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<SEC-DOCUMENT>0000950124-08-000097.txt : 20080110
<SEC-HEADER>0000950124-08-000097.hdr.sgml : 20080110
<ACCEPTANCE-DATETIME>20080110082118
ACCESSION NUMBER:		0000950124-08-000097
CONFORMED SUBMISSION TYPE:	424B2
PUBLIC DOCUMENT COUNT:		3
FILED AS OF DATE:		20080110
DATE AS OF CHANGE:		20080110

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			BLOCK FINANCIAL CORP
		CENTRAL INDEX KEY:			0001042397
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-PERSONAL SERVICES [7200]
		IRS NUMBER:				521781495
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0430

	FILING VALUES:
		FORM TYPE:		424B2
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-118020
		FILM NUMBER:		08522142

	BUSINESS ADDRESS:	
		STREET 1:		4400 MAIN STREET
		STREET 2:		SUITE 500
		CITY:			KANSAS CITY
		STATE:			MO
		ZIP:			64111
		BUSINESS PHONE:		8167536900

	MAIL ADDRESS:	
		STREET 1:		4400 MAIN STREET
		STREET 2:		SUITE 500
		CITY:			KANSAS CITY
		STATE:			MO
		ZIP:			64111

FILER:

	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:		424B2
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-118020-01
		FILM NUMBER:		08522143

	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
</SEC-HEADER>
<DOCUMENT>
<TYPE>424B2
<SEQUENCE>1
<FILENAME>c22310b2e424b2.htm
<DESCRIPTION>PROSPECTUS SUPPLEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE>e424b2</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->


<DIV align="right" style="margin-left: 61%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 8pt"> Filed pursuant to
    Rule&#160;424(b)(2)<BR>
    Registration No.&#160;333-118020<BR>
    Registration No.&#160;333-118020-01</FONT></B>
</DIV>



<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><U>PROSPECTUS SUPPLEMENT</U></B>
</DIV>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>(To prospectus dated October&#160;21, 2004)</B>
</DIV>


<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 18pt"> $600,000,000</FONT></B>
</DIV>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="c22310b2n2231001.gif" alt="(HR BLOCK LOGO)"><B><FONT style="font-size: 18pt">
    </FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 24pt">Block Financial LLC</FONT></B>
</DIV>


<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 14pt"> 7.875% Notes due
    2013</FONT></B>
</DIV>


<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><I><FONT style="font-size: 14pt"> Fully and Unconditionally
    Guaranteed by</FONT></I></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 14pt">H&#038;R Block,
    Inc</FONT></B><FONT style="font-size: 14pt">.
    </FONT>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 19%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=455 length=90 -->


<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will pay interest on the notes on January&#160;15 and
    July&#160;15 of each year, beginning July&#160;15, 2008. The
    notes will mature on January&#160;15, 2013. We may redeem some
    or all of the notes at any time at the redemption price
    described in this prospectus supplement. If we experience a
    change of control triggering event, we may be required to offer
    to purchase the notes from holders as described in this
    prospectus supplement. The interest rate payable on the notes
    will be subject to adjustments from time to time if either
    Moody&#146;s Investors Service, Inc. or Standard and Poor&#146;s
    Ratings Services downgrades (or subsequently upgrades) the debt
    rating assigned to the notes as described in this prospectus
    supplement. There is no sinking fund for the notes.
</DIV>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The notes will be unsecured obligations of Block Financial LLC
    and will rank equally with all of its other existing and future
    unsecured and unsubordinated senior indebtedness. The notes will
    be fully and unconditionally guaranteed by H&#038;R Block, Inc.
    The guarantee will rank equally with all of H&#038;R Block,
    Inc.&#146;s existing and future unsecured and unsubordinated
    senior indebtedness and guarantees. The notes will be issued in
    registered form only, in denominations of $2,000 and whole
    multiples of $1,000.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 12pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Investing in our notes involves risks. See &#147;Risk
    Factors&#148; beginning on
    <FONT style="white-space: nowrap">page&#160;S-8</FONT>
    of this prospectus supplement for more information.</B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 19%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=455 length=90 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>


<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="71%">&nbsp;</TD>         <!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>  <!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>    <!-- colindex=02 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>    <!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>     <!-- colindex=02 type=hang1 -->
    <TD width="6%">&nbsp;</TD>  <!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>    <!-- colindex=03 type=lead -->
    <TD width="12%" align="right">&nbsp;</TD>   <!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>     <!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Per Note</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Total</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Public offering price(1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    99.896
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    599,376,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Underwriting discount
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.600
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,600,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Proceeds, before expenses, to Block Financial LLC
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    99.296
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    595,776,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>



<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (1) Plus accrued interest from January&#160;11, 2008, if
    settlement occurs after that date
</DIV>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Neither the Securities and Exchange Commission nor any state
    securities commission or other regulatory body has approved or
    disapproved of these notes or determined if this prospectus
    supplement or the accompanying prospectus is truthful or
    complete. Any representation to the contrary is a criminal
    offense.
</DIV>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The notes will be ready for delivery in book-entry form only
    through The Depository Trust&#160;Company, Clearstream and
    Euroclear on or about January&#160;11, 2008.
</DIV>


<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 19%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=455 length=90 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Joint Book-Running Managers</I>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="33%"></TD>
    <TD width="33%"></TD>
    <TD width="33%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">    <B><FONT style="font-size: 18pt; font-family: 'Times New Roman', Times">Merrill
    Lynch&#160;&#038; Co.</FONT></B></TD>
    <TD nowrap align="center">    <B><FONT style="font-size: 18pt; font-family: 'Times New Roman', Times">JPMorgan</FONT></B></TD>
    <TD nowrap align="right">    <B><FONT style="font-size: 18pt; font-family: 'Times New Roman', Times">HSBC</FONT></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 19%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=455 length=90 -->


<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The date of this prospectus supplement is January&#160;8, 2008.
</DIV>


<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">TABLE OF
    CONTENTS</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Prospectus
    Supplement</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>
<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="tocpage"></A>
</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="97%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Page</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#101'>About This Prospectus Supplement</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-ii
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#102'>How to Obtain More Information</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-ii
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#103'>Incorporation of Information Filed with the
    SEC</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-ii
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#104'>Forward-Looking Statements</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-iv
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#105'>Prospectus Supplement Summary</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#106'>H&#038;R Block, Inc.&#160;</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#107'>Block Financial LLC</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#108'>Recent Developments&#160;&#151; Discontinued
    Operations</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-2
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#109'>The Offering</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-4
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <A HREF='#110'>Ratios of Earnings to Fixed Charges</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-7
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#111'>Risk Factors</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-8
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#112'>Selected Financial Data</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-14
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#113'>Capitalization</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-15
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#114'>Use of Proceeds</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-16
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#115'>Description of Notes</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-17
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#116'>Material United States Federal Income and Estate
    Tax Consequences for
    <FONT style="white-space: nowrap">Non-U.S.</FONT>
    Holders</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-29
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#117'>Underwriting</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-32
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#118'>Legal Matters</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-34
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#119'>Experts</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-34
</TD>
<TD>&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Prospectus</FONT></B>
</DIV>



<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="95%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Page</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    About This Prospectus
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    How to Obtain More Information
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Incorporation of Information Filed with the SEC
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Forward-Looking Statements
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Risk Factors
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Block Financial Corporation
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    H&#038;R Block, Inc.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Use of Proceeds
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Ratio of Earnings to Fixed Charges
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Description of Debt Securities
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Plan of Distribution
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Legal Matters
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    21
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Experts
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    21
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 19%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=455 length=90 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>You should rely only on the information contained in or
    incorporated by reference into this prospectus supplement and
    the accompanying prospectus. We have not, and the underwriters
    have not, authorized any other person to provide you with
    different information. If anyone provides you with different or
    inconsistent information, you should not rely on it. We are not,
    and the underwriters are not, making an offer to sell these
    securities in any jurisdiction where the offer or sale is not
    permitted. You should assume that information contained in this
    prospectus supplement, the accompanying prospectus and the
    documents incorporated by reference is accurate only as of their
    respective dates. Our business, financial condition, results of
    operations and prospects may have changed since those dates.</I>
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-i
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->


<!-- link1 "ABOUT THIS PROSPECTUS SUPPLEMENT" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='101'></A><B><FONT style="font-family: 'Times New Roman', Times">ABOUT
    THIS PROSPECTUS SUPPLEMENT</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This prospectus supplement relates to a prospectus which is part
    of a registration statement on
    <FONT style="white-space: nowrap">Form&#160;S-3</FONT>
    that we filed with the Securities and Exchange Commission, or
    SEC, utilizing a &#147;shelf&#148; registration process. Under
    this &#147;shelf&#148; registration process, we may sell the
    debt securities described in the accompanying prospectus in one
    or more offerings up to the aggregate total amount stated
    therein. The accompanying prospectus provides you with a general
    description of the debt securities we may offer. This prospectus
    supplement contains specific information about the terms of this
    offering. This prospectus supplement may add, update or change
    information contained in the accompanying prospectus. If
    information in this prospectus supplement is inconsistent with
    the accompanying prospectus, you should rely on the information
    contained in this prospectus supplement. Please carefully read
    both this prospectus supplement and the accompanying prospectus
    in addition to the information described in this prospectus
    supplement in &#147;Incorporation of Information Filed with the
    SEC&#148; and &#147;How to Obtain More Information.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This prospectus supplement offers a series of notes to be issued
    by Block Financial LLC. Block Financial LLC is also referred to
    as &#147;Block Financial&#148; in this prospectus supplement.
    The notes are fully and unconditionally guaranteed by H&#038;R
    Block, Inc. H&#038;R Block, Inc. is also referred to as
    &#147;H&#038;R Block&#148; in this prospectus supplement. Block
    Financial and H&#038;R Block are collectively referred to as
    &#147;us&#148; or &#147;we&#148; in this prospectus supplement.
</DIV>


<!-- link1 "HOW TO OBTAIN MORE INFORMATION" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='102'></A><B><FONT style="font-family: 'Times New Roman', Times">HOW
    TO OBTAIN MORE INFORMATION</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    H&#038;R Block files annual, quarterly and interim reports,
    proxy and information statements and other information with the
    SEC. These filings contain important information, which does not
    appear in this prospectus supplement or the accompanying
    prospectus. The reports and other information can be inspected
    and copied at the public reference facilities maintained by the
    SEC at Room&#160;1580, 100&#160;F&#160;Street, N.E.,
    Washington,&#160;D.C. 20549. Copies of this material can be
    obtained by mail from the Public Reference Section of the SEC at
    Room&#160;1580, 100&#160;F&#160;Street, N.E.,
    Washington,&#160;D.C. 20549 at prescribed rates. The public may
    obtain information on the operation of the public reference room
    by calling the SEC at
    <FONT style="white-space: nowrap">1-800-SEC-0330.</FONT>
    The SEC maintains an Internet website
    <FONT style="white-space: nowrap">(http://www.sec.gov)</FONT>
    that contains reports, proxy and information statements and
    other materials that are filed through the SEC Electronic Data
    Gathering, Analysis and Retrieval (EDGAR) system.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have filed with the SEC a registration statement on
    <FONT style="white-space: nowrap">Form&#160;S-3</FONT>
    covering the securities offered by this prospectus supplement.
    You should be aware that this prospectus supplement does not
    contain all of the information contained or incorporated by
    reference in that registration statement and its exhibits and
    schedules. You may inspect and obtain the registration
    statement, including exhibits, schedules, reports and other
    information that we have filed with the SEC, as described in the
    preceding paragraph. Statements contained in this prospectus
    supplement concerning the contents of any document we refer you
    to are not necessarily complete and in each instance we refer
    you to the applicable document filed with the SEC for more
    complete information.
</DIV>


<!-- link1 "INCORPORATION OF INFORMATION FILED WITH THE SEC" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='103'></A><B><FONT style="font-family: 'Times New Roman', Times">INCORPORATION
    OF INFORMATION FILED WITH THE SEC</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The SEC allows us to &#147;incorporate by reference&#148; into
    this prospectus supplement and the accompanying prospectus the
    information we file with the SEC, which means we can disclose
    important information to you by referring to those documents.
    The information incorporated by reference is an important part
    of this prospectus supplement and the accompanying prospectus.
    We are incorporating by reference into this prospectus
    supplement the following documents filed with the SEC:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    H&#038;R Block&#146;s Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the year ended April&#160;30, 2007, as filed on
    June&#160;29, 2007.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    H&#038;R Block&#146;s Quarterly Reports on
    <FONT style="white-space: nowrap">Form&#160;10-Q</FONT>
    for the quarters ended July&#160;31, 2007, as filed on
    September&#160;6, 2007, and October&#160;31, 2007, as filed on
    December&#160;13, 2007.
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-ii
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    H&#038;R Block&#146;s Current Reports on
    <FONT style="white-space: nowrap">Form&#160;8-K</FONT>
    filed on May&#160;1, 2007, May&#160;17, 2007, June&#160;19,
    2007, July&#160;3, 2007, July&#160;20, 2007, August&#160;7,
    2007, August&#160;9, 2007 (as amended by our Amendment to
    Current Report filed on
    <FONT style="white-space: nowrap">Form&#160;8-K/A</FONT>
    on September&#160;11, 2007), August&#160;13, 2007,
    August&#160;22, 2007, September&#160;25, 2007, October&#160;3,
    2007, October&#160;15, 2007, October&#160;25, 2007,
    November&#160;1, 2007, November&#160;8, 2007, November&#160;19,
    2007, November&#160;23, 2007, November&#160;27, 2007,
    November&#160;29, 2007, December&#160;4, 2007, December&#160;21,
    2007 and December&#160;31, 2007.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    H&#038;R Block&#146;s Definitive Proxy Statement on
    Schedule&#160;14A for H&#038;R Block&#146;s 2007 Annual Meeting
    of Shareholders, as filed on July&#160;30, 2007 and H&#038;R
    Block&#146;s Definitive Proxy Statement on Schedule&#160;14A for
    H&#038;R Block&#146;s Special Meeting of Shareholders, as filed
    on November&#160;21, 2007.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, all documents filed by H&#038;R Block under
    Section&#160;13(a), 13(c), 14 or 15(d) of the Exchange Act after
    the date of this prospectus supplement and prior to the
    termination of the offering of the securities covered by this
    prospectus supplement will be deemed incorporated by reference
    herein. Any statement contained herein or incorporated or deemed
    to be incorporated herein shall be deemed to be modified or
    superseded for purposes of this prospectus supplement to the
    extent that a statement contained herein or in any other
    subsequently filed document which also is or is deemed to be
    incorporated by reference herein modifies or supersedes such
    statement. Any statement so modified or superseded shall not be
    deemed, except as so modified or superseded, to constitute a
    part of this prospectus supplement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following information contained in documents described above
    is not incorporated herein by reference: (i)&#160;information
    furnished under, and exhibits relating to, Items&#160;2.02 and
    7.01 of H&#038;R Block&#146;s Current Reports on
    <FONT style="white-space: nowrap">Form&#160;8-K,</FONT>
    unless such reports specifically provide for such incorporation,
    (ii)&#160;certifications accompanying or furnished in any such
    documents pursuant to Title&#160;18, Section&#160;1350 of the
    United States Code and (iii)&#160;any other information in such
    documents which is not deemed to be filed with the SEC under
    Section&#160;18 of the Exchange Act or otherwise subject to the
    liabilities of that section (except the information in
    Part&#160;I of H&#038;R Block&#146;s Quarterly Reports on
    <FONT style="white-space: nowrap">Form&#160;10-Q).</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You can obtain documents incorporated by reference in this
    prospectus supplement or the accompanying prospectus and any
    other applicable offering materials (including exhibits that are
    specifically incorporated by reference in such documents) at no
    cost to you by requesting them in writing or by telephone from
    us at the following address:
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">H&#038;R
    Block, Inc.<BR>
    Attn: Investor Relations<BR>
    One H&#038;R Block Way<BR>
    Kansas City, Missouri 64105<BR>
    <FONT style="white-space: nowrap">(800)&#160;869-9220</FONT></FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    H&#038;R Block&#146;s SEC filings also are available through its
    Internet website at www.hrblock.com. The information on such
    website is not, and you must not consider the information to be,
    a part of this prospectus supplement or the accompanying
    prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As you read these documents, you may find some differences in
    information from one document to another. You should assume that
    the information appearing in the prospectus supplement or the
    accompanying prospectus is accurate only as of the date on their
    respective covers, and you should assume the information
    appearing in any document incorporated or deemed to be
    incorporated by reference in this prospectus supplement or the
    accompanying prospectus is accurate only as of the date that
    document was filed with the SEC. Our business, financial
    condition, results of operations and prospects may have changed
    since those dates.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-iii
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->


<!-- link1 "FORWARD-LOOKING STATEMENTS" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='104'></A><B><FONT style="font-family: 'Times New Roman', Times">FORWARD-LOOKING
    STATEMENTS</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This prospectus supplement, the accompanying prospectus and the
    documents incorporated by reference herein and therein may
    include forward-looking statements within the meaning of
    Section&#160;27A of Securities Act of 1933, as amended, and
    Section&#160;21E of the Exchange Act. Forward-looking statements
    are made pursuant to the safe harbor provisions of the Private
    Securities Litigation Reform Act of 1995, as amended. All
    statements other than statements of historical fact may be
    deemed to be forward-looking statements. Examples of
    forward-looking statements include, but are not limited to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    projections of revenues, income or loss, earnings or loss per
    share, capital expenditures, the payment or non-payment of
    dividends, the repurchase of stock, capital structure and other
    financial items;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    statements of plans and objectives of H&#038;R Block&#146;s
    management or Board of Directors, including plans or objectives
    relating to products, services or business sales;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    statements of future economic performance;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    statements of assumptions underlying the statements described in
    the above bullet points.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Forward-looking statements can often be identified by the use of
    forward-looking terminology, such as &#147;expects,&#148;
    &#147;anticipates,&#148; &#147;intends,&#148; &#147;plans,&#148;
    &#147;believes,&#148; &#147;seeks,&#148; &#147;estimates&#148;,
    &#147;may&#148;, &#147;will be&#148; and variations of these
    words and similar expressions. Any forward-looking statement
    speaks only as of the date on which it is made and is qualified
    in its entirety by reference to the factors discussed throughout
    this prospectus supplement, the accompanying prospectus and in
    documents incorporated by reference. We do not undertake to
    update any forward-looking statement to reflect events or
    circumstances after the date on which it is made.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Forward-looking statements are not guarantees of future
    performance or results, and are subject to known and unknown
    risks and uncertainties. Forward looking statements necessarily
    are dependent on assumptions, data or methods that may be
    incorrect or imprecise. Actual results may vary materially and
    adversely from those anticipated in the forward-looking
    statements. Some of the factors that could cause actual results
    to differ include:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the effect of economic and market conditions, volatility in the
    non-prime mortgage industry and changes in interest rates;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our involvement in lawsuits;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    changes in federal and state government regulations concerning
    the securities and banking industries in general;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    changes in federal and state government regulations related to
    refund anticipation loans, privacy of client information, the
    practice of public accounting and auditor independence rules;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our ability to complete evaluations of internal controls and
    provide related certifications in accordance with various SEC
    rules;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the effect of changes in delinquency rates or collateral values
    relating to mortgage loans held for investment;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the risk that we may identify material deficiencies in our
    internal controls, and the risk that we may be unable to correct
    such deficiencies in a timely manner;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our ability to borrow in the future;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    recent changes in our independent public accounting firm, which
    may result in changes in our financial reporting if our new
    auditor has a different interpretation with respect to our
    application of generally accepted accounting principles;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our ability to attract and retain experienced financial advisors;
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-iv
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our ability to regain compliance with Office of Thrift
    Supervision (&#147;OTS&#148;) regulatory capital requirements;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our ability to continue to facilitate the offering of refund
    anticipation loans;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    increased competition for tax preparation clients in our retail
    offices, online and software channels;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    delays by the Internal Revenue Service (&#147;IRS&#148;) in
    accepting certain electronically filed tax returns;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    risk of loss resulting from inadequate or failed processes or
    systems, theft or fraud;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    risks associated with the termination of the agreement to sell
    Option One Mortgage Corporation (&#147;OOMC&#148;);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    risks associated with the termination of the origination
    activities of OOMC;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    risks associated with the liquidity demands to fund servicing
    advances to loan pools serviced by OOMC;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    risks associated with litigation and other contingent
    liabilities arising from OOMC&#146;s historical and ongoing
    operations;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    risks associated with the failure to sell our remaining loan
    servicing business, including the risk of further impairment;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    if a down grade in our credit ratings were to occur, the effect
    of such down grade on our liquidity, capital resources and cost
    of capital;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    other risks referenced from time to time in filings with the SEC
    and those factors listed or incorporated by reference into this
    prospectus supplement under &#147;Risk Factors.&#148;
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Additional factors that could cause actual results to differ
    materially from those expressed in the forward-looking
    statements are discussed in H&#038;R Block&#146;s reports filed
    with the SEC and incorporated by reference herein. See
    &#147;Incorporation of Information Filed with the SEC.&#148; In
    addition, other factors not identified could also have such an
    effect. We cannot give you any assurance that the
    forward-looking statements included or incorporated by reference
    in this prospectus supplement or the accompanying prospectus
    will prove to be accurate. In light of the significant
    uncertainties inherent in the forward-looking statements
    included or incorporated by reference in this prospectus
    supplement or the accompanying prospectus, you should not regard
    the inclusion of this information as a representation by us or
    any other person that the results or conditions described in
    those statements or objectives and plans will be achieved.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-v
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->


<!-- link1 "PROSPECTUS SUPPLEMENT SUMMARY" -->


<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='105'></A><B><FONT style="font-family: 'Times New Roman', Times">PROSPECTUS
    SUPPLEMENT SUMMARY</FONT></B>
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>This summary highlights information contained elsewhere or
    incorporated by reference in this prospectus supplement. Because
    this is a summary, it does not contain all the information that
    may be important to you. For a more complete understanding of
    our business and this offering, you should read the entire
    prospectus supplement and the accompanying prospectus and the
    documents incorporated by reference in this prospectus
    supplement, including our &#147;Risk Factors&#148; and financial
    statements.</I>
</DIV>


<!-- link1 "H&#038;R Block, Inc." -->


<DIV style="margin-top: 16pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='106'></A><B><FONT style="font-family: 'Times New Roman', Times">H&#038;R
    Block, Inc.</FONT></B>
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    H&#038;R Block was organized as a corporation in 1955 under the
    laws of the State of Missouri, and is a holding company with
    operating subsidiaries providing financial services and products
    to the general public.
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    H&#038;R Block is a financial services company with subsidiaries
    providing tax, investment, mortgage, and accounting and business
    consulting services and products. H&#038;R Block&#146;s Tax
    Services segment provides income tax return preparation and
    other services and products related to tax return preparation to
    the general public in the United States, Canada and Australia.
    H&#038;R Block&#146;s Business Services segment is a non-attest
    national accounting, tax and business consulting firm primarily
    serving mid-sized businesses under the RSM McGladrey name.
    H&#038;R Block&#146;s Consumer Financial Services segment offers
    brokerage services, along with investment planning and related
    financial advice, through H&#038;R Block Financial Advisors and
    full-service banking through H&#038;R Block Bank (&#147;HRB
    Bank&#148;). H&#038;R Block&#146;s mortgage operations, which
    were primarily directed through Option One Mortgage Corporation
    (&#147;OOMC&#148;), have discontinued originating loans. The
    loan servicing operations are in the process of being offered
    for sale and all mortgage operations have been accounted for as
    discontinued operations.
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    H&#038;R Block&#146;s principal executive office is located at
    One H&#038;R Block Way, Kansas City, Missouri&#160;64105. The
    telephone number for H&#038;R Block&#146;s principal executive
    office is
    <FONT style="white-space: nowrap">(816)&#160;854-3000.</FONT>
</DIV>


<!-- link1 "Block Financial LLC" -->


<DIV style="margin-top: 16pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='107'></A><B><FONT style="font-family: 'Times New Roman', Times">Block
    Financial LLC</FONT></B>
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Block Financial is an indirect wholly-owned subsidiary of
    H&#038;R Block. Block Financial was incorporated in May 1992 for
    the purpose of issuing debt and developing and providing
    tax-related and technology-related financial services. Block
    Financial was converted to a Delaware limited liability company
    effective January&#160;1, 2008. Block Financial&#146;s principal
    business activities include:
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    purchasing participation interests in Refund Anticipation Loans
    or &#147;RALs&#148; made by a lending bank to H&#038;R Block tax
    customers;
</TD>
</TR>


<TR style="line-height: 8pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    servicing non-prime loans;
</TD>
</TR>


<TR style="line-height: 8pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    providing brokerage services and investment planning services;
</TD>
</TR>


<TR style="line-height: 8pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    offering equity lines of credit to H&#038;R Block&#146;s tax
    preparation franchisees;
</TD>
</TR>


<TR style="line-height: 8pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    issuing commercial paper and corporate debt obligations to
    finance our working capital needs;
</TD>
</TR>


<TR style="line-height: 8pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    developing and marketing TaxCut income tax preparation software,
    H&#038;R Block
    DeductionPro<SUP style="font-size: 85%; vertical-align: text-top">TM</SUP>,
    Kiplinger&#146;s Home and Business Attorney and Kiplinger&#146;s
    WILLPowers<SUP style="font-size: 85%; vertical-align: text-top">SM</SUP>
    software products;&#160;and
</TD>
</TR>


<TR style="line-height: 8pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    full-service banking operations through HRB Bank.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Refund Anticipation Loans.</I>&#160;&#160;Since July 1996,
    Block Financial has been a party to agreements with Household
    Tax Masters, Inc. (&#147;Household&#148;) and others to purchase
    participation interests in RALs provided by a lending bank to
    H&#038;R Block tax clients. The July 1996 agreement was amended
    and restated in January 2003 and again in June 2003. In January
    2003, Block Financial entered into an agreement with Household,
</DIV>
</DIV><!-- End box 1 -->

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    <BR>
    S-1
</DIV><!-- END PAGE WIDTH -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    whereby Block Financial waived its right to purchase any
    participation interests in and to receive fees related to RALs
    during the period January&#160;1, through April&#160;30, 2003.
    In the June 2003 agreement, Block Financial obtained the right
    to purchase a 49.9% participation interest in RALs obtained
    through offices owned by subsidiaries of H&#038;R Block and a
    25% interest in RALs obtained through major franchise offices.
    Pursuant to agreements entered into in September 2005 with HSBC
    Holdings plc (&#147;HSBC&#148;) (a successor to Household by
    acquisition) and certain affiliates of HSBC, Block Financial
    obtained the right to purchase a 49.999999% participation
    interest in RALs originated by HSBC or certain HSBC affiliates
    obtained through offices owned by subsidiaries of H&#038;R Block
    and through franchise offices. Block Financial&#146;s purchases
    of the RAL participation interests are financed through
    short-term borrowings, and it bears all of the credit risk
    associated with its interests in the RALs.
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>H&#038;R Block Financial Advisors, Inc.</I>&#160;&#160;Block
    Financial provides brokerage services and investment planning
    through H&#038;R Block Financial Advisors, Inc. Products and
    services offered to customers include traditional brokerage
    products, as well as annuities, insurance, fee-based accounts,
    online account access, equity research and focus lists, model
    portfolios, asset allocation strategies, and other investment
    tools and information.
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Franchise Equity Lines of Credit.</I>&#160;&#160;Block
    Financial offers to H&#038;R Block&#146;s tax preparation
    franchisees lines of credit under a program designed to better
    enable the franchisees to refinance existing business debt,
    expand or renovate offices or meet off-season cash flow needs. A
    franchise equity loan is a revolving line of credit secured by
    the H&#038;R Block franchise and underlying business.
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>H&#038;R Block Bank.</I>&#160;&#160;HRB Bank offers
    traditional consumer banking services, including checking and
    savings accounts, individual retirement accounts, certificates
    of deposit and prepaid debit card accounts. In 2007, HRB Bank
    offered the H&#038;R Block Emerald Prepaid Debit Mastercard, a
    stored value card with the H&#038;R Block brand name (the
    &#147;Emerald Card&#148;), through H&#038;R Block retail tax
    offices. In late&#160;2007, HRB Bank began offering through
    H&#038;R Block retail tax offices the Emerald Advance Line of
    Credit, a unique revolving line of credit linked to the Emerald
    Card.
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Non-Prime Mortgage Operations.</I>&#160;&#160;Block Financial
    services non-prime loans through OOMC. Revenues consist
    primarily of servicing fee income. OOMC has discontinued
    originating loans and we are currently in the process of
    attempting to sell our mortgage servicing business. We are
    accounting for OOMC as a discontinued operation. There can be no
    assurance that we will be able to sell this business on terms
    acceptable to us.
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Block Financial&#146;s principal executive office is located at
    One H&#038;R Block Way, Kansas City, Missouri 64105. The
    telephone number for H&#038;R Block&#146;s principal executive
    office is
    <FONT style="white-space: nowrap">(816)&#160;854-3000.</FONT>
</DIV>


<!-- link1 "Recent Developments &#151; Discontinued Operations" -->


<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='108'></A><B><FONT style="font-family: 'Times New Roman', Times">Recent
    Developments&#160;&#151; Discontinued Operations</FONT></B>
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On April&#160;19, 2007, we entered into an agreement to sell
    OOMC to Cerberus Capital Management (&#147;Cerberus&#148;). In
    conjunction with this plan, we also announced we would terminate
    the operations of H&#038;R Block Mortgage Corporation
    (&#147;HRBMC&#148;), a wholly-owned subsidiary of OOMC.
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On December&#160;4, 2007, we agreed to terminate the agreement
    with Cerberus in light of the changing business environment for
    OOMC, as mutually acceptable alternatives for restructuring the
    original agreement could not be reached. We are in the process
    of terminating all origination activities and we are pursuing
    the sale of OOMC&#146;s loan servicing activities.
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Termination of the mortgage lending activities of OOMC is
    expected to result in a pretax restructuring charge of
    $74.8&#160;million. The restructuring charge covers expected
    severance and lease termination costs, write-off of property,
    plant and equipment and related shutdown costs. Of the total
    restructuring charge, $34.9&#160;million was incurred in our
    second quarter ending October&#160;31, 2007, with the remainder
    to be incurred primarily in our third quarter ending
    January&#160;31, 2008. This charge, combined with the
    restructuring activities previously
</DIV>
</DIV><!-- End box 1 -->

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    <BR>
    S-2
</DIV><!-- END PAGE WIDTH -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    announced, brings our total restructuring charges for the three
    and six months ended October&#160;31, 2007 to $61.0&#160;million
    and $77.1&#160;million, respectively.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Following the termination of its loan origination activities,
    OOMC will continue to carry out its servicing activities and
    collect servicing revenues as it does today. Because of the
    cessation of new originations, the volume of mortgage loans
    serviced will gradually decline as the aggregate principal
    amount of existing loans being serviced declines without
    replacement. The majority of OOMC&#146;s servicing activities
    are carried out with respect to loans owned by third parties.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have estimated the fair values of the servicing business and
    other assets, which resulted in an additional asset impairment
    for the second quarter ending October&#160;31, 2007 of
    $123.0&#160;million, bringing our total impairment recorded in
    discontinued operations to $146.2&#160;million for the six
    months ended October&#160;31, 2007. Fair value estimates are
    subject to various assumptions and changing market conditions
    and, therefore, actual results may differ from our current
    estimates.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <FONT style="font-family: 'Times New Roman', Times">See
    discussion of operating results in the documents incorporated by
    reference herein.
    </FONT>
</DIV>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Recent
    Developments&#160;&#151; Express IRA</FONT></B>
</DIV>



<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On January&#160;2, 2008, the Mississippi Attorney General filed
    an action concerning the Express IRA product in the Chancery
    Court of Hinds County, Mississippi, First Judicial District
    (Case
    <FONT style="white-space: nowrap">No.&#160;G-2008-6)</FONT>
    entitled <I>Jim Hood, Attorney General for the State of
    Mississippi, ex rel. the State of Mississippi&#160;v. H&#038;R
    Block, Inc., et al. </I>This action asserts claims concerning
    the Express IRA product similar to those claims asserted in
    lawsuits previously disclosed by H&#038;R Block in its Annual
    Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    and Quarterly Reports on
    <FONT style="white-space: nowrap">Form&#160;10-Q.</FONT>
    We intend to defend this case vigorously, but there are no
    assurances as to its outcome.
</DIV>

  </DIV><!-- End box 1 -->

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    <BR>
    S-3
</DIV><!-- END PAGE WIDTH -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->


<!-- link1 "The Offering" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='109'></A><B><FONT style="font-family: 'Times New Roman', Times">The
    Offering</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>The following is a brief summary of some of the terms of this
    offering. For a more complete description of the terms of the
    notes see &#147;Description of Notes&#148; in this prospectus
    supplement and &#147;Description of Debt Securities&#148; in the
    accompanying prospectus.</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
    Issuer</TD>
    <TD></TD>
    <TD valign="bottom">
    Block Financial LLC, a Delaware limited liability company.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Guarantor</TD>
    <TD></TD>
    <TD valign="bottom">
    H&#038;R Block, Inc., a Missouri corporation.</TD>
</TR>

</TABLE>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
    Notes offered</TD>
    <TD></TD>
    <TD valign="bottom">
    $600,000,000 initial principal amount of 7.875%&#160;notes due
    2013, fully and unconditionally guaranteed by H&#038;R Block.</TD>
</TR>

</TABLE>



<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
    Maturity Date</TD>
    <TD></TD>
    <TD valign="bottom">
    January&#160;15, 2013, unless earlier redeemed by us at our
    option.</TD>
</TR>

</TABLE>



<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
    Interest payment dates</TD>
    <TD></TD>
    <TD valign="bottom">
    The 15th of January and July of each year, beginning
    July&#160;15, 2008 to holders of record at the close of business
    on the preceding December&#160;31 and June&#160;30, respectively.</TD>
</TR>

</TABLE>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
    Interest rate adjustment</TD>
    <TD></TD>
    <TD valign="bottom">
    The interest rate payable on the notes will be subject to
    adjustments from time to time if either Moody&#146;s or S&#038;P
    downgrades (or subsequently upgrades) the debt rating assigned
    to the notes as described under &#147;Description of
    Notes&#160;&#151; Interest Rate Adjustment&#148;.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Optional redemption</TD>
    <TD></TD>
    <TD valign="bottom">
    At our option, we may redeem any or all of the notes, in whole
    or in part, at any time as described under &#147;Description of
    Notes&#160;&#151; Optional Redemption&#148;.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Mandatory offer to repurchase</TD>
    <TD></TD>
    <TD valign="bottom">
    If we experience a &#147;Change of Control Triggering
    Event&#148; (as defined in this prospectus supplement), we will
    be required, unless we have exercised our right to redeem the
    notes, to offer to purchase the notes at a purchase price equal
    to 101% of their principal amount, plus accrued and unpaid
    interest. See &#147;Description of Notes&#160;&#151; Change of
    Control Triggering Event&#148;.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Ranking</TD>
    <TD></TD>
    <TD valign="bottom">
    The notes are unsecured obligations of Block Financial and will
    rank equally with all of its other existing and future unsecured
    and unsubordinated senior debt. The notes will be fully and
    unconditionally guaranteed on a senior unsecured basis by
    H&#038;R Block. The guarantee will rank equally with H&#038;R
    Block&#146;s existing and future unsecured and unsubordinated
    senior indebtedness and guarantees. The notes and the guarantee
    will be effectively junior to any secured debt of Block
    Financial or H&#038;R Block, and effectively junior to
    liabilities of the subsidiaries of Block Financial or H&#038;R
    Block.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    As of October&#160;31, 2007, Block Financial had outstanding
    approximately $3.1&#160;billion of liabilities ranking senior to
    the notes and approximately $2.5&#160;billion of indebtedness
    ranking pari passu with the notes. As of the same date, H&#038;R
    Block (excluding Block Financial) had outstanding approximately
    $858.7&#160;million of liabilities ranking senior to the
    guarantee of the notes and approximately $16.7&#160;million of
    indebtedness ranking pari passu with the guarantee of the notes.</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    On a pro forma basis giving effect to this offering and the
    application of the net proceeds therefrom, as of
    October&#160;31, 2007, Block Financial would have had
    outstanding approximately $3.1&#160;billion </TD>
</TR>

</TABLE>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-4
</DIV><!-- END PAGE WIDTH -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
     of liabilities ranking senior to the notes and approximately
    $2.7&#160;billion of indebtedness, consisting of the notes and
    other indebtedness, ranking pari passu with the notes.</TD>
</TR>

</TABLE>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
    Covenants</TD>
    <TD></TD>
    <TD valign="bottom">
    We will issue the notes under an indenture containing covenants
    for your benefit. These covenants restrict our ability, with
    certain exceptions, to:</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    &#149;&#160;&#160;&#160;&#160;&#160;merge or consolidate with
    another entity or transfer all or <BR>
    &#160;&#160;&#160;&#160;&#160;&#160;substantially all of our
    property and assets; and</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -24pt; margin-left: 24pt">
    &#149;&#160;&#160;&#160;&#160;&#160;incur liens.</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Additional notes</TD>
    <TD></TD>
    <TD valign="bottom">
    We may create and issue further notes ranking equally and
    ratably with the notes in all respects, so that such further
    notes will be consolidated and form a single series with the
    notes and will have the same terms as to status, redemption or
    otherwise as the notes.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Denomination and form</TD>
    <TD></TD>
    <TD valign="bottom">
    We will issue the notes in the form of one or more fully
    registered global notes registered in the name of the nominee of
    The Depository Trust&#160;Company, or DTC. Beneficial interests
    in the notes will be represented through book-entry accounts of
    financial institutions acting on behalf of beneficial owners as
    direct and indirect participants in DTC. Clearstream Banking,
    soci&#233;t&#233; anonyme and Euroclear Bank, S.A./N.V., as
    operator of the Euroclear System, will hold interests on behalf
    of their participants through their respective U.S.
    depositaries, which in turn will hold such interests in accounts
    as participants of DTC. Except in the limited circumstances
    described in this prospectus supplement, owners of beneficial
    interests in the notes will not be entitled to have notes
    registered in their names, will not receive or be entitled to
    receive notes in definitive form and will not be considered
    holders of notes under the indenture. The notes will be issued
    only in denominations of $2,000 and integral multiples of $1,000
    in excess thereof.</TD>
</TR>

</TABLE>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
    Designated trustee</TD>
    <TD></TD>
    <TD valign="bottom">
    Deutsche Bank Trust&#160;Company Americas.</TD>
</TR>

</TABLE>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
    Governing law</TD>
    <TD></TD>
    <TD valign="bottom">
    The notes, the guarantee and the indenture will be governed by
    New York law.</TD>
</TR>

</TABLE>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
    Use of proceeds</TD>
    <TD></TD>
    <TD valign="bottom">
    The net proceeds to us from the sale of the notes offered hereby
    are expected to be approximately $595,104,000 million, after
    deducting the underwriting discount and commissions and our
    estimated offering expenses. We intend to use the first
    $250&#160;million of the net proceeds from this offering to
    repay the amount outstanding under an Amended and Restated
    Bridge Credit and Guarantee Agreement we entered into on
    December&#160;20, 2007 with BNP Paribas. We intend to use the
    next $50&#160;million of net proceeds from this offering for
    working capital, capital expenditures, repayment of other debt
    and other general corporate purposes. Seventy five percent of
    any additional net proceeds will be applied to repay the amount
    outstanding under an Amended and Restated Bridge Credit and
    Guarantee Agreement we entered into on December&#160;20, 2007
    with HSBC Bank USA, National Association with the remainder
    being used for working capital, capital expenditures, repayment
    of other debt and other general corporate purposes. Pending such
    uses, we may temporarily invest the net proceeds in short-term </TD>
</TR>

</TABLE>

</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-5
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    marketable securities. In our discretion, we may use all or a
    portion of the funds designated for general corporate purposes
    to repay the HSBC bridge facility. See &#147;Use of
    Proceeds&#148;.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Risk factors</TD>
    <TD></TD>
    <TD valign="bottom">
    Investing in our notes involves risks. See the &#147;Risk
    Factors&#148; section of this prospectus supplement, the
    &#147;Risk Factors&#148; section of the accompanying prospectus,
    the &#147;Risk Factors&#148; section of H&#038;R Block&#146;s
    Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the year ended April&#160;30, 2007 and the &#147;Risk
    Factors&#148; section of H&#038;R Block&#146;s Quarterly Reports
    on
    <FONT style="white-space: nowrap">Form&#160;10-Q</FONT>
    for the quarters ended July&#160;31, 2007 and October&#160;31,
    2007, together with all other information included or
    incorporated by reference in this prospectus supplement and the
    accompanying prospectus, for a discussion of factors you should
    carefully consider before deciding to invest in the notes.</TD>
</TR>

</TABLE>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-6
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->


<!-- link1 "Ratios of Earnings to Fixed Charges" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='110'></A><B><FONT style="font-family: 'Times New Roman', Times">Ratios
    of Earnings to Fixed Charges</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The ratios of earnings to fixed charges for each of the fiscal
    years ended April&#160;30, 2003 through 2007 and the six month
    period ended October&#160;31, 2007 for H&#038;R Block and Block
    Financial are set forth below. Due to the seasonal nature of our
    Tax Services and Business Services segments, the ratios of
    earnings to fixed charges for the six month period ended
    October&#160;31, 2007 are not indicative of the ratios for the
    full fiscal year.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="57%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="5%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=07 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=07 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=07 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=07 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Six Months<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Ended<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="19" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Fiscal Year Ended April&#160;30,</B>
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>October&#160;31, 2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2006</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2005</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2004</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2003</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Block Financial LLC(a)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.8
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.1
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.8
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    H&#038;R Block, Inc.(b)&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.7
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.9
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.2
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.2
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The ratio of earnings to fixed charges is computed by dividing
    earnings by fixed charges. Earnings consist of earnings from
    continuing operations before income taxes plus fixed charges.
    Fixed charges consist of interest expense and the portion of
    operating rental expense management believes represents the
    interest component of rent expense.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR>
    <TD valign="top">
    (a) </TD>
    <TD></TD>
    <TD valign="bottom">
    Fixed charges exceeded earnings by approximately
    $6.2&#160;million for the six months ended October&#160;31,
    2007, approximately $24.7&#160;million for the year ended
    April&#160;30, 2004, and approximately $64.8&#160;million for
    the year ended April&#160;30, 2003.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    (b) </TD>
    <TD></TD>
    <TD valign="bottom">
    Fixed charges exceeded earnings by approximately
    $407.3&#160;million for the six months ended October&#160;31,
    2007.</TD>
</TR>

</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-7
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->


<!-- link1 "RISK FACTORS" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='111'></A><B><FONT style="font-family: 'Times New Roman', Times">RISK
    FACTORS</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Investing in our notes involves a risk of loss. In addition
    to the other information included or incorporated by reference
    in this prospectus supplement and the accompanying prospectus,
    you should carefully consider the risks described below and in
    the &#147;Risk Factors&#148; section of H&#038;R Block&#146;s
    Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the year ended April&#160;30, 2007 and in the &#147;Risk
    Factors&#148; section of H&#038;R Block&#146;s Quarterly Reports
    on
    <FONT style="white-space: nowrap">Form&#160;10-Q</FONT>
    for the quarters ended July&#160;31, 2007 and October&#160;31,
    2007, all of which are incorporated by reference herein, before
    making an investment decision with respect to the notes.</I>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Relating to Our Business</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Potential
    Sale Transaction&#160;&#151; We may be unsuccessful in selling
    OOMC, which could result in further impairments.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On April&#160;19, 2007, we entered into an agreement to sell
    OOMC to Cerberus. In conjunction with this plan, we also
    announced we would terminate the operations of HRBMC.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On December&#160;4, 2007, we agreed to terminate the agreement
    with Cerberus in light of the changing business environment for
    OOMC, as mutually acceptable alternatives for restructuring the
    original agreement could not be reached. We are in the process
    of terminating all origination activities and we are pursuing
    the sale of OOMC&#146;s loan servicing activities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Following the termination of its loan origination activities,
    OOMC will continue to carry out its servicing activities and
    collect servicing revenues as it does today. Because of the
    cessation of new originations, the volume of mortgage loans
    serviced will gradually decline as the aggregate principal
    amount of existing loans being serviced declines without
    replacement. The majority of servicing activities are carried
    out with respect to loans owned by third parties.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have estimated the fair values of the servicing business and
    other assets, which resulted in an additional impairment for the
    second quarter ending October&#160;31, 2007 of
    $123.0&#160;million. Although we are actively pursuing the sale
    of our remaining loan servicing activities, it is possible that
    we will be unsuccessful in selling or selling at a price that
    does not result in further impairment.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Liquidity
    and Capital&#160;&#151; We may not have enough capital to
    service our debt and to meet our future financing needs and may
    not be able to obtain additional financing, which could prevent
    us from meeting our obligations under the notes.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We use capital primarily to fund working capital requirements,
    pay dividends, share repurchases and acquire businesses.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Market conditions and recent credit-rating downgrades have
    negatively impacted our ability to issue commercial paper. As an
    alternative to commercial paper issuance, we have been borrowing
    under our unsecured revolving committed lines of credit
    (&#147;CLOCs&#148;) to support working capital requirements
    arising from off-season operating losses in our Tax Services and
    Business Services segments and operating losses from our
    mortgage businesses. We have borrowings totaling
    $1.8&#160;billion outstanding under our CLOCs, out of a total
    borrowing capacity of $2.0&#160;billion, as of the date of this
    prospectus supplement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The CLOCs, among other things, require that we maintain at least
    $650.0&#160;million of Adjusted Net Worth, as defined in each of
    the agreements, on the last day of any fiscal quarter. Before
    October&#160;31, 2007, we initiated efforts to seek an amendment
    to the Minimum Net Worth Requirement (i)&#160;in light of the
    possibility that we might not have met the Minimum Net Worth
    Requirement for the fiscal quarter ended October&#160;31, 2007,
    (ii)&#160;to obtain flexibility for purposes of negotiating a
    sale of OOMC, and (iii)&#160;in light of the possibility that,
    without the amendment, we would not be in compliance with the
    Minimum Net Worth Covenant as of January&#160;31, 2008 without
    taking steps to raise additional capital. On November&#160;19,
    2007, effective October&#160;31, 2007, the CLOCs were amended
    to, among other things, require $450.0&#160;million of Adjusted
    Net Worth, for the fiscal quarters ending October&#160;31, 2007
    and January&#160;31, 2008. When financial
</DIV>

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    <BR>
    S-8
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    results for the six months ended October&#160;31, 2007 were
    finalized, we determined that we had an Adjusted Net Worth of
    $544.3&#160;million at October&#160;31, 2007, primarily due to
    operating losses of our discontinued operations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A violation of covenants under our CLOCs could adversely affect
    our access to these funds. In addition, it is possible that the
    borrowing capacity under our CLOCs may not be sufficient to meet
    our financing needs. To meet our future financing needs we may
    be required to obtain additional credit facilities or issue
    additional debt or equity securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As part of our loan servicing responsibilities, we are required
    to advance funds to cover delinquent scheduled principal and
    interest payments to security holders, as well as to cover
    delinquent tax and insurance payments and other costs required
    to protect the investors&#146; interest in the collateral
    securing the loans. Generally, servicing advances are
    recoverable from either the mortgagor, the insurer of the loan
    or the investor through the non-recourse provision of the loan
    servicing contract. In light of increased delinquencies of
    mortgage loans that we service, the amount of funds we are
    required to advance on a monthly basis has been increasing.
    Servicing advances and related assets totaled
    $821.4&#160;million, $510.2&#160;million and $445.4&#160;million
    at October, 31, 2007, July&#160;31, 2007 and April&#160;30,
    2007, respectively. We expect the volume of servicing advances
    to increase, although we cannot know the volume of servicing
    advances that are likely to be required in any given period.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On October&#160;1, 2007, OOMC entered into a facility to fund
    servicing advances, which provided funding of up to
    $400.0&#160;million. On November&#160;16, 2007, this agreement
    was amended to increase the amount of funding available from
    $400.0&#160;million to $750.0&#160;million. On December&#160;24,
    2007, this agreement was amended to increase the amount of
    funding available from $750.0&#160;million to
    $800.0&#160;million. To meet our servicing advance obligations,
    we may need to increase the size of our facility that funds
    servicing advances, obtain other servicing advance financing or
    sell portions of our mortgage servicing rights. It is possible
    that we (i)&#160;may not be able to obtain additional servicing
    advance financing, (ii)&#160;may not be able to sell mortgage
    servicing rights within a timeframe that would allow us to
    reduce our servicing advance obligations on a timely basis or
    (iii)&#160;may be forced to sell mortgage servicing rights at
    prices that will result in further impairment.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Market
    and Credit Risks&#160;&#151; The mortgage industry continues to
    be extremely volatile, which could result in additional
    operating losses, loan loss provisions or asset
    impairments.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The valuation of our retained residual interests, mortgage
    servicing rights and mortgage loans held for sale includes many
    estimates and assumptions made by management including, but not
    limited to, interest rates, prepayment speeds and credit losses.
    Variation in interest rates or the factors underlying our
    assumptions could affect our results of operations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Conditions in the non-prime mortgage industry continued to be
    challenging into fiscal year 2008. Our mortgage operations, as
    well as the entire industry, were impacted by deteriorating
    conditions in the secondary market, where reduced investor
    demand for loan purchases, higher investor yield requirements
    and increased estimates for future losses reduced the value of
    non-prime loans. Under these conditions non-prime originators
    generally reported significant increases in losses and many were
    unable to meet their financial obligations. Conditions in the
    non-prime mortgage industry resulted in significant losses in
    our mortgage operations during fiscal year 2007 and 2008. The
    mortgage industry continues to be extremely volatile, which
    could result in further impairments to our residual interests
    and loans held for sale, or further losses as a result of
    obligations to repurchase loans previously sold.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To the extent that market conditions remain volatile, or fail to
    improve, our mortgage business may continue to incur operating
    losses and asset impairments.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We held mortgage loans at HRB Bank for investment totaling
    $1.1&#160;billion at October&#160;31, 2007. The overall credit
    quality of mortgage loans held for investment is impacted by the
    strength of the U.S.&#160;economy and local economic conditions,
    including residential housing prices. Economic trends that
    negatively affect housing prices and the job market could result
    in deterioration in credit quality of our mortgage loan
    portfolio and a decline in the value of associated collateral.
    Future ARM resets could also lead to increased
</DIV>

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    <BR>
    S-9
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    delinquencies in our mortgage loans held for investment. Recent
    trends in the residential mortgage loan market reflect an
    increase in loan delinquencies and declining collateral values.
    As a result of similar trends in HRB Bank&#146;s loan portfolio,
    we recorded loan loss provisions totaling $9.8&#160;million
    during the quarter ended October&#160;31, 2007.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If adverse trends in the residential mortgage loan market
    continue, including adverse trends in HRB Bank&#146;s mortgage
    loan portfolio specifically, we could incur additional
    significant loan loss provisions.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Regulatory
    Environment&#160;&#151; Banking&#160;&#151; H&#038;R Block, as a
    savings and loan holding company, does not expect to be in
    compliance with regulatory minimum ratios which could result in
    the OTS taking further regulatory actions, which could
    negatively affect our operations. In addition, if we are not in
    a position to cure deficiencies, our ability to repurchase
    shares of our common stock, acquire businesses or pay dividends
    could be impaired.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    H&#038;R Block, as a savings and loan holding company, is
    subject to a three percent minimum ratio of adjusted tangible
    capital to adjusted total assets, as defined by the Office of
    Thrift Supervision (&#147;OTS&#148;). We fell below the three
    percent minimum ratio at April&#160;30, 2007. We notified the
    OTS of our failure to meet this requirement, and on May&#160;29,
    2007, the OTS issued a Supervisory Directive. We submitted a
    revised capital plan to the OTS on July&#160;19, 2007, in which
    we expected to meet the three percent minimum ratio at
    April&#160;30, 2008. The OTS accepted our revised capital plan.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Supervisory Directive included additional conditions that we
    will be required to meet in addition to the commitments made as
    a part of our charter approval order (&#147;Master
    Commitments&#148;), which included: (1)&#160;H&#038;R Block, as
    a savings and loan holding company, to maintain a 3% minimum
    ratio of adjusted tangible capital to adjusted total assets, as
    defined by OTS; (2)&#160;maintain all HRB Bank capital within
    HRB Bank in accordance with the submitted three year business
    plan; and (3)&#160;follow federal regulations surrounding
    intercompany transactions and approvals. The significant
    additional conditions included in the Supervisory Directive:
    (A)&#160;require HRB Bank to extend its compliance with a
    minimum 12.0% leverage ratio through fiscal year 2012;
    (B)&#160;require H&#038;R Block, as a savings and loan holding
    company, to comply with the Master Commitment at all times,
    except for the projected capital levels and compliance with the
    three percent minimum ratio, as provided in the fiscal year 2008
    and 2009 capital adequacy projections presented to the OTS on
    July&#160;19, 2007; (C)&#160;institutes reporting requirements
    to the OTS quarterly and monthly by the Board of Directors and
    management, respectively; and (D)&#160;require HRB Bank&#146;s
    Board of Directors to have an independent chairperson and at
    least the same number of outside directors as inside directors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Operating losses of our discontinued operations for the first
    half of fiscal year 2008 were higher than projected in our
    revised capital plan that was submitted to the OTS in July 2007.
    As a result, our capital levels are lower than those
    projections. H&#038;R Block continued to be below the three
    percent minimum ratio during our second quarter, and had
    adjusted tangible capital of negative $644.4&#160;million, which
    was below $177.5&#160;million necessary for H&#038;R Block to be
    in compliance at October&#160;31, 2007.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In November 2007, the OTS directed H&#038;R Block, as a savings
    and loan holding company, to submit a new revised capital plan
    no later than January&#160;15, 2008. At this time, we do not
    expect to be in compliance with the three percent minimum ratio
    at April&#160;30, 2008. Achievement of the capital plan depends
    on future events and circumstances, the outcome of which cannot
    be assured. If we are not in a position to cure deficiencies and
    if operating results continue to be below our plan, a resulting
    failure could impair our ability to repurchase shares of our
    common stock, acquire businesses or pay dividends.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Failure to meet the conditions under the Master Commitment and
    the Supervisory Directive, including capital levels of H&#038;R
    Block, could result in the OTS taking further regulatory
    actions, such as a supervisory agreement,
    <FONT style="white-space: nowrap">cease-and-desist</FONT>
    orders and civil monetary penalties. The OTS could also require
    us to sell assets, which could negatively impact our operations.
    At this time, the financial impact, if any, of additional
    regulatory actions cannot be determined.
</DIV>

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    <BR>
    S-10
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<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Regulatory
    Environment&#160;&#151; Tax Services&#160;&#151; The IRS has
    postponed the electronic filing of certain tax returns until mid
    February 2008 which may result in a shifting of our revenues
    from our fiscal third quarter to our fourth quarter, could
    potentially result in a decline in the number of tax returns we
    prepare during the 2008 fiscal year and could cause us to incur
    additional operating expenses.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Alternative Minimum Tax (&#147;AMT&#148;) was enacted in
    1969 to ensure that a small number of high-income taxpayers
    could not use special tax deductions to substantially eliminate
    their tax. Because this initial legislation was not indexed for
    inflation, an increasing number of taxpayers are becoming
    subject to AMT. In December 2007, Congress passed legislation to
    limit the number of affected taxpayers for the 2007 tax year.
    The IRS has indicated that it will need to postpone the
    electronic filing of certain tax returns until mid February
    2008. Delays by the IRS in accepting certain electronic filings
    may result in a shifting of our revenues from our fiscal third
    quarter to our fourth quarter, could potentially result in a
    decline in the number of tax returns we prepare during the 2008
    fiscal year, and could cause us to incur additional operating
    expenses and further impact our net worth. The effect to our
    business and financial results is uncertain.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Refund
    Anticipation Loans&#160;&#151; A reduction in our ability to
    facilitate the issuance of RALs could adversely affect our
    operations.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Changes in government regulation related to RALs could adversely
    affect our ability to offer RALs or our ability to purchase
    participation interests. Third-party financial institutions
    currently originating RALs and similar products could decide to
    cease or significantly limit such offerings and related
    collection practices. Changes in IRS practices could adversely
    affect our ability to use the IRS debt indicator to limit our
    bad debt exposure. In January 2008, the IRS announced that it is
    considering proposing rules that would prohibit a tax return
    preparer from disclosing personal tax return information to RAL
    lenders with the tax payer&#146;s consent for use in connection
    with the marketing and issuance of RALs. Changes in any of
    these, as well as possible litigation related to RALs, may
    adversely affect our results of operations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Since July 1996, we have been a party to agreements with HSBC
    and its predecessors to participate in RALs provided by a
    lending bank to H&#038;R Block tax clients. During fiscal year
    2006, we signed a new agreement with HSBC under which HSBC and
    its designated bank will provide funding of all RALs offered
    through June 2011. We may extend this agreement for two
    successive one-year periods. If HSBC and its designated bank do
    not continue to provide funding for RALs, we could seek other
    RAL lenders to continue offering RALs to our clients or consider
    alternative funding strategies.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The RAL program is regularly reviewed both from a business
    perspective and to ensure compliance with applicable state and
    federal laws. It is our intention to continue to offer the RAL
    program in the foreseeable future.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Loss of the RAL program could adversely affect our operating
    results. In addition to the loss of revenues and income directly
    attributable to the RAL program, the inability to offer RALs
    could indirectly result in the loss of retail tax clients and
    associated tax preparation revenues, unless we were able to take
    mitigating actions. Total revenues related directly to the RAL
    program (including revenues from participation interests) were
    $193.5&#160;million for the year ended April&#160;30, 2007,
    representing 4.8% of consolidated revenues and contributed
    $120.5&#160;million to the segment&#146;s pretax results.
    Revenues related directly to the RAL program totaled
    $179.3&#160;million for the year ended April&#160;30, 2006,
    representing 5.0% of consolidated revenues and contributed
    $106.5&#160;million to the segment&#146;s pretax results.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Relating to the Notes</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We may
    not be able to repurchase the notes upon a change of
    control.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon the occurrence of change of control events that constitute
    Change of Control Triggering Events, unless we have exercised
    our right to redeem the notes, each holder of notes will have
    the right to require us to repurchase all or any part of such
    holder&#146;s notes at a price equal to 101% of their principal
    amount, plus accrued and unpaid interest, if any, to the date of
    purchase. If we experience a Change of Control Triggering Event,
    there can be no assurance that we would have sufficient
    financial resources available to satisfy our
</DIV>

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    <BR>
    S-11
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    obligations to repurchase the notes. Our failure to purchase the
    notes as required under the indenture governing the notes would
    result in a default under the indenture, which could have
    material adverse consequences for us and the holders of the
    notes. See &#147;Description of Notes&#160;&#151; Change of
    Control Triggering Event&#148;.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We may
    be unable to pay interest on or repay the notes; our
    subsidiaries will have no obligations to the holders of the
    notes and the liabilities of our subsidiaries will be
    effectively senior to the notes.</FONT></I></B>
</DIV>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The notes will mature on January&#160;15, 2013. In addition, we
    will be obligated to pay interest on the notes semiannually on
    January&#160;15 and July&#160;15 each year, beginning
    July&#160;15, 2008. On October 31, 2007, we had approximately
    $2.9&#160;billion of total debt outstanding, including debt of
    OOMC outstanding under a facility to fund servicing advances
    which is accounted for in discontinued operations. Our ability
    to make interest payments on this debt will depend in part on
    our cash flow. Our cash flow and, consequently, our ability to
    pay interest in cash and to service our debt, including the
    notes, will be dependent upon the cash flow of our subsidiaries
    and the payment of funds to us by those subsidiaries in the form
    of loans, dividends or otherwise. Our subsidiaries will be
    separate and distinct legal entities and will have no
    obligation, contingent or otherwise, to pay any amounts due on
    the notes or to make cash available for that purpose. These
    subsidiaries may use the earnings they generate, as well as
    their existing assets, to fulfill their own direct obligations.
    As of October 31, 2007, these subsidiaries had outstanding
    liabilities of approximately $6.6 billion. Our subsidiaries may
    incur additional liabilities. The liabilities of our
    subsidiaries will be effectively senior to the notes.
</DIV>


<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    indenture governing the notes will not limit our ability to
    incur future indebtedness, pay dividends, repurchase securities,
    engage in transaction with affiliate or engage in other
    activities, which could adversely affect our ability to pay our
    obligations under the notes</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The indenture governing the notes does not contain any financial
    covenants and contains only limited restrictive covenants. The
    indenture will not limit our or our subsidiaries&#146; ability
    to incur additional indebtedness, issue or repurchase
    securities, pay dividends or engage in transactions with
    affiliates. We, therefore, may pay dividends and incur
    additional debt, including secured indebtedness in certain
    circumstances or indebtedness by, or other obligations of, our
    subsidiaries to which the notes would be structurally
    subordinate. Our ability to incur additional indebtedness and
    use our funds for numerous purposes may limit the funds
    available to pay our obligations under the notes.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    credit ratings may not reflect all risks of an investment in the
    notes.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our credit ratings are an assessment by rating agencies of our
    ability to pay our debts when due. Consequently, real or
    anticipated changes in our credit ratings will generally affect
    the market value of the notes. Agency ratings are not a
    recommendation to buy, sell or hold any security, and may be
    revised or withdrawn at any time by the issuing organization.
    Each agency&#146;s rating should be evaluated independently of
    any other agency&#146;s rating.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">No
    prior market exists for the notes and you cannot be sure that an
    active trading market will develop for those
    notes.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    No public market exists for the notes and we cannot assure the
    liquidity of any market that may develop for the notes, the
    ability of the holders to sell their notes or the price at which
    holders will be able to sell their notes. We do not intend to
    apply for listing of the notes on any securities exchange.
    Future trading prices of the notes will depend on many factors
    including, among other things, prevailing interest rates, our
    credit ratings, our operating results and the market for similar
    securities.
</DIV>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The underwriters have informed us that they intend to make a
    market in the notes. They are not, however, obligated to do so,
    and they may terminate any such market making activity at any
    time without notice to the holders of the notes. See
    &#147;Underwriting.&#148;
</DIV>


<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-12
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Federal
    and state statues allow courts, under specific circumstances, to
    void guarantees, subordinate claims in respect of guarantees and
    require note holders to return payments received from
    guarantors.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The notes will be guaranteed by H&#038;R Block. The issuance of
    the guarantee by H&#038;R Block may be subject to review under
    state and federal laws if a bankruptcy, liquidation or
    reorganization case or a lawsuit, including in circumstances in
    which bankruptcy is not involved, were commenced at some future
    date by, or on behalf of, our unpaid creditors or the unpaid
    creditors of H&#038;R Block. Under the federal bankruptcy laws
    and comparable provisions of state fraudulent transfer laws, a
    court may void or otherwise decline to enforce a
    guarantor&#146;s guarantee, or subordinate such guarantee to
    such guarantor&#146;s existing and future indebtedness. While
    the relevant laws may vary from state to state, a court might do
    so if it found that when a guarantor entered into its guarantee
    or, in some states, when payments became due under such
    guarantee, such guarantor received less than reasonably
    equivalent value or fair consideration and either:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="2%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    was insolvent or rendered insolvent by reason of such incurrence;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    was engaged in a business or transaction for which the
    guarantor&#146;s remaining assets constituted unreasonably small
    capital; or
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    intended to incur, or believed that it would incur, debts beyond
    its ability to pay such debts as they mature.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The court might also void a guarantee, without regard to the
    above factors, if the court found that a guarantor entered into
    its guarantee with actual intent to hinder, delay or defraud its
    creditors. In addition, any payment by a guarantor pursuant to
    its guarantee could be voided and required to be returned to
    such guarantor or to a fund for the benefit of such
    guarantor&#146;s creditors. A court would likely find that
    H&#038;R Block did not receive reasonably equivalent value or
    fair consideration for such guarantee if H&#038;R Block did not
    substantially benefit directly or indirectly from the issuance
    of the notes. If a court were to void the guarantee, you would
    no longer have a claim against H&#038;R Block. Sufficient funds
    to repay the notes may not be available from other sources. In
    addition, the court might direct you to repay any amounts that
    you already received from H&#038;R Block. The measures of
    insolvency for purposes of these fraudulent transfer laws will
    vary depending upon the law applied in any proceeding to
    determine whether a fraudulent transfer has occurred. Generally,
    however, a guarantor would be considered insolvent if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="2%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the sum of its debts, including contingent liabilities, was
    greater than the fair saleable value of all of its assets;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if the present fair saleable value of its assets was less than
    the amount that would be required to pay its probable liability
    on its existing debts, including contingent liabilities, as they
    become absolute and mature; or
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    it could not pay its debts as they become due.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To the extent a court voids the guarantee as a fraudulent
    transfer or holds the guarantee unenforceable for any other
    reason, holders of notes would cease to have any direct claim
    against H&#038;R Block. If a court were to take this action,
    H&#038;R Block assets would be applied first to satisfy its
    liabilities, if any, before any portion of its assets could be
    applied to the payment of the notes. The guarantee will contain
    a provision intended to limit H&#038;R Block liability to the
    maximum amount that it could incur without causing the
    incurrence of obligations under its guarantee to be a fraudulent
    transfer. This provision may not be effective to protect the
    guarantees from being voided under fraudulent transfer law, or
    may reduce H&#038;R Block obligation to an amount that
    effectively makes the guarantee worthless.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-13
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->


<!-- link1 "SELECTED FINANCIAL DATA" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='112'></A><B><FONT style="font-family: 'Times New Roman', Times">SELECTED
    FINANCIAL DATA</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Set forth below are consolidated financial data of H&#038;R
    Block for the periods indicated. H&#038;R Block&#146;s selected
    consolidated financial information for the three year period
    ended April&#160;30, 2007 have been derived from H&#038;R
    Block&#146;s audited consolidated financial statements.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The selected financial data for H&#038;R Block as of and for the
    six months ended October&#160;31, 2006 and 2007 are derived from
    H&#038;R Block&#146;s unaudited consolidated financial
    statements. In the opinion of management, such unaudited
    financial information contains all adjustments, consisting only
    of normal, recurring items, necessary to present fairly the
    financial information for such periods. Due to the seasonal
    nature of our Tax Services and Business Services segments, the
    results for the six months ended October&#160;31, 2006 and 2007
    are not indicative of the results of operations for a full
    fiscal year.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This table should be read in conjunction with H&#038;R
    Block&#146;s consolidated financial statements, including the
    related footnotes and &#147;Management&#146;s Discussion and
    Analysis of Financial Condition and Results of Operations&#148;
    contained in H&#038;R Block&#146;s Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the fiscal year ended April&#160;30, 2007 and in H&#038;R
    Block&#146;s Quarterly Reports on
    <FONT style="white-space: nowrap">Form&#160;10-Q</FONT>
    for the fiscal quarters ended July&#160;31, 2007 and
    October&#160;31, 2007, which are incorporated by reference
    herein and available as described under &#147;Incorporation of
    Information Filed with the SEC&#148; and &#147;How to obtain
    More Information&#148;.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="41%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom">
    <B>Six Months Ended<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Fiscal Years Ended April&#160;30,</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>October&#160;31,</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2005</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2006</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2006</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom">
    <B>(Unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="18" nowrap align="center" valign="bottom">
    <B>(In thousands, except per share data)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Revenues
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,146,369
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,574,753
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,021,274
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    738,853
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    816,033
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Operating expenses
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,584,218
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,037,739
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,361,412
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,118,602
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,241,168
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Net income (loss) from continuing operations
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    319,749
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    297,541
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    374,337
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (238,836
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (245,928
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Net income (loss) from discontinued operations
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    304,161
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    192,867
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (807,990
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (49,001
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (558,923
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Net income (loss)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    623,910
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    490,408
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (433,653
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (287,837
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (804,851
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Basic earnings (loss) per share from continuing operations
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.96
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.91
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1.16
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (0.74
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (0.76
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Basic earnings (loss) per share from discontinued operations
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.92
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.58
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (2.50
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (0.15
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (1.72
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Diluted earnings (loss) per share from continuing operations
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.95
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.89
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1.15
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (0.74
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (0.76
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Diluted earnings (loss) per share from discontinued operations
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.90
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.58
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (2.48
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (0.15
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (1.72
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Dividends paid on common stock per share
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.43
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.49
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.53
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.26
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.28
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="75%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="21%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Balance Sheet Data</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>As of October&#160;31, 2007</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>(In thousands, unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Cash and cash equivalents
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    386,915
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Cash and cash equivalents&#160;&#151; restricted
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    237,176
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total assets
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    7,106,771
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Long Term Debt
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,144,012
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Shareholders&#146; equity
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    544,280
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-14
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->


<!-- link1 "CAPITALIZATION" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='113'></A><B><FONT style="font-family: 'Times New Roman', Times">CAPITALIZATION</FONT></B>
</DIV>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following table sets forth the consolidated capitalization
    of H&#038;R Block as of October&#160;31, 2007, on an actual
    basis and as adjusted to give effect to the sale of the notes
    offered hereby and the application of the estimated net proceeds
    as described in &#147;Use of Proceeds&#148;. This table should
    be read in conjunction with our consolidated financial
    statements and related notes contained in H&#038;R Block&#146;s
    Quarterly Report on
    <FONT style="white-space: nowrap">Form&#160;10-Q</FONT>
    for the quarter ended October&#160;31, 2007, which is
    incorporated by reference herein. See &#147;Incorporation of
    Information Filed with the SEC&#148;. The information presented
    in the table below relates only to continuing operations.
</DIV>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>


<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="75%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>As of October&#160;31, 2007</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Actual</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>As Adjusted</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom">
    <B>(Unaudited, in thousands<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom">
    <B>except share data)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Cash and cash equivalents
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    386,915
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    510,859
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Cash and cash equivalents&#160;&#151; Restricted
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    237,176
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    237,176
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Debt:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Short-term debt
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    511,480
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    39,648
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Long-term debt
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,144,012
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,743,388
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 30pt">
    Total debt
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,655,492
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,783,036
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Shareholders&#146; equity:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Convertible preferred stock, no par, stated value $0.01 per share
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Common stock, no par, stated value $.01 per share,
    800,000,000&#160;shares authorized, 435,890,796&#160;shares
    issued
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,359
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,359
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Additional paid-in capital
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    678,407
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    678,407
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Accumulated other comprehensive income
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,131
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,131
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Retained earnings
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,981,378
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,981,378
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Less cost of 111,009,460&#160;shares of common stock in treasury
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (2,120,995
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (2,120,995
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 30pt">
    Total shareholders&#146; equity
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    544,280
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    544,280
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total capitalization
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,199,772
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,327,316
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>


<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-15
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->


<!-- link1 "USE OF PROCEEDS" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='114'></A><B><FONT style="font-family: 'Times New Roman', Times">USE
    OF PROCEEDS</FONT></B>
</DIV>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The net proceeds to us from the sale of the notes offered hereby
    are expected to be approximately $595,104,000&#160;million,
    after deducting the underwriting discount and commissions and
    our estimated offering expenses.
</DIV>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We intend to use the first $250&#160;million of the net proceeds
    from this offering to repay the amount outstanding under an
    Amended and Restated Bridge Credit and Guarantee Agreement we
    entered into on December&#160;20, 2007 with BNP Paribas. The
    BNPP bridge facility matures on February&#160;29, 2008, with a
    $50&#160;million principal payment due on January&#160;31, 2008
    and a $100&#160;million principal payment due on
    February&#160;15, 2008.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We intend to use the next $50&#160;million of net proceeds from
    this offering for working capital, capital expenditures,
    repayment of other debt and other general corporate purposes.
    Seventy five percent of any additional net proceeds will be
    applied to repay the amount outstanding under an Amended and
    Restated Bridge Credit and Guarantee Agreement we entered into
    on December&#160;20, 2007 with HSBC Bank USA, National
    Association with the remainder being used for working capital,
    capital expenditures, repayment of other debt and other general
    corporate purposes. Pending such uses, we may temporarily invest
    the net proceeds in short-term marketable securities. In our
    discretion, we may use all or a portion of the funds designated
    for general corporate purposes to repay the HSBC bridge
    facility. The HSBC bridge facility matures on April&#160;30,
    2008. HSBC Bank USA, National Association is an affiliate of
    HSBC Securities (USA) Inc., one of the underwriters for this
    offering. See &#147;Underwriting&#160;&#151; Other
    Relationships.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The bridge facilities bear interest at a floating rate equal to
    LIBOR plus an applicable margin that ranges from 1.00% to 2.50%
    based on our credit rating. After February&#160;15, 2008, the
    applicable margin increases by 0.50%. As of January 7, 2008, the
    applicable margin under the bridge facilities was 2.00%.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The net proceeds from the bridge facilities were used to
    temporarily refinance $500&#160;million of notes issued by Block
    Financial that matured on April&#160;16, 2007.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-16
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->


<!-- link1 "DESCRIPTION OF NOTES" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='115'></A><B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF NOTES</FONT></B>
</DIV>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>The 7.875%&#160;notes due 2013 are to be issued under an
    indenture dated as of October&#160;20, 1997 originally among
    Block Financial, H&#038;R Block and Bankers Trust&#160;Company,
    as trustee, as supplemented. Under the terms of this indenture,
    we are allowed to appoint a trustee for each series of notes
    issued thereunder. At the closing of the offering, we will
    appoint Deutsche Bank Trust&#160;Company Americas, as the
    trustee for the notes offered hereunder. The following
    summarizes certain provisions of the notes and the indenture. A
    copy of the indenture is an exhibit to our Registration
    Statement
    <FONT style="white-space: nowrap">No.&#160;333-33655.</FONT>
    This summary does not purport to be complete and is subject to,
    and qualified in its entirety by reference to, all of the
    provisions of the notes and the indenture, including the
    definitions of certain terms. Capitalized terms used in this
    &#147;Description of Notes&#148; have the meanings attributed to
    them in the accompanying prospectus.</I>
</DIV>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>The following description of the particular terms of the
    notes supplements and, to the extent inconsistent, replaces the
    description of the general terms and provisions of the debt
    securities and the indenture set forth in the accompanying
    prospectus. In particular, the Limitation on Liens covenant
    described below updates the description of the Limitation on
    Liens covenant found in the accompanying prospectus under the
    caption &#147;Description of Debt Securities&#160;&#150; Certain
    Covenants&#148; and the provisions relating to Consolidation,
    Merger and Sale of Assets described below updates the
    description of the similar provisions found in the accompanying
    prospectus under the caption &#147;Description of Debt
    Securities&#160;&#151; Consolidation, Merger and Sale of
    Assets&#148;.</I>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">General</FONT></B>
</DIV>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The notes will initially be limited to $600,000,000 aggregate
    principal amount and will mature on January&#160;15, 2013. The
    notes will bear interest at the rate of 7.875% per annum from
    January&#160;11, 2008 or from the most recent interest payment
    date on which we paid or provided for interest on the notes
    until their principal is paid. We will pay interest
    semi-annually on January&#160;15 and July&#160;15 of each year,
    commencing July&#160;15, 2008, to the registered holders at the
    close of business on the preceding December&#160;31 or
    June&#160;30, whether or not a business day. Interest on the
    notes will be computed on the basis of a
    <FONT style="white-space: nowrap">360-day</FONT> year
    of twelve
    <FONT style="white-space: nowrap">30-day</FONT>
    months. If any interest payment date or the maturity date is not
    a business day, payment will be made on the next business day
    and no additional interest will accrue.
</DIV>


<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Issuance
    of Additional Notes</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may, without the consent of the holders, increase the
    principal amount of the notes by issuing additional notes in the
    future on the same terms and conditions, except for any
    differences in the issue price and interest accrued prior to the
    issue date of the additional notes, and with the same CUSIP
    number as the notes offered hereby. The notes offered by this
    prospectus supplement and any additional notes would rank
    equally and ratably and would be treated as a single class for
    all purposes under the indenture. There is no limitation on the
    amount of other debt securities we may issue under the indenture.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Ranking</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The notes will be general unsecured obligations of Block
    Financial and will rank equal in right of payment, on a pari
    passu basis, with all of its other existing and future unsecured
    and unsubordinated senior indebtedness. The notes will be fully
    and unconditionally guaranteed on a senior unsecured basis by
    H&#038;R Block. The guarantee will rank equal in right of
    payment, on a pari passu basis, with all of H&#038;R
    Block&#146;s existing and future unsecured and unsubordinated
    senior indebtedness and guarantees. See &#147;Description of
    Debt Securities&#160;&#151; Guarantees&#148; in the accompanying
    prospectus. The notes and the guarantee will be effectively
    junior to any secured debt of Block Financial or H&#038;R Block
    and effectively junior to liabilities of their subsidiaries, in
    each case as may be outstanding from time to time.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-17
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Optional
    Redemption</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may, at our option, redeem the notes in whole or in part at
    any time at a redemption price equal to the greater of:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    100% of the principal amount of the notes to be redeemed, plus
    accrued interest to the redemption date,&#160;or
</TD>
</TR>

</TABLE>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the sum of the present values of the remaining principal amount
    and scheduled payments of interest on the notes to be redeemed
    (not including any portion of payments of interest accrued as of
    the redemption date) discounted to the redemption date on a
    semi-annual basis at the Treasury Rate plus 70 basis points plus
    accrued interest to the redemption date.
</TD>
</TR>

</TABLE>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The redemption price will be calculated assuming a
    <FONT style="white-space: nowrap">360-day</FONT> year
    consisting of twelve
    <FONT style="white-space: nowrap">30-day</FONT>
    months.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Treasury Rate&#148; </I>means, with respect to any
    redemption date, the rate per year equal to the semi-annual
    equivalent yield to maturity of the Comparable Treasury Issue,
    calculated on the third business day preceding the redemption
    date, assuming a price for the Comparable Treasury Issue
    (expressed as a percentage of its principal amount) equal to the
    Comparable Treasury Price for that redemption date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Comparable Treasury Issue&#148; </I>means the United
    States Treasury security selected by the Independent Investment
    Banker as having an actual or interpolated maturity comparable
    to the remaining term of the notes that would be used, at the
    time of selection and in accordance with customary financial
    practice, in pricing new issues of corporate debt securities of
    comparable maturity to the remaining term of the notes.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Comparable Treasury Price&#148; </I>means, with respect
    to any redemption date:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the average of the Reference Treasury Dealer Quotations for that
    redemption date, after excluding the highest and lowest of the
    Reference Treasury Dealer Quotations,&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    if the trustee obtains fewer than five Reference Treasury Dealer
    Quotations, the average of all Reference Treasury Dealer
    Quotations so received.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Independent Investment Banker&#148; </I>means one of
    the Reference Treasury Dealers appointed by the trustee after
    consultation with us.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Reference Treasury Dealer&#148; </I>means (a) each of
    Merrill Lynch, Pierce, Fenner &#038; Smith Incorporated, J.P.
    Morgan Securities Inc. and HSBC Securities (USA) Inc. and their
    respective successors, unless any of them ceases to be a primary
    U.S. government securities dealer in New York City (a
    <I>&#147;Primary Treasury </I>Dealer&#148;), in which case we
    shall substitute another Primary Treasury Dealer, and
    (b)&#160;any other Primary Treasury Dealer selected by us.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>&#147;Reference Treasury Dealer Quotations&#148; </I>means,
    with respect to each Reference Treasury Dealer and any
    redemption date, the average, as determined by the trustee, of
    the bid and asked prices for the Comparable Treasury Issue
    (expressed in each case as a percentage of its principal amount)
    quoted in writing to the trustee by that Reference Treasury
    Dealer at 3:30&#160;p.m., New York City time, on the third
    business day preceding that redemption date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will mail notice of any redemption at least 30&#160;days but
    not more than 60&#160;days before the redemption date to each
    holder of the notes to be redeemed. Notices of redemption may
    not be conditional. Unless we default in payment of the
    redemption price, on and after the redemption date, interest
    will cease to accrue on the notes or portions of the notes
    called for redemption.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We understand that under DTC&#146;s current practice, if we
    elect to redeem less than all of the notes, DTC would determine
    by lot the notes to be redeemed. If at the time of a partial
    redemption, individual notes have been issued in definitive
    form, the trustee will select in a fair and appropriate manner
    the notes to be redeemed.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-18
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Change of
    Control Triggering Event</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If a Change of Control Triggering Event occurs with respect to
    the notes, unless we have exercised our right to redeem the
    notes as described under &#147;&#151;&#160;Optional
    Redemption&#148; above, holders of notes will have the right to
    require us to repurchase all or any part (equal to $2,000 or an
    integral multiple of $1,000 in excess thereof) of their notes
    pursuant to the offer described below (the &#147;<I>Change of
    Control Offer</I>&#148;) on the terms set forth in the
    indenture. In the Change of Control Offer, we will offer payment
    in cash equal to 101% of the aggregate principal amount of notes
    repurchased plus accrued and unpaid interest, if any, on the
    notes repurchased, to the date of purchase (the &#147;<I>Change
    of Control Payment</I>&#148;). Within 30&#160;days following any
    Change of Control Triggering Event, we will mail a notice to the
    holders of the notes describing the transaction or transactions
    that constitute the Change of Control Triggering Event and
    offering to repurchase the notes on the date specified in the
    notice, which date will be no earlier than 30&#160;days and no
    later than 60&#160;days from the date such notice is mailed (the
    &#147;<I>Change of Control Payment Date</I>&#148;), pursuant to
    the procedures required by the indenture and described in such
    notice. We will comply with the requirements of
    <FONT style="white-space: nowrap">Rule&#160;14e-1</FONT>
    under the Exchange Act and any other securities laws and
    regulations thereunder to the extent those laws and regulations
    are applicable in connection with the repurchase of the notes as
    a result of a Change of Control Triggering Event. To the extent
    that the provisions of any securities laws or regulations
    conflict with the Change of Control Triggering Event provisions
    of the indenture, we will comply with the applicable securities
    laws and regulations and will not be deemed to have breached our
    obligations under the Change of Control Triggering Event
    provisions of the indenture by virtue of such conflicts.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On the Change of Control Payment Date, we will, to the extent
    lawful:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    accept for payment all notes or portions of notes properly
    tendered pursuant to the Change of Control Offer;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    deposit with the paying agent an amount equal to the Change of
    Control Payment in respect of all notes or portions of notes
    properly tendered;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    deliver or cause to be delivered to the trustee for cancellation
    the notes properly accepted together with an officers&#146;
    certificate stating the aggregate principal amount of notes or
    portions of notes being purchased by us.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Unless we default in the Change of Control Payment, on and after
    the Change of Control Payment Date, interest will stop accruing
    on the notes or portions of the notes tendered for repurchase
    pursuant to the Change of Control Offer.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For purposes of the foregoing discussion of a repurchase at the
    option of holders of notes upon the occurrence of a Change of
    Control Triggering Event, the following definitions are
    applicable:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    &#147;<I>Below Investment Grade Rating Event</I>&#148; means the
    ratings on the notes are lowered by each of the Rating Agencies
    and the notes are rated below an Investment Grade Rating by each
    of the Rating Agencies on any date from the date of the public
    notice of an arrangement that could result in a Change of
    Control until the end of the
    <FONT style="white-space: nowrap">60-day</FONT>
    period following public notice of the occurrence of the Change
    of Control (which
    <FONT style="white-space: nowrap">60-day</FONT>
    period shall be extended so long as the rating of the notes is
    under publicly announced consideration for possible downgrade by
    any of the Rating Agencies); provided that a Below Investment
    Grade Rating Event otherwise arising by virtue of a particular
    reduction in rating shall not be deemed to have occurred in
    respect of a particular Change of Control (and thus shall not be
    deemed a Below Investment Grade Rating Event for purposes of the
    definition of Change of Control Triggering Event hereunder) if
    the Rating Agencies making the reduction in rating to which this
    definition would otherwise apply do not announce or publicly
    confirm or inform the trustee or us in writing at its or our
    request that the reduction was the result, in whole or in part,
    of any event or circumstance comprised of or arising as a result
    of, or in respect of, the applicable Change of Control (whether
    or not the applicable Change of Control shall have occurred at
    the time of the Below Investment Grade Rating Event).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    &#147;<I>Capital Stock</I>&#148; of any Person means any and all
    shares, interests, rights to purchase, warrants, options,
    participation or other equivalents of or interests in (however
    designated) equity of such Person,
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-19
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    including any preferred stock and limited liability or
    partnership interests (whether general or limited), but
    excluding any debt securities convertible into such equity.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    &#147;<I>Change of Control</I>&#148; means the occurrence of any
    of the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;the direct or indirect sale, transfer, conveyance or
    other disposition (other than by way of merger or
    consolidation), in one or a series of related transactions, of
    all or substantially all of H&#038;R Block&#146;s properties or
    assets and of its subsidiaries&#146; properties or assets taken
    as a whole to any Person or group of related &#147;persons&#148;
    (as that term is used in Section&#160;13(d)(3) of the Exchange
    Act) (a &#147;<I>Group</I>&#148;) other than us or one of our
    subsidiaries;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)&#160;the adoption of a plan relating to the liquidation or
    dissolution of H&#038;R Block;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (c)&#160;the consummation of any transaction (including, without
    limitation, any merger or consolidation) the result of which is
    that any Person or Group becomes the beneficial owner, directly
    or indirectly, of more than 50% of the then outstanding number
    of shares of the Voting Stock of H&#038;R Block or Block
    Financial,&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (d)&#160;the first day on which a majority of the members of the
    board of directors of H&#038;R Block are not Continuing
    Directors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Notwithstanding the foregoing, a transaction will not be
    considered to be a Change of Control if (1)&#160;H&#038;R Block
    becomes a direct or indirect wholly owned subsidiary of a
    holding company and (2)&#160;immediately following that
    transaction, (A)&#160;the direct or indirect holders of the
    Voting Stock of the holding company are substantially the same
    as the holders of the Voting Stock of H&#038;R Block immediately
    prior to that transaction or (B)&#160;no Person or Group is the
    beneficial owner, directly or indirectly, of more than 50% of
    the Voting Stock of the holding company.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    &#147;<I>Change of Control Triggering Event</I>&#148; means the
    occurrence of both a Change of Control and a Below Investment
    Grade Rating Event.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    &#147;<I>Continuing Director</I>&#148; means, as of any date of
    determination, any member of the board of directors of H&#038;R
    Block, who (1)&#160;was a member of the board of directors of
    H&#038;R Block on the date of the issuance of the notes or
    (2)&#160;was nominated for election, elected or appointed to our
    board of directors with the approval of a majority of the
    Continuing Directors who were members of the board of directors
    of H&#038;R Block at the time of such nomination, election or
    appointment (either by a specific vote or by approval of our
    proxy statement in which such member was named as a nominee for
    election as a director).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    &#147;<I>Investment Grade Rating</I>&#148; means a rating equal
    to or higher than Baa3 (or the equivalent) by Moody&#146;s and
    BBB- (or the equivalent) by S&#038;P.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    &#147;<I>Moody&#146;s</I>&#148; means Moody&#146;s Investors
    Service, Inc.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    &#147;<I>Person</I>&#148; means any individual, corporation,
    partnership, joint venture, association, joint stock company,
    trust, unincorporated organization, limited liability company,
    government or any agency or political subdivision thereof or any
    other entity, and includes a &#147;person&#148; as used in
    Section&#160;13(d)(3) of the Securities Exchange Act of 1934.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    &#147;<I>Rating Agencies</I>&#148; means (1)&#160;each of
    Moody&#146;s and S&#038;P and (2)&#160;if either of Moody&#146;s
    or S&#038;P ceases to rate the notes or fails to make a rating
    of the notes publicly available for reasons outside of our
    control, a &#147;nationally recognized statistical rating
    organization&#148; within the meaning of
    <FONT style="white-space: nowrap">Rule&#160;15c3-1(c)(2)(vi)(F)</FONT>
    under the Exchange Act selected by us (as certified by a
    resolution of our board of directors) as a replacement agency
    for Moody&#146;s or S&#038;P, or either of them, as the case may
    be.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    &#147;<I>S&#038;P</I>&#148; means Standard&#160;&#038;
    Poor&#146;s Ratings Services, a division of The McGraw-Hill
    Companies, Inc.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    &#147;<I>Voting Stock</I>&#148; of a Person means all classes of
    Capital Stock of such Person then outstanding and normally
    entitled to vote in the election of directors, managers or
    trustees, as applicable.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-20
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Interest
    Rate Adjustment Covenant</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The interest rate payable on the notes will be subject to
    adjustments from time to time if either Moody&#146;s or S&#038;P
    downgrades (or subsequently upgrades) the debt rating assigned
    to the notes, as set forth below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If the rating from Moody&#146;s of the notes is decreased to a
    rating set forth in the immediately following table, the
    interest rate on the notes will increase from the interest rate
    payable on the notes on the date of their issuance by the
    percentage set forth opposite that rating:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="89%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Rating</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Percentage</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Ba1
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.25
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Ba2
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.50
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Ba3
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.75
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    B1 or below
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If the rating from S&#038;P of the notes is decreased to a
    rating set forth in the immediately following table, the
    interest rate on the notes will increase from the interest rate
    payable on the notes on the date of their issuance by the
    percentage set forth opposite that rating:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="89%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Rating</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Percentage</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    BB+
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.25
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    BB
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.50
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    BB&#8722;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.75
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    B+ or below
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If at any time the interest rate on the notes has been adjusted
    upward and either Moody&#146;s or S&#038;P, as the case may be,
    subsequently increases its rating of the notes to any of the
    threshold ratings set forth above, the interest rate on the
    notes will be decreased such that the interest rate for the
    notes equals the interest rate payable on the notes on the date
    of their issuance plus the percentages set forth opposite the
    ratings from the tables above in effect immediately following
    the increase. If Moody&#146;s subsequently increases its rating
    of the notes to Baa3 or higher and S&#038;P increases its rating
    to BBB- or higher the interest rate on the notes will be
    decreased to the interest rate payable on the notes on the date
    of their issuance.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each adjustment required by any decrease or increase in a rating
    set forth above, whether occasioned by the action of
    Moody&#146;s or S&#038;P, shall be made independent of any and
    all other adjustments. In no event shall (1)&#160;the interest
    rate for the notes be reduced to below the interest rate payable
    on the notes on the date of their issuance or (2)&#160;the total
    increase in the interest rate on the notes exceed 2.00% above
    the interest rate payable on the notes on the date of their
    issuance.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If either Moody&#146;s or S&#038;P ceases to provide a rating of
    the notes, any subsequent increase or decrease in the interest
    rate of the notes necessitated by a reduction or increase in the
    rating by the agency continuing to provide the rating shall be
    twice the percentage set forth in the applicable table above. No
    adjustments in the interest rate of the notes shall be made
    solely as a result of either Moody&#146;s or S&#038;P ceasing to
    provide a rating. If both Moody&#146;s and S&#038;P cease to
    provide a rating of the notes, the interest rate on the notes
    will increase to, or remain at, as the case may be, 2.00% above
    the interest rate payable on the notes on the date of their
    issuance.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Any interest rate increase or decrease described above will take
    effect from the first day of the interest period during which a
    rating change requires an adjustment in the interest rate.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The interest rates on the notes will permanently cease to be
    subject to any adjustment described above (notwithstanding any
    subsequent decrease in the ratings by either or both rating
    agencies) if the notes become rated A3 and BBB or higher by
    Moody&#146;s and S&#038;P, respectively (or one of these ratings
    if only rated by one rating agency), with a stable or positive
    outlook by each of the rating agencies.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-21
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Limitation
    on Liens</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    H&#038;R Block may not, and may not permit any of its
    subsidiaries to create or permit to exist any lien on any
    principal property (or any stock or indebtedness of a subsidiary
    that owns or leases a principal property), whether owned on the
    date of issuance of the notes or thereafter acquired, to secure
    any indebtedness, unless H&#038;R Block contemporaneously
    secures the notes equally and ratably with (or prior to) that
    obligation. The preceding sentence will not require H&#038;R
    Block to secure the notes if the lien consists of the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    permitted liens;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    liens securing indebtedness if, after giving pro forma effect to
    the incurrence of such indebtedness (and the receipt and
    application of the proceeds thereof) or the securing of
    outstanding indebtedness, all indebtedness of H&#038;R Block and
    its subsidiaries secured by liens on any principal property
    (other than permitted liens), at the time of determination does
    not exceed the greater of $250&#160;million or 15% of the total
    consolidated stockholders&#146; equity of H&#038;R Block as
    shown on the audited consolidated balance sheet contained in the
    latest annual report to stockholders of H&#038;R Block.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Please refer to &#147;Description of Debt Securities-Certain
    Covenants-Limitation on Liens&#148; for a discussion of what
    constitutes <I>&#147;indebtedness&#148; </I>and
    <I>&#147;principal properties&#148;</I>.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under the indenture, <I>&#147;permitted liens&#148; </I>of any
    person are defined as&#160;&#151;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;pledges or deposits by that person under worker&#146;s
    compensation laws, unemployment insurance laws, social security
    laws or similar legislation, or good faith deposits in
    connection with bids, tenders, contracts (other than for the
    payment of indebtedness) or leases to which that person is a
    party, or deposits to secure public or statutory obligations of
    that person or deposits of cash or bonds to secure performance,
    surety or appeal bonds to which that person is a party or which
    are otherwise required of that person, or deposits as security
    for contested taxes or import duties or for the payment of rent
    or other obligations of like nature, in each case incurred in
    the ordinary course of business;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)&#160;liens imposed by law, such as carriers&#146;,
    warehousemen&#146;s, laborers&#146;, materialmen&#146;s,
    landlords&#146;, vendors&#146;, workmen&#146;s, operators&#146;,
    factors and mechanics liens, in each case for sums not yet due
    or being contested in good faith by appropriate proceedings;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (c)&#160;liens for taxes, assessments and other governmental
    charges or levies not yet delinquent or which are being
    contested in good faith by appropriate proceedings;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (d)&#160;survey exceptions, encumbrances, easements or
    reservations of or with respect to, or rights of others for or
    with respect to, licenses, rights-of-way, sewers, electric and
    other utility lines and usages, telegraph and telephone lines,
    pipelines, surface use, operation of equipment, permits,
    servitudes and other similar matters, or zoning or other
    restrictions as to the use of real property or liens incidental
    to the conduct of the business of that person or to the
    ownership of its properties which were not incurred in
    connection with indebtedness and which do not in the aggregate
    materially adversely affect the value of the properties or
    materially impair their use in the operation of the business of
    that person;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (e)&#160;liens existing on or provided for under the terms of
    agreements existing on the date the notes are issued (including,
    without limitation, under H&#038;R Block&#146;s current credit
    agreements);
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (f)&#160;liens on property at the time H&#038;R Block or any of
    its subsidiaries acquired the property or the entity owning the
    property; however, any such lien may not extend to any other
    property owned by H&#038;R Block or any of its subsidiaries;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (g)&#160;liens on any principal property, or any shares of stock
    or indebtedness of any subsidiary, that H&#038;R Block or any
    subsidiary acquires after the date of the indenture that are
    created
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-22
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    contemporaneously with such acquisition, or within
    24&#160;months after the acquisition, to secure or provide for
    the payment or financing of any part of the purchase price;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (h)&#160;liens arising from, or in connection with, any
    securitization, sale or other transfer, or any financing,
    involving loans, servicing assets, securities, receivables or
    other financial assets (or, in each case, portions thereof, or
    participations therein) and/or, in each case, related rights and
    interests;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;liens securing the obligations of that person pursuant
    to any hedging agreements of the type customarily entered into
    for the purpose of limiting risk with respect to fluctuations in
    interest rates, foreign currency exchange rates, commodity
    prices or similar risks;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (j)&#160;liens on property securing indebtedness that H&#038;R
    Block or any of its subsidiaries incurs to provide funds for all
    or any portion of the cost of acquiring, constructing, altering,
    expanding, improving or repairing that property or assets used
    in connection with that property;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (k)&#160;liens securing intercompany indebtedness owed to
    H&#038;R Block or a wholly owned subsidiary of H&#038;R Block;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (l)&#160;liens on any property to secure indebtedness incurred
    in connection with the construction, installation or financing
    of pollution control or abatement facilities or other forms of
    industrial revenue bond financing or indebtedness issued or
    guaranteed by the United States, any state or any department,
    agency or instrumentality thereof;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (m)&#160;liens required by any contract, statute, regulation or
    order in order to permit H&#038;R Block or any of its
    subsidiaries to perform any contract or subcontract made by it
    with or at the request of the United States or any State thereof
    or any department, agency or instrumentality of either or to
    secure partial, progress, advance or other payments by H&#038;R
    Block or any of its subsidiaries to the United States or any
    State thereof or any department, agency or instrumentality of
    either pursuant to the provisions of any contract, statute,
    regulation or order;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (n)&#160;liens securing indebtedness of joint ventures in which
    H&#038;R Block or a subsidiary has an interest to the extent the
    liens are on property or assets of those joint ventures;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (o)&#160;liens arising in connection with payables to brokers
    and dealers in the ordinary course of business;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (p)&#160;liens arising in connection with deposits and other
    liabilities incurred by banking
    <FONT style="white-space: nowrap">and/or</FONT> other
    financial services activities in the ordinary course of business;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (q)&#160;bankers&#146; liens, rights of setoff and other similar
    liens existing solely with respect to bank accounts maintained
    by H&#038;R Block and its subsidiaries, in each case granted in
    the ordinary course of business in favor of the bank or banks
    with which such accounts are maintained; <I>provided </I>that,
    unless the liens are non-consensual and arise by operation of
    law, the liens shall not secure (either directly or indirectly)
    the repayment of any indebtedness;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (r)&#160;liens resulting from the deposit of funds or evidences
    of indebtedness in trust for the purpose of defeasing
    indebtedness of H&#038;R Block or any of its subsidiaries;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (s)&#160;legal or equitable encumbrances deemed to exist by
    reason of negative pledges or the existence of any litigation or
    other legal proceeding and any related <I>lis pendens </I>filing
    (excluding any attachment prior to judgment lien or attachment
    lien in aid of execution on a judgment);
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (t)&#160;any attachment lien being contested in good faith and
    by proceedings promptly initiated and diligently conducted,
    unless the attachment giving rise to the lien will not, within
    60&#160;days after the entry thereof, have been discharged or
    fully bonded or will not have been discharged within
    60&#160;days after the termination of any such bond;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (u)&#160;any judgment lien, unless the judgment it secures will
    not, within 60&#160;days after the entry of the judgment, have
    been discharged or execution thereof stayed pending appeal, or
    will not have been discharged within 60&#160;days after the
    expiration of any such stay;
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-23
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (v)&#160;liens to banks arising from the issuance of letters of
    credit issued by those banks;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (w)&#160;rights of a common owner of any interest in property
    held by that person;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (x)&#160;any defects, irregularities or deficiencies in title to
    easements, rights-of-way or other properties which do not in the
    aggregate materially adversely affect H&#038;R Block and its
    subsidiaries taken as a whole;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (y)&#160;liens to secure any refinancing, refunding, extension,
    renewal or replacement (or successive refinancings, refundings,
    extensions, renewals or replacements), as a whole, or in part,
    of any indebtedness secured by any lien referred to in the
    foregoing clauses&#160;(e) through (n); provided, however,
    that&#160;&#151;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 15%; margin-right: 0%; text-indent: 3%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;the new lien must be limited to all or part of the same
    property that secured the original lien (plus improvements on
    the property),&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 15%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;the indebtedness secured by the lien at such time is
    not increased to any amount greater than the sum of&#160;&#151;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 23%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (A)&#160;the outstanding principal amount or, if greater,
    committed amount of the indebtedness described under
    clauses&#160;(e) through (j)&#160;at the time the original lien
    became a permitted lien under the indenture,&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 23%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (B)&#160;an amount necessary to pay any fees and expenses,
    including premiums, related to the refinancing, refunding,
    extension, renewal or replacement.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Consolidation,
    Merger and Sale of Assets</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Neither H&#038;R Block nor Block Financial may consolidate with
    or merge with or into any Person, or convey, transfer, or lease
    all or substantially all of the assets of H&#038;R Block on a
    consolidated basis, unless the following conditions have been
    satisfied:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    either (1)&#160;H&#038;R Block or Block Financial is the
    continuing Person in the case of a merger or (2)&#160;the
    surviving entity is a Person organized and existing under the
    laws of the United States, any State, or the District of
    Columbia and expressly assumes all of the obligations of
    H&#038;R Block or Block Financial, as appropriate, under the
    debt securities and the indenture;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    immediately after giving effect to the transaction (and treating
    any indebtedness that becomes an obligation of the successor
    company or any subsidiary of H&#038;R Block as a result of the
    transaction as having been incurred by the successor company or
    the subsidiary at the time of the transaction), no default or
    event of default would occur or be continuing;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    H&#038;R Block has delivered to the trustee an officers&#146;
    certificate and an opinion of counsel, each stating that such
    consolidation, merger, or transfer complies with the indenture.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Sinking
    Fund</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    There will be no sinking fund payments for the notes.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Defeasance</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The notes are subject to Block Financial&#146;s legal defeasance
    option and covenant defeasance option as set forth under
    &#147;Description of Debt Securities-Satisfaction and Discharge
    of the Indenture; Defeasance&#148; in the accompanying
    prospectus.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-24
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Book-Entry
    Delivery and Settlement</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Global
    Notes</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will issue the notes in the form of one or more global notes
    in definitive, fully registered, book-entry form. The global
    notes will be deposited with or on behalf of DTC and registered
    in the name of Cede&#160;&#038; Co., as nominee of DTC.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">DTC,
    Clearstream and Euroclear</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Beneficial interests in the global notes will be represented
    through book-entry accounts of financial institutions acting on
    behalf of beneficial owners as direct and indirect participants
    in DTC. Investors may hold interests in the global notes through
    either DTC (in the United States), Clearstream Banking,
    soci&#233;t&#233; anonyme, Luxembourg, which we refer to as
    Clearstream, or Euroclear Bank S.A./ N.V., as operator of the
    Euroclear System, which we refer to as Euroclear, in Europe,
    either directly if they are participants in such systems or
    indirectly through organizations that are participants in such
    systems. Clearstream and Euroclear will hold interests on behalf
    of their participants through customers&#146; securities
    accounts in Clearstream&#146;s and Euroclear&#146;s names on the
    books of their U.S.&#160;depositaries, which in turn will hold
    such interests in customers&#146; securities accounts in the
    U.S.&#160;depositaries&#146; names on the books of DTC.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    DTC has advised us:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    DTC is a limited-purpose trust company organized under the New
    York Banking Law, a &#147;banking organization&#148; within the
    meaning of the New York Banking Law, a member of the Federal
    Reserve System, a &#147;clearing corporation&#148; within the
    meaning of the New York Uniform Commercial Code and a
    &#147;clearing agency&#148; registered under Section&#160;17A of
    the Securities Exchange Act of 1934.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    DTC holds securities that its participants deposit with DTC and
    facilitates the settlement among participants of securities
    transactions, such as transfers and pledges, in deposited
    securities through electronic computerized book-entry changes in
    participants&#146; accounts, thereby eliminating the need for
    physical movement of securities certificates.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    Direct participants include securities brokers and dealers,
    banks, trust companies, clearing corporations and other
    organizations.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    DTC is owned by a number of its direct participants and by The
    New York Stock Exchange, Inc., the American Stock Exchange LLC
    and the National Association of Securities Dealers, Inc.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    Access to the DTC system is also available to others such as
    securities brokers and dealers, banks and trust companies that
    clear through or maintain a custodial relationship with a direct
    participant, either directly or indirectly.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    The rules applicable to DTC and its direct and indirect
    participants are on file with the SEC.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Clearstream has advised us that it is incorporated under the
    laws of Luxembourg as a professional depositary. Clearstream
    holds securities for its customers and facilitates the clearance
    and settlement of securities transactions between its customers
    through electronic book-entry changes in accounts of its
    customers, thereby eliminating the need for physical movement of
    certificates. Clearstream provides to its customers, among other
    things, services for safekeeping, administration, clearance and
    settlement of internationally traded securities and securities
    lending and borrowing. Clearstream interfaces with domestic
    markets in several countries. As a professional depositary,
    Clearstream is subject to regulation by the Luxembourg
    Commission for the Supervision of the Financial Section.
    Clearstream customers are recognized financial institutions
    around the world, including underwriters, securities brokers and
    dealers, banks, trust companies, clearing corporations and other
    organizations and may include the underwriters. Indirect access
    to Clearstream is also available to others, such as banks,
    brokers, dealers and trust companies that clear through or
    maintain a custodial relationship with a Clearstream customer
    either directly or indirectly.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-25
</DIV><!-- END PAGE WIDTH -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Euroclear has advised us that it was created in 1968 to hold
    securities for participants of Euroclear and to clear and settle
    transactions between Euroclear participants through simultaneous
    electronic book-entry delivery against payment, thereby
    eliminating the need for physical movement of certificates and
    any risk from lack of simultaneous transfers of securities and
    cash. Euroclear provides various other services, including
    securities lending and borrowing and interfaces with domestic
    markets in several countries. Euroclear is operated by Euroclear
    Bank S.A./N.V., which we refer to as the Euroclear Operator,
    under contract with Euroclear Clearance Systems S.C., a Belgian
    cooperative corporation, which we refer to as the Cooperative.
    All operations are conducted by the Euroclear Operator, and all
    Euroclear securities clearance accounts and Euroclear cash
    accounts are accounts with the Euroclear Operator, not the
    Cooperative. The Cooperative establishes policy for Euroclear on
    behalf of Euroclear participants. Euroclear participants include
    banks (including central banks), securities brokers and dealers,
    and other professional financial intermediaries and may include
    the underwriters. Indirect access to Euroclear is also available
    to other firms that clear through or maintain a custodial
    relationship with a Euroclear participant, either directly or
    indirectly.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Euroclear Operator is licensed by the Belgian Banking and
    Finance Commission to carry out banking activities on a global
    basis. As a Belgian bank, it is regulated and examined by the
    Belgian Banking and Finance Commission.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have provided the descriptions of the operations and
    procedures of DTC, Clearstream and Euroclear in this prospectus
    supplement solely as a matter of convenience. These operations
    and procedures are solely within the control of those
    organizations and are subject to change by them from time to
    time. None of us, the underwriters nor the trustee takes any
    responsibility for these operations or procedures, and you are
    urged to contact DTC, Clearstream and Euroclear or their
    participants directly to discuss these matters.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We expect that under procedures established by DTC:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    upon deposit of the global notes with DTC or its custodian, DTC
    will credit on its internal system the accounts of direct
    participants designated by the underwriters with portions of the
    principal amounts of the global notes;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    ownership of the notes will be shown on, and the transfer of
    ownership thereof will be effected only through, records
    maintained by DTC or its nominee, with respect to interests of
    direct participants, and the records of direct and indirect
    participants, with respect to interests of persons other than
    participants.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The laws of some jurisdictions may require that purchasers of
    securities take physical delivery of those securities in
    definitive form. Accordingly, the ability to transfer interests
    in the notes represented by a global note to those persons may
    be limited. In addition, because DTC can act only on behalf of
    its participants, who in turn act on behalf of persons who hold
    interests through participants, the ability of a person having
    an interest in notes represented by a global note to pledge or
    transfer those interests to persons or entities that do not
    participate in DTC&#146;s system, or otherwise to take actions
    in respect of such interest, may be affected by the lack of a
    physical definitive security in respect of such interest.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    So long as DTC or its nominee is the registered owner of a
    global note, DTC or that nominee will be considered the sole
    owner or holder of the notes represented by that global note for
    all purposes under the indenture and under the notes. Except as
    provided below, owners of beneficial interests in a global note
    will not be entitled to have notes represented by that global
    note registered in their names, will not receive or be entitled
    to receive physical delivery of certificated notes and will not
    be considered the owners or holders thereof under the indenture
    or under the notes for any purpose, including with respect to
    the giving of any direction, instruction or approval to the
    trustee. Accordingly, each holder owning a beneficial interest
    in a global note must rely on the procedures of DTC and, if that
    holder is not a direct or indirect participant, on the
    procedures of the participant through which that holder owns its
    interest, to exercise any rights of a holder of notes under the
    indenture or a global note.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Neither we nor the trustee will have any responsibility or
    liability for any aspect of the records relating to or payments
    made on account of notes by DTC, Clearstream or Euroclear, or
    for maintaining, supervising or reviewing any records of those
    organizations relating to the notes.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-26
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Payments on the notes represented by the global notes will be
    made to DTC or its nominee, as the case may be, as the
    registered owner thereof. We expect that DTC or its nominee,
    upon receipt of any payment on the notes represented by a global
    note, will credit participants&#146; accounts with payments in
    amounts proportionate to their respective beneficial interests
    in the global note as shown in the records of DTC or its
    nominee. We also expect that payments by participants to owners
    of beneficial interests in the global note held through such
    participants will be governed by standing instructions and
    customary practice as is now the case with securities held for
    the accounts of customers registered in the names of nominees
    for such customers. The participants will be responsible for
    those payments.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Distributions on the notes held beneficially through Clearstream
    will be credited to cash accounts of its customers in accordance
    with its rules and procedures, to the extent received by the
    U.S.&#160;depositary for Clearstream.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Securities clearance accounts and cash accounts with the
    Euroclear Operator are governed by the Terms and Conditions
    Governing Use of Euroclear and the related Operating Procedures
    of the Euroclear System, and applicable Belgian law, which we
    refer to collectively as the Terms and Conditions. The Terms and
    Conditions govern transfers of securities and cash within
    Euroclear, withdrawals of securities and cash from Euroclear,
    and receipts of payments with respect to securities in
    Euroclear. All securities in Euroclear are held on a fungible
    basis without attribution of specific certificates to specific
    securities clearance accounts. The Euroclear Operator acts under
    the Terms and Conditions only on behalf of Euroclear
    participants and has no record of or relationship with persons
    holding through Euroclear participants.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Distributions on the notes held beneficially through Euroclear
    will be credited to the cash accounts of its participants in
    accordance with the Terms and Conditions, to the extent received
    by the U.S.&#160;depositary for Euroclear.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Clearance
    and Settlement Procedures</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Initial settlement for the notes will be made in immediately
    available funds. Secondary market trading between DTC
    participants will occur in the ordinary way in accordance with
    DTC rules and will be settled in immediately available funds.
    Secondary market trading between Clearstream customers
    <FONT style="white-space: nowrap">and/or</FONT>
    Euroclear participants will occur in the ordinary way in
    accordance with the applicable rules and operating procedures of
    Clearstream and Euroclear, as applicable, and will be settled
    using the procedures applicable to conventional eurobonds in
    immediately available funds.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Cross-market transfers between persons holding directly or
    indirectly through DTC, on the one hand, and directly or
    indirectly through Clearstream customers or Euroclear
    participants, on the other, will be effected through DTC in
    accordance with DTC rules on behalf of the relevant European
    international clearing system by the U.S.&#160;depositary;
    however, such cross-market transactions will require delivery of
    instructions to the relevant European international clearing
    system by the counterparty in such system in accordance with its
    rules and procedures and within its established deadlines
    (European time). The relevant European international clearing
    system will, if the transaction meets its settlement
    requirements, deliver instructions to the U.S.&#160;depositary
    to take action to effect final settlement on its behalf by
    delivering or receiving the notes in DTC, and making or
    receiving payment in accordance with normal procedures for
    <FONT style="white-space: nowrap">same-day</FONT>
    funds settlement applicable to DTC. Clearstream customers and
    Euroclear participants may not deliver instructions directly to
    their U.S.&#160;depositaries.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Because of time-zone differences, credits of the notes received
    in Clearstream or Euroclear as a result of a transaction with a
    DTC participant will be made during subsequent securities
    settlement processing and dated the business day following the
    DTC settlement date. Such credits or any transactions in the
    notes settled during such processing will be reported to the
    relevant Clearstream customers or Euroclear participants on such
    business day. Cash received in Clearstream or Euroclear as a
    result of sales of the notes by or through a Clearstream
    customer or a Euroclear participant to a DTC participant will be
    received with value on the DTC settlement date but will be
    available in the relevant Clearstream or Euroclear cash account
    only as of the business day following settlement in DTC.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-27
</DIV><!-- END PAGE WIDTH -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Although DTC, Clearstream and Euroclear have agreed to the
    foregoing procedures to facilitate transfers of the notes among
    participants of DTC, Clearstream and Euroclear, they are under
    no obligation to perform or continue to perform such procedures
    and such procedures may be changed or discontinued at any time.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Certificated
    Notes</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will issue certificated notes to each person that DTC
    identifies as the beneficial owner of the notes of either series
    represented by a global note upon surrender by DTC of the global
    note if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    DTC notifies us that it is no longer willing or able to act as a
    depositary for such global note or ceases to be a clearing
    agency registered under the Securities Exchange Act of 1934, and
    we have not appointed a successor depositary within 90&#160;days
    of that notice or becoming aware that DTC is no longer so
    registered;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    an event of default has occurred and is continuing, and DTC
    requests the issuance of certificated notes;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    we determine not to have the notes of such series represented by
    a global note.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Neither we nor the trustee will be liable for any delay by DTC,
    its nominee or any direct or indirect participant in identifying
    the beneficial owners of the notes. We and the trustee may
    conclusively rely on, and will be protected in relying on,
    instructions from DTC or its nominee for all purposes, including
    with respect to the registration and delivery, and the
    respective principal amounts, of the certificated notes to be
    issued.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Additional
    Terms</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For additional important information about the notes, see
    &#147;Description of Debt Securities&#148; in the accompanying
    prospectus. That information includes:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a description of events of default under the indenture;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    additional information on the indenture and the terms of the
    notes.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Concerning
    the Trustee</FONT></B>
</DIV>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We intend to appoint Deutsche Bank Trust&#160;Company Americas
    as the trustee for the notes under the indenture and as
    registrar, paying agent, transfer agent and authenticating agent
    with respect to the notes.
</DIV>


<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-28
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->


<!-- link1 "MATERIAL UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSEQUENCES FOR NON-U.S. HOLDERS" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='116'></A><B><FONT style="font-family: 'Times New Roman', Times">MATERIAL
    UNITED STATES FEDERAL INCOME AND<BR>
    ESTATE TAX CONSEQUENCES FOR
    <FONT style="white-space: nowrap">NON-U.S.</FONT>
    HOLDERS</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>The following is a summary of the material United States
    federal income and estate tax consequences of the purchase,
    ownership and disposition of notes by
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holders</FONT>
    (as defined below). Except where noted, this summary deals only
    with notes held as capital assets by a
    <FONT style="white-space: nowrap">non-U.S.&#160;Holder</FONT>
    who purchases notes in this offering at their issue price. This
    summary is based upon the provisions of the Internal Revenue
    Code of 1986, as amended, or the Code, regulations promulgated
    thereunder and judicial and administrative rulings and decisions
    now in effect, all of which are subject to change or differing
    interpretations, possibly with retroactive effect. This summary
    does not purport to address all aspects of United States federal
    income and estate taxation that may affect particular investors
    in light of their individual circumstances, or certain types of
    investors subject to special treatment under the United States
    federal income tax laws, such as persons that mark to market
    their securities, financial institutions, individual retirement
    and other tax-deferred accounts, tax-exempt organizations,
    broker-dealers, former United States citizens or long-term
    residents, &#147;controlled foreign corporations,&#148;
    &#147;passive foreign investment companies,&#148; partnerships
    or other pass-through entities for United States federal income
    tax purposes, life insurance companies, persons that hold notes
    as part of a hedge against currency or interest rate risks or
    that hold notes as part of a straddle, conversion transaction or
    other integrated investment. This summary does not address the
    United States federal income tax consequences of the purchase,
    ownership and disposition of notes by U.S.&#160;Holders (as
    defined below). In addition, this summary does not address any
    aspect of state, local or foreign taxation.</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For purposes of this summary, a &#147;U.S.&#160;Holder&#148; is
    a beneficial owner of a note that is, for United States federal
    income tax purposes:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    an individual citizen or resident of the United States;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a corporation, or other entity treated as a corporation for
    United States federal income tax purposes, created or organized
    in or under the laws of the United States or any state or
    political subdivision thereof;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    an estate, the income of which is subject to United States
    federal income taxation regardless of its source;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a trust, if (a)&#160;a court within the United States is able to
    exercise primary jurisdiction over administration of the trust
    and one or more United States persons have authority to control
    all substantial decisions of the trust or (b)&#160;it has a
    valid election in effect under applicable United States Treasury
    regulations to be treated as a United States person.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For purposes of this summary, a
    <FONT style="white-space: nowrap">&#147;Non-U.S.&#160;Holder&#148;</FONT>
    is a beneficial owner of a note that is not a U.S.&#160;Holder
    or a partnership (including an entity or arrangement treated as
    a partnership for United States federal income tax purposes).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If a partnership (including an entity or arrangement treated as
    a partnership for United States federal income tax purposes) is
    a beneficial owner of notes, the tax treatment of a partner will
    generally depend upon the status of the partner and the
    activities of the partnership. Partners of partnerships that are
    beneficial owners of notes should consult their tax advisors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="white-space: nowrap">Non-U.S.&#160;Holders</FONT>
    that are considering the purchase of notes should consult their
    own tax advisors concerning the particular United States federal
    income and estate tax consequences to them of the ownership of
    the notes, as well as the consequences to them arising under the
    laws of any other taxing jurisdiction.</B>
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-29
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Payments
    of Interest</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Payments of interest on a note received by a
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holder</FONT>
    generally will qualify for the &#147;portfolio interest&#148;
    exemption and generally will not be subject to United States
    federal income tax or withholding tax, as long as the
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holder:</FONT>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    does not conduct a trade or business in the United States with
    respect to which the interest is effectively connected;
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    does not actually, indirectly or constructively own 10% or more
    of the total combined voting power of all classes of H&#038;R
    Block&#146;s voting stock (or 10% or more of the capital or
    profits interests in Block Financial) within the meaning of the
    Code and applicable United States Treasury regulations;
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    is not a &#147;controlled foreign corporation&#148; with respect
    to which H&#038;R Block or Block Financial is a &#147;related
    person&#148; within the meaning of Section&#160;881(c)(3)(C) of
    the Code;
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    is not a bank whose receipt of the interest is described in
    Section&#160;881(c)(3)(A) of the Code;&#160;and
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    satisfies the certification requirements described below.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The certification requirements will be satisfied if either
    (a)&#160;the beneficial owner of the note timely certifies,
    under penalties of perjury, to us or to the person who otherwise
    would be required to withhold United States tax that such owner
    is a
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holder</FONT>
    and provides its name and address or (b)&#160;a custodian,
    broker, nominee or other intermediary acting as an agent for the
    beneficial owner (such as a securities clearing organization,
    bank or other financial institution that holds customers&#146;
    securities in the ordinary course of its trade or business) that
    holds the note in such capacity timely certifies, under
    penalties of perjury, to us or to the person who otherwise would
    be required to withhold United States tax that such statement
    has been received from the beneficial owner of the note by such
    intermediary, or by any other financial institution between such
    intermediary and the beneficial owner, and furnishes to us or to
    the person who otherwise would be required to withhold United
    States tax a copy thereof. The foregoing certification may be
    provided on a properly completed Internal Revenue Service, or
    IRS,
    <FONT style="white-space: nowrap">Form&#160;W-8BEN</FONT>
    or <FONT style="white-space: nowrap">W-8IMY,</FONT>
    with all of the attachments required by the IRS, as applicable.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holder</FONT>
    that is not exempt from tax under the portfolio interest
    exemption generally will be subject to United States federal
    income tax withholding at a rate of 30% on payments of interest
    unless:
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the interest is effectively connected with the conduct by the
    <FONT style="white-space: nowrap">non-U.S.&#160;Holder</FONT>
    of a United States trade or business (and, if an applicable
    income tax treaty so provides, is attributable to a permanent
    establishment maintained in the United States by the
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holder),</FONT>
    in which case such interest will not be subject to United States
    withholding tax so long as the
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holder</FONT>
    complies with the certification procedures discussed below, but
    will be subject to United States federal income tax on a net
    income basis as applicable to U.S.&#160;Holders generally (and,
    if received by a
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holder</FONT>
    that is treated as a corporation for United States federal
    income tax purposes, may also be subject to an additional branch
    profits tax at a rate of 30% or such lower rate as may be
    specified by an applicable income tax treaty);&#160;or
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    an applicable income tax treaty provides for a lower rate of, or
    exemption from, withholding tax.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To claim the benefit of an income tax treaty or to claim
    exemption from withholding because income is effectively
    connected with a United States trade or business (or
    attributable to a permanent establishment if an applicable
    income tax treaty so provides), the
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holder</FONT>
    must timely provide a properly executed IRS Form&#160;W-8BEN or
    <FONT style="white-space: nowrap">Form&#160;W-8ECI</FONT>
    or other applicable forms, as appropriate. These forms may be
    required to be periodically updated.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Sale,
    Exchange or Other Taxable Disposition of a Note</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holder</FONT>
    generally will not be subject to United States federal income
    tax on any gain realized on the sale, exchange, retirement or
    other disposition of a note unless (a)&#160;such gain is
    effectively connected with the conduct by the
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holder</FONT>
    of a United States trade or business (and, if an applicable
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-30
</DIV><!-- END PAGE WIDTH -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    income tax treaty so provides, is attributable to a permanent
    establishment maintained in the United States by the
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holder)</FONT>
    or (b)&#160;in the case of a
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holder</FONT>
    who is an individual, the holder is present in the United States
    for 183&#160;days or more during the taxable year in which such
    gain is realized and certain other conditions exist.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Except to the extent that an applicable income tax treaty
    otherwise provides, generally a
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holder</FONT>
    will be taxed in the same manner as a U.S.&#160;Holder with
    respect to gain that is effectively connected with the
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holder&#146;s</FONT>
    conduct of a United States trade or business. A
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holder</FONT>
    that is treated as a corporation for United States federal
    income tax purposes may also, under certain circumstances, be
    subject to an additional &#147;branch profits tax&#148; at a
    rate of 30% (or such lower rate as may be specified by an
    applicable income tax treaty) on any &#147;effectively
    connected&#148; gain on the notes.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">United
    States Federal Estate Tax</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holder&#146;s</FONT>
    estate will not be subject to United States federal estate tax
    on the value of notes beneficially owned by such holder at the
    time of such holder&#146;s death, provided that any payment to
    such holder on the notes would be eligible for exemption from
    the 30% United States federal withholding tax under the
    &#147;portfolio interest rule&#148; described above under
    &#147;Payments of Interest&#148; without regard to the
    certification requirements described in that section.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Information
    Reporting and Backup Withholding</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Payments of interest to a
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holder</FONT>
    and the amount of tax, if any, withheld with respect to those
    payments generally will be reported to the IRS and to the
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holder</FONT>
    on IRS
    <FONT style="white-space: nowrap">Form&#160;1042-S.</FONT>
    Copies of applicable IRS information returns reporting such
    interest payments and any withholding may be made available
    under the provisions of a specific tax treaty or agreement to
    the tax authorities of the country in which the
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holder</FONT>
    resides.
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holders</FONT>
    are generally exempt from backup withholding and additional
    information reporting on payments of principal, premium (if
    any), or interest, provided that the
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holder</FONT>
    (a)&#160;certifies its nonresident status on IRS
    <FONT style="white-space: nowrap">Form&#160;W-8BEN</FONT>
    or
    <FONT style="white-space: nowrap">Form&#160;W-8IMY</FONT>
    (or a suitable substitute form) and certain other conditions are
    met or (b)&#160;otherwise establishes an exemption. Any backup
    withholding tax generally will be allowed as a credit or refund
    against the
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holder&#146;s</FONT>
    United States federal income tax liability, provided that the
    required information is timely furnished to the IRS.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Information reporting and backup withholding may apply to the
    proceeds of a sale of a Note by a
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holder</FONT>
    made within the United States or conducted through certain
    U.S.&#160;related financial intermediaries, unless the payor
    receives the applicable statement described above.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    THE PRECEDING DISCUSSION IS ONLY A SUMMARY OF CERTAIN OF THE
    U.S.&#160;FEDERAL INCOME AND ESTATE TAX IMPLICATIONS OF AN
    INVESTMENT IN THE NOTES. PROSPECTIVE INVESTORS ARE URGED TO
    CONSULT WITH THEIR OWN TAX ADVISORS PRIOR TO INVESTING TO
    DETERMINE THE TAX IMPLICATIONS OF SUCH AN INVESTMENT IN LIGHT OF
    SUCH INVESTOR&#146;S PARTICULAR CIRCUMSTANCES.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-31
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->


<!-- link1 "UNDERWRITING" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='117'></A><B><FONT style="font-family: 'Times New Roman', Times">UNDERWRITING</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We intend to offer the notes through the underwriters. Subject
    to the terms and conditions contained in a purchase agreement
    between us and the underwriters, we have agreed to sell to the
    underwriters and the underwriters severally have agreed to
    purchase from us, the principal amount of the notes listed
    opposite their names below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>


<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="36%">&nbsp;</TD>         <!-- colindex=01 type=maindata -->
    <TD width="50%">&nbsp;</TD>  <!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>    <!-- colindex=02 type=lead -->
    <TD width="12%" align="right">&nbsp;</TD>   <!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>     <!-- colindex=02 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Principal<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom"><DIV style="border-bottom: 0px solid #000000; width: 1%; padding-bottom: 1px">
    <B><u>Underwriter</U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
<DIV style="border-bottom: 0px solid #000000; width: 1%; padding-bottom: 1px">
    <B><u>Amount</U></B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -52pt; margin-left: 52pt">
    Merrill Lynch, Pierce, Fenner &#038; Smith<BR>
    Incorporated
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    200,000,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J.P. Morgan Securities Inc.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    200,000,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    HSBC Securities (USA) Inc.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    200,000,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 62pt">
    Total
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    600,000,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The underwriters have agreed to purchase all the notes sold
    pursuant to the purchase agreement if they purchase any notes.
    The purchase agreement also provides that if an underwriter
    defaults, the purchase commitments of non-defaulting
    underwriters may also be increased or the offering may be
    terminated.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have agreed to indemnify the underwriters against certain
    liabilities, including liabilities under the Securities Act, or
    to contribute to payments the underwriters may be required to
    make in respect of those liabilities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The underwriters are offering the notes, subject to prior sale,
    when, as and if issued to and accepted by them, subject to
    approval of legal matters by their counsel, including the
    validity of the notes, and other conditions contained in the
    purchase agreement, such as the receipt by the underwriters of
    officer&#146;s certificates and legal opinions. The underwriters
    reserve the right to withdraw, cancel or modify offers to the
    public and to reject orders in whole or in part.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This offering is being conducted pursuant to Conduct
    Rule&#160;2710(h) of the Financial Industry Regulatory Authority.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Commissions
    and Discounts</FONT></B>
</DIV>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The underwriters have advised us that they propose initially to
    offer the notes to the public at the public offering price on
    the cover page of this prospectus supplement, and to dealers at
    that price less a concession not in excess of 0.35% of the
    principal amount of the notes. The underwriters may allow, and
    the dealers may reallow, a discount not in excess of 0.25% of
    the principal amount of the notes to other dealers. After the
    initial public offering, the public offering price, concession
    and discount may be changed.
</DIV>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The expenses of the offering, not including the underwriting
    discount, are estimated to be $672,000 and are payable by us.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Price
    Stabilization and Short Position</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In connection with this offering, the underwriters are permitted
    to engage in transactions that stabilize the market price of the
    notes. Such transactions consist of bids or purchases to peg,
    fix or maintain the price of the notes. If the underwriters
    create a short position in the notes in connection with the
    offering, i.e. if they sell more notes than are on the cover
    page of this prospectus supplement, the underwriters may reduce
    the short position by purchasing notes in the open market.
    Purchases of a security to stabilize the price or reduce a short
    position could cause the price of the security to be higher than
    it might be in the absence of such purchases.
</DIV>


<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Neither we nor any of the underwriters makes any representation
    or prediction as to the direction or magnitude of any effect
    that the transactions described above may have on the price of
    the notes. In addition, neither we nor any of the underwriters
    makes any representation that the underwriters will engage in
    these transactions or that these transactions, once commenced,
    will not be discontinued without notice.
</DIV>


<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-32
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">New Issue
    of Notes</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The notes are a new issue of securities with no established
    trading market. We do not intend to apply for listing of the
    notes on any national securities exchange or for quotation of
    the notes on any automated dealer quotation system. We have been
    advised by the underwriters that they presently intend to make a
    market in the notes after completion of the offering. However,
    they are under no obligation to do so and may discontinue any
    market-making activities at any time without any notice. We
    cannot assure the liquidity of the trading market for the notes
    or that an active trading market for the notes will develop. If
    an active public trading market for the notes does not develop,
    the market price and liquidity of the notes may be adversely
    affected.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Other
    Relationships</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Some of the underwriters and their affiliates have engaged in,
    and may in the future engage in, investment banking and other
    commercial dealings in the ordinary course of business with us.
    They have received customary fees and commissions for these
    transactions. In particular, an affiliate of HSBC has been a
    lender under the revolving credit facility that funds purchases
    by Block Financial of RALs. In addition, certain affiliates of
    HSBC are parties to various agreements with subsidiaries of
    H&#038;R Block pursuant to which (i)&#160;such affiliates
    originate RALs and issue RACs to eligible clients of H&#038;R
    Block offices and clients who use tax preparation products or
    services through other H&#038;R Block distribution channels;
    (ii)&#160;Block Financial purchases participation interests in
    RALs originated by such affiliates of HSBC and
    (iii)&#160;certain HSBC affiliates service RALs in which Block
    Financial purchases participation interests. In addition, an
    affiliate of JPMorgan is the administrative agent and a lender
    under each of our two $1&#160;billion CLOCs. Furthermore, an
    affiliate of HSBC and an affiliate of Merrill Lynch lenders
    under each of our two $1&#160;billion CLOCs.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    An affiliate of HSBC is also lender under an Amended and
    Restated Bridge Credit and Guarantee Agreement we entered into
    on December&#160;20, 2007. See &#147;Use of Proceeds.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Selling
    Restrictions</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">European
    Economic Area</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In relation to each member state of the European Economic Area
    that has implemented the Prospectus Directive (each, a relevant
    member state), with effect from and including the date on which
    the Prospectus Directive is implemented in that relevant member
    state (the relevant implementation date), an offer of notes
    described in this prospectus supplement may not be made to the
    public in that relevant member state prior to the publication of
    a prospectus in relation to the notes that has been approved by
    the competent authority in that relevant member state or, where
    appropriate, approved in another relevant member state and
    notified to the competent authority in that relevant member
    state, all in accordance with the Prospectus Directive, except
    that, with effect from and including the relevant implementation
    date, an offer of securities may be offered to the public in
    that relevant member state at any time:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    to any legal entity that is authorized or regulated to operate
    in the financial markets or, if not so authorized or regulated,
    whose corporate purpose is solely to invest in securities&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    to any legal entity that has two or more of (1)&#160;an average
    of at least 250&#160;employees during the last financial year;
    (2)&#160;a total balance sheet of more than &#128;43,000,000 and
    (3)&#160;an annual net turnover of more than &#128;50,000,000,
    as shown in its last annual or consolidated accounts&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    to fewer than 100 natural or legal persons (other than qualified
    investors as defined in the Prospectus Directive) subject to
    obtaining the prior consent of the representatives of any such
    offer
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    in any other circumstances that do not require the publication
    of a prospectus pursuant to Article&#160;3 of the Prospectus
    Directive.
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-33
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each purchaser of notes described in this prospectus supplement
    located within a relevant member state will be deemed to have
    represented, acknowledged and agreed that it is a
    &#147;qualified investor&#148; within the meaning of
    Article&#160;2(1)(e) of the Prospectus Directive.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For purposes of this provision, the expression an &#147;offer to
    the public&#148; in any relevant member state means the
    communication in any form and by any means of sufficient
    information on the terms of the offer and the securities to be
    offered so as to enable an investor to decide to purchase or
    subscribe the securities, as the expression may be varied in
    that member state by any measure implementing the Prospectus
    Directive in that member state, and the expression
    &#147;Prospectus Directive&#148; means Directive 2003/71/EC and
    includes any relevant implementing measure in each relevant
    member state.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">United
    Kingdom</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each of the underwriters has represented and agreed that (a) it
    has not made or will not make an offer of shares to the public
    in the United Kingdom within the meaning of section 102B of the
    Financial Services and Markets Act 2000 (as amended) (FSMA)
    except to legal entities which are authorized or regulated to
    operate in the financial markets or, if not so authorized or
    regulated, whose corporate purpose is solely to invest in
    securities or otherwise in circumstances which do not require
    the publication by us of a prospectus pursuant to the Prospectus
    Rules of the Financial Services Authority (FSA); (b) it has only
    communicated or caused to be communicated and will only
    communicate or cause to be communicated an invitation or
    inducement to engage in investment activity (within the meaning
    of section 21 of FSMA) to persons who have professional
    experience in matters relating to investments falling within
    Article 19(5) of the Financial Services and Markets Act 2000
    (Financial Promotion) Order 2005 or in circumstances in which
    section 21 of FSMA does not apply to us; and (c) it has complied
    with, and will comply with all applicable provisions of FSMA
    with respect to anything done by it in relation to the shares
    in, from or otherwise involving the United Kingdom.
</DIV>


<!-- link1 "LEGAL MATTERS" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='118'></A><B><FONT style="font-family: 'Times New Roman', Times">LEGAL
    MATTERS</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The validity of the notes will be passed upon for us by Stinson
    Morrison Hecker LLP, Kansas City, Missouri and for the
    underwriters by Simpson Thacher&#160;&#038; Bartlett LLP, New
    York, New York.
</DIV>


<!-- link1 "EXPERTS" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='119'></A><B><FONT style="font-family: 'Times New Roman', Times">EXPERTS</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The consolidated financial statements and schedules of H&#038;R
    Block as of April&#160;30, 2006 and 2007 and for each of the
    years in the three-year period ended April&#160;30, 2007 and
    management&#146;s assessment of the effectiveness of internal
    control over financial reporting as of April&#160;30, 2007 have
    been incorporated by reference in this prospectus supplement and
    the accompanying prospectus and in the registration statement of
    which this prospectus supplement and the accompanying prospectus
    are a part, in reliance upon the reports of KPMG LLP,
    independent registered public accounting firm, incorporated by
    reference herein and upon the authority of that firm as experts
    in accounting and auditing.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    S-34
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>PROSPECTUS</B>
</DIV>

<DIV style="margin-top: 27pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="c22310b2c2231000.gif" alt="(HR BLOCK LOGO)">


</DIV>

<DIV style="margin-top: 30pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 18pt">$1,250,000,000</FONT></B>
</DIV>

<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 24pt">Block Financial
    Corporation</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 14pt">Debt Securities</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 14pt">Fully and Unconditionally
    Guaranteed by</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 14pt">H&#038;R Block, Inc.</FONT></B>
</DIV>

<DIV style="margin-top: 36pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Block Financial Corporation may from time to time issue up to a
    total of $1,250,000,000 of debt securities. The specific terms
    of the debt securities with respect to which this prospectus is
    being delivered will be set forth in one or more supplements to
    this prospectus.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You should read this prospectus and any prospectus supplement
    carefully before you purchase any of our debt securities. This
    prospectus may not be used to sell debt securities unless
    accompanied by a prospectus supplement.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may sell the debt securities directly to you, through agents
    we select, or through underwriters or dealers we select. If we
    use agents, underwriters or dealers to sell the debt securities,
    they will be named and their compensation will be described in
    one or more prospectus supplements. The net proceeds we expect
    to receive from such sales will be set forth in the respective
    prospectus supplements.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 12pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Investing in the debt securities involves risks.&#160;See
    &#147;Risk Factors&#148; on page&#160;4.</B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Neither the Securities and Exchange Commission nor any state
    securities commission or other regulatory body has approved or
    disapproved of these securities or passed upon the accuracy or
    adequacy of this prospectus. Any representation to the contrary
    is a criminal offense.</B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The date of this prospectus is October&#160;21, 2004.
</DIV>

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="tocpage"></A>
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">TABLE OF
    CONTENTS</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="94%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="4%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B><FONT style="font-size: 10pt">Page</FONT></B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#101'>About This Prospectus</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#102'>How to Obtain More Information</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#103'>Incorporation of Information Filed With the
    SEC</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#104'>Forward-Looking Statements</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#105'>Risk Factors</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#106'>Block Financial Corporation</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#107'>H&#038;R Block, Inc. </A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#108'>Use of Proceeds</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#109'>Ratio of Earnings to Fixed Charges</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#110'>Description of Debt Securities</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#111'>Plan of Distribution</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#112'>Legal Matters</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    21
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#113'>Experts</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    21
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>


<!-- link1 "About This Prospectus" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='101'></A><B><FONT style="font-family: 'Times New Roman', Times">About
    This Prospectus</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This prospectus is part of a registration statement we filed
    with the Securities and Exchange Commission, or SEC, using a
    &#147;shelf&#148; registration process. Under the shelf
    registration process, using this prospectus, together with a
    prospectus supplement, we may sell, from time to time, in one or
    more offerings, any combination of the debt securities described
    in this prospectus in a dollar amount that does not exceed
    $1,250,000,000 in the aggregate. If we issue these debt
    securities at a discount from their original stated principal
    amount, then, for purposes of calculating the total dollar
    amount of all debt securities issued under this prospectus, we
    will treat the initial offering price of the debt securities as
    the total original principal amount of the debt securities. If
    we issue these debt securities with a principal amount
    denominated in a currency other than U.S.&#160;dollars or a
    composite currency, then, for purposes of calculating the total
    dollar amount of all debt securities issued under this
    prospectus, we will treat such U.S.&#160;dollar amount that
    shall result from converting the aggregate public offering price
    of such debt securities into U.S.&#160;dollars at the spot
    exchange rate in effect on the date such debt securities are
    initially offered to the public as the total original principal
    amount of the debt securities. This prospectus provides you with
    a general description of the debt securities we may offer. Each
    time we offer debt securities, a prospectus supplement will be
    provided that will contain specific information about the terms
    of that offering. The prospectus supplement may also add, update
    or change information contained in this prospectus. You should
    read this prospectus, the applicable prospectus supplement and
    the information incorporated by reference in this prospectus
    before making an investment in our debt securities. See
    &#147;How to Obtain More Information&#148; and
    &#147;Incorporation of Information Filed with the SEC&#148; for
    more information.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You should rely only on the information contained in or
    incorporated by reference in this prospectus or a prospectus
    supplement. We have not authorized anyone to provide you with
    different information. This document may be used only in
    jurisdictions where offers and sales of these securities are
    permitted. You should not assume that information contained in
    this prospectus, in any supplement to this prospectus, or in any
    document incorporated by reference is accurate as of any date
    other than the date on the front page of the document that
    contains the information, regardless of when this prospectus is
    delivered or when any sale of our debt securities occurs.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In this prospectus, we use the terms
    <B><I>&#147;Company&#148;</I></B>,
    <B><I>&#147;BFC&#148;</I></B>, <B><I>&#147;we&#148;
    &#147;us&#148;</I></B> and <B><I>&#147;our&#148;</I></B> to
    refer to Block Financial Corporation. References to
    <B><I>&#147;H&#038;R Block&#148;</I></B> and
    <B><I>&#147;Guarantor&#148;</I></B> are to H&#038;R Block, Inc.,
    a Missouri corporation and our indirect parent company.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    2
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->


<!-- link1 "How to Obtain More Information" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='102'></A><B><FONT style="font-family: 'Times New Roman', Times">How
    to Obtain More Information</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    H&#038;R Block files annual, quarterly and interim reports,
    proxy and information statements and other information with the
    SEC. These filings contain important information, which does not
    appear in this prospectus. You may read and copy any materials
    we or H&#038;R Block file with the SEC at the SEC&#146;s public
    reference room at 450&#160;Fifth Street, NW,
    Washington,&#160;D.C. 20549. You may obtain information on the
    operation of the public reference room by calling the SEC at
    <FONT style="white-space: nowrap">1-800-SEC-0330.</FONT>
    The SEC maintains an Internet site that contains reports, proxy
    and information statements and other information regarding
    H&#038;R&#160;Block and us at http://www.sec.gov.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have filed with the SEC a registration statement on
    <FONT style="white-space: nowrap">Form&#160;S-3</FONT>
    under the Securities Act of 1933, as amended, with respect to
    the debt securities offered by this prospectus. This prospectus
    does not contain all of the information in the registration
    statement. We have omitted certain parts of the registration
    statement, as permitted by the rules and regulations of the SEC.
    You may inspect and copy the registration statement, including
    exhibits, at the SEC&#146;s public reference facilities or web
    site.
</DIV>


<!-- link1 "Incorporation of Information Filed With the SEC" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='103'></A><B><FONT style="font-family: 'Times New Roman', Times">Incorporation
    of Information Filed With the SEC</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The SEC allows us to &#147;incorporate by reference&#148; into
    this prospectus, which means that we may disclose important
    information to you by referring you to other documents that we
    or H&#038;R Block have filed or will file with the SEC. We are
    incorporating by reference into this prospectus the following
    document filed with the SEC:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    &#160;H&#038;R Block&#146;s Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the year ended April&#160;30, 2004,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    &#160;H&#038;R Block&#146;s Quarterly Report on
    <FONT style="white-space: nowrap">Form&#160;10-Q</FONT>
    for the quarterly period ended July&#160;31, 2004,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    &#160;H&#038;R Block&#146;s Current Reports on
    <FONT style="white-space: nowrap">Form&#160;8-K</FONT>
    filed July&#160;30, 2004, August&#160;24, 2004 and
    September&#160;10, 2004, and H&#038;R Block&#146;s Current
    Report on
    <FONT style="white-space: nowrap">Form&#160;8-K/A</FONT>
    filed September&#160;16, 2004.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    All documents which we or H&#038;R Block file with the SEC
    pursuant to section&#160;13(a), 13(c), 14 or 15(d) of the
    Securities Exchange Act of 1934, as amended, after the date of
    this prospectus and before the termination of this offering of
    the debt securities will be deemed to be incorporated by
    reference in this prospectus and to be a part of it from the
    filing dates of such documents. Also, all such documents filed
    by H&#038;R Block or us with the SEC pursuant to
    Section&#160;13(a), 13(c), 14 or 15(d) of the Securities
    Exchange act of 1934, as amended, after the date of the
    registration statement of which this prospectus forms a part and
    prior to effectiveness of the registration statement will be
    deemed to be incorporated by reference in this prospectus and to
    be a part of it from the filing dates of such documents. Certain
    statements in and portions of this prospectus update and
    supersede information in the above listed documents incorporated
    by reference. Likewise, statements in or portions of a future
    document incorporated by reference in this prospectus may update
    and supersede statements in and portions of this prospectus or
    the above listed documents.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following information contained in such documents is not
    incorporated herein by reference:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    &#160;information furnished under Items&#160;2.02 or 7.01 (or
    Items&#160;9 and 12 before August&#160;23, 2004) of H&#038;R
    Block&#146;s Current Reports on
    <FONT style="white-space: nowrap">Form&#160;8-K,</FONT>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    &#160;certifications accompanying or furnished in any such
    documents pursuant to Title&#160;18, Section&#160;1350 of the
    United States Code&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    &#160;any other information in such documents which is not
    deemed to be filed with the SEC under Section&#160;18 of the
    Securities Exchange Act of 1934, as amended, or otherwise
    subject to the liabilities of that section, except that the
    information contained in Part&#160;I to H&#038;R Block&#146;s
    Quarterly Reports on
    <FONT style="white-space: nowrap">Form&#160;10-Q</FONT>
    shall be deemed to be incorporated herein by reference.
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    3
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    H&#038;R Block has furnished information under Item&#160;12
    &#147;Reports of Operations and Financial Condition&#148; in the
    Current Report on
    <FONT style="white-space: nowrap">Form&#160;8-K</FONT>
    filed on June&#160;10, 2004, and under Item&#160;2.02
    &#147;Reports of Operations and Financial Condition&#148; in the
    Current Report on
    <FONT style="white-space: nowrap">Form&#160;8-K/A</FONT>
    filed on August&#160;30, 2004.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will provide you without charge, upon your written or oral
    request, a copy of any of the documents incorporated by
    reference in this prospectus, other than exhibits to such
    documents which are not specifically incorporated by reference
    into such documents or this prospectus. Please direct your
    requests to Investor Relations,
    <FONT style="white-space: nowrap">1-800-869-9220,</FONT>
    ext. 2721, or by mail to 4400 Main Street, Kansas City, Missouri
    64111.
</DIV>


<!-- link1 "Forward-Looking Statements" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='104'></A><B><FONT style="font-family: 'Times New Roman', Times">Forward-Looking
    Statements</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This prospectus, any prospectus supplement, and the documents
    incorporated by reference in this prospectus, may include
    forward-looking statements within the meaning of
    Section&#160;27A of Securities Act of 1933, as amended, and
    Section&#160;21E of the Securities Exchange Act of 1934, as
    amended. Forward-looking statements are made pursuant to the
    safe harbor provisions of the Private Securities Litigation
    Reform Act of 1955, as amended. All statements other than
    statements of historical fact may be deemed to be
    forward-looking statements. Examples of forward-looking
    statements include, but are not limited to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    &#160;projections of revenues, income or loss, earnings or loss
    per share, capital expenditures, the payment or non-payment of
    dividends, the repurchase of stock, capital structure and other
    financial items,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    &#160;statements of plans and objectives of H&#038;R
    Block&#146;s management or Board of Directors, including plans
    or objectives relating to products or services,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    &#160;statements of future economic performance,&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    &#160;statements of assumptions underlying the statements
    described in above bullet points.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Forward-looking statements can often be identified by the use of
    forward-looking terminology, such as &#147;expects,&#148;
    &#147;anticipates,&#148; &#147;intends,&#148; &#147;plans,&#148;
    &#147;believes,&#148; &#147;seeks,&#148; &#147;estimates&#148;
    and variations of these words and similar expressions. Any
    forward-looking statement speaks only as of the date on which it
    is made and is qualified in its entirety by reference to the
    factors discussed throughout this prospectus and in documents
    incorporated by reference. We do not undertake to update any
    forward-looking statement to reflect events or circumstances
    after the date on which it is made.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Forward-looking statements are not guarantees of future
    performance or results, and are subject to known and unknown
    risks and uncertainties. Actual results may vary materially and
    adversely from those anticipated in the forward-looking
    statements as a result of a number of factors, including the
    risks described in &#147;Risk Factors&#148; below. Other factors
    not identified could also have such an effect.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We cannot give you any assurance that the forward-looking
    statements included or incorporated by reference in this
    prospectus will prove to be accurate. In light of the
    significant uncertainties inherent in the forward-looking
    statements included or incorporated by reference in this
    prospectus, you should not regard the inclusion of this
    information as a representation by us or any other person that
    the results or conditions described in those statements or
    objectives and plans will be achieved.
</DIV>


<!-- link1 "Risk Factors" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='105'></A><B><FONT style="font-family: 'Times New Roman', Times">Risk
    Factors</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Investing in our securities involves a risk of loss.&#160;Before
    investing in the securities, you should carefully consider the
    risk factors described in &#147;Risk Factors&#148; in H&#038;R
    Block&#146;s Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    filed with the SEC for the fiscal year ended April&#160;30,
    2004, and subsequent filings containing updated disclosures of
    such factors, together with all of the other information
    included in this prospectus and any prospectus supplement and
    the other information that we have incorporated by reference. We
    also will include in the prospectus supplement additional risk
    factors applicable to H&#038;R Block and us and the particular
    debt securities being issued. Any of these risks, as well as
    other risks and uncertainties, could harm the business and
    financial results of H&#038;R Block and us, and cause the value
    of our debt securities to decline, which in turn
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    4
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    could cause you to lose all or a part of your investment. These
    risks are not the only ones facing H&#038;R&#160;Block or us.
    Additional risks not currently known to H&#038;R Block or us or
    that we currently deem immaterial also may impair or harm the
    business and financial results of H&#038;R Block and us.
    Statements in or portions of a future document incorporated by
    reference in this prospectus, including, without limitation,
    those relating to risk factors, may update and supersede
    statements in and portions of this prospectus or such
    incorporated documents.
</DIV>


<!-- link1 "Block Financial Corporation" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='106'></A><B><FONT style="font-family: 'Times New Roman', Times">Block
    Financial Corporation</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Block Financial is an indirect wholly-owned subsidiary of
    H&#038;R Block. Block Financial was organized in May 1992 for
    the purpose of developing and providing tax-related and
    technology-related financial services. Block Financial&#146;s
    principal business activities include:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    &#160;originating residential mortgage loans, servicing
    non-prime residential mortgage loans, and selling and
    securitizing residential mortgage loans and residual interests
    in residential mortgage loans,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    &#160;purchasing participation interests in Refund Anticipation
    Loans or <B><I>&#147;RALS&#148; </I></B>made by a lending bank
    to H&#038;R Block tax customers,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    &#160;providing brokerage services and investment planning
    services,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    &#160;offering equity lines of credit to H&#038;R Block&#146;s
    tax preparation franchisees,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    &#160;issuing commercial paper and corporate debt obligations to
    finance our working capital needs,&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    &#160;developing and marketing TaxCut income tax preparation
    software, H&#038;R&#160;Block
    DeductionPro<SUP style="font-size: 85%; vertical-align: text-top"><FONT style="font-variant: SMALL-CAPS">TM</FONT></SUP>,
    Kiplinger&#146;s Home and Business Attorney and Kiplinger&#146;s
    WILLPower<SUP style="font-size: 85%; vertical-align: text-top"><FONT style="font-variant: SMALL-CAPS">SM</FONT></SUP>
    software products.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Refund Anticipation Loans.</I>&#160;&#160;Since July 1996,
    Block Financial has been a party to agreements with Household
    Tax Masters, Inc. and others to purchase participation interests
    in RALs provided by a lending bank to H&#038;R Block tax
    clients. The July 1996 agreement was amended and restated in
    January 2003 and again in June 2003. In January 2003, Block
    Financial entered into an agreement with Household, whereby
    Block Financial waived its right to purchase any participation
    interests in and to receive fees related to RALs during the
    period January&#160;1, through April&#160;30, 2003. In the June
    2003 agreement, Block Financial obtained the right to purchase a
    49.9% participation interest in RALs obtained through offices
    owned by subsidiaries of H&#038;R Block and a 25% interest in
    RALs obtained through major franchise offices. The current
    agreement continues through June 2006. Block Financial&#146;s
    purchases of the RAL participation interests are financed
    through short-term borrowings, and it bears all of the credit
    risk associated with its interests in the RALs.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Mortgage Services.</I>&#160;Block Financial&#146;s Mortgage
    Services segment originates mortgage loans, services non-prime
    loans and sells and securitizes mortgage loans and residual
    interests in the United States. Revenues consist primarily of
    gains from sales and securitizations of mortgage assets,
    interest income and servicing fee income.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Investment Services.</I>&#160;&#160;Block Financial&#146;s
    Investment Services segment provides brokerage services and
    investment planning through H&#038;R Block Financial Advisors,
    Inc. Products and services offered to customers include
    traditional brokerage products, as well as annuities, insurance,
    fee-based accounts, online account access, equity research and
    focus lists, model portfolios, asset allocation strategies, and
    other investment tools and information.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Franchise Equity Lines of Credit.</I>&#160;&#160;Block
    Financial offers to H&#038;R Block&#146;s tax preparation
    franchisees lines of credit under a program designed to better
    enable the franchisees to refinance existing business debt,
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    5
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    expand or renovate offices or meet off-season cash flow needs. A
    franchise equity loan is a revolving line of credit secured by
    the H&#038;R Block franchise and underlying business.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 19%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=455 length=90 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Block Financial&#146;s principal executive office is located
    at 4400 Main Street, Kansas City, Missouri 64111 and its
    telephone number is (816)&#160;753-6900.</B>
</DIV>


<!-- link1 "H&#038;R Block, Inc." -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='107'></A><B><FONT style="font-family: 'Times New Roman', Times">H&#038;R
    Block, Inc.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    H&#038;R Block, Inc. is a diversified company delivering tax
    products and services and financial advice, investment and
    mortgage products and services and business and consulting
    services. For nearly 50&#160;years, H&#038;R Block has been
    developing relationships with millions of tax clients and its
    strategy is to expand on these relationships. H&#038;R
    Block&#146;s tax services segment provides income tax return
    preparation services, electronic filing services and other
    services and products related to income tax preparation to the
    general public in the United States, and also in Canada,
    Australia and the United Kingdom. H&#038;R Block also offers
    investment services through H&#038;R Block Financial Advisors,
    Inc. H&#038;R Block&#146;s mortgage services segment offers a
    full range of home mortgage products and services through Option
    One Mortgage Corporation and H&#038;R Block Mortgage
    Corporation. RSM McGladrey Business Services, Inc. is a national
    accounting, tax and consulting firm primarily serving mid-sized
    businesses. H&#038;R Block, Inc. was organized as a corporation
    in 1955 under the laws of the State of Missouri, and is a
    holding company with operating subsidiaries providing tax and
    financial products and services to the general public.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Tax Services.</I>&#160;&#160;H&#038;R Block&#146;s Tax
    Services segment is primarily engaged in providing tax return
    preparation, filing and related services and products in the
    United States, Canada, Australia and the United Kingdom.
    Revenues include fees earned for tax-related services performed
    at company-owned retail tax offices, royalties from franchise
    retail tax offices, sales of service guarantees associated with
    tax returns prepared by us, sales of tax preparation and other
    software, fees from online tax preparation, and fees related to
    refund anticipation loans. Retail income tax return preparation
    and related services is H&#038;R Block&#146;s original business.
    These services are provided by tax professionals via a system of
    retail offices operated directly by H&#038;R Block or by
    franchisees. In addition to its retail offices, H&#038;R Block
    offers digital tax preparation alternatives.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Mortgage Services.</I>&#160;&#160;H&#038;R Block&#146;s
    Mortgage Services segment originates mortgage loans, services
    non-prime loans and sells and securitizes mortgage loans and
    residual interests in the United States. Revenues consist
    primarily of gains from sales and securitizations of mortgage
    assets, interest income and servicing fee income.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Business Services.</I>&#160;&#160;H&#038;R Block&#146;s
    Business Services segment offers middle-market companies
    accounting, tax and consulting services. H&#038;R Block has
    continued to expand the services it has to offer to clients by
    adding wealth management, retirement resources, payroll
    services, corporate finance and financial process outsourcing.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Investment Services.</I>&#160;&#160;H&#038;R Block&#146;s
    Investment Services segment provides brokerage services and
    investment planning through H&#038;R Block Financial Advisors,
    Inc. Products and services offered to customers include
    traditional brokerage products, as well as annuities, insurance,
    fee-based accounts, online account access, equity research and
    focus lists, model portfolios, asset allocation strategies, and
    other investment tools and information.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Changes in Segment Reporting.</I>&#160;&#160;In the first
    quarter of fiscal year 2005, H&#038;R Block&#146;s reportable
    segments were redefined and the previously reported
    International Tax Operations and U.S.&#160;Tax Operations
    segments were aggregated and are now reported as the Tax
    Services segment.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 19%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=455 length=90 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>H&#038;R Block is headquartered at 4400 Main Street, Kansas
    City, Missouri and its telephone number is
    (816)&#160;753-6900.</B>
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    6
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->


<!-- link1 "Use of Proceeds" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='108'></A><B><FONT style="font-family: 'Times New Roman', Times">Use
    of Proceeds</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Except as otherwise described in the applicable prospectus
    supplement, we intend to use the net proceeds from the sale of
    the debt securities for working capital, capital expenditures
    and other general corporate purposes, including refinancing of
    existing debt. Pending such uses, we may temporarily invest the
    net proceeds in interest-bearing securities. The prospectus
    supplement relating to an offering may contain a more detailed
    description of the use of proceeds.
</DIV>


<!-- link1 "Ratio of Earnings to Fixed Charges" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='109'></A><B><FONT style="font-family: 'Times New Roman', Times">Ratio
    of Earnings to Fixed Charges</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The ratios of earnings to fixed charges for each of the fiscal
    years ended April&#160;30, 2000 through 2004 and the quarterly
    period ended July&#160;31, 2004, for H&#038;R Block and Block
    Financial are set forth below. Due to the seasonal nature of our
    Tax Services and Business Services segments, the ratio of
    earnings to fixed charges for the quarterly period ended
    July&#160;31, 2004 is not indicative of the ratio for the full
    fiscal year.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="63%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="5%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=06 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=07 type=gutter -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=07 type=maindata -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Three<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Months<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Ended<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>July&#160;31,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="9" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Fiscal Year Ended April 30,</B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2004</B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2004</B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2003</B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2002</B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2001</B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2000</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Block Financial Corporation
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6.3
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13.3
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9.9
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.8
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.5
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.7
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    H&#038;R Block, Inc
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.9)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8.1
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7.0
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.0
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.6
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.0
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The ratio of earnings to fixed charges is computed by dividing
    earnings by fixed charges. Earnings consist of earnings from
    continuing operations before income taxes plus fixed charges.
    Fixed charges consist of interest expense and the portion of
    operating rental expense management believes represents the
    interest component of rent expense.
</DIV>


<!-- link1 "Description of Debt Securities" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='110'></A><B><FONT style="font-family: 'Times New Roman', Times">Description
    of Debt Securities</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This prospectus sets forth some of the general terms and
    provisions of the debt securities. The particular terms of the
    debt securities and the extent, if any, to which such general
    provisions may apply to the debt securities so offered will be
    described in the prospectus supplement relating to such debt
    securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The debt securities will be general obligations of us and will
    be irrevocably and unconditionally guaranteed by H&#038;R Block.
    The debt securities and guarantees will be issued under an
    indenture between us, H&#038;R Block and Bankers Trust Company,
    as trustee for our $250,000,000 6.75%&#160;senior notes due
    2004, and The Bank of New York, as trustee for our $500,000,000
    8.50%&#160;senior notes due 2007. The trustee for each
    additional series of debt securities will be named in the
    prospectus supplement for that series. A copy of the indenture
    has been filed as an exhibit to the registration statement of
    which this prospectus is a part. The following discussion of
    certain provisions of the indenture is a summary only and does
    not purport to be a complete description of the terms and
    provisions of the indenture.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">General</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The indenture does not limit the aggregate principal amount of
    debt securities that we can issue under the indenture. The debt
    securities may be issued in one or more series as our board of
    directors may authorize from time to time. The prospectus
    supplement relating to any debt securities being offered will
    include the specific terms relating to the offering. These terms
    will include some or all of the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the title of debt securities of the series;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    any limit on the aggregate principal amount of the debt
    securities of the series that may be authenticated and delivered
    under the indenture;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the date or dates on which the principal and premium, if any,
    with respect to the debt securities of the series are payable;
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    7
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the rate or rates (which may be fixed or variable) at which the
    debt securities of the series will bear interest (if any) and
    the method of determining any variable rate of interest;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the date or dates from which interest will accrue on the debt
    securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the interest payment dates on which we will pay interest or the
    method for determining the interest payment dates;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the record dates for the determination of holders of the debt
    securities to whom interest is payable (in the case of
    registered securities);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the basis upon which we will calculate interest if other than
    that of a
    <FONT style="white-space: nowrap">360-day</FONT> year
    of twelve
    <FONT style="white-space: nowrap">30-day</FONT>
    months;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the place or places of payment where we will pay the principal,
    premium, if any, and interest with respect to debt securities of
    the series;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the price or prices at which, the period or periods within
    which, and the terms and conditions upon which we may redeem the
    debt securities of the series, in whole or in part, at our
    option or otherwise;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our obligation, if any, to redeem, purchase, or repay debt
    securities of the series pursuant to any sinking fund or
    analogous provisions or at the option of a holder and the price
    or prices at which, the period or periods within which, and the
    terms and conditions upon which debt securities of the series
    will be redeemed, purchased, or repaid, in whole or in part,
    pursuant to these obligations;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the terms, if any, upon which the debt securities of the series
    may be convertible into or exchanged for other debt securities
    of us, H&#038;R Block or any other obligor and the terms and
    conditions upon which such conversion or exchange will be
    effected, including the initial conversion or exchange price or
    rate, the conversion or exchange period and any other provision
    in addition to or in lieu of those described herein;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the denominations in which we will issue the debt securities of
    the series;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    if the amount of principal, premium, if any, or interest with
    respect to the debt securities of the series may be determined
    with reference to an index or pursuant to a formula, the manner
    in which these amounts will be determined;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    if the principal amount payable at the stated maturity of debt
    securities of the series will not be determinable as of any one
    or more dates prior to the stated maturity, the amount that will
    be deemed to be the principal amount as of any date of
    determination for any purpose, including the principal amount
    that will be due and payable upon any maturity other than the
    stated maturity or that will be deemed to be outstanding as of
    any date of determination (or, in such case, the manner in which
    the deemed principal amount is to be determined), and if
    necessary, the manner of determining the equivalent thereof in
    United States currency;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    any changes or additions to the provisions of the indenture
    dealing with defeasance, including the addition of additional
    covenants that are subject to our covenant defeasance option;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the coin or currency or currencies or units of two or more
    currencies in which we will pay the principal of and premium, if
    any, and interest with respect to debt securities of the series
    if other than Unites States currency;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    if other than the full principal amount of the debt securities,
    the portion of the principal amount of debt securities of the
    series that will be payable upon declaration of acceleration or
    provable in bankruptcy;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the terms, if any, of any liens granted as security for the debt
    securities of the series and a description of the collateral
    securing those liens, including whether certain provisions of
    the
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    8
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>
</TD>
    <TD align="left">
    Trust Indenture Act are applicable and any corresponding changes
    to provisions of the indenture as currently in effect;
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    any addition to or change in the events of default with respect
    to the debt securities of the series and any change in the right
    of the trustee or the holders to declare the principal of and
    interest on, those debt securities due and payable;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    if the debt securities of the series are issued in whole or in
    part in the form of a global security, the terms and conditions,
    if any, upon which the holders may exchange the global security
    in whole or in part for other individual debt securities in
    definitive registered form and the depositary for the global
    security;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    any trustees, authenticating or paying agents, transfer agents
    or registrars;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the applicability of, and any addition to or change in the
    covenants and definitions currently set forth in the indenture
    or in the terms relating to permitted consolidations, mergers,
    or sales of assets, including conditioning any merger,
    conveyance, transfer or lease permitted by the indenture upon
    the satisfaction of an indebtedness coverage standard by us and
    any successor company;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the terms, if any, of any guarantee (other than the guarantee of
    H&#038;R Block) of the payment of principal of, and premium, if
    any, and interest on, debt securities of the series and any
    corresponding changes to the provisions of the indenture as
    currently in effect;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the subordination, if any, of the debt securities of the series
    pursuant to the indenture and any changes or additions to the
    provisions of the indenture relating to subordination;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    with regard to debt securities of any series that do not bear
    interest, the dates for certain required reports to the
    trustee;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    any other terms of the debt securities of the series that are
    not prohibited by the indenture.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The prospectus supplement will also describe any material United
    States federal income tax consequences or other special
    considerations applicable to the series of debt securities to
    which the prospectus supplement relates, including the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    debt securities with respect to which payments of principal,
    premium, or interest are determined with reference to an index
    or formula (including changes in prices of particular
    securities, currencies, or commodities);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    debt securities with respect to which principal, premium, or
    interest is payable in a foreign or composite currency;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    debt securities that are issued at a discount below their stated
    principal amount, bearing no interest or interest at a rate that
    at the time of issuance is below market rates;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    variable rate debt securities that are exchangeable for fixed
    rate debt securities.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will make payments of interest on the debt securities at the
    corporate trust office of the trustee for the applicable series
    or at our option by check mailed to the registered holders or,
    if so provided in the applicable prospectus supplement, at the
    option of a holder by wire transfer to an account designated by
    the holder.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Unless otherwise provided in the applicable prospectus
    supplement, holders of debt securities may transfer or exchange
    their debt securities at the office of the trustee at which its
    corporate trust business is principally administered in the
    United States or at the office of the trustee or the
    trustee&#146;s agent in the Borough of Manhattan, the City and
    State of New York, at which its corporate agency business is
    conducted, subject to the limitations provided in the indenture,
    without the payment of any service charge, other than any tax or
    governmental charge payable in connection therewith.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    9
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Guarantees</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    H&#038;R Block will irrevocably and unconditionally guarantee to
    each holder of a debt security the due and punctual payment of
    the principal of, and any premium and interest on, the debt
    security, when and as the same become due and payable, whether
    at maturity, upon acceleration, by call for redemption or
    otherwise. H&#038;R Block has:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    agreed that its obligations under the guarantees in the event of
    an event of default will be as if it were principal obligor and
    not merely surety, and will be enforceable irrespective of any
    invalidity, irregularity or unenforceability of any series of
    the debt securities or the indenture or any indenture
    supplement;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    waived its right to require the trustee or the holders to pursue
    or exhaust their legal or equitable remedies against us prior to
    exercising their rights under the guarantees.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Global
    Securities</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The debt securities of a series may be issued in whole or in
    part in the form of one or more fully registered global
    securities that will be deposited with a depositary, or with a
    nominee for a depositary identified in the prospectus supplement
    relating to the series. In such case, one or more global
    securities will be issued in a denomination or aggregate
    denomination equal to the portion of the aggregate principal
    amount of outstanding registered debt securities of the series
    to be represented by the global security or securities. Unless
    and until it is exchanged in whole or in part for debt
    securities in definitive registered form, a global security may
    not be transferred except as a whole by the depositary for the
    global security to a nominee of the depositary or by a nominee
    of the depositary to the depositary or another nominee of the
    depositary or by the depositary or any such nominee to a
    successor of the depositary or a nominee of the successor.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will describe the specific terms of the depositary
    arrangement with respect to any portion of a series of debt
    securities represented by a global security in the prospectus
    supplement relating to the series. We anticipate that the
    following provisions will apply to all depositary arrangements.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon the issuance of a global security, the depositary for the
    global security will credit, on its book-entry registration and
    transfer system, the respective principal amounts of the debt
    securities represented by the global security to the accounts of
    persons that have accounts with the depositary, who are commonly
    referred to as &#147;participants&#148;. The amounts to be
    credited will be designated by any underwriters or agents
    participating in the distribution of the debt securities.
    Ownership of beneficial interests in a global security will be
    limited to participants or persons that may hold interest
    through participants. Ownership of beneficial interests in the
    global security will be shown on, and the transfer of that
    ownership will be effected only through, records maintained by
    the depositary for the global security (with respect to
    interests of participants) or by participants or persons that
    hold through participants (with respect to interests of persons
    other than participants). So long as the depositary for a global
    security, or its nominee, is the registered owner of the global
    security, the depositary or the nominee, as the case may be,
    will be considered the sole owner or holder of the debt
    securities represented by the global security for all purposes
    under the indenture. Except as set forth below, owners of
    beneficial interests in a global security will not:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    be entitled to have the debt securities represented by the
    global security registered in their names,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    receive or be entitled to receive physical delivery of their
    debt securities in definitive form,&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    be considered the owners or holders of the debt securities under
    the indenture.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will pay to the depositary or its nominee, as the registered
    owner of a global security, the principal, premium, if any, and
    interest payments on debt securities represented by the global
    security. Neither we, nor the trustee or any paying agent for
    the debt securities will have any responsibility or liability
    for any aspect of the records relating to or payments made on
    account of beneficial ownership interests in the global
    securities or for maintaining, supervising or reviewing any
    records relating to the beneficial ownership interests.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    10
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We expect that the depositary for any debt securities
    represented by a global security, upon receipt of any payment of
    principal, premium, or interest, will immediately credit
    participants&#146; accounts with payments in amounts
    proportionate to their respective beneficial interests in the
    principal amount of the global security as shown on the records
    of the depositary. We also expect that payments by participants
    to owners of beneficial interests in the global security held
    through the participants will be governed by standing
    instructions and customary practices, as is now the case with
    the securities held for the accounts of customers registered in
    street name, and will be the responsibility of the participants.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If the depositary for any debt securities represented by a
    global security is at any time unwilling or unable to continue
    as depositary and we do not appoint a successor depositary
    within 90&#160;days, we will issue debt securities in definitive
    form in exchange for the global security. In addition, we may at
    any time and in our sole discretion determine not to have any of
    the debt securities of a series represented by one or more
    global securities. In such event, we will issue debt securities
    of the series in definitive form in exchange for the global
    security or securities representing the debt securities.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Subordination</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Debt securities of any series may be subordinated to our senior
    indebtedness to the extent set forth in the prospectus
    supplement relating to that series. In general, senior
    indebtedness for any series of subordinated debt securities will
    be defined as:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    indebtedness that we owe to banks,&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    any other indebtedness that we designate as senior indebtedness
    with respect to that series.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The prospectus supplement relating to each series of
    subordinated debt securities will describe the specific terms
    and conditions of the subordination.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon any payment or distribution of our to creditors or upon a
    total or partial liquidation or dissolution of us or in a
    bankruptcy, receivership, or similar proceeding relating to us
    or our property&#151;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    holders of senior indebtedness will be entitled to receive
    payment in full in cash of the senior indebtedness before
    holders of subordinated debt securities will be entitled to
    receive any payment of principal, premium, or interest with
    respect to the subordinated debt securities,&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    until the senior indebtedness is paid in full, any distribution
    to which holders of subordinated debt securities would otherwise
    be entitled will be made to the holders of senior indebtedness
    (except that the holders of subordinated debt securities may
    receive shares of stock and any debt securities that are
    subordinated to senior indebtedness to at least the same extent
    as the subordinated debt securities).
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may not&#160;&#151;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    make any payments of principal, premium, or interest with
    respect to subordinated debt securities,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    make any deposit for the purpose of defeasance of the
    subordinated debt securities,&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    repurchase, redeem, or otherwise retire any subordinated debt
    securities (except, in the case of subordinated debt securities
    that provide for a mandatory sinking fund, by our delivery of
    subordinated debt securities to the trustee in satisfaction of
    our sinking fund obligation)
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    if&#160;&#151;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    any principal, premium, if any, or interest with respect to
    senior indebtedness is not paid within any applicable grace
    period (including at maturity)&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    any other default on senior indebtedness occurs and the maturity
    of the senior indebtedness is accelerated in accordance with its
    terms,
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    11
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    unless, in either case&#160;&#151;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the default has been cured or waived and the acceleration has
    been rescinded,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the senior indebtedness has been paid in full in cash,&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the holders of the senior indebtedness give the trustee and us
    written notice approving the payment.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    During the continuance of any default (other than those
    described above) under any senior indebtedness that permits the
    holders of the senior indebtedness to immediately accelerate the
    senior indebtedness&#146; maturity without further notice or the
    expiration of any applicable grace periods, we may not pay the
    subordinated debt securities for a period (the
    <B><I>&#147;payment blockage period&#148;</I></B>) commencing on
    the receipt by the trustee and us of written notice of the
    default from the representative of the senior indebtedness
    specifying an election to effect a payment blockage period (a
    <B><I>&#147;blockage notice&#148;</I></B>). The payment blockage
    period may be terminated before its expiration by&#160;&#151;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    written notice to the trustee and us from the person who gave
    the blockage notice,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    repayment in full in cash of the senior indebtedness with
    respect to which the blockage notice was given,&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    because the default giving rise to the payment blockage period
    is no longer continuing.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Unless the holders of the senior indebtedness have accelerated
    the maturity of their indebtedness, we may resume payments on
    the subordinated debt securities after the expiration of the
    payment blockage period. Not more than one blockage notice may
    be given in any period of 360 consecutive days unless the first
    blockage notice within the
    <FONT style="white-space: nowrap">360-day</FONT>
    period is given by or on behalf of holders of senior
    indebtedness other than bank indebtedness, in which case the
    representative of the bank indebtedness may give another
    blockage notice within such period. In no event, however, may
    the total number of days during which any payment blockage
    period or periods is in effect exceed 179&#160;days in the
    aggregate during any period of 360 consecutive days. After all
    senior indebtedness is paid in full and until the subordinated
    debt securities are paid in full, holders of the subordinated
    debt securities will be subrogated to the rights of holders of
    senior indebtedness to receive distributions applicable to
    senior indebtedness.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    All payments by H&#038;R Block pursuant to any guarantees of
    subordinated debt securities will be subordinated in right of
    payment to the prior payment in full of all senior indebtedness
    of H&#038;R Block.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    By reason of such subordination, in the event of insolvency,
    creditors of H&#038;R Block and us who are holders of senior
    indebtedness, as well as certain general creditors of H&#038;R
    Block and us, may recover more, ratably, than the holders of the
    subordinated debt securities.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Events of
    Default and Remedies</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following events are defined in the indenture as
    <B><I>&#147;events of default&#148;</I></B> with respect to each
    series of debt securities:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    default in the payment of any installment of interest on any
    debt securities of that series as and when the same becomes due
    and payable (whether or not, in the case of subordinated debt
    securities, the payment is prohibited by reason of the
    subordination provisions described above) and continuance of the
    default for a period of 30&#160;days;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    default in the payment of principal or premium with respect to
    any debt securities of that series as and when the same becomes
    due and payable, whether at maturity, upon redemption, by
    declaration, upon required repurchase, or otherwise (whether or
    not, in the case of subordinated debt securities, the payment is
    prohibited by reason of the subordination provisions described
    above);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    default in the payment of any sinking fund payment with respect
    to any debt securities of that series as and when the same
    becomes due and payable;
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    12
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    failure on the part of H&#038;R Block or us to comply with the
    provisions of the indenture relating to consolidations, mergers
    and sales of assets;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    failure on the part of H&#038;R Block or us duly to observe or
    perform any of our other covenants or agreements with respect to
    that series, which failure continues for a period of
    60&#160;days after the date on which the trustee or the holders
    of at least 25% of the then outstanding principal amount of the
    debt securities of that series provide written notice specifying
    the failure and requiring H&#038;R Block or us to remedy the
    same;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    indebtedness of H&#038;R Block or any its subsidiaries is not
    paid within any applicable grace period after final maturity or
    is accelerated by the holders of the indebtedness because of a
    default, but only if the total amount of the indebtedness unpaid
    or accelerated exceeds $100&#160;million or the United States
    dollar equivalent at the time and the default remains uncured or
    the acceleration is not rescinded for 10&#160;days after the
    date on which the trustee or the holders of at least 25% of the
    then outstanding principal amount of the debt securities of that
    series provide written notice specifying the failure and
    requiring H&#038;R Block to remedy the same;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    certain events of bankruptcy or insolvency occur with respect to
    H&#038;R Block or us;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    any other event of default specified in the prospectus
    supplement for that series of debt securities.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    An event of default with respect to one series of debt
    securities is not necessarily an event of default for another
    series.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If an event of default occurs and is continuing with respect to
    any series of debt securities, unless the principal and interest
    with respect to all the debt securities of that series have
    already become due and payable, either the trustee or the
    holders of at least 25% of the then outstanding principal amount
    of the debt securities of that series may declare the principal
    of (or, if the debt securities were issued at a discount below
    their stated principal amount and bear no interest or interest
    at a rate that at the time of issuance is below market, the
    portion of the principal amount as may be specified in the
    series) and interest on all the debt securities of that series
    due and payable immediately.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If an event of default occurs and is continuing, the trustee
    may&#160;&#151;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    institute any action or proceeding for the collection of the
    sums so due and unpaid or to enforce the performance of any
    provision of the debt securities of the affected series or the
    indenture,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    prosecute any such action or proceeding to judgment or final
    decree,&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    enforce any such judgment or final decree against us or any
    other obligor on the debt securities of that series.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, if any proceedings for the bankruptcy or
    reorganization of us or any other obligor on the debt securities
    is pending, or if a receiver, trustee, or similar official is
    appointed for our or another obligor&#146;s property, the
    trustee may file and prove a claim for the whole amount of
    principal, premium and interest (or, in the case of debt
    securities that are issued at a discount, the portion of the
    principal amount as may be specified in the terms of that
    series) owing and unpaid with respect to the debt securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    No holder of any debt securities of any series will have any
    right to institute any action or proceeding upon or under or
    with respect to the indenture, for the appointment of a receiver
    or trustee, or for any other remedy, unless&#160;&#151;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the holder previously has given written notice to the trustee
    that an event of default with respect to the debt securities of
    that series has occurred and is continuing,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the holders of at least 25% of the then outstanding principal
    amount of the debt securities of that series requested the
    trustee to institute such action or proceeding with respect to
    the event of default and have offered to the trustee such
    reasonable indemnity as it may require against
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    13
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>
</TD>
    <TD align="left">
    the costs, expenses, and liabilities to be incurred by it in
    connection with the action or proceeding,&#160;and
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the trustee, for 60&#160;days after its receipt of the above
    notice, request, and offer of indemnity has failed to institute
    the action or proceeding and no direction inconsistent with the
    written request has been given to the trustee pursuant to the
    provisions of the indenture.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Prior to the acceleration of the maturity of the debt securities
    of any series, the holders of a majority of the then outstanding
    principal amount of the debt securities of that series may, on
    behalf of the holders of all debt securities of that series,
    waive any past default or event of default and its consequences
    for that series, except&#160;&#151;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a default in the payment of the principal, premium or interest
    with respect to such debt securities,&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a default with respect to a provision of the indenture that
    cannot be amended without the consent of each holder affected
    thereby.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In case of any waiver, the default will cease to exist, any
    event of default arising therefrom will be deemed to have been
    cured for all purposes, and we, the trustee and the holders of
    the debt securities of that series will be restored to our
    former positions and rights under the indenture.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Within 90&#160;days after the occurrence of a default known to
    the trustee with respect to a series of debt securities, the
    trustee will give to the holders of the debt securities of that
    series notice of all uncured defaults with respect to that
    series that are known to it, unless the defaults have been cured
    or waived before the giving of the notice. However, except in
    the case of default in the payment of principal, premium, or
    interest with respect to the debt securities of any series or in
    the making of any sinking fund payment with respect to the debt
    securities of any series, the trustee will be protected in
    withholding the notice if it in good faith determines that the
    withholding of the notice is in the interest of the holders of
    the debt securities.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Modification
    of the Indenture</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    H&#038;R Block, the trustee and we may enter into supplemental
    indentures without the consent of the holders of debt securities
    issued under the indenture for one or more of the following
    purposes:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    to evidence the succession of another person to us or H&#038;R
    Block pursuant to the provisions of the indenture relating to
    consolidations, mergers, and sales of assets and the assumption
    by the successor of the covenants, agreements, and obligations
    of us or H&#038;R Block in the indenture and in the debt
    securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    to surrender any right or power conferred upon us or H&#038;R
    Block by the indenture, to add to the covenants of us or
    H&#038;R Block such further covenants, restrictions, conditions,
    or provisions for the protection of the holders of all or any
    series of debt securities as our board of directors or the board
    of directors of H&#038;R Block consider to be for the protection
    of the holders of the debt securities, and to make the
    occurrence, or the occurrence and continuance of a default in
    any of such additional covenants, restrictions, conditions, or
    provisions, a default or an event of default under the indenture
    (provided, however, that with respect to any such additional
    covenant, restriction, condition, or provision, the supplemental
    indenture may provide for a period of grace after default, which
    may be shorter or longer than that allowed in the case of other
    defaults, may provide for an immediate enforcement upon the
    occurrence of the default, may limit the remedies available to
    the trustee upon the occurrence of the default, or may limit the
    right of holders of a majority in aggregate principal amount of
    any or all series of debt securities to waive the default);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    to cure any ambiguity or to correct or supplement any provision
    contained in the indenture, in any supplemental indenture, or in
    any debt securities that may be defective or inconsistent with
    any other provision contained in the indenture; to convey,
    transfer, assign, mortgage, or pledge any property to or with
    the trustee, or to make such other provisions in regard to
    matters or
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    14
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>
</TD>
    <TD align="left">
    questions arising under the indenture as do not adversely affect
    the interests of any holders of debt securities of any series;
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    to modify or amend the indenture to permit the qualification of
    the indenture or any supplemental indenture under the Trust
    Indenture Act as then in effect;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    to add or change any of the provisions of the indenture to
    change or eliminate any restriction on the payment of principal
    or premium with respect to debt securities so long as any such
    action does not adversely affect the interest of the holders of
    debt securities in any material respect or permit or facilitate
    the issuance of debt securities of any series in uncertificated
    form;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    to comply with the provisions of the indenture relating to
    consolidations, mergers, and sales of assets;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    in the case of subordinated debt securities, to make any change
    in the provisions of the indenture relating to subordination
    that would limit or terminate the benefits available to any
    holder of senior indebtedness under such provisions (but only if
    the holder of senior indebtedness consents to the change);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    to add additional guarantees with respect to the debt securities
    or to secure the debt securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    to make any change that does not adversely affect the rights of
    any holder;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    to add to, change, or eliminate any of the provisions of the
    indenture with respect to one or more series of debt securities,
    so long as any addition, change, or elimination not otherwise
    permitted under the indenture will (1)&#160;neither apply to any
    debt securities of any series created prior to the execution of
    the supplemental indenture and entitled to the benefit of such
    provision nor modify the rights of the holders of any such debt
    security with respect to such provision or (2)&#160;become
    effective only when there is no such debt security outstanding;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    to evidence and provide for the acceptance of appointment by a
    successor or separate trustee with respect to the debt
    securities of one or more series and add to or change any of the
    provisions of the indenture that are necessary to provide for or
    facilitate the administration of the indenture by more than one
    trustee;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    to establish the form or terms of debt securities of any series.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    With the consent of the holders of a majority of the then
    outstanding principal amount of the debt securities of each
    affected series, we, H&#038;R Block and the trustee may from
    time to time and at any time enter into a supplemental indenture
    for the purpose of adding any provisions to, changing in any
    manner, or eliminating any of the provisions of the indenture or
    of any supplemental indenture or modifying in any manner the
    rights of the holder of the debt securities of that series.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Without the consent of the holders of each debt security so
    affected, no supplemental indenture will&#160;&#151;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    reduce the percentage in principal amount of debt securities of
    any series whose holders must consent to an amendment,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    reduce the rate of or extend the time for payment of interest on
    any debt security,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    reduce the principal of or extend the stated maturity of any
    debt security,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    reduce the premium payable upon the redemption of any debt
    security or change the time at which any debt security may or
    will be redeemed,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    make any debt security payable in a currency other than that
    stated in the debt security,
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    in the case of any subordinated debt security, make any change
    in the provisions of the indenture relating to subordination
    that adversely affects the rights of any holder under those
    provisions,
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    15
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    release any security that may have been granted with respect to
    the debt securities,&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    make any change in the provisions of the indenture relating to
    waivers of defaults or amendments that require unanimous consent.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Certain
    Covenants</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Limitation on Liens.</I>&#160;&#160;H&#038;R Block may not,
    and may not permit any of its subsidiaries to, directly or
    indirectly, create or permit to exist any lien on any principal
    property (or any stock or indebtedness of a subsidiary that owns
    or leases a principal property), whether owned on the date of
    issuance of the debt securities or thereafter acquired, to
    secure any obligation, unless H&#038;R Block contemporaneously
    secures the debt securities equally and ratably with (or prior
    to) that obligation. The preceding sentence will not require
    H&#038;R Block to secure the debt securities if the lien
    consists of the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    permitted liens;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    liens securing indebtedness if, after giving pro forma effect to
    the incurrence of such indebtedness (and the receipt and
    application of the proceeds thereof) or the securing of
    outstanding indebtedness, all indebtedness of H&#038;R Block and
    its subsidiaries secured by liens on any principal property
    (other than permitted liens), at the time of determination does
    not exceed 10% of the total consolidated stockholders&#146;
    equity of H&#038;R Block as shown on the audited consolidated
    balance sheet contained in the latest annual report to
    stockholders of H&#038;R Block.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under the indenture, a <B><I>&#147;principal
    property&#148;</I></B> is any property or assets owned by
    H&#038;R Block or any of its subsidiaries other than any
    property which, in the good faith opinion of H&#038;R
    Block&#146;s board of directors, is not of material importance
    to the business conducted by H&#038;R Block and its subsidiaries
    taken as a whole.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under the indenture, the term
    <B><I>&#147;indebtedness&#148;</I></B> means, with respect to
    any person on any date of determination (without
    duplication)&#160;&#151;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the principal of indebtedness of that person for borrowed money;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the principal of obligations of that person evidenced by bonds,
    debentures, notes or other similar instruments;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    all obligations of that person that are required to be
    classified and accounted for as a capitalized lease for
    financial reporting purposes in accordance with generally
    accepted accounting principles;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    all obligations of that person to pay the deferred and unpaid
    purchase price of property or services other than trade payables;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    all obligations of that person in respect of letters of credit
    or other similar instruments, other than obligations with
    respect to letters of credit securing obligations (other than
    obligations listed in the preceding four bullet points) entered
    into in the ordinary course of business, if the letters of
    credit are not drawn upon or, if drawn upon, the drawing is
    reimbursed with three business day after a demand for repayment
    has been made;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the amount of all obligations of that person with respect to the
    redemption, repayment or other repurchase of any disqualified
    stock, other than accrued dividends. <B><I>&#147;Disqualified
    stock&#148;</I></B> is any capital stock that by its terms (or
    by the terms of any security into which it is convertible of for
    which it is exchangeable) or upon the happening of any
    event&#160;&#151;
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="13%"></TD>
    <TD width="5%"></TD>
    <TD width="82%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    matures or is mandatorily redeemable pursuant to a sinking fund
    obligation or otherwise,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    is convertible or exchangeable for indebtedness (other than
    preferred stock) or &#147;disqualified stock&#148;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    is redeemable at the option of the holder thereof, in whole or
    in part
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 5%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    on or prior to the first anniversary of the maturity date of the
    debt securities.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    16
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="13%"></TD>
    <TD width="5%"></TD>
    <TD width="82%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    all indebtedness of other persons secured by a lien on any asset
    of that person, whether or not the indebtedness is assumed by
    that person; provided, however, that the amount of the
    indebtedness will be the lesser of&#160;&#151;
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="13%"></TD>
    <TD width="5%"></TD>
    <TD width="82%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the fair market value of the asset at the date of
    determination;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the amount of the indebtedness of the other persons;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    all indebtedness of other persons to the extent guaranteed by
    that person.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under the indenture, <B><I>&#147;permitted liens&#148;</I></B>
    of any person are defined as&#160;&#151;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    pledges or deposits by that person under worker&#146;s
    compensation laws, unemployment insurance laws, social security
    laws or similar legislation, or good faith deposits in
    connection with bids, tenders, contracts (other than for the
    payment of indebtedness) or leases to which that person is a
    party, or deposits to secure public or statutory obligations of
    that person or deposits of cash or bonds to secure performance,
    surety or appeal bonds to which that person is a party or which
    are otherwise required of that person, or deposits as security
    for contested taxes or import duties or for the payment of rent
    or other obligations of like nature, in each case incurred in
    the ordinary course of business;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    liens imposed by law, such as carriers&#146;,
    warehousemen&#146;s, laborers&#146;, materialmen&#146;s,
    landlords&#146;, vendors&#146;, workmen&#146;s, operators&#146;,
    factors and mechanics liens, in each case for sums not yet due
    or being contested in good faith by appropriate proceedings;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    liens for taxes, assessments and other governmental charges or
    levies not yet delinquent or which are being contested in good
    faith by appropriate proceedings;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    survey exceptions, encumbrances, easements or reservations of or
    with respect to, or rights of others for or with respect to,
    licenses,
    <FONT style="white-space: nowrap">rights-of-way,</FONT>
    sewers, electric and other utility lines and usages, telegraph
    and telephone lines, pipelines, surface use, operation of
    equipment, permits, servitudes and other similar matters, or
    zoning or other restrictions as to the use of real property or
    liens incidental to the conduct of the business of that person
    or to the ownership of its properties which were not incurred in
    connection with indebtedness and which do not in the aggregate
    materially adversely affect the value of the properties or
    materially impair their use in the operation of the business of
    that person;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    liens existing on or provided for under the terms of agreements
    existing on date any debt securities are issued (including,
    without limitation, under H&#038;R Block&#146;s then existing
    credit agreement);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    liens on property at the time H&#038;R Block or any of its
    subsidiaries acquired the property or the entity owning the
    property; however, any such lien may not extend to any other
    property owned by H&#038;R Block or any of its subsidiaries;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    liens on any principal property, or any shares of stock or
    indebtedness of any subsidiary, that H&#038;R Block or any
    subsidiary acquires after the date of the indenture that are
    created contemporaneously with such acquisition, or within
    24&#160;months after the acquisition, to secure or provide for
    the payment or financing of any part of the purchase price;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    liens arising in connection with the securitization of any
    mortgage loans that H&#038;R Block or any of its subsidiaries
    own;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    liens arising in connection with the sale of any credit card
    receivables that H&#038;R Block or any of its subsidiaries own;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    liens securing the obligations of that person pursuant to any
    hedging agreements of the type customarily entered into for the
    purpose of limiting risk with respect to fluctuations in
    interest rates, foreign currency exchange rates, commodity
    prices or similar risks;
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    17
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    liens on property securing indebtedness that H&#038;R Block or
    any of its subsidiaries incurs to provide funds for all or any
    portion of the cost of acquiring, constructing, altering,
    expanding, improving or repairing that property or assets used
    in connection with that property;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    liens securing intercompany indebtedness owed to H&#038;R Block
    or a wholly owned subsidiary of H&#038;R Block;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    liens on any property to secure indebtedness incurred in
    connection with the construction, installation or financing of
    pollution control or abatement facilities or other forms of
    industrial revenue bond financing or indebtedness issued or
    guaranteed by the United States, any state or any department,
    agency or instrumentality thereof;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    liens required by any contract, statute, regulation or order in
    order to permit H&#038;R Block or any of its subsidiaries to
    perform any contract or subcontract made by it with or at the
    request of the United States or any State thereof or any
    department, agency or instrumentality of either or to secure
    partial, progress, advance or other payments by H&#038;R Block
    or any of its subsidiaries to the United States or any State
    thereof or any department agency or instrumentality of either
    pursuant to the provisions of any contract, statute, regulation
    or order;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    liens securing indebtedness of joint ventures in which H&#038;R
    Block or a subsidiary has an interest to the extent the liens
    are on property or assets of, those joint ventures;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    liens resulting from the deposit of funds or evidences of
    indebtedness in trust for the purpose of defeasing indebtedness
    of H&#038;R Block or any of its subsidiaries;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    legal or equitable encumbrances deemed to exist by reason of
    negative pledges or the existence of any litigation or other
    legal proceeding and any related <I>lis pendens </I>filing
    (excluding any attachment prior to judgment lien or attachment
    lien in aid of execution on a judgment);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    any attachment lien being contested in good faith and by
    proceedings promptly initiated and diligently conducted, unless
    the attachment giving rise to the lien will not, within
    60&#160;days after the entry thereof, have been discharged or
    fully bonded or will not have been discharged within
    60&#160;days after the termination of any such bond;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    any judgment lien, unless the judgment it secures will not,
    within 60&#160;days after the entry of the judgment, have been
    discharged or execution thereof stayed pending appeal, or will
    not have been discharged within 60&#160;days after the
    expiration of any such stay;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    liens to banks arising from the issuance of letters of credit
    issued by those banks;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    rights of a common owner of any interest in property held by
    that person;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    any defects, irregularities or deficiencies in title to
    easements,
    <FONT style="white-space: nowrap">rights-of-way</FONT>
    or other properties which do not in the aggregate materially
    adversely affect the value of the properties or materially
    impair their use in the operation of the business of the
    person;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    liens to secure any refinancing, refunding, extension, renewal
    or replacement (or successive refinancings, refundings,
    extensions, renewals or replacements), as a whole, or in part,
    of any indebtedness secured by any lien referred to in the
    foregoing clauses&#160;(e) through (p); provided, however,
    that&#160;&#151;
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="13%"></TD>
    <TD width="5%"></TD>
    <TD width="82%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the new lien must be limited to all or part of the same property
    that secured the original lien (plus improvements on the
    property),&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the indebtedness secured by the lien at such time is not
    increased to any amount greater than the sum of&#160;&#151;
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="18%"></TD>
    <TD width="7%"></TD>
    <TD width="75%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (B)&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the outstanding principal amount or, if greater, committed
    amount of the indebtedness described under clauses&#160;(e)
    through (1)&#160;at the time the original lien became a
    permitted lien under the indenture,&#160;and
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    18
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="13%"></TD>
    <TD width="7%"></TD>
    <TD width="80%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (C)&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    an amount necessary to pay any fees and expenses, including
    premiums, related to the refinancing, refunding, extension,
    renewal or replacement.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Ownership of the Company.</I>&#160;&#160;So long as any of
    the debt securities are outstanding and subject to certain
    rights described below under &#147;&#151;&#160;Consolidation,
    Merger, and Sale of Assets&#148;, H&#038;R Block will continue
    to own, directly or indirectly, all of our outstanding voting
    shares.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Consolidation,
    Merger and Sale of Assets</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Neither H&#038;R Block nor we may consolidate with or merge with
    or into any person, or convey, transfer, or lease all or
    substantially all of our assets, unless the following conditions
    have been satisfied:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    either (1)&#160;H&#038;R Block is the continuing person in the
    case of a merger or (2)&#160;the surviving corporation is a
    corporation organized and existing under the laws of the United
    States, any State, or the District of Columbia and expressly
    assumes all of the obligations of us and H&#038;R&#160;Block
    under the debt securities and the indenture;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    immediately after giving effect to the transaction (and treating
    any indebtedness that becomes an obligation of the successor
    company or any subsidiary of H&#038;R Block as a result of the
    transaction as having been incurred by the successor company or
    the subsidiary at the time of the transaction), no default or
    event of default would occur or be continuing;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    H&#038;R Block has delivered to the trustee an officers&#146;
    certificate and an opinion of counsel, each stating that such
    consolidation, merger, or transfer complies with the indenture.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Satisfaction
    and Discharge of the Indenture; Defeasance</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The indenture will generally cease to be of any further effect
    with respect to a series of debt securities if
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    we have delivered to the trustee for cancellation all debt
    securities of that series (with certain limited
    exceptions)&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    all debt securities of that series not previously delivered to
    the trustee for cancellation have become due and payable, or are
    by their terms to become due and payable within one year or are
    to be called for redemption within one year, and we have
    deposited with the trustee as trust funds the entire amount in
    the currency in which the debt securities are denominated
    sufficient to pay at maturity or upon redemption all of those
    debt securities.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In either case, we must also pay or cause to be paid all other
    sums payable by us under the indenture.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, we have a &#147;legal defeasance option&#148; that
    permits us to terminate, with respect to the debt securities of
    any particular series, all of our obligations under those debt
    securities and the indenture with respect to those debt
    securities. If we exercise our legal defeasance option with
    respect to a series of debt securities, payment of those debt
    securities cannot be accelerated because of an event of default.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We also have a &#147;covenant defeasance option&#148; that
    permits us to terminate, with respect to the debt securities of
    any particular series, our obligations with respect to those
    debt securities under certain specified covenants contained in
    the indenture. If we exercise our covenant defeasance option
    with respect to any series of debt securities, payment of those
    debt securities cannot be accelerated because of an event of
    default related to the specified covenants.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may exercise our legal defeasance option or our covenant
    defeasance option with respect to the debt securities of a
    series only if, among other things&#151;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    we irrevocably deposits in trust with the trustee cash or United
    States government securities sufficient to pay the principal,
    premium, and interest with respect to those debt securities to
    maturity or redemption, as the case may be,
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    19
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    we deliver to the trustee a certificate from a nationally
    recognized firm of independent accountants expressing their
    opinion that the payment of principal and interest when due and
    without reinvestment on the deposited U.S.&#160;government
    securities plus any deposited money without investment will
    provide cash at such times and in such amounts as will be
    sufficient to pay the principal, premium, and interest when due
    with respect to all the debt securities of those series to
    maturity or redemption, as the case may be,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    91&#160;days after the deposit is made and during that
    <FONT style="white-space: nowrap">91-day</FONT>
    period no default relating the bankruptcy or dissolution of us
    or H&#038;R Block occurs that is continuing at the end of that
    period,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    no event of default has occurred and is continuing on the date
    of the deposit and after giving effect to the deposit,&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the deposit does not constitute a default under any other
    agreement binding on us or H&#038;R&#160;Block, and, in the case
    of subordinated debt securities, is not prohibited by the
    provisions of the indenture relating to subordination.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The trustee will hold in trust the cash or U.S.&#160;government
    securities deposited with it as described above and will apply
    the deposited cash and the proceeds from the deposited
    U.S.&#160;government securities to the payment of principal,
    premium, and interest with respect to the debt securities of the
    defeased series. In the case of subordinated debt securities,
    the money and U.S.&#160;government securities so held in trust
    will not be subject to the subordination provisions of the
    indenture.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">The
    Trustee</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may maintain banking and other commercial relationships with
    the trustee and its affiliates in the ordinary course of
    business and the trustee may own debt securities.
</DIV>


<!-- link1 "Plan of Distribution" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='111'></A><B><FONT style="font-family: 'Times New Roman', Times">Plan
    of Distribution</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may sell the debt securities being offered hereby in one or
    more of the following ways from time to time:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    to underwriters for resale to the public or to investors;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    through agents to the public or to investors;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    directly to investors;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    through a number of direct sales or auctions performed by
    utilizing the Internet or a bidding or ordering system;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    through a combination of any of these methods of sale.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may distribute the debt securities from time to time in one
    or more transactions at a fixed price or prices, which may be
    changed, or at market prices prevailing at the time of sale, at
    prices related to the prevailing market prices or at negotiated
    prices.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Sale
    Through Underwriters</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If we use underwriters in the sale, such underwriters will
    acquire the debt securities for their own account. The
    underwriters may resell the securities in one or more
    transactions, including negotiated transactions, at a fixed
    public offering price or at varying prices determined at the
    time of sale. The obligations of the underwriters to purchase
    the debt securities will be subject to certain conditions. The
    underwriters will be obligated to purchase all the debt
    securities of the series offered if any of the securities are
    purchased. The underwriters may change from time to time any
    initial public offering price and any discounts or concessions
    allowed or re-allowed or paid to dealers.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    20
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Sale
    Through Agents</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may sell offered debt securities through agents designated by
    us. Unless indicated in the prospectus supplement, the agents
    will use their reasonable best efforts to solicit purchases for
    the period of their appointment.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Direct
    Sales</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may also sell offered debt securities directly. In this case,
    no underwriters or agents would be involved.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Sale
    Through the Internet</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may from time to time offer debt securities directly to the
    public, with or without the involvement of agents, underwriters
    or dealers, and may utilize the Internet or another electronic
    bidding or ordering system for the pricing and allocation of
    such debt securities. Such a system may allow bidders to
    directly participate, through electronic access to an auction
    site, by submitting conditional offers to buy that are subject
    to acceptance by us, and which may directly affect the price or
    other terms at which such securities are sold.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Such a bidding or ordering system may present to each bidder, on
    a real-time basis, relevant information to assist you in making
    a bid, such as the clearing spread at which the offering would
    be sold, based on the bids submitted, and whether a
    bidder&#146;s individual bids would be accepted, prorated or
    rejected. Typically the clearing spread will be indicated as a
    number of basis points above an index treasury note. Other
    pricing methods may also be used. Upon completion of such an
    auction process, the debt securities will be allocated based on
    prices bid, terms of bid or other factors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The final offering price at which debt securities would be sold
    and the allocation of debt securities among bidders, would be
    based in whole or in part on the results of the Internet bidding
    process or auction. Many variations of Internet auction or
    pricing and allocation systems are likely to be developed in the
    future, and we may utilize such systems in connection with the
    sale of debt securities. The specific rules of such an auction
    would be distributed to potential bidders in an applicable
    prospectus supplement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If an offering is made using such a bidding or ordering system
    you should review the auction rules, as described in the
    prospectus supplement, for a more detailed description of such
    offering procedures.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">General
    Information</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Underwriters, dealers and agents that participate in the
    distribution of the offered debt securities may be underwriters
    as defined in the Securities Act of 1933, and any discounts or
    commissions received by them from us and any profit on the
    resale of the offered debt securities by them may be treated as
    underwriting discounts and commissions under the Securities Act.
    We will identify any underwriters or agents, and describe their
    compensation, in a prospectus supplement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may have agreements with the underwriters, dealers and agents
    to indemnify them against certain civil liabilities, including
    liabilities under the Securities Act, or to contribute with
    respect to payments which the underwriters, dealers or agents
    may be required to make. Underwriters, dealers and agents may
    engage in transactions with, or perform services for, us or our
    subsidiaries in the ordinary course of their businesses.
</DIV>


<!-- link1 "Legal Matters" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='112'></A><B><FONT style="font-family: 'Times New Roman', Times">Legal
    Matters</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The validity of the securities to be offered by this prospectus
    will be passed upon for us by Stinson Morrison Hecker LLP,
    Kansas City, Missouri.
</DIV>


<!-- link1 "Experts" -->


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <A name='113'></A><B><FONT style="font-family: 'Times New Roman', Times">Experts</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The consolidated financial statements and financial statement
    schedule of H&#038;R Block, Inc. and subsidiaries as of and for
    the year ended April&#160;30, 2004 have been incorporated by
    reference herein in reliance
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    21
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    upon the report of KPMG LLP, an independent registered public
    accounting firm, incorporated herein by reference, and upon the
    authority of said firm as experts in accounting and auditing.
    The report of independent registered public accounting firm
    covering the April&#160;30, 2004 consolidated financial
    statements refers to changes in methods of accounting to adopt
    Staff Accounting Bulletin No.&#160;105, &#147;Application of
    Accounting Principles to Loan&#160;Commitments,&#148; Emerging
    Issues Task Force Issue No, 00-21, &#147;Revenue Arrangements
    with Multiple Deliverables,&#148; and Statement of Financial
    Accounting Standards No.&#160;148, &#147;Accounting for
    Stock-Based Compensation&#160;&#151; Transition and
    Disclosure&#148; during the year ended April&#160;30, 2004.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The consolidated financial statements of H&#038;R Block, Inc. as
    of April&#160;30, 2003 and for the years ended April&#160;30,
    2003 and 2002, incorporated in this prospectus supplement by
    reference to the Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the year ended April&#160;30, 2004, have been so
    incorporated in reliance on the report of PricewaterhouseCoopers
    LLP, an independent registered public accounting firm, given on
    the authority of said firm as experts in auditing and accounting.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    22
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<CENTER style="font-size: 1pt; width: 100%; border-bottom: 2pt solid #000000"></CENTER><!-- callerid=999 iwidth=455 length=0 -->

<CENTER style="font-size: 1pt; width: 100%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=455 length=0 -->

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 52pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 16pt">$600,000,000</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 20pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="c22310b2n2231001.gif" alt="(H and R BLOCK LOGO)"><FONT style="font-size: 16pt">
    </FONT>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 18pt">Block Financial LLC</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 14pt">7.875%&#160;Notes due
    2013</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><I><FONT style="font-size: 14pt"> Fully and Unconditionally
    Guaranteed by</FONT></I></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 14pt">H&#038;R Block, Inc.</FONT></B>
</DIV>

<DIV style="margin-top: 52pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 31%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=455 length=142 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>PROSPECTUS SUPPLEMENT</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 31%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=455 length=142 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 16pt">Merrill Lynch&#160;&#038;
    Co.</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 16pt">JPMorgan</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 16pt">HSBC</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>January&#160;8, 2008</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

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<CENTER style="font-size: 1pt; width: 100%; border-bottom: 2pt solid #000000"></CENTER><!-- callerid=999 iwidth=455 length=0 -->

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