Exhibit 10.26
EXECUTION COPY
SECOND AMENDMENT TO
PROGRAM CONTRACTS
     This Second Amendment to Program Contracts (this “Second Amendment”), dated
as of November 13, 2006, is made by and among the following parties
(collectively, the “Parties”):
     HSBC Bank USA, National Association, a national banking association (“HSBC
NA”);
     HSBC Trust Company (Delaware), N.A., a national banking association (“HSBC
Trust”);
     HSBC Taxpayer Financial Services Inc., a Delaware corporation (“HSBC TFS”);
     Beneficial Franchise Company Inc., a Delaware corporation (“Beneficial
Franchise”);
     H&R Block Services, Inc., a Missouri corporation (“Block Services”);
     H&R Block Tax Services, Inc., a Missouri corporation (“Block Tax
Services”);
     H&R Block Enterprises, Inc., a Missouri corporation (“Block Enterprises”);
     H&R Block Eastern Enterprises, Inc., a Missouri corporation (“Block Eastern
Enterprises”);
     H&R Block Digital Tax Solutions, LLC, a Delaware limited liability company
(“Block Digital”);
     H&R Block and Associates, L.P., a Delaware limited partnership (“Block
Associates”);
     HRB Royalty, Inc., a Delaware corporation (“Royalty”);
     HSBC Finance Corporation, a Delaware corporation (“HSBC Finance”); and
     H&R Block, Inc., a Missouri corporation (“H&R Block”).
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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RECITALS
     A. All the Parties hereto, other than HSBC Trust, entered into that certain
HSBC Retail Settlement Products Distribution Agreement, dated as of
September 23, 2005 (the “Original Retail Distribution Agreement”).
     B. All the Parties hereto, including HSBC Trust, as well as Block Financial
Corporation, a Delaware corporation (“BFC”), entered into that certain Joinder
and First Amendment to Program Contracts, dated as of November 10, 2006 (the
“First Amendment”), which amended the Original Retail Distribution Agreement and
the other Program Contracts (as defined therein).
     C. The Parties hereto desire (i) to include certain pre-file, unsecured
loans (referred to herein as instant money advances or “IMAs”) as a type of
Settlement Product that may be made available to Clients, and (ii) to amend the
Original Retail Distribution Agreement and other Program Contracts, each as
amended by the First Amendment, to include IMAs as Settlement Products offered
pursuant to the Settlement Products Program (the Original Retail Distribution
Agreement, as amended by the First Amendment and this Second Amendment, and all
subsequent amendments and restatements thereof and supplemental thereto, is
referred to as the “Retail Distribution Agreement”).
     D. Concurrently with the execution of this Second Amendment, certain of the
Parties hereto and BFC are executing a First Amended and Restated HSBC Refund
Anticipation Loan and IMA Participation Agreement, dated as of the date hereof
(the “First A&R Participation Agreement”), and a First Amended and Restated HSBC
Settlement Products Servicing Agreement, dated as of the date hereof (the “First
A&R Servicing Agreement”).
AGREEMENT
     ACCORDINGLY, the Parties to this Second Amendment agree as follows:
     Section 1 Definitions. All capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the HSBC
Appendix of Defined Terms and Rules of Construction attached to the Original
Retail Distribution Agreement (the “Appendix of Defined Terms and Rules of
Construction”), as amended by the First Amendment and as hereinafter amended by
this Second Amendment.
     Section 2 Amendments.
          (a) Amendments to the Appendix of Defined Terms and Rules of
Construction.
                         (i) The following existing definitions set forth in the
Appendix of Defined Terms and Rules of Construction are hereby amended to read
as follows:

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     “Applicant” shall mean a Person who has submitted an Application to the
Originator and such Application shall be deemed to relate to the Calculation
Period in which the applied-for Settlement Product would be deemed to be issued.
     “Applicant Information File” shall mean the electronic file transmitted to
the Originator by an ERO containing information pertaining to an Applicant
including, but not limited to (i) Applicant identification information from the
Applicant’s Application including, but not limited to, the Applicant’s name,
address and telephone number, (ii) the amount of the ERO Charges, if any,
(iii) the amount of the Refund Due (except with respect to IMAs), and
(iv) certain other qualifying Application information as reasonably requested by
the Originator subject to the ability of the ERO to collect and provide such
information, each used by the Originator solely for those purposes set forth
pursuant to the terms and conditions of the Program Contracts.
     “Best in Market Price” shall mean, [***] .
     “Client” shall mean a customer of any Block Office or of the Block Digital
Channel, as applicable, that is rendered tax preparation, transmission, filing
or other similar services at such office or channel.
     “Deposit Account” shall mean a Refund Deposit Account or the General
Collection Deposit Account.
     “Disbursement Check” shall mean, with respect to a Settlement Product, a
cashier’s check drawn on the Originator and payable to or at the direction of a
Settlement Products Client in the amount authorized by the Originator (which
shall not include Delinquent ERO Charges, ERO Charges, RAL Principal Amounts,
IMA Principal Amounts, First Priority Prior Indebtedness, Second Priority Prior
Indebtedness, Other Required Deductions or Authorized Deductions).
     “Electronic Disbursement” shall mean, with respect to any Settlement
Product, any disbursement of proceeds (but excluding Disbursement Checks) of
such product made by the Originator, directly or indirectly, to or at the
direction of a Settlement Products Client in the amount authorized by the
Originator, whether via ACH credit, wire transfer, stored value card, debit
card, secured credit card or other electronic means (which amount shall not
include ERO charges, Delinquent ERO Charges, ERO Charges, RAL Principal Amounts,
IMA Principal Amounts, First Priority Prior Indebtedness, Second Priority Prior
Indebtedness, Other Required Deductions or Authorized Deductions).

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     “Final Credit Criteria” shall mean, with respect to HSBC RALs and HSBC
IMAs, as applicable, the related final credit criteria for the origination of
HSBC RALs and HSBC IMAs, as applicable, as established by the Originator
pursuant to the terms of the Retail Distribution Agreement.
     “Final Fees” shall mean the final fees for Settlement Products established
by the Originator pursuant to the terms of the Retail Distribution Agreement
including, but not limited to, the Refund Account Fee, the RAL Fee and the IMA
Fee.
     “Initial Credit Criteria” shall mean the initial credit criteria for the
origination of HSBC RALs and HSBC IMAs as established by the Originator pursuant
to the terms of the Retail Distribution Agreement.
     “Initial Fees” shall mean the initial fees for Settlement Products
established by the Originator pursuant to the terms of the Retail Distribution
Agreement including, but not limited to, the Refund Account Fee, the RAL Fee and
the IMA Fee.
     “Late Fee” shall mean, with respect to a Delinquent RAL or a Delinquent
IMA, the late fee that may be charged on such Delinquent RAL or Delinquent IMA
as disclosed to the Settlement Products Client in the Application and/or the
TILA disclosure for such RAL or IMA.
     “Note” shall mean with respect to any HSBC RAL, the promissory note or
other evidence of indebtedness or agreements evidencing the indebtedness of an
Obligor under such HSBC RAL.
     “Obligor” shall mean the Settlement Products Client obligated to make
payments to the Originator with respect to any HSBC RAL or HSBC IMA.
     “Originator” shall mean the originator of Retail Settlement Products
through Block Offices and Digital Settlement Products through the Block Digital
Channel; provided, however, that (i) with respect to Retail Settlement Products,
other than IMAs, issued through the Retained Locations in the HSBC NA States,
the term “Originator” refers only to HSBC NA; (ii) with respect to Retail
Settlement Products, other than IMAs, issued through the Assigned Locations in
the HSBC Trust States and Digital Settlement Products issued through the Block
Digital Channel, the term “Originator” refers only to HSBC Trust; and (iii) with
respect to IMAs issued through any Block Office, the term “Originator” refers to
HSBC NA.
     “Participant” shall mean any Person who has purchased or otherwise owns a
Participation Interest in an HSBC RAL or HSBC IMA.

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     “Participation Interest” shall mean an undivided ownership interest in, and
in an amount equal to the Applicable Percentage of, all of the Originator’s
right, title and interest in and to an HSBC RAL or an HSBC IMA created on and
after the effective date of the Participation Agreement, including all monies
due or to become due with respect thereto and all collections pertaining thereto
and other proceeds (as defined in the UCC as in effect in the State of
Delaware), which interest is created pursuant to, or contemplated by, the
Participation Agreement.
     “Principal Amount” of an HSBC RAL or an HSBC IMA shall mean the dollar
amount, if any, that the Originator lends to a Settlement Products Client based
upon such Client’s Application and the Originator’s credit criteria (which
principal amount shall include all payments of such Client’s ERO Charges, if
any, made by the Originator to such Client’s ERO, RAL Fees or IMA Fees, as the
case may be, and, with respect to HSBC RALs, Refund Account Fees (unless such
charges were paid by the Client at the time of preparation of such Client’s
Return(s)) and all Disbursements made by the Originator directly to such
Client).
     “Prior Debt Indicator File” shall mean a file provided from time to time
upon the request of any Block Company by the HSBC Companies containing a listing
of Persons and their respective social security numbers who owe any Defaulted
HSBC RALs, Defaulted HSBC IMAs, Prior Indebtedness, Delinquent ERO Charges, or
other fees, charges or indebtedness that the HSBC Companies may seek to collect
from such Person whether from the proceeds of any Settlement Product or
otherwise.
     “Prior Indebtedness” shall mean any outstanding obligations of a Settlement
Products Client for (ii) a refund anticipation loan or any other similar loan
product secured by a security interest in a deposit account into which the
borrower’s anticipated tax refund is to be deposited, or (ii) an unsecured
instant money advance loan or any other similar loan product issued to a
borrower based on such borrower’s pay stub prior to the preparation of a final
Return, in either case with all required documentation relating thereto, which
was made to such Settlement Products Client in a prior year by any originator;
provided, however, that prior to the Tax Period beginning on January 1, 2008,
Prior Indebtedness shall not include any instant money advance loan or similar
loan product that would otherwise constitute Second Priority Prior Indebtedness.
     “RAL Price Reduction” shall mean a reduction in pricing for RALs made
pursuant to Section 9.6(c) of the Retail Distribution Agreement.

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     “Refund Paid” shall mean the amount of the tax refund paid to a Settlement
Products Client by a Governmental Authority.
     “Repurchase Value” of a Participation Interest in an HSBC RAL or an HSBC
IMA shall equal the remainder of (i) the product of (A) the Applicable
Percentage multiplied by (B) the sum of (I) the Principal Amount plus (II) the
Late Fees, minus (ii) any amount remitted to BFC (or its permitted assignees,
successors and assigns pursuant to the Participation Agreement) pursuant to
clauses (ii), (iii) and (iv) of Section 3.4(b) of the Servicing Agreement, with
respect to such Participation Interest.
     “Retail Settlement Products” shall mean, collectively, RALs, RACs, IMAs,
and any similar financial product or service of the Originator offered to
Clients at Block Offices under the Program Contracts.
     “Security Agreement” shall mean, with respect to any HSBC RAL, the security
agreement or other instrument pursuant to which the related Obligor granted to
the Originator a security interest in collateral to secure such Obligor’s
obligations pursuant to the related Note.
                         (ii) The following additional definitions are hereby
added to the Appendix of Defined Terms and Rules of Construction:
     “Calculation Period” shall mean the period beginning on November 1 of a
calendar year and ending on December 31 of the immediately following calendar
year; provided that with respect to any Settlement Product originated in
November or December of any calendar year, such Settlement Product shall be
deemed to have been originated in the first month of the immediately following
calendar year. By way of example, the 2007 Calculation Period will be the period
beginning on November 1, 2006 and ending on December 31, 2007.
     “Defaulted HSBC IMA” shall mean each Participated HSBC IMA which, in
accordance with the IMA Guidelines and HSBC TFS’s customary and usual servicing
procedures for IMAs, the Originator has charged off as uncollectible; provided,
however, that no HSBC IMA originated during any Calculation Period shall be
classified as a Defaulted HSBC IMA prior to the close of business on the last
day of such Calculation Period.
     “Delinquent IMA” shall mean an HSBC IMA which has become due by its terms
and repayment has not been made by the applicable Settlement Products Client by
the applicable due date.

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     “Eligible IMA” shall mean each HSBC IMA:
     (a) that was created by the Originator and is in compliance in all material
respects, with the applicable Distribution Agreement and applicable Laws;
     (b) for which HSBC TFS supplied a disclosure statement satisfying the
requirements of the TILA to the applicable Agent for distribution to the
Settlement Products Client; and
     (c) as to which, at the time of the sale of the Participation Interest in
such HSBC IMA to any of the Block Companies, or any of their respective
Affiliates, Originator had good and marketable title thereto free and clear of
all Liens arising under or through HSBC TFS or any of its Affiliates.
     “General Collection Deposit Account” shall mean a deposit account or
subaccount established by Servicer for the purpose of depositing collections
received on account of a Settlement Product issued to a Client that are not
otherwise required to be deposited into a Refund Deposit Account in accordance
with Section 3.2.
     “HSBC IMA” shall mean any IMA made by the Originator through a Block Office
pursuant to or under color of (a) the Retail Distribution Agreement or a
Franchisee Distribution Agreement, as applicable, or (b) a referral to the
Originator by a Block Company, a Franchisee or either of their Affiliates
pursuant to a contractual electronic filing arrangement with any other Person.
     “Instant Money Advance” or “IMA” means a loan issued to a Client prior to
the preparation of a final Return with all required documentation relating
thereto, which loan is not secured.
     “IMA Documents” shall mean, with respect to each HSBC IMA, the related
Application, the related loan agreement and disclosure statement and any and all
other documents executed and delivered in connection with the origination or
subsequent modification of such HSBC IMA.
     “IMA Fee” means shall mean the aggregate amount payable to the Originator
by the Settlement Products Client for the privilege of obtaining an HSBC IMA,
the calculation of which is set forth on Schedule 9.3 to the Retail Distribution
Agreement, which amount will include the finance charge. For the avoidance of
doubt, IMA Fees shall not include any account setup fees.
     “IMA Guidelines” shall mean the Originator’s policies and procedures from
time to time relating to the operation of its IMA

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business, including the policies and procedures for determining the credit
worthiness of IMA clients, the extensions of credit to IMA clients and relating
to the collection and charge off of IMAs.
     “IMA Ownership Interest” shall mean Originator’s right, title and interest
in and to each HSBC IMA, including all monies due or to become due with respect
thereto and all collections pertaining thereto and other proceeds thereof (as
defined in the UCC as in effect in the State of Delaware), less any
Participation Interest.
     “IMA Price Reduction” shall mean a reduction in pricing for IMAs made
pursuant to Section 9.6(c) of the Retail Distribution Agreement.
     “IMA Price Reduction Amounts” shall mean, for a specific Calculation
Period, the sum of the IMA Fees that would have been charged if HSBC Bank had
not made an IMA Price Reduction minus the IMA Fees actually charged to each
Settlement Products Client who received an HSBC IMA during such Calculation
Period.
     “IMA Protocol” shall mean the document attached hereto as Exhibit A which
describes the policies and procedures for offering HSBC IMAs in certain states
as agents and in other states as independent contractors of the Originator.
     “Participated HSBC IMA” shall mean any HSBC IMA in which a Participation
Interest has been sold pursuant to the Participation Agreement and has not been
reassigned to HSBC TFS or repurchased by HSBC TFS pursuant to the Participation
Agreement.
     “Participated HSBC IMA Schedule” shall mean a schedule of certain IMAs
owned and held by the Originator and the Participants which sets forth
information with respect to such IMAs, as amended from time to time by the
parties.
     “Refund Deposit Account” shall mean a deposit account or subaccount
established by HSBC Bank for each Settlement Products Client (other than with
respect to IMAs) in accordance with Section 3.2 of the Servicing Agreement.
     “Unparticipated HSBC IMA” shall mean any HSBC IMA for which no
Participation Interests have been sold.
     (iii) The definition “Preseason Loan” is hereby deleted.
     (iv) The Parties agree that all Program Contracts are hereby amended to
incorporate the amendments to the Appendix of Defined

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Terms and Rules of Construction pursuant to this Section 2(a), as well as
pursuant to the First Amendment.
     (b) Amendments to the Retail Distribution Agreement.
                         (i) Section 2.1(c) of the Retail Distribution Agreement
is hereby amended by inserting the following clause at the beginning of such
Section 2.1(c): “Subject to Section 11.1(c),”.
                         (ii) Section 2.4 of the Retail Distribution Agreement
is hereby amended by deleting the word “and” at the end of clause (iv) thereof,
deleting the period at the end of clause (v) and replacing it with a semicolon
and the word “and”, and inserting the following new subsection:
                         (vi) IMAs, in accordance with the policies and
procedures set forth on the IMAs Schedule attached hereto as Schedule 2.4(a)(6).
                         (iii) The following new Sections 2.9 and 2.10 are
hereby added to the Retail Distribution Agreement immediately after the existing
Section 2.8:
     Section 2.9 HSBC Bank’s Right Not To Offer HSBC IMAs. Notwithstanding any
other provision of this Retail Distribution Agreement or the other Program
Contracts:
     (a) HSBC Bank may, in its sole discretion, at any time and from time to
time during the Term of this Retail Distribution Agreement, elect not to offer
(whether through a physical presence, via the internet or any computer software
program) HSBC IMAs in one or more states, commonwealths, territories or foreign
countries (each, an “HSBC Discontinued Location”) if HSBC Bank makes a
reasonable determination (after good faith discussions with the Block Companies
and good faith attempts to modify the Program Contracts to address any concerns,
pursuant to Section 11.6(a)), that continued inclusion of HSBC IMAs as a type of
Settlement Product offered pursuant to the Settlement Products Program would
jeopardize HSBC Bank’s regulatory standing with the OCC, including any component
of any of its composite CAMEL rating, or the OCC’s assessment of HSBC Bank’s
safe and sound operation, or otherwise would cause the OCC to raise serious
regulatory concerns under applicable Law, including OCC policies and procedures
relating to the conduct of HSBC Bank’s lending activities (in each case, an “
HSBC Regulatory Concern”). If HSBC Bank makes a reasonable determination that
such HSBC Regulatory Concern exists in such HSBC Discontinued Location with
respect to any other tax preparer through whom either HSBC Bank or any of its
Affiliates offers instant money advance loans or similar loan products, and the
terms of the arrangement with such

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other tax preparer are not modified to eliminate such HSBC Regulatory Concern as
it relates to such tax preparer, then HSBC Bank or its Affiliate, as the case
may be, shall also discontinue offering such products through such other tax
preparer in such HSBC Discontinued Location. If HSBC Bank ceases offering HSBC
IMAs in an HSBC Discontinued Location due to an HSBC Regulatory Concern, the
Block Agents may offer IMAs through a lender other than HSBC Bank in such HSBC
Discontinued Location, including, without limitation, IMAs or similar loan
products offered by any third party, any Affiliate of a Block Company or a
financial institution or finance company, owned in whole or in part, directly or
indirectly, by a Block Company or any of its Affiliates. If HSBC Bank makes a
reasonable determination that such HSBC Regulatory Concern ceases to exist in
such HSBC Discontinued Location, HSBC Bank may recommence offering IMAs through
other tax preparers in such HSBC Discontinued Location, provided that HSBC Bank
shall give the Block Companies notice of such intention to so recommence not
later than HSBC Bank gives notice to any other tax preparer located in such HSBC
Discontinued Location of its intention to so recommence, and shall give the
Block Companies the option to recommence offering HSBC IMAs in such HSBC
Discontinued Location through HSBC Bank at any time during the Term in
accordance with the terms set forth in this Retail Distribution Agreement.
     (b) Subject to Section 2.9(c), HSBC Bank may in its sole discretion at any
time and from time to time on or before March 16 of any calendar year during the
Term of this Retail Distribution Agreement, elect to discontinue offering,
effective November 1 of such calendar year, HSBC IMAs in one or more HSBC
Discontinued Locations, if, and only if, neither HSBC Bank nor any of its
Affiliates offer instant money advance loans or similar loan products through
any other tax preparer located in, or via the internet or any computer software
program to residents of, such HSBC Discontinued Locations.
     (c) If HSBC Bank elects to discontinue offering HSBC IMAs in HSBC
Discontinued Locations pursuant to Section 2.9(b) above, then the Block Agents
may, with respect to such HSBC Discontinued Locations, offer IMAs or similar
loan products originated from sources other than HSBC Bank, including, without
limitation, IMAs or similar loan products offered by any third party, any
Affiliate of a Block Company or a financial institution or finance company,
owned in whole or in part, directly or indirectly, by a Block Company or any of
its Affiliates; provided, that, the Block Agents shall provide written notice to
HSBC Bank

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(i) within twenty (20) days following HSBC Bank’s election to discontinue
offering HSBC IMAs in such HSBC Discontinued Locations of the Block Agents’
intention to so offer IMAs or similar loan products in such HSBC Discontinued
Locations originated from sources other than HSBC Bank, promptly updating such
notice to HSBC Bank if the Block Agents’ intentions change, and (ii) within
10 days after a Block Company enters into an agreement with another lender to
offer IMAs or makes a final determination to offer IMAs originated by any
Affiliate of a Block Company or a financial institution or finance company,
owned in whole or in party, directly or indirectly, by a Block Company or any of
its Affiliates, of the Block Agents’ intention to so offer IMAs or similar loan
products in such HSBC Discontinued Locations originated from sources other than
HSBC Bank. If the Block Agents provide a notice to HSBC Bank pursuant to clause
(ii) above of their agreement with another lender to offer IMAs in such HSBC
Discontinued Locations or their intention to in-source IMAs, HSBC Bank and its
Affiliates may offer instant money advance loans or similar products through
other tax preparers located in, or via the internet or any computer software
program to residents of, such HSBC Discontinued Locations.
Section 2.10 Block Agents’ Right Not To Offer HSBC IMAs.
     (a) Notwithstanding any other provision of this Retail Distribution
Agreement or the other Program Contracts, the Block Agents may, in their sole
discretion, at any time and from time to time during the Term of this Retail
Distribution Agreement, elect not to offer HSBC IMAs in one or more states,
commonwealths, territories or foreign countries (each, a “Block Discontinued
Location”).
     (b) If subsequent thereto, the Block Agents desire to recommence offering
IMAs in any such Block Discontinued Locations, then the Block Companies shall
give HSBC Bank 120 days’ notice in writing of such desire to recommence offering
IMAs in such Block Discontinued Locations. Upon receipt of such written notice,
HSBC Bank (i) shall recommence offering HSBC IMAs in such Block Discontinued
Locations, if at that time HSBC Bank or any of its Affiliates are offering
instant money advance loans or similar loan products through tax preparers
located in, or via the internet or any computer software program to residents
of, such Block Discontinued Locations, or (ii) have the option (exercisable
within thirty (30) calendar days) to recommence offering HSBC IMAs in such Block
Discontinued Locations, if at that time HSBC Bank or any of such Affiliates are
not offering instant money advance loans or similar loan products through tax

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preparers located in, or via the internet or any computer software program to
residents of, such Block Discontinued Locations. If HSBC Bank and the Block
Agents recommence offering HSBC IMAs in such Block Discontinued Locations
pursuant to (i) or (ii) of this Section 2.10(b), then they shall do so in
accordance with the terms of this Retail Distribution Agreement.
     (c) If HSBC Bank does not exercise its option within thirty (30) calendar
days to recommence offering HSBC IMAs in any such Block Discontinued Locations,
then the Block Agents may, with respect to such Block Discontinued Locations,
offer IMAs originated from sources other than HSBC Bank, including, without
limitation, IMAs offered by any third party, any Affiliate of a Block Company or
a financial institution or finance company, owned in whole or in part, directly
or indirectly, by a Block Company or any of its Affiliates.
                         (iv) Section 5.8 of the Retail Distribution Agreement
is hereby amended to read as follows:
Section 5.8 Franchisees in Settlement Products Program.
     (a) Block Tax Services, Royalty and Block Associates shall use commercially
reasonable efforts to cause their respective Franchisees to offer Retail
Settlement Products through the Block Franchisee Offices, and Block Tax Services
and Block Associates shall provide the means for each of their respective
Franchisees to agree to be bound by the terms of its Franchisee Distribution
Agreement.
     (b) On an annual basis, and at other times upon the written request of HSBC
Bank, Block Tax Services, Royalty and Block Associates will provide a report
listing all Franchisees that have electronically accepted and agreed to be bound
by a Franchisee Distribution Agreement that was electronically disseminated to,
and electronically accepted by, the Franchisee via TPS Software and the Block
Companies web-based communication system for Franchisees. The parties
acknowledge that such electronic acceptance is the only form of acceptance being
required for such Franchisees to be legally bound under the terms of such
Franchisee Distribution Agreements. Block Services represents that, with respect
to 2007 and subsequent Tax Periods and Calculation Periods, the TPS Software
will not permit a Franchisee to originate Retail Settlement Products unless the
Franchisee has electronically accepted and agreed to be bound by the Franchisee
Distribution Agreement.
     (c) Block Tax Services, Royalty and Block Associates will provide to HSBC
Bank by January 3rd of each year, and at other times

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upon the written request of HSBC Bank, the address and the e-mail address for
any Franchisee that is a party to a Franchisee Distribution Agreement.
                         (v) A new Section 5.13 is added to the Retail
Distribution Agreement immediately after Section 5.12 as follows:
     Section 5.13 IMA Notices to Franchisees. Any notification sent pursuant to
Section 6.1(c) of a Franchisee Distribution Agreement by either a Block Company
or an HSBC Company will be made only with the consent of the other party,
provided, however, that (i) when an HSBC Company exercises its rights under
Section 2.9 above to discontinue or recommence offering a product, it may give
notice to a Franchisee of such discontinuation or recommencement without
obtaining the consent of a Block Company, and (ii) when a Block Company
exercises its rights under Section 2.10 above to discontinue or recommence
offering a product, it may give notice to a Franchisee of such discontinuation
or recommencement without obtaining the consent of a HSBC Company.
                         (vi) Sections 6.8(a)(ii) and 6.8(a)(iii) of the Retail
Distribution Agreement are hereby amended by replacing in every instance therein
the term “Preseason Loan” with the term “IMA.”
                         (vii) A new Section 6.12 is added to the Retail
Distribution Agreement immediately after Section 6.11 as follows:
     Section 6.12 Further Regulatory Approvals of IMAs. During the Term of this
Retail Distribution Agreement, the HSBC Companies agree to use commercially
reasonable efforts to obtain, on a timely basis, all necessary regulatory
approvals for HSBC Trust to offer HSBC IMAs through the Block Agents and the
Franchisee Agents at Block Offices located in the HSBC Trust States. This
obligation shall be a continuing annual covenant with respect to each successive
Calculation Period until such regulatory approval is obtained. In making such
commercially reasonable efforts, the HSBC Companies may take into account the
written positions of the regulatory authorities and the impact of such efforts
on the regulatory standing of HSBC Trust, and the other HSBC Companies and their
Affiliates, and their relationships with the regulatory authorities.
                         (viii) Sections 7.6(c), 7.6(d) and 7.6(e) of the Retail
Distribution Agreement are hereby amended to read as follows:
     (c) except with respect to IMAs, provide and require Settlement Product
Clients to complete and sign an authorization permitting the Block Agent to use
the Client’s Return information for the

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application process in accordance with Section 301.7216-3(b) of the United
States Treasury Department Regulations;
     (d) provide and require each Settlement Product Client (except with respect
to IMAs) to complete and sign IRS Form 8453;
     (e) sign each Form 8453 as ERO, except with respect to IMAs;
                         (ix) Section 7.9 of the Retail Distribution Agreement
is hereby amended to read as follows:
     Section 7.9. Applicant Copies. Each Block Agent shall provide each of its
Applicants with a copy of such Applicant’s signed Application and, to the extent
applicable, IRS Form 8453, together with any other commercially reasonable
disclosures or documents required to be provided to the Applicant by HSBC Bank.
                         (x) The introductory clause of Section 9.1 of the
Retail Distribution Agreement is hereby amended to read as follows:
     Section 9.1 Form of Application. HSBC Bank shall prepare the form of
Application to be used by the Agents and shall supply such Application to the
Agents no later than September 1 prior to each Tax Period with respect to RALs
and RACs, or August 1 prior to each Calculation Period with respect to IMAs. The
form of Application for RALs and RACs shall include:
                         (xi) The first sentence of Section 9.3 of the Retail
Distribution Agreement is hereby amended to read as follows:
     HSBC Bank and HSBC Trust shall annually make a determination of their
respective Initial Fees, which shall include, but not be limited to, the Refund
Account Fee, the RAL Fee and the IMA Fee.
                         (xii) Section 9.6(b) of the Retail Distribution
Agreement is hereby amended to read as follows:
     (b) The parties share a mutual desire to endeavor to offer the most
compelling customer value proposition which includes factors of price, loan size
and approval rate. With this goal in mind, HSBC Bank will set price with input
from the Block Companies on a mutually agreeable client value proposition when
considering an appropriate balance of price in combination with approval rate
and loan size. During the Term of this Retail Distribution Agreement, [***] .

14

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                         (xiii) Section 9.6(c) of the Retail Distribution
Agreement is hereby amended to read as follows:
     (c) Upon the written request of Block Services delivered to HSBC Bank prior
to the September 15th immediately preceding any Calculation Period, [***] .
                         (xiv) The first sentence of Section 9.7 of the Retail
Distribution Agreement is hereby amended to read as follows:
     Upon receipt of each Application, except with respect to IMAs, HSBC Bank
shall establish a Deposit Account in the name of the Settlement Products Client
listed on such Application.
                         (xv) Section 9.14 of the Retail Distribution Agreement
is hereby amended to read as follows:
     Section 9.14 Application and Disclosures. HSBC Bank shall create and
provide to the Block Companies initial drafts of pre-approved templates for
applications, forms, disclosures and other documents required for RALs and RACs
by August 1 of each year during the Term of this Retail Distribution Agreement.
After providing the Block Companies with an opportunity to review and provide
comments on the initial drafts of such pre-approved templates, HSBC Bank shall,
provide final pre-approved templates for applications, forms, disclosures and
other documents required for RALs and RACs by September 1 of each year during
the Term of this Retail Distribution Agreement. With respect to IMAs, beginning
in 2007, the initial drafts of such pre-approved templates shall be provided by
July 1 of each year and final pre-approved templates shall be provided by August
1 of each year during the Term of this Retail Distribution Agreement.
                         (xvi) Section 9.16 of the Retail Distribution Agreement
is hereby amended to read as follows:
    Section 9.16 New Products. During the Term of this Retail Distribution
Agreement, the Block Companies shall have:
   (a) a right [***] ;
   (b) the right, [***] ;
   (c) the right, [***] ; and
   (d) the right, [***] .

15

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                         (xvii) Section 9.18 of the Retail Distribution
Agreement is hereby amended by adding a new sentence at the end thereof as
follows:
     Notwithstanding the above, HSBC Bank shall review and process Applicant
Information Files for IMAs pursuant to the Service Level Thresholds set forth on
Schedule 13.4(i) hereto.
                         (xviii) Section 10.1 of the Retail Distribution
Agreement is hereby amended to read as follows:
     Section 10.1 Forward Applicant Information File with Debt Indicator
Information to HSBC Bank and HSBC Trust. Upon receipt of a copy of an Applicant
Information File for a RAL or RAC, IRS Return Notification and Debt Indicator
from Block Services, HSBC TFS shall electronically transmit to HSBC Bank or HSBC
Trust, as the case may be, a copy of the Applicant Information File and a copy
of the Applicant’s Debt Indicator. Upon receipt of the Applicant Information
File for an IRAL or an IMA, HSBC TFS shall electronically transmit a copy of
such Applicant Information File to HSBC Bank or HSBC Trust, as the case may be,
immediately upon receipt.
                         (xix) Section 10.2 of the Retail Distribution Agreement
is hereby amended to read as follows:
     Section 10.2 Disbursement Check Printing Authorization. Subject to
Section 10.3, HSBC TFS shall electronically provide Block Services authorization
to print a Disbursement Check or issue an Electronic Disbursement (a) for each
Applicant who has been approved to receive a RAL or IMA, upon approval thereof,
and (b) for each Applicant who has been approved to receive a RAC, if
applicable, upon HSBC TFS’s crediting of the Refund Paid to such Applicant’s
Deposit Account and after debiting all Authorized Deductions from such Deposit
Account in the manner set forth in the Servicing Agreement. With respect to RALs
and RACs, within four (4) hours after receipt of such Applicant’s Refund Paid,
if any funds remain in the Deposit Account after debiting all Authorized
Deductions, HSBC TFS shall authorize Block Services to print a check or issue an
Electronic Disbursement to the Settlement Products Client in the amount
remaining in the Deposit Account in accordance with such Client’s instructions.
                         (xx) Section 10.5 of the Retail Distribution Agreement
is hereby amended to read as follows:
     Section 10.5 Contingent Issuing of Disbursement Checks. If it becomes
infeasible due to events or occurrences beyond the parties’ control for the
Agents to issue and deliver Disbursement Checks or Electronic Disbursements
directly to Settlement Products Clients, then

16

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HSBC TFS shall issue and mail such Disbursement Checks or Electronic
Disbursements directly to such Settlement Products Clients. With respect to RALs
and IMAs, HSBC TFS shall use commercially reasonable efforts to mail the
Disbursement Check or Electronic Disbursement to the Settlement Products Client
or to the Block Offices for distribution to the Settlement Products Client the
same day as HSBC TFS’s approval of the RAL or IMA; provided, however, such
Application must be received by HSBC TFS by 11:00 a.m. Eastern Standard or
Daylight Savings Time (as the case may be). With respect to RACs, HSBC TFS shall
use commercially reasonable efforts to mail the Disbursement Check or Electronic
Disbursement to the Settlement Products Client within 24 hours following receipt
from the IRS of the Refund Paid.
                         (xxi) The following new Section 10.10 shall be added to
the Retail Distribution Agreement immediately after the existing Section 10.9:
     Section 10.10 Website Development. In addition to the covenants set forth
in Section 2.1(a), 7.18 and 9.16(b) hereof, during the Term of this Retail
Distribution Agreement the HSBC Companies and their Affiliates shall not use any
HTML code that was jointly developed with any Block Company or any of its
Affiliates to design or operate any internet website or similar electronic means
to offer instant money advance loans or similar loans through any tax preparer
other than the Block Agents or the Franchisee Agents. For the avoidance of
doubt, the HSBC Companies and their Affiliates may so use (i) HTML code used in
the performance of this Retail Distribution Agreement that was not jointly
developed with any Block Company or any of its Affiliates, and (ii) similar HTML
code that is developed independently (e.g., to provide similar functionality to
another customer).
                         (xxii) A new Section 11.1(c) is hereby added to Retail
Distribution Agreement immediately following Section 11.1(b) as follows:
     (c) Notwithstanding any other provision of this Retail Distribution
Agreement or the other Program Contracts, the following applies solely with
respect to HSBC IMAs offered through Block Offices from November 2006 through
the Term of this Retail Distribution Agreement:
     (i) pursuant to Section 2.1(c), the Block Agents are appointed as the
agents of HSBC NA for purposes of offering and distributing HSBC IMAs at Block
Offices located in the HSBC NA States. In performing their specified duties
under Article VII of the Retail Distribution Agreement with regard to
distributing HSBC IMAs at Block Offices located in the HSBC NA States, the Block
Agents are acting as agents of HSBC NA; and

17

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     (ii) notwithstanding Section 2.1(c), HSBC NA does not appoint Block
Enterprises, Block Eastern Enterprises or Block Associates as its agents for
purposes of offering and distributing HSBC IMAs at Block Offices located in any
of the HSBC Trust States. In performing their specified duties under Article VII
of this Retail Distribution Agreement with respect to distributing HSBC IMAs at
Block Offices located in the HSBC Trust States, Block Enterprises, Block Eastern
Enterprises and Block Associates are acting as independent contractors for HSBC
NA. Block Enterprises, Block Eastern Enterprises and Block Associates shall
offer HSBC IMAs at Block Offices in the HSBC Trust States in accordance with the
IMA Protocol.
                         (xxiii) A new subsection (i) shall be added to
Section 13.4 of the Retail Distribution Agreement to read as follows:
     The HSBC Companies shall be subject to the Service Level Thresholds for
IMAs set forth on Schedule 13.4(i).
                         (xxiv) Section 14.2 of the Retail Distribution
Agreement is hereby amended to read as follows:
     Section 14.2 Incremental Bank Product Fee. No later than November 1 of each
calendar year, HSBC TFS shall pay to the Block Enterprise Entities, via wire
transfer of immediately available funds to an account designated in writing by
the Block Enterprise Entities, an amount, in the aggregate, equal to [***] .
                         (xxv) Section 14.7(a) of the Retail Distribution
Agreement is hereby amended to read as follows:
     (a) On the first Business Day of January of each Tax Period during the Term
of this Retail Distribution Agreement, HSBC TFS shall pay to the Block
Enterprise Entities the Expense Reimbursement to partially reimburse the Block
Companies for their out-of-pocket expenses incurred in connection with the
Settlement Products Program for the applicable Calculation Period. The Expense
Reimbursement shall be paid by ACH credit to an account designated by the Block
Enterprise Entities.
                         (xxvi) Section 14.8 of the Retail Distribution
Agreement is hereby amended to read as follows:
     Section 14.8 IRAL and IMA Origination System Servicing Level Threshold. If
HSBC TFS fails to maintain the IRAL Origination System Servicing Level Threshold
set forth in Section 13.4(a) or the IMA origination system servicing level
threshold set forth in Schedule 13.4(i) on any Block Business Day, except to the
extent non-compliance arises from a Force Majeure Event or a failure by any
Block Company to

18

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perform any material Obligation under this Retail Distribution Agreement, HSBC
TFS shall pay to the Block Enterprise Entities an amount, in the aggregate,
equal to [***] . All amounts payable under this Section 14.8 accrued during any
Calculation Period, shall be payable by HSBC TFS on the last Business Day of
such Calculation Period. HSBC TFS shall pay such amounts via ACH credit to an
account designated in writing by the Block Enterprise Entities. To the extent
any failure by HSBC TFS to maintain the IRAL Origination System Servicing Level
Threshold under this Section 14.8 could not reasonably result in a Material
Adverse Effect, the amount paid by HSBC TFS to the Block Companies under this
Section 14.8 shall constitute the sole remedy for failure to maintain the IRAL
Origination System Servicing Level Threshold. Not later than the last Business
Day of the month of October during such Calculation Period, HSBC TFS shall
provide true and correct reports to the Block Companies setting forth (a) the
number of estimated lost IRAL Clients for each Block Business Day during the Tax
Period and lost IMA Clients for each Block Business Day beginning on the first
day that IMAs are offered by the Block Agents during or prior to the Calculation
Period and continuing through that last day of such Calculation Period, (b) the
actual number of IRALs and IMAs originated during each Block Business Day in the
preceding year and (c) the actual number of IRALs originated during each Block
Business Day during the Tax Period and IMAs originated during each Block
Business Day beginning on the first day that IMAs are offered by the Block
Agents during or prior to the Calculation Period and continuing through that
last day of such Calculation Period.
                         (xxvii) Section 14.14(a) of the Retail Distribution
Agreement is hereby amended to read as follows:
     (a) With respect to HSBC RALs or HSBC IMAs originated on or after
January 1, 2007, [***] .
                         (xxviii) Section 16.4(b) of the Retail Distribution
Agreement is hereby amended to read as follows:
     (b) To the extent permitted by applicable Law, each HSBC Company agrees to
promptly provide to each Block Company and its Affiliates, upon request, but not
more than twice during any calendar year, a list of all Persons, and their
complete mailing addresses, to whom such HSBC Company made HSBC RALs, HSBC RACs
or HSBC IMAs during the most recently ended Calculation Period. Such list shall
be provided in electronic form and, to the extent reasonably practicable, in a
form typical of mailing lists purchased in the open market. No Block Company or
Affiliate shall use, or permit the use of, such list for purposes of soliciting
Clients for credit related products. The Block Companies and their Affiliates
shall take appropriate action by agreement with third parties

19

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

 

having access to such list to prohibit such third parties from using such list
for purposes of soliciting Clients for credit related products.
                         (xxix) The Table of Contents to the Retail Distribution
Agreement is hereby amended to include reference to each of the new Sections
that were added to the agreement pursuant to this Second Amendment.
Section 3 Reference to and Effect Upon the Existing Program Contracts.
                    (a) Except as explicitly stated in this Second Amendment,
all terms of the Program Contracts as in effect immediately preceding execution
of this Second Amendment shall remain in full force and effect as provided
therein and in accordance with the terms thereof.
                    (b) Except as explicitly stated in this Second Amendment,
the execution, delivery and effectiveness of this Second Amendment shall not
operate as a waiver of any right, power or remedy of any party under the Program
Contracts as in effect immediately preceding execution of this Second Amendment,
nor constitute a waiver of any provision of the Program Contracts as in effect
immediately preceding execution of this Second Amendment.
                    (c) Upon the effectiveness of this Second Amendment, each
reference in each of the Program Contracts to “this Agreement”, “hereunder”,
“hereof,” “herein” or words of similar import shall mean and be a reference to
such Program Contract as amended by this Second Amendment.
              Section 4 Headings. Headings and captions used in this Second
Amendment (including all exhibits and schedules thereto) are included herein for
convenience of reference only and shall not constitute a part of this Second
Amendment for any other purpose or be given any substantive effect.
              Section 5 Alternative Dispute Resolution. ANY DISPUTE BETWEEN OR
AMONG THE PARTIES HERETO ARISING OUT OF OR RELATING TO THIS SECOND AMENDMENT OR
THE TRANSACTIONS CONTEMPLATED HEREIN (EXCEPT JUDICIAL ACTION FOR SPECIFIC
PERFORMANCE OR INJUNCTIVE RELIEF) SHALL BE RESOLVED AMONG THE PARTIES TO SUCH
DISPUTE BY NEGOTIATIONS, MEDIATION AND ARBITRATION IN ACCORDANCE WITH THE
PROVISIONS OF ARTICLE XXI OF THE RETAIL DISTRIBUTION AGREEMENT, WHICH ARE
INCORPORATED HEREIN BY REFERENCE.
             Section 6 Governing Law; Submission To Jurisdiction. THIS SECOND
AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF MISSOURI. WITHOUT LIMITING THE EFFECT OF SECTION 5 HEREOF
AND ARTICLE XXI OF THE RETAIL DISTRIBUTION AGREEMENT, EACH OF THE PARTIES HERETO
(A) SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND/OR STATE COURTS
SITTING IN

20

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ST. LOUIS, MISSOURI FOR PURPOSES OF ALL LEGAL PROCEEDINGS FOR SPECIFIC
PERFORMANCE OR INJUNCTIVE RELIEF PERMITTED BY SECTION 21.12 OF THE RETAIL
DISTRIBUTION AGREEMENT, (B) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE
VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM,
(C) IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN SUCH PROCEEDING IN THE MANNER
PROVIDED FOR NOTICES IN SECTION 22.3 OF THE RETAIL DISTRIBUTION AGREEMENT, AND
(D) AGREES THAT NOTHING IN THIS SECOND AMENDMENT WILL AFFECT THE RIGHT OF ANY
PARTY TO THIS SECOND AMENDMENT TO SERVE PROCESS IN ANY SUCH PROCEEDING IN ANY
OTHER MANNER PERMITTED BY LAW.
     Section 7 Waiver of Jury Trial. WITHOUT LIMITING THE EFFECT OF SECTION 5
HEREOF, EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION ARISING OUT OF OR RELATING TO THIS SECOND AMENDMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
     Section 8 Counterparts. This Second Amendment may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument. This Second
Amendment shall become effective upon the execution of a counterpart hereof by
each of the parties hereto
[remainder of page intentionally blank]

21

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THIS SECOND AMENDMENT CONTAINS A BINDING
ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES
     IN WITNESS WHEREOF, the following Parties have caused this Second Amendment
to Program Contracts to be executed by their respective duly authorized officers
as of the date first set forth above.

            HSBC BANK USA, NATIONAL ASSOCIATION,
a national banking association
      By:           Name:           Title:        

            HSBC TRUST COMPANY (DELAWARE), N.A.,
a national banking association
      By:           Name:           Title:        

            HSBC TAXPAYER FINANCIAL SERVICES INC.,
a Delaware corporation
      By:           Name:           Title:        

            BENEFICIAL FRANCHISE COMPANY INC.,
a Delaware corporation
      By:           Name:           Title:      

 

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THIS SECOND AMENDMENT CONTAINS A BINDING
ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES

            H&R BLOCK SERVICES, INC.,
a Missouri corporation
      By:           Name:           Title:        

            H&R BLOCK TAX SERVICES, INC.,
a Missouri corporation
      By:           Name:           Title:        

            H&R BLOCK ENTERPRISES, INC.,
a Missouri corporation
      By:           Name:           Title:        

            H&R BLOCK EASTERN ENTERPRISES, INC.,
a Missouri corporation
      By:           Name:           Title:        

            H&R BLOCK DIGITAL TAX SOLUTIONS, LLC,
A Delaware limited liability company
      By:           Name:           Title:      

 

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THIS SECOND AMENDMENT CONTAINS A BINDING
ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES

                  H&R BLOCK AND ASSOCIATES, L.P.,
a Delaware limited partnership    
 
           
 
  By:   HRB Texas Enterprises, Inc.
its General Partner    

                  By:           Name:           Title:        

            HRB ROYALTY, INC.,
a Delaware corporation
      By:           Name:           Title:      

 

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THIS SECOND AMENDMENT CONTAINS A BINDING
ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES
     IN WITNESS WHEREOF, the following Parties hereto have caused this Second
Amendment to Program Contracts to be executed by their respective duly
authorized officers as of the date first set forth above solely for the limited
purpose of acknowledging the amendments set forth herein in connection with such
Parties’ respective guaranties set forth in Article XX, and also for purposes of
Articles XXI and XXII of the Retail Distribution Agreement.

            HSBC FINANCE CORPORATION,
a Delaware corporation
      By:           Name:           Title:        

            H&R BLOCK, INC.,
a Missouri corporation
      By:           Name:           Title:        

 

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Schedule 2.4(a)(6)
Instant Money Advance Loan Product Procedures
[***]

 

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Schedule 13.4(i)
Origination
§ System will be available [***] ,
                November — January                 at least [***] %
§ On daily basis, [***] .
§ [***] .
§ [***] .
§ [***] .
Fee payment
§ [***] .
Check Authorization
§ [***] .
Web site

                                                          Website Availability
(EST)                     Times   Sunday   Monday   Tuesday   Wednesday  
Thursday   Friday   Saturday
Start
    [***]       [***]       [***]       [***]       [***]       [***]      
[***]  
Stop
    [***]       [***]       [***]       [***]       [***]       [***]      
[***]  

VRU System
§ Will be available [***] .
§ For customer call, [***] .
§ For client call, [***] .
§ For ERO call, [***] .
§ Toll free number will be provided
§ customer service hours

     
11/1-1/2
  [***]
1/3-1/8
  [***]
1/9-1/22
  [***]
1/23-4/17
  [***]

 

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Exhibit A
IMA PROTOCOL
     This IMA Protocol (this “Protocol”), dated November 13, 2006, sets forth
the agreement of the following parties (collectively, the “Parties”) on the
matters set forth herein:
     HSBC Bank USA, National Association, a national banking association (“HSBC
NA”);
     HSBC Trust Company (Delaware), N.A., a national banking association (“HSBC
Trust”);
     HSBC Taxpayer Financial Services Inc., a Delaware corporation (“HSBC TFS”);
     Beneficial Franchise Company Inc., a Delaware corporation (“Beneficial
Franchise”);
     H&R Block Services, Inc., a Missouri corporation (“Block Services”);
     H&R Block Tax Services, Inc., a Missouri corporation (“Block Tax
Services”);
     H&R Block Enterprises, Inc., a Missouri corporation (“Block Enterprises”);
     H&R Block Eastern Enterprises, Inc., a Missouri corporation (“Block Eastern
Enterprises”);
     H&R Block Digital Tax Solutions, LLC, a Delaware limited liability company
(“Block Digital”);
     H&R Block and Associates, L.P., a Delaware limited partnership (“Block
Associates”);
     HRB Royalty, Inc., a Delaware corporation (“Royalty”);
     HSBC Finance Corporation, a Delaware corporation (“HSBC Finance”); and
     H&R Block, Inc., a Missouri corporation (“H&R Block”).

 

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RECITALS
     A. All the Parties, other than HSBC Trust, entered into that certain HSBC
Retail Settlement Products Distribution Agreement, dated as of September 23,
2005 (the “Original Retail Distribution Agreement”).
     B. All the Parties, including HSBC Trust, as well as Block Financial
Corporation, a Delaware corporation (“BFC”), entered into that certain Joinder
and First Amendment to Program Contracts, dated as of November 10, 2006 (the
“First Amendment”), which amended the Original Retail Distribution Agreement and
other Program Contracts (as defined therein).
     C. All the Parties entered into that certain Second Amendment to Program
Contracts, dated as of November 13, 2006 (the “Second Amendment”), which amended
the Original Retail Distribution Agreement and other Program Contracts.
     D. Pursuant to the Second Amendment, the Parties are amending the Program
Contracts to include IMAs as a type of Settlement Product under the Settlement
Products Program.
     E. This Protocol is intended to set forth the Parties’ agreement as to
certain additional procedures and specifications that apply to the distribution
of IMAs and is the IMA Protocol referred to in Section 11.1(c) of the Retail
Distribution Agreement.
     F. All capitalized terms used in this Protocol and not otherwise defined in
this Protocol shall have the meanings assigned to such terms in the HSBC
Appendix of Defined Terms and Rules of Construction attached to the Retail
Distribution Agreement, as amended.
PROTOCOL
Part A. IMAs Offered Through Both Agents and Distributors.
     The Parties acknowledge and agree that although HSBC NA is offering IMAs
through Block Offices on a nationwide basis, HSBC NA is doing so in some states
through its expressly appointed agents, the Block Agents, and in other states
through independent contractor distributors, Block Enterprises, Block Eastern
Enterprises of Block Associates (when acting in such states as independent
contractors, the “Block Distributors”). While the Block Agents and the Block
Distributors are the same legal entities, they are acting in different
capacities in different states. The appointment by HSBC NA of the Block Agents
as its agents in certain states does not constitute the appointment of such
entities as its agents in any other state. This Protocol clarifies the rights,
duties and obligation of HSBC NA, the Block Agents and the Block Distributors
with respect to the offering of IMAs in each state.
Part B. Independent Contractor Distribution of IMAs.
     1. Independent Contractor States. HSBC NA is offering IMAs in the HSBC
Trust States exclusively through independent contractors. For the avoidance of
doubt, the HSBC Trust States include all territories of the United States, Block
Offices located in foreign countries, and

 

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the following states and commonwealths:

      Alabama
Alaska
Arizona
Arkansas
Colorado
Connecticut
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Michigan
Minnesota
Mississippi
Missouri   Montana
Nebraska
Nevada
New Hampshire
New Mexico
North Carolina
North Dakota
Ohio
Oklahoma
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
West Virginia
Wisconsin
Wyoming

     2. Status. The Parties hereby acknowledge that the Block Distributors are
acting as independent contractors of HSBC NA in the foregoing HSBC Trust States.
Unless otherwise provided herein, no agency, joint venture, partnership or
fiduciary relationship exists between HSBC NA and the Block Distributors in such
HSBC Trust States.
     3. Safety and Soundness. In the HSBC Trust States, HSBC NA and the Block
Distributors agree that the offering of IMAs must be conducted consistent with
safe and sound banking practices. The Block Distributors acknowledge that HSBC
NA is subject, inter alia, to the OCC Bulletin, “Risk Management Principles” and
may become subject to future regulatory guidance or requirements. The Block
Distributors agree to cooperate with HSBC NA in its efforts to comply with this
and other similar regulatory guidance. Such cooperation shall include, but is
not limited to:
     (i) the implementation by the Block Distributors of an independent
contractor distribution program, including training programs and audit
procedures designed by HSBC NA and approved by the Block Companies, which
approval shall not be unreasonably withheld or unreasonably delayed, for the use
of the Block Distributors with respect to the offering of IMAs in the HSBC Trust
States; and
     (ii) the use of Applications and other IMA Documents with respect to the
offering of IMAs in the HSBC Trust States that clearly indicate that the Block

 

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Distributors are acting as independent contractors, and not agents, of HSBC NA
in such states.
If the OCC raises any objection or concerns with the offering of IMAs, HSBC NA
and the Block Distributors agree to consult and negotiate with each other in
good faith to address the OCC’s objections or concerns, and to make mutually
agreeable amendments and modifications to the offering of IMAs in such states.
Part C. Agency Distribution of IMAs.
     1. Agency States. HSBC NA is offering IMAs in the HSBC NA States
exclusively through agents appointed pursuant to the Retail Distribution
Agreement. For the avoidance of doubt, the following is a list of all such
states, commonwealths and territories:
California
Delaware
Florida
Massachusetts
New Jersey
New York
Oregon
Pennsylvania
Washington
District of Columbia
     2. Status. The Parties hereby acknowledge that the Block Agents are acting
as agents of HSBC NA in the foregoing states.
     3. Safety and Soundness. In the HSBC NA States, Article XI of the Retail
Distribution Agreement governs the relationship between HSBC NA and the Block
Agents.
Part D. Timing. HSBC NA, the Block Distributors and the Block Agents are
offering IMAs in the period from on or about November 13, 2006 through
January 31, 2007, pursuant to the terms and conditions of the Program Contracts,
as amended by the First Amendment and Second Amendment, and this IMA Protocol.
With respect to the offering of IMAs in future years, the terms of this Protocol
shall be applicable unless the Parties otherwise agree in writing.
Part E. Conflict. If any provision contained in this IMA Protocol conflicts with
any provision in any of the Program Contracts, as amended by the First Amendment
and Second Amendment, the provision contained in this Protocol shall govern and
control.