Document:

exv10w2

 

Exhibit 10.2

H&R BLOCK, INC.

2003 LONG-TERM EXECUTIVE COMPENSATION PLAN

AWARD AGREEMENT

     This Award Agreement is entered into by and between H&R Block, Inc., a Missouri
corporation (the “Company”), and                                          (“Recipient”).

     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 Recipient’s execution of
an Award Agreement wherein Recipient agrees to abide by certain terms and conditions authorized by
the Compensation Committee of the Board of Directors;

     WHEREAS, the Recipient 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 an Award under the Plan.

     NOW THEREFORE, in consideration of the parties promises and agreements set forth in this Award
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 mean the Recipient’s gain or
benefit derived with regard to an Award. The Amount of Gain Realized with regard to the types of
awards listed in this Section 1.1 shall have the following meanings:

     (a) Restricted Shares. The Amount of Gain Realized shall be equal to the
number of Shares delivered to the Recipient multiplied by the 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.

     (b) Stock Option. 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.

     (c) Performance Shares. The Amount of Gain Realized shall be equal to the
number of Shares delivered to the Recipient multiplied by the FMV of one Share of the
Company’s Common Stock on the date the Shares became vested in or paid to the Recipient.

 

 

     1.2 Award. Award means one or more of the following: shares of Common Stock,
Restricted Shares, Stock Options, Stock Appreciation Rights, Performance Shares, Performance Units
and any other rights which may be granted to a Recipient under the Plan.

     1.3 Award Certificate means the document issued by the Committee or the CEO for the Company
confirming a grant of an Award under the Plan. The Award Certificate may be an email, letter or
any form acceptable to the Committee.

     1.4 Award Date means the date specified by the Committee on which a grant of an Award shall
become effective, which shall not be earlier than the date on which the Committee takes action with
respect thereto.

     1.5 Common Stock. Common Stock means the Common Stock, without par value of H&R Block, Inc.

     1.6 Change of Control. For the purposes of this Agreement, a “Change of Control” means:

     (a) The purchase or other acquisition (other than from the Company) by any person,
entity or group of persons, within the meaning of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) (excluding, for this purpose, the
Company or its subsidiaries or any employee benefit plan of the Company or its
subsidiaries), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 20% or more of either the then-outstanding shares of Common Stock or
the combined voting power of the Company’s then-outstanding voting securities entitled to
vote generally in the election of directors; or

     (b) Individuals who, as of the date hereof, constitute the Board of Directors of the
Company (the “Board” and, as of the date hereof, the “Incumbent Board”) cease for any reason
to constitute at least a majority of the Board, provided that any person who becomes a
director subsequent to the date hereof whose election, or nomination for election by the
Company’s shareholders, was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board (other than an individual whose initial assumption of office
is in connection with an actual or threatened election contest relating to the election of
directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) shall be, for purposes of this section, considered as
though such person was a member of the Incumbent Board; or

     (c) The completion of a reorganization or consolidation approved by the shareholders of
the Company, in each case with respect to which persons who were the shareholders of the
Company immediately prior to such reorganization or consolidation do not, immediately
thereafter, own more than 50% of, respectively, the Common Stock and the combined voting
power entitled to vote generally in the election of directors of the reorganized or
consolidated corporation’s then-outstanding voting securities, or the sale of all or
substantially all of the assets of the Company as approved by the shareholders of the
Company, or approval by the shareholders of the Company of a liquidation or dissolution of
the Company.

     1.7 Company. Company means H&R Block, Inc., a Missouri corporation, and, unless the context
otherwise requires, includes its “subsidiary corporations” (as defined in

 
			
	 	 	 
	Exhibit 1
	 	JUNE 30, 2006

2

 

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.

     1.8 Code. Code means the Internal Revenue Code of 1986, as amended.

     1.9 Committee. Committee means the Compensation Committee of the Board of Directors for H&R
Block, Inc.

     1.10 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.

     1.11 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.

     1.12 Earnings Target. Earnings Target means a benchmark established by the Committee for
measuring the net income of the Company or a subsidiary thereof.

     1.13 Fair Market Value. Fair Market Value (“FMV”) means, the average of the high and low
reported sales prices for one share of Common Stock, regular way, as reported by the New York Stock
Exchange (or any successor exchange or stock market on which such high and low sales prices are
reported) on the day in question. In the event the exchange is closed on the day on which FMV is
to be determined or if there were no sales reported on such date, FMV shall be computed as of the
last date preceding such date on which the exchange was open and a sale was reported.

     1.14 Last Day of Employment. Last Day of Employment means the date the Recipient 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

     1.15 Line of Business. Line of Business of the Company means any line of business of the
subsidiary of the Company by which Recipient 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 Recipient was
employed during the two-year period preceding the Last Day of Employment, provided that, if
Recipient’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 HRB Management, Inc. 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.

     1.16 Performance Shares. Performance Shares means the right to receive, upon satisfying
designated performance goals within the 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.

 
			
	 	 	 
	Exhibit 1
	 	JUNE 30, 2006

3

 

     1.17 Qualifying Termination. Qualifying Termination shall mean Recipient’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.

     1.18 Recipient. Recipient means an employee of the Company who has been granted an Award
under the Plan.

     1.19 Restricted Shares. Restricted Share (“Shares”) means a share of Common Stock issued to a
Recipient 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.

     1.20 Retirement. Retirement means the Recipient’s voluntary termination of employment with
the Company and each of its subsidiaries, at or after attaining age 65.

     1.21 S&P 500 Index. S&P 500 Index means the market-value weighted performance of the stocks
of the 500 US Companies listed by Standard & Poor’s.

     1.22 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.

     1.23 Total Shareholder Return. Total Shareholder Return (“TSR”) means the percentile ranking
of the sum of stock price appreciation of and dividend reinvestment with respect to a share of
Company Stock.

2. Restricted Shares.

     2.1 Issuance of Shares. As of an Award Date, the Company shall issue the number of Restricted
Shares evidenced by the Award Certificate (the “Shares”) to the Recipient 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 to be determined by the Committee on the Award Date, 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. The certificate or certificates representing such
Shares shall contain the following restrictive transfer legend:

“THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY
ARE SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE) OF THE 2003 LONG-TERM
EXECUTIVE COMPENSATION PLAN OF H&R BLOCK, INC. AND AN AGREEMENT ENTERED INTO BETWEEN
THE REGISTERED OWNER AND H&R BLOCK, INC. COPIES OF SUCH PLAN AND AGREEMENT ARE

 
			
	 	 	 
	Exhibit 1
	 	JUNE 30, 2006

4

 

ON FILE WITH THE SECRETARY OF H&R BLOCK, INC.”

     2.4 Dividends and Voting Rights. During the time that the Company, or its transfer agent or
other designee, continues to hold any Shares subject to substantial risk of forfeiture, the
Recipient shall be entitled to receive any dividends paid with respect to such Shares and to vote
such Shares on any matters submitted by the Company to its shareholders. Dividends paid with
respect to such Shares may not be reinvested under the H&R Block, Inc. Dividend Reinvestment Plan,
as amended.

     2.5 Requirement of Employment. The Recipient 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 Recipient’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 Recipient and Recipient authorizes the Company and its
stock transfer agent to cause delivery, transfer and conveyance of the Shares to the Company.

     2.6 Retirement. If a Recipient retires from employment with any subsidiary of the Company at
least one year after the anniversary of an Award Date, all Shares issued on such Award Date shall
no longer be considered to be held by the Company.

     2.7 Delivery of Shares. Any Shares to be delivered to the Recipient by the Company in
accordance with an Award shall be transferred directly into a brokerage account established for the
Recipient 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 Recipient 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.

3. Stock Option.

     3.1 Grant of Stock Option. As of an Award Date, the Company may grant the Recipient the right
and option to purchase a number of shares of Common Stock identified as subject to a Incentive
Stock Option, and a number of shares of Common Stock identified as subject to Nonqualified Stock
Option (hereinafter collectively referred to as “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.

     3.2 Number of Shares. The Award Certificate shall specify the number of shares granted on the
Award Date.

     3.3 Option Price. The Award Certificate shall specify the Option Price per Share for each
Stock Option, which shall be equal to or greater than the FMV on the Award Date.

     3.4 Vesting. The Award Certificate shall specify the period of continuous employment of the
Recipient by the Company that is necessary before the Stock Options or installments thereof shall
become exercisable.

     3.5 Acceleration of Vesting. Notwithstanding Section 3.4, the Recipient shall become vested
in all or a portion of the Stock Options awarded under the Plan on the

 
			
	 	 	 
	Exhibit 1
	 	JUNE 30, 2006

5

 

occurrence of any of the
following events:

     (a) Change of Control. The Recipient may purchase 100% of the total Stock
Options granted under an Award Certificate provided that the Change of Control occurs at
least six months after the Award Date.

     (b) Retirement. The Recipient may purchase 100% of the total Stock Options
granted under an Award Certificate provided that the Recipient Retires more than one year
after the Award Date.

     (c) Qualifying Termination. The Recipient experiences a Qualifying
Termination, all or a portion of the then outstanding Stock Options granted under an Award
Certificate shall vest according to the severance plan and Recipient may purchase 100% of
such vested Stock Options.

     (d) Employment Agreement. The Recipient may purchase all or a portion of the
total vested Stock Options granted under an Award Certificate upon the occurrence of certain
events specified in the Recipient’s employment agreement.

If application of this Section 3.5 results in the acceleration of vesting of all or any portion of
the Stock Options, shares of Common Stock then subject to Sock 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.

     3.6 Term of Option. No Stock Option awarded under the Plan may be exercised more than ten
years from the Award Date. Except as provided in this Section 3.6 and Section 3.7, all Stock
Options shall terminate when the Recipient ceases, for whatever reason, to be an employee of any of
the subsidiaries of the Company. In the event the Recipient ceases to be an employee of any of the
subsidiaries of the Company because of Retirement, Disability or Termination without Cause,
Recipient may exercise any vested Stock Options up to three months after employment ceases.

     3.7 Recipient’s Death. In the event the Recipient ceases to be an employee of any of the
subsidiaries of the Company because of Death, the person or persons to whom the Recipient’s rights
under the Stock Option shall pass by the Recipient’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.

     3.8 Exercise of Stock Option. The Stock Option granted under the Plan shall be exercisable
from time to time by the Recipient by giving written notice of exercise to 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).

     3.9 Payment of the Option Price. Full payment of the Option Price for shares purchased shall
be made at the time the Recipient 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

 
			
	 	 	 
	Exhibit 1
	 	JUNE 30, 2006

6

 

which the Sock 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 Recipient’s acquisition of
each share of Common Stock delivered by Recipient in full or partial payment of the aggregate
Option Price and the date on which the Stock Option is exercised.

     3.10 No Shareholder Privileges. Neither the Recipient 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.

4. Performance Shares.

     4.1 Grant of Performance Shares. As of the Award Date, the Company may grant an Award of
Performance Shares evidenced by the Award Certificate (the “Performance Shares”).

     4.2 Performance Period. The Award Certificate shall specify the Performance Period over which
each Performance Share shall be earned and certified by the Committee during which a Recipient must
satisfy any designated Performance Goals in order to receive an Award.

     4.3 Performance Goals. The Award Certificate shall specify the Performance Goals to be met
during the Performance Period as a condition of payment of the Performance Share Award.

     4.4 Payment Formula. The Award Certificate shall specify the Payment Formula for determining
the amount of any payment to be made based upon attainment of the Performance Goals. The Payment
Formula may provide a minimum acceptable level of achievement below which no payment will be made
and a maximum payment. No award of Performance Shares may exceed the maximum payment established
by the Committee on the Grant Date.

     4.5 Vesting. Recipient shall become vested in a Performance Award immediately upon completion
of the Performance Period for which the Performance Shares attach. If the Recipient’s employment
with the Company should terminate prior to completion of a Performance Period for any reason other
than: Retirement, Qualifying Termination, Disability or death, the Recipient shall forfeit all
rights in the Performance Shares and Recipient shall not be entitled to a distribution.

     4.6 Retirement. Upon Retirement, Recipient shall be entitled to a pro-rata award of any
Performance Shares awarded based upon actual performance. Such award shall be calculated and paid
at the end of the Performance Period. Receipt of the retirement award may be conditioned upon
Recipient’s execution of a separation agreement.

     4.7 Qualifying Termination. In the event Recipient experiences a Qualifying Termination,
Recipient shall be entitled to a pro-rata award of any Performance Shares awarded more than one
year prior to Qualifying Termination based upon actual performance through date of termination.
Such award shall be calculated and paid at the end of the Performance Period. Receipt of the award
may be conditioned upon Recipient’s execution of a separation agreement.

 
			
	 	 	 
	Exhibit 1
	 	JUNE 30, 2006

7

 

     4.8 Disability. In the event Recipient terminates employment due to Disability, Recipient
shall be entitled to a pro-rata award of any Performance Shares awarded based upon actual
performance through date of termination. Such award shall be calculated as of last
calculable date (e.g. last month close) and paid as soon as practicable.

     4.9 Death. In the event Recipient terminates employment due to Recipient’s death, Recipient’s
estate shall be entitled to a pro-rata award of any Performance Shares awarded based upon actual
performance through date of termination. Such award shall be calculated as of last calculable date
(e.g. last month close) and paid as soon as practicable.

     4.10 Change of Control. If Recipient terminates employment after a Change of Control,
Recipient shall be entitled to a pro-rata award of any Performance Shares awarded upon actual
performance through date of termination. Such award shall be calculated as of last calculable date
(e.g. last month close) and paid in cash as soon as practicable.

     4.11 Certification of a Performance Award. Upon completion of a Performance Period or such
earlier period, and prior to the payment of any Performance Award to a Recipient, the Committee
shall certify in writing that the Performance Goal has been satisfied.

     4.12 Payment of Performance Awards. Performance Awards shall be paid out, in Shares of the
Common Stock or cash (as determined by the Committee in its sole discretion), within 60 days of the
end of a Performance Period.

5. Covenants.

     5.1 Violation of Noncompete, Nonhire, Nonsolicitation and Nonuse Provisions. Recipient
acknowledges that Recipient’s agreement to this Section 5 is a key consideration for any Award
under the Plan. Recipient hereby agrees with Company as follows:

     5.2 Non-Compete. During Recipient’s employment, or within one year after Recipient’s Last Day
of Employment, Recipient shall not engage in, ownership of, or control of 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, any
firm, corporation, partnership, limited liability company, institution, business, government
agency, or entity that engages in any line of business that is competitive with any Line of
Business of the Company.

     5.3 Non-Hire. During Recipient’s employment, or within one year after the Last Day of
Employment, Recipient shall not employ or solicit for employment by any employer other than a
subsidiary of the Company any employee of any subsidiary of the Company, or recommend any such
employee for employment to any employer (other than a subsidiary of the Company) at which Recipient
is or intends to be (a) employed, (b) a member of the Board of Directors, (c) a partner, (d)
providing consulting services, or (e) an owner, regardless of Recipient’s percentage of ownership
interest in such employer (except if such employer is a publicly traded company and Recipient is a
passive investor in less than one percent of its outstanding securities).

     5.4 Non-Solicitation. During Recipient’s employment, or within one year after the Last Day of
Employment, Recipient shall not directly or indirectly solicit or enter into any arrangement with
any person or entity which is, at the time of the solicitation, a

 
			
	 	 	 
	Exhibit 1
	 	JUNE 30, 2006

8

 

significant customer of a
subsidiary of the Company for the purpose of engaging in any business transaction of the nature
performed by such subsidiary, or contemplated to be performed by such subsidiary, for such
customer, provided that this Section 5.4 shall only apply to customers for whom Recipient
personally provided services while employed by a
subsidiary of the Company or customers about whom or which Recipient acquired material information
while employed by a subsidiary of the Company; or

     5.5 Non-Use and Non-Disclosure. During Recipient’s employment or within one year after the
Last Day of Employment, Recipient shall not misappropriate or improperly use or disclose
confidential information of the Company and/or its subsidiaries.

     5.6 Forfeiture of Rights. Notwithstanding anything herein to the contrary, if Recipient
violates any provisions of this Section 5, Recipient shall forfeit all rights to payments or
benefits under the Plan. All Shares held on such date by the Company or its transfer agent or
other designee, if any, shall be forfeited by the Recipient and the Recipient authorizes the
Company and its stock transfer agent to cause delivery, transfer and conveyance of the Shares to
the Company. All Stock Options and Performance Shares outstanding on such date shall terminate.

     5.7 Remedies. Notwithstanding anything herein to the contrary, if Recipient violates any
provisions of this Section 5, whether prior to, on or after any Settlement of an Award under the
Plan, then Recipient shall promptly pay to Company and amount equal to the aggregate Amount of Gain
Realized by the Recipient on all Stock Options exercised or Awards paid under the Plan after a date
commencing one year prior to Recipient’s Last Day of Employment. The Recipient shall pay Company
within three (3) business days after the date of any written demand by the Company to the
Recipient.

     5.8 Remedies payable in Company’s Common Stock or Cash. The Recipient shall pay the amounts
described in Section 5.7 in the Company’s Common Stock or cash.

     5.9 Remedies without Prejudice. The remedies provided in this Section 5 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 Recipient 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.

     5.10 Survival. Recipient’s obligations in this Section 5 shall survive and continue beyond
settlement of all Awards under the Plan and any termination or expiration of this Agreement for any
reason.

6. Transfer Restrictions.

     6.1 Transfer Restrictions on Shares. During the period that Shares are held by the Company
hereunder for delivery to the Recipient, 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

 
			
	 	 	 
	Exhibit 1
	 	JUNE 30, 2006

9

 

terminate. Immediately after such termination, such
Shares shall be forfeited by the Recipient and the Recipient hereby authorizes the Company and its
stock transfer agent to cause the delivery, transfer and conveyance of such Shares to the Company.

     6.2 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.

7. Miscellaneous. 

     7.1 No Employment Contract. This Agreement does not confer on the Recipient 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 Recipient and any subsidiary of the
Company.

     7.2 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.

     7.3 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 Recipient of unexpired Stock
Option rights or Shares not yet delivered, for the substitution of a new award or other contractual
rights with regard to such Award.

     7.4 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 absence on leave 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).

 
			
	 	 	 
	Exhibit 1
	 	JUNE 30, 2006

10

 

     7.5 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.

     7.6 Reasonableness of Restrictions, Severability and Court Modification. Recipient 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 Recipient 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.

     7.7 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 Recipient 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 Recipient 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 Recipient has not made arrangements, the Company shall
withhold the amount of such tax obligations from such dividend payment or instruct the Recipient’s
employer to withhold such amount from the Recipient’s next payment(s) of wages. The Recipient
authorizes the Company to so instruct the Recipient’s employer and authorizes the Recipient’s
employer to make such withholdings from payment(s) of wages.

     7.8 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
Recipient and an officer of the Company.

     7.9 Incorporation. The terms and conditions of this Award Agreement are authorized by the
Compensation Committee of the Board of Directors of H&R Block, Inc. The terms and conditions of
this Award Agreement are deemed to be incorporated into and form a part of every Award under the
Plan unless the Award Certificate relating to a specific grant or award provides otherwise.

     7.10 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 Recipient. Any notice to be given to the Recipient shall be addressed
to the Recipient at the last address of record with the Company or at such other address as the
Recipient 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 mails via regular or certified mail,
addressed as aforesaid, postage prepaid.

 
			
	 	 	 
	Exhibit 1
	 	JUNE 30, 2006

11

 

     7.11 Choice of Law. This Award 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.

     7.12 Choice of Forum and Jurisdiction. Recipient and Company agree that any
proceedings to enforce the obligations and rights under this Award 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. Recipient agrees and submits to
personal jurisdiction in either court. Recipient 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 Recipient and H&R Block, Inc.

     7.13 Attorneys Fees. Recipient and Company agree that in the event of litigation to enforce
the terms and obligations under this Award Agreement, the party prevailing in any such cause of
action will be entitled to reimbursement of reasonable attorney fees.

     7.14 Relationship of the Parties. Recipient acknowledges that this Award Agreement is between
H&R Block, Inc. and Recipient. Recipient further acknowledges that H&R Block, Inc. is a holding
company and that Recipient is not an employee of H&R Block, Inc.

     7.15 Headings. The section headings herein are for convenience only and shall not be
considered in construing this Agreement.

     7.16 Amendment. No amendment, supplement, or waiver to this Agreement is valid or binding
unless in writing and signed by both parties.

     7.17 Execution of Agreement. This Agreement shall not be enforceable by either party, and
Recipient shall have no rights with respect to the Long Term Incentive Award, unless and until it
has been (1) signed by Recipient 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 Award Agreement effective as of June 30, 2006.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	H&R BLOCK, INC.	 	 
	 

(Signature of Recipient)

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

(Social Security Number)

	 	 	 	 	 	 

Mark A. Ernst

Chairman of the Board, President and

Chief Executive Officer
	 	 

			
	 	 	 
	Exhibit 1
	 	JUNE 30, 2006

12exv10w14

 

Exhibit 10.14

H&R BLOCK SEVERANCE PLAN

Amended and Restated August 11, 2003

1. Purpose. The H&R Block Severance Plan is a welfare benefit plan established by HRB
Management, Inc., an indirect subsidiary of H&R Block, Inc., for the benefit of certain
subsidiaries of H&R Block, Inc. in order to provide severance compensation and benefits to certain
employees of such subsidiaries whose employment is involuntarily terminated under the conditions
set forth herein. This document constitutes both the plan document and the summary plan
description required by the Employee Retirement Income Security Act of 1974.

2. Definitions.

(a) “Cause” means one or more of the following grounds of an Employee’s termination
of employment with a Participating Employer:

(i) misconduct that interferes with or prejudices the proper conduct of the
Company, the Employee’s Participating Employer, or any other affiliate of the
Company, or which may reasonably result in harm to the reputation of the
Company, the Employee’s Participating Employer, or any other affiliate of the
Company;

(ii) commission of an act of dishonesty or breach of trust resulting or
intending to result in material personal gain or enrichment of the Employee at
the expense of the Company, the Employee’s Participating Employer, or any other
affiliate of the Company;

(iii) commission of an act materially and demonstrably detrimental to the good
will of the Company, the Employee’s Participating Employer, or any other
affiliate of the Company, which act constitutes gross negligence or willful
misconduct by the Employee in the performance of the Employee’s material duties;

(iv) material violations of the policies or procedures of the Employee’s
Participating Employer, including, but not limited to, the H&R Block Code of
Business Ethics & Conduct, except those policies or procedures with respect to
which an exception has been granted under authority exercised or delegated by
the Participating Employer;

(v) disobedience, insubordination or failure to discharge employment duties;

(vi) conviction of, or entrance of a plea of guilty or no contest, to a
misdemeanor (involving an act of moral turpitude) or a felony;

(vii) inability of the Employee, the Company, the Employee’s Participating
Employer, and/or any other affiliate of the Company to participate, in whole or
in part, in any activity subject to governmental regulation as the result of any
action or inaction on the part of the Employee;

1

 

(viii) the Employee’s death or total and permanent disability. The term “total and
permanent disability” will have the meaning ascribed thereto under any long-term
disability plan maintained by the Employee’s Participating Employer;

(ix) any grounds described as a discharge or other similar term on the Participating
Employer’s separation review form or other similar document stating the reason for the
Employee’s termination of employment, including poor performance; or

(x) any other grounds of termination of employment that the Participating Employer deems
for cause.

Notwithstanding the definition of Cause above, if an Employee’s employment with a Participating
Employer is subject to an employment agreement that contains a definition of “cause” for purposes
of termination of employment, such definition of “cause” in such employment agreement shall
replace the definition of Cause herein for the purpose of determining whether the Employee has
incurred a Qualifying Termination, but only with respect to such Employee.

(b) “Company” means H&R Block, Inc.

(c) “Employee” means a regular full-time or part-time, active employee of a Participating
Employer whose employment with a Participating Employer is not subject to an employment contract
that contains a provision that includes severance benefits. This definition expressly excludes
employees of a Participating Employer classified as seasonal, temporary and/or inactive and
employees who are customarily employed by a Participating Employer less than 20 hours per week.

(d) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

(e) “Hour, of Service” means each hour for which an individual was entitled to compensation as a
regular full-time or part-time employee from a subsidiary of the Company.

(f) “Line of Business of the Company” with respect to a Participant means any line of business of
the Participating Employer by which the Participant was employed as of the Termination Date, as
well as any one or more lines of business of any other subsidiary of the Company by which the
Participant was employed during the two-year period preceding the Termination Date,
provided that, if Participant’s employment was, as of the Termination Date or during
the two-year period immediately prior to the Termination Date, with HRB Management, Inc. 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.

(g) “Monthly Salary” means –

2

 

(i) with respect to an Employee paid on a salary basis, the Employee’s current annual
salary divided by 12; and

(ii) with respect to an Employee paid on an hourly basis, the Employee’s current hourly
rate times the number of hours he or she is regularly scheduled to work per week
multiplied by 52 and then divided by 12.

(h) “Participant” means an Employee who has incurred a Qualifying Termination and has signed a
Release that has not been revoked during any revocation period provided under the Release.

(i) “Participating Employer” means a direct or indirect subsidiary of the Company (i) listed on
Schedule A, attached hereto, which may change from time to time to reflect new Participating
Employers or withdrawing Participating Employers, and (ii) approved by the Plan Sponsor for
participation in the Plan.

(j) “Plan” means the “H&R Block Severance Plan,” as stated herein, and as may be amended from time
to time.

(k) “Plan Administrator” and “Plan Sponsor” means HRB Management, Inc. The address and telephone
number of HRB Management, Inc. is 4400 Main Street, Kansas City, Missouri 64111, (816) 753-6900.
The Employer Identification Number assigned to HRB Management, Inc. by the Internal Revenue
Service is 43-1632589.

(l) “Qualifying Termination” means the involuntary termination of an Employee, but does not
include a termination resulting from:

(i) the elimination of the Employee’s position where the Employee was offered another
position with a subsidiary of the Company at a comparable salary and benefit level, or
where the termination results from a sale of assets or other corporate acquisition or
disposition;

(ii) the redefinition of an Employee’s position to a lower salary rate or
grade;

(iii) the termination of an Employee for Cause; or 

(iv) the non-renewal of employment contracts.

(m) “Release” means that agreement signed by and between an Employee who is eligible to
participate in the Plan and the Employee’s Participating Employer under which the Employee
releases all known and potential claims against the Employee’s Participating Employer and all of
such employer’s parents, subsidiaries, and affiliates.

(n) “Release Date” means, with respect to a Release that includes a revocation period, the date
immediately following the expiration date of the revocation period in the Release that has been
fully executed by both parties. “Release Date” means, with

3

 

respect to a Release that does not include a revocation period, the date the
Release has been fully executed by both parties.

(o) “Severance Period” means the period of time during which a Participant may receive
benefits under this Plan. The Severance Period with respect to a Participant begins on
the Termination Date. A Participant’s Severance Period will be the shorter of (i) 12
months or (ii) a number of months equal to the whole number of Years of Service
determined under Section 2(q), unless earlier terminated in accordance with Section 8 of
the Plan.

(p) “Termination Date” means the date the Employee severs employment with a
Participating Employer.

(q) “Year of Service” means each period of 12 consecutive months ending on the Employee’s
employment anniversary date during which the Employee had at least 1,000 Hours of
Service. In determining a Participant’s Years of Service, the Participant will be
credited with a partial Year of Service for his or her final period of employment
commencing on his or her most recent employment anniversary date equal to a fraction
calculated in accordance with the following formula:

Number of days since most recent employment anniversary date

365

Despite an Employee’s Years of Service calculated in accordance with the above, an
Employee whose pay grade at his or her Participating Employer fits in the following
categories at the time of the Qualifying Termination will be credited with no less than
the specified Minimum Years of Service and no more than the specified Maximum Years of
Service listed in the following table as applicable to such pay grade:

	 	 	 	 	 	 	 	 	 
	Pay Grade	 	Minimum Years of Service	 	Maximum Years of Service
	81-89 and 231-235
	 	 	6	 	 	 	18	 
	65-80, 140-145,
185-190, and 218-230
	 	 	3	 	 	 	18	 
	57-64, 115-135,
175-180, and 210-217
	 	 	1	 	 	 	18	 
	48-56, 100-110, 170,
and 200-209
	 	 	1	 	 	 	18	 

Notwithstanding the above, if an Employee has received credit for Years of Service
under this Plan or under any previous plan, program, or agreement for the purpose of
receiving severance benefits before a Qualifying Termination, such Years of Service will
be disregarded when calculating Years of Service for such Qualifying Termination under
the Plan; provided, however, that if such severance benefits were terminated prior to
completion because the Employee was rehired by any subsidiary of the Company then the
Employee will be re-credited with full Years of Service for which severance benefits were
not paid in full or in part because of such termination.

4

 

3. Eligibility and Participation.

An Employee who incurs a Qualifying Termination and signs a Release that has not been
revoked during any revocation period under the Release is eligible to participate in the
Plan. An eligible Employee will become a Participant in the Plan as of the Termination
Date.

4. Severance Compensation.

(a) Amount. Subject to Section 8, each Participant will receive during the
Severance Period from the applicable Participating Employer aggregate severance compensation
equal to:

(i) the Participant’s Monthly Salary multiplied by the Participant’s Years of
Service; plus

(ii) one-twelfth of the Participant’s target payout under the Short-Term Incentive
Program of the Participating Employer in effect at the time of his or her
Termination Date multiplied by the Participant’s Years of Service; plus

(iii) an amount to be determined by the Participating Employer at its sole
discretion, which amount may be zero.

(b) Timing of Payments. Except as stated in Section 4(c), and subject to Section 8,

(i) the sum of any amounts determined under Sections 4(a)(i) and 4(a)(ii) of the
Plan will be paid in semi-monthly or bi-weekly installments (the timing and amount
of each installment as determined by the Participating Employer) during the
Severance Period beginning after the later of the Termination Date or the Release
Date; and

(ii) any amounts determined under Section 4(a)(iii) of the Plan will be paid in
one lump sum within 15 days after the later of the Termination Date or the Release
Date, unless otherwise agreed in writing by the Participating Employer and
Participant or otherwise required by law.

(c) Death. In the event of the Participant’s death prior to receiving all payments
due under this Section 4, any unpaid severance compensation will be paid (i) in the same
manner as are death benefits under the Participant’s basic life insurance coverage
provided by the Participant’s Participating Employer, and (ii) in accordance with the
Participant’s beneficiary designation under such coverage. If no such coverage exists,
or if no beneficiary designation exists under such coverage as of the date of death of the
Participant, the severance compensation will be paid to the Participant’s estate in
one-lump sum.

5

 

     5. Health and Welfare Benefits.

(a) Benefits. In addition to the severance compensation provided pursuant to
Section 4 of the Plan, a Participant may continue to participate in the following health
and welfare benefits provided by his or her Participating Employer during the Severance
Period on the same basis as employees of the Participating Employer:

(i) medical;

(ii) dental;

(iii) vision;

(iv) employee assistance;

(v) medical expense reimbursement and dependent care expense reimbursement benefits provided under a cafeteria plan;

(vi) life insurance (basic and supplemental); and

(vii) accidental death and dismemberment insurance (basic and supplemental).

For the purposes of any of the above-described benefits provided under a Participating
Employer’s cafeteria plan, a Qualifying Termination constitutes a “change in status” or
“life event”.

(b) Payment and Expiration. Payment of the Participant’s portion of contribution
or premiums for such selected benefits will be withheld from any severance compensation
payments paid to the Participant under this Plan. The Participating Employer’s partial
subsidization of such coverages will remain in effect until the earlier of:

(i) the expiration or earlier termination of the Employee’s Severance Period,
after which time the Participant may be eligible to elect to continue coverage of
those benefits listed above that are provided under group health plans in
accordance with his or her rights under Section 4980B of the Internal Revenue
Code; or

(ii) the Participant’s attainment of or eligibility to attain health and welfare
benefits through another employer after which time the Participant may be eligible
to elect to continue coverage of those benefits listed above that are provided
under group health plans in accordance with his or her rights under Section 4980B
of the Internal Revenue Code.

6

 

6. Stock Options.

(a) Accelerated Vesting. Any portion of any outstanding incentive
stock options and nonqualified stock options that would have vested during the 18-
month period following the Termination Date had the Participant remained an employee
with the Participating Employer during such 18-month period will vest as of the
Termination Date. This Section 6(a) applies only to options (i) granted to the
Participant under the Company’s 1993 Long-Term Executive Compensation Plan, or any
successor plan to its 1993 Long-Term Executive Compensation Plan, not less than 6
months prior to his or her Termination Date and (ii) outstanding at the close of
business on such Termination Date. The determination of accelerated vesting under
this Section 6(a) shall be made as of the Termination Date and shall be based solely
on any time-specific vesting schedule included in the applicable stock option
agreement without regard to any accelerated vesting provision not related to the
Plan in such agreement.

(b) Post-Termination Exercise Period. Subject to the expiration dates and
other terms of the applicable stock option agreements, the Participant may elect to
have the right to exercise any outstanding incentive stock options and nonqualified
stock options granted prior to the Termination Date to the Participant under the
Company’s 1984 Long-Term Executive Compensation Plan, its 1993 Long-Term Executive
Compensation Plan, or any successor plan to its 1993 Long-Term Executive
Compensation Plan that are vested as of the Termination Date (or, if later, the
Release Date), whether due to the operation of Section 6(a), above, or otherwise, at
any time during the Severance Period and, except in the event that the Severance
Period terminates pursuant to Section 8(a), for a period up to 3 months after the
end of the Severance Period (notwithstanding Section 8). Any such election shall
apply to all outstanding incentive stock options and nonqualified stock options,
will be irrevocable and must be made in writing and delivered to the Plan
Administrator on or before the later of the Termination Date or Release Date. If the
Participant fails to make an election, the Participant’s right to exercise such
options will expire 3 months after the Termination Date.

(c) Stock Option Agreement Amendment. The operation of Sections 6(a) and
6(b), above, are subject to the Participant’s execution of an amendment to any
affected stock option agreements, if necessary.

7. Outplacement Services. In addition to the benefits described above, career transition counseling
or outplacement services may be provided upon the Participant’s Qualifying Termination. Such
outplacement service will be provided at the Participating Employer’s sole discretion. Outplacement
services are designed to assist employees in their search for new employment and to facilitate a
smooth transition between employment with the Participating Employer and employment with another
employer. Any outplacement services provided under this Plan will be provided by an outplacement
service chosen by the Participating Employer. The Participant is not entitled to any monetary
payment in lieu of outplacement services.

7

 

8. Termination of Benefits. Any right of a Participant to severance compensation and benefits
under the Plan, and all obligations of his or her Participating Employer to pay any unpaid
severance compensation or provide benefits under the Plan will terminate as of the day:

(a) The Participant has engaged in any conduct described in Sections 8(a)(i), 8(a)(ii),
8(a)(iii) or 8(a)(iv), below, as the same may be limited pursuant to Section 8(a)(vi).

(i) During the Severance Period, the Participant’s engagement in, ownership
of, or control of any interest in (except as a passive investor in less than
one percent of the outstanding securities of publicly held companies), or
acting as an officer, director or employee of, or consultant, advisor or
lender to, any firm, corporation, partnership, limited liability company,
institution, business, government agency, or entity that engages in any line
of business that is competitive with any Line of Business of the Company,
provided that this Section 8(a)(i) shall not apply to the Participant if the
Participant’s primary place of employment by a subsidiary of the Company as
of the Termination Date is in either the State of California or the State of
North Dakota.

(ii) During the Severance Period, the Participant employs or solicits for
employment by any employer other than a subsidiary of the Company any
employee of any subsidiary of the Company, or recommends any such employee
for employment to any employer (other than a subsidiary of the Company) at
which the Participant is or intends to be (A) employed, (B) a member of the
Board of Directors, (C) a partner, or (D) providing consulting services.

(iii) During the Severance Period, the Participant directly or indirectly
solicits or enters into any arrangement with any person or entity which is,
at the time of the solicitation, a significant customer ,of a subsidiary of
the Company for the purpose of engaging in any business transaction of the
nature performed by such subsidiary, or contemplated to be performed by such
subsidiary, for such customer, provided that this Section 8(a)(iii) shall
only apply to customers for whom the Participant personally provided
services while employed by a subsidiary of the Company or customers about
whom or which the Participant acquired material information while employed
by a subsidiary of the Company.

(iv) During the Severance Period, the Participant misappropriates or
improperly uses or discloses confidential information of the Company and/or
its subsidiaries.

(v) If the Participant engaged in any of the conduct described in Sections
8(a)(i), 8(a)(ii), 8(a)(iii) or 8(a)(iv) during or after Participant’s term
of employment with a Participating Employer, but prior to the

8

 

commencement of the Severance Period, and such engagement becomes
known to the Participating Employer during the Severance Period, such
conduct shall be deemed, for purposes of Sections 8(a)(i), 8(a)(ii), 8(a)(iii)
or 8(a)(iv) to have occurred during the Severance Period.

(vi) If the Participant is a party to an employment contract with a
Participating Employer that contains a covenant or covenants relating to the
Participant’s engagement in conduct that is the same as or substantially
similar to the conduct described in any of Sections 8(a)(i), 8(a)(ii),
8(a)(iii) or 8(a)(iv), and any specific conduct regulated in such covenant
or covenants in such employment contract is more limited in scope
geographically or otherwise than the corresponding specific conduct
described in any of such Sections 8(a)(i), 8(a)(ii), 8(a)(iii) or 8(a)(iv),
then the corresponding specific conduct addressed in the applicable Section
8(a)(i), 8(a)(ii), 8(a)(iii) or 8(a)(iv) shall be limited to the same extent
as such conduct is limited in the employment contract and the Participating
Employer’s rights and remedy with respect to such conduct under this Section
8 shall apply only to such conduct as so limited.

(b) The Participant is rehired by or her Participating Employer or hired by any other
subsidiary of the Company in any position other than a position classified as seasonal by
such employer.

9. Amendment and Termination. The Plan Sponsor reserves the right to amend the Plan or to
terminate the Plan and all benefits hereunder in their entirety at any time.

10. Administration of Plan. The Plan Administrator has the power and discretion to construe the
provisions of the Plan and to determine all questions relating to the eligibility of employees of
Participating Employers to become Participants in the Plan, and the amount of benefits to which any
Participant may be entitled thereunder in accordance with the Plan. Not in limitation, but in
amplification of the foregoing and of the authority conferred upon the Plan Administrator, the Plan
Sponsor specifically intends that the Plan Administrator have the greatest permissible discretion
to construe the terms of the Plan and to determine all questions concerning eligibility,
participation and benefits. Any such decision made by the Plan Administrator will be binding on
all Employees, Participants, and beneficiaries, and is intended to be subject to the most
deferential standard of judicial review. Such standard of review is not to be affected by any real
or alleged conflict of interest on the part of the Plan Administrator. The decision of the Plan
Administrator upon all matters within the scope of its authority will be final and binding.

11. Claims Procedures.

(a) Filing a Claim for Benefits. Participants are not required to submit claim forms to
initiate payment of benefits under this Plan. To make a claim for benefits, individuals
other than Participants who believe they are entitled to receive benefits under this Plan
and Participants who believe they have been denied certain benefits under the Plan must
write to the Plan Administrator. These individuals and such

9

 

Participants are hereinafter referred to in this Section 11 as “Claimants.” Claimants
must notify the Plan Administrator if they will be represented by a duly authorized
representative with respect to a claim under the Plan.

(b) Initial Review of Claims. The Plan Administrator will evaluate a claim for benefits
under the Plan. The Plan Administrator may solicit additional information from the Claimant
if necessary to evaluate the claim. If the Plan Administrator denies all or any portion of
the claim, the Claimant will receive, within 90 days after the receipt of the written
claim, a written notice setting forth:

(i) the specific reason for the denial;

(ii) specific references to pertinent Plan provisions on which the Plan
Administrator based its denial;

(iii) a description of any additional material and information needed for the
Claimant to perfect his or her claim and an explanation of why the material or
information is needed; and

(iv) that any appeal the Claimant wishes to make of the adverse determination must
be in writing to the Plan Administrator within 60 days after receipt of the notice
of denial of benefits. The notice must advise the Claimant that his or her failure
to appeal the action to the Plan Administrator in writing within the 60-day period
will render the Plan Administrator’s determination final, binding and conclusive.
The notice must further advise the Claimant of his or her right to bring a civil
action under Section 502(a) of ERISA following the exhaustion of the claims
procedures described herein.

(c) Appeal of Denied Claim and Final Decision. If the Claimant should appeal to the Plan
Administrator, the Claimant, or his or her duly authorized representative, must submit, in
writing, whatever issues and comments the Claimant or his or her duly authorized
representative feels are pertinent. The Claimant, or his or her duly authorized
representative, may review and request pertinent Plan documents. The Plan Administrator
will reexamine all facts related to the appeal and make a final determination as to whether
the denial of benefits is justified under the circumstances. The Plan Administrator will
advise the Claimant in writing of its decision within 60 days of the Claimant’s written
request for review, unless special circumstances (such as a hearing) require an extension
of time, in which case the Plan Administrator will make a decision as soon as possible, but
no later than 120 days after its receipt of a request for review.

12. Plan Financing. The benefits to be provided under the Plan will be paid by the applicable
Participating Employer, as incurred, out of the general assets of such Participating Employer.

13. General Information. The Plan’s records are maintained on a calendar year basis. The Plan
Number is 509. The Plan is self-administered and is considered a severance plan.

10

 

14. Governing Law. The Plan is established in the State of Missouri. To the extent
federal law does not apply, any questions arising under the Plan will be determined under the laws
of the State of Missouri.

15. Enforceability; Severability. If a court of competent jurisdiction determines that any
provision of the Plan is not enforceable, then such provision shall be enforceable to the maximum
extent possible under applicable law, as determined by such court. The invalidity or
unenforceability of any provision of the Plan, as determined by a court of competent jurisdiction,
will not affect the validity or enforceability of any other provision of the Plan and all other
provisions will remain in full force and effect.

16. Withholding of Taxes. The applicable Participating Employer may withhold from any benefit
payable under the Plan all federal, state, city or other taxes as may be required pursuant to any
law, governmental regulation or ruling. The Participant shall pay upon demand by the Company or the
Participating Employer any taxes required to be withheld or collected by the Company or the
Participating Employer upon the exercise by the Participant of a nonqualified stock option granted
under the Company’s 1984 Long-Term Executive Compensation Plan or its 1993 Long-Term Executive
Compensation Plan. If the Participant fails to pay any such taxes associated with such exercise
upon demand, the Participating Employer shall have the right, but not the obligation, to offset
such taxes against any unpaid severance compensation under this Plan.

17. Not an Employment Agreement. Nothing in the Plan gives an Employee any rights (or imposes any
obligations) to continued employment by his or her Participating Employer or other subsidiary of
the Company, nor does it give such Participating Employer any rights (or impose any obligations)
for the continued performance of duties by the Employee for the Participating Employer or any other
subsidiary of the Company.

18. No Assignment. The Employee’s right to receive payments of severance
compensation and benefits under the Plan are not assignable or transferable, whether by pledge,
creation of a security interest, or otherwise. In the event of any attempted assignment or
transfer contrary to this Section 18, the applicable Participating Employer will have no liability
to pay any amount so attempted to be assigned or transferred.

19. Service of Process. The Secretary of the Plan Administrator is designated as agent for service
of legal process. Service of legal process may be made upon the Secretary of the Plan Administrator
at:

HRB Management, Inc. 

Attn: Secretary 

4400 Main Street

Kansas City, Missouri 64111

     20. Statement of ERISA Rights. As a participant in the Plan, you are entitled to certain rights and
protections under ERISA, which provides that all Plan Participants are entitled to:

(a) examine without charge, at the Plan Administrator’s office, all documents
governing the Plan and a copy of the latest annual report (Form 5500 Series) filed by

11

 

the Plan with the U.S. Department of Labor and available at the Public Disclosure
Room of the Pension and Welfare Benefit Administration;

(b) obtain, upon written request to the Plan Administrator, copies of documents governing
the operation of the Plan, copies of the latest annual report (Form 5500 Series) and an
updated summary plan description. The Plan Administrator may make a reasonable charge for
the copies; and

(c) receive a summary of the Plan’s annual financial report if required to be filed for the
year. The Plan Administrator is required by law to furnish each participant with a copy of
this summary annual report if an annual report is required to be filed for the year.

     In addition to creating rights for Plan Participants, ERISA imposes duties upon the people
who are responsible for the operation of the Plan. The people who operate your Plan, called
“fiduciaries” of the Plan, have a duty to do so prudently and in the interest of you and other
Plan Participants and beneficiaries. No one, including your Participating Employer or any other
person, may fire you or otherwise discriminate against you in any way to prevent you from
obtaining a welfare benefit or exercising your rights under ERISA.

     If your claim for a welfare benefit is denied or ignored, in whole or in part, you have the
right to know why this was done, to obtain copies of documents relating to the decision without
charge, and to appeal any denial, all within certain time schedules.

     Under ERISA, there are steps you can take to enforce the above rights. For instance, if you
request a copy of plan documents or the latest annual report from the Plan and do not receive them
within 30 days, you may file suit in a Federal court. In such a case, the court may require the
Plan Administrator to provide the materials to you and pay you up to $110 a day until you receive
the materials, unless the materials were not sent because of reasons beyond the control of the
Plan Administrator. If you have a claim for benefits that is denied or ignored, in whole or in
part, you may file suit in a state or Federal court. If it should happen that you are discriminated
against for asserting your rights, you may seek assistance from the U. S. Department of Labor, or
you may file suit in a Federal court. The court will decide who should pay court costs and legal
fees. If you are successful, the court may order the person you have sued to pay these costs and
fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds
your claim is frivolous.

     If you have any questions about the Plan, you should contact the Plan Administrator. If you
have questions about this statement or about your rights under ERISA, or if you need assistance in
obtaining documents from the Plan Administrator, you should contact the nearest office of the
Pension and Welfare Benefits Administration, U.S. Department of Labor, listed in your telephone
directory or the Division of Technical Assistance and Inquiries, Pension and Welfare Benefits
Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. You
may also obtain certain publications about your rights and responsibilities under ERISA by calling
the publications hotline of the Pension and Welfare Benefits Administration.

12

 

     IN WITNESS WHEREOF, HRB Management, Inc. adopts this Severance Plan, as amended and restated,
effective this 11th day of August, 2003.

	 	 	 	 	 
	 	HRB MANAGEMENT, INC.

 	 
	 	/s/ Mark A. Ernst
 	 
	 	Mark A. Ernst 	 
	 	President and Chief Executive Officer 	 
	 

13

 

Schedule A

Participating Employers

Block Financial Corporation

Financial Marketing Services, Inc.

Franchise Partner, Inc.

H&R Block Investments, Inc.

H&R Block Services, Inc. and its U.S.-based direct and indirect subsidiaries

HRB Business Services, Inc.

H&R Block Small Business Resources, Inc.

HRB Management, Inc.

HRB Retail Services, Inc.

OLDE Financial Corporation and its U.S.-based direct and indirect subsidiaries, which subsidiaries
include H&R Block Financial Advisors, Inc.

14

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}]]