Document:

Exhibit 10.20

JACKSON HEWITT TAX SERVICE INC.

2004 EQUITY AND INCENTIVE PLAN

STOCK OPTION AGREEMENT

 

                This STOCK OPTION AGREEMENT is effective as of August
19, 2004 (the “Grant Date”), between Jackson Hewitt Tax Service Inc., a
Delaware corporation (the “Company”), and the optionee specified on Exhibit A
attached hereto and made a part hereof (the “Optionee”).

 

                Pursuant to the
Jackson Hewitt Tax Service Inc. 2004 Equity and Incentive Plan (the “Plan”),
the Compensation Committee of the Board of Directors of the Company (the “Committee”)
has determined that the Optionee is to be awarded, on the terms and conditions
set forth herein, and on the terms and conditions set forth in the Plan, an
option (an “Option”) to purchase shares of common stock of the Company as
specified below, and hereby grants such Option. 
Capitalized terms used herein which are not defined in this Stock Option
Agreement will have the meanings set forth in the Plan.  The Optionee acknowledges that he or she has
received a copy of the Plan Prospectus.

 

                1.             Number of Shares and Purchase
Price.  The Optionee is hereby
granted an Option to purchase the number of shares of common stock of the
Company specified on Exhibit A (the “Option Shares”) at the Option Price per
Share specified on Exhibit A, pursuant to the terms of this Stock Option
Agreement and the provisions of the Plan.

 

                2.             Term of Option and Conditions of
Exercise.

 

                                (a)
The Option has been granted as of the Grant Date and shall terminate on the
Expiration Date specified on Exhibit A, subject to earlier termination as
provided herein and in the Plan.  Upon
the termination or expiration of the Option, all rights of the Optionee in
respect of such Option hereunder shall cease.

 

                                (b)
Subject to the provisions of the Plan and this Stock Option Agreement, the
Option shall vest in accordance with the schedule set forth on Exhibit A, so
long as the Optionee continues to be employed by the Company.

 

                3.             Termination of Employment.

 

                The Option may not
be exercised following the Optionee’s termination of employment with the
Company and its subsidiaries; provided, however; that the Optionee shall have
the right to exercise the Option following any such termination of employment
as follows:  (I) during a period of
twelve (12) months following the Participant’s termination of employment for
any reason whatsoever, other than death or Disability; or (ii) the period of
twenty-four (24) months following the Participant’s termination of employment
by reason of his death or Disability.

 

 

1

 

 

                4.             Exercise of Option.

 

                                The
Option may only be exercised in accordance with the terms of the Plan and the
administrative procedures established by the Company and/or the Committee from
time to time.  The exercise of the Option
is subject to the Optionee making appropriate tax withholding arrangements with
the Company in accordance with the terms of the Plan and the administrative
procedures established by the Company and/or the Committee from time to time.

 

                5.             Adjustment upon Changes in
Capitalization.

 

                                The
Option is subject to adjustment in the event of certain changes in the
capitalization of the Company, to the extent set forth in Section 3 of the
Plan.

 

                6.             Miscellaneous.

 

                                (a)           Entire Agreement.  This Stock Option Agreement and the Plan
contain all of the understandings and agreements between the Company and the
Optionee concerning the Option and supersedes all earlier negotiations and
understandings, written or oral, between the parties with respect thereto.  The Company and the Optionee have made no
promises, agreements, conditions or understandings, either orally or in
writing, that are not included in this Stock Option Agreement or the Plan.

 

                                (b)           Captions.  The captions and section numbers appearing in
this Stock Option Agreement are inserted only as a matter of convenience.  They do not define, limit, construe or
describe the scope or intent of the provisions of this Stock Option Agreement.

 

                                (c)           Notices.  Any notice or communication having to do with
this Stock Option Agreement must be given by personal delivery or by certified
mail, return receipt requested, addressed, if to the Company or the Committee,
to the attention of the General Counsel of the Company at the principal office
of the Company and, if to the Optionee, to the Optionee’s last known address
contained in the personnel records of the Company.

 

                                (d)           Succession and Transfer.  Each and all of the provisions of this Stock
Option Agreement are binding upon and inure to the benefit of the Company and
the Optionee and their respective estate, successors and assigns, subject to
any limitations on transferability under applicable law or as set forth in the
Plan.

 

                                (e)           Governing Law.  This Stock Option Agreement and the rights of
all persons claiming hereunder will be construed and determined in accordance
with the laws of the State of Delaware without giving effect to the choice of
law principles thereof.

 

2

 

                                (f)            Blackout Periods.  The Optionee acknowledges that, from time to
time as determined by the Company in its sole discretion, the Company may
establish “blackout periods” during which this Option may not be
exercised.  The Company may establish a
blackout period for any reason or for no reason.

 

This Stock Option Agreement is made under and subject
to the provisions of the Plan, and all of the provisions of the Plan are hereby
incorporated by reference herein as provisions of this Stock Option
Agreement.  If there is a conflict
between the provisions of this Stock Option Agreement and the provisions of the
Plan, the provisions of the Plan will govern.

 

IN
WITNESS WHEREOF, the Company has executed this Stock Option Agreement on the
date and year first above written.

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  JACKSON HEWITT TAX SERVICE INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Michael D. Lister

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  President & Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

3

 

Exhibit A

 

 

	
   

  	
   

  
	
   

  	
  7 Sylvan Way

  
	
   

  	
  Parsippany, NJ 07054

  
	
   

  	
   

  

 

Effective August 19, 2004 you have been granted a
Stock Option to buy  shares of Jackson
Hewitt Tax Service Inc. (the Company), stock with an exercise price equal to
$18.20 per share.  The stock option is
granted pursuant to the Company’s 2004 Equity and Incentive Plan (the Plan).

 

Shares in each period will become vested on the dates
shown below.

  

	
  Total # of Options

  	
   

  	
  08/19/05

  	
   

  	
  08/19/06

  	
   

  	
  08/19/07

  	
   

  	
  08/19/08

  	
   

  	
  Expiration*

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  08/19/14

  	
   

  

 

By your signature and the Company’s signature below,
you and the Company agree that these stock options are granted under and
governed by the terms and conditions of the Plan and the Option Agreement, all
of which are attached and made a part of this document.

 

	
   

  	
   

  	
   

  
	
  Jackson Hewitt Tax
  Service Inc.

  	
   

  	
  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date

  	
   

  

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  

* The Stock Option will expire on such earlier date upon your
termination of employment with the Company, in accordance with the terms of the
Plan and the Award Agreement evidencing this Stock Option.

 

Note:      If there are any discrepancies in the name
or address shown above, please make the appropriate corrections on this form.

 

4EXHIBIT 10.9

                               EXCHANGE AGREEMENT

     THIS AGREEMENT ("Agreement") dated as of the 22nd day of March, 2004, is
made by and between Advanced Financial, Inc., a Delaware corporation, ("AFI")
and ARGUS Investment Group, Inc., a Missouri corporation ("ARGUS").

                                    RECITALS

     A.   WHEREAS, AFI is the holder and owner of 100 shares of common stock of
          AIH Receivable Management Services, Inc. ("AIH"), such common shares
          representing one hundred per cent (100%) of the outstanding common
          shares of AIH and are free and clear of any encumbrances (the "AIH
          Common Shares); and

     B.   WHEREAS, AFI is indebted to ARGUS under certain Notes Payable and
          certain open advances a total of $1,298,817 at the close of business
          on March 31, 2004, (the "ARGUS Obligations") which amounts were used
          to fund the operations of AIH; and

     C.   WHEREAS, AFI and ARGUS agree that such ARGUS Obligations are as set
          forth above; and

     D.   WHEREAS, ARGUS has agreed to cancel the ARGUS Obligations, and assume
          all of the remaining obligations of AIH as reflected in the March 31,
          2004 financial statements of AIH, as well as any future obligations
          which may or not be set forth in such March 31, 2004 financial
          statements in exchange for the AIH Common Shares (the "Exchange
          Transaction"); and

     E.   WHEREAS, the Board of Directors of AFI engaged an independent
          investment banking firm (Morgan Stanley) to determine the fair market
          value of the AIH operations on a going concern basis, and based on
          such valuation determined that the Exchange Transaction will result in
          a substantial economic and financial benefit to the AFI shareholders;
          and

     F.   WHEREAS, the independent `not at interest' Directors of AFI have
          approved the Exchange Transaction and authorized a Solicitation of
          Consents of Common Shareholders under date of February 27, 2004
          approving the Exchange Transaction; and

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<PAGE>

     G.   WHEREAS, on March 22, 2004, AFI had received the requisite affirmative
          votes from the common shareholders to effect the Exchange Transaction,
          and filed the required Form 8-K with the Securities and Exchange
          Commission under date of March 24, 2004; and

     H.   WHEREAS, on March 22, 2004, the ARGUS Board of Directors approved the
          Exchange Transaction.

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

     1.   The Exchange Transaction shall be closed and effective as of 12:01
          midnight, April 1, 2004.

     2.   AFI shall transfer and deliver to ARGUS the AIH Common Shares. Such
          transfer shall be effective as set forth in paragraph 1 above.

     3.   The parties agree, that except for the RECITALS above, no further
          representations, warranties, or closing obligations are required.

     4.   Any notice, request, consent or communication (a "Notice") shall be
          effective only if it is in writing and delivered, with receipt
          confirmed, addressed as follows:

                   If to ARGUS to:
                                         Philip J. Holtgraves
                                         ARGUS Investment Group, Inc.
                                         5425 Martindale
                                         Shawnee,   KS   66218

                   If to AFI to:         Charles A. Holtgraves
                                         Advanced Financial, Inc.
                                         5425 Martindale
                                         Shawnee,    KS    66218

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<PAGE>

     IN WITNESS WHEREOF, the parties hereto have entered in this Agreement as of
the date first herein above set forth.

                                            ADVANCED FINANCIAL, INC.

                                            By:  /s/  Charles A. Holtgraves
                                               --------------------------------
                                                      Charles A. Holtgraves
                                                      President

                                            ARGUS Investment Group, Inc.

                                            By:  /s/  Philip J.  Holtgraves
                                               --------------------------------
                                                      Philip J. Holtgraves
                                                      Vice President and
                                                      Secretary

                                       3

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