Employment Agreement - HRB Management Inc. and Jeffery W. Yabuki


                              EMPLOYMENT AGREEMENT


                  THIS EMPLOYMENT AGREEMENT ('Agreement') is entered into as of
the 7th day of September, 1999, by and between HRB MANAGEMENT, INC., a Missouri
corporation ('HRB') and Jeffery W. Yabuki ('Executive').

                                   ARTICLE ONE

                                   EMPLOYMENT

                  1.01 - Agreement as to Employment. Effective September 7,
1999, or such other date as is mutually agreed upon by Executive and HRB in
writing (the 'Employment Date'), HRB hereby employs Executive as President, H&R
Block International of H&R BLOCK, INC., a Missouri corporation ('Block') and the
indirect parent corporation of HRB, and Executive hereby accepts such employment
by HRB, subject to the terms of this Agreement. Subject to the terms of Section
1.06 of this Agreement, either party may terminate this Agreement for any
reason, or no reason, by providing not less than 45 days' prior written notice
of such termination to the other party, and, if such notice is properly given,
this Agreement and Executive's employment hereunder shall terminate as of the
close of business on the 45th day after such notice is deemed to have been given
or such later date as is specified in such notice. Any termination of this
Agreement shall not be effective as to those portions of this Agreement which,
by their express terms as set forth below, require performance by either party
following termination of this Agreement.

                  1.02 - Duties. (a) Executive is employed by HRB to serve as
the President, H&R Block International of Block subject to the authority and
direction of Block's Board of Directors (the 'Board'), the Chief Executive
Officer of Block, and the Chief Operating Officer of Block. Subject to the
foregoing, the Executive shall have such authority and responsibility and duties
as are normally associated with the principal officer of an operating segment of
Block.

                  (b)  So long as he is employed under this Agreement, Executive
agrees to devote his full business time and efforts exclusively on behalf of HRB
and Block and to competently and diligently discharge his duties hereunder.
Executive shall not be prohibited from engaging in such personal, charitable, or
other nonemployment activities as do not interfere with his full-time employment
hereunder and which do not violate the other provisions of this Agreement.
Executive may, following approval by the Board of Directors of Block, become a
member of the board of directors of a 'for-profit' corporation or entity. Such
approval will not be unreasonably withheld by the Board, but such approval may
be withheld if the Board reasonably determines that such activity conflicts with
Executive's duties hereunder, either in terms of 







Executive's time to be devoted thereto or in terms of the relationship of such
corporation's or entity's business to the present or future business then
conducted or proposed to be conducted by Block and its subsidiaries, whether or
not such business is directly competitive with the business of Block. Executive
shall comply fully with all reasonable policies of HRB and Block as are from
time to time in effect and applicable to his position.

                  1.03 - Compensation. (a) Base Salary. HRB shall pay to
Executive during the period between the Employment Date and June 30, 2000, a
minimum gross salary at an annual rate of $250,000 ('Base Salary'), payable
semimonthly or at any other pay periods as HRB may use for its other executive
employees. The Base Salary shall be reviewed for adjustment by the Board or
appropriate committee thereof no less often than annually during the term of
Executive's employment hereunder and, if adjusted by the Board, such adjusted
amount shall become the 'Base Salary' for purposes of this Agreement.

                  (b)  Short-Term Incentive Compensation.

                             (i)   As approved by the Compensation Committee of
          the Board, Executive shall participate in the H&R Block Short-Term
          Incentive Plan for the fiscal year ended April 30, 2000 and the
          discretionary short-term incentive program for such year. Under such
          Plan and program, the Executive shall have an aggregate target bonus
          for fiscal year 2000 of $137,500 and an opportunity to earn 200% of
          such target bonus. The payment of the actual award under the Plan (80%
          of target) shall be based upon the performance criteria determined by
          the Compensation Committee to be applicable to HRB participants for
          fiscal year 2000. The payment of the actual award under the
          discretionary program shall be based upon the performance of H&R Block
          International (10% of target) and Executive's individual performance
          (10%), as determined by the Chief Operating Officer of Block and
          approved by the Compensation Committee. For purposes of Executive's
          participation in such Plan and program for the fiscal year ending
          April 30, 2000, Executive's actual incentive compensation shall be
          prorated based upon the number of months during such year that he is
          actually employed by HRB.

                             (ii)  Executive shall be paid a $70,000 bonus
          upon completion of his employment by HRB from the Employment Date 
          through April 30, 2000.

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                  (c)  Stock Options. As approved by the Compensation
          Committee of the Board and the Board itself, Executive shall be
          granted (i) on the Employment Date a stock option under Block's 1993
          Long-Term Executive Compensation Plan (the '1993 Plan') to purchase
          40,000 shares of Block's common stock at a price per share equal to
          the closing price thereof on the New York Stock Exchange on the date
          of grant, such option to expire on the tenth anniversary of the date
          of grant; to vest and become exercisable as to 40% of the shares
          covered thereby on the third anniversary of the date of grant, as to
          an additional 30% of such shares on the fourth anniversary of the date
          of grant, and as to the remaining 30% of the shares on the fifth
          anniversary of the date of grant; to be an incentive stock option for
          the maximum number of shares permitted by Internal Revenue Code
          Section 422 and the regulations promulgated thereunder; and to
          otherwise be a nonqualified stock option; and (ii) a stock option to
          purchase a minimum of 22,000 shares under the 1993 Plan on the date of
          grant in fiscal year 2001 on which options are granted under the 1993
          Plan to all or substantially all other senior executive officers of
          Block and its subsidiaries, such stock option to have terms and
          conditions consistent with the terms and conditions of options granted
          to such other senior executive officers except as provided in Section
          1.06(a). Should HRB elect to change its fiscal year, such change shall
          not have a detrimental impact on Executive's stock option described in
          this Subsection 1.03(c)(2). In the event of a change in HRB's fiscal
          year, Executive shall be entitled to a pro rata adjustment of the
          minimum of 22,000 shares available for purchase by Executive under the
          1993 Plan based on the number of months the fiscal year is extended.

                  (d)  Restricted Stock. As approved by the Compensation
          Committee of the Board and the Board itself, Executive shall be
          awarded promptly after the date of the commencement of his employment,
          28,300 Restricted Shares of Block's common stock under the 1993 Plan.
          One-third of the 28,300 shares shall vest, respectively, on each of
          the first three anniversaries following such employment commencement
          date. Prior to the time such Restricted Shares are so vested,
          Executive shall be entitled to receive any cash dividends payable with
          respect to unvested Restricted Shares and vote such unvested
          Restricted Shares at any meeting of shareholders of Block. If the
          value of the Restricted Shares on the date of grant (determined by
          taking the average of the high and low reported sale price for Block
          Common Stock on such date and multiplying it by 28,300) does not equal
          or exceed $1,570,000, such number of Restricted Shares shall be
          increased to such number of Restricted Shares (rounded to the next
          highest 100 share increment) as shall first cause such fair market
          value equal to exceed $1,570,000.

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                  (e)  Relocation Benefits.

                             (i)   HRB shall reimburse the Executive for
          reasonable packing, shipping, transportation costs and other expenses
          incurred by Executive in relocating himself, his family and personal
          property to the Greater Kansas City Area, in accordance with HRB's
          standard relocation policy.

                             (ii)  If, as a result of Executive's acceptance of
          employment hereunder, Executive must reimburse any prior employer for
          any relocation expenses paid by such prior employer, HRB will pay to
          Executive the amount of any such reimbursement.

                             (iii) To the extent that Executive incurs taxable
          income related to any relocation benefits paid pursuant to this
          Agreement, HRB shall pay to Executive such additional amount as is
          necessary to 'gross up' such benefits and cover the anticipated income
          tax liability resulting from such taxable income.

                  1.04 - Business Expenses. HRB shall promptly pay directly, or
reimburse Executive for, all business expenses, to the extent such expenses are
paid or incurred by Executive during the term hereof in accordance with Block
policy in effect from time to time and to the extent such expenses are
reasonable and necessary to the conduct by Executive of Block's business.

                  1.05 - Fringe Benefits. During the term of Executive's
employment hereunder, HRB shall make available to Executive such insurance, sick
leave, deferred compensation, short-term incentive compensation, bonuses, stock
options (also referred to in Subsection 1.03(c) above), retirement, vacation and
other like benefits as are approved by the Board or the Compensation Committee
thereof and provided from time to time to the other executive-level employees of
HRB, Block or Block's other subsidiaries. Executive shall be entitled to 20 days
of paid vacation per year, commencing as of the date of this Agreement.

                  1.06 - Termination of Employment. (a) If, prior to the date of
Executive's retirement from gainful employment, HRB terminates Executive's
employment pursuant to Section 1.01 of this Agreement without 'cause' (as
defined in Subsection 1.06(b), below), or if Executive terminates his employment
pursuant to Sections 1.01 of this Agreement with 'good reason' (as defined in
Subsection 1.06(c) below) then, upon any such termination of Executive's
employment, (i) subject to Subsection 3.04(c), HRB shall pay to Executive
compensation at an annual rate equal to the sum of (A) the annual rate of Base
Salary in effect upon such 

                                       4





termination, and (B) the aggregate short-term incentive compensation (under the
H&R Block Short-Term Incentive Plan and any discretionary incentive program)
paid by HRB to Executive for the last fiscal year completed before the fiscal
year in which the termination of employment occurs (or, if such termination
occurs prior to end of the fiscal year in which the Employment Date occurs, the
amount of actual aggregate short-term incentive compensation to which Executive
would have been entitled (with any discretionary incentive compensation
calculated at target) had Executive remained employed through the last day of
such fiscal year), such compensation to be paid throughout the two-year period
following such termination at such periodic intervals as Base Salary would have
been made had Executive remained employed by HRB hereunder; (ii) any portion of
any option to purchase shares of Block common stock granted pursuant to
Subsections 1.03(c) or 1.05 of this Agreement and held by Executive at the time
of such termination of employment that is not yet vested in accordance with its
terms, but would vest within two years after the date of such termination of
employment, shall vest upon the date of such termination of employment to the
extent that it would be vested at the end of such two-year period, and shall be
exercisable to the extent so vested for a period of three months after such date
of termination of employment; (iii) any Restricted Shares granted pursuant to
Subsection 1.03(d) of this Agreement and held by Executive at the time of such
termination of employment that are not yet vested (meaning the Shares are still
subject to restrictions), but would vest within two years after the date of such
termination of employment, shall vest upon the date of such termination of
employment to the extent that they would be vested at the end of such two-year
period, and all restrictions on any Restricted Shares so vested shall terminate;
(iv) subject to Subsection 3.04(c), HRB shall, during the two-year period
following such termination, continue Executive's health, life and disability
insurance benefits, but only to the extent Executive does not obtain similar
benefits paid for by a third party after such termination;(v) HRB shall pay to
Executive, at such times as the same would have been paid Executive had he
remained employed hereunder, a pro rata portion of any actual short-term
incentive compensation to which he would have been entitled (with any
discretionary incentive compensation calculated at target) pursuant to
Subsection 1.03(b)(i) had he remained employed through the end of the fiscal
year in which such termination occurs (such portion to be the actual short-term
incentive compensation earned for the fiscal year during which such termination
occurs as is proportionate to the portion of such fiscal year in which he is
actively employed hereunder); and (vi) if not already paid, HRB shall pay to
Executive the compensation specified in Subsection 1.03(b)(ii).

                  (b) As used in this Agreement, the term 'cause' shall refer
only to any one or more of the following grounds:

                                       5




                             (i) Executive's commission of an act or Executive's
          omission to act, that, in either case, (A) is materially and
          demonstrably detrimental to the good will of Block or any subsidiary
          of Block, and (B) constitutes gross negligence (specifically defined
          to mean acting, or omitting to act in a situation where there is a
          duty to act, not inadvertently, but willfully and intentionally with a
          conscious indifference to the consequences of such act or omission)or
          willful misconduct by the Executive in the performance of his material
          duties to HRB or Block; or

                             (ii)  commission by Executive of any act of
          dishonesty or breach of trust resulting or intending to result in
          material personal gain or enrichment of Executive at the expense of
          Block or any subsidiary of Block; or

                             (iii) Executive's conviction of a misdemeanor
          (involving an act of moral turpitude) or a felony.


                             (c)   As used in this Agreement, Executive's
          termination of employment for 'good reason' shall mean termination of
          employment based on any one or more of the following:

                             (i)   An adverse change in Executive's status or
          position as an executive officer of Block, including, without
          limitation, (A) any adverse change in Executive's status or position
          as a result of a material diminution in Executive's duties,
          responsibilities or authority as of the date of this Agreement (or any
          status or position to which Executive may be promoted after the date
          hereof), or (B) the assignment to Executive of any duties or
          responsibilities which are inconsistent with Executive's status or
          position (except as may be related to a promotion or are intended to
          provide experience for a possible promotion to a position that is more
          senior than such status or position), or (C) any removal of Executive
          from or any failure to reappoint or reelect Executive to such
          positions (except in connection with an agreed upon promotion or the
          termination of Executive's employment for cause or by reason of
          Executive's disability or death);

                             (ii)  A reduction by HRB in Executive's Base Salary
          to an annual rate below $250,000 that is not mutually agreed upon by
          HRB and Executive.

                                       6




                             (iii) HRB's requiring (without Executive's
          agreement) Executive to be based anywhere outside the continental
          United States except for required travel on HRB or Block's business to
          an extent substantially consistent with the business travel
          obligations which Executive agreed to undertake on behalf of Block and
          HRB in connection with the position of President, H&R Block
          International prior to the date of this Agreement (or such obligations
          as Executive shall agree to undertake in connection with any promotion
          after the date of this Agreement);

                             (iv)  The failure by HRB or Block to obtain from 
          any successor an assent to this Agreement contemplated by Section 
          4.04 of this Agreement;

                             (v)   Any purported termination by HRB of this
          Agreement or the employment of the Executive by HRB which is not
          expressly authorized by this Agreement or any breach of this Agreement
          by HRB (A)other than an isolated, insubstantial and inadvertent
          failure not occurring in bad faith and (B) which is not remedied by
          HRB within a reasonable period of time not to exceed forty-five (45)
          days after HRB's receipt of written notice of the breach from the
          Executive; or

                             (vi)  Any refusal by HRB or Block to continue to
          allow Executive to attend to matters or engage in activities not
          directly related to the business of Block which, prior to the date of
          this Agreement or any time thereafter but prior to such refusal,
          Executive was permitted by the Board to attend to or engage in,
          provided that this Subsection 1.06(c)(v) shall not apply to any
          refusal resulting from a reasonable determination by the Board that
          such matters or activities conflict with Executive's duties hereunder,
          either in terms of Executive's time to be devoted thereto or in terms
          of the relationship of such matters or activities to the present or
          future business then conducted or proposed to be conducted by Block
          and its subsidiaries, whether or not such business is directly
          competitive with the business of Block.

                  (d)  In the event of Executive's death, Executive's employment
under this Agreement shall terminate and Executive's estate shall be paid the
benefits described in Subsections 1.06(a)(ii, iii, v, & vi) of this Agreement.
In the event of Executive's total and permanent disability defined under any
long-term disability plan maintained by HRB or Block for HRB executives,
Executive shall be paid the benefits described in 

                                       7




Subsections 1.06(a)(ii, iii, iv, v, & vi) of this Agreement, and shall also be
paid his Base Salary pursuant to Subsection 1.06(a)(i) to the date of the
determination of such disability.

                  (e)  The parties may terminate Executive's employment under
this Agreement at any time by mutual written agreement.

                  (f)  The termination of Executive's employment under this
Agreement for any reason (or no reason) by HRB or by Executive during the
180-day period following the date of the occurrence of a 'Change of Control' of
Block shall be considered a termination of Executive's employment without cause
for purposes of this Agreement. For the purpose of this subsection, a 'Change of
Control' shall mean:

                             (i) the acquisition, other than from Block, by any
          individual, entity or group (within the meaning of Section 13(d)(3) or
          14(d)(2) of the Securities Exchange Act of 1934, as amended (the
          'Exchange Act')), of beneficial ownership (within the meaning of Rule
          13d-3 promulgated under the Exchange Act) of 35% or more of the then
          outstanding voting securities of Block entitled to vote generally in
          the election of directors, but excluding, for this purpose, any such
          acquisition by Block or any of its subsidiaries, or any employee
          benefit plan (or related trust) of Block or its subsidiaries, or any
          corporation with respect to which, following such acquisition, more
          than 50% of the then outstanding voting securities of such corporation
          entitled to vote generally in the election of directors is then
          beneficially owned, directly or indirectly, by all or substantially
          all of the individuals and entities who were the beneficial owners of
          the voting securities of Block immediately prior to such acquisition
          in substantially the same proportion as their ownership, immediately
          prior to such acquisition, of the then outstanding voting securities
          of Block entitled to vote generally in the election of directors, as
          the case may be; or

                             (ii)  individuals who, as of the date hereof,
          constitute the Board (as of the date hereof, the 'Incumbent Board')
          cease for any reason to constitute at least a majority of the Board,
          provided that any individual or individuals becoming a director
          subsequent to the date hereof, whose election, or nomination for
          election by Block's shareholders, was approved by a vote of at least a
          majority of the Board (or nominating committee of the Board) shall be
          considered as though such individual were a member or members of the
          Incumbent Board, but excluding, for this 


                                       8




          purpose, any such individual whose initial assumption of office is in
          connection with an actual or threatened election contest relating to
          the election of the directors of Block (as such terms are used in Rule
          14a-11 of Regulation 14A promulgated under the Exchange Act); or

                             (iii) approval by the shareholders of Block of (A)
          a reorganization, merger or consolidation of Block, in each case, with
          respect to which all or substantially all of the individuals and
          entities who were the respective beneficial owners of the voting
          securities of Block immediately prior to such reorganization, merger
          or consolidation do not, following such reorganization, merger or
          consolidation, beneficially own, directly or indirectly, more than 50%
          of the then outstanding voting securities entitled to vote generally
          in the election of directors of the corporation resulting from such
          reorganization, merger or consolidation, (B) a complete liquidation or
          dissolution of Block, voluntary or involuntary, or (C) the sale or
          other disposition of all or substantially all of the assets of Block.

                  (g)  Upon termination of Executive's employment under this
Agreement, HRB shall have no further obligations under this Agreement and no
further payments of Base Salary or other compensation or benefits shall be
payable by HRB to Executive, except (i) as set forth in this Section 1.06, (ii)
as required by the express terms of any written benefit plans or written
arrangements maintained by HRB and applicable to Executive at the time of such
termination of Executive's employment, (iii) as may be required by law, or (iv)
as may be mutually agreed upon between the parties in a negotiated Employment
Agreement Termination package.

                                   ARTICLE TWO

                                 CONFIDENTIALITY

                  2.01 - Background and Relationship of Parties. The parties
acknowledge (for all purposes including, without limitation, Articles Two and
Three of this Agreement) that Block and its subsidiaries have been and will be
engaged in a continuous program of acquisition and development respecting their
businesses, present and future, and that, in connection with Executive's
employment by HRB, Executive will be expected to have access to all information
of value to HRB and Block and that Executive's employment creates a relationship
of confidence and trust between Executive and Block with respect to any
information applicable to the businesses of Block and its subsidiaries.

                                       9





Executive will possess or have unfettered access to information that has been
created, developed or acquired by Block and its subsidiaries or otherwise become
known to Block and its subsidiaries and which has commercial value in the
businesses in which Block and its subsidiaries have been and will be engaged and
has not been publicly disclosed by Block. All information described above is
hereinafter called 'Proprietary Information'. By way of illustration, but not
limitation, Proprietary Information includes trade secrets, customer lists and
information, employee lists and information, developments, systems, designs,
know-how, marketing plans, product information, business and financial
information and plans, strategies, forecasts, new products and services,
financial statements, budgets, projections, prices and acquisition and
disposition plans. Proprietary Information shall not include any portions of
such information which are now or hereafter made public by third parties in a
lawful manner or made public by parties hereto without violation of this
Agreement.

                  2.02 - Proprietary Information is Property of Block. (a) All
Proprietary Information shall be the sole property of Block (or the applicable
subsidiary of Block) and its assigns, and Block (or the applicable subsidiary of
Block) shall be the sole owner of all patents, copyrights, trademarks, names and
other rights in connection therewith and without regard to whether Block (or any
subsidiary of Block) is at any particular time developing or marketing the same.
Executive hereby assigns to Block any rights Executive may have or may acquire
in such Proprietary Information. At all times, Executive will keep in strictest
confidence and trust all Proprietary Information and Executive will not use or
disclose any Proprietary Information without the written consent of Block,
except as may be necessary in the ordinary course of performing duties as an
employee of HRB or an officer of Block or as may be required by law or the order
of any court or governmental authority.

                  (b) In the event of the termination of Executive's employment
by HRB for any reason (including no reason), Executive shall promptly deliver to
HRB all copies of all documents, notes, drawings, specifications, documentation,
data and other materials of any nature belonging to Block or any subsidiary of
Block and obtained during the course of Executive's employment with HRB. In
addition, upon such termination, Executive will not remove from the premises of
Block or any subsidiary of Block any of the foregoing or any reproduction of any
of the foregoing or any Proprietary Information that is embodied in a tangible
medium of expression.

                                       10





                                  ARTICLE THREE

                    NON-HIRING; NO CONFLICTS; NONCOMPETITION

                  3.01 - General. The parties hereto acknowledge that, during
the course of Executive's employment by HRB, Executive shall have access to
information valuable to HRB and Block concerning the key employees of Block and
its subsidiaries ('Block Employees') and, in addition to Executive's access to
such information, Executive may, during (and in the course of) Executive's
employment by HRB, develop relationships with such Block Employees whereby
information valuable to Block and its subsidiaries concerning the Block
Employees was acquired by Executive. Such information includes, without
limitation: the identity, skills and performance levels of the Block Employees,
as well as compensation and benefits paid by Block to such Block Employees.

                  3.02 - Non-Hiring. During the period of Executive's employment
hereunder and during the time Executive is receiving payments hereunder and for
a period of one year after the later of: termination by HRB or Executive for any
reason (or no reason) of such employment or cessation of such payments, the
Executive will not knowingly recruit, solicit or hire any Block Employee or
otherwise induce any such Block Employee to leave the employment of Block (or
the applicable employer-subsidiary of Block) to become an employee of or
otherwise be associated with any other party or with Executive or any company or
business with which Executive is or may become associated.

                  3.03 - No Conflicts. Executive represents in good faith that,
to the best of his knowledge, the performance by Executive of all the terms of
this Agreement will not breach any agreement as to which Executive is or was a
party and which requires Executive to keep any information in confidence or in
trust. Executive has not brought and will not bring with him to HRB or Block nor
will Executive use in the performance of employment responsibilities at HRB any
proprietary materials or documents of a former employer that are not generally
available to the public, unless Executive has obtained express written
authorization from such former employer for their possession and use. Executive
has not and will not breach any obligation of confidentiality that Executive may
have to former employers and Executive shall fulfill all such obligations during
his employment with HRB.

                  3.04 - Non-Competition.

                  (a) During any period of Executive's employment with HRB,
Executive shall not engage in, or own or control any interest in (except as a
passive investor in publicly-held companies, 

                                       11




holding less than one percent of its outstanding securities), or act as an
officer, director or employee of, or consultant, advisor or lender to, any firm,
corporation, institution or business which engages in any line of business which
is competitive with any line of business of Block or any of its subsidiaries (or
which Block or any subsidiary is engaged in evaluating or developing).

                  (b) During the two-year period immediately following the
termination of Executive's employment hereunder by HRB or Executive for any
reason (including no reason) other than a termination for 'cause,' as defined in
Subsection 1.06(b) of this Agreement, Executive will not, except as permitted by
Subsection (c), below (i) own or control any interest in (except as a passive
investor in publicly-held companies, holding less than one percent of its
outstanding equity securities) any firm, corporation, institution or business
that derives more than 40% of its revenues from tax and accounting services, or
(ii) act as an officer, director or employee of, or consultant, advisor or
lender to, any line of business of any firm, corporation, institution or
business which line of business (A) is competitive with any line of business of
Block or any of its subsidiaries, (B) is one in which Executive has or had
significant management responsibilities prior to or at the time Executive's
employment terminates, and (C) derives more than 40% of its revenues from tax
and accounting services (any such line of business to be referred to in this
Agreement as a 'Competitive Line of Business' and the prohibited acts set forth
in Subsections 3.04(b)(i) and (ii) to be referred to in this Agreement as the
'Prohibited Acts'). The Prohibited Acts shall not preclude Executive from
serving as an officer, director or employee of, or consultant, advisor or lender
to, any firm, corporation, institution or business with respect to any line of
business of such firm, corporation, institution or business that is not a
Competitive Line of Business, provided that Executive shall not provide direct
or indirect services, oversight, management, advice or loans to any Competitive
Line of Business and the person or persons responsible for the day-to-day
business of any such Competitive Line of Business shall not directly or
indirectly report to Executive.

                  (c) Notwithstanding the provisions of Subsection 3.04(b),
above, (i) during the two-year period immediately following termination of
Executive's employment hereunder by HRB for cause, Executive may engage in the
Prohibited Acts, or any one of them, without HRB's prior written consent, and
(ii) during the two-year period immediately following termination of Executive's
employment hereunder by HRB without 'cause,' or Executive's termination of this
Agreement for good reason, Executive may engage in the Prohibited Acts, or any
one of them, only if HRB gives to Executive its prior written consent to such
Prohibited Act. As of the effective date of any Prohibited Act to which HRB has
consented, HRB shall have no further obligation to continue to 

                                       12



pay compensation pursuant to Subsection 1.06(a)(i) of this Agreement and no
further obligation to continue Executive's health, life and disability insurance
benefits pursuant to Subsection 1.06(a)(iv) of this Agreement.

                  3.05 - Reasonableness of Restrictions. Executive and HRB
acknowledge that the restrictions contained in this Agreement are reasonable,
but should any provisions of any Article of this Agreement be determined to be
invalid, illegal or otherwise unenforceable or unreasonable in scope by any
court of competent jurisdiction, the validity, legality and enforceability of
the other provisions of this Agreement shall not be affected thereby and the
provision found invalid, illegal or otherwise unenforceable or unreasonable
shall be considered by HRB and Executive to be amended as to scope of
protection, time or geographic area (or any one of them, as the case may be) in
whatever manner is considered reasonable by that court and, as so amended, shall
be enforced.

                                  ARTICLE FOUR

                                  MISCELLANEOUS


                  4.01 - Third-Party Beneficiary. The parties hereto agree that
Block is a third-party beneficiary as to the obligations imposed upon Executive
under this Agreement and as to the rights and privileges to which HRB is
entitled pursuant to this Agreement, and that Block is entitled to all of the
rights and privileges associated with such third-party-beneficiary status.

                  4.02 - Entire Agreement. This Agreement constitutes the entire
agreement and understanding between HRB and Executive concerning the subject
matter hereof. No modification, amendment, termination or waiver of this
Agreement shall be binding unless in writing and signed by Executive and a duly
authorized officer of HRB. Failure of HRB, Block or Executive to insist upon
strict compliance with any of the terms, covenants or conditions hereof shall
not be deemed a waiver of such terms, covenants and conditions.

                  4.03 - Specific Performance by Executive. The parties
acknowledge that money damages alone will not adequately compensate HRB or Block
or Executive for breach of any of the covenants and agreements herein and,
therefore, in the event of the breach or threatened breach of any such covenant
or agreement by either party, in addition to all other remedies available at
law, in equity or otherwise, a wronged party shall be entitled to injunctive
relief compelling specific performance of (or other compliance with) the terms
hereof.


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                  4.04 - Successors and Assigns. This Agreement shall be binding
upon Executive and the heirs, executors, assigns and administrators of Executive
or his estate and property and shall inure to the benefit of HRB, Block and
their successors and assigns. Executive may not assign or transfer to others the
obligation to perform Executive's duties hereunder. Executive's estate, heirs,
successors, representatives, assigns, conservators and/or trustees may seek
enforcement, on behalf of Executive or his estate, of the obligations outlined
in Section 1.06 of this Agreement.

                  4.05 - Withholding Taxes. From any payments due hereunder to
Executive from HRB, there shall be withheld amounts reasonably believed by HRB
to be sufficient to satisfy liabilities for federal, state and local taxes and
other charges and customary withholdings. Executive remains primarily liable to
such authorities for such taxes and charges to the extent not actually paid by
HRB. This Section 4.05 shall not affect HRB's obligation to 'gross up' any
relocation benefits paid to Executive pursuant to Subsection 1.03(e)(iii).

                  4.06 - Indemnification. (a) To the fullest extent permitted by
law and Block's Bylaws, HRB hereby indemnifies during and after the period of
Executive's employment hereunder the Executive from and against all loss, costs,
damages and expenses including, without limitation, legal expenses of counsel
selected by HRB to represent the interests of Executive (which expenses HRB
will, to the extent so permitted, advance to executive as the same are incurred)
arising out of or in connection with the fact that Executive is or was a
director, officer, employee or agent of HRB or Block or serving in such capacity
for another corporation at the request of HRB or Block. Notwithstanding the
foregoing, the indemnification provided in this Section 4.06 shall not apply to
any loss, costs, damages and expenses arising out of or relating in any way to
any employment of Executive by any former employer or the termination of any
such employment.

                  (b) In the event that Executive and HRB mutually agree that
Executive has a valid claim or cause of action against a former employer to
secure deferred compensation, awards or other benefits from such former
employer, HRB shall reimburse Executive for any attorneys' fees, expenses and
other costs incurred by Executive in his efforts to secure such benefits. Any
net recovery (i.e., judgment, award or settlement amount paid to Executive by
such former employer, less any attorneys' fees, expenses, federal, state and
local income taxes and other costs not reimbursed by HRB) by Executive arising
from such claim shall be remitted by Executive to HRB.

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                  (c) In the event that a former employer makes a claim against
Executive arising out of or relating to its employment of Executive or the
termination of such employment, Executive may, in his sole discretion, assert a
counterclaim against the former employer seeking deferred compensation, awards
or other benefits, with the understanding that any award to Executive, net of
adverse awards, attorneys' fees, federal, state and local income taxes, costs
and expenses, will be remitted by Executive to HRB.

                  4.07 - Notices. Notices hereunder shall be deemed delivered
five days following deposit thereof in the United States mails (postage prepaid)
addressed to Executive at: 240 Central Park South, Suite 23B, New York, New York
10019, with a copy to William J. Egan, Esq., 150 Edina Executive Plaza, 5200
Willson Road, Edina, Minnesota 55424; and to HRB at: 4400 Main Street, Kansas
City, Missouri 64111; Attn: Mark A. Ernst, with a copy to James H. Ingraham,
Esq., H&R Block, Inc., 4400 Main Street, Kansas City, Missouri 64111; or to such
other address and/or person designated by either party in writing to the other
party.

                  4.08 - Counterparts. This Agreement may be signed in
counterparts and delivered by facsimile transmission confirmed promptly
thereafter by actual delivery of executed counterparts.

                  Executed as a sealed instrument under, and to be governed by,
construed and enforced in accordance with, the laws of the State of Missouri.

                                             EXECUTIVE:



Dated:   9-7-99                              /s/ Jeffery W. Yabuki         
      ------------                           ---------------------         
                                             Jeffery W. Yabuki


Accepted and Agreed:

HRB MANAGEMENT, INC.,
a Missouri corporation



By:/s/Mark A. Ernst            
   -------------------            
   Mark A. Ernst
   Executive Vice President

Dated:  7 Sept 99          
      ---------------          


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