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EXHIBIT 1
Block Financial Corporation
Underwriting Agreement
New York, New York
April 13, 2000
Tothe 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, as supplemented by the First
Supplemental Indenture dated as of April 18, 2000 among the Company, the
Guarantor, Bankers Trust Company and The Bank of New York, as separate 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
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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 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 jointly
and severally 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), (y) prior to the Effective Date of such
registration statement, an amendment to such registration statement,
including the form of final prospectus supplement or (z) a final prospectus
in accordance with Rules 415 and 424(b). 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
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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 Execution 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 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
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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 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
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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.
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(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 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.
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(b) The Company shall have furnished to the Representatives the
opinion of Bryan Cave 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) (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 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
capitalizations 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
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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 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;
(vii) this Agreement has been duly authorized, executed and
delivered by the Company and the Guarantor;
(viii) based upon the business being conducted by the Company
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and Guarantor, as known to such counsel, 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, 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
(xi) 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 such opinion, such counsel shall also state that, during the preparation
of the Registration Statement and the Prospectus, such counsel has participated
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in conferences with the representatives and counsel for the Underwriters and
with officers and representatives of the Company, at which conferences the
contents of the Registration Statement and the Prospectus were discussed,
reviewed and revised. On the basis of the information which was developed in the
course thereof, considered in the light of our understanding of applicable law
and the experience such counsel has gained through its practice thereunder, such
counsel has no reason to believe that any of the documents incorporated by
reference in the Prospectus, when they were filed with the SEC, contained an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made when such documents were so filed, not misleading or
that , as of the effective date of the Registration Statement or the date that
the Registration Statement was last deemed to be amended and the date hereof,
either the Registration Statement or the Prospectus contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.
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, the General Corporation Law of the State of Delaware 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 & Moore,
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
Representatives a certificate of the Company and the Guarantor, signed by the
Chairman of the Board or the President or a Vice President and the principal
financial or accounting officer or treasurer of the Company and the Guarantor,
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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;
(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, PricewaterhouseCoopers 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
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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 the Exchange Act;
or that 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 Registration Statement
and the Final Prospectus, there were any changes, at a specified date
not more than three 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
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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 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
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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, PricewaterhouseCoopers 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
Representatives, 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
Representatives may reasonably request.
If any of the conditions specified in this Section 5 shall not have been
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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 hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. 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 & Moore, counsel for the Underwriters, at
Worldwide Plaza, 825 Eighth Avenue, New York, New York, on 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 jointly and severally 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
<PAGE> 16
16
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 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 described in Schedule I 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 to the extent that 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
<PAGE> 17
17
(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 indemnified 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 parties, 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 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
<PAGE> 18
18
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). The Underwriters' obligations to contribute as provided in this Section
7(d) are several in proportion to their respective underwriting commitments and
not joint.
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 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
<PAGE> 19
19
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 (816) 753-8628 and
confirmed to it at 4400 Main Street, Kansas City, Missouri 64111, 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.
<PAGE> 20
20
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
Statement, 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
<PAGE> 21
21
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.
"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/ Frank L. Salizzoni
---------------------------------
Name: Frank L. Salizzoni
Title: President
H&R Block, Inc.
By: /s/ Frank L. Salizzoni
---------------------------------
Name: Frank L. Salizzoni
Title: Chief Executive Officer
<PAGE> 22
22
The foregoing Agreement is hereby confirmed and accepted as of the date
specified in Schedule I hereto.
Salomon Smith Barney Inc.
Chase Securities Inc.
Goldman, Sachs & Co.
Morgan Stanley & Co. Incorporated
Banc One Capital Markets, Inc.
Blaylock & Partners, L.P.
By: Salomon Smith Barney Inc.
By: /s/ Tim Devine
---------------------------
Name: Tim Devine
Title: Vice President
For themselves and the other several Underwriters, if any, named in Schedule II
to the foregoing Agreement.
<PAGE> 23
23
SCHEDULE I
Underwriting Agreement dated April 13, 2000
Registration Statement Nos. 333-33655 and 333-33655-01
Representative(s): Salomon Smith Barney Inc.
Chase Securities Inc.
Goldman, Sachs & Co.
Morgan Stanley & Co. Incorporated
Banc One Capital Markets, Inc.
Blaylock & Partners, L.P.
Title, Purchase Price and Description of Securities:
Title: 8.50% Senior Notes Due 2007
Principal amount: $500,000,000
Purchase price (include accrued
interest or amortization, if
any): 98.535%
Sinking fund provisions: None
Redemption provisions: None
Other provisions: None
Closing Date, Time and Location: April 18, 2000, at 10:00 a.m. New York
time at the offices of Cravath, Swaine
& Moore, 825 Eighth Avenue, New York, NY
10019
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): April 18, 2000
<PAGE> 24
24
Modification of items to be covered by the letter from PricewaterhouseCoopers
LLP delivered pursuant to Section 5(e) at the Execution Time: None
Information furnished in writing by or on behalf of the several underwriters for
purposes of Section 7(b): The third paragraph, the second sentence of the fourth
paragraph and the eighth paragraph under the heading "Underwriting" in the Final
Prospectus
<PAGE> 25
SCHEDULE II
<TABLE>
<CAPTION>
Principal Amount
of Securities to
Underwriters be Purchased
------------ -------------
<S> <C>
Salomon Smith Barney Inc. $ 200,000,000
Chase Securities Inc. $ 175,000,000
Goldman, Sachs & Co. $ 50,000,000
Morgan Stanley & Co. Incorporated $ 50,000,000
Banc One Capital Markets, Inc. $ 20,000,000
Blaylock & Partners, L.P. $ 5,000,000
-------------
Total ......................... $ 500,000,000
=============
</TABLE>
