Exhibit 10.13

 
 
CREDIT AND GUARANTEE AGREEMENT
dated as of
January 10, 2008
among
BLOCK FINANCIAL LLC,
as Borrower,
H&R BLOCK, INC.,
as Guarantor,
and
HSBC FINANCE CORPORATION,
as Lender
$3,000,000,000 REVOLVING CREDIT FACILITY
 
 
NOTE: CERTAIN MATERIAL HAS BEEN OMMITTED FROM THIS AGREEMENT PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2. THE LOCATIONS OF THESE
OMISSIONS ARE INDICATED THROUGHOUT THE AGREEMENT BY THE FOLLOWING MARKINGS:
[***].

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TABLE OF CONTENTS

              Page  
 
       
ARTICLE I DEFINITIONS
    1  
 
       
SECTION 1.1. Defined Terms
    1  
SECTION 1.2. Terms Generally
    14  
SECTION 1.3. Accounting Terms; GAAP
    14  
 
       
ARTICLE II THE CREDITS
    15  
 
       
SECTION 2.1. Commitment
    15  
SECTION 2.2. Loans
    15  
SECTION 2.3. Funding of Loans
    15  
SECTION 2.4. Termination and Reduction of Commitment
    15  
SECTION 2.5. Repayment of Loans; Evidence of Debt
    16  
SECTION 2.6. Prepayment of Loans
    16  
SECTION 2.7. Interest
    17  
SECTION 2.8. Alternate Rate of Interest
    18  
SECTION 2.9. Increased Costs
    18  
SECTION 2.10. Taxes
    19  
SECTION 2.11. Payments Generally
    20  
SECTION 2.12. Mitigation Obligations
    20  
 
       
ARTICLE III REPRESENTATIONS AND WARRANTIES
    20  
 
       
SECTION 3.1. Organization; Powers
    21  
SECTION 3.2. Authorization; Enforceability
    21  
SECTION 3.3. Governmental Approvals; No Conflicts
    21  
SECTION 3.4. Financial Condition; No Material Adverse Change
    21  
SECTION 3.5. Properties
    22  
SECTION 3.6. Litigation and Environmental Matters
    22  
SECTION 3.7. Compliance with Laws and Agreements
    22  
SECTION 3.8. Investment Company Status
    23  
SECTION 3.9. Taxes
    23  
SECTION 3.10. ERISA
    23  
SECTION 3.11. Disclosure
    23  
SECTION 3.12. Federal Regulations
    23  
SECTION 3.13. Subsidiaries
    23  
SECTION 3.14. Insurance
    23  
 
       
ARTICLE IV CONDITIONS
    24  
 
       
SECTION 4.1. Effective Date
    24  
SECTION 4.2. Closing Date
    24  

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              Page  
 
       
SECTION 4.3. Each Loan
    25  
 
       
ARTICLE V AFFIRMATIVE COVENANTS
    25  
 
       
SECTION 5.1. Financial Statements and Other Information
    25  
SECTION 5.2. Notices of Material Events
    27  
SECTION 5.3. Existence; Conduct of Business
    27  
SECTION 5.4. Payment of Taxes
    27  
SECTION 5.5. Maintenance of Properties; Insurance
    27  
SECTION 5.6. Books and Records; Inspection Rights
    28  
SECTION 5.7. Compliance with Laws
    28  
SECTION 5.8. Use of Proceeds
    28  
SECTION 5.9 Additional Collateral
    29  
 
       
ARTICLE VI NEGATIVE COVENANTS
    28  
 
       
SECTION 6.1. Adjusted Net Worth
    28  
SECTION 6.2. Indebtedness
    29  
SECTION 6.3. Liens
    31  
SECTION 6.4. Fundamental Changes; Sale of Assets
    33  
SECTION 6.5. Transactions with Affiliates
    33  
SECTION 6.6. Restrictive Agreements.
    34  
 
       
ARTICLE VII GUARANTEE
    34  
 
       
SECTION 7.1. Guarantee
    34  
SECTION 7.2. Delay of Subrogation
    35  
SECTION 7.3. Amendments, etc. with respect to the Obligations; Waiver of Rights
    36  
SECTION 7.4. Guarantee Absolute and Unconditional
    36  
SECTION 7.5. Reinstatement
    37  
SECTION 7.6. Payments
    37  
 
       
ARTICLE VIII EVENTS OF DEFAULT
    37  
 
       
ARTICLE IX
    40  
 
       
[RESERVED]
    40  
 
       
ARTICLE X MISCELLANEOUS
    40  
 
       
SECTION 10.1. Notices
    40  
SECTION 10.2. Waivers; Amendments
    41  
SECTION 10.3. Expenses; Indemnity; Damage Waiver
    41  
SECTION 10.4. Successors and Assigns
    42  
SECTION 10.5. Survival
    43  

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              Page  
 
       
SECTION 10.6. Counterparts; Integration; Effectiveness
    43  
SECTION 10.7. Severability
    43  
SECTION 10.8. Right of Setoff
    44  
SECTION 10.9. Governing Law; Jurisdiction; Consent to Service of Process
    44  
SECTION 10.10. WAIVER OF JURY TRIAL
    44  
SECTION 10.11. Headings
    45  
SECTION 10.12. Confidentiality
    45  
SECTION 10.13. Interest Rate Limitation
    45  
SECTION 10.14. USA Patriot Act.
    46  

SCHEDULES:

     
Schedule 3.4(a)
  Guarantee Obligations
Schedule 3.6
  Disclosed Matters
Schedule 3.13
  Subsidiaries
Schedule 6.2
  Existing Indebtedness
Schedule 6.3
  Existing Liens
Schedule 6.4(b)
  Additional Businesses
Schedule 6.6
  Existing Restrictions
 
   
EXHIBITS:
   
 
   
Exhibit A
  Form of Security Agreement
Exhibit B
  Form of Control Agreement
Exhibit C
  Form of HSBC TFS Letter
Exhibit D
  Form of Opinion of Stinson Morrison Hecker LLP

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CREDIT AND GUARANTEE AGREEMENT
          CREDIT AND GUARANTEE AGREEMENT, dated as of January 10, 2008, among
BLOCK FINANCIAL LLC, a Delaware limited liability company, as Borrower, H&R
BLOCK, INC., a Missouri corporation, as Guarantor, and HSBC FINANCE CORPORATION,
a Delaware corporation, as Lender.
          WHEREAS, the Borrower has requested that the Lender provide a
short-term revolving credit facility in an amount of $3,000,000,000;
          WHEREAS, the Guarantor has agreed to guarantee all of the Borrower’s
obligations hereunder; and
          WHEREAS, the Lender is willing to provide a short-term revolving
credit facility to the Borrower on the terms and conditions set forth herein.
          NOW, THEREFORE, in consideration of the agreements herein and in
reliance upon the representations and warranties set forth herein, the parties
agree as follows:
ARTICLE I
DEFINITIONS
          SECTION 1.1.   Defined Terms. Capitalized terms used in this Agreement
that are not defined below or otherwise herein shall have the meanings set forth
in the Appendix of Defined Terms and Rules of Construction attached as
Appendix A to the Retail Settlement Products Distribution Agreement. As used in
this Agreement, the following terms have the meanings specified below:
     “Adjusted Net Worth” means, at any time, Consolidated Net Worth of the
Guarantor without giving effect to reductions in stockholders’ equity as a
result of repurchases by the Guarantor of its own Capital Stock subsequent to
April 30, 2005 in an aggregate amount not exceeding $350,000,000.
     “Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified. For the
avoidance of doubt, neither the Guarantor nor any of its Subsidiaries shall be
deemed to Control any of its franchisees by virtue of provisions in the relevant
franchise agreement regulating the business and operations of such franchisee.
     “Agreement” means this Credit and Guarantee Agreement.
     “Availability Period” means the period from and including the first day in
2008 on which the U.S. Internal Revenue Service accepts electronic filings of
personal tax returns (or, if later, the Closing Date) to but excluding the
earlier of the Revolving Termination Date and the date of termination of the
Commitments.

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2

     “Average Weekly LIBOR” means [***] .
     “Bank Revolvers” means, collectively, (i) the Five-Year Credit and
Guarantee Agreement dated as of August 10, 2005 among the Borrower, the
Guarantor, various financial institutions and JPMorgan Chase Bank N.A., as
Administrative Agent, as amended by the First Amendment thereto dated as of
November 28, 2006 and the Second Amendment thereto dated as of November 19,
2007, and any restatement, extension, renewal and replacement thereof
(regardless of whether the amount available thereunder is changed or the term
thereof is modified) and (ii) the Amended and Restated Five-Year Credit and
Guarantee Agreement, dated as of August 10, 2005, among the Borrower, the
Guarantor, various financial institutions and JPMorgan Chase Bank, N.A., as
Administrative Agent, as amended by the First Amendment thereto dated as of
November 28, 2006 and the Second Amendment thereto dated as of November 19,
2007, and any restatement, extension, renewal and replacement thereof
(regardless of whether the amount available thereunder is changed or the term
thereof is modified).
     “Board” means the Board of Governors of the Federal Reserve System of the
United States of America.
     “Borrower” means Block Financial LLC, a Delaware limited liability company
and a wholly-owned indirect Subsidiary of the Guarantor.
     “Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; provided that, when used in connection with a Eurodollar Loan,
the term “Business Day” shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.
     “Capital Lease Obligations” of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
     “Capital Stock” means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants or options to purchase any of the foregoing.
     “Cash Equivalents” means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition;
(b) certificates of deposit, time deposits, eurodollar time deposits or
overnight bank deposits having maturities of six months or less from the date of
acquisition issued by (i) any “Lender” as defined in a Bank Revolver, (ii) any
commercial bank organized under the laws of the United States or any

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3

state thereof having combined capital and surplus of not less than $500,000,000
or (iii) any other bank if, and to the extent, covered by FDIC insurance;
(c) commercial paper of an issuer rated at least A-1 by S&P or P-1 by Moody’s,
or carrying an equivalent rating by a nationally recognized rating agency, if
both of the two named rating agencies cease publishing ratings of commercial
paper issuers generally, and maturing within six months from the date of
acquisition; (d) repurchase obligations of any “Lender” as defined in a Bank
Revolver or of any commercial bank satisfying the requirements of clause (b) of
this definition, having a term of not more than 30 days, with respect to
securities issued or fully guaranteed or insured by the United States
government; (e) securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least A
by S&P or A2 by Moody’s; (f) securities with maturities of six months or less
from the date of acquisition backed by standby letters of credit issued by any
“Lender” as defined in a Bank Revolver or any commercial bank satisfying the
requirements of clause (b) of this definition; (g) money market mutual or
similar funds that invest exclusively in assets satisfying the requirements of
clauses (a) through (f) of this definition; (h) money market funds that
(i) comply with the criteria set forth in SEC Rule 2a-7 under the Investment
Company Act of 1940, as amended, (ii) are rated AAA by S&P and Aaa by Moody’s
and (iii) have portfolio assets of at least $1,000,000,000; (i) interests in
privately offered investment funds under Section 3(c)(7) of the U.S. Investment
Company Act of 1940 where such interests are (i) freely transferable and (ii)
rated AAA by S&P or Aaa by Moody’s; and (j) one month LIBOR floating rate asset
backed securities that are (i) freely transferable and (ii) rated AAA by S&P or
Aaa by Moody’s.
     “Change in Control” means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934, as amended, and the rules of the
Securities and Exchange Commission thereunder as in effect on the date hereof)
of shares representing more than 25% of the aggregate ordinary voting power
represented by the issued and outstanding Capital Stock of the Guarantor;
(b) occupation of a majority of the seats (other than vacant seats) on the board
of directors of the Guarantor by Persons who were neither (i) nominated by the
board of directors of the Guarantor nor (ii) appointed by directors so
nominated; (c) the acquisition of direct or indirect Control of the Guarantor by
any Person or group; or (d) the failure of the Guarantor to own, directly or
indirectly, shares representing 100% of the aggregate ordinary voting power
represented by the issued and outstanding Capital Stock of the Borrower.
     “Change in Law” means (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by the Lender (or, for purposes of
Section 2.9(b), by any lending office of the Lender or by the Lender’s holding
company, if any) with any

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4

request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
     “Charges” has the meaning assigned to such term in Section 10.13.
     “Closing Date” means the date on which the conditions specified in
Section 4.2 are satisfied (or waived in accordance with Section 10.2).
     “Code” means the Internal Revenue Code of 1986, as amended from time to
time.
     “Commitment” means the commitment of the Lender to make Loans, subject to
the terms and conditions of this Agreement, in an amount not to exceed (i)
$3,000,000,000 from the first day in 2008 on which the U.S. Internal Revenue
Service accepts electronic filings of personal tax returns through and including
March 30, 2008 and (ii) thereafter, $120,000,000, as such commitment may be
reduced from time to time pursuant to Section 2.4.
     “Consolidated Net Worth” means, at any time, the total amount of
stockholders’ equity of the Guarantor and its consolidated Subsidiaries at such
time determined on a consolidated basis in accordance with GAAP.
     “Contractual Obligation” means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its property is bound.
     “Control” means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.
     “Control Agreement” means the Investment Account Control Agreement between
the Borrower, the Lender and the Securities Intermediary referred to therein in
substantially the form of Exhibit B hereto.
     “Credit Parties” means the collective reference to the Borrower and the
Guarantor.
     “Default” means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
     “Disclosed Matters” means (a) matters disclosed in the Borrower’s public
filings with the Securities and Exchange Commission prior to January 10, 2008
and (b) the actions, suits, proceedings and environmental matters disclosed in
Schedule 3.6.
     “dollars” or “$” refers to lawful money of the United States of America.

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5

     “Effective Date” means the date on which the conditions specified in
Section 4.1 are satisfied (or waived in accordance with Section 10.2).
     “Environmental Laws” means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, to the
management, release or threatened release of any Hazardous Material or to health
and safety matters.
     “Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of any Credit Party or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
     “ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with any Credit Party, is treated as a single employer under
Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
     “ERISA Event” means (a) any “reportable event”, as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by any Credit Party or any of their ERISA Affiliates of
any liability under Title IV of ERISA with respect to the termination of any
Plan; (e) the receipt by any Credit Party or any ERISA Affiliate from the PBGC
or a plan administrator of any notice relating to an intention to terminate any
Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence
by any Credit Party or any of their ERISA Affiliates of any liability with
respect to the withdrawal or partial withdrawal from any Plan or Multiemployer
Plan; or (g) the receipt by any Credit Party or any ERISA Affiliate of any
notice, or the receipt by any Multiemployer Plan from any Credit Party or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.

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6

     “Eurodollar”, when used in reference to any Loan, means that such Loan is
bearing interest at a rate determined by reference to the LIBO Rate.
     “Events of Default” has the meaning assigned to such term in Article VIII.
     “Excluded Taxes” means, with respect to the Lender or any payment to be
made by or on account of any obligation of the Borrower hereunder, (a) income or
franchise taxes imposed on (or measured by) its net income by the United States
of America, or by the jurisdiction under the laws of which the Lender is
organized or in which its principal office is located or in which its applicable
lending office is located and (b) any branch profits taxes imposed by the United
States of America or any similar tax imposed by any other jurisdiction in which
the Borrower is located.
     “Federal Funds Effective Rate” means for each day, the rate per annum which
is the average of the rates on the offered side of the Federal funds market
quoted by three interbank Federal funds brokers, selected by the Lender, at
approximately 2:00 p.m., New York City time, on such day for dollar deposits in
immediately available funds, in an amount comparable to the outstanding
principal amount of the Loans, as determined by the Lender and rounded upwards,
if necessary, to the nearest 1/100 of 1%.
     “Financial Officer” means the chief financial officer, principal accounting
officer, treasurer or controller of the Borrower or the Guarantor, as the
context may require.
     “GAAP” means generally accepted accounting principles in the United States
of America.
     “Governmental Authority” means the government of the United States of
America, any other nation or any political subdivision thereof, whether state,
provincial or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
     “Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.

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7

     “Guarantee Obligation” means, as to any Person, any obligation of such
Person guaranteeing or in effect guaranteeing any Indebtedness, leases,
dividends or other obligations (the “primary obligations”) of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, including
any obligation of such Person, whether or not contingent, (a) to purchase any
such primary obligation or any property constituting direct or indirect security
therefor, (b) to advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation or
(d) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the term
Guarantee Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business. The amount of any Guarantee
Obligation shall be deemed to be an amount equal as of any date of determination
to the stated determinable amount of the primary obligation in respect of which
such Guarantee Obligation is made (unless such Guarantee Obligation shall be
expressly limited to a lesser amount, in which case such lesser amount shall
apply) or, if not stated or determinable, the amount as of any date of
determination of the maximum reasonably anticipated liability in respect thereof
as determined by such Person in good faith.
     “Guarantor” means H&R Block, Inc., a Missouri corporation.
     “Hazardous Materials” means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
     “Hedging Agreement” means any interest rate protection agreement, foreign
currency exchange agreement, commodity price protection agreement or other
interest or currency exchange rate or commodity price hedging arrangement.
     “HSBC RAL” means “HSBC RAL” as such term is defined in the Appendix of
Defined Terms and Rules of Construction attached as Appendix A to Retail
Settlement Products Distribution Agreement.
     “HSBC TFS” means HSBC Taxpayer Financial Services, Inc., a Delaware
corporation.
     “HSBC TFS Letter” means a letter agreement between the Borrower, HSBC TFS
and the Lender in substantially the form of Exhibit C hereto.
     “Indebtedness” of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar

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8

instruments, (c) all obligations of such Person upon which interest charges are
customarily paid, (d) all obligations of such Person under conditional sale or
other title retention agreements relating to property acquired by such Person,
(e) all obligations of such Person in respect of the deferred purchase price of
property or services (excluding current accounts payable and accrued expenses
incurred in the ordinary course of business), (f) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all Guarantees by such Person of Indebtedness of others,
(h) all Capital Lease Obligations of such Person, (i) all obligations,
contingent or otherwise, of such Person as an account party in respect of
letters of credit and letters of guaranty, (j) all obligations, contingent or
otherwise, of such Person in respect of bankers’ acceptances and (k) for
purposes of Section 6.2 only, all preferred stock issued by a Subsidiary of such
Person. The Indebtedness of any Person shall include the Indebtedness of any
other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person’s ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness provide that such Person is not liable
therefor. Indebtedness of a Person shall not include obligations with respect to
funds held by such Person in custody for, or for the benefit of, third parties
which are to be paid at the direction of such third parties (and are not used
for any other purpose).
     “Indemnified Taxes” means Taxes other than Excluded Taxes.
     “Indemnitee” has the meaning assigned to such term in Section 10.3(b).
     “Indirect RAL Participation Transaction” means any transaction by the
Guarantor or any Subsidiary involving (a) an investment in a partnership,
limited partnership, limited liability company, limited liability partnership,
business trust or other pass-through entity which is partially owned by the
Guarantor or any Subsidiary, (b) the purchase by such pass-through entity of
refund anticipation loans or participation interests in refund anticipation
loans (and/or related rights and interests), and (c) the distribution of cash
flow received by such pass-through entity with respect to such refund
anticipation loans or participation interests therein to the owners of such
pass-through entity.
     “Information” has the meaning assigned to such term in Section 10.12.
     “LIBO Rate” means [***] .
     “Lien” means, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset and (c) in the case of securities, any purchase option,
call or similar right of a third party with respect to such securities; provided
that clause (c) above shall be deemed not to include stock options

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9

granted by any Person to its directors, officers or employees with respect to
the Capital Stock of such Person.
     “Loan Documents” means this Agreement, the Security Agreement, the Control
Agreement, the HSBC TFS Letter and the Notes, if any.
     “Loans” means the loans made by the Lender to the Borrower pursuant to this
Agreement.
     “Margin” means [***] % per annum.
     “Margin Stock” means any “margin stock” as defined in Regulation U of the
Board.
     “Material Adverse Effect” means a material adverse effect on (a) the
business, assets, property or condition (financial or otherwise) of the
Guarantor and the Subsidiaries taken as a whole, (b) the ability of any Credit
Party to perform any of its obligations under this Agreement or (c) the rights
of or benefits available to the Lenders under this Agreement.
     “Material Indebtedness” means Indebtedness (other than the Loans), or
obligations in respect of one or more Hedging Agreements, of any one or more of
the Credit Parties and any Subsidiaries in an aggregate principal amount
exceeding $40,000,000. For purposes of determining Material Indebtedness, the
“principal amount” of the obligations of any Credit Party or any Subsidiary in
respect of any Hedging Agreement at any time shall be the aggregate amount
(giving effect to any netting agreements) that the Credit Party or such
Subsidiary would be required to pay if such Hedging Agreement were terminated at
such time.
     “Material Subsidiary” means any Subsidiary of any Credit Party, other than
OOMC, the aggregate assets or revenues of which, as of the last day of the most
recently ended fiscal quarter for which the Borrower has delivered financial
statements pursuant to Section 5.1(a) or (b), when aggregated with the assets or
revenues of all other Subsidiaries with respect to which the actions
contemplated by Section 6.4 are taken, are greater than 5% of the total assets
or total revenues, as applicable, of the Guarantor and its consolidated
Subsidiaries, in each case as determined in accordance with GAAP.
     “Maximum Rate” has the meaning assigned to such term in Section 10.13.
     “Moody’s” means Moody’s Investors Service, Inc.
     “Multiemployer Plan” means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
     “Notes” means the collective reference to any promissory note evidencing
Loans.
     “Obligations” means, collectively, the unpaid principal of and interest on
the Loans and all other obligations and liabilities of the Borrower (including
interest accruing

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10

at the then applicable rate provided herein after the maturity of the Loans and
interest accruing at the then applicable rate provided herein after the filing
of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
to the Lender, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, this Agreement, the Security Agreement, the Control
Agreement, the HSBC TFS Letter, any Note or any other document made, delivered
or given in connection herewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including all fees and disbursements of counsel to the Lender that are required
to be paid by the Borrower pursuant to the terms of any of the foregoing
agreements).
     “OOMC” means Option One Mortgage Corporation, a California corporation, and
all of its subsidiaries.
     “Other Taxes” means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement.
     “Participant” has the meaning assigned to such term in Section 10.4(c).
     “Participation Agreement” means the First Amended and Restated HSBC Refund
Anticipation Loan and IMA Participation Agreement, dated as of November 13,
2006, as amended from time to time, and any restatement, extension, renewal and
replacement thereof, by and among the Borrower, HSBC Bank USA, National
Association, HSBC TFS and HSBC Trust Company (Delaware), National Association.
     “Participation Interest” means a “Participation Interest” as defined in the
Participation Agreement.
     “PBGC” means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
     “Permitted Encumbrances” means:
     (a) judgment Liens in respect of judgments not constituting an Event of
Default under clause (k) of Article VIII;
     (b) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 5.4;
     (c) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and
other like Liens imposed by law, arising in the ordinary course of business and
securing obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 5.4;

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     (d) pledges and deposits made in the ordinary course of business in
compliance with workers’ compensation, unemployment insurance and other social
security laws or regulations;
     (e) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of business;
and
     (f) easements, zoning restrictions, rights-of-way and similar encumbrances
on real property imposed by law or arising in the ordinary course of business
that do not secure any monetary obligations and do not materially detract from
the value of the affected property or interfere with the ordinary conduct of
business of the Credit Parties or any Subsidiary;
provided that the term “Permitted Encumbrances” shall not include any Lien
securing Indebtedness.
     “Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
     “Plan” means any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which any Credit Party or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
     “Prime Rate” means the rate of interest per annum publicly announced from
time to time by JPMorgan Chase Bank, N.A., as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
     “Proceeding” means any suit, action or proceeding arising out of or
relating to this Agreement, the Security Agreement, the Control Agreement or the
HSBC TFS Letter, or for recognition or enforcement of any judgment.
     “Purchase Price” means “Purchase Price” as such term is defined in the
Appendix of Defined Terms and Rules of Construction attached as Appendix A to
Retail Settlement Products Distribution Agreement.
     “RAL Receivables Amount” means, at any time, the difference (but not less
than zero) between (i) the aggregate amount of funds received by the Guarantor,
any Subsidiary or any qualified or unqualified special purpose entity created by
any Subsidiary with respect to the transfer of refund anticipation loans, or
participation interests in refund anticipation loans (and/or related rights and
interests), to any third party in any RAL Receivables Transaction, at or prior
to such time, minus (ii) the

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12

aggregate amount received by all such third parties with respect to the
transferred refund anticipation loans, or participation interests in refund
anticipation loans (and/or related rights and interests), in all RAL Receivables
Transactions, at or prior to such time, excluding from the amounts received by
such third parties, the aggregate amount of any origination, set up, structuring
or similar fees, all implicit or explicit financing expenses and all
indemnification and reimbursement payments paid to such any third party in
connection with any RAL Receivables Transaction.
     “RAL Receivables Transaction” means any securitization, on — or off —
balance sheet financing or sale transaction, involving refund anticipation
loans, or participation interests in refund anticipation loans (and/or related
rights and interests), that were acquired by the Guarantor, any Subsidiary or
any qualified or unqualified special purpose entity created by any Subsidiary.
     “Related Parties” means, with respect to any specified Person, such
Person’s Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person’s Affiliates.
     “Restricted Margin Stock” means all Margin Stock owned by the Guarantor and
its Subsidiaries to the extent the value of such Margin Stock does not exceed
25% of the value of all assets of the Guarantor and its Subsidiaries (determined
on a consolidated basis) that are subject to the provisions of Section 6.3 and
6.4.
     “Retail Settlement Products Distribution Agreement” means the HSBC Retail
Settlement Products Distribution Agreement, dated as of September 23, 2005, as
amended by the Joinder and First Amendment to Program Contracts dated as of
November 10, 2006 and the Second Amendment to Program Contracts dated as of
November 13, 2006, and as further amended from time to time, and any
restatement, extension, renewal and replacement thereof, by and among the
parties thereto, including, the Lender and the Guarantor.
     “Revolving Credit Exposure” means with respect to the Lender at any time,
the outstanding principal amount of the Lender’s Loans.
     “Revolving Termination Date” means the earlier of (i) June 30, 2008 and
(ii) the first day after April 15, 2008 on which the aggregate outstanding
amount of the Participation Interests purchased by the Borrower in HSBC RALs
under the Participation Agreement which have been financed by the making of
Loans is less than $60,000,000.
     “RSM” means RSM McGladrey, Inc., a Delaware corporation.
     “S&P” means Standard & Poor’s Ratings Services.
     “Security Agreement” means a Security Agreement between the Borrower and
the Lender in substantially the form of Exhibit A hereto.

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     “Servicing Agreement” means the First Amended and Restated HSBC Settlement
Products Servicing Agreement dated as of November 13, 2006 , as amended from
time to time, and any restatement, extension, renewal and replacement thereof,
among HSBC Bank USA, National Association, HSBC TFS, HSBC Trust Company
(Delaware), N.A., and the Borrower.
     “Short-Term Debt” means, at any time, the aggregate amount of Indebtedness
of the Guarantor and its Subsidiaries at such time (excluding seasonal
Indebtedness of H&R Block Canada, Inc.) having a final maturity less than one
year after such time, determined on a consolidated basis in accordance with
GAAP, plus the aggregate amount of Indebtedness at such time under the Bank
Revolvers, minus (a) to the extent otherwise included therein, Indebtedness
outstanding at such time (i) under mortgage facilities secured by mortgages and
related assets, (ii) incurred to fund servicing obligations required as part of
servicing mortgage backed securities in the ordinary course of business,
(iii) incurred and secured by broker-dealer Subsidiaries in the ordinary course
of business and (iv) deposits and other customary banking related liabilities
incurred by banking Subsidiaries in the ordinary course of business, (b) the
excess, if any, of (i) the aggregate amount of cash and Cash Equivalents held at
such time in accounts of the Guarantor and its Subsidiaries (other than
broker-dealer Subsidiaries and banking Subsidiaries) to the extent freely
transferable to the Credit Parties and capable of being applied to the
Obligations without any contractual, legal or tax consequences over (ii)
$15,000,000 and (c) to the extent otherwise included therein, the current
portion of long term debt.
     “Subsidiary” means, with respect to any Person (the “parent”) at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more Subsidiaries of the parent or by the
parent and one or more Subsidiaries of the parent. Notwithstanding the
foregoing, no entity shall be considered a “Subsidiary” solely as a result of
the effect and application of FASB Interpretation No. 46R (Consolidation of
Variable Interest Entities). Unless the context shall otherwise require, all
references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Guarantor, including the Borrower and the
Subsidiaries of the Borrower.
     “Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
     “Total Facility Commitments” means the sum of the total “Commitments” under
and as defined in the Bank Revolvers.

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     “Total Facility Loan Outstandings” has the meaning assigned to such term in
Section 6.2.
     “Transactions” means the execution, delivery and performance by the Credit
Parties of the Loan Documents, the borrowing of Loans, the use of the proceeds
thereof, and the granting of the security provided for in the Security
Agreement.
     “Unrestricted Margin Stock” means all Margin Stock owned by the Guarantor
and its Subsidiaries other than Restricted Margin Stock.
     “Withdrawal Liability” means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
          SECTION 1.2.   Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word “shall”.
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person’s successors and
assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
“asset” and “property” shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
          SECTION 1.3.   Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Lender that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Lender notifies the Borrower that the
Lender requests an amendment to any provision hereof for such purpose),
regardless of whether any such notice is given before or after such change in
GAAP or in the application thereof, then such provision shall be interpreted on
the basis of GAAP as in effect and applied immediately before such change shall
have become effective until such notice shall have been withdrawn or such
provision amended in accordance herewith.

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ARTICLE II
THE CREDITS
          SECTION 2.1.   Commitment. Subject to the terms and conditions set
forth herein (including the proviso at the end of Section 6.2), the Lender
agrees to make revolving loans (“Loans”) to the Borrower from time to time
during the Availability Period in an aggregate principal amount that will not
result in the Lender’s Revolving Credit Exposure exceeding the Lender’s
Commitment as then in effect. Within the foregoing limits and subject to the
terms and conditions set forth herein, the Borrower may borrow, prepay and
reborrow Loans.
          SECTION 2.2.   Loans. Subject to Section 2.8, all Loans shall be
comprised entirely of Eurodollar Loans in accordance herewith. The Lender at its
option may make any Eurodollar Loan by causing any domestic or foreign branch or
Affiliate of such Lender to make such Loan; provided that any exercise of such
option shall not affect the obligation of the Borrower to repay such Loan in
accordance with the terms of this Agreement.
          SECTION 2.3.   Funding of Loans. As provided in the HSBC TFS Letter,
HSBC TFS shall notify the Lender of the aggregate amount of the Purchase Price
for the Participation Interests to be purchased by the Borrower under the
Participation Agreement on any Business Day at the same time as HSBC TFS
notifies the Borrower of such amount, but in any event not later than 9:30 a.m.
New York City time on such Business Day. Subject to the terms and conditions of
this Agreement, the Lender shall make a Loan in the amount so notified in
respect of each Business Day by wire transfer of immediately available funds to
or as instructed by HSBC TFS by 4:30 p.m., New York City time, on such Business
Day; provided, that if the Borrower shall notify the Lender and HSBC TFS not
later than one hour after the notification by HSBC TFS referred to in the
preceding sentence that the Borrower does not wish to borrow all or some of the
amount so notified by HSBC TFS, then the Lender shall make a Loan in such lesser
amount, if any, specified in such notice of the Borrower. The Borrower hereby
irrevocably (i) authorizes and instructs the Lender to make Loans by transfer of
Loan proceeds directly to or as instructed by HSBC TFS as provided in the
preceding sentence and (ii) acknowledges and agrees that Loans will not be
disbursed in any other manner or for any other purpose than to fund the purchase
by the Borrower of Participation Interests in HSBC RALs under the Participation
Agreement. Notices under this Section 2.3 shall be made by telephone discussion
with a representative of the Person being notified (and not by voicemail or
other form of recorded message) and promptly confirmed by fax. Absent manifest
error, the Lender shall be entitled to rely without further inquiry on notices
and information received from HSBC TFS or the Borrower as contemplated in this
Section 2.3
          SECTION 2.4.   Termination and Reduction of Commitment. (a) Unless
previously terminated, the Commitment shall terminate on the Revolving
Termination Date.
          (b) The Borrower may at any time terminate, or from time to time
reduce, the Commitment; provided that (i) each reduction of the Commitment shall
be in an amount that is an integral multiple of $1,000,000 and not less than
$25,000,000 and (ii) the Borrower shall not terminate or reduce the Commitment
if, after giving effect to any concurrent prepayment of the

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Loans in accordance with Section 2.6, the Revolving Credit Exposure would exceed
the Commitment.
          (c) The Borrower shall notify the Lender of any election to terminate
or reduce the Commitment under paragraph (b) of this Section at least three
Business Days prior to the effective date of such termination or reduction,
specifying such election and the effective date thereof. Each notice delivered
by the Borrower pursuant to this Section shall be irrevocable; provided that a
notice of termination of the Commitment delivered by the Borrower may state that
such notice is conditioned upon the effectiveness of other credit facilities, in
which case such notice may be revoked by the Borrower (by notice to the Lender)
on or prior to the specified effective date if such condition is not satisfied.
Any termination or reduction of the Commitment shall be permanent.
          SECTION 2.5.   Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay to the Lender (i) the unpaid principal
amount of the Loans on March 31, 2008 to the extent that such principal amount
exceeds the Commitment on such date and (ii) the then unpaid principal amount of
each Loan on the Revolving Termination Date.
          (b) The Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to the Lender
resulting from each Loan made by the Lender, including the amounts of principal
and interest payable and paid to the Lender from time to time hereunder.
          (c) The entries made in the account maintained pursuant to paragraph
(b) of this Section shall be prima facie evidence of the existence and amounts
of the obligations recorded therein; provided that the failure of the Lender to
maintain such account or any error therein shall not in any manner affect the
obligation of the Borrower to repay the Loans in accordance with the terms of
this Agreement.
          (d) The Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and deliver
to the Lender a promissory note payable to the order of the Lender (or, if
requested by the Lender, to the Lender and its assigns) and in a form approved
by the Lender. Thereafter, the Loans evidenced by such promissory note and
interest thereon shall at all times (including after assignment pursuant to
Section 10.4) be represented by one or more promissory notes in such form
payable to the order of the payee named therein. In addition, upon receipt of an
affidavit of an officer of the Lender as to the loss, theft, destruction or
mutilation of the promissory note, the Borrower will issue, in lieu thereof, a
replacement promissory note in the same principal amount thereof and otherwise
of like tenor.
          SECTION 2.6.   Prepayment of Loans. (a) The Borrower (i) shall have
the right at any time and from time to time voluntarily to prepay the Loans in
whole or in part without premium or penalty, subject to prior notice in
accordance with paragraph (b) of this Section, and (ii) shall prepay the Loans
from time to time in whole or in part without premium or penalty in accordance
with paragraph (c) of this Section.

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17

          (b) The Borrower shall notify the Lender by telephone discussion with
a representative of the Lender (and not by voicemail or other form of recorded
message) (confirmed by telecopy) of any voluntary prepayment of Loans under
Section 2.6(a)(i), not later than 12:00 noon, New York City time, on the date of
prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date and the principal amount of Loans to be prepaid; provided that,
if a notice of prepayment is given in connection with a conditional notice of
termination of the Commitments as contemplated by Section 2.4, then such notice
of prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.4.
          (c) The Borrower shall prepay the principal of the Loans in an amount
equal to (i) 97% of the amount of all payments constituting repayment of HSBC
RALs in which the Borrower has purchased a Participation Interest that has been
financed by the Lender which are remitted to the Borrower by HSBC TFS under
Section 3.4(b)(iii) of the Servicing Agreement, and (ii) 97% of the amount of
all repurchases of Participation Interests by HSBC TFS under Section 6 of the
Participation Agreement as to Participation Interests that have been financed by
the Lender. In the HSBC TFS Letter, the Borrower will irrevocably authorize and
instruct (A) HSBC TFS, as Servicer under the Servicing Agreement, to pay 97% of
all amounts from time to time to be remitted to the Borrower by the Servicer
under Section 3.4(b)(iii) of the Servicing Agreement in respect of Participation
Interests financed by the Lender directly to the Lender for application to the
prepayment of the Loans under this Section 2.6(c) and (B) HSBC TFS to pay 97% of
all amounts otherwise payable to the Borrower in respect of the repurchase under
Section 6 of the Participation Agreement of Participation Interests in HSBC RALs
that have been financed by the Lender directly to the Lender for application to
the prepayment of the Loans under this Section 2.6(c). The Lender shall be
entitled to rely without further inquiry on notices and information received
from HSBC TFS as contemplated in this Section 2.6(c). The Lender shall credit
payments received from HSBC TFS under this Section 2.6(c) to prepayment of the
principal of the Loans on the date of receipt.
          SECTION 2.7.   Interest. (a) The Loans shall bear interest for each
day at a rate per annum equal to [***] .
          (b) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any other amount payable by the Borrower hereunder is not paid when
due, whether at stated maturity, upon acceleration or otherwise, such overdue
amount shall bear interest, after as well as before judgment, at a rate per
annum equal to 3% plus the rate of interest otherwise applicable to the Loans
hereunder.
          (c) Accrued interest on each Loan shall be payable monthly in arrears
on the fifth Business Day of the following month and on the Revolving
Termination Date; provided that interest accrued pursuant to paragraph (b) of
this Section shall be payable on demand. On the second Business Day of such
following month, the Lender shall deliver to the Borrower and HSBC TFS by e-mail
an invoice for the amount of accrued interest on the Loans for the preceding
month, together with a schedule in reasonable detail showing how such amount was
calculated.

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18

          (d) All interest hereunder shall be computed on the basis of a year of
360 days, except that interest computed by reference to the Prime Rate under
Section 2.8 shall be computed on the basis of a year of 365 days (or 366 days in
a leap year), and in each case shall be payable for the actual number of days
elapsed (including the first day but excluding the last day). The LIBO Rate (and
in the case of determinations under Section 2.8, the Federal Funds Effective
Rate and the Prime Rate) shall be determined by the Lender, and such
determination shall be conclusive absent manifest error. The Lender shall as
soon as practicable notify the Borrower of the effective date and the amount of
each change in interest rate.
          SECTION 2.8.   Alternate Rate of Interest. If at any time:
          (a) the Lender determines (which determination shall be conclusive
absent manifest error) that adequate and reasonable means do not exist for
ascertaining the LIBO Rate; or
          (b) the Lender determines that the LIBO Rate will not adequately and
fairly reflect the cost to the Lender of making or maintaining Loans;
then the Lender shall give notice thereof to the Borrower by telephone or
telecopy as promptly as practicable thereafter and, until the Lender notifies
the Borrower that the circumstances giving rise to such notice no longer exist,
the Loans shall bear interest at a rate per annum equal to, for any day, a rate
per annum equal to the greater of (a) the Prime Rate in effect on such day [***]
, and (b) the Federal Funds Effective Rate in effect on such day [***] . Any
change in the Prime Rate or the Federal Funds Effective Rate shall be effective
from and including the effective date of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.
          SECTION 2.9.   Increased Costs. (a) If any Change in Law shall:
     (i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of, or
credit extended by, the Lender; or
     (ii) impose on the Lender or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans made by the Lender;
and the result of any of the foregoing shall be to increase the cost to the
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to the Lender or to
reduce the amount of any sum received or receivable by the Lender hereunder
(whether of principal, interest or otherwise), then the Borrower will pay to the
Lender such additional amount or amounts as will compensate the Lender for such
additional costs incurred or reduction suffered.
          (b) If the Lender determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on the
Lender’s capital or on the capital of the Lender’s holding company, if any, as a
consequence of this Agreement or the Loans made by the Lender to a level below
that which the Lender or the Lender’s holding

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19

company could have achieved but for such Change in Law (taking into
consideration the Lender’s policies and the policies of the Lender’s holding
company with respect to capital adequacy), then from time to time the Borrower
will pay to the Lender such additional amount or amounts as will compensate the
Lender or the Lender’s holding company for any such reduction suffered.
          (c) A certificate of the Lender setting forth the amount or amounts
necessary to compensate the Lender or its holding company, as the case may be,
as specified in paragraph (a) or (b) of this Section (together with a statement
of the reason for such compensation and a calculation thereof in reasonable
detail) shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay the Lender the amount shown as due on any
such certificate within 10 days after receipt thereof.
          (d) Failure or delay on the part of the Lender to demand compensation
pursuant to this Section shall not constitute a waiver of the Lender’s right to
demand such compensation; provided that the Borrower shall not be required to
compensate the Lender pursuant to this Section for any increased costs or
reductions incurred more than six months prior to the date that the Lender
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of the Lender’s intention to claim compensation therefor;
provided, further, that, if the Change in Law giving rise to such increased
costs or reductions is retroactive, then the six-month period referred to above
shall be extended to include the period of retroactive effect thereof.
          SECTION 2.10.   Taxes. (a) Any and all payments by or on account of
any obligation of the Borrower or the Guarantor hereunder shall be made free and
clear of and without deduction for any Indemnified Taxes or Other Taxes;
provided that if the Borrower or the Guarantor shall be required to deduct any
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Lender receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower or the Guarantor shall make such
deductions and (iii) the Borrower or the Guarantor shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law.
          (b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
          (c) The Borrower shall indemnify the Lender, within 10 days after
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) paid by the Lender and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the
Borrower by the Lender shall be conclusive absent manifest error.

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          (d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Lender the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Lender.
          SECTION 2.11.   Payments Generally. (a) The Borrower shall make each
payment required to be made by it hereunder (whether of principal or interest,
or under Section 2.9 or 2.10, or otherwise) prior to 12:00 noon, New York City
time, on the date when due, in immediately available funds, without set-off or
counterclaim. Any amounts received after such time on any date may, in the
discretion of the Lender, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Lender at its account at HSBC Bank USA, N.A., Buffalo,
N.Y., ABA #021001088, Cash Ops W/T, A/C #001842609, or at such other bank or
account as it shall specify from time to time by notice in writing to the
Borrower. If any payment hereunder shall be due on a day that is not a Business
Day, the date for payment shall be extended to the next succeeding Business Day,
and, in the case of any payment accruing interest, interest thereon shall be
payable for the period of such extension. All payments hereunder shall be made
in dollars. Notwithstanding the foregoing, this Section 2.11 shall not apply to
payments by HSBC TFS as contemplated by Section 2.6(c).
          (b) If at any time insufficient funds are received by and available to
the Lender to pay fully all amounts of principal, interest and any other amounts
then due hereunder, such funds shall be applied (i) first, to pay interest then
due hereunder, (ii) second, to pay principal then due hereunder, and
(iii) third, any other amounts due and owing hereunder.
          SECTION 2.12.   Mitigation Obligations. If the Lender requests
compensation under Section 2.9, or if the Borrower is required to pay any
additional amount to the Lender or any Governmental Authority for the account of
the Lender pursuant to Section 2.10, then the Lender shall use reasonable
efforts to designate a different lending office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the judgment of the Lender, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant
to Section 2.9 or 2.10, as the case may be, in the future and (ii) would not
subject the Lender to any unreimbursed cost or expense and would not otherwise
be disadvantageous to the Lender. The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by the Lender in connection with any such
designation or assignment.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
          Each of the Credit Parties represents and warrants to the Lender that:

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          SECTION 3.1.   Organization; Powers. Each of the Credit Parties and
the Subsidiaries is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, has the power and authority to
carry on its business as now conducted and, except where the failure to be so,
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required. The
Borrower was converted from a Delaware corporation known as “Block Financial
Corporation” on January 1, 2008 pursuant to Section 18-214 of the Delaware
Limited Liability Company Act.
          SECTION 3.2.   Authorization; Enforceability. The Transactions are
within each Credit Party’s corporate or limited liability company, as the case
may be, powers and have been duly authorized by all necessary corporate or
limited liability company, as the case may be, and, if required, stockholder or
member, as the case may be, action. This Agreement has been duly executed and
delivered by each Credit Party and constitutes a legal, valid and binding
obligation of each Credit Party, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors’ rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
          SECTION 3.3.   Governmental Approvals; No Conflicts. The Transactions
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except such as have been
obtained or made and are in full force and effect, (b) will not violate any
applicable law or regulation or the charter, by-laws, operating agreement or
other organizational documents of any Credit Party or any Subsidiary or any
order of any Governmental Authority, (c) will not violate or result in a default
under any indenture, material agreement or other instrument (other than those to
be terminated on or prior to the Closing Date) binding upon any Credit Party or
any Subsidiary or their assets, or give rise to a right thereunder to require
any payment to be made by any Credit Party or any Subsidiary, and (d) except as
provided in the Loan Documents, will not result in the creation or imposition of
any Lien on any asset of any Credit Party or any Subsidiary.
          SECTION 3.4.   Financial Condition; No Material Adverse Change.
(a) Each Credit Party has heretofore furnished to the Lender consolidated
balance sheets and statements of income and cash flows (and, in the case of the
Guarantor, of stockholders’ equity) (i) as of and for the fiscal year ended
April 30, 2007 (A) reported on by KPMG LLP, an independent registered public
accounting firm, in respect of the financial statements of the Guarantor, and
(B) certified by its chief financial officer, in respect of the financial
statements of the Borrower, and (ii) as of and for the fiscal quarter and the
portion of the fiscal year ended October 31, 2007. Such financial statements
present fairly, in all material respects, the financial position and results of
operations and cash flows of the Borrower and its consolidated Subsidiaries and
of the Guarantor and its consolidated Subsidiaries as of such date and for such
period in accordance with GAAP. Except as set forth on Schedule 3.4(a), neither
the Guarantor nor any of its consolidated Subsidiaries had, at the date of the
most recent balance sheet referred to above, any material Guarantee Obligation,
contingent liability or liability for taxes, or any long-term lease or unusual
forward or long-term commitment, including any interest rate or foreign currency
swap or exchange transaction not in the ordinary course of business, which is
not reflected in the

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foregoing statements or in the notes thereto. During the period from April 30,
2007 to and including the date hereof, and except as disclosed in filings made
by the Guarantor with the U.S. Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, there has been no sale, transfer or other disposition by the
Guarantor or any of its consolidated Subsidiaries of any material part of its
business or property other than in the ordinary course of business and no
purchase or other acquisition of any business or property (including any Capital
Stock of any other Person), material in relation to the consolidated financial
condition of the Guarantor and its consolidated Subsidiaries at April 30, 2007.
          (b) From April 30, 2007 through the Effective Date, there has been no
material adverse change in the business, assets, property or condition
(financial or otherwise) of the Guarantor and its Subsidiaries, taken as a
whole.
          SECTION 3.5.   Properties. (a) Each of the Credit Parties and the
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business, except for minor defects in
title that do not interfere with its ability to conduct its business as
currently conducted or to utilize such properties for their intended purposes.
          (b) Each of the Credit Parties and the Subsidiaries owns, or is
licensed to use, all trademarks, tradenames, copyrights, patents and other
intellectual property material to its business, and the use thereof by the
Credit Parties and the Subsidiaries does not infringe upon the rights of any
other Person, except for any such infringements that, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect.
          SECTION 3.6.   Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of any Credit Party, threatened
against or affecting any Credit Party or any Subsidiary that (i) have not been
disclosed in the Disclosed Matters and as to which there is a reasonable
possibility of an adverse determination and that, if adversely determined, would
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect or (ii) challenge or would reasonably be expected to
affect the legality, validity or enforceability of this Agreement.
          (b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect, neither of the Credit Parties
nor any Subsidiary (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
          SECTION 3.7.   Compliance with Laws and Agreements. Each of the Credit
Parties and the Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property,
except where the failure to be so, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect.

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          SECTION 3.8.   Investment Company Status. Neither of the Credit
Parties nor any of the Subsidiaries is an “investment company” as defined in, or
subject to regulation under, the Investment Company Act of 1940, as amended.
          SECTION 3.9.   Taxes. Each of the Credit Parties and the Subsidiaries
has timely filed or caused to be filed all Tax returns and reports required to
have been filed and has paid or caused to be paid all Taxes required to have
been paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Guarantor, the Borrower or such
Subsidiary, as applicable, has set aside on its books adequate reserves or
(b) to the extent that the failure to do so would not reasonably be expected to
result in a Material Adverse Effect.
          SECTION 3.10.   ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, would reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $25,000,000 the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $25,000,000 the fair
market value of the assets of all such underfunded Plans.
          SECTION 3.11.   Disclosure. None of the reports, financial statements,
certificates or other information furnished by or on behalf of the Credit
Parties to the Lender in connection with the negotiation of this Agreement or
delivered hereunder (as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with
respect to projected financial information, the Credit Parties represent only
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time.
          SECTION 3.12.   Federal Regulations. No part of the proceeds of any
Loans will be used for “purchasing” or “carrying” any “margin stock” (within the
respective meanings of each of the quoted terms under Regulation U of the Board
as now and from time to time hereafter in effect) in a manner or in
circumstances that would constitute or result in non-compliance by any Credit
Party or the Lender with the provisions of Regulations U, T or X of the Board.
If requested by the Lender, the Borrower will furnish to the Lender a statement
to the foregoing effect in conformity with the requirements of FR Form U-1
referred to in said Regulation U.
          SECTION 3.13.   Subsidiaries. As of the date hereof, the Guarantor has
only the Subsidiaries set forth on Schedule 3.13.
          SECTION 3.14.   Insurance. Each Credit Party and each Subsidiary of
each Credit Party maintains (pursuant to a self-insurance program and/or with
financially sound and reputable insurers) insurance with respect to its
properties and business and against at least such

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liabilities, casualties and contingencies and in at least such types and amounts
as is customary in the case of companies engaged in the same or a similar
business or having similar properties similarly situated.
ARTICLE IV
CONDITIONS
          SECTION 4.1.   Effective Date. Except as otherwise provided in
Sections 4.2 and 4.3, this Agreement shall become effective on the date on which
each of the following conditions is satisfied (or waived in accordance with
Section 10.2):
          (a) The Lender (or its counsel) shall have received from each party
hereto a counterpart of this Agreement signed on behalf of such party.
          SECTION 4.2.   Closing Date. The obligations of the Lender to make
Loans hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 10.2):
          (a) The Effective Date shall have occurred.
          (b) The Lender shall have received a reasonably satisfactory written
opinion (addressed to the Lender and dated the Closing Date) of Stinson Morrison
Hecker LLP, special counsel for the Credit Parties, substantially in the form of
Exhibit D hereto, and covering such other matters relating to the Credit
Parties, the Loan Documents or the Transactions as the Lender shall reasonably
request. The Credit Parties hereby request such counsel to deliver such opinion.
          (c) The Lender shall have received such documents and certificates as
the Lender or its counsel may reasonably request relating to the organization,
existence and good standing of the Credit Parties, the authorization of the
Transactions and any other legal matters relating to the Credit Parties, the
Loan Documents or the Transactions, all in form and substance satisfactory to
the Lender and its counsel.
          (d) The Lender shall have received a certificate, dated the Closing
Date and signed by the President, a Vice President or a Financial Officer of
each Credit Party, confirming compliance with the conditions set forth in
paragraphs (a) and (b) of Section 4.3.
          (e) All governmental and material third party approvals necessary in
connection with the execution, delivery and performance of this Agreement, the
Security Agreement, the Control Agreement and the HSBC TFS Letter shall have
been obtained and be in full force and effect.
          (f) The Lender shall have received a counterpart of the Security
Agreement, duly executed and delivered by the Borrower, and a counterpart of the
HSBC TFS Letter, duly executed and delivered by the parties thereto; and all
filings and other actions necessary or

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appropriate to perfect the security interest created by the Security Agreement
shall have been made or taken.
          (g) The Lender shall have received the results of searches of Uniform
Commercial Code filings in such jurisdictions as it shall deem appropriate and
such searches shall not reveal any filing that remains in effect and that
describes any of the “Collateral” referred to in the Security Agreement.
          (h) The Borrower shall have invested $60,000,000 in the HSBC Investor
Money Market Fund managed by HSBC Investments (USA), Inc. and the Lender shall
have received a counterpart of the Control Agreement with respect to that
investment, duly executed and delivered by the parties thereto.
The Lender shall notify the Borrower of the Closing Date, and such notice shall
be conclusive and binding. Notwithstanding the foregoing, the obligation of the
Lender to make Loans hereunder shall not become effective unless each of the
foregoing conditions is satisfied (or waived pursuant to Section 10.2) at or
prior to the Closing Date.
          SECTION 4.3.   Each Loan. The obligation of the Lender to make each
Loan is subject to the satisfaction of the following conditions:
          (a) The representations and warranties of the Credit Parties set forth
in Article III of this Agreement (other than the representations and warranties
set forth in subsections 3.4(b), 3.6(a)(i) and 3.6(b)) shall be true and correct
in all material respects on and as of the date of such Loan (except to the
extent related to a specific earlier date).
          (b) At the time of and immediately after giving effect to such Loan,
no Event of Default shall have occurred and be continuing.
Each Loan shall be deemed to constitute a representation and warranty by each of
the Credit Parties on the date thereof as to the matters specified in paragraphs
(a) and (b) of this Section.
ARTICLE V
AFFIRMATIVE COVENANTS
          Until the Commitment has expired or been terminated and the principal
of and interest on each Loan shall have been paid in full, each of the Credit
Parties covenants and agrees with the Lender that:
          SECTION 5.1.   Financial Statements and Other Information. The
Borrower will furnish to the Lender:
          (a) within 90 days after the end of each fiscal year of the Guarantor,
an audited consolidated balance sheet and related statements of operations,
stockholders’ equity and cash flows of the Guarantor and its consolidated
Subsidiaries as of the end of and for such year,

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26

setting forth in each case in comparative form the figures for the previous
fiscal year, all reported on by Deloitte & Touche LLP or another independent
registered public accounting firm of recognized national standing (without a
“going concern” or like qualification or exception and without any qualification
or exception as to the scope of such audit) to the effect that such consolidated
financial statements present fairly in all material respects the financial
condition and results of operations of the Guarantor and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied;
          (b) (i) in the case of the Guarantor, within 45 days after the end of
each of the first three fiscal quarters of each fiscal year of the Guarantor and
(ii) in the case of the Borrower, within 90 days after the end of each fiscal
year of the Borrower, consolidated balance sheets and related statements of
operations and cash flows of the Borrower and the Guarantor and their
consolidated Subsidiaries, and the consolidated statement of stockholders’
equity of the Guarantor, as of the end of and for such fiscal quarter (in the
case of the Guarantor) and the then elapsed portion of the fiscal year, setting
forth in each case in comparative form the figures for the corresponding period
or periods of (or, in the case of the balance sheet, as of the end of) the
previous fiscal year, all certified by a Financial Officer of the Borrower and
the Guarantor as presenting fairly in all material respects the financial
condition and results of operations of the Borrower and the Guarantor and their
consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes;
          (c) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the Borrower
and the Guarantor (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations demonstrating compliance with Section 6.1 and
(iii) stating whether any change in GAAP or in the application thereof has
occurred since the date of the audited financial statements referred to in
Section 3.4 and, if any such change has occurred, specifying the effect of such
change on the financial statements accompanying such certificate;
          (d) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials (other than
(i) statements of ownership such as Forms 3, 4 and 5 and Schedule 13G,
(ii) routine filings relating to employee benefits, such as Forms S-8 and 11-K,
and (iii) routine filings by (A) HRB Financial Corporation and its Subsidiaries,
including H&R Block Financial Advisors, Inc., (B) RSM McGladrey, Inc. and its
Subsidiaries, including Birchtree Financial Services, Inc., (C) RSM Equico, Inc.
and its Subsidiaries, including RSM Equico Capital Markets, LLC, (D) Option One
Mortgage Corporation, (E) H&R Block Canada, Inc. and (F) H&R Block Limited)
filed by any Credit Party or any Subsidiary with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of the
functions of said Commission, or with any national securities exchange, or
distributed by any Credit Party to its shareholders generally, as the case may
be;
          (e) a copy of any notice given by the Borrower under Section 4.1(b),
Section 4.4(c) or Section 4.8 of the Participation Agreement, such copy to be
provided at the same time as such notice is given under the Participation
Agreement; and

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          (f) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of any Credit
Party or any Subsidiary, or compliance with the terms of this Agreement, as the
Lender may reasonably request.
          SECTION 5.2. Notices of Material Events. The Borrower will furnish to
the Lender prompt written notice of the following:
          (a) the occurrence of any Default;
          (b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting any Credit
Party or any Affiliate thereof that is reasonably likely to be adversely
determined and, if so determined, would reasonably be expected to result in a
Material Adverse Effect;
          (c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, would reasonably be expected to result in
liability of the Borrower, the Guarantor or any Subsidiary in an aggregate
amount exceeding $25,000,000; and
          (d) any other development that results in, or would reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower and the Guarantor
setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto.
          SECTION 5.3. Existence; Conduct of Business. Each Credit Party will,
and will cause each of the Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business; provided that the foregoing shall not prohibit
any merger, consolidation, liquidation, disposition or dissolution permitted
under Section 6.4.
          SECTION 5.4. Payment of Taxes. Each Credit Party will, and will cause
each of the Subsidiaries to, pay its Tax liabilities that, if not paid, would
reasonably be expected to have a Material Adverse Effect before the same shall
become delinquent, except where (a) the validity or amount thereof is being
contested in good faith by appropriate proceedings, (b) such Credit Party or
such Subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP and (c) the failure to make payment pending such
contest would not reasonably be expected to result in a Material Adverse Effect.
          SECTION 5.5. Maintenance of Properties; Insurance. Each Credit Party
will, and will cause each of the Subsidiaries to, (a) keep and maintain all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted, and (b) maintain (pursuant to a
self-insurance program and/or with financially sound and reputable insurers)
insurance in such amounts and against such risks as is customarily maintained

 

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by companies engaged in the same or similar businesses operating in the same or
similar locations.
          SECTION 5.6. Books and Records; Inspection Rights. Each Credit Party
will, and will cause each of the Subsidiaries to, keep proper books of record
and account in which full, true and correct entries are made of all dealings and
transactions in relation to this Agreement and the transactions contemplated
hereby. Each Credit Party will, and will cause each of the Subsidiaries to,
permit any representatives designated by the Lender, upon reasonable prior
notice, to visit and inspect its properties, to examine and make extracts from
its books and records, and to discuss its affairs, finances and condition with
its officers and independent accountants, all at such reasonable times and as
often as reasonably requested; provided that so long as no Event of Default
exists, each Credit Party and each Subsidiary shall have the right to be present
and participate in any discussions with its independent accountants. Nothing in
this Section 5.6 shall permit the Lender to examine or otherwise have access to
the tax returns or other confidential information of any customer of either
Credit Party or any of their respective Subsidiaries.
          SECTION 5.7. Compliance with Laws. Each Credit Party will, and will
cause each of the Subsidiaries to, comply with all laws, rules, regulations and
orders of any Governmental Authority applicable to it or its property, except
where the failure to do so, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect.
          SECTION 5.8. Use of Proceeds. The proceeds of the Loans will be used
only to purchase Participation Interests in HSBC RALs pursuant to the
Participation Agreement. No part of the proceeds of any Loan will be used,
whether directly or indirectly, for any purpose that entails a violation of any
of the regulations of the Board, including Regulations U and X.
          SECTION 5.9 Additional Collateral. The Borrower shall provide
additional collateral to the Lender from time to time as provided in the
Security Agreement.
ARTICLE VI
NEGATIVE COVENANTS
          Until the Commitment has expired or terminated and the principal of
and interest on each Loan have been paid in full, each of the Credit Parties
covenants and agrees with the Lender that:
          SECTION 6.1. Adjusted Net Worth. The Guarantor will not permit
Adjusted Net Worth as at the last day of any fiscal quarter of the Guarantor to
be less than (a) for the fiscal quarter ending on January 31, 2008, $800,000,000
and (b) for each other fiscal quarter, $1,000,000,000.

 

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          SECTION 6.2. Indebtedness. The Credit Parties will not, and will not
permit any Subsidiary to create, incur, assume or permit to exist any
Indebtedness, except:
          (a) subject to the proviso at the end of this Section 6.2,
Indebtedness created under the Bank Revolvers;
          (b) Indebtedness existing on the date hereof and set forth in
Schedule 6.2 and extensions, renewals and replacements of any such Indebtedness
that do not increase the outstanding principal amount thereof;
          (c) seasonal Indebtedness of H&R Block Canada, Inc., provided that the
aggregate principal amount of all such Indebtedness incurred pursuant to this
subsection (c) shall not exceed 250,000,000 Canadian dollars at any time
outstanding;
          (d) Indebtedness of the Borrower and the Guarantor, provided that
(i) the obligations of the Credit Parties hereunder shall rank at least pari
passu with such Indebtedness (including with respect to security) and (ii) the
aggregate principal amount of all Indebtedness permitted by this subsection
(d) shall not exceed $2,000,000,000 at any time outstanding;
          (e) subject to the proviso at the end of this Section 6.2,
(i) Indebtedness in connection with commercial paper issued in the United States
through the Borrower which is guaranteed by the Guarantor and (ii) Indebtedness
under bank lines of credit or similar facilities;
          (f) Indebtedness in connection with Guarantees of the performance of
any Subsidiary’s obligations under or pursuant to (i) indemnity, fee, daylight
overdraft and other similar customary banking arrangements between such
Subsidiary and one or more financial institutions in the ordinary course of
business, (ii) any office lease entered into in the ordinary course of business,
and (iii) any promotional, joint-promotional, cross-promotional, joint
marketing, service, equipment or supply procurement, software license or other
similar agreement entered into by such Subsidiary with one or more vendors,
suppliers, retail businesses or other third parties in the ordinary course of
business, including indemnification obligations relating to such Subsidiary’s
failure to perform its obligations under such lease or agreement;
          (g) acquisition-related Indebtedness (either incurred or assumed) and
Indebtedness in connection with the Guarantor’s guarantees of the payment or
performance of primary obligations of Subsidiaries of the Guarantor in
connection with acquisitions by such Subsidiaries, or Indebtedness secured by
Liens permitted under subsection 6.3(f); provided that, during any fiscal year,
the aggregate outstanding principal amount of all Indebtedness incurred pursuant
to this subsection 6.2(g) shall not exceed at any time $325,000,000;
          (h) Indebtedness of any Credit Party to any other Credit Party, of any
Credit Party to any Subsidiary, of any Subsidiary to any Credit Party and of any
Subsidiary to any other Subsidiary; provided that such Indebtedness shall not be
prohibited by Section 6.5;
          (i) Indebtedness in connection with repurchase agreements pursuant to
which mortgage loans of a Credit Party or a Subsidiary are sold with the
simultaneous agreement to repurchase the mortgage loans at the same price plus
interest at an agreed upon rate; provided

 

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that the aggregate outstanding principal amount of all Indebtedness incurred
pursuant to this subsection 6.2(i) shall not at any time exceed $500,000,000;
provided, further, that no agreed upon repurchase date shall be later than 90
business days after the date of the corresponding repurchase agreement;
          (j) Indebtedness in connection with Guarantees or Guarantee
Obligations which are made, given or undertaken as representations and
warranties, indemnities or assurances of the payment or performance of primary
obligations in connection with securitization transactions or other transactions
permitted hereunder, as to which primary obligations the primary obligor is a
Credit Party, a Subsidiary or a securitization trust or similar securitization
vehicle to which a Credit Party or a Subsidiary sold, directly or indirectly,
the relevant mortgage loans;
          (k) Indebtedness of RSM, a Subsidiary of the Guarantor, to McGladrey &
Pullen, LLP (“M&P”) and certain related trusts under (i) that certain Asset
Purchase Agreement dated as of June 28, 1999 among RSM, M&P, the Guarantor and
certain other parties signatory thereto (the “M&P Purchase Agreement”) and
(ii) the Retired Partners Agreement and the Loan Agreement (as such terms are
defined in the M&P Purchase Agreement); provided that the aggregate outstanding
principal amount payable in respect of such Indebtedness permitted under this
paragraph (k) shall not exceed $200,000,000 at any time;
          (l) Indebtedness in connection with (i) Capital Lease Obligations in
an aggregate outstanding principal amount not at any time exceeding $50,000,000
(excluding any Capital Lease Obligations permitted by subsection 6.2(p)),
(ii) obligations under existing mortgages in an aggregate outstanding principal
amount not exceeding $12,000,000 at any time, (iii) securities sold and not yet
purchased, provided that the aggregate outstanding principal amount of all
Indebtedness incurred pursuant to this clause (iii) (other than Indebtedness of
Subsidiaries which act as broker-dealers) shall not at any time exceed
$15,000,000, (iv) customer deposits in the ordinary course of business,
(v) payables to brokers and dealers in the ordinary course of business and (vi)
reimbursement obligations of broker-dealers relating to letters of credit in
favor of a clearing corporation or Indebtedness of broker-dealers under other
credit facilities, provided that (A) such letters of credit or such other credit
facilities are used solely to satisfy margin deposit requirements and (B) the
aggregate outstanding exposure of the Guarantor and the Subsidiaries under all
such letters of credit and all such other credit facilities shall not exceed
$200,000,000 at any time;
          (m) subject to the proviso at the end of this Section 6.2,
Indebtedness incurred in connection with the Borrower’s Refund Anticipation Loan
Program, including any Indirect RAL Participation Transaction; provided that
(i) such Indebtedness is incurred during the period beginning on January 2 of
any year and ending on June 29 of such year, (iii) such Indebtedness is repaid
in full by June 30 of the year in which such Indebtedness is incurred and
(iii) the covenants contained in any agreement relating to such Indebtedness, or
guarantee thereof (other than covenants specific to the Borrower’s Refund
Anticipation Loan Program and the operation thereof), are no more restrictive
than the covenants contained in this Agreement;
          (n) subject to the proviso at the end of this Section 6.2, liabilities
related to the RAL Receivables Transactions to the extent consistent with the
definition thereof;

 

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          (o) Indebtedness in respect of letters of credit in an aggregate
outstanding principal amount not to exceed $100,000,000;
          (p) Indebtedness in an amount not exceeding $150,000,000 in connection
with the acquisition, development or construction of the Guarantor’s new
headquarters;
          (q) deposits and other liabilities incurred by banking Subsidiaries in
the ordinary course of business;
          (r) customary liabilities of broker-dealers incurred by broker-dealer
Subsidiaries in the ordinary course of business;
          (s) Indebtedness issued by a Subsidiary of the Borrower and primarily
secured by mortgage loans sold as contemplated by Section 6.5(c) hereof to such
Subsidiary by another Subsidiary of the Borrower;
          (t) Indebtedness secured by Liens permitted by subsection 6.3(d) or
6.3(e);
          (u) Indebtedness incurred solely to finance businesses described on
Schedule 6.4(b) after the date hereof that neither the Credit Parties nor their
respective Subsidiaries are currently engaged in to any material extent on the
date hereof; provided that the aggregate principal amount of all Indebtedness
incurred pursuant to this clause (u) shall not at any time exceed $400,000,000;
and
          (v) other Indebtedness (excluding Indebtedness of the types described
in subsections 6.2(a), 6.2(b)(ii), 6.2(e) and 6.2(m)) in an aggregate principal
amount not at any time exceeding $20,000,000;
provided, that the sum of the aggregate outstanding principal amount of all
Indebtedness permitted pursuant to subsections 6.2(a), 6.2(e) and 6.2(m) plus
the RAL Receivables Amount shall not at any time exceed the greater of (x) the
Total Facility Commitments then in effect or (y) the sum of the then outstanding
principal amount of the “Loans” under the Bank Revolvers (such sum, the “Total
Facility Loan Outstandings”), except that, during the period from January 2 of
any year through June 30 of such year, such sum may exceed the greater of the
Total Facility Commitments then in effect or the then Total Facility Loan
Outstandings by an amount up to the total of (A) the aggregate outstanding
principal amount of Indebtedness described in Section 6.2(m) and (B)
$500,000,000.
          SECTION 6.3. Liens. Each Credit Party will not, and will not permit
any Subsidiary to, create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it, or assign or sell any
income or revenues (including accounts receivable) or rights in respect of any
thereof, except:
          (a) Permitted Encumbrances;
          (b) (i) any Lien created under or securing a Bank Revolver and
(ii) any Lien on any property or asset of any Credit Party or any Subsidiary
existing on the date hereof and set

 

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forth in Schedule 6.3; provided that (i) such Lien shall not apply to any other
property or asset of any Credit Party or any Subsidiary and (ii) such Lien shall
secure only those obligations which it secures on the date hereof and
extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof;
          (c) any Lien existing on any property or asset prior to the
acquisition thereof by any Credit Party or any Subsidiary or existing on any
property or asset of any Person that becomes a Subsidiary after the date hereof
prior to the time such Person becomes a Subsidiary; provided that (i) such Lien
is not created in contemplation of or in connection with such acquisition or
such Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not
apply to any other property or assets of any Credit Party or any Subsidiary and
(iii) such Lien shall secure only those obligations which it secures on the date
of such acquisition or the date such Person becomes a Subsidiary, as the case
may be, and extensions, renewals and replacements thereof that do not increase
the outstanding principal amount thereof;
          (d) Liens and transfers in connection with the securitization,
financing or other transfer of any mortgage loans or mortgage servicing
reimbursement rights (and/or, in each case, related rights, interests and
servicing assets) owned by the Borrower or any of its Subsidiaries;
          (e) Liens and transfers in connection with the securitization or other
transfer of any credit card receivables (and/or related rights and interests)
owned by the Borrower or any of its Subsidiaries;
          (f) Liens on fixed or capital assets acquired, constructed or improved
by any Credit Party or any Subsidiary to secure Indebtedness of such Credit
Party or such Subsidiary incurred to finance the acquisition, construction or
improvement of such fixed or capital assets; provided that (i) such Liens and
the Indebtedness secured thereby are incurred prior to or within 90 days after
such acquisition or the completion of such construction or improvement, (ii) the
Indebtedness secured thereby does not exceed 100% of the cost of acquiring,
constructing or improving such fixed or capital assets and (iii) such Liens
shall not apply to any other property or assets of any Credit Party or any
Subsidiary;
          (g) Liens arising in connection with repurchase agreements
contemplated by Section 6.2(i); provided that such security interests shall not
apply to any property or assets of any Credit Party or any Subsidiary except for
the mortgage loans or securities, as applicable, subject to such repurchase
agreements;
          (h) Liens arising in connection with Indebtedness permitted by
Sections 6.2(l)(v) or 6.2(q), which Liens are granted in the ordinary course of
business;
          (i) Liens not otherwise permitted by this Section 6.3 so long as the
Obligations hereunder are contemporaneously secured equally and ratably with the
obligations secured thereby;

 

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          (j) Liens not otherwise permitted by this Section 6.3, so long as the
aggregate outstanding principal amount of the obligations secured thereby does
not exceed (as to the Credit Parties and all Subsidiaries) $250,000,000 at any
one time;
          (k) Liens and transfers in connection with the RAL Receivables
Transaction;
          (l) Liens securing Indebtedness permitted by subsection 6.2(u); and
          (m) Liens on Unrestricted Margin Stock.
          SECTION 6.4. Fundamental Changes; Sale of Assets. (a) Each Credit
Party will not, and will not permit any Material Subsidiary to, merge into or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or sell, transfer, lease or otherwise dispose of (in one
transaction or in a series of transactions) all or substantially all of its
assets (other than Unrestricted Margin Stock), or all or substantially all of
the stock or assets related to its tax preparation business or liquidate or
dissolve, except (i) transfers in connection with the RAL Receivables
Transaction and other securitizations otherwise permitted hereby, (ii) sales and
other transfers of mortgage loans (and/or related rights and interests and
servicing assets) and (iii) if at the time thereof and immediately after giving
effect thereto no Default shall have occurred and be continuing, (A) any
Material Subsidiary other than the Borrower may merge into a Credit Party in a
transaction in which the Credit Party is the surviving Person, (B) any wholly
owned Material Subsidiary other than the Borrower may merge into any other
wholly owned Material Subsidiary in a transaction in which the surviving entity
is a wholly owned Subsidiary, (C) any Material Subsidiary other than the
Borrower may sell, transfer, lease or otherwise dispose of its assets to the
Guarantor or to another Material Subsidiary and (D) any Material Subsidiary
other than the Borrower may liquidate or dissolve if the Guarantor determines in
good faith that such liquidation or dissolution is in the best interests of the
Guarantor and is not materially disadvantageous to the Lender; provided that any
such merger involving a Person that is not a wholly owned Subsidiary immediately
prior to such merger shall not be permitted unless also permitted by
Section 6.5.
          (b) Except as set forth on Schedule 6.4(b), the Credit Parties will
not, and will not permit any Material Subsidiary to, engage to any material
extent in any business other than businesses of the type conducted by the Credit
Parties and the Subsidiaries on August 10, 2005 and businesses reasonably
related thereto.
          SECTION 6.5. Transactions with Affiliates. Each Credit Party will not,
and will not permit any Subsidiary to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) in the ordinary course of business at prices and on terms
and conditions not less favorable to such Credit Party or such Subsidiary than
could be obtained on an arm’s-length basis from unrelated third parties,
(b) transactions between or among the Guarantor and/or its Subsidiaries not
involving any other Affiliate, and (c) transactions involving the transfer of
mortgage loans and other assets for cash and other consideration of not less
than the sum of (i) the lesser of (x) the fair market value of such mortgage
loans and (y) the outstanding principal amount of such mortgage loans, and
(ii) the fair market value of such other assets, to a Subsidiary of the Borrower
that issues Indebtedness

 

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permitted by Section 6.2(s); provided, that this Section 6.5 shall not apply to
any transactions with OOMC.
          SECTION 6.6. Restrictive Agreements. The Credit Parties will not, and
will not permit any Subsidiary to, directly or indirectly, enter into, incur or
permit to exist any agreement or other arrangement that by its terms prohibits,
restricts or imposes any condition upon (a) the ability of any Credit Party or
any Subsidiary to create, incur or permit to exist any Lien upon any of its
material property or assets (unless such agreement or arrangement does not
prohibit, restrict or impose any condition upon the ability of either Credit
Party or any Subsidiary to create, incur or permit to exist any Lien in favor of
the Lender created under the Loan Documents), or (b) the ability of any
Subsidiary to pay dividends or other distributions with respect to any shares of
its capital stock or to make or repay loans or advances to the Guarantor or any
other Subsidiary or to Guarantee Indebtedness of the Guarantor or any other
Subsidiary; provided that (i) the foregoing shall not apply to restrictions and
conditions imposed by law or by this Agreement, (ii) the foregoing shall not
apply to restrictions and conditions existing on the date hereof identified on
Schedule 6.6 (but shall apply to any extension, renewal, amendment or
modification expanding the scope of any such restriction or condition),
(iii) the foregoing shall not apply to customary restrictions and conditions
contained in agreements relating to the sale of a Subsidiary pending such sale,
provided such restrictions and conditions apply only to the Subsidiary that is
to be sold and such sale is permitted hereunder, (iv) the foregoing shall not
apply to customary restrictions and conditions contained in agreements relating
to the securitization, financing or other transfer of mortgage loans (and/or
related rights and interests and servicing assets) owned by the Borrower or any
of its Subsidiaries, (v) clause (a) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
obligations permitted by this Agreement (including obligations secured by Liens
permitted by Section 6.3(j)) if such restrictions or conditions apply only to
the property or assets securing such obligations, (vi) clause (a) of the
foregoing shall not apply to customary provisions in leases and other contracts
restricting the assignment thereof and (vii) clause (a) of the foregoing shall
not apply to restrictions or conditions imposed by any agreement relating to
Indebtedness permitted hereunder pursuant to subsection 6.2(m) or the RAL
Receivables Transaction
        .
ARTICLE VII
GUARANTEE
          SECTION 7.1. Guarantee. (a) The Guarantor hereby unconditionally and
irrevocably guarantees to the Lender and its successors, indorsees, transferees
and assigns, the prompt and complete payment and performance by the Borrower
when due (whether at the stated maturity, by acceleration or otherwise) of the
Obligations.
          (b) The Guarantor further agrees to pay any and all expenses
(including all fees and disbursements of counsel) which may be paid or incurred
by the Lender in enforcing, or obtaining advice of counsel in respect of, any
rights with respect to, or collecting, any or all of the Obligations and/or
enforcing any rights with respect to, or collecting against, the Guarantor under
this Article. This Article shall remain in full force and effect until the
Obligations and the

 

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obligations of the Guarantor under the guarantee contained in this Article shall
have been satisfied by payment in full and the Commitment shall be terminated,
notwithstanding that from time to time prior thereto the Borrower may be free
from any Obligations.
          (c) No payment or payments made by any Credit Party, any other
guarantor or any other Person or received or collected by the Lender from any
collateral security or Credit Party or any other Person by virtue of any action
or proceeding or any set-off or appropriation or application, at any time or
from time to time, in reduction of or in payment of the Obligations shall be
deemed to modify, reduce, release or otherwise affect the liability of the
Guarantor hereunder which shall, notwithstanding any such payment or payments,
remain liable hereunder for the Obligations until the Obligations are paid in
full and the Commitment is terminated.
          (d) The Guarantor agrees that whenever, at any time or from time to
time, it shall make any payment to the Lender on account of its liability
hereunder, it will notify the Lender in writing that such payment is made under
this Article for such purpose.
          SECTION 7.2. Delay of Subrogation. Notwithstanding any payment or
payments made by the Guarantor hereunder, or any set-off or application of funds
of the Guarantor by the Lender, the Guarantor shall not be entitled to be
subrogated to any of the rights of the Lender against the Borrower or against
any collateral security or guarantee or right of offset held by the Lender for
the payment of the Obligations, nor shall the Guarantor seek or be entitled to
seek any contribution or reimbursement from the Borrower in respect of payments
made by the Guarantor hereunder, until all amounts owing to the Lender by the
Borrower on account of the Obligations are paid in full and the Commitment is
terminated. If any amount shall be paid to the Guarantor on account of such
subrogation rights at any time when all of the Obligations shall not have been
paid in full, such amount shall be held by the Guarantor in trust for the
Lender, segregated from other funds of the Guarantor, and shall, forthwith upon
receipt by the Guarantor, be turned over to the Lender in the exact form
received by the Guarantor (duly indorsed by the Guarantor to the Lender, if
required) to be applied against the Obligations, whether matured or unmatured,
in such order as the Lender may determine. The provisions of this Section shall
be effective notwithstanding the termination of this Agreement and the payment
in full of the Obligations and the termination of the Commitment.

 

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          SECTION 7.3. Amendments, etc. with respect to the Obligations; Waiver
of Rights. The Guarantor shall remain obligated hereunder notwithstanding that,
without any reservation of rights against the Guarantor, and without notice to
or further assent by the Guarantor, any demand for payment of any of the
Obligations made by the Lender may be rescinded by the Lender, and any of the
Obligations continued, and the Obligations, or the liability of any other party
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Lender, and this Agreement and any other
documents executed and delivered in connection herewith may be amended,
modified, supplemented or terminated, in whole or in part, in accordance with
the provisions hereof as the Lender may deem advisable from time to time, and
any collateral security, guarantee or right of offset at any time held by the
Lender for the payment of the Obligations may be sold, exchanged, waived,
surrendered or released. The Lender shall not have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Obligations or for this Agreement or any property subject thereto. When making
any demand hereunder against the Guarantor, the Lender may, but shall be under
no obligation to, make a similar demand on the Borrower or any other guarantor,
and any failure by the Lender to make any such demand or to collect any payments
from the Borrower or any such other guarantor or any release of the Borrower or
such other guarantor shall not relieve the Guarantor of its obligations or
liabilities hereunder, and shall not impair or affect the rights and remedies,
express or implied, or as a matter of law, of the Lender against the Guarantor.
For the purposes hereof “demand” shall include the commencement and continuance
of any legal proceedings.
          SECTION 7.4. Guarantee Absolute and Unconditional. The Guarantor
waives any and all notice of the creation, renewal, extension or accrual of any
of the Obligations and notice of or proof of reliance by the Lender upon this
Agreement or acceptance of this Agreement; the Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon this Agreement; and all
dealings between the Borrower and the Guarantor, on the one hand, and the
Lender, on the other, shall likewise be conclusively presumed to have been had
or consummated in reliance upon this Agreement. The Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Borrower and the Guarantor with respect to the Obligations. This
Article shall be construed as a continuing, absolute and unconditional guarantee
of payment without regard to (a) the validity, regularity or enforceability of
this Agreement, any other documents executed and delivered in connection
herewith, any of the Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to
time held by the Lender, (b) any defense, set-off or counterclaim (other than a
defense of payment or performance) which may at any time be available to or be
asserted by the Guarantor against the Lender, or (c) any other circumstance
whatsoever (with or without notice to or knowledge of the Borrower or the
Guarantor) which constitutes, or might be construed to constitute, an equitable
or legal discharge of the Borrower for the Obligations, or of the Guarantor
under this Article, in bankruptcy or in any other instance. When pursuing its
rights and remedies hereunder against the Guarantor, the Lender may, but shall
be under no obligation to, pursue such rights and remedies as it may have
against the Borrower or any other Person or against any collateral security or
guarantee for the Obligations

 

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or any right of offset with respect thereto, and any failure by the Lender to
pursue such other rights or remedies or to collect any payments from the
Borrower or any such other Person or to realize upon any such collateral
security or guarantee or to exercise any such right of offset, or any release of
the Borrower or any such other Person or of any such collateral security,
guarantee or right of offset, shall not relieve the Guarantor of any liability
hereunder, and shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of the Lender against the
Guarantor. This Article shall remain in full force and effect and be binding in
accordance with and to the extent of its terms upon the Guarantor and its
successors and assigns, and shall inure to the benefit of the Lender and its
successors, indorsees, transferees and assigns, until all the Obligations and
the obligations of the Guarantor under this Agreement shall have been satisfied
by payment in full and the Commitment shall be terminated, notwithstanding that
from time to time during the term of this Agreement the Borrower may be free
from any Obligations.
          SECTION 7.5. Reinstatement. This Article shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by the Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of any Credit Party or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, any Credit Party or any substantial part of its property, or
otherwise, all as though such payments had not been made.
          SECTION 7.6. Payments. The Guarantor hereby agrees that all payments
required to be made by it hereunder will be made to the Lender without set-off
or counterclaim in accordance with the terms of the Obligations, including in
the currency in which payment is due.
ARTICLE VIII
EVENTS OF DEFAULT
          If any of the following events (“Events of Default”) shall occur:
          (a) the Borrower shall fail to pay any principal of any Loan when and
as the same shall become due and payable, whether at the due date thereof or at
a date fixed for prepayment thereof or otherwise;
          (b) the Borrower shall fail to pay any interest on any Loan or any
other amount (other than an amount referred to in clause (a) of this Article)
payable under this Agreement, when and as the same shall become due and payable,
and such failure shall continue unremedied for a period of five business days;
          (c) any representation or warranty made or deemed made by any Credit
Party (or any of its officers) in or in connection with this Agreement or any
amendment or modification hereof, or in any report, certificate, financial
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pursuant to or in connection with this Agreement or any amendment or
modification hereof, shall prove to have been incorrect in any material respect
when made or deemed made;
          (d) any Credit Party shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.2, 5.3 (with respect to the Credit
Parties’ existence), 5.8 or 5.9 or in Article VI;
          (e) any Credit Party shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement (other than those specified
in clause (a), (b) or (d) of this Article), and such failure shall continue
unremedied for a period of 30 days after notice thereof from the Lender to the
Borrower;
          (f) any Credit Party or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and payable (after
expiration of any applicable grace or cure period);
          (g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity; provided that this
clause (g) shall not apply to (i) secured Indebtedness that becomes due as a
result of the voluntary sale or transfer of the property or assets securing such
Indebtedness or (ii) any obligation under a Hedging Agreement that becomes due
as a result of a default by a party thereto other than a Credit Party or a
Subsidiary;
          (h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of any Credit Party or any Material Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for any Credit Party or any Material Subsidiary or for a
substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall be entered;
          (i) any Credit Party or any Material Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (h) of this Article, (iii) apply for
or consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Material Subsidiary or
for a substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
          (j) any Credit Party or any Material Subsidiary shall become unable,
admit in writing or fail generally to pay its debts as they become due;

 

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39

          (k) one or more final judgments for the payment of money shall be
rendered against the Guarantor, the Borrower, any Subsidiary or any combination
thereof and either (i) a creditor shall have commenced enforcement proceedings
upon any such judgment in an aggregate amount (to the extent not covered by
insurance as to which the relevant insurance company has not denied coverage) in
excess of $40,000,000 (a “Material Judgment”) or (ii) there shall be a period of
30 consecutive days during which a stay of enforcement of any Material Judgment
shall not be in effect (by reason of pending appeal or otherwise) (it being
understood that, notwithstanding the definition of “Default”, no “Default” shall
be triggered solely by the rendering of such a judgment or judgments prior to
the commencement of enforcement proceedings or the lapse of such 30 consecutive
day period, so long as such judgments are capable of satisfaction by payment at
any time);
          (l) an ERISA Event shall have occurred that, in the opinion of the
Lender, when taken together with all other ERISA Events that have occurred,
would reasonably be expected to result in a Material Adverse Effect;
          (m) a Change in Control shall occur;
          (n) the Guarantee contained in Article VII herein shall cease, for any
reason, to be in full force and effect in any material respect or any Credit
Party shall so assert;
          (o) the Security Agreement, the Control Agreement or the HSBC TFS
Letter shall for any reason cease to be valid and binding on or enforceable
against any Credit Party that is party thereto; or any Credit Party shall so
state in writing or bring an action to limit its obligations or liabilities
thereunder;
          (p) the Security Agreement shall for any reason (other than pursuant
to the terms thereof) cease to create a valid, perfected and first priority
security interest in the Collateral purported to be covered thereby;
          (q) any representation or warranty made or deemed made by any Credit
Party in the Security Agreement, the Control Agreement or the HSBC TFS Letter
shall prove to have been incorrect in any material respect when made or deemed
made; or
          (r) any Credit Party shall fail to observe or perform any covenant or
agreement (other than as specified in clauses (o), (p) and (q) of this Article)
contained in the Security Agreement, the Control Agreement or the TFS Letter
Agreement;
then, and in every such event (other than an event with respect to the Credit
Parties described in clause (h) or (i) of this Article), and at any time
thereafter during the continuance of such event, the Lender may, by notice to
the Borrower, take either or both of the following actions, at the same or
different times: (i) terminate the Commitment, and thereupon the Commitment
shall terminate immediately, and (ii) declare the Loans then outstanding to be
due and payable in whole (or in part, in which case any principal not so
declared to be due and payable may thereafter be declared to be due and
payable), and thereupon the principal of the Loans so declared to be due and
payable, together with accrued interest thereon and all fees and other

 

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40

Obligations of the Credit Parties accrued hereunder, shall become due and
payable immediately, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Credit Parties; and in case of any
event with respect to the Credit Parties described in clause (h) or (i) of this
Article, the Commitment shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
other Obligations of the Credit Parties accrued hereunder, shall automatically
become due and payable, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Credit Parties.
ARTICLE IX
[RESERVED]
ARTICLE X
MISCELLANEOUS
          SECTION 10.1. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone and except as
otherwise provided in Sections 2.3, 2.6 and 2.8, all notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:
          (a) if to the Borrower or the Guarantor, to it at One H&R Block Way,
Kansas City, Missouri 64105, Attention of Becky Shulman (Telecopy No.
(816) 854-8043), David Staley (Telecopy No. (816) 854-8043) and Andrew Somora
(Telecopy No. (816) 802-1043); and
          (b) if to the Lender, to it at 2700 Sanders Road, Prospect Heights,
Illinois 60070, attention: Treasurer (Telecopy No. (847) 205-7538), with copies
to 2700 Sanders Road, Prospect Heights, Illinois 60070, attention: Deputy
General Counsel- Corporate Law (Telecopy No.(847) 564-6366), HSBC Securities,
Inc., 425 Fifth Avenue, Lower Level, New York, N.Y. 10018 (Telecopy No.
(212) 525-2479), attention Vince Clark, HSBC Taxpayer Financial Services Inc.,
200 Somerset Corporate Boulevard, Bridgewater, N.J. 08807 (Telecopy No.
(908) 203-4211, attention: CEO and Managing Director, and HSBC Taxpayer
Financial Services Inc., 90 Christiana Road, New Castle, DE 19707 (Telecopy No.
(302) 327-2507, attention: General Counsel); provided, that notices under
Section 2.3 need only be given to Mr. Kyle Hartung at telephone number
(847) 564-6281, confirmed by telecopy at (847) 564-6138.
Any party hereto may change its address, telephone number or telecopy number for
notices and other communications hereunder by notice to the other parties
hereto. All notices and other

 

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41

communications given to any party hereto in accordance with the provisions of
this Agreement shall be deemed to have been given on the date of receipt. For so
long as any Affiliate of the Lender is a “Lender” under either of the Bank
Revolvers, the Lender will accept delivery of any financial statement or other
information to be delivered under Section 5.1(a), (b) and(d) hereunder that is
posted to Intralinks. The Lender, the Borrower or the Guarantor may, in its
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or
communications.
          SECTION 10.2. Waivers; Amendments. (a) No failure or delay by the
Lender in exercising any right or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Lender hereunder are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of this Agreement or consent to any departure by the
Credit Parties therefrom shall in any event be effective unless the same shall
be permitted by paragraph (b) of this Section, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan
shall not be construed as a waiver of any Default, regardless of whether the
Lender may have had notice or knowledge of such Default at the time.
          (b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Credit Parties and the Lender.
          SECTION 10.3. Expenses; Indemnity; Damage Waiver. (a) The Borrower
shall pay all reasonable and documented out-of-pocket expenses incurred by the
Lender, including the reasonable and documented fees, charges and disbursements
of any counsel for the Lender, in connection with the enforcement or protection
of its rights in connection with this Agreement, including its rights under this
Section, or in connection with the Loans made hereunder, including in connection
with any workout, restructuring or negotiations in respect thereof.
          (b) The Credit Parties shall jointly and severally indemnify the
Lender and each Related Party of the Lender (each such Person being called an
“Indemnitee”), against, and hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses, including the fees,
charges and disbursements of any counsel for any Indemnitee, incurred by or
asserted against any Indemnitee arising out of, in connection with, or as a
result of the material breach by any Credit Party of any representation,
warranty, covenant or agreement in this Agreement, the Security Agreement, the
Control Agreement or the HSBC TFS Letter; provided that such indemnity shall not
be available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or willful
misconduct of any Indemnitee or any of its Related Parties.

 

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42

          (c) No party to this Agreement shall be liable for lost profits,
incidental, consequential, exemplary, special or punitive damages arising under
or in connection with this Agreement, the Security Agreement, the Control
Agreement or the HSBC TFS Letter, or the transaction contemplated hereby or
thereby.
          SECTION 10.4. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that no
Credit Party may assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of the Lender (and any attempted
assignment or transfer by any Credit Party without such consent shall be null
and void). Nothing in this Agreement, expressed or implied, shall be construed
to confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, the Related Parties of the Lender) any legal or equitable
right, remedy or claim under or by reason of this Agreement.
          (b) The Lender may assign to one or more assignees all or a portion of
its rights under this Agreement (including all or a portion of the Loans at the
time owing to it); provided that the Borrower must give its prior written
consent to such assignment (which consent shall not be unreasonably withheld);
provided, further, that any consent of the Borrower otherwise required under
this paragraph shall not be required if an Event of Default has occurred and is
continuing. Any assignment or transfer by the Lender of rights under this
Agreement that does not comply with this paragraph shall be treated for purposes
of this Agreement as a sale by the Lender of a participation in such rights and
obligations in accordance with paragraph (c) of this Section.
          (c) The Lender may, without the consent of any Credit Party, sell
participations to one or more banks or other entities (a “Participant”) in all
or a portion of the Lender’s rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided that (i) the Lender’s obligations under this Agreement shall remain
unchanged, (ii) the Lender shall remain solely responsible to the other parties
hereto for the performance of the obligations and (iii) the Credit Parties shall
continue to deal solely and directly with the Lender in connection with the
Lender’s rights and obligations under this Agreement. Any agreement or
instrument pursuant to which the Lender sells such a participation shall provide
that the Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver of or under this Agreement that shall (i) increase the
Commitment, (ii) reduce the principal amount of any Loan or reduce the rate of
interest thereon, (iii) postpone the scheduled date of payment of the principal
amount of any Loan, or any interest thereon, or reduce the amount of, waive or
excuse any such payment, or postpone the scheduled date of expiration of the
Commitment, (iv) release any security provided for in the Security Agreement,
(v) release the guarantee contained in Article VII or (vi) change any of the
provisions of this Section. Subject to paragraph (d) of this Section, the
Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.9

 

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43

and 2.10 to the same extent as if it were a Lender and had acquired its interest
by assignment pursuant to paragraph (b) of this Section.
          (d) A Participant shall not be entitled to receive any greater payment
under Section 2.9 or 2.10 than the Lender would have been entitled to receive
with respect to the participation sold to such Participant, unless the sale of
the participation to such Participant is made with the Borrower’s prior written
consent.
          (e) The Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
the Lender, including any such pledge or assignment to a Federal Reserve Bank,
and this Section shall not apply to any such pledge or assignment of a security
interest; provided that no such pledge or assignment of a security interest
shall release the Lender from any of its obligations hereunder or substitute any
such assignee for the Lender as a party hereto.
          SECTION 10.5. Survival. All covenants, agreements, representations and
warranties made by the Credit Parties herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any other amount payable
under this Agreement is outstanding and unpaid and so long as the Commitment has
not expired or terminated. The provisions of Sections 2.9, 2.10, 10.3, 10.9,
10.10 and 10.l5 shall survive and remain in full force and effect regardless of
the consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Commitment or the termination of
this Agreement or any provision hereof.
          SECTION 10.6. Counterparts; Integration; Effectiveness. This Agreement
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and the
documents provided for herein constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.1, this Agreement shall become effective
when it shall have been executed by the Lender and when the Lender shall have
received counterparts hereof which, when taken together, bear the signatures of
each of the other parties hereto, and thereafter shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns. Delivery of an executed counterpart of a signature page of this
Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.
          SECTION 10.7. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality

 

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44

and enforceability of the remaining provisions hereof; and the invalidity of a
particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.
          SECTION 10.8. Right of Setoff. If an Event of Default shall have
occurred and be continuing, the Lender is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all indebtedness at any time owing by the Lender to or for the credit or the
account of either Credit Party against any of and all the obligations of such
Credit Party now or hereafter existing under this Agreement held by the Lender,
irrespective of whether or not the Lender shall have made any demand under this
Agreement and although such obligations may be unmatured. The rights of the
Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
          SECTION 10.9. Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
          (b) Each Credit Party hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of the Supreme
Court of the State of New York sitting in New York County and of the United
States District Court of the Southern District of New York, and any appellate
court from any thereof, in connection with any Proceeding, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any Proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such Proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law. Nothing in this Agreement shall affect any right
that the Lender may otherwise have to bring any Proceeding relating to this
Agreement against any Credit Party or its properties in the courts of any
jurisdiction.
          (c) Each Credit Party hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any Proceeding arising
out of or relating to this Agreement in any court referred to in paragraph
(b) of this Section. Each of the parties hereto hereby irrevocably waives, to
the fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such Proceeding in any such court.
          (d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10.1 in connection with a
Proceeding. Nothing in this Agreement will affect the right of any party to this
Agreement to serve process in any other manner permitted by law in connection
with a Proceeding.
          SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES

 

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45

THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
          SECTION 10.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
          SECTION 10.12. Confidentiality. The Lender agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates’ directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or the enforcement of rights
hereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement, (g) with the consent of the Borrower or (h) to the extent
such Information (i) becomes publicly available other than as a result of a
breach of this Section by it or (ii) becomes available to the Lender on a
nonconfidential basis from a source other than any Credit Party; provided, that
the Lender may file this Agreement with the Securities and Exchange Commission.
For the purposes of this Section, “Information” means all information received
from any Credit Party relating to any Credit Party or its business, other than
any such information that is available to the Lender on a nonconfidential basis
prior to disclosure by such Credit Party; provided that, in the case of
information received from any Credit Party after the date hereof, such
information is clearly identified at the time of delivery as confidential. The
Lender shall be considered to have complied with its obligation under this
Section if it has exercised the same degree of care to maintain the
confidentiality of such Information as it would accord to its own confidential
information.
          SECTION 10.13. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the “Charges”), shall exceed the
maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to the Lender in respect of other Loans or periods shall be increased

 

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46

(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by the Lender.
          SECTION 10.14. USA Patriot Act.
          The Lender hereby notifies the Borrower that pursuant to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the “Act”), it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow the Lender to
identify the Borrower in accordance with the Act.
[THIS SPACE LEFT BLANK INTENTIONALLY]

 

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.

            BLOCK FINANCIAL LLC, as Borrower
      By:   /s/ Becky S. Shulman         Name:   Becky S. Shulman       
Title:   SVP and Treasurer        H&R BLOCK, INC., as Guarantor
      By:   /s/ Becky S. Shulman         Name:   Becky S. Shulman       
Title:   SVP and Treasurer        HSBC FINANCE CORPORATION, as Lender
      By:   /s/ William H. Kesler         Name:   William H. Kesler       
Title:   Senior Vice President — Treasurer   

 

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SCHEDULE 3.4(a)
Guarantee Obligations

•   Guarantor’s obligation pursuant to the $250,000,000 Amended and Restated
Bridge Credit and Guarantee Agreement (HSBC) dated as of December 20, 2007,
among the Guarantor, the Borrower, the lenders party thereto and HSBC Bank USA,
National Association.   •   Guarantor’s obligation pursuant to the $250,000,000
Amended and Restated Bridge Credit and Guarantee Agreement (BNPP) dated as of
December 20, 2007, among the Guarantor, the Borrower, the lenders party thereto
and BNP Paribas.

 

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SCHEDULE 3.6
Disclosed Matters
None.

 

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SCHEDULE 3.13
Subsidiaries
          The following is a list of the direct and indirect subsidiaries of H&R
Block, Inc., a Missouri corporation.

      Company Name   Domestic Jurisdiction
4230 W. Green Oaks, Inc.
  Michigan
Aculink Mortgage Solutions, LLC
  Florida
AcuLink of Alabama, LLC
  Alabama
BFC Transactions, Inc.
  Delaware
Birchtree Financial Services, Inc.
  Oklahoma
Birchtree Insurance Agency, Inc.
  Missouri
Block Financial LLC
  Delaware
Burr Oak Technical Solutions, Inc.
  Delaware
CFS-McGladrey, LLC
  Massachusetts
Cfstaffing, Ltd.
  British Columbia
Companion Insurance, Ltd.
  Bermuda
Companion Mortgage Corporation
  Delaware
Creative Financial Staffing of Western Washington, LLC
  Massachusetts
EquiCo Europe Limited
  United Kingdom
Equico, Inc.
  California
Express Tax Service, Inc.
  Delaware
Financial Marketing Services, Inc.
  Michigan
Financial Stop Inc.
  British Columbia
First Option Asset Management Services, Inc.
  California
First Option Asset Management Services, LLC
  California
FM Business Services, Inc.
  Delaware
Franchise Partner, Inc.
  Nevada
H&R Block (India) Private Limited
  India
H&R Block (Nova Scotia), Incorporated
  Nova Scotia
H&R Block Bank
  Missouri
H&R Block Canada Financial Services, Inc.
  Federally Chartered
H&R Block Canada, Inc.
  Federally Chartered
H&R Block Eastern Enterprises, Inc.
  Missouri
H&R Block Enterprises, Inc.
  Missouri
H&R Block Financial Advisors, Inc.
  Michigan
H&R Block Global Solutions (Hong Kong) Limited
  Hong Kong
H&R Block Group, Inc.
  Delaware
H&R Block Insurance Agency of Massachusetts, Inc.
  Massachusetts
H&R Block Insurance Agency, Inc.
  Delaware
H&R Block Limited
  New South Wales
H&R Block Management, LLC
  Delaware
H&R Block Services, Inc.
  Missouri
H&R Block Tax and Business Services, Inc.
  Delaware
H&R Block Tax and Financial Services Limited
  United Kingdom
H&R Block Tax Institute, LLC
  Missouri

 

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      Company Name   Domestic Jurisdiction
H&R Block Tax Services, Inc.
  Missouri
HRB Advance LLC
  Delaware
HRB Center LLC
  Missouri
HRB Concepts LLC
  Delaware
HRB Corporate Enterprises LLC
  Delaware
HRB Corporate Services LLC
  Missouri
HRB Digital LLC
  Delaware
HRB Digital Technology Resources LLC
  Delaware
HRB Expertise LLC
  Missouri
HRB Financial Corporation
  Michigan
HRB Innovations, Inc.
  Delaware
HRB International LLC
  Missouri
HRB Products LLC
  Missouri
HRB Professional LLC
  Delaware
HRB Progression LLC
  Delaware
HRB Property Corporation
  Michigan
HRB Realty Corporation
  Michigan
HRB Support Services LLC
  Delaware
HRB Tax & Technology Leadership LLC
  Missouri
HRB Tax & Technology Software LLC
  Missouri
HRB Technology Holding LLC
  Delaware
HRB Texas Enterprises, Inc.
  Missouri
OLDE Discount of Canada
  Federally Chartered
OOMC Holdings LLC
  Delaware
OOMC Residual Corporation
  New York
Option One Advance Corporation
  Delaware
Option One Insurance Agency, Inc.
  California
Option One Loan Warehouse LLC
  Delaware
Option One Mortgage Acceptance Corporation
  Delaware
Option One Mortgage Capital Corporation
  Delaware
Option One Mortgage Corporation
  California
Option One Mortgage Corporation (India) Private Limited
  Pune
Option One Mortgage Securities Corp.
  Delaware
Option One Mortgage Securities II Corp.
  Delaware
Option One Mortgage Securities III Corp.
  Delaware
Option One Mortgage Securities IV LLC
  Delaware
Option One Mortgage Services, Inc.
  Massachusetts
O’Rourke Career Connections, LLC
  California
PDI Global, Inc.
  Delaware
Pension Resources, Inc.
  Illinois
Premier Mortgage Services of Washington, Inc.
  Washington
Premier Property Tax Services, LLC
  California
Premier Trust Deed Services, Inc.
  California
RedGear Technologies, Inc.
  Missouri
RSM (Bahamas) Global, Ltd.
  The Bahamas
RSM Employer Services Agency of Florida, Inc.
  Florida
RSM Employer Services Agency, Inc.
  Georgia
RSM Equico Canada, Inc.
  Federally Chartered
RSM Equico Capital Markets, LLC
  Delaware
RSM Equico, Inc.
  Delaware

 

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      Company Name   Domestic Jurisdiction
RSM McGladrey Business Services, Inc.
  Delaware
RSM McGladrey Business Solutions, Inc.
  Delaware
RSM McGladrey Employer Services, Inc.
  Georgia
RSM McGladrey Financial Process Outsourcing India Pvt. Ltd.
  India
RSM McGladrey Financial Process Outsourcing, LLC
  Minnesota
RSM McGladrey Insurance Services, Inc.
  Delaware
RSM McGladrey TBS, LLC
  Delaware
RSM McGladrey, Inc.
  Delaware
ServiceWorks, Inc.
  Delaware
TaxNet Inc.
  California
TaxWorks, Inc.
  Delaware
The Tax Man, Inc.
  Massachusetts
West Estate Investors, LLC
  Missouri
Woodbridge Mortgage Acceptance Corporation
  Delaware

 

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SCHEDULE 6.2
Existing Indebtedness

•   The Irrevocable Standby Letter of Credit issued on March 22, 2004 by KeyBank
National Association in favor of Old Republic Insurance Company for an amount up
to $16,509,269.

•   Irrevocable Standby Letter of Credit issued on December 18, 2003 by KeyBank
National Association in favor of Pacific Employer’s Insurance Company and ACE
American Insurance Company for an amount up to $865,650.

•   Irrevocable Standby Letter of Credit issued on February 16, 2005 by KeyBank
National Association in favor of Chubb National Company for an amount up to
$3,500,000.

•   Promissory Note dated December 6, 2001 in the principal amount of $5,500,000
between MyBenefitSource.com, Inc. (now RSM McGladrey Employer Services, Inc.)
and AUSA Holdings Company.

•   The Guarantor’s and Subsidiaries’ obligations under surety bonds and
fidelity bonds issued pursuant to state mortgage licensing requirements.

•   The $250,000,000 Amended and Restated Bridge Credit and Guarantee Agreement
(HSBC) dated as of December 20, 2007, among the Guarantor, the Borrower, the
lenders party thereto and HSBC Bank USA, National Association.

•   The $250,000,000 Amended and Restated Bridge Credit and Guarantee Agreement
(BNPP) dated as of December 20, 2007, among the Guarantor, the Borrower, the
lenders party thereto and BNP Paribas.

 

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SCHEDULE 6.3
Existing Liens
None.

 

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SCHEDULE 6.4(b)
ADDITIONAL BUSINESSES

•   Businesses that offer products and services typically provided by finance
companies, banks and other financial service providers, including consumer
finance and mortgage-loan related products and services, credit products,
insurance products, check cashing, money orders, wire transfers, stored value
cards, bill payment services, notary services and similar products and services.

•   Businesses that offer financial, or financial-related, products and services
that can be marketed, provided or distributed by leveraging the retail locations
of Guarantor’s Subsidiaries or the relationships of such Subsidiaries with their
clients as a tax return preparer or financial advisor or service provider.

 

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SCHEDULE 6.6
Existing Restrictions

•   Indenture dated as of October 20, 1997, by and between the Credit Parties
and Bankers Trust Company, as trustee (the “October 20, 1997 Indenture”).

•   Any other Indenture entered into by any Credit Party to the extent that
(a) the Indebtedness thereunder is permitted by Section 6.2(d) of this Agreement
and (b) such other Indenture has substantially similar terms to the October 20,
1997 Indenture.

•   Repurchase Agreements of the type referred to in Section 6.2(i) of this
Agreement.

•   Certain Subsidiaries must maintain capital requirements which could impair
their ability to pay dividends or other distributions.

 

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EXHIBIT A
[FORM OF SECURITY AGREEMENT]
SECURITY AGREEMENT
     SECURITY AGREEMENT dated as of January 10, 2008 between BLOCK FINANCIAL LLC
(“Debtor”), a Delaware limited liability company, and HSBC FINANCE CORPORATION
(“Secured Party”), a Delaware corporation.
     WHEREAS, Debtor, Secured Party and H&R Block, Inc. have entered into a
Credit and Guarantee Agreement dated as of January 10, 2008 (as amended,
restated or otherwise modified and in effect from time to time, the “Credit
Agreement”) pursuant to which Secured Party has agreed, subject to the terms and
conditions thereof, to make loans to Debtor from time to time.
     WHEREAS, Secured Party has required, as a condition to its making loans
under the Credit Agreement, that Debtor execute and deliver this Agreement.
     NOW, THEREFORE, in consideration of the premises and to induce Secured
Party to make loans to Debtor under the Credit Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
     1. Definitions. Capitalized terms used herein without definition are used
herein as defined in the Credit Agreement. In addition, the following terms
shall have the following meanings:
     “Additional Collateral Amount” means, at any time there is a Collateral
Deficiency, the amount by which the Required Collateral Amount exceeds the fair
market value of the Securities Account, as determined by the Securities
Intermediary or the Transfer Agent or another service provider.
     “BFC Program Contracts” means, collectively, the Indemnification Agreement,
the Participation Agreement and the Servicing Agreement.
     “Collateral” is defined in Section 2 hereof.
     “Collateral Deficiency” means at any time that the fair market value of the
Collateral held in the Securities Account, as determined by the Securities
Intermediary or the Transfer Agent or another service provider, shall be less
than the Required Collateral Amount.
     “Contract Obligor” means any Person that is obligated to Debtor under a BFC
Program Contract.

 

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     “Control Agreement” means the Investment Account Control Agreement between
Debtor, Secured Party and the Securities Intermediary with respect to the
Securities Account, in substantially the form of Exhibit B to the Credit
Agreement.
     “Direct Pay Provisions” means the provisions of paragraph 2 of the HSBC TFS
Letter.
     “HSBC RAL” means “HSBC RAL” as such term is defined in the Appendix of
Defined Terms and Rules of Construction attached as Appendix A to Retail
Settlement Products Distribution Agreement.
     “HSBC TFS” means HSBC Taxpayer Financial Services, Inc., a Delaware
corporation.
     “HSBC TFS Letter” means a letter agreement between Debtor, HSBC TFS and
Secured Party in substantially the form of Exhibit C to the Credit Agreement.
     “Indemnification Agreement” means the HSBC Settlement Products
Indemnification Agreement dated as of September 23, 2005 among HSBC Bank USA,
N.A., HSBC TFS, Household Tax Masters Acquisition Corporation, Beneficial
Franchise Company Inc., H&R Block Services, Inc., H&R Block Tax Services, Inc.,
H&R Block Enterprises, Inc., H&R Block Eastern Enterprises, Inc., HRB Digital
LLC (successor by merger to H&R Block Digital Tax Solutions, LLC), H&R Block and
Associates, L.P. (now dissolved), HRB Innovations Inc. (formerly known as HRB
Royalty, Inc.) and Debtor, as amended by the Joinder and First Amendment to
Program Contracts dated as of November 10, 2006 and the Second Amendment to
Program Contracts dated as of November 13, 2006, and as further amended from
time to time, and any restatement, extension, renewal and replacement thereof.
     “Participation Agreement” means the First Amended and Restated HSBC Refund
Anticipation Loan and IMA Participation Agreement, dated as of November 13,
2006, as amended from time to time, and any restatement, extension, renewal and
replacement thereof, by and among the Borrower, HSBC Bank USA, National
Association, HSBC TFS and HSBC Trust Company (Delaware), National Association.
     “Participation Interest” means a “Participation Interest” under and as
defined in the Credit Agreement.
     “Required Collateral Amount” means at any time the greater of (i)
$60,000,000 and (ii) the quotient of (a) the amount determined in good faith by
the Secured Party to be the excess of (A) its forecast of the amount of
delinquent HSBC RALs originated in 2008 as of December 31, 2008 (without
consideration of any subsequent recoveries) over (B) $96,300,000, divided by (b)
.89, which quotient shall be multiplied by .49999999. The Secured Party, acting
in good faith, may compute the Required Collateral Amount from time to time in
its discretion, and any such computation of the Required Collateral Amount shall
be based on the Secured Party’s statistical and reasonable judgmental forecast
and models and methods in accordance with its practices and policies then in
effect and shall be conclusive and binding in the absence of manifest error. The
Secured Party’s forecast of the amount of delinquent HSBC RALs originated in
2008 as of December 31, 2008 (without consideration of any subsequent
recoveries) as of the date of this Agreement is $96,270,623.

 

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     “Securities Account” means account number 615878 maintained by Debtor with
the Securities Intermediary, all cash balances, securities, instruments,
financial assets and investment property at any time and from time to time
credited to, received or receivable in respect of such account, and all
securities entitlements and claims thereunder or in connection therewith.
     “Securities Intermediary” means HSBC Investor Funds.
     “Servicing Agreement” means the First Amended and Restated HSBC Settlement
Products Servicing Agreement dated as of November 13, 2006 , as amended from
time to time, and any restatement, extension, renewal and replacement thereof,
among HSBC Bank USA, National Association, HSBC TFS, HSBC Trust Company
(Delaware), N.A., and Debtor.
     “Transfer Agent” has the meaning specified in the Control Agreement.
     “Uniform Commercial Code” means the Uniform Commercial Code as in effect
from time to time in the State of New York; provided, however, if, by reason of
mandatory provisions of law, the attachment, perfection or priority of Secured
Party’s security interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State of New York,
the term “Uniform Commercial Code” shall mean the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof relating
to such attachment, perfection or priority and for purposes of definitions
related to such provisions.
     The terms “control”, entitlement holder”, “entitlement order”, “financial
asset”, “instrument”, “investment property”, “proceeds”, “security”, “security
entitlement”, “securities intermediary” and “supporting obligation” shall have
the respective meanings set forth in the Uniform Commercial Code.
     2. Security Interest. As collateral security for the prompt payment in full
when due (whether at stated maturity, by acceleration or otherwise) of the
Obligations, Debtor hereby assigns and pledges to Secured Party and grants to
Secured Party a security interest in and to all of Debtor’s right, title and
interest in the following property and interests in property, whether now owned
or hereafter acquired by Debtor and wherever located (collectively, the
“Collateral”):
     (a) the BFC Program Contracts, including (without limitation) the
Participation Interests purchased by Debtor under the Participation Agreement,
all rights of Debtor related to the HSBC RALs to which such Participation
Interests relate, and all monies due and to become due in respect thereof;
provided, that the security interest created hereby shall not extend to the
rights reserved to Debtor pursuant to the proviso in Section 3 hereof;
     (b) the Securities Account (including without limitation any Additional
Collateral Amount deposited therein pursuant to Section 5(d) hereof); and
     (c) all proceeds, supporting obligations, income, benefits, substitutions,
additions and replacements of and to any of the property described in this
Section 2

 

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including, without limitation, all rights, claims and benefits against any
Contract Obligor or other Person obligated on any Collateral, and all related
books, correspondence, files, records, invoices and other papers, including,
without limitation, all computer runs, programs and files.
     3. Certain Rights of Debtor. Notwithstanding any other term or provision of
this Agreement, as long as no Event of Default has occurred, Debtor may exercise
all of its rights under the BFC Program Contracts, other than the following,
which Debtor may not exercise: (a) the right to receive payments from HSBC TFS
under the Direct Pay Provisions of the amounts to be transferred by HSBC TFS to
Secured Party thereunder, (b) the right to sell, assign, pledge or grant a
security interest in or Lien on the Collateral and (c) its right to modify,
amend or waive its rights under the BFC Program Contracts that would affect in
any way the Participation Interests that have been financed by Secured Party
pursuant to the Credit Agreement, provided, further, that even after an Event of
Default has occurred and is continuing under the Credit Agreement, Debtor will
have the right, on a prospective basis, (i) under Section 4.1 of the
Participation Agreement, to participate or not participate in subsequently
originated HSBC RALs and to change the Applicable Percentage (as defined in the
Participation Agreement) with respect thereto, (ii) under Section 4.4 of the
Participation Agreement, to elect not to purchase a participation interest in
certain groups of subsequently originated HSBC RALs; and (iii) under Section 4.8
of the Participation Agreement to sell, assign or transfer its right to purchase
participation interests on subsequently originated HSBC RALs that are not
financed by Secured Party.
     4. Representations and Warranties of Debtor. Debtor represents and warrants
to Secured Party as follows:
     (a) Binding Effect. This Agreement has been, and the Control Agreement and
the HSBC TFS Letter will be, duly executed and delivered by Debtor, and this
Agreement constitutes, and the Control Agreement and the HSBC TFS Letter will
constitute, legal, valid and binding agreements of Debtor, enforceable in
accordance with their terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.
     (b) Ownership and Liens. Debtor is and will be the owner of the Collateral
and no Lien exists or will exist upon such Collateral at any time except as
provided for in this Agreement. Debtor is the sole entitlement holder with
respect to the Securities Account.
     (c) Perfection. This Agreement is effective to create in favor of Secured
Party a valid security interest in and Lien upon all of Debtor’s right, title
and interest in and to the Collateral and, upon the filing of an appropriate
Uniform Commercial Code financing statement in the Office of the Secretary of
State of the State of Delaware, such security interest will be a duly perfected
security interest in all of the Collateral and no further recordings or filings
are or will be required in connection with the creation, perfection or
enforcement of such security interest and Lien, other than (i) the filing of
continuation statements or financing change statements in accordance with
applicable law and (ii) additional filings if Debtor changes its name, identity
or organizational structure or the jurisdiction in which it is organized.

 

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     5. Agreements of Debtor. Debtor hereby agrees with Secured Party as
follows:
     (a) Direct Payment to Secured Party. Debtor shall enter into the HSBC TFS
Letter with Secured Party and HSBC TFS. Debtor shall, forthwith upon becoming
aware or being made aware that it has received any amount in payment under the
Direct Pay Provisions at any time, pay such amount to Secured Party, and any
such amount which may be so received by Debtor shall, from the time of Debtor
being or becoming aware of such receipt, not be commingled by Debtor with any of
its other funds or property but, until paid to Secured Party, shall be held
separate and apart from such other funds and property and in trust for Secured
Party. Debtor authorizes and empowers Secured Party (i) to ask, demand, receive,
receipt and give acquittance for any and all amounts which may be or become due
or payable at any time to Debtor under the Direct Pay Provisions and (ii) in its
discretion to file any claims or take any action or proceeding, either in its
own name or in the name of Debtor or otherwise, which Secured Party may deem to
be necessary or advisable to collect amounts due under the Direct Pay
Provisions.
     (b) Performance of BFC Program Contracts. Debtor shall remain liable under
the BFC Program Contracts to perform all of its obligations thereunder and shall
duly and punctually perform and observe all of the terms and provisions of the
BFC Program Contracts on the part of Debtor to be performed or observed, subject
to any applicable grace or cure periods contained in the BFC Program Contracts.
Secured Party does not assume and shall not have any obligations or liabilities
under the BFC Program Contracts by reason of or arising out of this Agreement,
nor shall Secured Party be obligated to make any inquiry as to the nature or
sufficiency of any payment received under the BFC Program Contracts or to
collect or enforce the BFC Program Contracts. Debtor shall not agree to or
suffer or permit any amendment, modification or waiver of or under the BFC
Program Contracts that would affect in any way the Participation Interests that
have been financed by Secured Party pursuant to the Credit Agreement.
     (c) Other Documents and Actions. Debtor shall, within 10 days of request by
Secured Party, give, execute, deliver, file or record any financing statement,
notice, instrument, agreement or other document that may be necessary or
desirable in the reasonable judgment of Secured Party to create, preserve,
perfect or validate the security interest granted pursuant hereto or to enable
Secured Party to exercise and enforce the rights of Secured Party hereunder with
respect to such security interest.
     (d) Additional Collateral. Not later than one Business Day after the date
of any written demand by the Secured Party made upon the Debtor at any time
after February 15, 2008 when there is a Collateral Deficiency, the Borrower
shall deposit into the Securities Account cash in the amount of the Additional
Collateral Amount stated in such demand, which shall thereupon constitute part
of the Collateral. Any such demand shall include a computation of the Additional
Collateral Amount and the Secured Party’s forecast of the amount of delinquent
HSBC RALs originated during 2008 as of December 31, 2008 and shall be conclusive
and binding in the absence of manifest error. Without limiting the foregoing,
the Additional Collateral Amount so deposited shall be made available from funds
of the Debtor and not from collections distributable to the Secured Party under
the Direct Pay Provisions.

 

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     (e) Control Agreement. Debtor shall take any and all actions required or
requested by Secured Party from time to time to cause Secured Party to maintain
exclusive control the Securities Account and for that purpose Debtor shall enter
into the Control Agreement with Secured Party and the Securities Intermediary.
Debtor agrees that Debtor shall not withdraw any money or property from the
Securities Account or modify or terminate the Control Agreement or any customer
agreement relating to the Securities Account without the prior written consent
of Secured Party.
     (f) Other Liens. Debtor shall not create, permit or suffer to exist, and
shall defend the Collateral against and take such other action as is necessary
to remove, any Lien on the Collateral and shall defend the right, title and
interest of Secured Party in and to the Collateral and in and to all Proceeds
thereof against the claims and demands of all Persons whatsoever.
     (g) Preservation of Rights. Whether or not any Event of Default has
occurred or is continuing, Secured Party may, but shall not be required to, take
any actions Secured Party reasonably deems necessary or appropriate to preserve
any Collateral or any rights against third parties to any of the Collateral and
Debtor shall, within 30 days of demand by Secured Party, pay, or reimburse
Secured Party for, all expenses incurred in connection therewith.
     (h) Changes in Name, etc. The name of Debtor that appears above its
signature on this Agreement is its full and correct legal name as it appears in
its certificate of formation. Debtor shall notify Secured Party promptly in
writing prior to any change in Debtor’s name, identity, limited liability
company structure or state of formation.
     (i) Financing Statements. Debtor hereby irrevocably authorizes Secured
Party, at Debtor’s expense, to file such financing and continuation statements
relating to this Agreement, without Debtor’s signature, as Secured Party may
deem appropriate, and appoints Secured Party as Debtor’s attorney-in-fact to
execute any such statements in Debtor’s name and to perform all other acts which
Secured Party deems appropriate to perfect and continue the security interest
created hereby.
     6. Remedies. During the period during which an Event of Default shall have
occurred and be continuing:
     (a) Secured Party shall have, in addition to other rights and remedies
provided for herein or otherwise available to it, all of the rights and remedies
of a Secured Party upon default under the Uniform Commercial Code (whether or
not the Uniform Commercial Code applies to the affected Collateral) and Secured
Party may, without notice, demand or legal process of any kind except as may be
required by law, at any time or times (i) if Secured Party shall have requested
that Debtor assemble any tangible Collateral pursuant to Section 6(a)(ii) hereof
and Debtor shall have failed to do so in a commercially reasonable time, enter
Debtor’s premises and take physical possession of such tangible Collateral and
maintain such possession on Debtor’s premises, at no cost to Secured Party, or
remove such tangible Collateral or any part thereof to such other place or
places as Secured Party may desire, (ii) require Debtor to, and Debtor hereby
agrees to, assemble any tangible Collateral as directed by Secured Party and
make it available to Secured Party at a place to be designated by Secured Party
which is reasonably convenient to

 

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Secured Party and Debtor and (iii) without notice except as specified below,
sell, lease, assign, grant an option or options to purchase or otherwise dispose
of the Collateral or any part thereof at public or private sale, at any
exchange, broker’s board or at any of the offices of Secured Party or elsewhere,
for cash, on credit or for future delivery, and upon such other terms as Secured
Party may deem commercially reasonable. Debtor agrees that, to the extent notice
of sale shall be required by law, at least 10 days’ notice to Debtor of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. Secured Party shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. Secured Party may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor and such sale may,
without further notice, be made at the time and place to which it was so
adjourned;
     (b) Secured Party may make any compromise or settlement deemed desirable
with respect to any of the Collateral and may extend the time of payment,
arrange for payment in installments or otherwise modify the terms of, any of the
Collateral;
     (c) Secured Party may, in the name of Secured Party or in the name of
Debtor or otherwise, demand, sue for, collect or receive any money or property
at any time payable or receivable on account of or in exchange for any of the
Collateral, but shall be under no obligation to do so; and
     (d) Secured Party may take any action and exercise any right or remedy
available to it under the Control Agreement, including any right to give
instructions or entitlement orders to the Securities Intermediary under the
Control Agreement and to dispose of any Collateral in the Securities Account as
provided in Section 6(a).
     7. Deficiency; Application of Proceeds. If the proceeds of sale, collection
or other realization of or upon the Collateral are insufficient to cover the
costs and expenses of such realization and the payment in full of the
Obligations, Debtor shall remain liable for any deficiency. The proceeds of any
collection, sale or other realization of all or any part of the Collateral shall
be applied first, to payment of all expenses payable or reimbursable by Debtor
under the Loan Documents in connection with such collection, sale or other
realization on the Collateral, and then as provided in the Credit Agreement.
     8. Power of Attorney. Debtor hereby irrevocably constitutes and appoints
Secured Party, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of Debtor and in the name of Debtor or in its own name, from time to time
in the discretion of Secured Party, after the occurrence and during the
continuance of an Event of Default, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action and to execute and
deliver any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement and, without limiting the
generality of the foregoing, hereby gives Secured Party the power and right, on
behalf of Debtor, without notice to or assent by Debtor, to do the following
upon the occurrence and during the continuance of an Event of Default:

 

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     (a) to ask, demand, collect, receive and give acquittance and receipts for
any and all moneys due and to become due under any Collateral and, in the name
of Debtor or its own name or otherwise, to take possession of and endorse and
collect any checks, drafts, notices acceptances or other instruments for the
payment of monies due under any Collateral and to file any claim or to take any
other action or proceeding in any court of law or equity or otherwise deemed
appropriate by Secured Party for the purpose of collecting any and all such
moneys due under any Collateral whenever payable and to file any claim or to
take any other action or proceeding or otherwise deemed appropriate by Secured
Party for the purpose of collecting any and all such moneys due under any
Collateral;
     (b) to pay or discharge charges or Liens levied or placed on or threatened
against the Collateral;
     (c) to direct any Contract Obligor or other party liable under any of the
Collateral to make payment of any and all monies due and to become due
thereunder directly to Secured Party or as Secured Party may direct, and to
receive payment of and receipt for any and all moneys, claims and other amounts
due and to become due in respect of or arising out of any Collateral;
     (d) to sign and indorse any invoices, drafts against debtors, assignments,
verifications and notices in connection with or relating to the Collateral;
     (e) to commence and prosecute any suits, actions or proceedings to collect
the Collateral or any part thereof and to enforce any other right in respect of
any Collateral;
     (f) to participate in the defense of any suit, action or proceeding brought
against Debtor with respect to any Collateral, or to defend same with Debtor’s
consent;
     (g) to settle, compromise or adjust any such suit, action or proceeding as
it relates to the Collateral and, in connection therewith, to give such
discharges or releases as Secured Party may deem appropriate;
     (h) to notify each Contract Obligor in respect of any BFC Program Contracts
that such Collateral has been assigned to Secured Party and that any payments
due or to become due in respect of such Collateral are to be made directly to
Secured Party; and to communicate in its own name with any party to any BFC
Program Contract with regard to the assignment of the right, title and interest
of Debtor in and under the BFC Program Contracts hereunder and other matters
relating thereto;
     (i) to execute, in connection with any sale of Collateral provided for in
Section 6 hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and
     (j) generally to sell, transfer, pledge, make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as though
Secured Party were the absolute owner thereof for all purposes and to do, at
Secured Party’s option and at Debtor’s expense, at any time or from time to
time, all acts and things which Secured Party reasonably

 

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deems necessary to protect, preserve or realize upon the Collateral and Secured
Party’s Lien therein, in order to effect the intent of this Agreement, all as
fully and effectively as Debtor might do.
The power of attorney granted hereunder is a power coupled with an interest,
shall be irrevocable until this Agreement is terminated pursuant to Section 9,
and shall not limit the rights of Secured Party when no Event of Default shall
have occurred and be continuing.
     9. Termination. This Agreement and the security interests granted hereunder
shall not terminate until the termination of the Commitment of the Secured Party
under the Credit Agreement and the full and complete payment and satisfaction of
all Obligations (regardless of whether the Credit Agreement shall have earlier
terminated), at which time Secured Party shall notify (i) the Securities
Intermediary of the termination of the Control Agreement pursuant to Section 15
thereof and (ii) HSBC TFS of the termination of the HSBC TFS Letter pursuant to
paragraph 3 thereof.
     10. Further Assurances. At any time and from time to time, within 10 days
of request of Secured Party, and at the sole expense of Debtor, Debtor shall
duly execute and deliver any and all such further instruments, documents and
agreements and take such further actions as Secured Party may reasonably require
in order for Secured Party to obtain the full benefits of this Agreement,
including, without limitation, using Debtor’s best efforts to secure all
consents and approvals necessary or appropriate for the assignment to Secured
Party of any Collateral held by Debtor or in which Debtor has any rights not
heretofore assigned.
     11. Limitation on Duty of Secured Party. The powers conferred on Secured
Party under this Agreement are solely to protect the Secured Party’s interest in
the Collateral and shall not impose any duty upon it to exercise any such
powers. Except for the safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Secured Party shall
have no duty as to any of the Collateral. Secured Party shall be accountable
only for amounts that it actually receives as a result of the exercise of such
powers and neither Secured Party nor any of its officers, directors, employees
or agents shall be responsible to Debtor for any act or failure to act, except
for gross negligence or willful misconduct. Without limiting the foregoing,
Secured Party shall be deemed to have exercised reasonable care in the custody
and preservation of the Collateral in its possession if such Collateral is
accorded treatment substantially equivalent to that which Secured Party, in its
individual capacity, accords its own property consisting of the type of
Collateral involved, it being understood and agreed that Secured Party shall
have no responsibility for taking any necessary steps, other than steps taken in
accordance with the standard of care set forth above, to preserve rights against
any Person with respect to any Collateral.
     12. Private Sales. Debtor recognizes that Secured Party may be unable to
effect a public sale of certain of the Collateral by reason of prohibitions
contained in the Securities Act of 1933, as amended, and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such Collateral for their own account
for investment and not with a view to the distribution or resale thereof. Debtor
acknowledges and

 

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agrees that any such private sale may result in prices and other terms less
favorable than if such sale were a public sale and, notwithstanding such
circumstances, agrees that, solely by reason of such circumstances, any such
private sale shall be deemed to have been made in a commercially reasonable
manner; provided, that nothing in this Section 12 shall otherwise relieve
Secured Party of any duty to proceed in a commercially reasonable manner in
connection with such private sale. Secured Party shall be under no obligation to
delay a sale of any of the Collateral for the period of time necessary to permit
registration of any Collateral for public sale under such Act or applicable
state securities laws.
     13. Miscellaneous.
     (a) No Waiver. No failure on the part of Secured Party to exercise, and no
course of dealing with respect to, and no delay in exercising, any right, power
or remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise by Secured Party of any right, power or remedy hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. The rights and remedies hereunder provided are
cumulative and may be exercised singly or concurrently, and are not exclusive of
any rights and remedies provided by law.
     (b) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
     (c) Notices. All notices, demands and requests that any party is required
or elects to give to any other party shall be given in accordance with the
provisions of the Credit Agreement.
     (d) Amendments. The terms of this Agreement may be waived, altered or
amended only by an instrument in writing duly executed by Debtor and Secured
Party.
     (e) Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the respective successors and assigns of each of the parties
hereto; provided, that Debtor shall not assign or transfer its rights or
delegate its obligations hereunder without the prior written consent of Secured
Party.
     (f) Counterparts; Headings. This Agreement may be executed in any number of
counterparts and by any party on any counterpart, all of which together shall
constitute one and the same instrument. The headings in this Agreement are for
convenience of reference only and shall not alter or otherwise affect the
meaning hereof.
     (g) Severability. If any provision hereof is invalid or unenforceable in
any jurisdiction, then, to the fullest extent permitted by law, the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of Secured Party in order to carry out the
intentions of the parties hereto as nearly as may be possible, and the
invalidity or unenforceability of any provision in any jurisdiction shall not
affect the validity or enforceability of such provision in any other
jurisdiction.

 

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     IN WITNESS WHEREOF, the parties have caused this Security Agreement to be
duly executed and delivered as of the date first written above.

            BLOCK FINANCIAL LLC
      By:           Name:           Title:           HSBC FINANCE CORPORATION
      By:           Name:           Title:      

 

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EXHIBIT B
[FORM OF CONTROL AGREEMENT]
INVESTMENT ACCOUNT CONTROL AGREEMENT
     INVESTMENT ACCOUNT CONTROL AGREEMENT dated as of January 10, 2008 among
BLOCK FINANCIAL LLC, a Delaware limited liability company (“Debtor”), HSBC
FINANCE CORPORATION (“Secured Party”), a Delaware corporation, and HSBC INVESTOR
FUNDS (the “Securities Intermediary”), a Massachusetts business trust.
     WHEREAS, Debtor, Secured Party and H&R Block, Inc. have entered into a
Credit and Guarantee Agreement dated as of January 10, 2008 (as amended,
restated or otherwise modified and in effect from time to time, the “Credit
Agreement”) pursuant to which Secured Party has agreed, subject to the terms and
conditions thereof, to make loans to Debtor from time to time.
     WHEREAS, Secured Party has required, as a condition to its making loans
under the Credit Agreement, that Debtor execute and deliver to Secured Party a
Security Agreement (as amended, restated or otherwise modified and in effect
from time to time, the “Security Agreement”), which Security Agreement creates a
security interest in certain property of Debtor, including the Securities
Account, as hereinafter defined, maintained with Securities Intermediary by
Debtor in which certain cash balances, securities, financial assets and other
investment property are held.
     WHEREAS, Secured Party, Debtor and Securities Intermediary have agreed to
enter into this Agreement to perfect Secured Party’s security interests in the
Collateral, as defined below.
     NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
     Section 1. Meaning of “UCC”. All references herein to the “UCC” shall mean
the Uniform Commercial Code as in effect in the State of New York.
     Section 2. Establishment of Securities Account. The Securities Intermediary
hereby confirms that (i) the Securities Intermediary has established account
number 615878 in the name Debtor (such account and any successor account, the
“Securities Account”), (ii) the Securities Account is a “securities account” as
such term is defined in Section 8-501(a) of the UCC, (iii) pursuant to that the
Security Agreement, Secured Party has a security interest in Debtor’s right,
title and interest in and to such Securities Account and all cash balances,
securities, instruments, investment property and financial assets maintained
therein from time to time, including any Additional Collateral Amount (as
defined in the Security Agreement) deposited into the Securities Account at any
time (collectively, “Collateral”) and all securities entitlements relative
thereto, (iv) the Securities Intermediary shall, subject to the terms of this
Agreement, treat Secured Party as entitled to exercise the rights relating to
any Collateral credited to the Securities Account, (v) all property delivered to
the Securities Intermediary pursuant to the Security Agreement will be promptly
credited to the Securities Account and become Collateral, and (vi) all
Collateral credited to the Securities Account shall be registered in the name of
the Secured

 

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Party, endorsed to the Secured Party or in blank, and in no case will any
Collateral credited to the Securities Account be registered in the name of the
Debtor, payable to the order of the Debtor or specially endorsed to the Debtor
except to the extent the foregoing have been specially endorsed to the Secured
Party or in blank.
     Section 3. “Financial Assets” Election. The Securities Intermediary hereby
agrees that each item of property (whether investment property, financial asset,
security, instrument or cash) credited to the Securities Account shall be
treated as a “financial asset” within the meaning of Section 8-102(a)(9) of the
UCC.
     Section 4. Sole Control. Secured Party shall have sole control over the
Securities Account. Securities Intermediary shall not accept any direction,
instructions, or entitlement orders with respect to the Securities Account or
the Collateral credited thereto from any person other than Secured Party, except
as provided in Section 6 and unless otherwise ordered by a court of competent
jurisdiction.
     Section 5. Entitlement Orders. The Securities Intermediary hereby agrees
that if Secured Party delivers to the Securities Intermediary and its transfer
agent identified in Section 14 (the “Transfer Agent”) an “entitlement order”
(within the meaning of Section 8-102(a)(8) of the UCC) relating to the
Securities Account, the Securities Intermediary shall comply with such
entitlement order (and shall cause the Transfer Agent to so comply) without
further consent by the Debtor or any other person, and Debtor hereby irrevocably
authorizes such compliance. Secured Party will only issue an entitlement order
following an “Event of Default” under the Credit Agreement and for the purpose
of directing the Securities Intermediary to distribute Collateral to the Secured
Party for application to the obligations of the Debtor under the Credit
Agreement and the Security Agreement.
     Section 6. Procedures for Securities Account. (a) The Debtor may from time
to time deposit in the Securities Account cash as Additional Collateral Amounts
as provided in the Security Agreement.
     (b) The Securities Intermediary shall, or shall cause the Transfer Agent or
another servicer provider to, determine the fair market value of the assets in
the Securities Account from time to time in accordance with its then current
policies and procedures on the request of the Secured Party and shall notify, or
cause the Transfer Agent or such other service provider to notify, the Secured
Party of such fair market value.
     (c) Without Secured Party’s prior written consent: (i) neither Debtor nor
any party other than Secured Party may withdraw any Collateral from the
Securities Account and (ii) the Securities Intermediary will not comply with any
entitlement order or request to withdraw any Collateral from the Securities
Account given by any party other than Secured Party.
     Section 7. Subordination of Lien; Waiver of Set-Off. In the event that the
Securities Intermediary has or subsequently obtains by agreement, operation of
law or otherwise a security interest in the Securities Account or any Collateral
credited thereto, the Securities Intermediary hereby agrees that such security
interest shall be subordinate to the security interest of the Secured Party. The
Collateral will not be subject to deduction, set-off, banker’s lien, or any

 

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other right in favor any person other than the Secured Party except for the
payment of the customary fees and expenses of the Securities Intermediary.
     Section 8. Choice of Law. Both this Agreement and the Securities Account
shall be governed by the laws of the State of New York. Regardless of any
provision in any other agreement, for purposes of the UCC, New York shall be
deemed to be the Securities Intermediary’s location and the Securities Account
(as well as the securities entitlements related thereto) shall be governed by
the laws of the State of New York.
     Section 9. Conflict with other Agreements. There are no other agreements
entered into between the Securities Intermediary and the Debtor with respect to
the Securities Account except for a certain account application dated
December 15, 2006 (the “Account Agreement”), which the Securities Intermediary
and the Debtor agree remains in full force and effect in accordance with its
terms. In the event of any conflict between this Agreement (or any portion
thereof) and any other agreement now existing (including the Account Agreement)
or hereafter entered into, the terms of this Agreement shall prevail.
     Section 10. Indemnification The Securities Intermediary shall have no
liability under this Agreement except in the case of its gross negligence or
willful misconduct. Debtor agrees to indemnify Securities Intermediary and
Transfer Agent against all claims, liabilities and expenses incurred, sustained
or payable by Securities Intermediary or Transfer Agent arising out of this
Agreement except to the extent directly caused by the Securities Intermediary’s
or the Transfer Agent’s gross negligence or willful misconduct.
     Section 11. Amendments. No amendment or modification of this Agreement or
waiver of any right hereunder shall be binding on any party hereto unless it is
in writing and is signed by all of the parties hereto.
     Section 12. Notice of Adverse Claims. Except for the claims and interests
of the Secured Party and of Debtor in the Securities Account, the Securities
Intermediary does not know of any claim to, or interest in, the Securities
Account or in any financial asset credited thereto. If any person asserts any
lien, encumbrance or adverse claim (including any writ, garnishment, judgment,
warrant of attachment, execution or similar process) against the Securities
Account or in any Collateral carried therein, the Securities Intermediary will
promptly notify the Secured Party and Debtor thereof.
     Section 13. Successors. The terms of this Agreement shall be binding upon,
and shall inure to the benefit of, the parties hereto and their respective
corporate successors or heirs and personal representatives.
     Section 14. Notices. All notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as follows:

         
 
  Secured Party:   HSBC Finance Corporation
 
      2700 Sanders Road
 
      Prospect Heights, IL 60070
 
      Attention: Treasurer
 
      Fax no.: . (847) 205-7538

 

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      with copies to:
 
       
 
      HSBC Finance Corporation
 
      2700 Sanders Road
 
      Prospect Heights, IL 60070
 
      Attention: Deputy General Counsel-Corporate
 
      Law Fax no.: (847) 564-6366
 
       
 
      HSBC Securities, Inc.
 
      425 Fifth Avenue, Lower Level
 
      New York, N.Y. 10018
 
      (Telecopy No. (212) 525-2479)
 
      Attention: Vince Clark
 
       
 
      HSBC Taxpayer Financial Services Inc.
 
      200 Somerset Corporate Boulevard
 
      Bridgewater, N.J. 08807
 
      (Telecopy No. (908) 203-4211)
 
      attention: CEO and Managing Director
 
       
 
      HSBC Taxpayer Financial Services Inc.
 
      90 Christiana Road
 
      New Castle, DE 19707
 
      (Telecopy No. (302) 327-2507)
 
      attention: General Counsel
 
       
 
  Debtor:   Block Financial LLC
 
      One H&R Block Way
 
      Kansas City, MO 64105
 
      Attention: Becky Shulman (Telecopy
 
      No. (816) 854-8043), David Staley
 
      (Telecopy No. (816) 854-8043) and Andrew
 
      Somora (Telecopy No. (816) 802-1043)
 
       
 
  Securities Intermediary:   HSBC Investor Funds
 
      c/o HSBC Investments (USA) Inc.
 
      452 Fifth Avenue
 
      New York, NY 10018
 
      Attention: Richard Fabietti
 
      Telephone: 212 525-2387
 
      Fax No.: 917 525-1032

 

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      with a copy to:
 
       
 
      HSBC Investments (USA) Inc.
 
      452 Fifth Avenue
 
      New York, NY 10018
 
      Attention: James M. Curtis
 
      Telephone: 212 525-6961
 
      Fax No.: 917 229-5219
 
       
 
  Transfer Agent:   Citi Fund Services Ohio, Inc.
 
      3455 Stelzer Road
 
      Columbus, Ohio 43219
 
      Attention: Ayre Spencer
 
      TA Risk Management
 
      Telephone: 1-877-244-2424
 
      Telecopy: (614) 428-3061

Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
Debtor, Secured Party or Securities Intermediary may, in its sole discretion,
agree to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it; provided that approval of
such procedures may be limited to particular notices or communications.
     Section 15. Termination. The rights and powers granted herein to the
Secured Party have been granted in order to perfect its security interests in
the Securities Account, are powers coupled with an interest and will neither be
affected by the bankruptcy of Debtor nor by the lapse of time. This Agreement,
the rights and powers granted herein to the Secured Party, and the obligations
of the Securities Intermediary hereunder shall automatically terminate upon the
termination of the Secured Party’s security interests pursuant to the terms of
the Security Agreement. The Secured Party shall promptly provide written notice
of such termination to the Securities Intermediary.
     Section 16. Counterparts. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and any
party hereto may execute this Agreement by signing and delivering one or more
counterparts.

 

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     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first written above.

            BLOCK FINANCIAL LLC
      By:           Name:           Title:           HSBC FINANCE CORPORATION
      By:           Name:           Title:           HSBC INVESTOR FUNDS,
as Securities Intermediary
      By:           Name:           Title:        

 

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EXHIBIT C
[FORM OF HSBC TFS LETTER]
HSBC TAXPAYER FINANCIAL SERVICES, INC.
90 Christiana Road
New Castle, Delaware 19720
As of January 10, 2008
HSBC Finance Corporation
2700 Sanders Road
Prospect Heights, IL 60070
Block Financial LLC
One H&R Block Way
Kansas City, MO 64105
Ladies and Gentlemen:
     HSBC Taxpayer Financial Services (“HSBC TFS”) acknowledges that HSBC
Finance Corporation (the “Lender”) and Block Financial LLC (the “Borrower”) have
notified HSBC TFS that they are party to (1) a Credit and Guarantee Agreement
dated as of January 10, 2008 (as amended, restated or otherwise modified and in
effect from time to time, the “Credit Agreement”) with H&R Block, Inc., as
Guarantor, pursuant to which the Lender has agreed, subject to the terms and
conditions thereof, to make loans to the Borrower from time to time and (2) a
Security Agreement dated as of January 10, 2008 (as amended, restated or
otherwise modified and in effect from time to time, the “Security Agreement”)
pursuant to which the Borrower has granted to the Lender a security interest in
certain property, including the Borrower’s right, title and interest in and to
the Servicing Agreement and the Participation Agreement to secure the
obligations of the Borrower under the Credit Agreement. The parties are entering
into this letter agreement to set forth certain agreements among them.
     1. Definitions. Capitalized terms used herein that are not otherwise
defined herein shall have the meanings set forth in the Credit Agreement.

 

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     2. Instructions. As contemplated in the Credit Agreement and the Security
Agreement, the Borrower hereby authorizes and instructs HSBC TFS: (1) to give
notice to the Lender of the Purchase Price of all Participation Interests to be
purchased by the Borrower under the Participation Agreement, such notice to be
given to the Lender simultaneously with the giving of notice to the Borrower
under Section 4.3 of the Participation Agreement but in any case not later than
9:30 a.m., New York City time; (2) to accept from the Lender for the account of
the Borrower the proceeds of Loans made by the Lender to the Borrower under the
Credit Agreement in payment of the Purchase Price of Participation Interests to
the extent of the amount of such Loans; (3) to pay 97% of all amounts from time
to time payable to the Borrower by HSBC TFS under Section 6 of the Participation
Agreement in respect of the repurchase of Participation Interests which have
been financed by the Lender direct to the Lender to such account as it shall
specify from time to time; and (4) to pay 97% of all amounts from time to time
to be remitted to the Borrower by HSBC TFS under Section 3.4(b)(iii) of the
Servicing Agreement in respect of principal of HSBC RALs in which the Borrower
has purchased Participation Interests which have been financed by the Lender
directly to the Lender to such account as it shall specify from time to time;
provided, that so long as no Event of Default has occurred and is continuing
under the Credit Agreement, HSBC TFS is authorized and instructed to pay 3% of
all amounts from time to time to be remitted to the Borrower by HSBC TFS under
Section 3.4(b)(ii) of the Servicing Agreement in respect of HSBC RALs in which
the Borrower has purchased Participation Interests which have been financed by
the Lender directly to the Borrower to such account as it shall specify from
time to time.
     The Borrower and HSBC TFS agree that the authorizations and instructions in
the preceding paragraph may not be waived, modified or revoked without the prior
written agreement of the Lender. HSBC TFS hereby acknowledges and agrees to the
instructions in the preceding paragraph. The Lender agrees that it shall give
prompt written notice to HSBC TFS and the Borrower when all Loans borrowed and
other amounts payable under the Credit Agreement have been paid in full and no
further Commitment exists thereunder, at which time the authorizations and
instructions in the preceding paragraph and the agreements of the parties in
this letter agreement shall terminate.
     3. Miscellaneous. Except as provided in paragraph 2, all notices and other
communications provided for in this letter agreement shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

         
 
  Lender:   HSBC Finance Corporation
 
      2700 Sanders Road
 
      Prospect Heights, IL 60070
 
      Attention: Treasurer
 
      Fax no.: (847) 205-7538
 
       
 
      with a copy to:  
 
      HSBC Finance Corporation
 
      2700 Sanders Road
 
      Prospect Heights, IL 60070

 

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      Attention: Deputy General Counsel- Corporate
Law  
 
      Fax no.: (847) 564-6366
 
      HSBC Securities, Inc.
 
      425 Fifth Avenue, Lower Level
 
      New York, N.Y. 10018
 
      (Telecopy No. (212) 525-2479)
 
      Attention: Vince Clark
 
       
 
      HSBC Taxpayer Financial Services Inc.
 
      200 Somerset Corporate Boulevard
 
      Bridgewater, N.J. 08807
 
      (Telecopy No. (908) 203-4211)
 
      attention: CEO and Managing Director
 
       
 
      HSBC Taxpayer Financial Services Inc.
 
      90 Christiana Road
 
      New Castle, DE 19707
 
      (Telecopy No. (302) 327-2507)
 
      attention: General Counsel
 
       
 
  Borrower:   Block Financial
 
      One H&R Block Way
 
      Kansas City, MO 64105
 
      Attention: Becky Shulman (Telecopy
 
      No. (816) 854-8043), David Staley
 
      (Telecopy No. (816) 854-8043) and Andrew
 
      Somora (Telecopy No. (816) 802-1043)
 
       
 
  HSBC TFS:   HSBC Taxpayer Financial Services Inc.
 
      90 Christiana Road
 
      New Castle, Delaware 19720
 
      Attention: CEO and Managing Director
 
      Telephone: 908-203-4441
 
      Fax No.: 302-327-2533

Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this letter agreement shall be deemed to have been given on the date of
receipt. Without limiting paragraph 2 hereof, the Lender, the Borrower or HSBC
TFS may, in its sole discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant

 

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to procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.
     This letter agreement shall be governed by and construed in accordance with
the law of the State of New York.

 

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     By executing this letter agreement in the space below, each of the
Borrower, HSBC TFS and the Lender agree to the terms and provision of this
letter agreement.

            Very truly yours,

HSBC TAXPAYER FINANCIAL SERVICES, INC.
      By:           Name:           Title:           Accepted and agreed:

HSBC FINANCE CORPORATION
      By:           Name:           Title:           Accepted and agreed:

BLOCK FINANCIAL LLC
      By:           Name:           Title:      

 

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EXHIBIT D
[FORM OF OPINION OF STINSON MORRISON HECKER LLP]
January 10, 2008
HSBC Finance Corporation
2700 Sanders Road
Prospect Heights, Illinois 60070
Ladies and Gentlemen:
          We have acted as special counsel for Block Financial LLC (the
“Borrower”) and H&R Block, Inc. (the “Guarantor” and, together with the
Borrower, the “Credit Parties”), in connection with the Credit and Guarantee
Agreement, dated as of January 10, 2008 (the “Credit Agreement”), by and among
the Borrower, the Guarantor and HSBC Finance Corporation (the “Lender”). Unless
otherwise defined herein, capitalized terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement, and
capitalized terms defined in the Security Agreement (defined below) and used
herein, but not defined in the Credit Agreement, shall have the meanings given
to them in the Security Agreement.
          In connection with this opinion letter, we have examined originally
executed counterparts or other copies identified to our satisfaction of the
following documents (the “Reviewed Documents”):

  (a)   the Credit Agreement;     (b)   the Security Agreement, dated as of
January 10, 2008 (the “Security Agreement”), between the Borrower and the
Lender;     (c)   the Investment Account Control Agreement dated as of
January 10, 2008 (the “Control Agreement”), among the Borrower, the Lender and
HSBC Investor Funds (the “Securities Intermediary”);     (d)   the letter
agreement, dated as of January 10, 2008 (the “HSBC TFS Letter”) among the
Borrower, the Lender and HSBC TFS;     (e)   the Form UCC-1 Financing Statement
naming the Borrower, as Debtor, and the Lender, as Secured Party, filed or to be
filed by Lender in the office of the Secretary of State of Delaware in the form
attached hereto as Exhibit A (the “Financing Statement”);

 

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  (f)   the following documents regarding the Borrower: (i) the certificate of
conversion and certificate of formation and any amendments thereto certified as
of the date hereof by the Secretary of the Borrower, (ii) the Operating
Agreement, dated as of January 1, 2008, and any amendments thereto certified as
of the date hereof by the Secretary of the Borrower, (iii) a copy of the
resolutions of the sole member of the Borrower certified as of the date hereof
by the Secretary of the Borrower and (iv) a certificate of good standing dated
January 8, 2008 issued by the Secretary of State of Delaware;     (g)   the
following documents regarding the Guarantor: (i) the articles of incorporation
and any amendments thereto certified as of the date hereof by the Secretary of
the Guarantor, (ii) the by-laws and any amendments thereto certified as of the
date hereof by the Secretary of the Guarantor, (iii) a copy of the resolutions
of the Board of Directors of the Guarantor certified as of the date hereof by
the Secretary of the Guarantor and (iv) a certificate of good standing dated
January 8, 2008 issued by the Secretary of State of Missouri; and     (h)   such
other, agreements, certificates, documents, orders, pleadings, records and
papers, including, without limitation, certificates of public officials and
certificates of representatives of the Borrower and the Guarantor, as we have
deemed appropriate, in our professional judgment, to render the opinions set
forth below.

          The documents specified in items (a) through (d) above are hereinafter
collectively called the “Loan Documents” and individually, a “Loan Document.”
          In rendering the opinions and confirmations set forth herein, we have
made, without investigation on our part, the following assumptions:
     a. (i) Each Reviewed Document submitted to us as an original is authentic;
(ii) each Reviewed Document submitted to us as a certified, conformed,
telecopied, photostatic, electronic or execution copy conforms to the original
of such document, and each such original is authentic; (iii) all signatures
appearing on Reviewed Documents are genuine; (iv) the execution, delivery and
performance of each Loan Document have been duly authorized by all requisite
corporate, limited liability company, partnership or other action on the part
of, and each Loan Document has been duly executed and delivered by, the parties
thereto other than the Credit Parties, and each Loan Document is, under all
applicable laws, the valid and binding obligation of the parties thereto (other
than the Credit Parties) enforceable against such parties (other than the Credit
Parties) in accordance with its terms; (v) all natural persons who have signed
or will sign any of the Reviewed Documents had, or will have, as the case may
be, the legal capacity to do so at the time of such signature; and
(vi) excluding Reviewed Documents, there is no agreement, understanding, course
of dealing or performance, usage of trade, or writing defining, supplementing,
amending, modifying, waiving or qualifying the terms of any of the Loan
Documents.

 

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     b. The statements, recitals, representations and warranties as to matters
of fact set forth in the Loan Documents are accurate and complete. All
certificates and similar documents provided to us by public officials are
accurate and complete. The certificates provided to us by either or both of the
Credit Parties are accurate and complete as to the factual matters set forth
therein.
     c. There is no circumstance (such as, but not limited to mutual mistake of
fact or misunderstanding, fraud in the inducement, duress, undue influence,
waiver or estoppel) extrinsic to the Loan Documents which might give rise to a
defense against enforcement of any of the Loan Documents.
     d. The conduct of the parties and their respective agents in connection
with the Loan Documents and the transactions contemplated thereby has complied
with any requirements of good faith, fair dealing, and conscionability.
     e. The Collateral exists, and the Borrower has sufficient rights in the
Collateral to grant a security interest therein under Section 9-203 of the New
York UCC (defined below), the Missouri UCC (defined below) or the Delaware UCC
(defined below), as applicable, and we express no opinion as to the nature or
extent of the rights or title of the Borrower in and to any of the Collateral.
     f. Each opinion recipient is without notice of any defense against
enforcement of any rights created by, or any adverse claim to any property or
security interest transferred or created as a part of or contemplated by, the
Loan Documents.
     g. The Financing Statement has been, or will be, properly filed and indexed
in the Uniform Commercial Code records of the Secretary of State of Delaware.
     h. The Securities Intermediary is a “securities intermediary” (as defined
in § 8-102(a)(14) of the New York UCC) with respect to the Collateral which is
the subject of the Control Agreement.
          Based upon the foregoing, and subject to the assumptions,
qualifications and limitations set forth herein, we are of the opinion that as
of this date:
          1. Borrower is a limited liability company validly existing and in
good standing under the laws of the State of Delaware, Guarantor is a
corporation validly existing and in good standing under the laws of the State of
Missouri, and each Credit Party has the limited liability company or corporate
(as applicable) power to own its properties and to carry on its

 

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business as presently conducted by it as described in the Guarantor’s Form 10-K
for the year ended April 30, 2007, as amended, or any of the Guarantor’s
subsequent filings with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934.
          2. Each Credit Party has all requisite limited liability company or
corporate (as applicable) power and authority to execute, deliver and perform
its obligations under the Loan Documents to which it is a party and has taken
all necessary limited liability company or corporate (as applicable) action to
authorize the execution and delivery of, and the performance of its obligations
under, the Loan Documents to which it is a party.
          3. Each Credit Party has duly executed and delivered the Loan
Documents to which it is a party and such Loan Documents constitute the legal,
valid and binding agreements of such Credit Party, enforceable against such
Credit Party in accordance with their respective terms.
          4. The execution and delivery by each Credit Party of each Loan
Document to which it is a party do not, and the performance of its obligations
thereunder will not, (a) violate the Borrower’s certificate of formation or
Operating Agreement, dated as of January 1, 2008, or the Guarantor’s articles of
incorporation or by-laws, as the case may be, (b) violate any applicable law,
statute or regulation of the United States or the State of Missouri that we,
based upon the scope of our representation of and our experience with such
Credit Party, reasonably recognize as applicable to such Credit Party with
respect to transactions of the type contemplated by the Loan Documents,
(c) violate any order, writ, judgment, injunction, decree, determination or
award of any court or other Governmental Authority binding upon such Credit
Party of which we have knowledge, or (d) breach, constitute a default under,
result in the acceleration of (or entitle any party to accelerate) the maturity
of, any obligation of a Credit Party under, or result in or require the creation
of any lien upon or security interest in (other than pursuant to the Loan
Documents) any of its property pursuant to the terms of, the Bank Revolvers and
the other financing agreements and instruments and the BFC Program Contracts
listed on Exhibit B attached hereto.
          5. No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority of the United States, the State of
Missouri or the State of Delaware is required for the execution and delivery by
a Credit Party, or the validity or enforceability against such Credit Party, of
each Loan Document to which it is a party other than (i) such as have been
obtained, made or given and are in full force in effect, (ii) the filing of
financing statements (including the Financing Statement) under the Uniform
Commercial Code pursuant to the requirements of the Loan Documents and (iii) any
authorization, approval, notice, filing or other action which is not a condition
required to be satisfied on or before the Effective Date but is itself a future
obligation of such Credit Party under a Loan Document.
          6. To our knowledge, there is no suit, action or proceeding pending
against either Credit Party before any court, governmental or regulatory
authority, agency or commission, or board of arbitration or overtly threatened
against either Credit Party in writing which (whether pending or threatened)
challenges the legality, validity or enforceability of any Loan Document.

 

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          7. The Security Agreement is effective to create in favor of the
Lender a valid security interest in all right, title and interest of the
Borrower in the Collateral described in the Security Agreement to secure the
Obligations. Assuming that the Financing Statement was filed in the office of
the Secretary of State of Delaware (the “Filing Office”), the security interest
of the Lender in the Collateral has been duly perfected in that portion of the
Collateral in which a security interest may be perfected by the filing of a
financing statement under the Delaware UCC. Without limiting the foregoing, the
security interest of the Lender in the Securities Account has been perfected
pursuant to the execution and delivery of the Control Agreement.
          8. The making of the Loans and the application of the proceeds thereof
as provided in the Credit Agreement do not violate Regulations T, U and X of the
Board of Governors of the Federal Reserve Board.
          9. The Borrower is not an “investment company” or a company
“controlled by” an “investment company,” as such terms are defined in the
Investment Company Act of 1940, as amended.
     Our opinions set forth above are subject to the following additional
qualifications and limitations:

a.   The enforceability of each Loan Document is subject to the effect of
applicable bankruptcy, insolvency, reorganization, receivership, arrangement,
moratorium, assignment for the benefit of creditors and other similar laws
affecting the rights and remedies of creditors. This qualification includes,
without limitation, the avoidance, fraudulent transfer and preference provisions
of the federal Bankruptcy Code of 1978 (11 U.S.C. §§ 101 et seq.), as amended,
and the fraudulent transfer and conveyance laws of the State of Missouri, and we
render no opinion that any transaction provided for in the Loan Documents would
not be subject to avoidance or otherwise adversely affected under such
provisions or laws.

b.   The enforceability of each Loan Document is subject to the effect of
principles of equity (including those respecting the availability of specific
performance), whether considered in a proceeding at law or in equity, and the
limitations imposed by applicable procedural requirements of applicable state or
federal law.

c.   The enforceability of each Loan Document is subject to (1) the effect of
generally applicable rules of law that limit or deny the enforceability of
provisions (i) purporting to waive defenses or rights or the obligations of good
faith, fair dealing, diligence and reasonableness; (ii) purporting to authorize
a party to take discretionary independent actions for the account of, or as
agent or attorney-in-fact for, a Credit Party under a Loan Document; or
(iii) purporting to provide for the indemnification or exculpation of a party
with respect to such party’s intentional acts or gross negligence, with respect
to securities law violations or to the extent that such provisions violate
public policy considerations; and (2) the effect of generally applicable rules
of law that may, where a portion of the contract may be unenforceable, limit the
enforceability of the balance of the contract to

 

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    circumstances in which the unenforceable portion is not an essential part of
the transaction or contract.

d.   We express no opinion as to the enforceability of (i) any contractual
provision which either directly or indirectly limits or tends to limit the time
in which any suit or action may be instituted by a party; (ii) any contractual
provision which requires a party to execute and deliver additional agreements or
instruments other than agreements or instruments which are limited in effect to
effectuating the express terms of a Loan Document and do not expand or modify
such terms; (iii) any waiver by a party of personal service of process or any
consent of a party to service of process upon it in a manner that does not
satisfy the requirements of applicable law; (iv) any waiver by a party of its
right to a jury trial, (v) any provision of a Loan Document that purports to
waive or modify the rules identified in Section 9-602 of the applicable Uniform
Commercial Code; and (vi) any contractual provision which would have the effect
of giving the Lender cumulative or duplicative remedies, to the extent such
cumulative or duplicate remedies purport to or would have the effect of
compensating the Lender in amounts in excess of the actual amount of the
indebtedness owed to the Lender and other loss suffered by the Lender.

e.   The enforceability of any right of set-off in any of the Loan Documents is
subject to the effect of common law principles pertaining to set-off, such as
mutuality of obligations, maturity of obligations, and the like.

f.   The enforceability of a Loan Document which purports to be a guarantee of,
or the grant of a lien or security interest for, the payment or performance of
obligations of another person (“guaranteed obligations”), including, without
limitation, the applicable provisions of the Credit Agreement, is subject to the
effect of generally applicable rules of law that may discharge the guarantor or
grantor of such lien or security interest to the extent that (i) action or
inaction by the beneficiary of the guaranteed obligations impairs the value of
collateral securing guaranteed obligations to the detriment of such guarantor or
grantor or (ii) the guaranteed obligations are materially modified.

g.   With respect to the recovery of attorneys’ fees under the Loan Documents,
to the extent that the laws of the State of Missouri are applicable, the
provisions of Mo. Rev. Stat. § 408.092 limit the right to recover attorneys’
fees in connection with a “credit agreement” (as defined in Mo. Rev. Stat. §
432.045.1) and reads in pertinent part as follows:

      Notwithstanding any other provision of law to the contrary, attorneys’
fees are permitted to enforce a credit agreement provided the enforcing attorney
is a licensed member of the Missouri Bar or is authorized to practice law in
Missouri, and such fees meet one of the following requirements:

     (1) Such fees are included in a written credit agreement, and are not
otherwise prohibited by law; or

 

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     (2) Such fees do not exceed fifteen percent of the outstanding credit
balance in default, provided such credit was extended by a for-profit business
or credit union. ...
At the court’s discretion, additional fees may be awarded to the attorney for
the prevailing party.
A “credit agreement” is defined in Mo. Rev. Stat. § 432.045.1 as “an agreement
to lend or forebear repayment of money, to otherwise extend credit, or to make
other financial accommodation.”

h.   With respect to the enforceability of any contractual provision stating
that the Credit Agreement or any of the other Loan Documents or the obligations,
rights or remedies of the parties thereunder shall be governed by or construed
or determined in accordance with the laws of the State of New York, we call your
attention to the following: Missouri courts generally apply the rules of
Section 187 of the Restatement (Second) of Conflicts of Law (1971) in deciding
whether to give effect to the parties’ choice of the state whose law will govern
the interpretation of their contractual rights and duties. State ex rel. Geil v.
Corcoran, 623 S.W.2d 557, 559 (Mo. Ct. App. 1981); Davidson & Associates, Inc.
v. Internet Gateway, 334 F. Supp. 2d 1164, 1175 (E.D. Mo. 2004). Section 187 of
the Restatement provides in pertinent part as follows:

  (1)   The law of the state chosen by the parties to govern their contractual
rights and duties will be applied if the particular issue is one which the
parties could have resolved by an explicit provision in their agreement directed
to that issue.     (2)   The law of the state chosen by the parties to govern
their contractual rights and duties will be applied even if the particular issue
is one which the parties could not have resolved by an explicit provision in
their agreement directed to that issue unless either:

  (a)   the chosen state has no substantial relationship to the parties or the
transaction and there is no other reasonable basis for the parties’ choice, or  
  (b)   application of the law of the chosen state would be contrary to a
fundamental policy of a state which has a materially greater interest than the
chosen state in the determination of the particular issue and which, under the
rule of § 188 [of the Restatement], would be the state of the applicable law in
the absence of an effective choice of law by the parties.

     While the Missouri choice of law rules are, nevertheless, not entirely
settled, we believe that a state or federal court sitting in the State of
Missouri, properly presented with the question and properly applying the choice
of law rules of the State of Missouri should honor the provisions of a Loan
Document stating that, to the extent provided therein, the rights and duties of
the parties thereto are

 

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to be governed by the laws of the State of New York (except as to matters of
procedure which may be governed by the laws of the forum state) unless either
(a) the State of New York has no substantial relationship to the parties to such
Loan Document or the transactions contemplated by such Loan Document and there
is no reasonable basis for such parties’ choice or (b) application of the laws
of the State of New York would be contrary to a fundamental policy of the State
of Missouri and the State of Missouri has materially greater interest than the
State of New York in the determination of the particular issue.

i.   With respect to the enforceability of any contractual provision in the
Credit Agreement or any other Loan Document whereby the parties submit to the
jurisdiction of the federal and New York State courts located in the City or
County of New York in connection with any suit, action or proceeding related to
such agreement or any of the matters contemplated thereby, we call your
attention to the following: Missouri courts generally follow the holding of the
Missouri Supreme Court in High Life Sales Co. v. Brown-Forman Corp., 823 S.W.2d
493 (Mo. 1992) that a forum selection clause in a contract should be enforced
unless it is unfair or unreasonable to do so. Id. at 494. Factors considered by
Missouri courts in determining the fairness of enforcing forum selection clauses
include (1) whether a forum selection clause is a part of an adhesive contract
(i.e., “one in which the parties have unequal standing in terms of bargaining
power (usually a large corporation versus an individual) and often involv[ing]
take-it-or-leave-it provisions in printed form contracts”, id. at 497),
(2) whether the forum selection clause was neutral and reciprocal (Id.) and
(3) whether inclusion of the forum selection clause in the contract was the
product of fraud or coercion (Marano Enterprises v. Z-Teca Restaurants, L.P.,
254 F.3d 753, 757 (8th Cir. 2001)). There are also Missouri cases which have
found a forum selection clause to be unreasonable (e.g., High Life Sales).

j.   In addition to the other qualifications set forth in this opinion letter
regarding the enforceability of a Loan Document under the laws of the State of
Missouri, certain waivers, procedures, remedies and other provisions of any Loan
Document covered by such opinion may be rendered unenforceable or limited by the
laws, regulations or judicial decisions of the State of Missouri within the
scope of this opinion letter, but such laws, regulations and judicial decisions
would not render any of such Loan Documents invalid as a whole under the laws of
the State of Missouri and would not make the remedies available under such Loan
Documents inadequate for the practical realization of the principal rights and
benefits purporting to be afforded thereby, except for the economic consequences
of any judicial, administrative or other delay or procedure which may be imposed
by applicable law.

k.   With respect to our opinions regarding security interests set forth in
opinion paragraph 7 above, we advise you that (i) any security interest in
“proceeds” (as defined in the New York UCC, the Missouri UCC or the Delaware
UCC, as applicable) of Collateral may be limited as to perfection and
effectiveness to the extent provided in Section 9-315 of the New York UCC, the
Missouri UCC or the Delaware UCC, as applicable; and (ii) the Lender’s rights
under the Loan Documents are subject to the rights of the following parties
under circumstances described in the applicable sections of the New York UCC,
the Missouri UCC or the Delaware UCC, as applicable, set forth below:
(a) purchasers of

 

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    chattel paper or instruments under the circumstances described in
Section 9-330 or (b) holders in due course of negotiable instruments, holders to
whom negotiable documents of title have been duly negotiated, or protected
purchasers of securities, in each case, under the circumstances described in
Section 9-331.

l.   We note that in order to continue the perfection of the security interest
in that portion of the Collateral which has been perfected by the filing of the
Financing Statement under the Delaware UCC for more than five (5) years, a
continuation statement must be filed as to such Financing Statement in the
Filing Office within six (6) months prior to the expiration of each consecutive
five-year period (with the first such period commencing on the date the
Financing Statement was duly filed) and in all respects in compliance with
Article 9, Part 5 of the Delaware UCC.

m.   We call your attention to the fact that with respect to any security
interest in Collateral perfected by the filing of the Financing Statement under
the Delaware UCC, the Financing Statement will not be effective to perfect a
security interest under the Delaware UCC in (i) any Collateral acquired by the
Borrower more than four (4) months after it changes it name so as to make the
Financing Statement seriously misleading, unless a new appropriate financing
statement indicating its new name is properly filed before the expiration of
such four (4) months and (ii) any Collateral four (4) months after it changes
its jurisdiction of organization (or if earlier, when perfection under the
Delaware UCC would have ceased) unless such security interest is perfected in
such new jurisdiction before that termination occurs.

n.   We are expressing no opinion as to the priority of any lien or security
interest created by the Loan Documents.

o.   We call your attention that Section 522 of the federal Bankruptcy Code
limits the extent to which property acquired by a debtor after the commencement
of a case under the federal Bankruptcy Code may be subject to a security
interest arising from a security agreement entered into by such debtor before
the commencement of such case.

p.   We do not express any opinion as to the attachment or perfection of a
security interest in deposit accounts, letter-of-credit rights, money or
commercial tort claims as those terms are defined in the New York UCC, the
Missouri UCC or the Delaware UCC, as applicable.

q.   We express no opinion with respect to any laws, rules or regulations
governing the issuance or sale of securities.

r.   In connection with any matters confirmed by us with respect to the
existence or absence of facts, conditions or circumstances, the words “to our
knowledge”, “of which we have knowledge”, “known to us” and words of similar
import mean that in the course of performing legal services on behalf of any
Credit Party, we are without conscious awareness of facts or other information
that such confirmed matters are untrue, and in preparing this opinion letter, we
have not undertaken any independent verification of such confirmed matters
beyond our recollection of legal services currently or previously

 

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    performed by us for the Credit Parties, and have made no investigation or
inquiry with any Credit Party or any other persons regarding such confirmed
matters except as stated above in this opinion letter. For purposes of the
preceding sentence, the terms “to our knowledge”, “of which we have knowledge”,
“known to us” and similar phrases refer to the actual present knowledge of those
lawyers of Stinson Morrison Hecker LLP who have devoted substantive attention to
the matters relating to the Loan Documents and the other transactions of the
Credit Parties occurring on the date hereof, and not to the knowledge of Stinson
Morrison Hecker LLP as a firm or its partners or employees generally.

s.   Our opinions set forth in this opinion letter are based upon the facts in
existence and the laws in effect on the date hereof, and we expressly disclaim
any obligation to update or supplement our opinions in response to changes in
the law becoming effective hereafter or future events or circumstances affecting
the transactions contemplated by the Loan Documents.

          Our opinions and statements expressed herein are restricted to matters
governed by (a) the federal laws of the United States of America; (b) the laws
of the State of Missouri, including, without limitation, the Uniform Commercial
Code as in effect in the State of Missouri, Mo. Rev. Stat. §§ 400.1-101 et seq.
(the “Missouri UCC”); (c) with respect to the opinions given as to the Borrower
set forth in opinion paragraphs 1, 2, 3, 4(a) and 5, the Delaware Limited
Liability Company Act, 6 Del. Code Ann. §§ 18-101 et seq.; (d) with respect to
the opinions given as to the Borrower set forth in the first and third sentences
of opinion paragraph 7, Article 9 of the Uniform Commercial Code as in effect in
the State of New York, 38 New York Consol. Laws §§ 9-101 et seq. (the “New York
UCC”); and (e) with respect to the opinions given as to the Borrower set forth
in opinion paragraph 5 and the second sentence of opinion paragraph 7, Article 9
of the Uniform Commercial Code as in effect in the State of Delaware, 6 Del.
Code Ann. §§ 9-101 et seq. (the “Delaware UCC”). Except as indicated in the
preceding sentence, we express no opinion as to any matter rising under the laws
of any other jurisdiction, including, without limitation, the statutes,
ordinances, rules and regulations of counties, towns, municipalities and special
political subdivisions of the State of Missouri. To the extent that any Reviewed
Document is governed by or subject to the laws of any state or jurisdiction not
specified above in this paragraph with respect to such opinion or confirmation,
we have assumed that the laws of such state or jurisdiction (without regard to
conflicts of laws principles) are substantively identical to the laws of the
State of Missouri.
          This opinion letter is solely for the benefit of the addressee hereof
in connection with the execution and delivery of the Loan Documents and may not
be relied upon for any other purpose or by any other person for any purpose,
without in each instance our prior written consent. We understand that this
opinion letter may be included in closing binders with respect to the
transactions contemplated by the Loan Documents.
Very truly yours,

 

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EXHIBIT A

Financing Statement

[Attached]

 

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EXHIBIT B
Financing Agreements and Instruments

1.   Indenture dated October 20, 1997 among Block Financial LLC (the “Company”),
H&R Block, Inc. (the “Guarantor”) and Deutsche Bank Trust Company Americas
(f/k/a Bankers Trust Company) (the “First Trustee”), together with:

  a.   The First Supplemental Indenture dated as of April 18, 2000 among the
Company, the Guarantor, the First Trustee and The Bank of New York, as separate
trustee under the Indenture (the “Second Trustee”).     b.   The Company’s 8.50%
Notes due 2007, which are guaranteed by the Guarantor pursuant to the guarantees
endorsed on said Notes.     c.   The Officers’ Certificate of the Company dated
October 26, 2004 establishing the terms of the Notes described in d. below.    
d.   The Company’s 5.125% Notes due 2014, which are guaranteed by the Guarantor
pursuant to the guarantees endorsed on said Notes.

2.   The Amended and Restated Five-year Credit and Guarantee Agreement dated as
of August 10, 2005 among the Company, the Guarantor, the financial institutions
which are Lender parties thereto, and JP Morgan Chase Bank, N.A., as
Administrative Agent (in such capacity, the “Administrative Agent”), as amended
by the First Amendment dated as of November 28, 2006 among the Company, the
Guarantor, the Lender parties and the Administrative Agent and the Second
Amendment dated as of November 19, 2007 among the Company, the Guarantor, the
Lender parties and the Administrative Agent.

3.   The Five-Year Credit and Guarantee Agreement dated as of August 10, 2005
among the Company, the Guarantor, the financial institutions which are Lender
parties thereto, and the Administrative Agent, as amended by the First Amendment
dated as of November 28, 2006 among the Company, the Guarantor, the Lender
parties and the Administrative Agent and the Second Amendment dated as of
November 19, 2007 among the Company, the Guarantor, the Lender parties and the
Administrative Agent.

4.   The HSBC Retail Settlement Products Distribution Agreement, dated as of
September 23, 2005 among HSBC Bank USA, National Association, HSBC TFS,
Beneficial Franchise Company Inc., Household Tax Masters Acquisition
Corporation, H&R Block Services, Inc., H&R Block Tax Services, Inc., H&R Block
Enterprises, Inc., H&R Block Eastern Enterprises, Inc., HRB Digital LLC
(successor by merger to H&R Block Digital Tax Solutions, LLC), H&R Block and
Associates, L.P. (now dissolved), HRB Innovations Inc. (formerly known as HRB
Royalty, Inc.), HSBC Finance Corporation and the Guarantor, as amended by the
Joinder and First Amendment to Program Contracts dated as of November 10, 2006
and the Second Amendment to Program Contracts dated as of November 13, 2006, by
and among the parties thereto, including, the Lender and the Guarantor, and as
further amended from time to time, and any restatement, extension, renewal and
replacement thereof.

 

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5.   The First Amended and Restated HSBC Refund Anticipation Loan and IMA
Participation Agreement, dated as of November 13, 2006, by and among the
Borrower, HSBC Bank USA, National Association, HSBC TFS and HSBC Trust Company
(Delaware), National Association, as amended from time to time, and any
restatement, extension, renewal and replacement thereof.

6.   The First Amended and Restated HSBC Settlement Products Servicing Agreement
dated as of November 13, 2006, among HSBC Bank USA, National Association, HSBC
TFS, HSBC Trust Company (Delaware), N.A., and the Borrower, as amended from time
to time, and any restatement, extension, renewal and replacement thereof.

7.   The HSBC Settlement Products Indemnification Agreement dated as of
September 23, 2005 among HSBC Bank USA, National Association, HSBC TFS,
Household Tax Masters Acquisition Corporation, Beneficial Franchise Company
Inc., H&R Block Services, Inc., H&R Block Tax Services, Inc., H&R Block
Enterprises, Inc., H&R Block Eastern Enterprises, Inc., HRB Digital LLC
(successor by merger to H&R Block Digital Tax Solutions, LLC), H&R Block and
Associates, L.P. (now dissolved), HRB Innovations Inc. (formerly known as HRB
Royalty, Inc.) and the Company, as amended by the Joinder and First Amendment to
Program Contracts dated as of November 10, 2006 and the Second Amendment to
Program Contracts dated as of November 13, 2006, and as further amended from
time to time, and any restatement, extension, renewal and replacement thereof.

8.   The Amended and Restated Bridge Credit and Guarantee Agreement (HSBC),
dated as of December 20, 2007, among the Borrower, the Guarantor, the lenders
party thereto and HSBC Bank USA, National Association, as administrative agent.

9.   The Amended and Restated Bridge Credit and Guarantee Agreement (BNPP),
dated as of December 20, 2007, among the Borrower, the Guarantor, the lenders
party thereto and BNP Paribas, as administrative agent.