
(c) A majority of members of the Company’s Board of Directors (the “Board”) is
replaced during any 12-month period by directors whose appointment or election
is not endorsed by two-thirds (2/3) of the members of the Board before the date
of such appointment or election.
(d) Any one person, or more than one person acting as a group, acquires (or has
acquired during the 12-month period ending on the date of the most recent
acquisition by such person or persons) assets from the Company that have a total
gross fair market value equal to or more than 50 percent of the total gross fair
market value of all of the assets of the Company immediately before such
acquisition or acquisitions. For this purpose, gross fair market value means the
value of the assets of the Company, or the value of the assets being disposed
of, determined without regard to any liabilities associated with such assets.
Notwithstanding the foregoing, there is no Change in Control event under this
Section 1.2(d) when there is a transfer to an entity that is controlled by the
shareholders of the Company immediately after the transfer. A transfer of assets
by the Company is not treated as a change in the ownership of such assets if the
assets are transferred to: (i) a shareholder of the Company (immediately before
the asset transfer) in exchange for or with respect to its stock; (ii) an
entity, 50 percent or more of the total value or voting power of which is owned,
directly or indirectly, by the Company; (iii) a person, or more than one person
acting as a group, that owns, directly or indirectly, 50 percent or more of the
total value or voting power of all the outstanding stock of the Company; or
(iv) an entity, at least 50 percent of the total value or voting power of which
is owned, directly or indirectly, by a person described in (iii) above.
For purposes of the foregoing, persons will be considered acting as a group in
accordance with Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of
1934, as amended, and Section 409A of the Code.

2

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1.3 Code. Code means the Internal Revenue Code of 1986, as amended.
1.4 Committee. Committee means the Compensation Committee of the Board of
Directors for H&R Block, Inc.
1.5 Common Stock. Common Stock means the common stock, without par value, of the
Company.
1.6 Company. Company means H&R Block, Inc., a Missouri corporation, and, unless
the context otherwise requires, includes its “subsidiary corporations” (as
defined in Section 424(f) of the Internal Revenue Code) and their respective
divisions, departments and subsidiaries and the respective divisions,
departments and subsidiaries of such subsidiaries.
1.7 Closing Price. Closing Price shall mean the last reported market price for
one share of Common Stock, regular way, on the New York Stock Exchange (or any
successor exchange or stock market on which such last reported market price is
reported) on the day in question. In the event the exchange is closed on the day
on which Closing Price is to be determined or if there were no sales reported on
such date, Closing Price shall be computed as of the last date preceding such
date on which the exchange was open and a sale was reported.
1.8 Disability. Disability or disabled shall be as defined in the employment
practices or policies of the applicable subsidiary of the Company in effect from
time to time during the term hereof or, absent such definition, then as defined
in the H&R Block Retirement Savings Plan or any successor plan thereto.
1.9 Fair Market Value. Fair Market Value (“FMV”) means the Closing Price for one
share of H&R Block, Inc. Stock.
1.10 Last Day of Employment. Last Day of Employment means the date the
Participant ceases for whatever reason to be an employee and is not immediately
thereafter and continuously employed as a regular active employee by any other
direct or indirect subsidiary of the Company
1.11 Line of Business. Line of Business of the Company means any line of
business of the subsidiary of the Company by which Participant was employed as
of the Last Day of Employment, as well as any one or more lines of business of
any other subsidiary of the Company by which Participant was employed during the
two-year period preceding the Last Day of Employment, provided that, if
Participant’s employment was, as of the Last Day of Employment or during the
two-year period immediately prior to the Last Day of Employment, with H&R Block
Management, LLC or any successor entity thereto, “Line of Business of the
Company” shall mean any lines of business of the Company and all of its
subsidiaries.
1.12 Qualifying Termination. Qualifying Termination shall mean Participant’s
termination of employment which meets the definition of a “Qualifying
Termination”

3

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under a severance plan sponsored by the Company or a subsidiary of the Company.
In the event that no formal severance plan exists for the Participant’s
subsidiary, the definition of “Qualifying Termination” contained in any
applicable severance plan for the Company will govern.
1.13 Restricted Shares. Restricted Share (“Shares”) means a share of Common
Stock issued to a Participant under the Plan subject to such terms and
conditions, including without limitation, forfeiture or resale to the Company,
and to such restrictions against sale, transfer or other disposition, as the
Committee may determine at the time of issuance.
1.14 Retirement. Retirement means the Participant’s voluntary termination of
employment with the Company and each of its subsidiaries, at or after attaining
age 65.
2. Restricted Shares.
2.1 Issuance of Shares. As of [Grant Date] (the “Award Date”), the Company shall
issue [Number of Shares Granted] [Grant Type] (the “Shares”) evidenced by this
Grant Agreement to the Participant which shall be held by the Company and
subject to the substantial risk of forfeiture.
2.2 Substantial Risk of Forfeiture. Each grant of an Award shall provide that
the Shares covered thereby shall be subject to a “substantial risk of
forfeiture” within the meaning of Code Section 83 for a period time as
designated by Section 2.7, and any such Award may provide for the earlier
termination of such risk of forfeiture in the event of change of control of the
Company or other similar transaction or event.
2.3 Restrictions on Transfer. During for period the Shares are subject to
substantial risk of forfeiture, the Shares shall be held by the Company, or its
transfer agent or other designee and shall be subject to restrictions on
transfer.
2.4 [RESERVED]
2.5 Requirement of Employment. The Participant must remain in continuous
employment of the Company during the period any Shares are subject to
substantial risk of forfeiture. Absent an agreement to the contrary, if
Participant’s employment with the Company should terminate for any reason, other
than Retirement, all Shares then held by the Company or its transfer agent or
other designee, if any, shall be forfeited by the Participant and Participant
authorizes the Company and its stock transfer agent to cause delivery, transfer
and conveyance of the Shares to the Company.
2.6 Delivery of Shares. Any Shares to be delivered to the Participant by the
Company in accordance with the following Schedule:

4

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              Percent of Shares Subject to Vesting Vesting Date   on Such
Vesting Date  
First Anniversary of the Award Date
    25 %
Second Anniversary of the Award Date
    25 %
Third Anniversary of the Award Date
    25 %
Fourth Anniversary of the Award Date
    25 %

Upon the vesting date, Shares shall be transferred directly into a brokerage
account established for the Participant at a financial institution the Committee
shall select at its sole discretion (the “Financial Institution”) or delivered
in certificate form free of restrictions, such method to be selected by the
Committee in its sole discretion. The Participant agrees to complete any
documentation with the Company or the financial institution that is necessary to
affect the transfer of Shares to the financial institution before the delivery
will occur.
2.7 Acceleration of Vesting. Notwithstanding Section 2.6, the Participant shall
become vested in all or a portion of the Shares awarded under this Grant
Agreement on the occurrence of any of the following events:
(a) Change of Control. In the event the Participant incurs a Qualifying
Termination in the 24 months immediately following a Change of Control, as
defined in Section 1.2, such Participant shall become 100% vested in all
outstanding Shares granted under this Grant Agreement. Receipt of this award may
be conditioned upon Participant’s execution of a separation agreement.
(b) Qualifying Termination. The Participant experiences a Qualifying
Termination, all or a portion of the then outstanding Shares granted under this
Grant Agreement shall vest according to the terms of the applicable severance
plan. Receipt of this award may be conditioned upon Participant’s execution of a
separation agreement.
(c) Retirement. If a Participant retires from employment with any subsidiary of
the Company at least one year after the anniversary of the Grant Date, all
Shares issued on such Grant Date shall no longer be considered to be held by the
Company. Receipt of this retirement award may be conditioned upon Participant’s
execution of a separation agreement.

5

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3. Covenants.
3.1 Consideration for Award under the Plan Participant acknowledges that
Participant’s agreement to this Section 3 is a key consideration for any Award
under the Plan. Participant hereby agrees to abide by the Covenants set forth in
Sections 3.2, 3.3, and 3.4.
3.2 Covenant Against Competition. During the period of Participant’s employment
and for two (2) years after his/her Last Day of Employment, Participant
acknowledges and agrees he/she will not engage in, or own or control any
interest in, or act as an officer, director or employee of, or consultant,
advisor or lender to, any entity that engages in any business that is
competitive with the primary business activities of the Company’s Tax Services
business which are tax preparation, accounting, and small business services.
3.3 Covenant Against Hiring. Participant acknowledges and agrees the he/she will
not directly or indirectly recruit, solicit, or hire any Company employee or
otherwise induce any such employee to leave the Company’s employment during the
period of Participant’s employment and for one (1) year after his/her Last Day
of Employment.
3.4 Covenant Against Solicitation. During the period of Participant’s employment
and for two (2) years after his/her Last Day of Employment, Participant
acknowledges and agrees that he/she will not directly or indirectly solicit or
enter into any business transaction of the nature performed by the Company with
any Company client for which Participant personally performed services or
acquired material information.
3.5 Forfeiture of Rights. Notwithstanding anything herein to the contrary, if
Participant violates any provisions of this Section 3, Participant shall forfeit
all rights to payments or benefits under the Plan. All Shares held by the
Company and subject to forfeiture on such date shall terminate.
3.6 Remedies. Notwithstanding anything herein to the contrary, if Participant
violates any provisions of this Section 3, whether prior to, on or after any
Settlement of an Award under the Plan, then Participant shall promptly pay to
Company an amount equal to the aggregate Amount of Gain Realized by the
Participant on all Shares received after a date commencing one year prior to
Participant’s Last Day of Employment. The Participant shall pay Company within
three (3) business days after the date of any written demand by the Company to
the Participant.
3.7 Remedies payable in Company’s Common Stock or Cash. The Participant shall
pay the amounts described in Section 3.6 in the Company’s Common Stock or cash.
3.8 Remedies without Prejudice. The remedies provided in this Section 3 shall be
without prejudice to the rights of the Company and/or the rights of any one or
more of its subsidiaries to recover any losses resulting from the applicable
conduct of the Participant and shall be in addition to any other remedies the
Company and/or any one or more subsidiaries may have, at law or in equity,
resulting from such conduct.

6

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3.9 Survival. Participant’s obligations in this Section 3 shall survive and
continue beyond settlement of all Awards under the Plan and any termination or
expiration of this Agreement for any reason.
4. Transfer Restrictions.
4.1 Transfer Restrictions on Shares. During the period that Shares are held by
the Company hereunder for delivery to the Participant, such Shares and the
rights and privileges conferred hereby shall not be transferred, assigned,
pledged, or hypothecated in any way (whether by operation of law or otherwise)
and shall not be subject to sale under execution, attachment or similar process.
Upon any attempt, contrary to the terms hereof, to transfer, assign, pledge,
hypothecate, or otherwise so dispose of such Shares or any right or privilege
conferred hereby, or upon any attempted sale under any execution, attachment, or
similar process upon such Shares or the rights and privileges hereby granted,
then and in any such event this Agreement and the rights and privileges hereby
granted shall immediately terminate. Immediately after such termination, such
Shares shall be forfeited by the Participant and the Participant hereby
authorizes the Company and its stock transfer agent to cause the delivery,
transfer and conveyance of such Shares to the Company.
4.2 Non-Transferability of Awards Generally. Any Award (including all rights,
privileges and benefits conferred under such Award) shall not be transferred,
assigned, pledged, or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to sale under execution, attachment or
similar process. Upon any attempt to transfer, assign, pledge, hypothecate, or
otherwise dispose of any Award, or of any right or privilege conferred hereby,
contrary to the provisions hereof, or upon any attempted sale under any
execution, attachment, or similar process upon the rights and privileges hereby
granted, then and in any such event such Award and the rights and privileges
hereby granted shall immediately become null and void.
5. Miscellaneous.
5.1 No Employment Contract. This Agreement does not confer on the Participant
any right to continued employment for any period of time, is not an employment
contract, and shall not in any manner modify any effective contract of
employment between the Participant and any subsidiary of the Company.
5.2 Clawback for Negligence or Misconduct. If the Committee determines that the
Participant has engaged in negligence or intentional misconduct that results in
a significant restatement of the Company’s financial results and a resulting
overpayment in compensation or Awards under this Plan, the Committee may seek
reimbursement of any portion of the Amount of Gain Realized from such Awards
where such Awards were greater than the Awards would have been if calculated on
the restated financial results.
5.3 Adjustment of Shares. If there shall be any change in the capital structure
of the Company, including but not limited to a change in the number or kind of
the outstanding shares of the Common Stock resulting from a stock dividend or
split-up, or combination

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or reclassification of such shares (or of any stock or other securities into
which shares shall have been changed, or for which they shall have been
exchanged), then the Board of Directors of the Company shall make such equitable
adjustments with respect to the Shares, or any other provisions of the Plan, as
it deems necessary or appropriate to prevent dilution or enlargement of the
Stock Option rights hereunder or of the shares subject to this Grant Agreement.
5.4 Merger, Consolidation, Reorganization, Liquidation, etc. If the Company
shall become a party to any corporate merger, consolidation, major acquisition
of property for stock, reorganization, or liquidation, the Board of Directors
shall, acting in its absolute and sole discretion, make such arrangements, which
shall be binding upon the Participant of outstanding Awards, including but not
limited to, the substitution of new Awards or for any Awards then outstanding,
the assumption of any such Awards and the termination of or payment for such
Awards.
5.5 Interpretation and Regulations. The Board of Directors of the Company shall
have the power to provide regulations for administration of the Plan by the
Committee and to make any changes in such guidelines as from time to time the
Board may deem necessary. The Committee shall have the sole power to determine,
solely for purposes of the Plan and this Agreement, the date of and
circumstances which shall constitute a cessation or termination of employment
and whether such cessation or termination is the result of retirement, death,
disability or termination without cause or any other reason, and further to
determine, solely for purposes of the Plan and this Agreement, what constitutes
continuous employment with respect to the delivery of Shares under the Grant
Agreement (except that leaves of absence approved by the Committee or transfers
of employment among the subsidiaries of the Company shall not be considered an
interruption of continuous employment for any purpose under the Plan).
5.6 Reservation of Rights. If at any time counsel for the Company determines
that qualification of the Shares under any state or federal securities law, or
the consent or approval of any governmental regulatory authority, is necessary
or desirable as a condition of the executing an Award or benefit under the Plan,
then such action may not be taken, in whole or in part, unless and until such
qualification, registration, consent or approval shall have been effected or
obtained free of any conditions such counsel deems unacceptable.
5.7 Reasonableness of Restrictions, Severability and Court Modification.
Participant and the Company agree that, the restrictions contained in this
Agreement are reasonable, but, should any provision of this Agreement be
determined by a court of competent jurisdiction to be invalid, illegal or
otherwise unenforceable or unreasonable in scope, the validity, legality and
enforceability of the other provisions of this Agreement will not be affected
thereby, and the provision found invalid, illegal, or otherwise unenforceable or
unreasonable will be considered by the Company and Participant to be amended as
to scope of protection, time or geographic area (or any one of them, as the case
may be) in whatever manner is considered reasonable by that court, and, as so
amended will be enforced.

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5.8 Withholding of Taxes. To the extent that the Company is required to withhold
taxes in compliance with any federal, state, local or foreign law in connection
with any payment made or benefit realized by a Participant or other person under
this Plan, it shall be a condition to the receipt of such payment or the
realization of such benefit that the Participant or such other person make
arrangements satisfactory to the Company for the payment of all such taxes
required to be withheld. At the discretion of the Committee, such arrangements
may include relinquishment of a portion of such benefit. In the event the
Participant has not made arrangements, the Company shall withhold the amount of
such tax obligations from such dividend payment or instruct the Participant’s
employer to withhold such amount from the Participant’s next payment(s) of
wages. The Participant authorizes the Company to so instruct the Participant’s
employer and authorizes the Participant’s employer to make such withholdings
from payment(s) of wages.
5.9 Waiver. The failure of the Company to enforce at any time any terms,
covenants or conditions of this Agreement shall not be construed to be a waiver
of such terms, covenants or conditions or of any other provision. Any waiver or
modification of the terms, covenants or conditions of this Agreement shall only
be effective if reduced to writing and signed by both Participant and an officer
of the Company.
5.10 Notices. Any notice to be given to the Company or election to be made under
the terms of this Agreement shall be addressed to the Company (Attention:
Long-Term Incentive Department) at One H&R Block Way, Kansas City Missouri 64105
or at such other address as the Company may hereafter designate in writing to
the Participant. Any notice to be given to the Participant shall be addressed to
the Participant at the last address of record with the Company or at such other
address as the Participant may hereafter designate in writing to the Company.
Any such notice shall be deemed to have been duly given when deposited in the
United States mail via regular or certified mail, addressed as aforesaid,
postage prepaid.
5.11 Choice of Law. This Grant Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Missouri without reference
to principles of conflicts of laws.
5.12 Choice of Forum and Jurisdiction. Participant and Company agree that any
proceedings to enforce the obligations and rights under this Grant Agreement
must be brought in Missouri District Court located in Jackson County, Missouri,
or in the United States District Court for the Western District of Missouri in
Kansas City, Missouri. Participant agrees and submits to personal jurisdiction
in either court. Participant and Company further agree that this Choice of Forum
and Jurisdiction is binding on all matters related to Awards under the Plan and
may not be altered or amended by any other arrangement or agreement (including
an employment agreement) without the express written consent of Participant and
H&R Block, Inc.
5.13 Attorneys Fees. Participant and Company agree that in the event of
litigation to enforce the terms and obligations under this Grant Agreement, the
party prevailing in any such cause of action will be entitled to reimbursement
of reasonable attorney fees.

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5.14 Relationship of the Parties. Participant acknowledges that this Grant
Agreement is between H&R Block, Inc. and Participant. Participant further
acknowledges that H&R Block, Inc. is a holding company and that Participant is
not an employee of H&R Block, Inc.
5.15 Headings. The section headings herein are for convenience only and shall
not be considered in construing this Agreement.
5.16 Amendment. No amendment, supplement, or waiver to this Agreement is valid
or binding unless in writing and signed by both parties.
5.17 Execution of Agreement. This Agreement shall not be enforceable by either
party, and Participant shall have no rights with respect to the Long Term
Incentive Award, unless and until it has been (1) signed by Participant and on
behalf of the Company by an officer of the Company, provided that the signature
by such officer of the Company on behalf of the Company may be a facsimile or
stamped signature, and (2) returned to the Company.
In consideration of said Award and the mutual covenants contained herein, the
parties agree to the terms set forth above.
The parties hereto have executed this Grant Agreement.

     
Associate Name:
  [Participant Name]
 
   
Date Signed:
  [Acceptance Date]
H&R BLOCK, INC.
   
By:
   

President and Chief Executive Officer

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