EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of
November 5, 2001, by and between H&R Block Financial Advisors, Inc., a Michigan
corporation (the "Company"), and Brian L. Nygaard ("Executive").
ARTICLE ONE
EMPLOYMENT
1.01 - Agreement as to Employment. Effective November 5, 2001
or an earlier date as agreed upon by both parties (the "Employment Date"), the
Company hereby employs Executive to serve in the capacity set forth in Section
1.02, and Executive hereby accepts such employment by the Company, subject to
the terms of this Agreement. The Company reserves the right, in its sole
discretion, to change the title of Executive at any time.
1.02 - Duties.
(a) Executive is employed by the Company to serve as its
President and Chief Executive Officer, subject to the authority and direction of
the Board of Directors of the Company and the Chief Executive Officer of H&R
Block, Inc. ("Block"). Subject to the foregoing, Executive will have such
authority and responsibility and duties as are normally associated with the
position of President. The Company reserves the right to modify, delete, add, or
otherwise change Executive's job responsibilities, in its sole discretion, at
any time. Executive will perform such other duties as are assigned to Executive
from time to time.
(b) So long as Executive is employed under this Agreement,
Executive agrees to devote Executive's full business time and efforts
exclusively on behalf of the Company and to competently and diligently discharge
Executive's duties hereunder. Executive will not be prohibited from engaging in
such personal, charitable, or other nonemployment activities that do not
interfere with Executive's full-time employment hereunder and that do not
violate the other provisions of this Agreement or the H&R Block, Inc. Code of
Business Ethics & Conduct, which Executive acknowledges having read and
understood. Executive will comply fully with all reasonable policies of the
Company as are from time to time in effect and applicable to Executive's
position. Executive understands that the business of Block, the Company, and/or
any other direct or indirect subsidiary of Block (each such other subsidiary an
"Affiliate") may be subject to governmental regulation, some of which may
require Executive to submit to background investigation as a condition of Block,
the Company, and/or Affiliates' participation in certain activities subject to
such regulation. If Executive, Block, the Company, or Affiliates are unable to
participate, in whole or in part, in any such activity as the result of any
action or inaction on the part of Executive, then this Agreement and Executive's
employment hereunder may be terminated by the Company without notice.
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1.03 - Compensation.
(a) Base Salary. The Company will pay to Executive a gross
salary at an annual rate of $350,000 ("Base Salary"), payable semimonthly or at
any other pay periods as the Company may use for its other executive employees.
The Base Salary will be reviewed for adjustment no less often than annually
during the term of Executive's employment hereunder and, if adjusted, such
adjusted amount will become the "Base Salary" for purposes of this Agreement.
(b) Short-Term Incentive Compensation. As approved by the
Compensation Committee of the Board of Block, Executive shall participate in the
H&R Block Short-Term Incentive Plan and the discretionary short-term incentive
program. Under such Plan and program, Executive shall have an aggregate target
bonus for calendar year 2001 of $192,500 and an opportunity to earn 200% of such
target bonus. The payment of the actual award under such Plan and program shall
be based upon such performance criteria which shall be determined by the
Compensation Committee of Block. Under such Plan and program, for calendar year
2001 only, Executive's actual incentive compensation shall be prorated based
upon the number of months during such year that he is actually employed by the
Company but shall be no less than $300,000 (after such proration), provided that
Executive must remain employed through December 31, 2001 to receive any payments
under the Plan and program. Such incentive compensation shall be paid to
Executive following the completion of calendar year 2001 when the same is paid
to other senior executives of the Company. If Executive voluntarily terminates
his employment with the Company prior to the expiration of 12 months after the
Employment Date, other than for "good reason" (as defined in Section
1.07(a)(ii)) or following a "Change of Control" (as defined in Section
1.07(a)(iii) or if the Company terminates Executive with "cause" (as defined in
Section 1.07(a)(iv), Executive shall reimburse the Company 50% of Executive's
actual incentive compensation paid on account of calendar year 2001 (which in no
case will be less than $150,000) on or before the 30th day after the effective
date of such termination. In addition, Executive shall be eligible to earn
additional incentive compensation in an amount from 0% to 25% of annual base
salary based upon the assessment of the Compensation Committee of the Board of
Directors of Block or the Board of Directors of Block itself of the performance
of Block and its subsidiaries during calendar year 2002 with respect to
long-term strategic objectives. Such additional incentive compensation, if any,
shall be paid to Executive following the completion of calendar year 2002 when
the same is paid to other senior executives of the Company.
(c) Stock Options. As authorized under the H&R Block 1993
Long-Term Executive Compensation Plan, as amended (the "1993 Plan"), Executive
shall be granted (i) on the Employment Date a stock option under the 1993 Plan
to purchase 40,000 shares of Block's common stock at an option price per share
equal to its closing price on the New York Stock Exchange on the date of grant,
such option to expire on the tenth anniversary of the date of grant; to vest and
become exercisable as to one-third (13,333) of the shares covered thereby on the
second anniversary of the date of grant, as to an additional one-third (13,333)
of such shares on the third anniversary of the date of grant, and as to the
remaining one-third (13,334) of the shares on the fourth anniversary of the date
of grant; to be an incentive stock option for the maximum
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number of shares permitted by Internal Revenue Code Section 422 and the
regulations promulgated thereunder; to otherwise be a nonqualified stock option;
and (ii) a stock option to purchase a minimum of 50,000 shares of Block's common
stock at an option price per share equal to its closing price on the New York
Stock Exchange on the date in fiscal year 2003 on which options are granted
under the 1993 Plan to all or substantially all other senior executive officers
of Block and its subsidiaries, such stock option to have terms and conditions
consistent with the terms and conditions of options granted to such other senior
executive officers except as provided in Section 1.07(a).
(d) Restricted Stock. As approved by the Compensation
Committee of the Board of Block and the Board of Block itself, Executive shall
be awarded promptly after the Employment Date, 14,500 Restricted Shares of
Block's common stock under the 1993 Plan. One-third of the 14,500 shares shall
vest (i.e., the restrictions on such shares shall terminate), respectively, on
each of the first three anniversaries following such employment commencement
date (in increments of 4,833, 4,833 and 4834 whole shares). Prior to the time
such Restricted Shares are so vested, (i) such Restricted Shares shall be
nontransferable, and (ii) Executive shall be entitled to receive any cash
dividends payable with respect to unvested Restricted Shares and vote such
unvested Restricted Shares at any meeting of shareholders of Block.
1.04 - Relocation Benefits.
(a) The Company will reimburse Executive for reasonable
packing, shipping, transportation costs and other expenses incurred by Executive
in relocating Executive, Executive's family and personal property to the Greater
Kansas City Area, in accordance with the H&R Block Executive Relocation Program.
(b) To the extent that Executive incurs taxable income related
to any relocation benefits paid pursuant to this Agreement, the Company will pay
to Executive such additional amount as is necessary to "gross up" such benefits
and cover the anticipated income tax liability resulting from such taxable
income.
1.05 - Business Expenses. The Company will promptly pay
directly, or reimburse Executive for, all business expenses, to the extent such
expenses are paid or incurred by Executive during the term hereof in accordance
with the Company's policy in effect from time to time and to the extent such
expenses are reasonable and necessary to the conduct by Executive of the
Company's business.
1.06 - Fringe Benefits. During the term of Executive's
employment hereunder, and subject to the discretionary authority given to the
applicable benefit plan administrators, the Company will make available to
Executive such insurance, sick leave, deferred compensation, short-term
incentive compensation, bonuses, stock options, retirement, vacation, and other
like benefits as are approved and provided from time to time to the other
executive-level employees of the Company or Affiliates.
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1.07 - Termination of Employment.
(a) Termination for Good Reason, Due to a Change of Control or
Without Cause.
(i) If Executive terminates Executive's employment
under this Agreement for "good reason" (as defined in subsection
1.07(a)(ii), below), or during the 180-day period following the date of
the occurrence of a "Change of Control" (as defined in subsection
1.07(a)(iii), below) of Block, or if the Company terminates Executive's
employment under this Agreement for any reason other than for "cause"
(as defined in subsection 1.07(a)(iv), below) then, upon any such
termination of Executive's employment and conditioned on Executive's
execution of an agreement with the Company under which Executive
releases all known and potential claims against Block, the Company, and
Affiliates, the Company will provide Executive with Executive's
election (the "Change of Control Election") of the same level of
severance compensation and benefits as would be provided under the H&R
Block Severance Plan (the "Severance Plan") as the Severance Plan
exists either (A) on the date of this Agreement or (B) on Executive's
last day of active employment by the Company or any Affiliate (the
"Last Day of Employment"), as if Executive had incurred a "Qualifying
Termination" (as such term is defined in the Severance Plan); provided,
however, that if Executive terminates Executive's employment under this
Agreement during the 180-day period following the date of the
occurrence of a "Change of Control" of Block, (1) the "Severance
Period" (as such term is defined in the Severance Plan) will be 24
months, notwithstanding any provision in the Severance Plan to the
contrary, (2) Executive will be credited with 24 "Years of Service" (as
such term is defined in the Severance Plan) for the purpose of
determining severance compensation under Section 4(a)(i) of the
Severance Plan as it exists on the date of this Agreement or the
comparable section of the Severance Plan as it exists on Executive's
Last Day of Employment, notwithstanding any provision in the Severance
Plan to the contrary, (3) Executive will receive an amount equal to
Executive's most recent payment under the H&R Block Short-Term
Incentive Plan and the discretionary short-term incentive program
(except in the case of a "Change of Control" that occurs in calendar
year 2002, in which case Executive will receive $192,500) in lieu of
any amount calculated under Section 4(a)(ii) of the Severance Plan as
it exists on the date of this Agreement or the comparable section of
the Severance Plan as it exists on Executive's Last Day of Employment
to be paid out over the Severance Period, and (4) any nonvested portion
of stock options or nonvested Restricted Shares awarded pursuant to
Sections 1.03(c)(i) and 1.03(d) of this Agreement shall immediately
vest on Executive's Last Day of Employment notwithstanding any
provision in the Severance Plan to the contrary. In the event Executive
terminates Executive's employment under this Agreement during the
180-day period following the date of the occurrence of a "Change of
Control" of Block, all restrictions on any Restricted Shares awarded to
Executive, other than the Restricted Shares awarded pursuant to Section
1.03(d) of this Agreement, that would have vested in accordance with
their terms by reason of lapse of time within 18 months after the
effective date of the termination of employment (absent such
termination of employment) shall terminate (and such Restricted Shares
shall be fully vested) and any Restricted Shares
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that would not have vested in accordance with their terms by reason of
lapse of time within 18 months after the effective date of termination
of employment shall be forfeited. In the event of the termination of
employment by Executive for good reason, or the termination of
employment by the Company for any reason other than for "cause," all
restrictions on any Restricted Shares awarded to Executive, including
the Restricted Shares awarded pursuant to Section 1.03(d) of this
Agreement, that would have vested in accordance with their terms by
reason of lapse of time within 18 months after the effective date of
the termination of employment (absent such termination of employment)
shall terminate (and such Restricted Shares shall be fully vested) and
any Restricted Shares that would not have vested in accordance with
their terms by reason of lapse of time within 18 months after the
effective date of termination of employment shall be forfeited. The
Severance Plan as it exists on the date of this Agreement is attached
hereto as Exhibit A. Executive must notify the Company in writing
within 5 business days after Executive's Last Day of Employment of
Executive's Change of Control Election. Severance compensation and
benefits provided under this Section 1.07(c) will terminate immediately
if Executive violates Sections 3.02, 3.03, or 3.05 of this Agreement or
becomes reemployed with the Company or an Affiliate.
(ii) For the purpose of this subsection, "good
reason" shall mean:
(A) Any material diminution in Executive's
duties, responsibilities, or authority as set forth in this
Agreement unless such diminution is a result of or due to the
revocation or suspension without reinstatement within 180 days
after such revocation or suspension of any license required by
law, regulation, or rule governing broker/dealers or
investment advisors to be held by the President and/or Chief
Executive Officer of the Company; or
(B) Any other material breach of this
Agreement by the Company which is not remedied by the Company
within a reasonable period of time not to exceed 30 days after
the Company's receipt of written notice of the breach from
Executive.
To the extent that this Agreement or any agreement referred to
herein imposes an obligation on Block or otherwise requires
that Block take (or refrain from taking) any action, any
material breach of such obligation or requirement by Block
shall be treated as a material breach of this Agreement by the
Company.
(iii) For the purpose of this subsection, a "Change
of Control" means:
(A) the acquisition, other than from Block,
by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")), of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 35% or more of the then outstanding
voting securities of Block entitled to vote generally in
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the election of directors, but excluding, for this purpose,
any such acquisition by Block or any of its subsidiaries, or
any employee benefit plan (or related trust) of Block or its
subsidiaries, or any corporation with respect to which,
following such acquisition, more than 50% of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners of the voting securities of Block
immediately prior to such acquisition in substantially the
same proportion as their ownership, immediately prior to such
acquisition, of the then outstanding voting securities of
Block entitled to vote generally in the election of directors,
as the case may be; or
(B) individuals who, as of the date hereof,
constitute the Board of Directors of Block (generally, 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 individual or individuals becoming a
director subsequent to the date hereof, whose election, or
nomination for election by Block's shareholders, was approved
by a vote of at least a majority of the Board (or nominating
committee of the Board) will be considered as though such
individual were a member or members of the Incumbent Board,
but excluding, for this purpose, any such individual whose
initial assumption of office is in connection with an actual
or threatened election contest relating to the election of the
directors of Block (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act); or
(C) the completion of a reorganization,
merger or consolidation approved by the shareholders of Block,
in each case, with respect to which all or substantially all
of the individuals and entities who were the respective
beneficial owners of the voting securities of Block
immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger or
consolidation, beneficially own, directly or indirectly, more
than 50% of the then outstanding voting securities entitled to
vote generally in the election of directors of the corporation
resulting from such reorganization, merger or consolidation,
or a complete liquidation or dissolution of Block, as approved
by the shareholders of Block, or the sale or other disposition
of all or substantially all of the assets of Block, as
approved by the shareholders of Block.
(iv) For the purpose of this subsection, "cause"
shall mean any one or more of the following grounds:
(A) Executive's gross misconduct that
interferes with or prejudices the proper conduct of the
business of Block, the Company or any Affiliate or which may
reasonably result in material harm to the reputation of Block,
the Company and/or any Affiliate; or
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(B) Executive's commission of an act
materially and demonstrably detrimental to the good will of
Block or any subsidiary of Block, which act constitutes gross
negligence or willful misconduct by Executive in the
performance of Executive's material duties to Block or such
subsidiary; or
(C) Commission by Executive of any act of
dishonesty or breach of trust resulting or intending to result
in material personal gain or enrichment of Executive at the
expense of Block or any subsidiary of Block; or
(D) Executive's violation of Article Two or
Three of this Agreement; or
(E) Executive's conviction of a misdemeanor
(involving an act of moral turpitude) or a felony; or
(F) Executive's disobedience,
insubordination or material failure to discharge Executive's
duties; or
(G) The revocation or suspension of any
license required by law, regulation, or rule governing
broker/dealers or investment advisors to be held by the
President and/or Chief Executive Officer of the Company
without reinstatement by the end of 180 days after such
revocation or suspension; or
(H) Executive's suspension by the Internal
Revenue Service from participation in the Electronic Filing
Program; or
(I) The inability of Executive, Block, the
Company, and/or an Affiliate 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 Executive,
as described in Section 1.02(b); or
(J) Executive'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 Company or Block for
executives of the Company.
(b) Termination Due to Mutual Agreement. The parties may
terminate Executive's employment under this Agreement at any time by mutual
written agreement.
(c) Further Obligations. Upon termination of Executive's
employment under this Agreement, neither the Company, Block, nor any Affiliate
will have any further obligations under this Agreement and no further payments
of Base Salary or other compensation or benefits will be
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payable by the Company, Block, or any Affiliate to Executive, except (i) as set
forth in this Section 1.07, (ii) as required by the express terms of any written
benefit plans or written arrangements maintained by the Company or Block and
applicable to Executive at the time of such termination of Executive's
employment, or (iii) as may be required by law. Any termination of this
Agreement, however, will not be effective as to Sections 3.02, 3.03 and 3.05, or
any other portions or provisions of this Agreement which, by their express
terms, require performance by either party following termination of this
Agreement.
ARTICLE TWO
CONFIDENTIALITY
2.01 - Background and Relationship of Parties. The parties
hereto acknowledge (for all purposes including, without limitation, Articles Two
and Three of this Agreement) that Block and its subsidiaries have been and will
be engaged in a continuous program of acquisition and development respecting
their businesses, present and future, and that, in connection with Executive's
employment by the Company, Executive will be expected to have access to all
information of value to the Company and Block and that Executive's employment
creates a relationship of confidence and trust between Executive and Block with
respect to any information applicable to the businesses of Block and its
subsidiaries. Executive will possess or have unfettered access to information
that has been created, developed, or acquired by Block and its subsidiaries or
otherwise become known to Block and its subsidiaries and which has commercial
value in the businesses in which Block and its subsidiaries have been and will
be engaged and has not been publicly disclosed by Block. All information
described above is hereinafter called "Proprietary Information." By way of
illustration, but not limitation, Proprietary Information includes trade
secrets, customer lists and information, employee lists and information,
developments, systems, designs, software, databases, know-how, marketing plans,
product information, business and financial information and plans, strategies,
forecasts, new products and services, financial statements, budgets,
projections, prices, and acquisition and disposition plans. Proprietary
Information does not include any portions of such information which are now or
hereafter made public by third parties in a lawful manner or made public by
parties hereto without violation of this Agreement.
2.02 - Proprietary Information is Property of Block.
(a) All Proprietary Information is the sole property of Block
(or the applicable subsidiary of Block) and its assigns, and Block (or the
applicable subsidiary of Block) is the sole owner of all patents, copyrights,
trademarks, names, and other rights in connection therewith and without regard
to whether Block (or any subsidiary of Block) is at any particular time
developing or marketing the same. Executive hereby assigns to Block any rights
Executive may have or may acquire in such Proprietary Information. At all times
during and after Executive's employment with the Company or any Affiliate,
Executive will keep in strictest confidence and trust all Proprietary
Information and Executive will not use or disclose any Proprietary Information
without the written consent of Block, except as may be necessary in the ordinary
course of performing
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duties as an employee of the Company or as may be required by law or the order
of any court or governmental authority.
(b) In the event of any termination of Executive's employment
hereunder, Executive will promptly deliver to the Company all copies of all
documents, notes, drawings, specifications, documentation, data, and other
materials of any nature belonging to Block or any subsidiary of Block and
obtained during the course of Executive's employment with the Company. In
addition, upon such termination, Executive will not remove from the premises of
Block or any subsidiary of Block any of the foregoing or any reproduction of any
of the foregoing or any Proprietary Information that is embodied in a tangible
medium of expression.
ARTICLE THREE
NON-HIRING; NON-SOLICITATION; NO CONFLICTS; NON-COMPETITION
3.01 - General. The parties hereto acknowledge that, during
the course of Executive's employment by the Company, Executive will have access
to information valuable to the Company and Block concerning the employees of
Block and its subsidiaries ("Block Employees") and, in addition to Executive's
access to such information, Executive may, during (and in the course of)
Executive's employment by the Company, develop relationships with such Block
Employees whereby information valuable to Block and its subsidiaries concerning
the Block Employees was acquired by Executive. Such information includes,
without limitation: the identity, skills, and performance levels of the Block
Employees, as well as compensation and benefits paid by Block to such Block
Employees.
3.02 - Non-Hiring. During the period of Executive's employment
hereunder and during the time Executive is receiving payments hereunder, and for
a period of two (2) years after the later of Executive's Last Day of Employment
or cessation of such payments, Executive may not directly or indirectly recruit,
solicit, or hire any Block Employee or otherwise induce any such Block Employee
to leave the employment of Block (or the applicable employer-subsidiary of
Block) to become an employee of or otherwise be associated with any other party
or with Executive or any company or business with which Executive 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.
3.03 - Non-Solicitation. During the period of Executive's
employment hereunder and during the time Executive is receiving payments
hereunder, and for two (2) years after the later of Executive's Last Day of
Employment or cessation of such payments, Executive 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 the Company or an
Affiliate for the purpose of engaging in any business transaction of the nature
performed by the Company or such Affiliate, or contemplated to be performed by
the Company or such Affiliate, for such customer, provided that this Section
3.03 will only apply to customers for whom Executive personally provided
services
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while employed by the Company or an Affiliate or customers about whom or which
Executive acquired material information while employed by the Company or an
Affiliate. 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.
3.04 - No Conflicts. Executive represents in good faith that,
to the best of Executive's knowledge, the performance by Executive of all the
terms of this Agreement will not breach any agreement to which Executive is or
was a party and which requires Executive to keep any information in confidence
or in trust. Executive has not brought and will not bring to the Company or
Block nor will Executive use in the performance of employment responsibilities
at the Company any proprietary materials or documents of a former employer that
are not generally available to the public, unless Executive has obtained express
written authorization from such former employer for their possession and use.
Executive has not and will not breach any obligation of confidentiality that
Executive may have to former employers and Executive will fulfill all such
obligations during Executive's employment with the Company.
3.05 - Non-Competition.
(a) During the period of Executive's employment hereunder,
Executive 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, 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
Block (as defined below). "Line of Business of Block" means any line of business
(including lines of business under evaluation or development) of the Company, as
well as any one or more lines of business (including lines of business under
evaluation or development) of any Affiliate by which Executive was employed
during the two-year period preceding the Last Day of Employment, provided that,
"Line of Business of Block" will in all events include, but not be limited to,
the income tax return preparation business, and provided further that if
Executive's employment was, as of the Last Day of Employment or during the
2-year period immediately prior to the Last Day of Employment, with HRB
Management, Inc. or any successor entity thereto, "Line of Business of Block"
means any line of business (including lines of business under evaluation or
development) of Block and all of its subsidiaries. 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.
(b) During the two (2) years after the later of Executive's
Last Day of Employment or the cessation of Executive's receipt of any payments
pursuant to this Agreement, Executive 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
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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 provision of investment products or services to its clients, or (ii) any
subsidiary, division or segment of 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
Executive, 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.
(c) If this Agreement is assigned by the Company to an
Affiliate at any time in accordance with Section 4.04, then, during the two (2)
years after the later of Executive's Last Day of Employment or the cessation of
Executive's receipt of any payments pursuant to this Agreement, Executive shall
not engage in any conduct proscribed in subsection 3.05(a) of this Agreement.
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.
(d) No provision in this Section 3.05 shall apply to Executive
if Executive's primary place of employment by the Company or an Affiliate as of
the Last Day of Employment is in either the State of California or the State of
North Dakota.
3.06 - Reasonableness of Restrictions. Executive and the
Company acknowledge that the restrictions contained in this Agreement are
reasonable, but should any provisions of any Article of this 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 will not be affected
thereby and the provision found invalid, illegal, or otherwise unenforceable or
unreasonable will be considered by the Company and Executive 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.
ARTICLE FOUR
MISCELLANEOUS
4.01 - Third-Party Beneficiary. The parties hereto agree that
Block is a third-party beneficiary as to the obligations imposed upon Executive
under this Agreement and as to the rights and privileges to which the Company is
entitled pursuant to this Agreement, and that Block is entitled to all of the
rights and privileges associated with such third-party-beneficiary status.
4.02 - Entire Agreement. This Agreement constitutes the entire
agreement and understanding between the Company and Executive concerning the
subject matter hereof. No
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modification, amendment, termination, or waiver of this Agreement will be
binding unless in writing and signed by Executive and a duly authorized officer
of the Company. Failure of the Company, Block, or Executive 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.
4.03 - Specific Performance by Executive. The parties hereto
acknowledge that money damages alone will not adequately compensate the Company
or Block or Executive 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.
4.04 - Successors and Assigns. This Agreement is binding upon
Executive and the heirs, executors, assigns and administrators of Executive or
Executive's estate and property and will inure to the benefit of the Company,
Block and their successors and assigns. Executive may not assign or transfer to
others the obligation to perform Executive's duties hereunder. The Company may
assign this Agreement to an Affiliate with the consent of Executive, in which
case, after such assignment, the "Company" means the Affiliate to which this
Agreement has been assigned.
4.05 - Withholding Taxes. From any payments due hereunder to
Executive from the Company, there will be withheld amounts reasonably believed
by the Company to be sufficient to satisfy liabilities for federal, state, and
local taxes and other charges and customary withholdings. Executive remains
primarily liable to such authorities for such taxes and charges to the extent
not actually paid by the Company. This Section 4.05 does not affect the
Company's obligation to "gross up" any relocation benefits paid to Executive
pursuant to Subsection 1.04(b).
4.06 - Indemnification. To the fullest extent permitted by law
and Block's Bylaws, the Company hereby indemnifies during and after the period
of Executive's employment hereunder Executive from and against all loss, costs,
damages, and expenses including, without limitation, legal expenses of counsel
selected by the Company to represent the interests of Executive (which expenses
the Company will, to the extent so permitted, advance to executive as the same
are incurred) arising out of or in connection with the fact that Executive is or
was a director, officer, employee, or agent of the Company or Block or serving
in such capacity for another corporation at the request of the Company or Block.
Notwithstanding the foregoing, the indemnification provided in this Section 4.06
will not apply to any loss, costs, damages, and expenses arising out of or
relating in any way to any employment of Executive by any former employer or the
termination of any such employment.
4.07 - Right to Offset. To the extent not prohibited by
applicable law and in addition to any other remedy, the Company has the right
but not the obligation to offset any amount that Executive owes the Company
under this Agreement against any amounts due Executive by Block, the Company, or
Affiliates.
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4.08 - Waiver of Jury Trial. Both parties to this Agreement,
and Block, as a third-party beneficiary pursuant to Section 4.01 of this
Agreement, waive any and all right to any trial by jury in any action or
proceeding directly or indirectly related to this Agreement and Executive's
employment hereunder.
4.09 - Notices. All notices required or desired to be given
hereunder must be in writing and will be deemed served and delivered if
delivered in person or mailed, postage prepaid to Executive at: 2274 Edgemere
Lake Circle, Marietta, Georgia, 30062; and to the Company at: 751 Griswold,
Detroit, Michigan 48226, Attn: Secretary, with a copy to H&R Block, Inc., 4400
Main Street, Kansas City, Missouri 64111, Attn: President; or to such other
address and/or person designated by either party in writing to the other party.
Any notice given by mail will be deemed given as of the date it is so mailed and
postmarked or received by a nationally recognized overnight courier for
delivery.
4.10 - Counterparts. This Agreement may be signed in
counterparts and delivered by facsimile transmission confirmed promptly
thereafter by actual delivery of executed counterparts.
4.11 - Binding Effect. This Agreement is effective only when
executed by an officer of the Company and approved in writing by the President
and Chief Executive Officer of Block.
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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.
EXECUTIVE:
Dated: 11-05-01 /s/ Brian L. Nygaard
-------------------- ----------------------------------
Brian L. Nygaard
ACCEPTED AND AGREED:
H&R Block Financial Advisors, Inc.
a Michigan corporation
By: /s/ Bernard M. Wilson
-------------------------------------
Name: Bernard M. Wilson
-----------------------------------
Title: SVP
----------------------------------
Dated: 11/30/01
-------------------
APPROVED:
H&R Block, Inc.
a Missouri corporation
By: /s/ Mark A. Ernst
-------------------------------------
Mark A. Ernst
President and Chief Executive Officer
Dated: 20 Nov 01
--------------------
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H&R BLOCK SEVERANCE PLAN
(AS AMENDED SEPTEMBER 19, 2001)
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) "Company" means H&R Block, Inc.
(b) "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 seasonal, temporary and inactive employees of a Participating
Employer and employees who are customarily employed by a Participating
Employer less than 20 hours per week.
(c) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
(d) "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.
(e) "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.
(f) "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.
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(g) "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.
(h) "Plan" means the "H&R Block Severance Plan," as stated herein, and
as may be amended from time to time.
(i) "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.
(j) "Qualifying Termination" means the involuntary termination of an
Employee, but does not include a termination resulting from:
(i) the termination of an Employee as a result of 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;
(ii) the redefinition of an Employee's position to a lower
salary rate;
(iii) the termination of an Employee for cause; or
(iv) the non-renewal of employment contracts.
(k) "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.
(l) "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 respect to a Release that does
not include a revocation period, the date the Release has been fully
executed by both parties.
(m) "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
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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(p), unless earlier terminated in accordance with
Section 8 of the Plan.
(n) "Termination Date" means the date the Employee severs employment
with a Participating Employer.
(o) "Monthly Salary" means -
(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.
(p) "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:
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Employment Agreement - H&R Block Financial Advisors Inc. and Brian L. Nygaard
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