SEPARATION AND RELEASE
AGREEMENT
This SEPARATION
AND RELEASE AGREEMENT (the “Agreement”) is entered into
as of the day of July, 2009,
by and between, HRB Tax Group, Inc., a Missouri corporation
(“Block”), and Timothy C. Gokey
(“Executive”).
WHEREAS, Executive
and Block are parties to an Employment Agreement dated
June 28, 2004 (the “Employment
Agreement”),
WHEREAS, Executive
and Block agree to end Executive’s employment,
WHEREAS, Executive
and Block 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 Block agree as follows:
1.
Termination of Employment . The parties agree that
Executive’s employment with Block will end on August 31,
2009 (“Separation Date”). Until the Separation Date,
the Executive will remain on active payroll and be paid his current
salary in accordance with Block’s regular payroll practices.
Until the Separation Date, Executive agrees that he will only
perform transition work as specifically agreed by Block Chief
Executive Officer (“CEO”) Russ Smyth and Executive.
Executive further agrees that he will timely respond to questions
and provide guidance as requested by Block CEO Russ Smyth. On or
after the Separation Date, Executive acknowledges and agrees that
he will not represent himself as being an employee, officer,
director, trustee, member, partner, agent, or representative of
Block for any purpose, and will not make any public statements on
behalf of Block. 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 Separation
Date, he resigns from all offices, directorships, trusteeships,
committee memberships, and fiduciary capacities held with, or on
behalf of, Block or its parents, subsidiaries, or affiliates
(collectively as “Affiliates”), or any benefit plans of
Block 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 separation 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 Separation
Date except for the following:
a. Severance
Pay . Subject to the terms of the H&R Block Severance Plan
(“Severance Plan”), Block will pay to Executive
$833,340.00, less required tax
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withholdings,
in a lump sum payment within 30 days from the later of the
Separation Date or the Effective Date of this Agreement.
b. Employee
Benefits . Executive will remain eligible to participate in the
various health and welfare benefit plans maintained by Block until
the Separation Date. After the Separation Date, Block will pay
Executive a lump sum payment of $10,008, lass applicable tax
withholdings, which represents Executive’s monthly
post-employment premium for health and welfare benefits under COBRA
for twelve (12) months 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
Block’s health and welfare plans on the Terminate Date. If
Executive qualifies for this payment, Block will pay Executive this
payment within 30 days from the later of the Separation Date
or the Effective Date of this Agreement. Conversion privileges may
also be available for other benefit plans.
c. Stock
Options . Those portions of any outstanding incentive stock
options (“ISO Stock Options”) and nonqualified stock
options (“NQ Stock Options”) to purchase shares of
Block’s common stock Block granted to Executive that are
scheduled to vest between the Separation 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 Separation 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 Block on the Separation Date. No later than the
Separation 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 Block has not provided him any
personal tax advice about this election. Block encourages Executive
to seek independent tax advice regarding this election.
d. Restricted
Shares , All restrictions on any shares of Block’s common
stock Block awarded to Executive (“Restricted Shares”)
that would have lapsed absent a termination of employment in
accordance with their terms by reason of time between the
Separation Date and 18 months thereafter shall terminate (and
shall be fully vested) as of the Separation Date. Executive shall
forfeit on the Separation Date any shares unaffected by the
operation of this Section. 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.
e. Performance
Shares . The number of performance shares Executive will
receive at the end of each applicable performance period 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.
Block will pay any performance shares due Executive to him at the
time payments are generally made to other individuals who received
a similar award of performance shares. On the Separation Date,
Executive shall forfeit to Block any Performance Shares Block
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.
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f. Outplacement
Services . Block will pay directly to Right Management Services
for twelve (12) months of outplacement services to be provided
to Executive. Executive must elect these outplacement services on
or before August 31, 2009 in writing to the Block Senior
Vice-President, Human Resources. Executive waives these
outplacement services if he fails to provide such written
notification on or before August 31, 2009.
g. 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.
h.
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 . Block 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 30 days of the Separation
Date (the “PTO Payout”). Executive agrees that his PTO
Payout will be $60,332.31, less applicable withholdings. Executive
will not receive any other payment for vacation or
holidays.
5.
Executive’s Representations . Executive represents and
acknowledges to Block that (a) Block 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 Block any information in his possession concerning
any conduct involving Block 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 Block 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 Block involving any aspect of his
employment which have not been terminated as of the date of this
Agreement. Executive understands that Block regards the
representations made by him as material and that Block 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 CEO Russ Smyth which action shall revoke
this Agreement. If Exe
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