OPERATIONS AGREEMENT

Exhibit 10.37

OPERATIONS AGREEMENT

           THIS OPERATIONS AGREEMENT (the “Agreement”), dated as of August 2, 1999 is made by and among MCGLADREY & PULLEN, LLP (“M&P”), an Iowa limited liability partnership, MP ACTIVE PARTNERS TRUST, Clifford Newman, Trustee (“Trust”), MARK W. SCALLY, a resident of Minneapolis, Minnesota (“Scally”), THOMAS G. ROTHERHAM, a resident of Eden Prairie, Minnesota (“Rotherham”), RSM MCGLADREY, INC., a Delaware corporation (“RSM”), HRB BUSINESS SERVICES, INC., a Delaware corporation (“HRB”) and H&R BLOCK, INC., a Missouri corporation (“Block”). Capitalized terms used and not otherwise defined herein shall have the meaning ascribed to them in the Purchase Agreement (hereinafter defined).

RECITALS

           WHEREAS, M&P, Trust, Scally, Rotherham, RSM, Block and certain other persons and entities are parties to the Asset Purchase Agreement dated as of June 28, 1999 (the “Purchase Agreement”) providing for, among other things, the purchase of certain assets of M&P by RSM; and

           WHEREAS, M&P and RSM are parties to the Administrative Services Agreement dated as of August 2, 1999 (“Administrative Services Agreement”) providing for, among other things, the provision by RSM to M&P of certain administrative and other services; and

           WHEREAS, Block is the ultimate parent corporation of RSM and HRB, and RSM is a direct subsidiary of HRB; and

           WHEREAS, Scally and Rotherham were formerly appointed to the Office of Managing Partner of and were partners of M&P, but effective the date hereof have resigned such positions and partnership and are parties to respective Managing Director Employment Agreements with RSM dated the date hereof (the “Employment Agreements”); and

           WHEREAS, the parties hereto desire to set forth certain understandings and agreements regarding the respective business operations of M&P and RSM after the Closing, as set forth herein.

AGREEMENT

           NOW, THEREFORE, in consideration of the mutual premises and the covenants, representations and warranties herein contained, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

          1.  Board of Directors of RSM . Effective the date hereof and for the duration of the Earnout Period but subject to Section 16 hereof, HRB will cause the Board of

Directors of RSM to be comprised of five (5) directors, consisting of (1) the Chief Executive Officer of RSM, (2) the Chief Operating Officer of RSM and (3) three other directors nominated by Block (such three nominees, the “Block Nominees”).

          2.  Chief Executive Officer and Chief Operating Officer of RSM . Effective the date hereof and for the duration of the Earnout Period but subject to Section 16 hereof, Block will cause the Block Nominees to vote in favor of the appointment of Scally as the Chief Executive Officer, and Rotherham as the Chief Operating Officer, of RSM, provided that Scally’s and/or Rotherham’s respective Employment Agreement has not then been terminated or expired. In the event that such employment of Scally or Rotherham is terminated prior to the end of the Earnout Period, the Executive Management Committee shall recommend his or their replacement, subject to the good faith approval of Block, which shall not be unreasonably withheld or delayed.

          3.  Executive Management Committee .

          a) Formation . Effective the date hereof and for the duration of the Earnout Period but subject to Section 16 hereof, Block or HRB will use its best efforts to cause the Block Nominees to, and Scally and Rotherham shall as directors of RSM, vote in favor:

          i) of the establishment and maintenance of the Executive Management Committee of the RSM Board of Directors (the “Committee”), which Committee shall initially consist of the Chief Executive Officer of RSM (as sole voting member), the Chief Operating Officer of RSM, and up to seven (7) other persons (each a “Committee Member”) who are selected on the basis set forth in Schedule 3 hereof. The resolution of the RSM Board initially establishing such Committee and the initial members thereof is attached hereto as Schedule 3.

          ii) of the RSM Board’s authorization and direction of the Committee to (i) establish, on an annual basis, the allocation of the Annual Compensation among the Senior Managing Directors and Managing Directors of RSM as provided in Schedule 5 of each of the forms of Managing Director Employment Agreement and the Senior Managing Director Employment Agreement, respectively, dated of even date hereof, (ii) promote or terminate Managing Directors and Senior Managing Directors, (iii) allocate Closing Block Options and Post Closing Block Options and (iv) recommend any replacement for Scally or Rotherham in the event of termination of their employment with RSM during the Earnout Period, as provided in Section 2. The resolution of the RSM Board making such authorization and direction is included within Schedule 3 hereof.

          4.  Capital for Acquisitions . Subject to Section 16 hereof, the parties acknowledge that:

          a) Block management has set a strategic goal of building a national accounting and consulting firm. In pursuing this strategy. Block has to date acquired non-attest assets of accounting firms with aggregate revenues of approximately $102,000,000 for an approximate aggregate base purchase price of $102,000,000. Upon consummation of the transaction contemplated by the Purchase Agreement (the “Transactions”), Block shall have acquired non-attest assets of accounting firms with aggregate revenues of approximately $342,000,000 for an approximate aggregate minimum base price of $342,000,000.

          b) After consummation of the Transactions, Block intends to continue to build a national accounting and consulting firm by expanding Buyer through the acquisition of non-attest assets of other accounting, tax and consulting firms. Block expects to consummate between $300,000,000 to $400,000,000 (in base purchase price) of such acquisitions during the two-year period following the Closing Date. Block anticipates that it will continue to make similar acquisitions after such two-year period.

          c) The foregoing expressed goals, intentions, expectations and anticipations of Block are not, and do not constitute, legally binding obligations of Block or its affiliates and Block may, by decision of its Board of Directors (the “Board”), change such goals, intentions, expectations and anticipations because of a number of factors, including (without limitation) concerns regarding the performance of Buyer, increased costs of capital, adverse economic, regulatory or industry trends or events, and the good faith exercise of fiduciary and other duties owed by the Board to the shareholders of Block.

          5.  Working Capital Funds . Effective the date hereof and for the duration of the Earnout Period, Block or a subsidiary or affiliate of Block will provide working capital funds to RSM, bearing interest at the Prime Rate quoted in The Wall Street Journal (adjusted quarterly based upon the Prime Rate reported for the first business day of such quarter and applied against the average of the beginning and closing balance for each month within such quarter) during the Earnout Period. Such working capital funds shall be in such amounts as are reasonably required by the business of RSM (including the purchase of fixed assets), consistent with that funded in past practice and for similarly situated firms, and agreed by Block in its good faith, reasonable discretion considering the foregoing.

          6.  Post-Closing Development Expenditures . Block either directly or through any direct or indirect subsidiary of Block agrees to provide capital to M&P for development expenditures in an amount not to exceed Six Million Dollars ($6,000,000) per year for each of the one year periods commencing on the Closing Date and each of the first four anniversary dates of the Closing Date, respectively, regardless of whether such development expenditures are capitalized or expensed for accounting purposes. Such capital shall be used for the development of RSM’s infrastructure, mergers, integration resources, branding or related

promotional efforts, acquisitions or similar purposes (“Development Purposes”) set forth in an annual preliminary budget (for each such annual period) and for which a year end (for each such annual period) accounting is prepared by RSM and delivered to Block. For purposes of this Section 1.6, it is assumed that such $6,000,000 annual amount is expended ratably over the course of such year.

          7.  Certain Acquisitions . Effective the date hereof and for the duration of the Earnout Period, the acquisition of accounting, consulting or financial services businesses to be integrated into RSM, shall be subject to the prior written approval of both Block (whether directly or through HRB) and the Executive Management Committee.

          8.  Allocation of Costs to Foundation Firms . Effective the date hereof and for the duration of the Earnout Period, RSM shall not allocate to any Foundation Firm or Prior Add-On Firm any costs for services provided by RSM unless and only to the extent that the Foundation Firm or Prior Add-On Firm has a tangible cost reduction or revenue enhancement derived or resulting from such services; provided however, this Section shall not prohibit M&P from charging Foundation Firms or Prior Add-On Firms for services rendered by M&P for or on behalf of clients of Foundation Firms or Prior Add-On Firms and which services are billed or are billable to such clients.

          9.  Use of Block Corporate Services; Reimbursement of Certain Costs . Effective the date hereof and for the duration of the Earnout Period:

          a) RSM shall not be charged an overhead or similar charge by Block or HRB (or any Block Entity not within Group) for use of general administrative, legal, marketing or similar services unless and only to the extent that RSM’s use of such services results or demands incremental costs relating to the hiring of additional personnel, use of additional office space or material, out-of-pocket supply or independent contractor costs; and

          b) Block shall pay, or reimburse M&P, for its reasonable and necessary out of pocket incremental costs incurred by TP Services, LLC (“TPS”), including but not limited to the legal organization of TPS in Delaware, ongoing filing/qualification costs (in Delaware and as a foreign company in other states in which it does business) and annual state franchise taxes or fees (excluding, however, any taxes or fees or portions of taxes or fees representing tax on income or profits of TPS).

          10.  Putney Compensation . Effective the date hereof and for the duration of the Earnout Period, the employment and compensation of Terrence E. Putney, an officer of HRB, shall be the obligation and expense of HRB (or another Block Entity not within Group). Terrence E. Putney shall perform work under the direction and on behalf of Block, HRB or RSM.

          11.  Professional Liability Insurance Expense.

          a) RSM and M&P shall each have, and pay for, separate professional liability insurance on a “claims made” coverage basis. Since it is anticipated that professional liability claims made after the Closing will, on a declining basis over time, relate to services performed prior to Closing (for which the Trust has assumed liability), the parties agree that Trust shall have certain obligations regarding the reimbursement of professional liability insurance costs after Closing, as set forth in subsection (b), below.

          b) The professional liability insurance costs (including premiums and payments of deductible and copay amounts) of RSM and M&P (for themselves and their respective employees/partners) shall be allocated as follows, with RSM/M&P paying the insurer(s) directly for their respective entire costs and being reimbursed by Trust for Trust’s respective portion, upon demand from RSM/M&P:

          12.  New Partners . M&P shall require that all persons acquiring equity or capital or rights to equity or capital in M&P or rights similar thereto, agree as a condition to becoming a partner of M&P to be bound by the terms of the Amended Partnership Agreement and a Managing Director Employment Agreement or a Senior Managing Director Employment Agreement. RSM intends to, but shall have no obligation to, enter into any employment agreement with any person who becomes a partner of M&P.

          13.  Non-Solicitation/Non-Disclosure Covenants .

          a) Certain Acknowledgments . M&P acknowledges and agrees as follows in exchange for valuable consideration, the receipt and sufficiency of which M&P acknowledges:

          i) RSM and Block have obtained and will maintain an advantage over their respective competitors as a result of name, location and reputation developed at great expense;

          ii) M&P’s relationship with RSM involves the understanding of and access to certain trade secrets and confidential information pertaining to the property, business and operations of RSM and its Affiliates;

          iii) M&P’s recognition of the value of the special, unique and extraordinary knowledge and skill required to accept, undertake and perform the

type of work normally undertaken and performed by M&P, RSM, the Partners and RSM’s other employees and agents;

          iv) All clients/customers of RSM, regardless of when or by whom acquired, are RSM assets and not assets of M&P;

          v) M&P has carefully considered the restrictions contained herein, and M&