SEPARATION AND RELEASE
AGREEMENT
This SEPARATION
AND RELEASE AGREEMENT (the “Agreement”) is entered into
as of the 20th day of January, 2009, by and between RSM McGladrey
Business Services, Inc., a Delaware corporation
(“RSM”), and Steven Tait
(“Executive”).
WHEREAS, Executive
and RSM are parties to an Employment Agreement dated April 1,
2003 (the “Employment Agreement”),
WHEREAS, Executive
and RSM agree to terminate Executive’s employment,
WHEREAS, Executive
and RSM intend the terms and conditions of this Agreement to govern
all issues related to Executive’s employment and
separation,
NOW, THEREFORE, in
consideration of the covenants and mutual promises contained in
this Agreement, Executive and RSM agree as follows:
1.
Termination of Employment . The parties agree that
Executive’s employment with RSM will terminate on
April 30, 2009 (“Termination Date”). Until the
Termination Date, the Executive will remain on active payroll and
be paid his current salary in accordance with RSM’s regular
payroll practices. Until the Termination Date, Executive agrees
that he will continue to perform his current role, and will respond
to questions and provide guidance as requested by RSM. On or after
the Termination Date, Executive acknowledges and agrees that he
will not represent himself as being an employee, officer, director,
trustee, member, partner, agent, or representative of RSM for any
purpose, and will not make any public statements on behalf of RSM.
Executive further acknowledges and agrees that he has received
proper notice under Section 1.07(b) of his Employment
Agreement to terminate it.
2.
Resignation . Executive agrees that as of the Termination
Date, he resigns from all offices, directorships, trusteeships,
committee memberships, and fiduciary capacities held with, or on
behalf of, RSM or its parents, subsidiaries, or affiliates
(collectively as “Affiliates”), or any benefit plans of
RSM or its Affiliates. Executive will execute the resignations
attached as Exhibit A on minute book paper contemporaneously
with his execution of this Agreement.
3.
Severance Benefits . The parties agree to treat
Executive’s termination of employment as a termination
without “cause” and a “Qualifying
Termination” (as defined in Section 1.07 of the Employment
Agreement) for purposes of Executive’s eligibility for
severance compensation and benefits as set forth in this Section.
Subject to the terms and conditions of this Agreement, including
Executive’s executing this Agreement and the Supplemental
General Release, Executive acknowledges and agrees that he will not
be eligible for any compensation or benefits after the Termination
Date except for the following:
a. Severance
Pay . Subject to the terms of the H&R Block Severance Plan
(“Severance Plan”), RSM will pay to Executive
$827,688.00, less required tax withholdings, (which amount
represents an aggregate of (A) Executive’s annual
base
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salary of
$486,875.00 and (B) a severance enhancement equal to
Executive’s target short-term incentive compensation for
RSM’s fiscal year 2009 of $340,813.00, each determined as of
the date of this Agreement) in a lump sum payment within
30 days from the later of the Termination Date or the
Effective Date of this Agreement.
b. Short Term
Incentive Bonus Payment . RSM will pay Executive a Short Term
Incentive bonus for Fiscal Year 2009 in accordance with RSM’s
regular short term incentive process, and the terms and conditions
of the short term incentive plan in which Executive currently
participates. RSM will pay Executive the Short Term Incentive bonus
due him at the time RSM pays other such bonuses.
c. Employee
Benefits . Executive will remain eligible to participate in the
various health and welfare benefit plans maintained by RSM until
the Termination Date. After the Termination Date, RSM will pay
Executive a lump sum payment, less applicable tax withholdings, in
an amount equal to Executive’s COBRA Subsidy multiplied by
12. COBRA Subsidy means an amount equal to Executive’s
monthly post-employment premium for health and welfare benefits
under COBRA less the amount Executive paid for such benefits as an
active employee. To be eligible for the payment described in this
subsection, Executive must be enrolled in RSM’s health and
welfare plans on the Terminate Date. If Executive qualifies for
this payment, RSM will pay Executive this payment within
30 days from the later of the Termination Date or the
Effective Date of this Agreement. 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 Executive by RSM that are
scheduled to vest between the Termination Date and 18 months
thereafter (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 stock
options vested as of the date of this Agreement and to become
vested pursuant to this Section is attached as Exhibit B. Any
stock options unaffected by the operation of this Section shall be
forfeited to RSM on the Termination Date. No later than the
Termination Date, Executive will complete an election form on which
he will elect the time period during which he may exercise his ISO
and NQ Stock Options. Executive acknowledges and agrees that he is
solely responsible for the income tax treatment of his ISO and NQ
Stock Options election, and that RSM has not provided him any
personal tax advice about this election. RSM encourages Executive
to seek independent tax advice regarding this election.
e. Restricted
Shares . All restrictions on any shares of HRB’s common
stock awarded to Executive by RSM (“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 18 months thereafter 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
RSM on the Termination Date. A list of the Restricted Shares
outstanding as of the date of this Agreement and to become vested
pursuant to this Section is attached as Exhibit C.
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f. Performance
Shares . The number of performance shares Executive will
receive at the end of the performance period (June 30, 2009)
of those awarded him under the June 30, 2006 grant will be
determined based upon (1) Executive’s pro-rata length of
service during the performance period, and (2) the achievement
of the performance goals at the end of the performance period. RSM
will pay any performance shares due Executive to him at the time
payments are generally made to other individuals who received an
award of performance shares on June 30, 2006. On the
Termination Date, Executive shall forfeit to RSM any Performance
Shares RSM awarded him pursuant to a cycle which is less than one
year old. A list of the Performance Shares eligible to become
payable pursuant to this subsection is attached as
Exhibit D.
g. Outplacement
Services . RSM will pay directly to Right Management Services
for twelve (12) months of outplacement services to be provided
to Executive.
h. Deferred
Compensation . Executive will receive his vested account
balance and payment in accordance with Executive’s payment
elections under the H&R Block Deferred Compensation Plan for
Executives, as amended.
i.
Forfeiture . Executive 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.
4.
Vacation . RSM will pay Executive for his accrued, unused
paid time off which includes vacation, floating holidays, and
personal days (but excludes sick leave as set forth in the
Company’s policies) within 21 days of the Termination
Date. Executive will not receive any other payment for vacation or
holidays.
5.
Executive’s Representations . Executive represents and
acknowledges to RSM that (a) RSM 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 RSM any
information in his possession concerning any conduct involving RSM
or its Affiliates that he has any reason to believe involves any
false claims to any governmental agency, or is or may be unlawful,
or violates RSM 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 RSM involving any
aspect of his employment which have not been terminated as of the
date of this Agreement. Executive understands that RSM regards the
representations made by him as material and that RSM is relying on
these representations in entering into this Agreement.
6.
Effective Date of this Agreement . Executive 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 Russ Smyth, Chief Executive Officer,
which action shall revoke this Agreement. If Executive revokes this
Agreement, all of its provisions shall be void and unenforceable.
If Executive does not revoke his consent, this Agreement will take
effect on the day after the end of this revocation period (the
“Effective Date”).
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7.
Surviving Employment Agreement Obligations . Executive and
RSM agree that the termination of Executive’s employment will
not affect the following provisions of the Employment Agreement
which, by their express terms, impose continuing obligations on one
or more of the parties 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, “Specific
Performance” — Section 4.03. Executive
acknowledges and agrees that he will fully comply with these
obligations. RSM may agree to waive any of Executive’s
surviving post-employment obligations under the Employment
Agreement. Any such waiver must be in writing and signed by
Executive and the Chief Executive Officer of HRB. Unless otherwise
agreed by the parties in writing, any payments made to Executive
under this Agreement will immediately cease upon any such
waiver.
8.
Business Expenses and Commitments . As of the Termination
Date, Executive agrees that he will have submitted required
documentation for all outstanding expenses on his corporate credit
card. Executive furth
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