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Exhibit 10.32
SEPARATION AND RELEASE AGREEMENT
This SEPARATION AND RELEASE
AGREEMENT (the "Agreement") is entered into as of the ___day of
November, 2006, by and between HRB Management, Inc., a Missouri
corporation ("HRB") and Nicholas J. Spaeth ("Mr. Spaeth").
WHEREAS Mr. Spaeth and HRB
agree to terminate his employment with HRB,
WHEREAS Mr. Spaeth and HRB
intend the terms and conditions of this Agreement to govern all
issues related to Mr. Spaeth’s employment and separation
from HRB,
NOW, THEREFORE, in consideration
of the covenants and mutual promises contained in this Agreement,
Mr. Spaeth and HRB agree as follows:
1. Termination Date .
HRB and Mr. Spaeth are parties to an Employment Agreement
dated February 2, 2004 (the "Employment Agreement"). The
parties agree to terminate Mr. Spaeth’s employment
pursuant to Section 1.07(b) of the Employment Agreement. The
parties further agree to treat Mr. Spaeth’s termination
of employment as a "Qualifying Termination," as defined in the
Employment Agreement, for purposes of determining
Mr. Spaeth’s severance compensation and benefits as set
forth in Section 2 of this Agreement. The parties also agree
that the termination is not the result of the elimination of the
position of Senior Vice President, Chief Legal Officer of HRB.
Block shall continue to employ Mr. Spaeth on active payroll
and be paid his current salary at HRB’s regular pay intervals
until January 2, 2007, upon which date Mr. Spaeth’s
employment under the Employment Agreement will terminate (the
"Termination Date"). Mr. Spaeth will continue to work
full-time until November 10, 2006. After that date and until
the Termination Date, Mr. Spaeth is expected to be available
for consultation with respect to matters within the scope of his
employment. From the date of this Agreement through the Termination
Date, Mr. Spaeth will appropriately respond to and cooperate
with HRB management. The parties agree to waive any notice of
termination required by the Employment Agreement.
2. Severance Benefits
. HRB agrees to provide Mr. Spaeth with compensation and
benefits under the H&R Block Severance Plan ("Severance Plan")
as follows:
a. Release Agreement .
Mr. Spaeth and HRB agree that this Agreement constitutes the
release agreement required under the Severance Plan.
b. Severance Pay . Subject
to the terms of the Severance Plan, HRB will pay to Mr. Spaeth
$659,200.00 (which amount represents an aggregate of
Mr. Spaeth’s (A) annual base salary of $412,000.00
and (B) target short-term incentive compensation for
HRB’s fiscal year 2007 of $247,200.00, each determined as of
the date of this Agreement) over the 12-month period beginning on
the Termination Date in semi-monthly equal installments of
$27,466.66 (less required tax withholdings and elected benefit
withholdings).
c. Employee Benefits .
Mr. Spaeth will remain eligible to participate in the various
health and welfare benefit plans maintained by HRB in accordance
with the terms
of the Severance Plan. After his severance benefits cease,
Mr. Spaeth may be eligible to continue coverage of group
health plan benefits under COBRA. Conversion privileges may also be
available for other benefit plans.
d. Stock Options . Those
portions of any outstanding incentive stock options ("ISO Stock
Options") and nonqualified stock options ("NQ Stock Options") to
purchase shares of HRB’s common stock granted to
Mr. Spaeth by HRB that are scheduled to vest between the
Termination Date and July 2, 2008 (based solely on the
time-specific vesting schedule included in the applicable stock
option agreement) shall vest and become exercisable as of the
Termination Date. A list of the ISO Stock Options and NQ Stock
Options vested as of the date of this Agreement and to become
vested pursuant to this Section is attached as Exhibit A. No later
than the Termination Date, Mr. Spaeth will complete an
election form on which he will elect the time period during which
he may exercise his ISO and NQ Stock Options. Mr. Spaeth
acknowledges and agrees that he is solely responsible for the
income tax treatment of his ISO and NQ Stock Options election, and
that HRB has not provided him any personal tax advice about this
election. HRB encourages Mr. Spaeth to seek independent tax
advice regarding this election.
e. Restricted Shares . All
restrictions on any shares of HRB’s common stock awarded to
Mr. Spaeth by HRB ("Restricted Shares") that would have lapsed
absent a termination of employment in accordance with their terms
by reason of time between the Termination Date and July 2,
2008 shall terminate (and shall be fully vested) as of the
Termination Date. Any shares unaffected by the operation of this
Section shall be forfeited to HRB on the Termination Date. A list
of the Restricted Shares vested as of the date of this Agreement
and to become vested pursuant to this Section is attached as
Exhibit B.
f. Performance Shares . On
the Termination Date, Mr. Spaeth shall forfeit to HRB all
Performance Shares because HRB awarded him those Performance Shares
pursuant to a cycle which is less than one year old.
g. Outplacement Services .
HRB will pay directly to Right Management Services for twelve
(12) months of outplacement services to be provided to
Mr. Spaeth.
h. Forfeiture .
Mr. Spaeth agrees that the compensation and benefits described
in this Section will cease and no further compensation and benefits
will be provided to him if he violates any of the post-employment
obligations under Section 7 of this Agreement, or Articles Two
and Three of the Employment Agreement.
3. Vacation . HRB
will pay Mr. Spaeth for his accrued, unused 2007 vacation
within 21 days of the Termination Date. Mr. Spaeth will not
receive any other payment for vacation or holidays.
4. Mr. Spaeth
Representations . Mr. Spaeth represents and acknowledges
to HRB that (a) HRB has advised him to consult with an attorney of
his choosing; (b) he has had twenty-one (21) days to consider
the waiver of his rights under the Age Discrimination in Employment
Act of 1967, as amended ("ADEA") prior to signing this Agreement;
(c) he has disclosed to HRB any information in his possession
concerning any conduct involving HRB or its subsidiaries or
affiliates
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("Affiliates") that he has any reason to believe involves any
false claims to any governmental agency, or is or may be unlawful,
or violates HRB policy in any respect; (d) the consideration
provided him under this Agreement is sufficient to support the
releases provided by him under this Agreement; and (e) he has
not filed any charges, claims or lawsuits against HRB involving any
aspect of his employment which have not been terminated as of the
date of this Agreement. Mr. Spaeth understands that HRB regards the
representations made by him as material and that HRB is relying on
these representations in entering into this Agreement.
5. Effective Date of this
Agreement . Mr. Spaeth shall have seven (7) days from
the date he signs this Agreement to revoke his consent to the
waiver of his rights under the ADEA in writing addressed and
delivered to the HRB official executing this Agreement on behalf of
HRB which action shall revoke this Agreement. If Mr. Spaeth
revokes this Agreement, all of its provisions shall be void and
unenforceable. If Mr. Spaeth does not revoke his consent, this
Agreement will take effect on the day after the end of this
revocation period (the "Effective Date").
6. Resignation as an
Officer . As of November 10, 2006, Mr. Spaeth will
resign (a) as Senior Vice President, Chief Legal Officer of
HRB and (b) from any other officer and director positions held
with HRB and any Affiliates. Mr. Spaeth will execute the
resignations attached as Exhibit C on minute book paper
contemporaneously with his execution of this Agreement.
7. Surviving Employment
Agreement Obligations . Mr. Spaeth and HRB agree that the
termination of Mr. Spaeth’s employment will not affect
the following provisions of the Employment Agreement which impose
continuing obligations on him following termination of the
Employment Agreement: (a) Article Two, "Confidentiality"
— Sections 2.01, 2.02; (b) Article Three,
"Non-Hiring; Non-Solicitation; No Conflicts; Non-Competition"
— Sections 3.01, 3.02, 3.03, 3.05, 3.06; and
(c) Article Four, "Miscellaneous" —
Section 4.03. Mr. Spaeth acknowledges and agrees that he
will fully comply with these obligations. HRB may agree to waive
any of Mr. S
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