Sample Business Contracts


Employment Agreement - H&R Block Financial Advisors Inc. and Brian L. Nygaard

Employment Forms

  • Employers can customize an employment agreement that states the salary, benefits, working hours and other important provisions for their new or existing employee.
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  • Companies may offer their business executives a contract that is different from the one provided to their regular employees. Executive employment agreements may be more complex because the compensation structure may include a combination of salary and commissions, provide for bonuses based on sales, stock or other financial targets, and include non-compete, confidentiality and severance provisions.
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                              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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<PAGE>

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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<PAGE>

                  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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<PAGE>

         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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<PAGE>

                  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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<PAGE>

                                    (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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<PAGE>

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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<PAGE>

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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<PAGE>

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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<PAGE>

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


                                       11
<PAGE>

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.


                                       12
<PAGE>

                  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.


                                       13
<PAGE>

         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
       --------------------



                                       14
<PAGE>

                            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.


                                      A-2
<PAGE>

         (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


                                      A-3
<PAGE>

         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:


                                      A-4
<PAGE>



                         MINIMUM YEARS        MAXIMUM YEARS
    PAY GRADE             OF SERVICE           OF SERVICE
    ---------            -------------        -------------
                                        
81-89 and 231-235             6                   18

 65-80, 109-110,              3                   18
   and 218-230

 57-64, 105-108,              1                   18
   and 210-217

 48-56, 100-102,              1                   18
   and 200-209


         Notwithstanding the above, if an Employee has received credit for Years
         of Service under this Plan or under any previous plan, program, or
         agreement for the purpose of receiving severance benefits before a
         Qualifying Termination, such Years of Service will be disregarded when
         calculating Years of Service for such Qualifying Termination under the
         Plan; provided, however, that if such severance benefits were
         terminated prior to completion because the Employee was rehired by any
         subsidiary of the Company then the Employee will be re-credited with
         full Years of Service for which severance benefits were not paid in
         full or in part because of such termination.

3. ELIGIBILITY AND PARTICIPATION. All Employees who incur a Qualifying
Termination and sign a Release are eligible to participate in the Plan. An
eligible Employee will become a Participant in the Plan as of the Termination
Date.

4. SEVERANCE COMPENSATION.

         (a) Amount. Subject to Section 8, each Participant will receive during
         the Severance Period from the applicable Participating Employer
         aggregate severance compensation equal to:

                  (i) the Participant's Monthly Salary multiplied by the
                  Participant's Years of Service; plus

                  (ii) one-twelfth of the Participant's target payout under the
                  Short-Term Incentive Program of the Participating Employer in
                  effect at the time of his or her Termination Date multiplied
                  by the Participant's Years of Service; plus

                  (iii) an amount to be determined by the Participating Employer
                  at its sole discretion, which amount may be zero.

         (b) Timing of Payments. Except as stated in Section 4(c), and subject
         to Section 8,

                  (i) the sum of any amounts determined under Sections 4(a)(i)
                  and 4(a)(ii) of the Plan will be paid in semi-monthly or
                  bi-weekly installments (the timing and amount of each
                  installment as


                                      A-5

<PAGE>

                  determined by the Participating Employer) during the Severance
                  Period beginning after the later of the Termination Date or
                  the Release Date; and

                  (ii) any amounts determined under Section 4(a)(iii) of the
                  Plan will be paid in one lump sum within 15 days after the
                  later of the Termination Date or the Release Date, unless
                  otherwise agreed in writing by the Participating Employer and
                  Participant or otherwise required by law.

         (c) Death. In the event of the Participant's death prior to receiving
         all payments due under this Section 4, any unpaid severance
         compensation will be paid (i) in the same manner as are death benefits
         under the Participant's basic life insurance coverage provided by the
         Participant's Participating Employer, and (ii) in accordance with the
         Participant's beneficiary designation under such coverage. If no such
         coverage exists, or if no beneficiary designation exists under such
         coverage as of the date of death of the Participant, the severance
         compensation will be paid to the Participant's estate in one-lump sum.

5. HEALTH AND WELFARE BENEFITS.

         (a) Benefits. In addition to the severance compensation provided
         pursuant to Section 4 of the Plan, a Participant may continue to
         participate in the following health and welfare benefits provided by
         his or her Participating Employer during the Severance Period on the
         same basis as employees of the Participating Employer:

                  (i)   medical;

                  (ii)  dental;

                  (iii) vision;

                  (iv)  employee assistance;

                  (v)   medical expense reimbursement and dependent care expense
                  reimbursement benefits provided under a cafeteria plan;

                  (vi)  life insurance (basic and supplemental); and

                  (vii) accidental death and dismemberment insurance (basic and
                  supplemental).

         For the purposes of any of the above-described benefits provided under
         a Participating Employer's cafeteria plan, a Qualifying Termination
         constitutes


                                      A-6
<PAGE>

         a "change in status" or "life event."

         (b) Payment and Expiration. Payment of the Participant's portion of
         contribution or premiums for such selected benefits will be withheld
         from any severance compensation payments paid to the Participant under
         this Plan. The Participating Employer's partial subsidization of such
         coverages will remain in effect until the earlier of:

                  (i) the expiration or earlier termination of the Employee's
                  Severance Period, after which time the Participant may be
                  eligible to elect to continue coverage of those benefits
                  listed above that are provided under group health plans in
                  accordance with his or her rights under Section 4980B of the
                  Internal Revenue Code; or

                  (ii) the Participant's attainment of or eligibility to attain
                  health and welfare benefits through another employer after
                  which time the Participant may be eligible to elect to
                  continue coverage of those benefits listed above that are
                  provided under group health plans in accordance with his or
                  her rights under Section 4980B of the Internal Revenue Code.

6. STOCK OPTIONS.

         (a) Accelerated Vesting. Any portion of any outstanding incentive stock
         options and nonqualified stock options that would have vested during
         the 18-month period following the Termination Date had the Participant
         remained an employee with the Participating Employer during such
         18-month period will vest as of the Termination Date. This Section 6(a)
         applies only to options (i) granted to the Participant under the
         Company's 1993 Long-Term Executive Compensation Plan, or any successor
         plan to its 1993 Long-Term Executive Compensation Plan, not less than 6
         months prior to his or her Termination Date and (ii) outstanding at the
         close of business on such Termination Date. The determination of
         accelerated vesting under this Section 6(a) shall be made as of the
         Termination Date and shall be based solely on any time-specific vesting
         schedule included in the applicable stock option agreement without
         regard to any accelerated vesting provision not related to the Plan in
         such agreement.

         (b) Post-Termination Exercise Period. Subject to the expiration dates
         and other terms of the applicable stock option agreements, the
         Participant may elect to have the right to exercise any outstanding
         incentive stock options and nonqualified stock options granted prior to
         the Termination Date to the Participant under the Company's 1984
         Long-Term Executive Compensation Plan, its 1993 Long-Term Executive
         Compensation Plan, or any successor plan to its 1993 Long-Term
         Executive Compensation Plan that are vested as of the Termination Date
         (or, if later, the Release Date), whether due to the


                                      A-7
<PAGE>

         operation of Section 6(a), above, or otherwise, at any time during the
         Severance Period and, except in the event that the Severance Period
         terminates pursuant to Section 8(a), for a period up to 3 months after
         the end of the Severance Period (notwithstanding Section 8). Any such
         election shall apply to all outstanding incentive stock options and
         nonqualified stock options, will be irrevocable and must be made in
         writing and delivered to the Plan Administrator on or before the later
         of the Termination Date or Release Date. If the Participant fails to
         make an election, the Participant's right to exercise such options will
         expire 3 months after the Termination Date.

         (c) Stock Option Agreement Amendment. The operation of Sections 6(a)
         and 6(b), above, are subject to the Participant's execution of an
         amendment to any affected stock option agreements.

7. OUTPLACEMENT SERVICES. In addition to the benefits described above, career
transition counseling or outplacement services may be provided upon the
Participant's Qualifying Termination. Such outplacement service will be provided
at the Participating Employer's sole discretion. Outplacement services are
designed to assist employees in their search for new employment and to
facilitate a smooth transition between employment with the Participating
Employer and employment with another employer. Any outplacement services
provided under this Plan will be provided by an outplacement service chosen by
the Participating Employer. The Participant is not entitled to any monetary
payment in lieu of outplacement services.

8. TERMINATION OF BENEFITS. Any right of a Participant to severance compensation
and benefits under the Plan, and all obligations of his or her Participating
Employer to pay any unpaid severance compensation or provide benefits under the
Plan will terminate as of the day:

         (a) The Participant has engaged in any conduct described in Sections
         8(a)(i), 8(a)(ii), 8(a)(iii) or 8(a)(iv), below, as the same may be
         limited pursuant to Section 8(a)(vi).

                  (i) During the Severance Period, the Participant's engagement
                  in, ownership of, or control of any interest in (except as a
                  passive investor in less than one percent of the outstanding
                  securities of publicly held companies), or acting 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 the Company, provided
                  that this Section 8(a)(i) shall not apply to the Participant
                  if the Participant's primary place of employment by a
                  subsidiary of the Company as of the Termination Date is in
                  either the State of California or the State of North Dakota.


                                      A-8
<PAGE>

                  (ii) During the Severance Period, the Participant employs or
                  solicits for employment by any employer other than a
                  subsidiary of the Company any employee of any subsidiary of
                  the Company, or recommends any such employee for employment to
                  any employer (other than a subsidiary of the Company) at which
                  the Participant is or intends to be (A) employed, (B) a member
                  of the Board of Directors, (C) a partner, or (D) providing
                  consulting services.

                  (iii) During the Severance Period, the Participant directly or
                  indirectly solicits or enters into any arrangement with any
                  person or entity which is, at the time of the solicitation, a
                  significant customer of a subsidiary of the Company for the
                  purpose of engaging in any business transaction of the nature
                  performed by such subsidiary, or contemplated to be performed
                  by such subsidiary, for such customer, provided that this
                  Section 8(a)(iii) shall only apply to customers for whom the
                  Participant personally provided services while employed by a
                  subsidiary of the Company or customers about whom or which the
                  Participant acquired material information while employed by a
                  subsidiary of the Company.

                  (iv) During the Severance Period, the Participant
                  misappropriates or improperly uses or discloses confidential
                  information of the Company and/or its subsidiaries.

                  (v) If the Participant engaged in any of the conduct described
                  in Sections 8(a)(i), 8(a)(ii), 8(a)(iii) or 8(a)(iv) during or
                  after Participant's term of employment with a Participating
                  Employer, but prior to the commencement of the Severance
                  Period, and such engagement becomes known to the Participating
                  Employer during the Severance Period, such conduct shall be
                  deemed, for purposes of Sections 8(a)(i), 8(a)(ii), 8(a)(iii)
                  or 8(a)(iv) to have occurred during the Severance Period.

                  (vi) If the Participant is a party to an employment contract
                  with a Participating Employer that contains a covenant or
                  covenants relating to the Participant's engagement in conduct
                  that is the same as or substantially similar to the conduct
                  described in any of Sections 8(a)(i), 8(a)(ii), 8(a)(iii) or
                  8(a)(iv), and any specific conduct regulated in such covenant
                  or covenants in such employment contract is more limited in
                  scope geographically or otherwise than the corresponding
                  specific conduct described in any of such Sections 8(a)(i),
                  8(a)(ii), 8(a)(iii) or 8(a)(iv), then the corresponding
                  specific conduct addressed in the applicable Section 8(a)(i),
                  8(a)(ii), 8(a)(iii) or 8(a)(iv) shall be limited to the same
                  extent as such conduct is limited in the employment contract
                  and the Participating Employer's rights and remedy with
                  respect to such conduct under this Section 8 shall apply only
                  to such conduct as so limited.


                                      A-9
<PAGE>

         (b) The Participant is rehired by his or her Participating Employer or
         hired by any other subsidiary of the Company in any position other than
         a position classified as seasonal by such employer.

9. AMENDMENT AND TERMINATION. The Plan Sponsor reserves the right to amend the
Plan or to terminate the Plan and all benefits hereunder in their entirety at
any time.

10. ADMINISTRATION OF PLAN. The Plan Administrator has the power and discretion
to construe the provisions of the Plan and to determine all questions relating
to the eligibility of employees of Participating Employers to become
Participants in the Plan, and the amount of benefits to which any Participant
may be entitled thereunder in accordance with the Plan. Not in limitation, but
in amplification of the foregoing and of the authority conferred upon the Plan
Administrator, the Plan Sponsor specifically intends that the Plan Administrator
have the greatest permissible discretion to construe the terms of the Plan and
to determine all questions concerning eligibility, participation and benefits.
Any such decision made by the Plan Administrator will be binding on all
Employees, Participants, and Beneficiaries, and is intended to be subject to the
most deferential standard of judicial review. Such standard of review is not to
be affected by any real or alleged conflict of interest on the part of the Plan
Administrator. The decision of the Plan Administrator upon all matters within
the scope of its authority will be final and binding.

11. CLAIMS PROCEDURES.

         (a) FILING A CLAIM FOR BENEFITS. Participants are not required to
         submit claim forms to initiate payment of benefits under this Plan. To
         make a claim for benefits, individuals other than Participants who
         believe they are entitled to receive benefits under this Plan and
         Participants who believe they have been denied certain benefits under
         the Plan must write to the Plan Administrator. These individuals and
         such Participants are hereinafter referred to in this Section 11 as
         "Claimants." Claimants must notify the Plan Administrator if they will
         be represented by a duly authorized representative with respect to a
         claim under the Plan.

         (b) INITIAL REVIEW OF CLAIMS. The Plan Administrator will evaluate a
         claim for benefits under the Plan. The Plan Administrator may solicit
         additional information from the Claimant if necessary to evaluate the
         claim. If the Plan Administrator denies all or any portion of the
         claim, the Claimant will receive, within 90 days after the receipt of
         the written claim, a written notice setting forth:

                  (i) the specific reason for the denial;

                  (ii) specific references to pertinent Plan provisions on which
                  the


                                      A-10
<PAGE>
                  Plan Administrator based its denial;

                  (iii) a description of any additional material and information
                  needed for the Claimant to perfect his or her claim and an
                  explanation of why the material or information is needed; and

                  (iv) that any appeal the Claimant wishes to make of the
                  adverse determination must be in writing to the Plan
                  Administrator within 60 days after receipt of the notice of
                  denial of benefits. The notice must advise the Claimant that
                  his or her failure to appeal the action to the Plan
                  Administrator in writing within the 60-day period will render
                  the Plan Administrator's determination final, binding and
                  conclusive. The notice must further advise the Claimant of his
                  or her right to bring a civil action under Section 502(a) of
                  ERISA following the exhaustion of the claims procedures
                  described herein.

         (c) APPEAL OF DENIED CLAIM AND FINAL DECISION. If the Claimant should
         appeal to the Plan Administrator, the Claimant, or his or her duly
         authorized representative, must submit, in writing, whatever issues and
         comments the Claimant or his or her duly authorized representative
         feels are pertinent. The Claimant, or his or her duly authorized
         representative, may review and request pertinent Plan documents. The
         Plan Administrator will reexamine all facts related to the appeal and
         make a final determination as to whether the denial of benefits is
         justified under the circumstances. The Plan Administrator will advise
         the Claimant in writing of its decision within 60 days of the
         Claimant's written request for review, unless special circumstances
         (such as a hearing) require an extension of time, in which case the
         Plan Administrator will make a decision as soon as possible, but no
         later than 120 days after its receipt of a request for review.

12. PLAN FINANCING. The benefits to be provided under the Plan will be paid by
the applicable Participating Employer, as incurred, out of the general assets of
such Participating Employer.

13. GENERAL INFORMATION. The Plan's records are maintained on a calendar year
basis. The Plan Number is 509. The Plan is self-administered and is considered a
severance plan.

14. GOVERNING LAW. The Plan is established in the State of Missouri. To the
extent federal law does not apply, any questions arising under the Plan will be
determined under the laws of the State of Missouri.

15. ENFORCEABILITY; SEVERABILITY. If a court of competent jurisdiction
determines that any provision of the Plan is not enforceable, then such
provision shall be enforceable to the maximum extent possible under applicable
law, as determined by such court. The invalidity or unenforceabilty of any
provision of the


                                      A-11
<PAGE>

Plan, as determined by a court of competent jurisdiction, will not affect the
validity or enforceability of any other provision of the Plan and all other
provisions will remain in full force and effect.

16. WITHHOLDING OF TAXES. The applicable Participating Employer may withhold
from any benefit payable under the Plan all federal, state, city or other taxes
as may be required pursuant to any law, governmental regulation or ruling. The
Participant shall pay upon demand by the Company or the Participating Employer
any taxes required to be withheld or collected by the Company or the
Participating Employer upon the exercise by the Participant of a nonqualified
stock option granted under the Company's 1984 Long-Term Executive Compensation
Plan or its 1993 Long-Term Executive Compensation Plan. If the Participant fails
to pay any such taxes associated with such exercise upon demand, the
Participating Employer shall have the right, but not the obligation, to offset
such taxes against any unpaid severance compensation under this Plan.

17. NOT AN EMPLOYMENT AGREEMENT. Nothing in the Plan gives an Employee any
rights (or imposes any obligations) to continued employment by his or her
Participating Employer or other subsidiary of the Company, nor does it give such
Participating Employer any rights (or impose any obligations) for the continued
performance of duties by the Employee for the Participating Employer or any
other subsidiary of the Company.

18. NO ASSIGNMENT. The Employee's right to receive payments of severance
compensation and benefits under the Plan are not assignable or transferable,
whether by pledge, creation of a security interest, or otherwise. In the event
of any attempted assignment or transfer contrary to this section, the applicable
Participating Employer will have no liability to pay any amount so attempted to
be assigned or transferred.

19. SERVICE OF PROCESS. The Secretary of the Plan Administrator is designated as
agent for service of legal process. Service of legal process may be made upon
the Secretary of the Plan Administrator at:

         HRB Management, Inc.
         Attn: Secretary
         4400 Main Street
         Kansas City, Missouri 64111

20. STATEMENT OF ERISA RIGHTS. As a participant in the Plan, you are entitled to
certain rights and protections under ERISA, which provides that all Plan
Participants are entitled to:

         (a) examine without charge, at the Plan Administrator's office, all
         documents governing the Plan and a copy of the latest annual report
         (Form 5500 Series) filed by the Plan with the U.S. Department of Labor
         and


                                      A-12
<PAGE>

         available at the Public Disclosure Room of the Pension and Welfare
         Benefit Administration;

         (b) obtain, upon written request to the Plan Administrator, copies of
         documents governing the operation of the Plan, copies of the latest
         annual report (Form 5500 Series) and an updated summary plan
         description. The Plan Administrator may make a reasonable charge for
         the copies; and

         (c) receive a summary of the Plan's annual financial report if required
         to be filed for the year. The Plan Administrator is required by law to
         furnish each participant with a copy of this summary annual report if
         an annual report is required to be filed for the year.

         In addition to creating rights for Plan Participants, ERISA imposes
duties upon the people who are responsible for the operation of the Plan. The
people who operate your Plan, called "fiduciaries" of the Plan, have a duty to
do so prudently and in the interest of you and other Plan Participants and
beneficiaries. No one, including your Participating Employer or any other
person, may fire you or otherwise discriminate against you in any way to prevent
you from obtaining a welfare benefit or exercising your rights under ERISA.

         If your claim for a welfare benefit is denied or ignored, in whole or
in part, you have the right to know why this was done, to obtain copies of
documents relating to the decision without charge, and to appeal any denial, all
within certain time schedules.

         Under ERISA, there are steps you can take to enforce the above rights.
For instance, if you request a copy of plan documents or the latest annual
report from the Plan and do not receive them within 30 days, you may file suit
in a Federal court. In such a case, the court may require the Plan Administrator
to provide the materials to you and pay you up to $110 a day until you receive
the materials, unless the materials were not sent because of reasons beyond the
control of the Plan Administrator. If you have a claim for benefits that is
denied or ignored, in whole or in part, you may file suit in a state or Federal
court. If it should happen that you are discriminated against for asserting your
rights, you may seek assistance from the U. S. Department of Labor, or you may
file suit in a Federal court. The court will decide who should pay court costs
and legal fees. If you are successful, the court may order the person you have
sued to pay these costs and fees. If you lose, the court may order you to pay
these costs and fees, for example, if it finds your claim is frivolous.

         If you have any questions about the Plan, you should contact the Plan
Administrator. If you have questions about this statement or about your rights
under ERISA, or if you need assistance in obtaining documents from the Plan
Administrator, you should contact the nearest office of the Pension and Welfare
Benefits Administration, U.S. Department of Labor, listed in your telephone
directory or


                                      A-13
<PAGE>

the Division of Technical Assistance and Inquiries, Pension and Welfare Benefits
Administration, U.S. Department of Labor, 200 Constitution Avenue N.W.,
Washington, D.C. 20210. You may also obtain certain publications about your
rights and responsibilities under ERISA by calling the publications hotline of
the Pension and Welfare Benefits Administration.


                                      A-14
<PAGE>

IN WITNESS WHEREOF, HRB Management, Inc. adopts this Severance Plan effective
this 23rd day of April, 2001.


                                       HRB MANAGEMENT, INC.


                                       /s/ Mark A. Ernst
                                       -----------------------------------------
                                       Mark A. Ernst
                                       President and Chief Executive Officer


                                      A-15
<PAGE>

                                   SCHEDULE A

                             PARTICIPATING EMPLOYERS


Block Financial Corporation

Financial Marketing Services, Inc.

Franchise Partner, Inc.

H&R Block Investments, Inc.

H&R Block Services, Inc. and its U.S.-based direct and indirect subsidiaries

HRB Business Services, Inc.

HRB Management, Inc.

HRB Retail Services, Inc.

Olde Financial Corporation and its U.S.-based direct and indirect subsidiaries,
which subsidiaries include H&R Block Financial Advisors, Inc.


                                      A-16


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