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<SEC-DOCUMENT>0000903423-07-000818.txt : 20070822
<SEC-HEADER>0000903423-07-000818.hdr.sgml : 20070822
<ACCEPTANCE-DATETIME>20070822125433
ACCESSION NUMBER:		0000903423-07-000818
CONFORMED SUBMISSION TYPE:	DFAN14A
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20070822
DATE AS OF CHANGE:		20070822
EFFECTIVENESS DATE:		20070822

SUBJECT COMPANY:	

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			H&R BLOCK INC
		CENTRAL INDEX KEY:			0000012659
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-PERSONAL SERVICES [7200]
		IRS NUMBER:				440607856
		STATE OF INCORPORATION:			MO
		FISCAL YEAR END:			0430

	FILING VALUES:
		FORM TYPE:		DFAN14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-06089
		FILM NUMBER:		071072632

	BUSINESS ADDRESS:	
		STREET 1:		ONE H&R BLOCK WAY
		CITY:			KANSAS CITY
		STATE:			MO
		ZIP:			64105
		BUSINESS PHONE:		8168543000

	MAIL ADDRESS:	
		STREET 1:		ONE H&R BLOCK WAY
		CITY:			KANSAS CITY
		STATE:			MO
		ZIP:			64105

FILED BY:		

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			Breeden Capital Management LLC
		CENTRAL INDEX KEY:			0001376259
		IRS NUMBER:				113765220
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		DFAN14A

	BUSINESS ADDRESS:	
		STREET 1:		100 NORTHFIELD STREET
		CITY:			GREENWICH
		STATE:			CT
		ZIP:			06830
		BUSINESS PHONE:		203-618-0065

	MAIL ADDRESS:	
		STREET 1:		100 NORTHFIELD STREET
		CITY:			GREENWICH
		STATE:			CT
		ZIP:			06830
</SEC-HEADER>
<DOCUMENT>
<TYPE>DFAN14A
<SEQUENCE>1
<FILENAME>breeden-dfan14a_0822.htm
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=2>UNITED STATES</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=2>SECURITIES AND EXCHANGE COMMISSION</font></B></p>

<p style=' margin-bottom:12pt; margin-top:0pt;text-align:center;'><b><font size=2>Washington, D.C. 20549</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=2>SCHEDULE 14A</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=2>Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 </font></b></p>

<p style=' margin-bottom:6pt; margin-top:0pt;text-align:center;'><b><font size=2>(Amendment No. __)</font></b></p>

<p style=' margin-bottom:3pt; margin-top:0pt;text-align:left;'><font size=2>Filed by the Registrant  </font><font face=Wingdings>o</font></p>

<p style=' margin-bottom:3pt; margin-top:0pt;text-align:left;'><font size=2>Filed by a Party other than the Registrant </font><font face=Wingdings>x</font></p>

<p style=' margin-bottom:3pt; margin-top:0pt;text-align:left;'><font size=2>Check the appropriate box:</font></p>


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    <tr>
        <td width="3%" valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font face=Wingdings>o</font></p> </td>
        <td  valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Preliminary Proxy Statement</font></p> </td> </tr></table>



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    <tr>
        <td width="3%" valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font face=Wingdings>o</font></p> </td>
        <td  valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))</font></p> </td> </tr></table>



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        <td width="3%" valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font face=Wingdings>o</font></p> </td>
        <td  valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Definitive Proxy Statement</font></p> </td> </tr></table>



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    <tr>
        <td width="3%" valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font face=Wingdings>x</font></p> </td>
        <td  valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Definitive Additional Materials</font></p> </td> </tr></table>



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    <tr>
        <td width="3%" valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font face=Wingdings>o</font></p> </td>
        <td  valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Soliciting Material Pursuant to Rule 14a-12 </font></p> </td> </tr></table>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=2>H&amp;R BLOCK, INC.</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>(Name of Registrant as Specified in its Charter)</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=2>Breeden Capital Management LLC</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=2>Breeden Partners L.P.</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=2>Breeden Partners (California) L.P.</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=2>Breeden Partners Holdco Ltd.</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=2>Richard C. Breeden</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=2>Robert A. Gerard</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=2>L. Edward Shaw, Jr.</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:3pt; margin-top:0pt;text-align:left;'><font size=2>Payment of Filing Fee (Check the appropriate box):</font></p>


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    <tr>
        <td width="3%" valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font face=Wingdings>x</font></p> </td>
        <td  valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>No fee required.</font></p> </td> </tr></table>



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        <td width="3%" valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font face=Wingdings>o</font></p> </td>
        <td  valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.</font></p> </td> </tr></table>



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    <tr>
        <td width="3%" valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:3.0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(1)</font></p> </td>
        <td  valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Title of each class of securities to which transaction applies: </font></p> </td> </tr></table>



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        <td width="3%" valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:3.0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(2)</font></p> </td>
        <td  valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Aggregate number of securities to which transaction applies: </font></p> </td> </tr></table>



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    <tr>
        <td width="3%" valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:3.0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(3)</font></p> </td>
        <td  valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): </font></p> </td> </tr></table>



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    <tr>
        <td width="3%" valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:3.0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(4)</font></p> </td>
        <td  valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Proposed maximum aggregate value of transaction: </font></p> </td> </tr></table>



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    <tr>
        <td width="3%" valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:3.0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(5)</font></p> </td>
        <td  valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Total fee paid: </font></p> </td> </tr></table>



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        <td width="3%" valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font face=Wingdings>o</font></p> </td>
        <td  valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Fee paid previously with preliminary materials:</font></p> </td> </tr></table>



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        <td width="3%" valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font face=Wingdings>o</font></p> </td>
        <td  valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.</font></p> </td> </tr></table>



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        <td width="3%" valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:3.0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(1)</font></p> </td>
        <td  valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Amount previously paid: </font></p> </td> </tr></table>



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        <td width="3%" valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:3.0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(2)</font></p> </td>
        <td  valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Form, Schedule or Registration Statement No.: </font></p> </td> </tr></table>



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        <td width="3%" valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:3.0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(3)</font></p> </td>
        <td  valign=top style='padding:0in 0in 3.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Filing Party: </font></p> </td> </tr>
    <tr>
      <td valign=top style='padding:0in 0in 3.0pt 0in'>&nbsp;</td>
      <td valign=top style='padding:0in 0in 3.0pt 0in'><font size=2>(4)</font></td>
      <td  valign=top style='padding:0in 0in 3.0pt 0in'><font size=2>Date Filed:</font></td>
    </tr>
</table>



<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


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    <tr style='height:24.0pt'>
        <td width="33%" valign=bottom style='padding:0in 5.75pt 0in 5.75pt; height:24.0pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'>&nbsp;</p> </td>
        <td width="33%" valign=top style='padding:0in 5.75pt 0in 5.75pt; height:24.0pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="33%" valign=top style='padding:0in 5.75pt 0in 5.75pt; height:24.0pt'>
            <p style='margin-left:0pt;text-indent:151.5pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Contacts:</font></p>


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        <td  nowrap colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>For Media:</font></b></p> </td>
        <td  nowrap colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>For Investors</font></b><font size=2>:</font></p> </td>
        <td  width="12%">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td  nowrap colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Kekst and Company</font></p> </td>
        <td  nowrap colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Morrow &amp; Co.</font></p> </td>
        <td   colspan="2">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr>
        <td  nowrap colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Victoria Weld</font></p> </td>
        <td  nowrap colspan="4" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Eric Olson/Mike Verrechia</font></p> </td> </tr>
    <tr>
      <td  nowrap colspan="2" valign=top ><font size=2>212-521-4800</font></td>
      <td  nowrap colspan="4" valign=top ><font size=2>203-658-9400</font></td>
    </tr>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><U><I><B><font SIZE=2>FOR IMMEDIATE RELEASE</font></B></I></U></p>

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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><u><b><font size=2>ISS RECOMMENDS H&amp;R BLOCK SHAREHOLDERS VOTE IN FAVOR OF ALL THREE BREEDEN PARTNERS&#146; NOMINEES</font></b></u></p>

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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>--&#147;The long-term financial and operational performance of the company and the dissidents&#146; skill sets and track record establish both the need for change and the dissidents&#146; ability to effect change.&#148;<sup>*</sup>--</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>--&#147;[I]t appears that the company has batted below the &#145;Mendoza line&#146; when it comes to its diversification strategy.&#148;--</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>--&#147;We believe that HRB&#146;s performance and strategic decisions tend to indicate that the board has not adequately overseen management.&#148;--</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>--&#147;[W]e recommend shareholders support all three dissident candidates.&#148;--</font></p>

<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><b><font size=2>Greenwich, CT., August 22, 2007.</font></b><font size=2>  Breeden Capital Management LLC, a Greenwich, CT., based investment fund manager, today announced that Institutional Shareholder Services (ISS), an independent proxy advisory firm, has recommended to its worldwide clients a vote for all three nominees of Breeden Partners to the board of H&amp;R Block at the Company&#146;s upcoming annual meeting.  To follow ISS's recommendation, HRB shareholders should vote FOR the Breeden Partner&#146;s director nominees on the BLUE proxy card and not sign or return H&amp;R Block&#146;s white proxy card.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><u><font size=2>Poor Performance.</font></u><font size=2>  The ISS report reviews the performance of H&amp;R Block over the past five years, and finds:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:7.69%;text-align:left;'><i><font size=2>&#147;Over the past five years, the company&#146;s shares have underperformed the S&amp;P 500 index by 92%.  Since June 2004 (the IPO of JTX), HRB has underperformed its direct competitor by approximately 80%.&#148;</font></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:7.69%;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:7.69%;text-align:left;'><i><font size=2>&#147;[W]e conclude the company has underperformed over the long term, above and beyond the company&#146;s recent difficulties arising from its mortgage business.&#148;  </font></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><u><font size=2>Failed Diversification Strategy and Poor Execution.</font></u><font size=2> ISS observes that: </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:7.69%;text-align:left;'><i><font size=2>&#147;It does not appear that the company&#146;s strategy of diversification has resulted in the hoped-for synergies... </font></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:7.69%;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:7.69%;text-align:left;'><i><font size=2>&#147;[I]t appears that the company has batted below the &#145;Mendoza line&#146; when it comes to its diversification strategy.&#148;</font></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:7.69%;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:7.69%;text-align:left;'><i><font size=2>&#147;In sum, we conclude that the company has made some key operational missteps over recent years, which calls into question the adequacy of the board&#146;s oversight of management and strategy.&#148;</font></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><u><font size=2>Board Change is Warranted. </font></u><font size=2> ISS reviews the arguments of both sides regarding the company&#146;s performance and the adequacy of the current board&#146;s oversight, and finds that there is a need for change. </font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:7.69%; text-indent:0.92%;text-align:left;'><i><font size=2> &#147;After evaluating the dissident and incumbent arguments with respect to the company&#146;s financial and shareholder return performance, strategic track record and governance profile, we conclude the dissidents have met their burden of proving that board change is warranted.&#148;</font></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><u><font size=2>New Directors to Add Value</font></u><font size=2>.  ISS reviews the specific candidates of both the incumbent directors and the three nominees of Breeden Partners.  It states:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:7.69%; text-indent:0.92%;text-align:left;'><i><font size=2> &#147;[O]n balance we conclude that the presence of the three dissidents on the HRB board would likely prove beneficial to long-term shareholder value.&#148;</font></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><u><font size=2>The &#147;KPMG Issue.&#148;</font></u><font size=2> ISS carefully reviewed the arguments of the company&#146;s management that election of Mr. Breeden or any of Breeden Partners&#146; nominees could impair the independence of KPMG, the company&#146;s independent auditors.  In a complete rejection of management&#146;s arguments, ISS notes that Mr. Breeden&#146;s role at KPMG as monitor on behalf of the U.S. Department of Justice &#147;should be put into perspective.&#148; </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2> ISS notes that Mr. Breeden&#146;s role:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:7.69%;text-align:left;'><i><font size=2>&#147;is related to that firm&#146;s tax practice, not its audit business.  KPMG has not appeared troubled by Breeden&#146;s similar role at other companies.  Moreover, as a former SEC Chairman who over the years became the US government&#146;s &#145;go to&#146; guy to oversee companies suffering from ethical turmoil, we believe that Breeden has a hard-earned reputation for integrity to protect that mitigates against any incentive for him to misuse his position.&#148;</font></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Noting management&#146;s arguments concerning KPMG, ISS concludes: </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:7.69%;text-align:left;'><font size=2>&#147;</font><i><font size=2>In the worst case scenario, KPMG could decide to resign as auditor.  In our view, however, any cost or disruption has to be weighed against the opportunity cost of not changing the board&#146;s composition.  We believe that, in this case, given HRB&#146;s poor long term returns, these concerns should take second priority.&#148; </font></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:10.46%;text-align:left;'><font size=2>Richard C. Breeden, Chairman and CEO of Breeden Partners, said &#147;We are pleased that ISS has recommended the election of all three of the Breeden Partners nominees.  To follow this recommendation, VOTE BLUE. &#148;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:8.62%;text-align:left;'><font size=2>Mr. Breeden also noted, &#147;This recommendation from ISS is a key moment in this proxy campaign.  Rejecting the strident arguments of management, ISS has concluded that the interests of shareholders will best be served by electing all of the Breeden Partners&#146; nominees. We hope that this election will begin the process of transition to a new era for H&amp;R Block.&#148;  </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><u><b><font size=2>About Breeden Partners, LP</font></b></u></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:8.31%;text-align:left;'><font size=2>Breeden Partners is a private investment partnership that was formed for purposes of investing in companies that are underperforming in terms of earnings and share price.  Breeden Partners invests solely in the equity securities of publicly traded companies headquartered in the United States or Canada, and it does not use either leverage or derivatives. Breeden Partners&#146; governing policies also prohibit it from taking a majority equity interest in any portfolio company. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:8.31%;text-align:left;'><font size=2>Breeden Partners seeks to invest in companies with strong cash flows and underlying asset values where it can be a catalyst for change that will enhance market value. Breeden Partners seeks to maximize returns by persuading portfolio companies to adopt new strategies to increase earnings and rates of return, improve capital allocation, strengthen accountability for performance, enhance transparency and adopt healthier governance practices, among other things. Breeden Partners believes that implementing improved management and governance practices will help portfolio companies achieve higher earnings and command a higher multiple on such earnings in the marketplace.</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><u><b><font size=2>About Breeden Capital Management LLC</font></b></u></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:8.31%;text-align:left;'><font size=2>Breeden Capital Management is based in Greenwich, Connecticut. Both Breeden Partners and Breeden Capital Management were founded by Richard C. Breeden, former Chairman of the U.S. Securities and Exchange Commission.  The firm has a total of more than 20 professionals, and, together with its affiliates, it has more than $1 billion in committed capital under management. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER DOCUMENTS RELATED TO THE SOLICITATION OF PROXIES BY BREEDEN CAPITAL MANAGEMENT, LLC, BREEDEN PARTNERS L.P., BREEDEN PARTNERS (CALIFORNIA) L.P., BREEDEN PARTNERS HOLDCO LTD., RICHARD C. BREEDEN, ROBERT A. GERARD AND L. EDWARD SHAW, JR. FROM THE SHAREHOLDERS OF H&amp;R BLOCK FOR USE AT THE 2007 ANNUAL MEETING OF SHAREHOLDERS OF H&amp;R BLOCK BECAUSE THEY CONTAIN (AND ANY SUBSEQUENT AMENDMENTS OR SUPPLEMENTS WILL CONTAIN) IMPORTANT INFORMATION. THE DEFINITIVE PROXY STATEMENT AND FORM OF PROXY IS BEING MAILED TO SHAREHOLDERS OF H&amp;R BLOCK AND IS AVAILABLE AT NO CHARGE AT THE SECURITIES AND EXCHANGE COMMISSION&#146;S WEBSITE AT HTTP://WWW.SEC.GOV OR BY CONTACTING MORROW &amp; CO., INC. BY TELEPHONE AT (203) 658-9400 OR BY E-MAIL AT BREEDENINFO@MORROWCO.COM.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;________________</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size="2">*</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Breeden Partners has not sought or obtained consent from ISS to use any statements or information indicated herein as having been obtained or derived from statements made or published by ISS. Any such statements or information should not be viewed as indicating the support of ISS for the views expressed herein.</font></p>

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