Document:

exv10w18

 

	 	 	 	 	 

Exhibit 10.18

FIRST AMENDMENT TO THE NISOURCE INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2004)

     WHEREAS, NiSource Inc. (the “Company”) maintains the NiSource Inc. Supplemental Executive
Retirement Plan, as amended and restated effective January 1, 2004 (the “Plan”); and

     WHEREAS, pursuant to Section 7.5 of the Plan, the Company deems it desirable to amend the Plan as
described below.

     NOW, THEREFORE, the Plan is hereby amended, effective January 28, 2005, as follows:

     1. The first two sentences of Section 7.5 are amended to read as follows:

“The Committee may amend any provision of the Plan. In addition, the Chairman of
the Board of Directors may amend any provision of the Plan, except for Articles III,
IV and V which may only be amended by the Committee. The Committee may terminate
the Plan at any time, except that any benefits that are payable due to a Retirement,
death, disability, or other termination of employment occurring prior to the
amendment or termination shall not be reduced or discontinued.”

     2. Section 7.7 is amended to read as follows:

“7.7 Action by Company. Any action required of, or permitted by, the
Company under the Plan shall be by resolution of the Committee, or by a person or
persons authorized by resolution of the Committee.”

     IN WITNESS WHEREOF, the Company has caused this First Amendment to be executed on its behalf, by
its officer duly authorized, this 28th day of January, 2005.

	 	 	 	 	 
	 	NISOURCE INC.

 	 
	 	By:  	/s/ S. LaNette Zimmermanexv10w1

 

Exhibit 10.1

TERMINATION AGREEMENT

     THIS TERMINATION AGREEMENT (“this Agreement”) is entered into as of the 7th day of January,
2005, by and between H&R Block, Inc., a Missouri corporation (“HRB”), H&R Block Financial Advisors,
Inc., a Michigan corporation (“HRBFA”) and Brian L. Nygaard (“Nygaard”).

ARTICLE ONE

TERMINATION OF EMPLOYMENT

     1. Mutual Agreement to Terminate Employment Agreement. HRBFA and Nygaard are parties
to an Employment Agreement dated November 5, 2001 (the “Employment Agreement”), and the parties
desire to terminate Nygaard’s employment according to Section 1.07(b) of the Employment Agreement
by this Agreement. The parties agree, however, to treat Nygaard’s termination of employment as a
“Qualifying Termination,” as such term is used in the Employment Agreement, for purposes of
determining Nygaard’s severance compensation and benefits as set forth in Section 3 of this
Agreement. The parties further agree that the termination is not the result of the elimination of
the position of President and Chief Executive Officer of HRBFA. Such employment and the Employment
Agreement will terminate effective as of the close of business on January 7, 2005, or such earlier
date as is agreed upon by the parties in writing (the “Termination Date”). By this Agreement, the
parties agree to waive any notice of termination required by the Employment Agreement. Unless
otherwise agreed in this Agreement, the termination of the Employment Agreement will not be
effective as to those portions of the Employment Agreement which, by their express terms as set
forth therein, require performance by either party following termination of the Employment
Agreement.

     2. Resignation as Officer. Nygaard will resign (a) as President and Chief Executive
Officer of HRBFA and (b) from any and all officer and director positions held with HRBFA and with
all other subsidiaries of HRB (all such other subsidiaries of HRB, “Affiliates”). Such
resignations will be effective as of the Termination Date. Nygaard will execute resignations in the
form attached hereto as Exhibit A contemporaneously with his execution of this Agreement.

     3. Surviving Obligations. Notwithstanding the above, the termination of Nygaard’s
employment will not affect the following provisions of the Employment Agreement which, by their
express terms as set forth therein, impose continuing obligations on one or more of the parties
following termination of the Employment Agreement:

	 	•  	Article Two, “Confidentiality,” Sections 2.01, 2.02
	 
	 	•  	Article Three, “Non-Hiring; Non-Solicitation; No Conflicts; Non-Competition”
Sections 3.01, 3.02, 3.03, 3.05
	 
	 	•  	Article Four, “Miscellaneous,” Section 4.03

     3. Severance Compensation and Benefits.

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     (a) In consideration of Nygaard’s promises herein, HRBFA agrees to continue to employ Nygaard
through the Termination Date. On the Termination Date, Nygaard will be given the opportunity to
execute a release agreement (the “Release Agreement”) in the form attached hereto as Exhibit B. If
Nygaard executes the Release Agreement on the Termination Date, HRB and HRBFA will agree to provide
the compensation and benefits under the H&R Block Severance Plan as follows and as described in the
Release Agreement on the terms described therein:

     (i) HRB and HRBFA will pay to Nygaard $312,000 (which amount represents an aggregate of
one-half of Nygaard’s (A) annual base salary and (B) target short-term incentive
compensation for HRBFA’s fiscal year 2005, each determined as of the date of this Agreement)
over the 6-month period beginning on the Termination Date in semi-monthly equal installments
of $26,000 (less required tax withholdings and elected benefit withholdings). Such payments
shall not encompass payment to Nygaard for any unused vacation or other paid time off
accrued as of the Termination Date, payment for which will be made in accordance with HRB’s
policy as soon as administratively feasible after the Termination Date.

     (ii) Nygaard will remain eligible to participate in those health and welfare plans
maintained by HRBFA offering medical, dental, vision, employee assistance, flexible spending
account, life insurance, and accidental death and dismemberment insurance benefits during
the 6-month period beginning on the Termination Date on the same basis as employees of
HRBFA, after which Nygaard may be eligible to continue coverage of those benefits provided
under group health plans in accordance with his rights under Section 4980B of the Internal
Revenue Code of 1986, as amended.

     (iii) Those portions of any outstanding incentive stock options and nonqualified stock
options to purchase shares of HRB’s common stock granted to Nygaard by HRB (“Stock Options”)
that are scheduled to vest between the Termination Date and July 6, 2006 (based solely on
the time-specific vesting schedule included in the applicable stock option agreement), shall
vest and become exercisable as of the Termination Date. Accordingly, Nygaard shall have
until October 6, 2005 to exercise such Stock Options. The operation of such provision is
subject to Nygaard’s execution of an amendment to the affected stock option agreements in
the form attached as an exhibit to the Release Agreement.

     (iv) All restrictions on any shares of HRB’s common stock awarded to Nygaard by HRB
(“Restricted Shares”) that would have lapsed absent a termination of employment in
accordance with their terms by reason of time between the Termination Date and July 6, 2006
shall terminate (and shall be fully vested) as of the Termination Date. Any shares
unaffected by the operation of this section 3(a)(iv) shall be forfeited to HRB on the
Termination Date. A list of the Restricted Shares existing and (A) vested as of the date of
this Agreement and (B) to become vested pursuant to Section 5 of the Release Agreement is
attached hereto as Exhibit C.

     (v) HRB and HRBFA will arrange for Right Management Consultants to provide outplacement
services to Nygaard for the 12-month period beginning on the Termination Date.

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     (b) The compensation and benefits described in Section 3(a) of this Agreement will cease and
no further compensation and benefits will be provided to Nygaard under the Release Agreement if
Nygaard violates any of the post-employment obligations under Section 5 of this Agreement and
Articles Two and Three of the Employment Agreement.

     (c) The parties agree that, in accordance with Section 1.07(c) of the Employment Agreement,
upon termination of Nygaard’s employment under the Employment Agreement, and payment of the
Compensation and Benefits under the Severance Plan as stated in Section 3 of this Agreement, HRB
and HRBFA will have no further obligations to Nygaard under the Employment Agreement and no further
payments of base salary or other compensation or benefits will be payable by HRB or HRBFA to
Nygaard thereunder.

     4. Business Expenses; Commitments. HRBFA will promptly pay directly, or reimburse
Nygaard for, all business expenses to the extent such expenses are paid or incurred by Nygaard
during the term of the Employment Agreement in accordance with HRBFA’s policy in effect from time
to time and to the extent such expenses were reasonable and necessary to the conduct by Nygaard of
HRBFA’s business; provided, however, during the period from the date of this Agreement through the
Termination Date and at all times thereafter, Nygaard will not initiate, make, renew, confirm or
ratify any contracts or commitments for or on behalf of HRB, HRBFA or any Affiliate, nor will
Nygaard incur any expenses on behalf of HRB, HRBFA or any Affiliate without HRB’s prior written
consent except for those expenses incurred on behalf of HRBFA that are reasonable and necessary to
the conduct by Nygaard of HRBFA’s business.

     5. Nygaard’s Responsibilities.

     (a) During the period from the date of this Agreement through the Termination Date, Nygaard
will be reasonably and appropriately responsive to, and fully supportive of the management of HRB,
HRBFA and Affiliates and will be cooperative with such management in providing information
regarding areas of his expertise and experience with HRB and HRBFA. Nygaard acknowledges that his
employment responsibilities may be reduced prior to the Termination Date at HRBFA’s sole
discretion.

     (b) After the Termination Date, in the event a (i) claim is asserted against HRB, HRBFA or any
Affiliates and/or their respective employees, agents, officers, or directors or (ii) a government
investigation is commenced with respect to HRB, HRBFA or any Affiliates and/or their respective
employees, agents, officers, or directors, Nygaard will assist and cooperate with HRB, HRBFA or
Affiliates in good faith and in such manner as is reasonably possible in developing the
information, or providing the statements, documents or testimony reasonably required to properly
respond to or defend such claim or government investigation. HRBFA will reimburse Nygaard for his
out-of-pocket expenses directly associated with providing such assistance and cooperation. If such
assistance and cooperation requires a substantial amount of Nygaard’s time, HRBFA agrees to
reasonably compensate Nygaard for such time, except in litigation matters where Nygaard is a named
party. In such cases Nygaard will continue to provide reasonable assistance and cooperation, as
requested, and will receive reimbursement for his out-of-pocket expenses directly associated with
providing such assistance and cooperation, but receive no compensation for his time.

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     (c) Nygaard will not at any time or in any manner (i) defame HRB, HRBFA, or any Affiliate or
their respective past or present directors and employees, (ii) make disparaging statements to the
media, to any employee or contractor of HRB, HRBFA or any Affiliate, or to any other person or
entity concerning HRB, HRBFA or any Affiliate, their respective past or present directors and
employees or any matter related to his employment or non-employment, or (iii) do any deliberate act
designed primarily to injure the business or reputation of HRB, HRBFA or any Affiliate.

     (d) For a period of 2 years after the Termination Date, Nygaard may not directly or indirectly
recruit, solicit, or hire any employees of subsidiaries of HRB (“HRB Employees”) or otherwise
induce any such HRB Employee to leave the employment of the applicable employer-subsidiary of HRB
to become an employee of or otherwise be associated with any other party or with Nygaard or any
company or business with which Nygaard is or may become associated. The running of the 2-year
period will be suspended during any period of violation and/or any period of time required to
enforce this covenant by litigation or threat of litigation.

     (e) During the time Nygaard is receiving payments pursuant to the Release Agreement, and for 2
years after the cessation of such payments, Nygaard may not directly or indirectly solicit or enter
into any arrangement with any person or entity which is, at the time of the solicitation, a
significant customer of HRB, HRBFA, or an Affiliate for the purpose of engaging in any business
transaction of the nature performed by HRB, HRBFA or such Affiliate, or contemplated to be
performed by HRB, HRBFA or such Affiliate, for such customer, provided that this Section 5(e) will
only apply to customers for whom Nygaard personally provided services while employed by HRBFA or
customers about whom or which Nygaard acquired material information while employed by HRBFA. The
running of the 2-year period will be suspended during any period of violation and/or any period of
time required to enforce this covenant by litigation or threat of litigation.

     (f) During the time Nygaard is receiving payments pursuant to the Release Agreement, and for 2
years after the cessation of such payments, Nygaard shall not engage in, or own or control any
interest in (except as a passive investor in less than one percent of the outstanding securities of
publicly held companies), or act as an officer, director or employee of, or consultant, advisor or
lender to, (i) any firm, corporation, partnership, limited liability company, institution,
business, government agency, or entity that at the time of the initiation of such engagement,
ownership, control, or action by Executive, engages in, or has developed a plan to engage in a
business whose core strategy is to integrate the provision of tax and/or accounting products or
services with the provisions of investment products or services to its clients, or (ii) any
subsidiary, division or segment or a firm, corporation, partnership, limited liability company,
institution, business, government agency, or entity that at the time of the initiation of such
engagement, ownership, control, or action by Nygaard, engages in, or has developed a plan to engage
in a business that integrates the provision of tax and/or accounting products or services with the
provision of investment products or services to its clients. The running of the 2-year period will
be suspended during any period of violation and/or any period of time required to enforce this
covenant by litigation or threat of litigation.

     (g) The parties acknowledge that the restrictions contained in this Agreement and the
surviving restrictions of the Employment Agreement are reasonable, but should any provisions of any
Section of this Agreement or the surviving restrictions of the

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Employment Agreement be determined to be invalid, illegal, or otherwise unenforceable or
unreasonable in scope by any court of competent jurisdiction, the validity, legality, and
enforceability of the other provisions of this Agreement or the other surviving provisions of the
Employment Agreement will not be affected thereby and the provision found invalid, illegal, or
otherwise unenforceable or unreasonable will be considered by the parties 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.

     (h) HRB and HRBFA may agree to waive any of Nygaard’s obligations under this Agreement or the
surviving post-employment obligations under the Employment Agreement; provided that any such waiver
must be in writing and signed by Nygaard, a duly authorized officer of HRBFA, and the Chief
Executive Officer of HRB, and further provided that payments under the Release Agreement will
immediately cease upon any such waiver.

     6. HRB and HRBFA Conduct. HRB and HRBFA will not at any time or in any manner (i)
defame Nygaard, (ii) make disparaging statements to the media, to any employee or contractor of
HRB, HRBFA or Affiliates, or to any other person or entity regarding Nygaard, his performance,
character, status or any other personal or professional matter, or (iii) do any deliberate act
designed in whole or in part to injure, embarrass or damage Nygaard’s reputation.

     7. Release by Nygaard. In consideration of the promises and agreements of HRB and
HRBFA, as set forth in this Agreement, Nygaard for himself and for his relations, heirs, legal
representatives and assigns unconditionally releases and forever discharges HRB, HRBFA, and each
HRB Affiliate, their respective present and past directors, officers, employees, agents,
predecessors, successors, and assigns of and from any and all claims, demands, actions, causes of
action and suits of any kind whatsoever, whether under federal or state statute, local regulation
or at common law or which thereafter arise from any matter, fact, circumstance, event, happening or
thing whatsoever occurring or failing to occur prior to the date of this Agreement involving
Nygaard’s employment by HRBFA or any Affiliate including, without limitation, Nygaard’s hiring,
compensation earned as of or before the date of this Agreement, the termination of Nygaard’s
responsibilities as an officer of HRBFA and as a director and/or officer of each Affiliate,
Nygaard’s termination as an employee of HRBFA, other obligations of HRB, HRBFA or any HRB Affiliate
(except for those obligations expressly stated in this Agreement, the surviving post-termination
provisions of the Employment Agreement or applicable benefit plans), and further including, but not
limited to, any claims for race, sex or age discrimination under the Age Discrimination in
Employment Act, as amended (“ADEA”), Title VII of the Civil Rights Act of 1964, the 1991 amendments
of such Civil Rights Act, the Americans with Disabilities Act, as amended, and all other federal
and state statutes and common law doctrines.

     8. Consideration of Release of ADEA Claims. With regard to the waiver/release of
rights or claims under the ADEA, Nygaard acknowledges and understands that this is a legal document
and that he is legally entitled to, and has been offered, a period of twenty-one (21) days (the
“Consideration Period”) to consider the waiver/release of such rights or claims under this
Agreement before signing it. After signing this Agreement, Nygaard may revoke the waiver/release of
rights or claims under the ADEA by giving written notice (“Revocation Notice”) to Mark A. Ernst,
4400 Main Street, Kansas City, Missouri 64111,

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within seven (7) days after the date of signing (such seven (7) day period, the “Revocation
Period” and such date of signing, the “Signing Date”). For such revocation to be effective, the
Revocation Notice must be received no later than 5:00 p.m., Kansas City, Missouri time, on the
seventh (7th) day after the Signing Date. If Nygaard provides the Revocation Notice to HRB or
HRBFA, this Agreement will be null, void and unenforceable.

     9. Acknowledgements. Nygaard acknowledges that HRB and HRBFA have advised him to
consult with an attorney prior to signing this Agreement or before the expiration of the Revocation
Period. Nygaard specifically acknowledges and agrees that either the full twenty-one (21) day
Consideration Period has lapsed or he has been offered such twenty-one (21) day Consideration
Period but has elected to waive and forego all of the applicable days which have not yet lapsed in
such twenty-one (21) day Consideration Period. Nygaard acknowledges and agrees that upon such
consideration, he has decided to waive and release any claims that he may have under the ADEA,
pursuant to the terms of this Agreement.

     10. Entire Agreement. This Agreement, the Release Agreement, and the surviving
post-termination obligations of the Employment Agreement constitute the entire agreement and
understanding between HRB, HRBFA and Nygaard concerning the subject matter hereof. No modification,
amendment, termination, or waiver of this Agreement will be binding unless in writing and signed by
Nygaard and a duly authorized officer of HRBFA and the Chief Executive Officer of HRB. Failure of
HRB, HRBFA or Nygaard to insist upon strict compliance with any of the terms, covenants, or
conditions hereof will not be deemed a waiver of such terms, covenants, and conditions.

     11. Successors and Assigns. This Agreement and each of its provisions will be binding
upon Nygaard and the heirs, executors, successors and administrators of Nygaard or his estate and
property, and will inure to the benefit of HRB, HRBFA and their successors and assigns. Nygaard may
not assign or transfer to others the obligation to perform his duties hereunder.

     12. Specific Performance by Nygaard. The parties acknowledge that money damages alone
will not adequately compensate HRB or HRBFA for breach of any of the covenants and agreements
herein and, therefore, in the event of the breach or threatened breach of any such covenant or
agreement by either party, in addition to all other remedies available at law, in equity or
otherwise, a wronged party will be entitled to injunctive relief compelling specific performance of
(or other compliance with) the terms hereof.

     13. Notices. Notices hereunder will be deemed delivered five days following deposit
thereof in the United States mail (postage prepaid) addressed to Nygaard at; and to HRBFA at 4400
Main Street, Kansas City, Missouri 64111; Attn: Mark A. Ernst, with a copy to Nicholas J. Spaeth,
Esq., H&R Block, Inc., 4400 Main Street, Kansas City, Missouri 64111; or to such other address
and/or person designated by any party in writing to the other parties.

     14. Counterparts. This Agreement may be signed in counterparts and delivered by
facsimile transmission confirmed promptly thereafter by actual delivery of executed counterparts.

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Executed as a sealed instrument under, and to be governed by, construed and enforced in accordance
with, the laws of the State of Missouri.

	 	 	 	 
	

	 		BRIAN L. NYGAARD:
	 
	 		 
	Dated:

	1/07/05		/s/ Brian L. Nygaard
	

	 		 
	

	 		Brian L. Nygaard

Accepted and Agreed:

H&R Block, Inc.

a Missouri corporation

H&R Block Financial Advisors, Inc.

a Michigan corporation

	 	 	 	 	 
	By:

	 	/s/ Mark A. Ernst	 	 
	

	 	 	 	 
	

	 	Mark A. Ernst	 	 
	 	 	Chairman of the Board, President and Chief Executive Officer of H&R Block, Inc.

Dated:                                         

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EXHIBIT A

RESIGNATION

TO: The Board of Directors of H&R Block, Inc.:

     Effective January 7, 2005, I hereby resign as President and Chief Executive
Officer of H&R Block Financial Advisors, Inc., a Michigan
corporation.

	 	 	 
	Dated:                                         

	 	                                                                                
	

	 	Brian L. Nygaard

A-1

 

EXHIBIT B

RELEASE AGREEMENT

     THIS RELEASE AGREEMENT (“this Release Agreement”) is entered into as of the ___day of
                                        , 2005, by and between H&R Block Financial Advisors, Inc., a Michigan corporation
(“HRBFA”), H&R Block, Inc., a Missouri corporation (“HRB”) and Brian L. Nygaard (“Nygaard”).

     WHEREAS, HRB, HRBFA and Nygaard are parties to an Agreement dated as of                                         , 2005,
under which the parties mutually agreed to terminate the Employment Agreement dated November 5,
2001, by and between HRBFA and Nygaard (the “Employment Agreement”), and Nygaard’s employment
thereunder (the “Termination Agreement”).

     NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein,
the sufficiency of which is hereby acknowledged, the parties agree as follows:

     1. Release by Nygaard. In consideration of the promises of HRB and HRBFA to Nygaard of
the compensation and benefits specified in Section 4 of this Release Agreement, Nygaard for himself
and for his relations, heirs, legal representatives, and assigns unconditionally releases and
forever discharges HRB, HRBFA and HRB’s direct and indirect parents, subsidiaries and affiliates
(collectively, “Affiliates”), their respective present and past directors, officers, employees,
agents, predecessors, successors, and assigns of and from any and all claims, demands, actions,
causes of action and suits of any kind whatsoever, whether under federal or state statute, local
regulation or at common law or which thereafter arise from any matter, fact, circumstance, event,
happening or thing whatsoever occurring or failing to occur prior to the date of this Release
Agreement involving Nygaard’s employment by HRBFA or any Affiliate, including, without limitation,
Nygaard’s hiring, compensation earned as of or before the date of this Release Agreement, the
termination of Nygaard’s responsibilities as an officer of HRBFA and as a director and/or officer
of each Affiliate, Nygaard’s termination as an employee of HRBFA, other obligations of HRB, HRBFA
or any Affiliate (except for those obligations expressly stated in this Release Agreement, the
post-termination provisions of the Employment Agreement or applicable benefit plans), and further
including, but not limited to, any claims for race, sex or age discrimination under the Age
Discrimination in Employment Act, as amended (“ADEA”), Title VII of the Civil Rights Act of 1964,
the 1991 amendments of such Civil Rights Act, the Americans with Disabilities Act, as amended, and
all other federal and state statutes and common law doctrines.

     2. Consideration of Release of ADEA Claims. With regard to the waiver/release of
rights or claims under the ADEA, Nygaard acknowledges and understands that this is a legal document
and that he is legally entitled to, and has been offered, a period of twenty-one (21) days (the
“Consideration Period”) to consider the waiver/release of such rights or claims under this Release
Agreement before signing it. After signing this Release Agreement, Nygaard may revoke the
waiver/release of rights or claims under the ADEA by giving written notice (“Revocation Notice”) to
Mark A. Ernst, 4400 Main Street, Kansas

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City, Missouri 64111, within seven (7) days after the date of signing (such seven (7) day
period, the “Revocation Period” and such date of signing, the “Signing Date”). For such revocation
to be effective, the Revocation Notice must be received no later than 5:00 p.m., Kansas City,
Missouri time, on the seventh (7th) day after the Signing Date. If Nygaard provides the Revocation
Notice to HRB or HRBFA, this Agreement will be null, void and unenforceable and HRB and HRBFA will
have no obligation to make any payments or provide any benefits to Nygaard hereunder.

     3. Acknowledgements. Nygaard acknowledges that HRB and HRBFA have advised him to
consult with an attorney prior to signing this Release Agreement or before the expiration of the
Revocation Period. Nygaard specifically acknowledges and agrees that either the full twenty-one
(21) day Consideration Period has lapsed or he has been offered such twenty-one (21) day
Consideration Period but has elected to waive and forego all of the applicable days which have not
yet lapsed in such twenty-one (21) day Consideration Period. Nygaard acknowledges and agrees that
upon such consideration he has decided to waive and release any claims he may have under the ADEA,
pursuant to the terms of this Release Agreement.

     4. Compensation and Benefits. The parties agree that Nygaard will receive compensation
and benefits from HRB and HRBFA after the Termination Date as follows:

     (i) HRB and HRBFA will pay to Nygaard $312,000 over the 6-month period beginning on the
Termination Date in semi-monthly equal installments of $26,000 (less required tax withholdings).
Such payments shall not encompass payment to Nygaard for any unused vacation or other paid time off
accrued as of the Termination Date.

     (ii) Nygaard will remain eligible to participate in those health and welfare plans maintained
by HRBFA offering medical, dental, vision, employee assistance, flexible spending account, life
insurance, and accidental death and dismemberment insurance benefits during the 6-month period
beginning on the Termination Date on the same basis as employees of HRBFA.

     (iii) Those portions of any outstanding incentive stock options and nonqualified stock options
to purchase shares of HRB’s common stock granted to Nygaard by HRB (“Stock Options”) that are
scheduled to vest between the Termination Date and July 6, 2006 (based solely on the time-specific
vesting schedule included in the applicable stock option agreement), shall vest and become
exercisable as of the Termination Date. Nygaard shall have until October 6, 2005 to exercise such
Stock Options. The operation of this Section 4(a)(iii) is subject to Nygaard’s execution of an
amendment to the affected stock option agreements in the form attached hereto as Exhibit I.

     (iv) All restrictions on any shares of HRB’s common stock awarded to Nygaard by HRB
(“Restricted Shares”) that would have lapsed absent a termination of employment in accordance with
their terms by reason of time between the Termination Date and July 6, 2006 shall terminate (and
shall be fully vested) as of the Termination Date. Any shares unaffected by the operation of this
section 3(a)(iv) shall be forfeited to HRB on the Termination Date. A list of the Restricted
Shares existing and (A) vested as of the date of this Agreement and (B) to become vested pursuant
to Section 5 of the Release Agreement is attached hereto as Exhibit B.

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     (v) HRB and HRBFA will arrange for Right Management Consultants to provide outplacement
services to Nygaard for the 12-month period beginning on the Termination Date.

     5. Termination of Compensation and Benefits. The compensation and benefits described
in Section 4 of this Release Agreement will cease and no further compensation and benefits will be
provided to Nygaard under this Release Agreement if (a) Nygaard violates his obligations under
Section 5 of the Termination Agreement or any of the post-employment obligations under Sections
3.02, 3.03 and 3.05 of the Employment Agreement, or (b) HRB and HRBFA agree to waive any of such
obligations pursuant to and in accordance with Section 5(h) of the Termination Agreement.

     6. Successors and Assigns. This Release Agreement and each of its provisions will be
binding upon Nygaard and the heirs, executors, successors, and administrators of Nygaard or his
estate and property, and shall inure to the benefit of HRB, HRBFA and their successors and assigns.
Nygaard may not assign or transfer to others the obligation to perform his duties hereunder.

     7. Binding Effect. This Agreement is effective only when approved in writing by the
Chairman of the Board, President and Chief Executive Officer of HRB.

     Executed as a sealed instrument under, and to be governed by, construed and enforced in accordance
with, the laws of the State of Missouri.

	 	 	 
	

	 	BRIAN L. NYGAARD:
	 
	Dated:                                                             

	 	                                                            
	 

	 	Brian L. Nygaard

Accepted and Agreed:

H&R Block, Inc.

a Missouri corporation

H&R Block Financial Advisors, Inc.

a Michigan corporation

	 	 	 
	By:

	 	                                                            
	

	 	Mark A. Ernst
	

	 	Chairman of the Board, President and Chief Executive Officer of H&R Block, Inc.

Dated:                                                             

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Exhibit I

H&R BLOCK, INC.

1993 LONG-TERM EXECUTIVE COMPENSATION PLAN

2003 LONG-TERM EXECUTIVE COMPENSATION PLAN

AMENDMENT TO STOCK OPTION AGREEMENT(S)

     WHEREAS, H&R Block, Inc. (“HRB”) and Brian L. Nygaard (“Optionee”) are parties to one or
more Stock Option Agreements, Restricted Shares Agreements and Award Agreements under the H&R
Block, Inc. 1993 Long-Term Executive Compensation Plan and the H&R Block, Inc. 2003 Long-Term
Executive Compensation Plan pursuant to which there are one or more Stock Options (as such term is
defined in such Agreement(s)) outstanding on the date hereof (such one or more Stock Option
Agreements to be referred to herein as the “SOA”);

     WHEREAS, H&R Block Financial Advisors, Inc., an indirect wholly owned subsidiary of the
Company (“HRBFA”) and the Company, have entered into an agreement with Optionee under which
Optionee and the parties agree to terminate Optionee’s employment (the “Termination Agreement”);
and

     WHEREAS, Optionee has executed an agreement under which Optionee releases all known and
potential claims against the Company, HRBFA, and all other direct or indirect subsidiaries of the
Company (the “Release”);

     NOW, THEREFORE, subject to the provisions of the Termination Agreement and the Release,
Optionee and the Company agree as follows:

	(1)  	Section 3(a) of each SOA attached hereto as Exhibits 1, 2, and 3 are hereby amended to add
the following sentence to the end of such Section:
	 
	   	“Notwithstanding the above, in the event that Optionee and Optionee’s employer sign the
agreement presented to Optionee by Optionee’s employer under which Optionee releases all
known and potential claims against the Company, Optionee’s employer, and all other
subsidiaries of the Company (the “Release Agreement”) and Optionee does not revoke the
Release Agreement during any revocation period described therein (the “Revocation Period”),
this Stock Option shall become exercisable to the extent provided in the Release Agreement
as of the applicable date specified in the Release Agreement.”
	 
	(2)  	Section 3(b) of each SOA attached hereto as Exhibits 1, 2, and 3 are hereby amended to add
the following sentence to the end of such Section:
	 
	   	“Notwithstanding the above, in the event that Optionee signs the Release Agreement and does
not revoke the Release Agreement during the Revocation Period, any shares of Common Stock of
the Company identified in the SOA as subject to an Incentive Stock Option shall become
subject to a Nonqualified Stock

I-1

 

	   	Option in lieu of subject to an Incentive Stock Option, and the Stock Option shall continue
and Optionee shall have the right to exercise such Stock Option during the applicable time
period described in the Release Agreement and to the extent specified in the Release
Agreement.”
	 
	(3)  	Except as modified in this Amendment to Stock Option Agreement(s), the SOA attached hereto as
Exhibits 1, 2, and 3 shall remain in full force and effect in accordance with its terms.
	 
	(4)  	Sections 1(c) and (d) of the Restricted Shares Agreement attached hereto as Exhibit 4 is
hereby amended to add the following sentence to the end of Sections 1(c) and (d) respectively:
	 
	   	“Notwithstanding the above, in the event that Recipient and Recipient’s employer sign the
agreement presented to Recipient by Recipient’s employer under which Recipient releases all
known and potential claims against the Company, Recipient’s employer, and all other
subsidiaries of the Company (the “Release Agreement”) and Recipient does not revoke the
Release Agreement during any revocation period described therein (the “Revocation Period”),
the Restricted Shares shall become fully vested to the extent provided in the Release
Agreement as of the applicable date specified in the Release Agreement and the Company shall
promptly thereafter deliver to the Recipient such shares held by the Company and such Shares
shall no longer be considered to be held by the Company.”
	 
	(5)  	Section I(A)(1) of the Award Agreement attached hereto as Exhibit 5 is hereby amended to add
the following to the end of Sections I(A)(1) respectively:
	 
	   	“Notwithstanding the above, in the event that Recipient and Recipient’s employer sign the
agreement presented to Recipient by Recipient’s employer under which Recipient releases all
known and potential claims against the Company, Recipient’s employer, and all other
subsidiaries of the Company (the “Release Agreement”) and Recipient does not revoke the
Release Agreement during any revocation period described therein (the “Revocation Period”),
the Restricted Shares shall become fully vested to the extent provided in the Release
Agreement as of the applicable date specified in the Release Agreement and the Company shall
promptly thereafter deliver to the Recipient such shares held by the Company and such Shares
shall no longer be considered to be held by the Company. ”
	 
	(6)  	Section II(B) of the Award Agreement attached hereto as Exhibit 5 is hereby amended to add
the following to the end of Sections II(B) respectively:
	 
	   	“Notwithstanding the above, in the event that Recipient signs the Release Agreement and does
not revoke the Release Agreement during the Revocation Period, any shares of Common Stock of
the Company identified in the Award Agreement as subject to an Incentive Stock Option shall
become subject to a Nonqualified Stock Option in lieu of subject to an Incentive Stock
Option, and the Stock Option shall continue and Recipient shall have the right to exercise
such Stock Option during the applicable time period described in the Release Agreement and
to the extent specified in the Release Agreement.”

I-2

 

	(7)  	Except as modified in this Amendment to Award Agreement attached hereto as Exhibit 5, the
Award Agreement shall remain in full force and effect in accordance with its terms.

	 	 	 	 	 
	 	 	H&R BLOCK, INC.
	                                                            
	 	 	 	 
	(Signature of Optionee)
	 	 	 	 
	 
	 	 	 	 
	                                                            
	 	 	 	 
	(Social Security Number)

	 	By
	 	                                                            
	

	 	 	 	Mark A. Ernst
	                                                            

	 	 	 	Chairman of the Board, President, and
	(Street Address)

	 	 	 	Chief Executive Officer
	 
	 	 	 	 
	                                                            
	 	 	 	 
	(City, State/Province, Postal Code)
	 	 	 	 

I-3

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