Block Financial Corporation
Underwriting Agreement
New York, New York
October 21, 1997
To the Representatives
named in Schedule I
hereto of the Under-
writers named in
Schedule II hereto
Ladies and Gentlemen:
Block Financial Corporation, a Delaware corporation (the "Company"),
proposes to sell to the underwriters named in Schedule II hereto (the
"Underwriters"), for whom you (the "Representatives") are acting as
representatives, the principal amount of its securities identified in Schedule I
hereto (the "Securities"), to be issued under an indenture (the "Indenture")
dated as of October 20, 1997, between the Company, H&R Block, Inc. (the
"Guarantor") and Bankers Trust Company, as trustee (the "Trustee"). The
Securities will be unconditionally guaranteed by the Guarantor pursuant to
guarantees (the "Guarantees") endorsed on the Securities under the terms of the
Indenture. If the firm or firms listed in Schedule II hereto include only the
firm or firms listed in Schedule I hereto, then the terms "Underwriters" and
"Representatives", as used herein, shall each be deemed to refer to such firm or
firms. To the extent there are no additional Underwriters listed on Schedule I
other than you, the term Representatives as used herein shall mean you, as
Underwriters, and the terms Representatives and Underwriters shall mean either
the singular or plural as the context requires. Any reference herein to the
Registration Statement, the Basic Prospectus, any Preliminary Final Prospectus
or the Final Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 which were
filed under the Securities Exchange Act of 1934, as amended (the "Exchange Act")
on or before the Effective Date of the Registration Statement or the issue date
of the Basic Prospectus, any Preliminary Final Prospectus or the Final
Prospectus, as the case may be; and any reference herein to the terms "amend",
"amendment" or "supplement" with respect to the
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Registration Statement, the Basic Prospectus, any Preliminary Final Prospectus
or the Final Prospectus shall be deemed to refer to and include the filing of
any document under the Exchange Act after the Effective Date of the Registration
Statement or the issue date of the Basic Prospectus, any Preliminary Final
Prospectus or the Final Prospectus, as the case may be, deemed to be
incorporated therein by reference.
1. Representations and Warranties. The Company and the
Guarantor represent and warrant to, and agree with, each Underwriter as set
forth below in this Section 1. Certain terms used in this Section 1 are defined
in Section 17 hereof.
(a) The Company and the Guarantor meet the requirements for
the use of Form S-3 under the Securities Act of 1933, as amended (the
"Act"), and have filed with the Securities and Exchange Commission (the
"Commission") a registration statement (the file number of which is set
forth in Schedule I hereto) on such Form, including a basic prospectus
and a prospectus supplement relating to the Securities, for
registration under the Act of the offering and sale of the Securities.
The Company and the Guarantor have filed four pre-effective amendments
thereto, including a Preliminary Final Prospectus, each of which has
previously been furnished to you. The Company and the Guarantor will
next file with the Commission either (x) a final prospectus supplement
relating to the Securities in accordance with Rules 430A and 424(b)(1)
or (4), or (y) prior to the Effective Date of such registration
statement, an amendment to such registration statement, including the
form of final prospectus supplement. In the case of clause (x), the
Company and the Guarantor have included in such registration statement,
as amended at the Effective Date, all information (other than Rule 430A
Information) required by the Act and the rules thereunder to be
included in such registration statement and the Final Prospectus. As
filed, such final prospectus supplement or such amendment and form of
final prospectus supplement shall contain all Rule 430A Information,
together with all other such required information, and, except to the
extent the Representatives shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to you prior
to the Execu tion Time or, to the extent not completed at the Execution
Time, shall contain only such specific additional information and other
changes (beyond that contained in the Basic Prospectus and any
Preliminary Final Prospectus) as the Company has advised you, prior to
the Execution Time, will be included or made therein.
(b) On the Effective Date, the Registration Statement did, and
when the Final Prospectus is first filed (if required) in accordance
with Rule 424(b) and on the Closing Date, the Final Prospectus (and any
supplement thereto) will, comply in all material respects with the
applicable requirements of the Act, the Exchange Act and the Trust
Indenture Act of 1939 (the "Trust Indenture Act") and the respective
rules thereunder; on the Effective Date and at the Execution Time, the
Registration Statement did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; on the Effective Date and on the Closing Date the Indenture
did or will comply in all material respects with the requirements of
the Trust Indenture Act and the rules thereunder; and, on the Effective
Date, the Final Prospectus, if not filed pursuant to Rule 424(b), will
not, and on the date of any filing pursuant to Rule 424(b) and on the
Closing Date, the Final Prospectus (together with any supplement
thereto) will not, include any
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untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that neither the Company nor the Guarantor makes any
representations or warranties as to (i) that part of the Registration
Statement which shall constitute the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of the Trustee
or (ii) the information contained in or omitted from the Registration
Statement or the Final Prospectus (or any supplement thereto) in
reliance upon and in conformity with information furnished herein or in
writing to the Company by or on behalf of any Underwriter through the
Representatives specifically for inclusion in the Registration
Statement or the Final Prospectus (or any supplement thereto).
Any certificate signed by any officer of the Company or the Guarantor
and delivered to the Representatives or counsel for the Underwriters in
connection with the offering of the Securities shall be deemed a representation
and warranty by the Company or the Guarantor, as to matters covered thereby, to
each Underwriter.
2. Purchase and Sale. Subject to the terms and conditions and
in reliance upon the representations and warranties herein set forth, the
Company agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Company, at the purchase price
set forth in Schedule I hereto the principal amount of the Securities set forth
opposite such Underwriter's name in Schedule II hereto.
3. Delivery and Payment. Delivery of and payment for the
Securities shall be made on the date and at the time specified in Schedule I
hereto (or at such time on such later date not more than three Business Days
after the foregoing date as the Representatives shall designate), which date and
time may be postponed by agreement between the Representatives and the Company
or as provided in Section 8 hereof (such date and time of delivery and payment
for the Securities being herein called the "Closing Date"). Delivery of the
Securities shall be made to the Representatives for the respective accounts of
the several Underwriters against payment by the several Underwriters through the
Representatives of the purchase price thereof to or upon the order of the
Company by wire transfer payable in same-day funds to an account specified by
the Company. Delivery of the Securities shall be made through the facilities of
The Depository Trust Company unless the Representatives shall otherwise
instruct.
4. Agreements. The Company and the Guarantor agree with the
several Underwriters that:
(a) The Company and the Guarantor will use every reasonable
effort to cause the Registration Statement, if not effective at the
Execution Time, and any amendment thereto, to become effective. Prior
to the termination of the offering of the Securities, neither the
Company nor the Guarantor will file any amendment of the Registration
Statement or supplement (including the Final Prospectus or any
Preliminary Final Prospectus) to the Basic Prospectus or any Rule
462(b) Registration Statement unless the Company has furnished you a
copy for your review prior to filing and will not file any such
proposed amendment or supplement to which you reasonably object.
Subject to the foregoing sentence, the Company and the Guarantor will
cause the Final Prospectus, properly completed, and any supplement
thereto to be filed with the Commission pursuant to the applicable
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paragraph of Rule 424(b) within the time period prescribed and will
provide evidence satisfactory to the Representatives of such timely
filing. The Company will promptly advise the Representatives (i) when
the Registration Statement, if not effective at the Execution Time,
shall have become effective, (ii) when the Final Prospectus, and any
supplement thereto, shall have been filed with the Commission pursuant
to Rule 424(b) or when any Rule 462(b) Registration Statement shall
have been filed with the Commission, (iii) when, prior to termination
of the offering of the Securities, any amendment to the Registration
Statement shall have been filed or become effective, (iv) of any
request by the Commission or its staff for any amendment of the
Registration Statement, or any Rule 462(b) Registration Statement, or
for any supplement to the Final Prospectus or of any additional
information, (v) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (vi)
of the receipt by the Company or the Guarantor of any notification with
respect to the suspension of the qualification of the Securities for
sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company and the Guarantor will use
every reasonable effort to prevent the issuance of any such stop order
or the suspension of any such qualification and, if issued, to obtain
as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs
as a result of which the Final Prospectus as then supplemented would
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light of
the circumstances under which they were made not misleading, or if it
shall be necessary to amend the Registration Statement or supplement
the Final Prospectus to comply with the Act or the Exchange Act or the
respective rules thereunder, the Company and the Guarantor promptly
will (i) prepare and file with the Commission, subject to the second
sentence of paragraph (a) of this Section 4, an amendment or supplement
which will correct such statement or omission or effect such compliance
and (ii) supply any supplemented Prospectus to you in such quantities
as you may reasonably request.
(c) As soon as practicable, the Company and the Guarantor will
make generally available to security holders and to the Representatives
an earnings statement or statements of the Company and the Guarantor
and their subsidiaries which will satisfy the provisions of Section
11(a) of the Act and Rule 158 under the Act.
(d) The Company will furnish to the Representatives and
counsel for the Underwriters, without charge, copies of the
Registration Statement (including exhibits thereto) and, so long as
delivery of a prospectus by an Underwriter or dealer may be required by
the Act, as many copies of any Preliminary Final Prospectus and the
Final Prospectus and any supplement thereto as the Representatives may
reasonably request. The Company will pay the expenses of printing or
other production of all documents relating to the offering.
(e) The Company will arrange, if necessary, for the
qualification of the Securities for sale under the laws of such
jurisdictions as the Representatives may
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designate, will maintain such qualifications in effect so long as
required for the distribution of the Securities, will arrange for the
determination of the legality of the Securities for purchase by
institutional investors and will pay any fee of the National
Association of Securities Dealers, Inc., in connection with its review
of the offering.
(f) Until the date set forth on Schedule I hereto, neither the
Company nor the Guarantor will, without the consent of the
Representatives, offer, sell or contract to sell, or otherwise dispose
of (or enter into any transaction which is designed to, or could be
expected to, result in the disposition (whether by actual disposition
or effective economic disposition due to cash settlement or otherwise)
by the Company, the Guarantor or any affiliate of the Company or the
Guarantor or any person in privity with the Company or the Guarantor or
any affiliate of the Company or the Guarantor) directly or indirectly,
or announce the offering of, any debt securities issued or guaranteed
by the Company or the Guarantor (other than the Securities).
5. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Underwriters' Securities shall
be subject to the accuracy of the representations and warranties on the part of
the Company and the Guarantor contained herein as of the Execution Time and the
Closing Date, to the accuracy of the statements of the Company and the Guarantor
made in any certificates pursuant to the provisions hereof, to the performance
by the Company and the Guarantor of their obligations hereunder and to the
following additional conditions:
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the Representatives agree in
writing to a later time, the Registration Statement will become
effective not later than (i) 6:00 PM New York City time, on the date of
determination of the public offering price, if such determination
occurred at or prior to 3:00 PM New York City time on such date or (ii)
9:30 AM on the Business Day following the day on which the public
offering price was determined, if such determination occurred after
3:00 PM New York City time on such date; if filing of the Final
Prospectus, or any supplement thereto, is required pursuant to Rule
424(b), the Final Prospectus, and any such supplement, shall have been
filed in the manner and within the time period required by Rule 424(b);
and no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose
shall have been instituted or threatened.
(b) The Company shall have furnished to the Representatives
the opinion of ▇▇▇▇▇ ▇▇▇▇ LLP, counsel for the Company, dated the
Closing Date, to the effect that:
(i) each of the Company, the Guarantor and each of
their Significant Subsidiaries (as defined in Rule 1-02(a) of
Regulation S-X promulgated under the Act) other than
CompuServe Corporation (individually a "Subsidiary" and
collectively the "Subsidiaries") has been duly incorporated
and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or
organized, with full corporate power and authority to own its
material properties and conduct its business
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as described in the Final Prospectus, and is duly qualified to
do business as a foreign corporation and is in good standing
under the laws of each jurisdiction in which its ownership of
property or conduct of business requires such qualification,
except where the failure to be so qualified would not have a
material adverse effect.
(ii) all the outstanding shares of capital stock of
each Subsidiary have been duly and validly authorized and
issued and are fully paid and nonassessable, all outstanding
shares of capital stock of the Subsidiaries are owned by the
Guarantor either directly or through wholly owned subsidiaries
free and clear, to the knowledge of such counsel, after due
inquiry, of any perfected security interest and any other
security interests, claims, liens or encumbrances;
(iii) the Company's and the Guarantor's authorized
equity capital izations are as set forth in the Final
Prospectus; the Securities conform in all material aspects to
the description thereof contained in the Final Prospectus;
and, if the Securities are to be listed on any securities
exchange, authorization therefor has been given, subject to
official notice of issuance and evidence of satisfactory
distribution, or the Company has filed a preliminary listing
application and all required supporting documents with respect
to the Securities with such securities exchange and such
counsel has no reason to believe that the Securities will not
be authorized for listing, subject to official notice of
issuance and evidence of satisfactory distribution;
(iv) the Indenture has been duly authorized, executed
and delivered by the Company and the Guarantor, has been duly
qualified under the Trust Indenture Act, and constitutes a
legal, valid and binding instrument enforceable against the
Company and the Guarantor in accordance with its terms
(subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium or other
laws affecting creditors' rights generally from time to time
in effect); and the Securities and the Guarantees have been
duly authorized and, when executed and authenticated in
accordance with the provisions of the Indenture and delivered
to and paid for by the Underwriters pursuant to this
Agreement, will constitute legal, valid and binding
obligations of the Company and the Guarantor entitled to the
benefits of the Indenture;
(v) to the knowledge of such counsel, there is no
pending or threatened action, suit or proceeding by or before
any court or governmental agency, authority or body or any
arbitrator involving the Company, the Guarantor or any of
their subsidiaries, of a character required to be disclosed in
the Registration Statement which is not adequately disclosed
in the Final Prospectus, and there is no franchise, contract
or other document of a character required to be described in
the Registration Statement or Final Prospectus, or to be filed
as an exhibit thereto, which is not described or filed as
required; and the statements included or incorporated in the
Final Prospectus describing any legal
7
proceedings or material contracts or agreements relating to
the Company or the Guarantor fairly summarize such matters;
(vi) the Registration Statement has become effective
under the Act; any required filing of the Basic Prospectus,
any Preliminary Final Prospectus and the Final Prospectus, and
any supplements thereto, pursuant to Rule 424(b) has been made
in the manner and within the time period required by Rule
424(b); to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has
been issued, no proceedings for that purpose have been
instituted or threatened, and the Registration Statement and
the Final Prospectus (other than the financial statements and
other financial information contained therein, as to which
such counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the Act,
the Exchange Act and the Trust Indenture Act and the
respective rules thereunder; and no facts have come to the
attention of such counsel which leads it to reasonably believe
that on the Effective Date or at the Execution Time the
Registration Statement contains or contained any untrue
statement of a material fact or omitted or omits to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Final
Prospectus as of its date and on the Closing Date includes any
untrue statement of a material fact or omitted or omits to
state a material fact necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading (in each case, other than the
financial statements and other financial information contained
therein, as to which such counsel need express no opinion);
(vii) this Agreement has been duly authorized,
executed and delivered by the Company and the Guarantor;
(viii) neither the Company nor the Guarantor is and,
after giving effect to the offering and sale of the Securities
and the application of the proceeds thereof as described in
the Final Prospectus, neither will be an "investment company"
as defined in the Investment Company Act of 1940, as amended;
(ix) no consent, approval, authorization, filing with
or order of any court or governmental agency or body is
required in connection with the transactions contemplated
herein, except such as have been obtained under the Act and
qualification of the Indenture under the Trust Indenture Act
and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution
of the Securities by the Underwriters in the manner
contemplated in this Agreement and in the Final Prospectus;
(x) neither the execution and delivery of the
Indenture, the issue and sale of the Securities, nor the
consummation of any other of the transactions herein
contemplated nor the fulfillment of the terms hereof will
conflict with, result in a breach or violation of, or result
in the imposition of any lien, charge or encumbrance upon any
property or assets of the Company,
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the Guarantor or its subsidiaries pursuant to, (i) the charter
or by-laws of the Company, the Guarantor or any of their
respective Subsidiaries, or (ii) to the knowledge of such
counsel, after due inquiry, the terms of any indenture,
contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant
or instrument and to which the Company, the Guarantor or any
of their respective Subsidiaries is a party or bound or to
which their property is subject or (iii) any statute, law,
rule or regulation, or any judgment, order or decree known to
such counsel after due inquiry, applicable to the Company, the
Guarantor or any of their respective subsidiaries of any
court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over
the Company, the Guarantor or any of their respective
subsidiaries or any of its or their properties; and
(ix) to the knowledge of such counsel, holders of
securities of the Company or the Guarantor have rights to the
registration of such securities under the Registration
Statement.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
States of Missouri and New York or the Federal laws of the United
States, to the extent deemed proper and specified in such opinion, upon
the opinion of other counsel of good standing believed to be reliable
and who are satisfactory to counsel for the Underwriters and (B) as to
matters of fact, to the extent deemed proper, on certificates of
responsible officers of the Company and public officials. References to
the Final Prospectus in this paragraph (b) include any supplements
thereto at the Closing Date.
(c) The Representatives shall have received from Cravath,
Swaine & ▇▇▇▇▇, counsel for the Underwriters, such opinion or opinions,
dated the Closing Date, with respect to the issuance and sale of the
Securities, the Indenture, the Registration Statement, the Final
Prospectus (together with any supplement thereto) and other related
matters as the Representatives may reasonably require, and the Company
shall have furnished to such counsel such documents as they request for
the purpose of enabling them to pass upon such matters.
(d) The Company and the Guarantor shall have furnished to the
Repre sentatives a certificate of the Company and the Guarantor, signed
by the Chairman of the Board or the President and the principal
financial or accounting officer of the Company and the Guarantor, dated
the Closing Date, to the effect that the signers of such certificate
have carefully examined the Registration Statement, the Final
Prospectus, any supplements to the Final Prospectus and this Agreement
and that:
(i) the representations and warranties of the Company
and the Guarantor in this Agreement are true and correct in
all material respects on and as of the Closing Date with the
same effect as if made on the Closing Date and each of the
Company and the Guarantor has complied with all the agreements
and satisfied all the conditions on its part to be performed
or satisfied at or prior to the Closing Date;
9
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to the Company's or
the Guarantor's knowledge, threatened; and
(iii) since the date of the most recent financial
statements included in the Final Prospectus (exclusive of any
supplement thereto), there has been no material adverse change
in the condition (financial or otherwise), prospects,
earnings, business or properties of the Company or the
Guarantor and their subsidiaries, taken as a whole, whether or
not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Final
Prospectus (exclusive of any supplement thereto).
(e) At the Closing Date, Deloitte & Touche LLP shall have
furnished to the Representatives letters (which may refer to letters
previously delivered to one or more of the Representatives), dated as
of the Closing Date, in form and substance satisfactory to the
Representatives, confirming that they are independent accountants
within the meaning of the Act and the Exchange Act and the respective
applicable published rules and regulations thereunder and stating in
effect that:
(i) in their opinion the audited financial statements
and financial statement schedules and any pro forma financial
statements included or incorporated in the Registration
Statement and the Final Prospectus and reported on by them
comply in form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and
the related published rules and regulations;
(ii) on the basis of a reading of the latest
unaudited financial statements made available by the Company,
the Guarantor and their subsidiaries; their limited review, in
accordance with standards established under Statement on
Auditing Standards No. 71, carrying out certain specified
procedures (but not an examination in accordance with
generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of
the meetings of the stockholders, directors and executive
committee of the Company, the Guarantor and their
subsidiaries; and inquiries of certain officials of the
Company and the Guarantor who have responsibility for
financial and accounting matters of the Company and the
Guarantor and their subsidiaries as to transactions and events
subsequent to the date of the most recent audited financial
statements in or incorporated in the Registration Statement
and Final Prospectus, nothing came to their attention which
caused them to believe that:
(1) any unaudited financial statements
included or incorporated in the Registration
Statement and the Final Prospectus do not comply in
form in all material respects with applicable
accounting requirements and with the published rules
and regulations of the Commission with respect to
financial statements included or incorporated in
quarterly reports on Form 10-Q under
10
the Exchange Act; and said unaudited financial
statements are not in conformity with generally
accepted accounting principles applied on a basis
substantially consistent with that of the audited
financial statements included or incorporated in the
Registration Statement and the Final Prospectus;
(2) with respect to the period subsequent to
the date of the most recent financial statements
(other than any capsule information), audited or
unaudited, in or incorporated in the Regis tration
Statement and the Final Prospectus, there were any
changes, at a specified date not more than five
business days prior to the date of the letter, in the
long-term debt of the Company or the Guarantor and
their subsidiaries or capital stock of the Company or
the Guarantor or decreases in the stockholders'
equity of the Company or the Guarantor as compared
with the amounts shown on the most recent
consolidated balance sheet included or incorporated
in the Registration Statement and the Final
Prospectus, or for the period from the date of the
most recent financial statements included or
incorporated in the Registration Statement and the
Final Prospectus to such specified date there were
any decreases, as compared with the corresponding
period in the preceding year in net revenues or
income before income taxes or in total or per share
amounts of net income of the Company or the Guarantor
and their subsidiaries, except in all instances for
changes or decreases set forth in such letter, in
which case the letter shall be accompanied by an
explanation by the Company as to the significance
thereof unless said explanation is not deemed
necessary by the Representatives;
(3) the information included in the
Registration Statement and Prospectus in response to
Regulation S-K, Item 301 (Selected Financial Data),
Item 302 (Supplementary Financial Information), Item
402 (Executive Compensation) and Item 503(d) (Ratio
of Earnings to Fixed Charges) is not in conformity
with the applicable disclosure requirements of
Regulation S-K; and
(4) any amounts included in any unaudited
"capsule" information included or incorporated in the
Registration Statement and the Final Prospectus do
not agree with the amounts set forth in the unaudited
financial statements for the same periods or were not
determined on a basis substantially consistent with
that of the corresponding amounts in the audited
financial statements included or incorporated in the
Registration Statement and the Final Prospectus;
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Company, the Guarantor and their subsidiaries) set forth in
the Registration Statement and the Final Prospectus and in
Exhibit 12 to the Registration
11
Statement, including the information included or incorporated
in Items 1, 2, 6, 7 and 11 of the Guarantor's Annual Report on
Form 10-K, incorporated in the Registration Statement and the
Final Prospectus, and the information included in the
"Management's Discussion and Analysis of Financial Condition
and Results of Operations" included or incorporated in the
Guarantor's Quarterly Reports on Form 10-Q, incorporated in
the Registration Statement and the Final Prospectus, agrees
with the accounting records of the Guarantor and its
subsidiaries, excluding any questions of legal interpretation.
References to the Final Prospectus in this paragraph (e)
include any supplement thereto at the date of the letter.
In addition, except as provided in Schedule I hereto, at the
Execution Time, Deloitte & Touche LLP shall have furnished to the
Representatives a letter or letters, dated as of the Execution Time, in form and
substance satisfactory to the Representatives, to the effect set forth above.
(f) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Registration Statement
(exclusive of any amendment thereof) and the Final Prospectus
(exclusive of any supplement thereto), there shall not have been (i)
any change or decrease specified in the letter or letters referred to
in paragraph (e) of this Section 5 or (ii) any change, or any
development involving a prospective change, in or affecting the
condition (financial or otherwise), earnings, business or properties of
the Company or the Guarantor and their subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Final
Prospectus (exclusive of any supplement thereto) the effect of which,
in any case referred to in clause (i) or (ii) above, is, in the sole
judgment of the Representa tives, so material and adverse as to make it
impractical or inadvisable to proceed with the offering or delivery of
the Securities as contemplated by the Registration Statement (exclusive
of any amendment thereof) and the Final Prospectus (exclusive of any
supplement thereto).
(g) Subsequent to the Execution Time, there shall not have
been any decrease in the rating of any of the Company's or the
Guarantor's debt securities by any "nationally recognized statistical
rating organization" (as defined for purpose of Rule 436(g) under the
Act) or any notice given of any intended or potential decrease in any
such rating or of a possible change in any such rating that does not
indicate the direction of the possible change.
(h) Prior to the Closing Date, the Company shall have
furnished to the Representatives such further information, certificates
and documents as the Repre sentatives may reasonably request.
If any of the conditions specified in this Section 5 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and counsel for the
Underwriters, this Agreement and all obligations of the Underwriters
12
hereunder may be canceled at, or at any time prior to, the Closing Date by the
Repre sentatives. Notice of such cancelation shall be given to the Company in
writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 5 shall
be delivered at the office of Cravath, Swaine & ▇▇▇▇▇, counsel for the
Underwriters, at Worldwide Plaza, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ the
Closing Date.
6. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 5 hereof is not satisfied,
because of any termination pursuant to Section 9 hereof or because of any
refusal, inability or failure on the part of the Company or the Guarantor to
perform any agreement herein or comply with any provision hereof other than by
reason of a default by any of the Underwriters, the Company and the Guarantor,
jointly will reimburse the Underwriters severally through the Representatives on
demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by them in connection
with the proposed purchase and sale of the Securities.
7. Indemnification and Contribution. (a) Each of the Company
and the Guarantor agrees to indemnify and hold harmless each Underwriter, the
directors, officers, employees and agents of each Underwriter and each person
who controls any Underwriter within the meaning of either the Act or the
Exchange Act against any and all losses, claims, damages or liabilities, joint
or several, to which they or any of them may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement for the registration of the Securities as originally filed or in any
amendment thereof, or in the Basic Prospectus, any Preliminary Final Prospectus
or the Final Prospectus, or in any amendment thereof or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and agrees to reimburse each such indemnified
party, as incurred, for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company and the Guarantor will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company and the
Guarantor by or on behalf of any Underwriter through the Representatives
specifically for inclusion therein. This indemnity agreement will be in addition
to any liability which the Company and the Guarantor may otherwise have to any
Underwriters.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company and the Guarantor, each of their directors, each of their
officers who signs the Registration Statement, and each person who controls the
Company or the Guarantor within the meaning of either the Act or the Exchange
Act, to the same extent as the foregoing indemnity from the Company and the
Guarantor to each Underwriter, but only with reference to written information
relating to such Underwriter furnished by or on
13
behalf of such Underwriter through the Representatives specifically for
inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any Underwriter
may otherwise have. The Company and the Guarantor acknowledge that the
statements set forth in the last paragraph of the cover page regarding delivery
of the Securities, the stabilization legend in block capital letters on page S-2
and, under the heading "Underwriting" or "Plan of Distribution", the sentences
related to concessions and reallowances and the paragraph related to
stabilization in any Preliminary Final Prospectus or the Final Prospectus
constitute the only information furnished in writing by or on behalf of the
several Underwriters for inclusion in the documents referred to in the foregoing
indemnity.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 7, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the indemnified party
shall have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemni fied parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action or (iv) the indemnifying
party shall authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. An indemnifying party will not, without the
prior written consent of the indemnified par ties, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 7 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company, the Guarantor and the
Underwriters agree to contribute to the
14
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Company, the Guarantor and one or more of
the Underwriters may be subject in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Guarantor and by the
Underwriters from the offering of the Securities; provided, however, that in no
case shall any Underwriter (except as may be provided in any agreement among
underwriters relating to the offering of the Securities) be responsible for any
amount in excess of the underwriting discount or commission applicable to the
Securities purchased by such Underwriter hereunder. If the allocation provided
by the immediately preceding sentence is unavailable for any reason, the Company
and the Guarantor and the Underwriters shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the Guarantor and of the Underwriters in connection
with the statements or omissions which resulted in such Losses as well as any
other relevant equitable considerations. Benefits received by the Company and
the Guarantor shall be deemed to be equal to the total net proceeds from the
offering (before deducting expenses) received by the Company, and benefits
received by the Underwriters shall be deemed to be equal to the total
underwriting discounts and commissions, in each case as set forth on the cover
page of the Final Prospectus. Relative fault shall be determined by reference
to, among other things, whether any untrue or any alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information provided by the Company and the Guarantor on the one hand
or the Underwriters on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company, the Guarantor and the Underwriters
agree that it would not be just and equitable if contribution were determined by
pro rata allocation or any other method of allocation which does not take
account of the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, each person who controls an
Underwriter within the meaning of either the Act or the Exchange Act and each
director, officer, employee and agent of an Underwriter shall have the same
rights to contribution as such Underwriter, and each person who controls the
Company or the Guarantor within the meaning of either the Act or the Exchange
Act, each officer of the Company or the Guarantor who shall have signed the
Registration Statement and each director of the Company or the Guarantor shall
have the same rights to contribution as the Company and the Guarantor, subject
in each case to the applicable terms and conditions of this paragraph (d).
8. Default by an Underwriter. If any one or more Underwriters
shall fail to purchase and pay for any of the Securities agreed to be purchased
by such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule II hereto bears to the aggregate amount
of Securities set forth opposite the names of all the remaining Underwriters)
the Securities which the defaulting Underwriter or Underwriters agreed but
failed to purchase; provided, however, that in the event that the aggregate
amount of Securities which the defaulting Underwriter or Underwriters agreed but
failed to purchase shall exceed 10% of the aggregate amount of Securities set
forth in Schedule II hereto, the
15
remaining Underwriters shall have the right to purchase all, but shall not be
under any obligation to purchase any, of the Securities, and if such
nondefaulting Underwriters do not purchase all the Securities, this Agreement
will terminate without liability to any nondefaulting Underwriter, the Guarantor
or the Company. In the event of a default by any Underwriter as set forth in
this Section 8, the Closing Date shall be postponed for such period, not
exceeding five Business Days, as the Representatives shall determine in order
that the required changes in the Registration Statement and the Final Prospectus
or in any other documents or arrangements may be effected. Nothing contained in
this Agreement shall relieve any defaulting Underwriter of its liability, if
any, to the Company, the Guarantor and any nondefaulting Underwriter for damages
occasioned by its default hereunder.
9. Termination. This Agreement shall be subject to termination
in the absolute discretion of the Representatives, by notice given to the
Company prior to delivery of and payment for the Securities, if at any time
prior to such time (i) trading in the Guarantor's Common Stock shall have been
suspended by the Commission or the New York Stock Exchange or trading in
securities generally on the New York Stock Exchange shall have been suspended or
limited or minimum prices shall have been established on such Exchange, (ii) a
banking moratorium shall have been declared either by Federal or New York State
authorities or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war or
other calamity or crisis the effect of which on financial markets is such as to
make it, in the sole judgment of the Representatives, impractical or inadvisable
to proceed with the offering or delivery of the Securities as contemplated by
the Final Prospectus (exclusive of any supplement thereto).
10. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company and the Guarantor or their officers and of the Underwriters set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or the
Company or any of the officers, directors or controlling persons referred to in
Section 7 hereof, and will survive delivery of and payment for the Securities.
The provisions of Sections 6 and 7 hereof shall survive the termination or
cancelation of this Agreement.
11. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Representatives, will be
mailed, delivered or telefaxed to the address appearing in Schedule I or, if
sent to the Company or the Guarantor, will be mailed, delivered or telefaxed to
(▇▇▇) ▇▇▇-▇▇▇▇ and confirmed to it at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, attention of the Legal Department.
12. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 7 hereof,
and no other person will have any right or obligation hereunder.
13. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York.
16
14. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. Headings. The section headings used herein are for
convenience only and shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in this
Agreement, shall have the meanings indicated.
"Basic Prospectus" shall mean the basic prospectus referred to
in paragraph 1(a) above included in the Registration Statement at the
Effective Date.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a legal holiday or a day on which banking institutions or
trust companies are authorized or obligated by law to close in New York
City.
"Effective Date" shall mean each date and time that the
Registration State ment, any post-effective amendment or amendments
thereto and any Rule 462(b) Registration Statement became or become
effective.
"Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto.
"Final Prospectus" shall mean the prospectus relating to the
Securities that is first filed pursuant to Rule 424(b) after the
Execution Time or, if no filing pursuant to Rule 424(b) is required,
shall mean the form of final prospectus relating to the Securities
included in the Registration Statement at the Effective Date.
"Preliminary Final Prospectus" shall mean any preliminary
prospectus referred to in paragraph 1(a) above and any preliminary
prospectus included in the Registration Statement at the Effective Date
that omits Rule 430A Information.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at
the Execution Time, in the form in which it shall become effective)
and, in the event any post-effective amendment thereto or any Rule
462(b) Registration Statement becomes effective prior to the Closing
Date (as hereinafter defined), shall also mean such registration
statement as so amended or such Rule 462(b) Registration Statement, as
the case may be. Such term shall include any Rule 430A Information
deemed to be included therein at the Effective Date as provided by Rule
430A.
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules
under the Act.
"Rule 430A Information" means information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
17
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b)
relating to the offering covered by the initial registration statement.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company, the Guarantor and the several Underwriters.
Very truly yours,
Block Financial Corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
President
H&R Block, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
President
The foregoing Agreement is
hereby confirmed and accepted
as of the date specified in
Schedule I hereto.
Salomon Brothers Inc
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
By: Salomon Brothers Inc
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Associate
For themselves and the other
several Underwriters, if any,
named in Schedule II to the
foregoing Agreement.
SCHEDULE I
Underwriting Agreement dated October 21, 1997
Registration Statement Nos. 333-33655 and ▇▇▇-▇▇▇▇▇-▇▇
Representative(s): Salomon Brothers Inc
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Title, Purchase Price and Description of Securities:
Title: 6.75% Senior Notes Due 2004
Principal amount: $250,000,000
Purchase price (include accrued
interest or amortization, if
any): 99.235%
Sinking fund provisions: None
Redemption provisions: None
Other provisions: None
Closing Date, Time and Location: October 23, 1997, at 10:00 a.m. New York time
at the offices of Cravath, Swaine & ▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Type of Offering: Non-delayed
Date referred to in Section 4(f) after which the Company and Guarantor may offer
or sell debt securities issued or guaranteed by the Company or the Guarantor
without the consent of the Representative(s): October 23, 1997
Modification of items to be covered by the letter from
Deloitte & Touche LLP delivered pursuant to
Section 5(e) at the Execution Time: None
SCHEDULE II
Principal Amount
of Securities to
Underwriters be Purchased
------------ ----------------
Salomon Brothers Inc $83,400,000
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated 83,300,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated 83,300,000
------------
Total ......................... $250,000,000
============
