exv10w2







	 	 	 	 	 



Exhibit 10.2




EXECUTION VERSION





      




CREDIT AND GUARANTEE AGREEMENT



dated as of



January 12, 2010



among



BLOCK FINANCIAL LLC,

as Borrower,



H&R BLOCK, INC.,

as Guarantor,



and



HSBC BANK USA, NATIONAL ASSOCIATION,

as Lender



$2,500,000,000 REVOLVING CREDIT FACILITY



 





 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	ARTICLE I DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	SECTION 1.1. Defined Terms
	 	 	1	 
	SECTION 1.2. Terms Generally
	 	 	15	 
	SECTION 1.3. Accounting Terms; GAAP
	 	 	15	 
	 
	 	 	 	 
	ARTICLE II THE CREDITS
	 	 	16	 
	 
	 	 	 	 
	SECTION 2.1. Commitment
	 	 	16	 
	SECTION 2.2. Loans
	 	 	16	 
	SECTION 2.3. Funding of Loans
	 	 	16	 
	SECTION 2.4. Termination and Reduction of Commitment
	 	 	16	 
	SECTION 2.5. Repayment of Loans; Evidence of Debt
	 	 	17	 
	SECTION 2.6. Prepayment of Loans
	 	 	17	 
	SECTION 2.7. Interest
	 	 	18	 
	SECTION 2.8. Alternate Rate of Interest
	 	 	19	 
	SECTION 2.9. Increased Costs
	 	 	19	 
	SECTION 2.10. Taxes
	 	 	20	 
	SECTION 2.11. Payments Generally
	 	 	21	 
	SECTION 2.12. Mitigation Obligations
	 	 	21	 
	 
	 	 	 	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES
	 	 	22	 
	 
	 	 	 	 
	SECTION 3.1. Organization; Powers
	 	 	22	 
	SECTION 3.2. Authorization; Enforceability
	 	 	22	 
	SECTION 3.3. Governmental Approvals; No Conflicts
	 	 	22	 
	SECTION 3.4. Financial Condition; No Material Adverse Change
	 	 	22	 
	SECTION 3.5. Properties
	 	 	23	 
	SECTION 3.6. Litigation and Environmental Matters
	 	 	23	 
	SECTION 3.7. Compliance with Laws and Agreements
	 	 	24	 
	SECTION 3.8. Investment Company Status
	 	 	24	 
	SECTION 3.9. Taxes
	 	 	24	 
	SECTION 3.10. ERISA
	 	 	24	 
	SECTION 3.11. Disclosure
	 	 	24	 
	SECTION 3.12. Federal Regulations
	 	 	24	 
	SECTION 3.13. Subsidiaries
	 	 	25	 
	SECTION 3.14. Insurance
	 	 	25	 
	 
	 	 	 	 
	ARTICLE IV CONDITIONS
	 	 	25	 
	 
	 	 	 	 
	SECTION 4.1. Effective Date
	 	 	25	 
	SECTION 4.2. Closing Date
	 	 	25	 
	SECTION 4.3. Each Loan
	 	 	26	 






-i- 









 






	 	 	 	 	 
	 	 	Page	 
	ARTICLE V AFFIRMATIVE COVENANTS
	 	 	27	 
	 
	 	 	 	 
	SECTION 5.1. Financial Statements and Other Information
	 	 	27	 
	SECTION 5.2. Notices of Material Events
	 	 	28	 
	SECTION 5.3. Existence; Conduct of Business
	 	 	28	 
	SECTION 5.4. Payment of Taxes
	 	 	29	 
	SECTION 5.5. Maintenance of Properties; Insurance
	 	 	29	 
	SECTION 5.6. Books and Records; Inspection Rights
	 	 	29	 
	SECTION 5.7. Compliance with Laws
	 	 	29	 
	SECTION 5.8. Use of Proceeds
	 	 	29	 
	SECTION 5.9. Additional Collateral
	 	 	29	 
	 
	 	 	 	 
	ARTICLE VI NEGATIVE COVENANTS
	 	 	30	 
	 
	 	 	 	 
	SECTION 6.1. Adjusted Net Worth
	 	 	30	 
	SECTION 6.2. Indebtedness
	 	 	30	 
	SECTION 6.3. Liens
	 	 	33	 
	SECTION 6.4. Fundamental Changes; Sale of Assets
	 	 	34	 
	SECTION 6.5. Transactions with Affiliates
	 	 	35	 
	SECTION 6.6. Restrictive Agreements
	 	 	35	 
	 
	 	 	 	 
	ARTICLE VII GUARANTEE
	 	 	36	 
	 
	 	 	 	 
	SECTION 7.1. Guarantee
	 	 	36	 
	SECTION 7.2. Delay of Subrogation
	 	 	36	 
	SECTION 7.3. Amendments, etc. with respect to the Obligations; Waiver of Rights
	 	 	37	 
	SECTION 7.4. Guarantee Absolute and Unconditional
	 	 	37	 
	SECTION 7.5. Reinstatement
	 	 	38	 
	SECTION 7.6. Payments
	 	 	38	 
	 
	 	 	 	 
	ARTICLE VIII EVENTS OF DEFAULT
	 	 	38	 
	 
	 	 	 	 
	ARTICLE IX
	 	 	41	 
	 
	 	 	 	 
	[RESERVED]
	 	 	41	 
	 
	 	 	 	 
	ARTICLE X MISCELLANEOUS
	 	 	41	 
	 
	 	 	 	 
	SECTION 10.1. Notices
	 	 	41	 
	SECTION 10.2. Waivers; Amendments
	 	 	42	 
	SECTION 10.3. Expenses; Indemnity; Damage Waiver
	 	 	42	 
	SECTION 10.4. Successors and Assigns
	 	 	43	 
	SECTION 10.5. Survival
	 	 	44	 
	SECTION 10.6. Counterparts; Integration; Effectiveness
	 	 	45	 
	SECTION 10.7. Severability
	 	 	45	 
	SECTION 10.8. Right of Setoff
	 	 	45	 
	SECTION 10.9. Governing Law; Jurisdiction; Consent to Service of Process
	 	 	45	 






-ii- 









 






	 	 	 	 	 
	 	 	Page	 
	SECTION 10.10. WAIVER OF JURY TRIAL
	 	 	46	 
	SECTION 10.11. Headings
	 	 	46	 
	SECTION 10.12. Confidentiality
	 	 	46	 
	SECTION 10.13. Interest Rate Limitation
	 	 	47	 
	SECTION 10.14. USA Patriot Act
	 	 	47	 






	 	 	 
	SCHEDULES:
	 	 
	 
	 	 
	Schedule 3.4(a)

	 	Guarantee Obligations
	Schedule 3.6

	 	Disclosed Matters
	Schedule 3.13

	 	Subsidiaries
	Schedule 6.2

	 	Existing Indebtedness
	Schedule 6.3

	 	Existing Liens
	Schedule 6.4(b)

	 	Additional Businesses
	Schedule 6.6

	 	Existing Restrictions
	 
	 	 
	EXHIBITS:
	 	 
	 
	 	 
	Exhibit A

	 	Form of Security Agreement
	Exhibit B

	 	Form of Control Agreement
	Exhibit C

	 	Form of HSBC TFS Letter
	Exhibit D

	 	Form of Opinion of Stinson Morrison Hecker LLP











-iii- 









 








CREDIT AND GUARANTEE AGREEMENT




          CREDIT AND GUARANTEE AGREEMENT, dated as of January 12, 2010, among BLOCK FINANCIAL LLC, a
Delaware limited liability company, as Borrower, H&R BLOCK, INC., a Missouri corporation, as
Guarantor, and HSBC BANK USA, NATIONAL ASSOCIATION, a national banking association, as Lender.




          WHEREAS, the Borrower has requested that the Lender provide a short-term revolving credit
facility in an amount of $2,500,000,000;




          WHEREAS, the Guarantor has agreed to guarantee all of the Borrower’s obligations hereunder;
and




          WHEREAS, the Lender is willing to provide a short-term revolving credit facility to the
Borrower on the terms and conditions set forth herein.




          NOW, THEREFORE, in consideration of the agreements herein and in reliance upon the
representations and warranties set forth herein, the parties agree as follows:




ARTICLE I




DEFINITIONS



          SECTION 1.1. Defined Terms. Capitalized terms used in this Agreement that are not defined
below or otherwise herein shall have the meanings set forth in the Appendix of Defined Terms and
Rules of Construction attached as Appendix A to the Retail Settlement Products Distribution
Agreement. As used in this Agreement, the following terms have the meanings specified below:





     “Adjusted Net Worth” means, at any time, Consolidated Net Worth of the
Guarantor without giving effect to reductions in stockholders’ equity as a result of
repurchases by the Guarantor of its own Capital Stock subsequent to April 30, 2005 in an
aggregate amount not exceeding $350,000,000.




     “Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified. For the avoidance of doubt, neither the
Guarantor nor any of its Subsidiaries shall be deemed to Control any of its franchisees by
virtue of provisions in the relevant franchise agreement regulating the business and
operations of such franchisee.




     “Agreement” means this Credit and Guarantee Agreement.




     “Availability Period” means the period from and including the first day in 2010
on which the U.S. Internal Revenue Service accepts electronic filings of personal tax
returns (or, if later, the Closing Date) to but excluding the earlier of the Revolving
Termination Date and the date of termination of the Commitments.



 









 





2


     “Average Weekly LIBOR” means for each day the average of the LIBO Rate in
effect for each of the preceding five Business Days.




     “Bank Revolvers” means, collectively, (i) the Five-Year Credit and Guarantee
Agreement dated as of August 10, 2005 among the Borrower, the Guarantor, various financial
institutions and JPMorgan Chase Bank N.A., as Administrative Agent, as amended by the First
Amendment thereto dated as of November 28, 2006 and the Second Amendment thereto dated as of
November 19, 2007, and any restatement, extension, renewal and replacement thereof
(regardless of whether the amount available thereunder is changed or the term thereof is
modified) and (ii) the Amended and Restated Five-Year Credit and Guarantee Agreement, dated
as of August 10, 2005, among the Borrower, the Guarantor, various financial institutions and
JPMorgan Chase Bank, N.A., as Administrative Agent, as amended by the First Amendment
thereto dated as of November 28, 2006 and the Second Amendment thereto dated as of November
19, 2007, and any restatement, extension, renewal and replacement thereof (regardless of
whether the amount available thereunder is changed or the term thereof is modified).




     “Board” means the Board of Governors of the Federal Reserve System of the
United States of America.




     “Borrower” means Block Financial LLC, a Delaware limited liability company and
a wholly-owned indirect Subsidiary of the Guarantor.




     “Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to remain closed;
provided that, when used in connection with a Eurodollar Loan, the term “Business
Day” shall also exclude any day on which banks are not open for dealings in dollar deposits
in the London interbank market.




     “Capital Lease Obligations” of any Person means the obligations of such Person
to pay rent or other amounts under any lease of (or other arrangement conveying the right to
use) real or personal property, or a combination thereof, which obligations are required to
be classified and accounted for as capital leases on a balance sheet of such Person under
GAAP, and the amount of such obligations shall be the capitalized amount thereof determined
in accordance with GAAP.




     “Capital Stock” means any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all equivalent
ownership interests in a Person (other than a corporation) and any and all warrants or
options to purchase any of the foregoing.




     “Cash Equivalents” means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States government or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case maturing within
one year from the date of acquisition; (b) certificates of deposit, time deposits,
eurodollar time deposits or overnight bank deposits having maturities of six months or less
from the date of acquisition issued by (i) any “Lender” as defined in a Bank



 









 





3


Revolver, (ii) any commercial bank organized under the laws of the United States or any
state thereof having combined capital and surplus of not less than $500,000,000 or (iii) any
other bank if, and to the extent, covered by FDIC insurance; (c) commercial paper of an
issuer rated at least A-1 by S&P or P-1 by Moody’s, or carrying an equivalent rating by a
nationally recognized rating agency, if both of the two named rating agencies cease
publishing ratings of commercial paper issuers generally, and maturing within six months
from the date of acquisition; (d) repurchase obligations of any “Lender” as defined in a
Bank Revolver or of any commercial bank satisfying the requirements of clause (b) of this
definition, having a term of not more than 30 days, with respect to securities issued or
fully guaranteed or insured by the United States government; (e) securities with maturities
of one year or less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or taxing
authority of any such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision, taxing authority
or foreign government (as the case may be) are rated at least A by S&P or A2 by Moody’s; (f)
securities with maturities of six months or less from the date of acquisition backed by
standby letters of credit issued by any “Lender” as defined in a Bank Revolver or any
commercial bank satisfying the requirements of clause (b) of this definition; (g) money
market mutual or similar funds that invest exclusively in assets satisfying the requirements
of clauses (a) through (f) of this definition; (h) money market funds that (i) comply with
the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, as
amended, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at
least $1,000,000,000; (i) interests in privately offered investment funds under Section
3(c)(7) of the U.S. Investment Company Act of 1940 where such interests are (i) freely
transferable and (ii) rated AAA by S&P or Aaa by Moody’s; and (j) one month LIBOR floating
rate asset backed securities that are (i) freely transferable and (ii) rated AAA by S&P or
Aaa by Moody’s.




     “Change in Control” means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the meaning of the
Securities Exchange Act of 1934, as amended, and the rules of the Securities and Exchange
Commission thereunder as in effect on the date hereof) of shares representing more than 25%
of the aggregate ordinary voting power represented by the issued and outstanding Capital
Stock of the Guarantor; (b) occupation of a majority of the seats (other than vacant seats)
on the board of directors of the Guarantor by Persons who were neither (i) nominated by the
board of directors of the Guarantor nor (ii) appointed by directors so nominated; (c) the
acquisition of direct or indirect Control of the Guarantor by any Person or group; or (d)
the failure of the Guarantor to own, directly or indirectly, shares representing 100% of the
aggregate ordinary voting power represented by the issued and outstanding Capital Stock of
the Borrower.




     “Change in Law” means (a) the adoption of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the date of this
Agreement or (c) compliance by the Lender (or, for purposes of Section 2.9(b), by any
lending office of the Lender or by the Lender’s holding company, if any) with any



 









 





4


request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.




     “Charges” has the meaning assigned to such term in Section 10.13.




     “Closing Date” means the date on which the conditions specified in Section 4.2
are satisfied (or waived in accordance with Section 10.2).




     “Code” means the Internal Revenue Code of 1986, as amended from time to time.




     “Commitment” means the commitment of the Lender to make Loans, subject to the
terms and conditions of this Agreement, in an amount not to exceed (i) $2,500,000,000 from
the first day in 2010 on which the U.S. Internal Revenue Service accepts electronic filings
of personal tax returns through and including March 30, 2010 and (ii) thereafter,
$120,000,000, as such commitment may be reduced from time to time pursuant to Section 2.4.




     “Consolidated Net Worth” means, at any time, the total amount of stockholders’
equity of the Guarantor and its consolidated Subsidiaries at such time determined on a
consolidated basis in accordance with GAAP.




     “Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or undertaking to which such Person is
a party or by which it or any of its property is bound.




     “Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise. “Controlling” and
“Controlled” have meanings correlative thereto.




     “Control Agreement” means the Control Agreement between the Borrower, the
Lender and the Issuer referred to therein in substantially the form of Exhibit B hereto.




     “Credit Parties” means the collective reference to the Borrower and the
Guarantor.




     “Default” means any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become an Event of
Default.




     “Disclosed Matters” means (a) matters disclosed in the Borrower’s public
filings with the Securities and Exchange Commission on or before the last Business Day
preceding the date of this Agreement and (b) the actions, suits, proceedings and
environmental matters disclosed in Schedule 3.6.




     “dollars” or “$” refers to lawful money of the United States of
America.



 









 





5


     “Effective Date” means the date on which the conditions specified in
Section 4.1 are satisfied (or waived in accordance with Section 10.2).




     “Environmental Laws” means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated
or entered into by any Governmental Authority, relating in any way to the environment,
preservation or reclamation of natural resources, to the management, release or threatened
release of any Hazardous Material or to health and safety matters.




     “Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines, penalties
or indemnities), of any Credit Party or any Subsidiary directly or indirectly resulting from
or based upon (a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to
any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials
into the environment or (e) any contract, agreement or other consensual arrangement pursuant
to which liability is assumed or imposed with respect to any of the foregoing.




     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.




     “ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with any Credit Party, is treated as a single employer under Section 414(b)
or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the
Code, is treated as a single employer under Section 414 of the Code.




     “ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other than an event for
which the 30-day notice period is waived); (b) the existence with respect to any Plan of an
“accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of
ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by any Credit Party or any of their ERISA Affiliates
of any liability under Title IV of ERISA with respect to the termination of any Plan; (e)
the receipt by any Credit Party or any ERISA Affiliate from the PBGC or a plan administrator
of any notice relating to an intention to terminate any Plan or Plans or to appoint a
trustee to administer any Plan; (f) the incurrence by any Credit Party or any of their ERISA
Affiliates of any liability with respect to the withdrawal or partial withdrawal from any
Plan or Multiemployer Plan; or (g) the receipt by any Credit Party or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from any Credit Party or any ERISA
Affiliate of any notice, concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA.



 









 





6


     “Eurodollar”, when used in reference to any Loan, means that such Loan is
bearing interest at a rate determined by reference to the LIBO Rate.




     “Events of Default” has the meaning assigned to such term in Article VIII.




     “Excluded Taxes” means, with respect to the Lender or any payment to be made by
or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes
imposed on (or measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which the Lender is organized or in which its principal
office is located or in which its applicable lending office is located and (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed by any
other jurisdiction in which the Borrower is located.




     “Federal Funds Effective Rate” means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by Federal funds
brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for
such transactions received by the Federal Reserve Bank of New York from three Federal funds
brokers of recognized standing selected by it.




     “Federal Funds Margin” means the Federal Funds Margin specified in the Pricing
Letter.




     “Financial Officer” means the chief financial officer, principal accounting
officer, treasurer or controller of the Borrower or the Guarantor, as the context may
require.




     “GAAP” means generally accepted accounting principles in the United States of
America.




     “Governmental Authority” means the government of the United States of America,
any other nation or any political subdivision thereof, whether state, provincial or local,
and any agency, authority, instrumentality, regulatory body, court, central bank or other
entity exercising executive, legislative, judicial, taxing, regulatory or administrative
powers or functions of or pertaining to government.




     “Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any obligation of
the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness or other obligation or to purchase (or to
advance or supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain working



 









 





7


capital, equity capital or any other financial statement condition or liquidity of the
primary obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation or (d) as an account party in respect of any letter of credit or letter of
guaranty
issued to support such Indebtedness or obligation; provided that the term
Guarantee shall not include endorsements for collection or deposit in the ordinary course of
business.




     “Guarantee Obligation” means, as to any Person, any obligation of such Person
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or other
obligations (the “primary obligations”) of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, including any obligation of
such Person, whether or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or supply funds
(i) for the purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (c) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (d) otherwise to assure or
hold harmless the owner of any such primary obligation against loss in respect thereof;
provided, however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of business.
The amount of any Guarantee Obligation shall be deemed to be an amount equal as of any date
of determination to the stated determinable amount of the primary obligation in respect of
which such Guarantee Obligation is made (unless such Guarantee Obligation shall be expressly
limited to a lesser amount, in which case such lesser amount shall apply) or, if not stated
or determinable, the amount as of any date of determination of the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good faith.




     “Guarantor” means H&R Block, Inc., a Missouri corporation.




     “Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including petroleum or
petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls,
radon gas, infectious or medical wastes and all other substances or wastes of any nature
regulated pursuant to any Environmental Law.




     “Hedging Agreement” means any interest rate protection agreement, foreign
currency exchange agreement, commodity price protection agreement or other interest or
currency exchange rate or commodity price hedging arrangement.




     “HSBC RAL” means “HSBC RAL” as such term is defined in the Appendix of Defined
Terms and Rules of Construction attached as Appendix A to Retail Settlement Products
Distribution Agreement.




     “HSBC TFS” means HSBC Taxpayer Financial Services Inc., a Delaware corporation.



 









 





8


     “HSBC TFS Letter” means a letter agreement between the Borrower, HSBC TFS and
the Lender in substantially the form of Exhibit C hereto.




     “Indebtedness” of any Person means, without duplication, (a) all obligations of
such Person for borrowed money or with respect to deposits or advances of any kind, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c)
all obligations of such Person upon which interest charges are customarily paid, (d) all
obligations of such Person under conditional sale or other title retention agreements
relating to property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current accounts payable
and accrued expenses incurred in the ordinary course of business), (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees
by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person,
(i) all obligations, contingent or otherwise, of such Person as an account party in respect
of letters of credit and letters of guaranty, (j) all obligations, contingent or otherwise,
of such Person in respect of bankers’ acceptances and (k) for purposes of Section 6.2 only,
all preferred stock issued by a Subsidiary of such Person. The Indebtedness of any Person
shall include the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a result of
such Person’s ownership interest in or other relationship with such entity, except to the
extent the terms of such Indebtedness provide that such Person is not liable therefor.
Indebtedness of a Person shall not include obligations with respect to funds held by such
Person in custody for, or for the benefit of, third parties which are to be paid at the
direction of such third parties (and are not used for any other purpose).




     “Indemnification Agreement” means the HSBC Settlement Products Indemnification
Agreement dated as of September 23, 2005 among the Lender, HSBC Taxpayer Financial Services,
Inc., Household Tax Masters Acquisition Corporation, Beneficial Franchise Company Inc., H&R
Block Services, Inc., H&R Block Tax Services, Inc., H&R Block Enterprises, Inc., H&R Block
Eastern Enterprises, Inc., HRB Digital LLC (successor by merger to H&R Block Digital Tax
Solutions, LLC), H&R Block and Associates, L.P. (now dissolved), HRB Innovations Inc.
(formerly known as HRB Royalty, Inc.) and the Borrower, as amended by the Joinder and First
Amendment to Program Contracts dated as of November 10, 2006 (the “First
Amendment”), the Second Amendment to Program Contracts dated as of November 13, 2006
(the “Second Amendment”), and the Third Amendment to Program Contracts dated as of
December 5, 2008 (the “Third Amendment”), and as further amended from time to time,
and any restatement, extension, renewal and replacement thereof.




     “Indemnified Taxes” means Taxes other than Excluded Taxes.




     “Indemnitee” has the meaning assigned to such term in Section 10.3(b).



 









 





9


     “Indirect RAL Participation Transaction” means any transaction by the Guarantor
or any Subsidiary involving (a) an investment in a partnership, limited partnership, limited
liability company, limited liability partnership, business trust or other pass-through
entity which is partially owned by the Guarantor or any Subsidiary, (b) the
purchase by such pass-through entity of refund anticipation loans or participation
interests in refund anticipation loans (and/or related rights and interests), and (c) the
distribution of cash flow received by such pass-through entity with respect to such refund
anticipation loans or participation interests therein to the owners of such pass-through
entity.




     “Information” has the meaning assigned to such term in Section 10.12.




     “LIBO Rate” means for each day the rate appearing on the Reuters “LIBOR 01”
page (or such other page as may replace such page on that service or such other service or
services as may be nominated by the British Bankers’ Association for the purpose of
displaying London interbank offered rates for U.S. dollar deposits) at approximately 11:00
a.m., London time, two London business days prior to such day, as the rate for dollar
deposits with a one week maturity. In the event that such rate is not available at such
time for any reason, then the “LIBO Rate” shall be determined for each day by reference to
such other comparable publicly available service for displaying eurodollar rates as may be
selected by the Lender at approximately 11:00 a.m., London time, two Business Days prior to
such day.




     “Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b)
the interest of a vendor or a lessor under any conditional sale agreement, capital lease or
title retention agreement (or any financing lease having substantially the same economic
effect as any of the foregoing) relating to such asset and (c) in the case of securities,
any purchase option, call or similar right of a third party with respect to such securities;
provided that clause (c) above shall be deemed not to include stock options granted
by any Person to its directors, officers or employees with respect to the Capital Stock of
such Person.




     “Loan Documents” means this Agreement, the Pricing Letter, the Security
Agreement, the Control Agreement, the HSBC TFS Letter and the Notes, if any.




     “Loans” means the loans made by the Lender to the Borrower pursuant to this
Agreement.




     “Margin” means the Margin specified in the Pricing Letter.




     “Margin Stock” means any “margin stock” as defined in Regulation U of the
Board.




     “Material Adverse Effect” means a material adverse effect on (a) the business,
assets, property or condition (financial or otherwise) of the Guarantor and the Subsidiaries
taken as a whole, (b) the ability of any Credit Party to perform any of its



 









 





10


obligations
under this Agreement or (c) the rights of or benefits available to the Lenders under this
Agreement.




     “Material Indebtedness” means Indebtedness (other than the Loans), or
obligations in respect of one or more Hedging Agreements, of any one or more of the
Credit Parties and any Subsidiaries in an aggregate principal amount exceeding
$40,000,000. For purposes of determining Material Indebtedness, the “principal amount” of
the obligations of any Credit Party or any Subsidiary in respect of any Hedging Agreement at
any time shall be the aggregate amount (giving effect to any netting agreements) that the
Credit Party or such Subsidiary would be required to pay if such Hedging Agreement were
terminated at such time.




     “Material Subsidiary” means any Subsidiary of any Credit Party, the aggregate
assets or revenues of which, as of the last day of the most recently ended fiscal quarter
for which the Borrower has delivered financial statements pursuant to Section 5.1(a) or (b),
when aggregated with the assets or revenues of all other Subsidiaries with respect to which
the actions contemplated by Section 6.4 are taken, are greater than 5% of the total assets
or total revenues, as applicable, of the Guarantor and its consolidated Subsidiaries, in
each case as determined in accordance with GAAP.




     “Maximum Rate” has the meaning assigned to such term in Section 10.13.




     “Moody’s” means Moody’s Investors Service, Inc.




     “Multiemployer Plan” means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.




     “Notes” means the collective reference to any promissory note evidencing Loans.




     “Obligations” means, collectively, the unpaid principal of and interest on the
Loans and all other obligations and liabilities of the Borrower (including interest accruing
at the then applicable rate provided herein after the maturity of the Loans and interest
accruing at the then applicable rate provided herein after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) to the Lender, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, this Agreement, the Pricing Letter, the Security
Agreement, the Control Agreement, the HSBC TFS Letter, any Note or any other document made,
delivered or given in connection herewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including all
fees and disbursements of counsel to the Lender that are required to be paid by the Borrower
pursuant to the terms of any of the foregoing agreements).




     “Other Taxes” means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any payment



 









 





11


made
hereunder or from the execution, delivery or enforcement of, or otherwise with respect to,
this Agreement.




     “Participant” has the meaning assigned to such term in Section 10.4(c).




     “Participation Agreement” means the Second Amended and Restated HSBC Refund
Anticipation Loan Participation Agreement, dated as of January 12, 2010, as
amended from time to time, and any restatement, extension, renewal and replacement
thereof, by and among the Borrower, HSBC Bank USA, National Association, HSBC TFS and HSBC
Trust Company (Delaware), National Association.




     “Participation Interest” means a “Participation Interest” as defined in the
Participation Agreement.




     “PBGC” means the Pension Benefit Guaranty Corporation referred to and defined
in ERISA and any successor entity performing similar functions.




     “Permitted Encumbrances” means:




     (a) judgment Liens in respect of judgments not constituting an Event of Default under
clause (k) of Article VIII;




     (b) Liens imposed by law for taxes that are not yet due or are being contested in
compliance with Section 5.4;




     (c) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like
Liens imposed by law, arising in the ordinary course of business and securing obligations
that are not overdue by more than 30 days or are being contested in compliance with Section
5.4;




     (d) pledges and deposits made in the ordinary course of business in compliance with
workers’ compensation, unemployment insurance and other social security laws or regulations;




     (e) deposits to secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations of a like
nature, in each case in the ordinary course of business; and




     (f) easements, zoning restrictions, rights-of-way and similar encumbrances on real
property imposed by law or arising in the ordinary course of business that do not secure any
monetary obligations and do not materially detract from the value of the affected property
or interfere with the ordinary conduct of business of the Credit Parties or any Subsidiary;




provided that the term “Permitted Encumbrances” shall not include any
Lien securing Indebtedness.



 









 





12


     “Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority or other
entity.




     “Plan” means any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section
302 of ERISA, and in respect of which any Credit Party or any ERISA Affiliate is (or, if
such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer”
as defined in Section 3(5) of ERISA.




     “Pricing Letter” means the separate letter agreement, dated the date of this
Agreement, among the Borrower, the Guarantor and the Lender, setting forth certain fees and
margins payable by the Borrower in connection with this Agreement.




     “Prime Rate” means the rate of interest per annum publicly announced from time
to time by HSBC Bank USA, National Association, as its prime rate in effect at its principal
office in New York City; each change in the Prime Rate shall be effective from and including
the date such change is publicly announced as being effective.




     “Prime Rate Margin” means the Prime Rate Margin specified in the Pricing
Letter.




     “Proceeding” means any suit, action or proceeding arising out of or relating to
this Agreement, the Pricing Letter, the Security Agreement, the Control Agreement or the
HSBC TFS Letter, or for recognition or enforcement of any judgment.




     “Purchase Price” means “Purchase Price” as such term is defined in the Appendix
of Defined Terms and Rules of Construction attached as Appendix A to Retail Settlement
Products Distribution Agreement.




     “RAL Receivables Amount” means, at any time, the difference (but not less
than zero) between (i) the aggregate amount of funds received by the Guarantor, any
Subsidiary or any qualified or unqualified special purpose entity created by any Subsidiary
with respect to the transfer of refund anticipation loans, or participation interests in
refund anticipation loans (and/or related rights and interests), to any third party in any
RAL Receivables Transaction, at or prior to such time, minus (ii) the aggregate
amount received by all such third parties with respect to the transferred refund
anticipation loans, or participation interests in refund anticipation loans (and/or related
rights and interests), in all RAL Receivables Transactions, at or prior to such time,
excluding from the amounts received by such third parties, the aggregate amount of
any origination, set up, structuring or similar fees, all implicit or explicit financing
expenses and all indemnification and reimbursement payments paid to any such third party in
connection with any RAL Receivables Transaction.




     “RAL Receivables Transaction” means any securitization, on — or off — balance
sheet financing or sale transaction, involving refund anticipation loans, or participation
interests in refund anticipation loans (and/or related rights and interests), that were



 









 





13


acquired by the Guarantor, any Subsidiary or any qualified or unqualified special purpose
entity created by any Subsidiary.




     “Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and advisors of such
Person and such Person’s Affiliates.




     “Restricted Margin Stock” means all Margin Stock owned by the Guarantor and its
Subsidiaries to the extent the value of such Margin Stock does not exceed 25% of the value
of all assets of the Guarantor and its Subsidiaries (determined on a consolidated basis)
that are subject to the provisions of Section 6.3 and 6.4.




     “Retail Settlement Products Distribution Agreement” means the HSBC Retail
Settlement Products Distribution Agreement, dated as of September 23, 2005, as amended by
the Joinder and First Amendment to Program Contracts dated as of November 10, 2006, the
Second Amendment to Program Contracts dated as of November 13, 2006, and the Third Amendment
to Program Contracts dated as of December 5, 2008, and as further amended from time to time,
and any restatement, extension, renewal and replacement thereof, by and among the parties
thereto, including, the Lender and the Guarantor.




     “Revolving Credit Exposure” means with respect to the Lender at any time, the
outstanding principal amount of the Lender’s Loans.




     “Revolving Termination Date” means the earlier of (i) June 30, 2010 and (ii)
the first day after April 15, 2010 on which the aggregate outstanding amount of the
Participation Interests purchased by the Borrower in HSBC RALs under the Participation
Agreement which have been financed by the making of Loans is less than $60,000,000.




     “RSM” means RSM McGladrey, Inc., a Delaware corporation.




     “S&P” means Standard & Poor’s Ratings Services.




     “Security Agreement” means a Security Agreement between the Borrower and the
Lender in substantially the form of Exhibit A hereto.




     “Servicing Agreement” means the First Amended and Restated HSBC Settlement
Products Servicing Agreement dated as of November 13, 2006, as amended from time to time,
and any restatement, extension, renewal and replacement thereof, among HSBC Bank USA,
National Association, HSBC TFS, HSBC Trust Company (Delaware), N.A., and the Borrower.




     “Short-Term Debt” means, at any time, the aggregate amount of Indebtedness of
the Guarantor and its Subsidiaries at such time (excluding seasonal Indebtedness of H&R
Block Canada, Inc.) having a final maturity less than one year after such time, determined
on a consolidated basis in accordance with GAAP, plus the aggregate amount of Indebtedness
at such time under the Bank Revolvers, minus (a) to the extent otherwise



 









 





14


included therein,
Indebtedness outstanding at such time (i) under mortgage facilities secured by mortgages and
related assets, (ii) incurred to fund servicing obligations required as part of servicing
mortgage backed securities in the ordinary course of business, (iii) incurred and secured by
broker-dealer Subsidiaries in the ordinary course of business and (iv) deposits and other
customary banking related liabilities incurred by banking Subsidiaries in the ordinary
course of business, (b) the excess, if any, of (i) the aggregate amount of cash and Cash
Equivalents held at such time in accounts of the Guarantor and its Subsidiaries (other than
broker-dealer Subsidiaries and banking Subsidiaries) to the extent freely transferable to
the Credit Parties and capable of being applied to the Obligations without any contractual,
legal or tax consequences over (ii) $15,000,000 and (c) to the extent otherwise included
therein, the current portion of long term debt.




     “Subsidiary” means, with respect to any Person (the “parent”) at any
date, any corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the parent in the parent’s
consolidated financial statements if such financial statements were prepared in accordance
with GAAP as of such date, as well as any other corporation, limited liability company,
partnership, association or other entity (a) of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of the ordinary voting
power or, in the case of a partnership, more than 50% of the general partnership interests
are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more Subsidiaries of the parent or by the parent and one
or more Subsidiaries of the parent. Notwithstanding the foregoing, no entity shall be
considered a “Subsidiary” solely as a result of the effect and application of FASB
Interpretation No. 46R (Consolidation of Variable Interest Entities). Unless the context
shall otherwise require, all references to a “Subsidiary” or to “Subsidiaries” in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Guarantor, including the
Borrower and the Subsidiaries of the Borrower.




     “Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.




     “Total Facility Commitments” means the sum of the total “Commitments” under and
as defined in the Bank Revolvers.




     “Total Facility Loan Outstandings” has the meaning assigned to such term in
Section 6.2.




     “Transactions” means the execution, delivery and performance by the Credit
Parties of the Loan Documents, the borrowing of Loans, the use of the proceeds thereof, and
the granting of the security provided for in the Security Agreement.




     “Unrestricted Margin Stock” means all Margin Stock owned by the Guarantor and
its Subsidiaries other than Restricted Margin Stock.



 









 





15


     “Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in
Part I of Subtitle E of Title IV of ERISA.



          SECTION 1.2. Terms Generally. The definitions of terms herein shall apply equally to the
singular and plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The
word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the
context requires otherwise (a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or other document as
from time to time amended, supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference herein to any Person
shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer to this Agreement in its
entirety and not to any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and
Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be
construed to have the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights.




          SECTION 1.3. Accounting Terms; GAAP. Except as otherwise expressly provided herein, all terms
of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from
time to time; provided that, if the Borrower notifies the Lender that the Borrower requests
an amendment to any provision hereof to eliminate the effect of any change occurring after the date
hereof in GAAP or in the application thereof on the operation of such provision (or if the Lender
notifies the Borrower that the Lender requests an amendment to any provision hereof for such
purpose), regardless of whether any such notice is given before or after such change in GAAP or in
the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect
and applied immediately before such change shall have become effective until such notice shall
have been withdrawn or such provision amended in accordance herewith.





 











 




16


ARTICLE II




THE CREDITS



          SECTION 2.1. Commitment. Subject to the terms and conditions set forth herein (including the proviso at the end of
Section 6.2) and in the Pricing Letter, the Lender agrees to make revolving Loans to the Borrower
from time to time during the Availability Period in an aggregate principal amount that will not
result in the Lender’s Revolving Credit Exposure exceeding the Lender’s Commitment as then in
effect. Within the foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, prepay and reborrow Loans.




          SECTION 2.2. Loans. Subject to Section 2.8, all Loans shall be comprised entirely
of Eurodollar Loans in accordance herewith. The Lender at its option may make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided
that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan
in accordance with the terms of this Agreement.




          SECTION 2.3. Funding of Loans. As provided in the HSBC TFS Letter, HSBC TFS shall
notify the Lender of the aggregate amount of the Purchase Price for the Participation Interests to
be purchased by the Borrower under the Participation Agreement on any Business Day at the same time
as HSBC TFS notifies the Borrower of such amount, but in any event not later than 9:30 a.m. New
York City time on such Business Day. Subject to the terms and conditions of this Agreement, the
Lender shall make a Loan in the amount so notified in respect of each Business Day, by wire
transfer of immediately available funds to or as instructed by HSBC TFS by 4:30 p.m., New York City
time, on such Business Day; provided, that if the Borrower shall notify the Lender and HSBC TFS not
later than one hour after the notification by HSBC TFS referred to in the preceding sentence that
the Borrower does not wish to borrow all or some of the amount so notified by HSBC TFS, then the
Lender shall make a Loan in such lesser amount, if any, specified in such notice of the Borrower.
The Borrower hereby irrevocably (i) authorizes and instructs the Lender to make Loans by transfer
of Loan proceeds directly to or as instructed by HSBC TFS as provided in the preceding sentence and
(ii) acknowledges and agrees that Loans will not be disbursed in any other manner or for any other
purpose than to fund the purchase by the Borrower of Participation Interests in HSBC RALs under the
Participation Agreement. Notices under this Section 2.3 shall be made by telephone discussion with
a representative of the Person being notified (and not by voicemail or other form of recorded
message) and promptly confirmed by fax. Absent manifest error, the Lender shall be entitled to
rely without further inquiry on notices and information received from HSBC TFS or the Borrower as
contemplated in this Section 2.3.




          SECTION 2.4. Termination and Reduction of Commitment. (a) Unless previously
terminated, the Commitment shall terminate on the Revolving Termination Date.




          (b) The Borrower may at any time terminate, or from time to time reduce, the Commitment;
provided that (i) each reduction of the Commitment shall be in an amount that is an
integral multiple of $1,000,000 and not less than $25,000,000 and (ii) the Borrower shall not
terminate or reduce the Commitment if, after giving effect to any concurrent










 



17

prepayment of the Loans in accordance with Section 2.6, the Revolving Credit Exposure would exceed the Commitment.




          (c) The Borrower shall notify the Lender of any election to terminate or reduce the
Commitment under paragraph (b) of this Section at least three Business Days prior to the effective
date of such termination or reduction, specifying such election and the effective date thereof.
Each notice delivered by the Borrower pursuant to this Section shall be irrevocable;
provided that a notice of termination of the Commitment delivered by the Borrower may
state that such notice is conditioned upon the effectiveness of other credit facilities, in which
case such notice may be revoked by the Borrower (by notice to the Lender) on or prior to the
specified effective date if such condition is not satisfied. Any termination or reduction of the
Commitment shall be permanent.




          SECTION 2.5. Repayment of Loans; Evidence of Debt. (a) The Borrower hereby unconditionally promises to pay to the Lender (i) the unpaid
principal amount of the Loans on March 31, 2010 to the extent that such principal amount exceeds
the Commitment on such date and (ii) the then unpaid principal amount of each Loan on the Revolving
Termination Date.




          (b) The Lender shall maintain in accordance with its usual practice an account or accounts
evidencing the indebtedness of the Borrower to the Lender resulting from each Loan made by the
Lender, including the amounts of principal and interest payable and paid to the Lender from time
to time hereunder.




          (c) The entries made in the account maintained pursuant to paragraph (b) of this Section
shall be prima facie evidence of the existence and amounts of the obligations
recorded therein; provided that the failure of the Lender to maintain such account or any
error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in
accordance with the terms of this Agreement.




          (d) The Lender may request that Loans made by it be evidenced by a promissory note. In such
event, the Borrower shall prepare, execute and deliver to the Lender a promissory note payable to
the order of the Lender (or, if requested by the Lender, to the Lender and its assigns) and in a
form approved by the Lender. Thereafter, the Loans evidenced by such promissory note and interest
thereon shall at all times (including after assignment pursuant to Section 10.4) be represented by
one or more promissory notes in such form payable to the order of the payee named therein. In
addition, upon receipt of an affidavit of an officer of the Lender as to the loss, theft,
destruction or mutilation of the promissory note, the Borrower will issue, in lieu thereof, a
replacement promissory note in the same principal amount thereof and otherwise of like tenor.




          SECTION 2.6. Prepayment of Loans. (a) The Borrower (i) shall have the right at any time and from time to time voluntarily to
prepay the Loans in whole or in part without premium or penalty, subject to prior notice in
accordance with paragraph (b) of this Section, and (ii) shall prepay the Loans from time to time in
whole or in part without premium or penalty in accordance with paragraph (c) of this Section.










 



18




          (b) The Borrower shall notify the Lender by telephone discussion with a representative of
the Lender (and not by voicemail or other form of recorded message)
(confirmed by telecopy) of any voluntary prepayment of Loans under Section 2.6(a)(i), not
later than 10:00 a.m., New York City time, on the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date and the principal amount of Loans to be prepaid;
provided that, if a notice of prepayment is given in connection with a conditional notice
of termination of the Commitments as contemplated by Section 2.4, then such notice of prepayment
may be revoked if such notice of termination is revoked in accordance with Section 2.4.




          (c) At any time when there is outstanding unpaid principal on the Loans, the Borrower shall
prepay the principal of the Loans in an amount equal to (i) 100% of the amount of all payments
constituting repayment of HSBC RALs in which the Borrower has purchased a Participation Interest
which are remitted to the Borrower by HSBC TFS under Section 3.4(b)(iii) of the Servicing
Agreement, and (ii) 100% of the amount of all repurchases of Participation Interests under Section
6 of the Participation Agreement as to Participation Interests that have been purchased by the
Borrower. In the HSBC TFS Letter, the Borrower will irrevocably authorize and instruct HSBC TFS,
as Servicer under the Servicing Agreement, at any time when there is outstanding unpaid principal
on the Loans, (A) to pay 100% of all amounts from time to time to be remitted to the Borrower by
the Servicer under Section 3.4(b)(iii) of the Servicing Agreement in respect of Participation
Interests purchased by the Borrower directly to the Lender for application to the prepayment of
the Loans under this Section 2.6(c) and (B) to pay 100% of all amounts otherwise payable to the
Borrower in respect of the repurchase under Section 6 of the Participation Agreement of
Participation Interests in HSBC RALs that have been purchased by the Borrower directly to the
Lender for application to the prepayment of the Loans under this Section 2.6(c). The Lender shall
be entitled to rely without further inquiry on notices and information received from HSBC TFS as
contemplated in this Section 2.6(c). The Lender shall credit payments received from HSBC TFS
under this Section 2.6(c) to prepayment of the principal of the Loans on the date of receipt.




          SECTION 2.7. Interest




          (a) The Loans shall bear interest for each day at a rate per annum equal to the sum of (i)
the Average Weekly LIBO Rate for such day plus (ii) the Margin. The principal amount of any Loan
that is made by the Lender pursuant to Section 2.3 and is prepaid by the Borrower pursuant to
Section 2.6(a)(i) on the same Business Day shall not bear any interest for such Business Day.




          (b) Notwithstanding the foregoing, if any principal of or interest on any Loan or any other
amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon
acceleration or otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to 3% plus the rate of interest otherwise applicable to the
Loans hereunder.




          (c) Accrued interest on each Loan shall be payable monthly in arrears on the fifth Business
Day of the following month and on the Revolving Termination Date; provided










 



19

that interest
accrued pursuant to paragraph (b) of this Section shall be payable on demand. On the second
Business Day of such following month, the Lender shall deliver to the Borrower
and HSBC TFS by e-mail an invoice for the amount of accrued interest on the Loans for the
preceding month, together with a schedule in reasonable detail showing how such amount was
calculated.




          (d) All interest hereunder shall be computed on the basis of a year of 360 days, except that
interest computed by reference to the Prime Rate under Section 2.8 shall be computed on the basis
of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the
actual number of days elapsed (including the first day but excluding the last day). The LIBO Rate
(and in the case of determinations under Section 2.8, the Federal Funds Effective Rate and the
Prime Rate) shall be determined by the Lender, and such determination shall be conclusive absent
manifest error. The Lender shall as soon as practicable notify the Borrower of the effective date
and the amount of each change in interest rate.




          SECTION 2.8. Alternate Rate of Interest. If at any time:




          (a) the Lender determines (which determination shall be conclusive absent manifest error)
that adequate and reasonable means do not exist for ascertaining the LIBO Rate; or



          (b) the Lender determines that the LIBO Rate will not adequately and fairly reflect the cost
to the Lender of making or maintaining Loans;


then the Lender shall give notice thereof to the Borrower by telephone or telecopy as promptly as
practicable thereafter and, until the Lender notifies the Borrower that the circumstances giving
rise to such notice no longer exist, the Loans shall bear interest at a rate per annum equal to,
for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day plus
the Prime Rate Margin, and (b) the Federal Funds Effective Rate in effect on such day plus the
Federal Funds Margin. Any change in the Prime Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime Rate or the Federal
Funds Effective Rate, respectively.




          SECTION 2.9. Increased Costs. (a) If any Change in Law shall:





          (i) impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, the Lender; or




          (ii) impose on the Lender or the London interbank market any other condition
affecting this Agreement or Eurodollar Loans made by the Lender;


and the result of any of the foregoing shall be to increase the cost to the Lender of making or
maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to
increase the cost to the Lender or to reduce the amount of any sum received or receivable by the
Lender hereunder (whether of principal, interest or otherwise), then the Borrower will pay to the








 



20


Lender such additional amount or amounts as will compensate the Lender for such additional costs
incurred or reduction suffered.




          (b) If the Lender determines that any Change in Law regarding capital requirements has or
would have the effect of reducing the rate of return on the Lender’s capital or on the capital of
the Lender’s holding company, if any, as a consequence of this Agreement or the Loans made by the
Lender to a level below that which the Lender or the Lender’s holding company could have achieved
but for such Change in Law (taking into consideration the Lender’s policies and the policies of
the Lender’s holding company with respect to capital adequacy), then from time to time the
Borrower will pay to the Lender such additional amount or amounts as will compensate the Lender or
the Lender’s holding company for any such reduction suffered.




          (c) A certificate of the Lender setting forth the amount or amounts necessary to compensate
the Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section (together with a statement of the reason for such compensation and a calculation
thereof in reasonable detail) shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay the Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.




          (d) Failure or delay on the part of the Lender to demand compensation pursuant to this
Section shall not constitute a waiver of the Lender’s right to demand such compensation;
provided that the Borrower shall not be required to compensate the Lender pursuant to this
Section for any increased costs or reductions incurred more than six months prior to the date that
the Lender notifies the Borrower of the Change in Law giving rise to such increased costs or
reductions and of the Lender’s intention to claim compensation therefor; provided,
further, that, if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the six-month period referred to above shall be extended to include the period
of retroactive effect thereof.




          SECTION 2.10. Taxes. (a) Any and all payments by or on account of any obligation of the Borrower or the
Guarantor hereunder shall be made free and clear of and without deduction for any Indemnified Taxes
or Other Taxes; provided that if the Borrower or the Guarantor shall be required to deduct
any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Lender receives an amount equal to
the sum it would have received had no such deductions been made, (ii) the Borrower or the Guarantor
shall make such deductions and (iii) the Borrower or the Guarantor shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable law.




          (b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.




          (c) The Borrower shall indemnify the Lender, within 10 days after written demand therefor,
for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable










 



21

under this Section) paid by the
Lender and any penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability delivered to the Borrower by the
Lender shall be conclusive absent manifest error.




          (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrower to a Governmental Authority, the Borrower shall deliver to the Lender the original or a
certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy
of the return reporting such payment or other evidence of such payment reasonably satisfactory to
the Lender.




          SECTION 2.11. Payments Generally. (a) The Borrower shall make each payment required
to be made by it hereunder (whether of principal or interest, or under Section 2.9 or 2.10, or
otherwise) prior to 12:00 noon, New York City time, on the date when due, in immediately available
funds, without set-off or counterclaim. Any amounts received after such time on any date may, in
the discretion of the Lender, be deemed to have been received on the next succeeding Business Day
for purposes of calculating interest thereon. All such payments shall be made to the Lender at its
account at HSBC Bank USA, National Association, Buffalo, N.Y., ABA #021001088, Syndication & Asset,
A/C #001-940503, Ref. H&R Block, or at such other bank or account as it shall specify from time to
time by notice in writing to the Borrower. If any payment hereunder shall be due on a day that is
not a Business Day, the date for payment shall be extended to the next succeeding Business Day,
and, in the case of any payment accruing interest, interest thereon shall be payable for the period
of such extension. All payments hereunder shall be made in dollars. Notwithstanding the
foregoing, this Section 2.11 shall not apply to payments by HSBC TFS as contemplated by Section
2.6(c).




          (b) If at any time insufficient funds are received by and available to the Lender to pay
fully all amounts of principal, interest and any other amounts then due hereunder, such funds
shall be applied (i) first, to pay interest then due hereunder, (ii) second, to pay principal then
due hereunder, and (iii) third, any other amounts due and owing hereunder.




          SECTION 2.12. Mitigation Obligations. If the Lender requests compensation under Section 2.9, or if the Borrower is required to
pay any additional amount to the Lender or any Governmental Authority for the account of the Lender
pursuant to Section 2.10, then the Lender shall use reasonable efforts to designate a different
lending office for funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment of the Lender,
such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section
2.9 or 2.10, as the case may be, in the future and (ii) would not subject the Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to the Lender. The
Borrower hereby agrees to pay all reasonable costs and expenses incurred by the Lender in
connection with any such designation or assignment.










 



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ARTICLE III




REPRESENTATIONS AND WARRANTIES



          Each of the Credit Parties represents and warrants to the Lender that:




          SECTION 3.1. Organization; Powers. Each of the Credit Parties and the Subsidiaries is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, has the power and authority
to carry on its business as now conducted and, except where the failure to be so, individually or
in the aggregate, would not reasonably be expected to result in a Material Adverse Effect, is
qualified to do business in, and is in good standing in, every jurisdiction where such
qualification is required. The Borrower was converted from a Delaware corporation known as “Block
Financial Corporation” on January 1, 2008 pursuant to Section 18-214 of the Delaware Limited
Liability Company Act.




          SECTION 3.2. Authorization; Enforceability. The Transactions are within each Credit Party’s corporate or limited liability company, as
the case may be, powers and have been duly authorized by all necessary corporate or limited
liability company, as the case may be, and, if required, stockholder or member, as the case may be,
action. This Agreement has been duly executed and delivered by each Credit Party and constitutes a
legal, valid and binding obligation of each Credit Party, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors’ rights generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.




          SECTION 3.3. Governmental Approvals; No Conflicts. The Transactions (a) do not require any consent or approval of, registration or filing
with, or any other action by, any Governmental Authority, except such as have been obtained or made
and are in full force and effect, (b) will not violate any applicable law or regulation or the
charter, by-laws, operating agreement or other organizational documents of any Credit Party or any
Subsidiary or any order of any Governmental Authority, (c) will not violate or result in a default
under any indenture, material agreement or other instrument (other than those to be terminated on
or prior to the Closing Date) binding upon any Credit Party or any Subsidiary or their assets, or
give rise to a right thereunder to require any payment to be made by any Credit Party or any
Subsidiary, and (d) except as provided in the Loan Documents, will not result in the creation or
imposition of any Lien on any asset of any Credit Party or any Subsidiary.




          SECTION 3.4. Financial Condition; No Material Adverse Change. (a) Each Credit Party has heretofore furnished to the Lender consolidated balance sheets
and statements of income and cash flows (and, in the case of the Guarantor, of stockholders’
equity) (i) as of and for the fiscal year ended April 30, 2009 (A) reported on by Deloitte & Touche
LLP, an independent registered public accounting firm, in respect of the financial statements of
the Guarantor, and (B) certified by its chief financial officer, in respect of the financial
statements of the Borrower, and (ii) as of and for the fiscal quarter and the portion
of the fiscal year ended October 31, 2009. Such financial statements present fairly, in all
material respects, the financial position and results of operations and cash flows of the Borrower
and its consolidated










 



23

Subsidiaries and of the Guarantor and its consolidated Subsidiaries as of such
date and for such period in accordance with GAAP. Except as set forth on Schedule 3.4(a), neither
the Guarantor nor any of its consolidated Subsidiaries had, at the date of the most recent balance
sheet referred to above, any material Guarantee Obligation, contingent liability or liability for
taxes, or any long-term lease or unusual forward or long-term commitment, including any interest
rate or foreign currency swap or exchange transaction not in the ordinary course of business, which
is not reflected in the foregoing statements or in the notes thereto. During the period from April
30, 2009 to and including the date hereof, and except as disclosed in filings made by the Guarantor
with the U.S. Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, there has been no sale, transfer or
other disposition by the Guarantor or any of its consolidated Subsidiaries of any material part of
its business or property other than in the ordinary course of business and no purchase or other
acquisition of any business or property (including any Capital Stock of any other Person), material
in relation to the consolidated financial condition of the Guarantor and its consolidated
Subsidiaries at April 30, 2009.




          (b) From April 30, 2009 through the Effective Date, there has been no material adverse change
in the business, assets, property or condition (financial or otherwise) of the Guarantor and its
Subsidiaries, taken as a whole.




          SECTION 3.5. Properties. (a) Each of the Credit Parties and the Subsidiaries has good title to, or valid leasehold
interests in, all its real and personal property material to its business, except for minor defects
in title that do not interfere with its ability to conduct its business as currently conducted or
to utilize such properties for their intended purposes.




          (b) Each of the Credit Parties and the Subsidiaries owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property material to its
business, and the use thereof by the Credit Parties and the Subsidiaries does not infringe upon
the rights of any other Person, except for any such infringements that, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse Effect.




          SECTION 3.6. Litigation and Environmental Matters. (a) There are no actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of any Credit Party, threatened against or affecting
any Credit Party or any Subsidiary that (i) have not been disclosed in the Disclosed Matters and as
to which there is a reasonable possibility of an adverse determination and that, if adversely
determined, would reasonably be expected, individually or in the aggregate, to result in a Material
Adverse Effect or (ii) challenge or would reasonably be expected to affect the legality, validity
or enforceability of this Agreement.




          (b) Except for the Disclosed Matters and except with respect to any other matters that,
individually or in the aggregate, would not reasonably be expected to result in a Material Adverse
Effect, neither of the Credit Parties nor any Subsidiary (i) has failed to comply with any
Environmental Law or to obtain, maintain or comply with any permit, license
or other approval required under any Environmental Law, (ii) has become subject to any
Environmental Liability, (iii) has received notice of any claim with respect to any Environmental
Liability or (iv) knows of any basis for any Environmental Liability.










 



24




          SECTION 3.7. Compliance with Laws and Agreements. Each of the Credit Parties and the Subsidiaries is in compliance with all laws, regulations
and orders of any Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where the failure to be
so, individually or in the aggregate, would not reasonably be expected to result in a Material
Adverse Effect.




          SECTION 3.8. Investment Company Status. Neither of the Credit Parties nor any of the Subsidiaries is an “investment company” as
defined in, or subject to regulation under, the Investment Company Act of 1940, as amended.




          SECTION 3.9. Taxes. Each of the Credit Parties and the Subsidiaries has timely filed or caused to be filed all
Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes
required to have been paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Guarantor, the Borrower or such Subsidiary, as
applicable, has set aside on its books adequate reserves or (b) to the extent that the failure to
do so would not reasonably be expected to result in a Material Adverse Effect.




          SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when taken together
with all other such ERISA Events for which liability is reasonably expected to occur, would
reasonably be expected to result in a Material Adverse Effect. The present value of all
accumulated benefit obligations under each Plan (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent
financial statements reflecting such amounts, exceed by more than $25,000,000 the fair market value
of the assets of such Plan, and the present value of all accumulated benefit obligations of all
underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial statements reflecting such
amounts, exceed by more than $25,000,000 the fair market value of the assets of all such
underfunded Plans.




          SECTION 3.11. Disclosure. None of the reports, financial statements, certificates or other information furnished by
or on behalf of the Credit Parties to the Lender in connection with the negotiation of this
Agreement or delivered hereunder (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact necessary to make
the statements therein, in the light of the circumstances under which they were made, not
misleading; provided that, with respect to projected financial information, the Credit
Parties represent only that such information was prepared in good faith based upon assumptions
believed to be reasonable at the time.




          SECTION 3.12. Federal Regulations. No part of the proceeds of any Loans will be used for “purchasing” or “carrying” any
“margin stock” (within the respective meanings of each of the quoted terms under Regulation U of
the Board as now and from time to time hereafter in effect) in a manner or in circumstances that
would constitute or result in non-compliance by any Credit Party or the Lender with the provisions
of Regulations U, T or X of the Board. If requested by the Lender, the Borrower will furnish to
the Lender a statement to the foregoing effect in conformity with the requirements of FR Form U-1
referred to in said Regulation U.










 



25




          SECTION 3.13. Subsidiaries. As of the date hereof, the Guarantor has only the Subsidiaries set forth on Schedule 3.13.




          SECTION 3.14. Insurance. Each Credit Party and each Subsidiary of each Credit Party maintains (pursuant to a
self-insurance program and/or with financially sound and reputable insurers) insurance with respect
to its properties and business and against at least such liabilities, casualties and contingencies
and in at least such types and amounts as is customary in the case of companies engaged in the same
or a similar business or having similar properties similarly situated.




ARTICLE IV




CONDITIONS



          SECTION 4.1. Effective Date. Except as otherwise provided in Sections 4.2 and 4.3, this Agreement shall become effective
on the date on which each of the following conditions is satisfied (or waived in accordance with
Section 10.2):




          (a) The Lender (or its counsel) shall have received from each party hereto a counterpart of
this Agreement signed on behalf of such party.




          SECTION 4.2. Closing Date. The obligations of the Lender to make Loans hereunder shall not become effective until the
date on which each of the following conditions is satisfied (or waived in accordance with Section
10.2):




          (a) The Effective Date shall have occurred.




          (b) The Lender shall have received a reasonably satisfactory written opinion (addressed to
the Lender and dated the Closing Date) of (i) Stinson Morrison Hecker LLP, special counsel for the
Credit Parties, substantially in the form of Exhibit D hereto, and covering such other matters
relating to the Credit Parties, the Loan Documents or the Transactions as the Lender shall
reasonably request and (ii) Bingham McCutchen LLP, special counsel for the Lender, covering such
other matters relating to the Loan Documents as the
Lender shall reasonably request. The Credit Parties and the Lender hereby request such
counsel to deliver such opinions.




          (c) The Lender shall have received such documents and certificates as the Lender or its
counsel may reasonably request relating to the organization, existence and good standing of the
Credit Parties, the authorization of the Transactions and any other legal matters relating to the
Credit Parties, the Loan Documents or the Transactions, all in form and substance satisfactory to
the Lender and its counsel.




          (d) The Lender shall have received a certificate, dated the Closing Date and signed by the
President, a Vice President or a Financial Officer of each Credit Party, confirming compliance
with the conditions set forth in paragraphs (a) and (b) of Section 4.3.










 



26




          (e) All governmental and material third party approvals necessary in connection with the
execution, delivery and performance of this Agreement, the Security Agreement, the Control
Agreement and the HSBC TFS Letter shall have been obtained and be in full force and effect.




          (f) The Lender shall have received a counterpart of the Security Agreement, duly executed
and delivered by the Borrower, and a counterpart of the HSBC TFS Letter, duly executed and
delivered by the parties thereto; and all filings and other actions necessary or appropriate to
perfect the security interest created by the Security Agreement shall have been made or taken.




          (g) The Lender shall have received the results of searches of Uniform
Commercial Code filings in such jurisdictions as it shall deem appropriate and such searches shall
not reveal any filing that remains in effect and that describes any of the “Collateral” referred to
in the Security Agreement.




          (h) The Borrower shall have invested $60,000,000 in the HSBC Investor Prime Money Market
Fund managed by HSBC Global Asset Management (USA), Inc. and the Lender shall have received a
counterpart of the Control Agreement with respect to that investment, duly executed and delivered
by the parties thereto.




          (i) The Lender shall have received a counterpart of the Pricing Letter, duly executed and
delivered by the Borrower and the Guarantor.



The Lender shall notify the Borrower of the Closing Date, and such notice shall be conclusive and
binding. Notwithstanding the foregoing, the obligation of the Lender to make Loans hereunder
shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant
to Section 10.2) at or prior to the Closing Date.




          SECTION 4.3. Each Loan. The obligation of the Lender to make each Loan is subject to the satisfaction of the
following conditions:




          (a) The representations and warranties of the Credit Parties set forth in Article III of this
Agreement (other than the representations and warranties set forth in
subsections 3.4(b), 3.6(a)(i) and 3.6(b)) shall be true and correct in all material respects
on and as of the date of such Loan (except to the extent related to a specific earlier date).




          (b) At the time of and immediately after giving effect to such Loan, no Event of Default
shall have occurred and be continuing.



Each Loan shall be deemed to constitute a representation and warranty by each of the Credit Parties
on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section.










 



27




ARTICLE V




AFFIRMATIVE COVENANTS



          Until the Commitment has expired or been terminated and the principal of and interest on each
Loan shall have been paid in full, each of the Credit Parties covenants and agrees with the Lender
that:




          SECTION 5.1. Financial Statements and Other Information. The Borrower will furnish to the Lender:




          (a) within 90 days after the end of each fiscal year of the Guarantor, an audited
consolidated balance sheet and related statements of operations, stockholders’ equity and cash
flows of the Guarantor and its consolidated Subsidiaries as of the end of and for such year,
setting forth in each case in comparative form the figures for the previous fiscal year, all
reported on by Deloitte & Touche LLP or another independent registered public accounting firm of
recognized national standing (without a “going concern” or like qualification or exception and
without any qualification or exception as to the scope of such audit) to the effect that such
consolidated financial statements present fairly in all material respects the financial condition
and results of operations of the Guarantor and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied;




          (b) (i) in the case of the Guarantor, within 45 days after the end of each of the first three
fiscal quarters of each fiscal year of the Guarantor and (ii) in the case of the Borrower, within
90 days after the end of each fiscal year of the Borrower, consolidated balance sheets and related
statements of operations and cash flows of the Borrower and the Guarantor and their consolidated
Subsidiaries, and the consolidated statement of stockholders’ equity of the Guarantor, as of the
end of and for such fiscal quarter (in the case of the Guarantor) and the then elapsed portion of
the fiscal year, setting forth in each case in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal
year, all certified by a Financial Officer of the Borrower and the Guarantor as presenting fairly
in all material respects the financial condition and results of operations of the Borrower and the
Guarantor and their consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the absence of footnotes;




          (c) concurrently with any delivery of financial statements under clause (a) or (b) above, a
certificate of a Financial Officer of the Borrower and the Guarantor (i) certifying as to whether
a Default has occurred and, if a Default has occurred, specifying the details thereof and any
action taken or proposed to be taken with respect thereto, (ii) setting
forth reasonably detailed calculations demonstrating compliance with Section 6.1 and (iii)
stating whether any change in GAAP or in the application thereof has occurred since the date of
the audited financial statements referred to in Section 3.4 and, if any such change has occurred,
specifying the effect of such change on the financial statements accompanying such certificate;










 



28




          (d) promptly after the same become publicly available, copies of all periodic and other
reports, proxy statements and other materials (other than (i) statements of ownership such as
Forms 3, 4 and 5 and Schedule 13G, (ii) routine filings relating to employee benefits, such as
Forms S-8 and 11-K, and (iii) routine filings by (A) RSM McGladrey, Inc. and its Subsidiaries,
including Birchtree Financial Services, Inc., (B) RSM Equico, Inc. and its Subsidiaries, including
McGladrey Capital Markets, LLC, (C) H&R Block Canada, Inc. and (D) H&R Block Limited) filed by any
Credit Party or any Subsidiary with the Securities and Exchange Commission, or any Governmental
Authority succeeding to any or all of the functions of said Commission, or with any national
securities exchange, or distributed by any Credit Party to its shareholders generally, as the case
may be;




          (e) a copy of any notice given by the Borrower under Section 4.1(b), Section 4.4(c) or
Section 4.8 of the Participation Agreement, such copy to be provided at the same time as such
notice is given under the Participation Agreement; and




          (f) promptly following any request therefor, such other information regarding the operations,
business affairs and financial condition of any Credit Party or any Subsidiary, or compliance with
the terms of this Agreement, as the Lender may reasonably request.




          SECTION 5.2. Notices of Material Events. The Borrower will furnish to the Lender prompt written notice of the following:




          (a) the occurrence of any Default;




          (b) the filing or commencement of any action, suit or proceeding by or before any arbitrator
or Governmental Authority against or affecting any Credit Party or any Affiliate thereof that is
reasonably likely to be adversely determined and, if so determined, would reasonably be expected
to result in a Material Adverse Effect;




          (c) the occurrence of any ERISA Event that, alone or together with any other ERISA Events
that have occurred, would reasonably be expected to result in liability of the Borrower, the
Guarantor or any Subsidiary in an aggregate amount exceeding $25,000,000; and




          (d) any other development that results in, or would reasonably be expected to result in, a
Material Adverse Effect.



Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer
or other executive officer of the Borrower and the Guarantor setting forth the details of the event
or development requiring such notice and any action taken or proposed to be taken with respect
thereto.




          SECTION 5.3. Existence; Conduct of Business. Each Credit Party will, and will cause each of the Subsidiaries to, do or cause to be done
all things necessary to preserve, renew and keep in full force and effect its legal existence and
the rights, licenses, permits, privileges and franchises material to the conduct of its business;
provided that the foregoing shall not










 



29

prohibit any merger, consolidation, liquidation,
disposition or dissolution permitted under Section 6.4.




          SECTION 5.4. Payment of Taxes. Each Credit Party will, and will cause each of the Subsidiaries to, pay its Tax liabilities
that, if not paid, would reasonably be expected to have a Material Adverse Effect before the same
shall become delinquent, except where (a) the validity or amount thereof is being contested in good
faith by appropriate proceedings, (b) such Credit Party or such Subsidiary has set aside on its
books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make
payment pending such contest would not reasonably be expected to result in a Material Adverse
Effect.




          SECTION 5.5. Maintenance of Properties; Insurance. Each Credit Party will, and will cause each of the Subsidiaries to, (a) keep and maintain
all property material to the conduct of its business in good working order and condition, ordinary
wear and tear excepted, and (b) maintain (pursuant to a self-insurance program and/or with
financially sound and reputable insurers) insurance in such amounts and against such risks as is
customarily maintained by companies engaged in the same or similar businesses operating in the same
or similar locations.




          SECTION 5.6. Books and Records; Inspection Rights. Each Credit Party will, and will cause each of the Subsidiaries to, keep proper books of
record and account in which full, true and correct entries are made of all dealings and
transactions in relation to this Agreement and the transactions contemplated hereby. Each Credit
Party will, and will cause each of the Subsidiaries to, permit any representatives designated by
the Lender, upon reasonable prior notice, to visit and inspect its properties, to examine and make
extracts from its books and records, and to discuss its affairs, finances and condition with its
officers and independent accountants, all at such reasonable times and as often as reasonably
requested; provided that so long as no Event of Default exists, each Credit Party and each
Subsidiary shall have the right to be present and participate in any discussions with its
independent accountants. Nothing in this Section 5.6 shall permit the Lender to examine or
otherwise have access to the tax returns or other confidential information of any customer of
either Credit Party or any of their respective Subsidiaries.




          SECTION 5.7. Compliance with Laws. Each Credit Party will, and will cause each of the Subsidiaries to, comply with all laws,
rules, regulations and orders of any Governmental Authority applicable to it or its property,
except where the failure to do so, individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect.




          SECTION 5.8. Use of Proceeds. The proceeds of the Loans will be used only to purchase Participation Interests in HSBC RALs
pursuant to the Participation Agreement. No part of the proceeds of any Loan will be used, whether
directly or indirectly, for any purpose that entails a violation of any of the regulations of the
Board, including Regulations U and X.




          SECTION 5.9. Additional Collateral. The Borrower shall provide additional
collateral to the Lender from time to time as provided in the Security Agreement.










 



30




ARTICLE VI




NEGATIVE COVENANTS



          Until the Commitment has expired or terminated and the principal of and interest on each Loan
have been paid in full, each of the Credit Parties covenants and agrees with the Lender that:




          SECTION 6.1. Adjusted Net Worth. The Guarantor will not permit Adjusted Net Worth as at the last day of any fiscal quarter of
the Guarantor to be less than $1,000,000,000.




          SECTION 6.2. Indebtedness. The Credit Parties will not, and will not permit any Subsidiary to create, incur, assume or
permit to exist any Indebtedness, except:




          (a) subject to the proviso at the end of this Section 6.2, Indebtedness created under the
Bank Revolvers;




          (b) Indebtedness existing on the date hereof and set forth in Schedule 6.2 and extensions,
renewals and replacements of any such Indebtedness that do not increase the outstanding principal
amount thereof;




          (c) seasonal Indebtedness of H&R Block Canada, Inc., provided that the aggregate
principal amount of all such Indebtedness incurred pursuant to this subsection (c) shall not
exceed 250,000,000 Canadian dollars at any time outstanding;




          (d) Indebtedness of the Borrower and the Guarantor, provided that (i) the obligations
of the Credit Parties hereunder shall rank at least pari passu with such
Indebtedness (including with respect to security) and (ii) the aggregate principal amount of all
Indebtedness permitted by this subsection (d) shall not exceed $2,000,000,000 at any time
outstanding;




          (e) subject to the proviso at the end of this Section 6.2, (i) Indebtedness in connection
with commercial paper issued in the United States through the Borrower which is guaranteed by the
Guarantor and (ii) Indebtedness under bank lines of credit or similar facilities;




          (f) Indebtedness in connection with Guarantees of the performance of any Subsidiary’s
obligations under or pursuant to (i) indemnity, fee, daylight overdraft and other similar
customary banking arrangements between such Subsidiary and one or more financial institutions in
the ordinary course of business, (ii) any office lease entered into in the ordinary course of
business, and (iii) any promotional, joint-promotional, cross-promotional, joint marketing,
service, equipment or supply procurement, software license or other similar agreement entered into
by such Subsidiary with one or more vendors, suppliers, retail businesses or other third parties
in the ordinary course of business, including indemnification










 



31

obligations relating to such
Subsidiary’s failure to perform its obligations under such lease or agreement;




          (g) acquisition-related Indebtedness (either incurred or assumed) and Indebtedness in
connection with the Guarantor’s guarantees of the payment or performance of primary obligations of
Subsidiaries of the Guarantor in connection with acquisitions by such Subsidiaries, or
Indebtedness secured by Liens permitted under subsection 6.3(f); provided that, during any
fiscal year, the aggregate outstanding principal amount of all Indebtedness incurred pursuant to
this subsection 6.2(g) shall not exceed at any time $325,000,000;




          (h) Indebtedness of any Credit Party to any other Credit Party, of any Credit Party to any
Subsidiary, of any Subsidiary to any Credit Party and of any Subsidiary to any other Subsidiary;
provided that such Indebtedness shall not be prohibited by Section 6.5;




          (i) Indebtedness in connection with repurchase agreements pursuant to which mortgage loans of
a Credit Party or a Subsidiary are sold with the simultaneous agreement to repurchase the mortgage
loans at the same price plus interest at an agreed upon rate; provided that the aggregate
outstanding principal amount of all Indebtedness incurred pursuant to this subsection 6.2(i) shall
not at any time exceed $500,000,000; provided, further, that no agreed upon
repurchase date shall be later than 90 business days after the date of the corresponding
repurchase agreement;




          (j) Indebtedness in connection with Guarantees or Guarantee Obligations which are made, given
or undertaken as representations and warranties, indemnities or assurances of the payment or
performance of primary obligations in connection with securitization transactions or other
transactions permitted hereunder, as to which primary obligations the primary obligor is a Credit
Party, a Subsidiary or a securitization trust or similar securitization vehicle to which a Credit
Party or a Subsidiary sold, directly or indirectly, the relevant mortgage loans;




          (k) Indebtedness of RSM, a Subsidiary of the Guarantor, to McGladrey & Pullen, LLP
(“M&P”) and certain related trusts under (i) that certain Asset Purchase Agreement dated
as of June 28, 1999 among RSM, M&P, the Guarantor and certain other parties signatory thereto (the
“M&P Purchase Agreement”) and (ii) the Retired Partners Agreement and the Loan Agreement
(as such terms are defined in the M&P Purchase Agreement); provided that the aggregate
outstanding principal amount payable in respect of such Indebtedness permitted under this
paragraph (k) shall not exceed $200,000,000 at any time;




          (l) Indebtedness in connection with (i) Capital Lease Obligations in an aggregate outstanding
principal amount not at any time exceeding $50,000,000 (excluding any
Capital Lease Obligations permitted by subsection 6.2(p)), (ii) obligations under existing
mortgages in an aggregate outstanding principal amount not exceeding $12,000,000 at any time,
(iii) securities sold and not yet purchased, provided that the aggregate outstanding
principal amount of all Indebtedness incurred pursuant to this clause (iii) (other than
Indebtedness of Subsidiaries which act as broker-dealers) shall not at any time exceed
$15,000,000, (iv) customer deposits in the ordinary course of business, (v) payables to brokers










 



32

and dealers in the ordinary course of business and (vi) reimbursement obligations of
broker-dealers relating to letters of credit in favor of a clearing corporation or Indebtedness of
broker-dealers under other credit facilities, provided that (A) such letters of credit or
such other credit facilities are used solely to satisfy margin deposit requirements and (B) the
aggregate outstanding exposure of the Guarantor and the Subsidiaries under all such letters of
credit and all such other credit facilities shall not exceed $200,000,000 at any time;




          (m) subject to the proviso at the end of this Section 6.2, the Indebtedness hereunder and any
other Indebtedness incurred in connection with the Borrower’s Refund Anticipation Loan Program,
including any Indirect RAL Participation Transaction; provided that (i) such Indebtedness
is incurred during the period beginning on January 2 of any year and ending on June 29 of such
year, (ii) such Indebtedness is repaid in full by June 30 of the year in which such Indebtedness
is incurred and (iii) the covenants contained in any agreement relating to such Indebtedness, or
guarantee thereof (other than covenants specific to the Borrower’s Refund Anticipation Loan
Program and the operation thereof), are no more restrictive than the covenants contained in this
Agreement;




          (n) subject to the proviso at the end of this Section 6.2, liabilities related to the RAL
Receivables Transactions to the extent consistent with the definition thereof;




          (o) Indebtedness in respect of letters of credit in an aggregate outstanding principal amount
not to exceed $100,000,000;




          (p) Indebtedness in an amount not exceeding $150,000,000 in connection with the acquisition,
development or construction of the Guarantor’s new headquarters;




          (q) deposits and other liabilities incurred by banking Subsidiaries in the ordinary course of
business;




          (r) customary liabilities of broker-dealers incurred by broker-dealer Subsidiaries in the
ordinary course of business;




          (s) Indebtedness issued by a Subsidiary of the Borrower and primarily secured by mortgage
loans sold as contemplated by Section 6.5(c) hereof to such Subsidiary by another Subsidiary of
the Borrower;




          (t) Indebtedness secured by Liens permitted by subsection 6.3(d) or 6.3(e);




          (u) Indebtedness incurred solely to finance businesses described on Schedule 6.4(b) after the
date hereof that neither the Credit Parties nor their respective Subsidiaries are currently
engaged in to any material extent on the date hereof; provided that the aggregate
principal amount of all Indebtedness incurred pursuant to this clause (u) shall not at any time
exceed $400,000,000; and




          (v) other Indebtedness (excluding Indebtedness of the types described in subsections 6.2(a),
6.2(b), 6.2(e) and 6.2(m)) in an aggregate principal amount not at any time exceeding $20,000,000;










 



33



provided, that the sum of the aggregate outstanding principal amount of all Indebtedness
permitted pursuant to subsections 6.2(a), 6.2(e) and 6.2(m) plus the RAL Receivables Amount
shall not at any time exceed the greater of (x) the Total Facility Commitments then in effect or
(y) the sum of the then outstanding principal amount of the “Loans” under the Bank Revolvers (such
sum, the “Total Facility Loan Outstandings”), except that, during the period from
January 2 of any year through June 30 of such year, such sum may exceed the greater of the Total
Facility Commitments then in effect or the then Total Facility Loan Outstandings by an amount up to
the total of (A) the aggregate outstanding principal amount of Indebtedness described in Section
6.2(m) and (B) $500,000,000.




          SECTION 6.3. Liens. Each Credit Party will not, and will not permit any Subsidiary to, create, incur, assume or
permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign
or sell any income or revenues (including accounts receivable) or rights in respect of any thereof,
except:




          (a) Permitted Encumbrances;




          (b) (i) any Lien created under or securing a Bank Revolver and (ii) any Lien on any property
or asset of any Credit Party or any Subsidiary existing on the date hereof and set forth in
Schedule 6.3; provided that (i) such Lien shall not apply to any other property or asset
of any Credit Party or any Subsidiary and (ii) such Lien shall secure only those obligations which
it secures on the date hereof and extensions, renewals and replacements thereof that do not
increase the outstanding principal amount thereof;




          (c) any Lien existing on any property or asset prior to the acquisition thereof by any Credit
Party or any Subsidiary or existing on any property or asset of any Person that becomes a
Subsidiary after the date hereof prior to the time such Person becomes a Subsidiary;
provided that (i) such Lien is not created in contemplation of or in connection with such
acquisition or such Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not
apply to any other property or assets of any Credit Party or any Subsidiary and (iii) such Lien
shall secure only those obligations which it secures on the date of such acquisition or the date
such Person becomes a Subsidiary, as the case may be, and extensions, renewals and replacements
thereof that do not increase the outstanding principal amount thereof;




          (d) Liens and transfers in connection with the securitization, financing or other transfer of
any mortgage loans or mortgage servicing reimbursement rights (and/or, in each case, related
rights, interests and servicing assets) owned by the Borrower or any of its Subsidiaries;




          (e) Liens and transfers in connection with the securitization or other transfer of any credit
card receivables (and/or related rights and interests) owned by the Borrower or any of its
Subsidiaries;




          (f) Liens on fixed or capital assets acquired, constructed or improved by any Credit Party or
any Subsidiary to secure Indebtedness of such Credit Party or such Subsidiary incurred to finance
the acquisition, construction or improvement of such fixed or










 



34

capital assets; provided
that (i) such Liens and the Indebtedness secured thereby are incurred prior to or within 90 days
after such acquisition or the completion of such construction or improvement, (ii) the
Indebtedness secured thereby does not exceed 100% of the cost of acquiring, constructing or
improving such fixed or capital assets and (iii) such Liens shall not apply to any other property
or assets of any Credit Party or any Subsidiary;




          (g) Liens arising in connection with repurchase agreements contemplated by Section 6.2(i);
provided that such security interests shall not apply to any property or assets of any
Credit Party or any Subsidiary except for the mortgage loans or securities, as applicable, subject
to such repurchase agreements;




          (h) Liens arising in connection with Indebtedness permitted by Sections 6.2(l)(v) or 6.2(q),
which Liens are granted in the ordinary course of business;




          (i) Liens not otherwise permitted by this Section 6.3 so long as the Obligations hereunder
are contemporaneously secured equally and ratably with the obligations secured thereby;




          (j) Liens not otherwise permitted by this Section 6.3, so long as the aggregate outstanding
principal amount of the obligations secured thereby does not exceed (as to the Credit Parties and
all Subsidiaries) $250,000,000 at any one time;




          (k) Liens and transfers in connection with a RAL Receivables Transaction;




          (l) Liens securing Indebtedness permitted by subsection 6.2(u); and




          (m) Liens on Unrestricted Margin Stock.




          SECTION 6.4. Fundamental Changes; Sale of Assets. (a) Each Credit Party will not, and will not permit any Material Subsidiary to, merge into or
consolidate with any other Person, or permit any other Person to merge into or consolidate with it,
or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of
transactions) all or substantially all of its assets (other than Unrestricted Margin Stock), or all
or substantially all of the stock or assets related to its tax preparation business or liquidate or
dissolve, except (i) transfers in connection with the RAL Receivables Transaction and other
securitizations otherwise permitted hereby, (ii) sales and other transfers of mortgage loans
(and/or related rights and interests and servicing assets) and (iii) if at the time thereof and
immediately after giving effect thereto no Default shall have occurred and be continuing, (A) any
Material Subsidiary other than the Borrower may merge into a Credit Party in a transaction in which
the Credit Party is the surviving Person, (B) any wholly owned Material Subsidiary other than the
Borrower may merge into any other wholly owned Material Subsidiary in a transaction in which the
surviving entity is a wholly owned Subsidiary, (C) any Material Subsidiary other than the Borrower
may sell, transfer, lease or otherwise dispose of its assets to the Guarantor or to another
Material Subsidiary and (D) any Material Subsidiary other than the Borrower may liquidate or
dissolve if the Guarantor determines in good faith that such liquidation or dissolution
is in the best interests of the Guarantor and is not materially disadvantageous to the Lender;
provided that any such merger










 



35

involving a Person that is not a wholly owned Subsidiary
immediately prior to such merger shall not be permitted unless also permitted by Section 6.5.




          (b) Except as set forth on Schedule 6.4(b), the Credit Parties will not, and will not permit
any Material Subsidiary to, engage to any material extent in any business other than businesses of
the type conducted by the Credit Parties and the Subsidiaries on August 10, 2005 and businesses
reasonably related thereto.




          SECTION 6.5. Transactions with Affiliates. Each Credit Party will not, and will not permit any Subsidiary to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets
from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) in the
ordinary course of business at prices and on terms and conditions not less favorable to such Credit
Party or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third
parties, (b) transactions between or among the Guarantor and/or its Subsidiaries not involving any
other Affiliate, and (c) transactions involving the transfer of mortgage loans and other assets for
cash and other consideration of not less than the sum of (i) the lesser of (x) the fair market
value of such mortgage loans and (y) the outstanding principal amount of such mortgage loans, and
(ii) the fair market value of such other assets, to a Subsidiary of the Borrower that issues
Indebtedness permitted by Section 6.2(s).




          SECTION 6.6. Restrictive Agreements. The Credit Parties will not, and will not permit any Subsidiary to, directly or indirectly,
enter into, incur or permit to exist any agreement or other arrangement that by its terms
prohibits, restricts or imposes any condition upon (a) the ability of any Credit Party or any
Subsidiary to create, incur or permit to exist any Lien upon any of its material property or assets
(unless such agreement or arrangement does not prohibit, restrict or impose any condition upon the
ability of either Credit Party or any Subsidiary to create, incur or permit to exist any Lien in
favor of the Lender created under the Loan Documents), or (b) the ability of any Subsidiary to pay
dividends or other distributions with respect to any shares of its capital stock or to make or
repay loans or advances to the Guarantor or any other Subsidiary or to Guarantee Indebtedness of
the Guarantor or any other Subsidiary; provided that (i) the foregoing shall not apply to
restrictions and conditions imposed by law or by this Agreement, (ii) the foregoing shall not apply
to restrictions and conditions existing on the date hereof identified on Schedule 6.6 (but shall
apply to any extension, renewal, amendment or modification expanding the scope of any such
restriction or condition), (iii) the foregoing shall not apply to customary restrictions and
conditions contained in agreements relating to the sale of a Subsidiary pending such sale, provided
such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is
permitted hereunder, (iv) the foregoing shall not apply to customary restrictions and conditions
contained in agreements relating to the securitization, financing or other transfer of mortgage
loans (and/or related rights and interests and servicing assets) owned by the Borrower or any of
its Subsidiaries, (v) clause (a) of the foregoing shall not apply to restrictions or conditions
imposed by any agreement relating to secured obligations permitted by this Agreement (including
obligations secured by Liens permitted by Section 6.3(j)) if such restrictions or conditions apply
only to the property or assets securing such obligations, (vi) clause (a) of the foregoing shall
not apply to customary provisions in leases and other contracts
restricting the assignment thereof and (vii) clause (a) of the











 



36



foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to Indebtedness permitted hereunder
pursuant to subsection 6.2(m) or the RAL Receivables Transaction.




ARTICLE VII




GUARANTEE



          SECTION 7.1. Guarantee. (a) The Guarantor hereby unconditionally and irrevocably guarantees to the Lender and its
successors, indorsees, transferees and assigns, the prompt and complete payment and performance by
the Borrower when due (whether at the stated maturity, by acceleration or otherwise) of the
Obligations.




          (b) The Guarantor further agrees to pay any and all expenses (including all fees and
disbursements of counsel) which may be paid or incurred by the Lender in enforcing, or obtaining
advice of counsel in respect of, any rights with respect to, or collecting, any or all of the
Obligations and/or enforcing any rights with respect to, or collecting against, the Guarantor
under this Article. This Article shall remain in full force and effect until the Obligations and
the obligations of the Guarantor under the guarantee contained in this Article shall have been
satisfied by payment in full and the Commitment shall be terminated, notwithstanding that from
time to time prior thereto the Borrower may be free from any Obligations.




          (c) No payment or payments made by any Credit Party, any other guarantor or any other Person
or received or collected by the Lender from any collateral security or Credit Party or any other
Person by virtue of any action or proceeding or any set-off or appropriation or application, at
any time or from time to time, in reduction of or in payment of the Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of the Guarantor hereunder which shall,
notwithstanding any such payment or payments, remain liable hereunder for the Obligations until
the Obligations are paid in full and the Commitment is terminated.




          (d) The Guarantor agrees that whenever, at any time or from time to time, it shall make any
payment to the Lender on account of its liability hereunder, it will notify the Lender in writing
that such payment is made under this Article for such purpose.




          SECTION 7.2. Delay of Subrogation. Notwithstanding any payment or payments made by the Guarantor hereunder, or any set-off or
application of funds of the Guarantor by the Lender, the Guarantor shall not be entitled to be
subrogated to any of the rights of the Lender against the Borrower or against any collateral
security or guarantee or right of offset held by the Lender for the payment of the Obligations, nor
shall the Guarantor seek or be entitled to seek any contribution or reimbursement from the Borrower
in respect of payments made by the Guarantor hereunder, until all amounts owing to the Lender by
the Borrower on account of the Obligations are paid in full and the Commitment is terminated. If
any amount shall be paid to the Guarantor on account of such subrogation rights at any time when
all of the Obligations shall not have been paid in
full, such amount shall be held by the Guarantor in trust










 



37



for the Lender, segregated from
other funds of the Guarantor, and shall, forthwith upon receipt by the Guarantor, be turned over to
the Lender in the exact form received by the Guarantor (duly indorsed by the Guarantor to the
Lender, if required) to be applied against the Obligations, whether matured or unmatured, in such
order as the Lender may determine. The provisions of this Section shall be effective
notwithstanding the termination of this Agreement and the payment in full of the Obligations and
the termination of the Commitment.




          SECTION 7.3. Amendments, etc. with respect to the Obligations; Waiver of Rights.
The Guarantor shall remain obligated hereunder notwithstanding that, without any reservation
of rights against the Guarantor, and without notice to or further assent by the Guarantor, any
demand for payment of any of the Obligations made by the Lender may be rescinded by the Lender, and
any of the Obligations continued, and the Obligations, or the liability of any other party upon or
for any part thereof, or any collateral security or guarantee therefor or right of offset with
respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended,
modified, accelerated, compromised, waived, surrendered or released by the Lender, and this
Agreement and any other documents executed and delivered in connection herewith may be amended,
modified, supplemented or terminated, in whole or in part, in accordance with the provisions hereof
as the Lender may deem advisable from time to time, and any collateral security, guarantee or right
of offset at any time held by the Lender for the payment of the Obligations may be sold, exchanged,
waived, surrendered or released. The Lender shall not have any obligation to protect, secure,
perfect or insure any Lien at any time held by it as security for the Obligations or for this
Agreement or any property subject thereto. When making any demand hereunder against the Guarantor,
the Lender may, but shall be under no obligation to, make a similar demand on the Borrower or any
other guarantor, and any failure by the Lender to make any such demand or to collect any payments
from the Borrower or any such other guarantor or any release of the Borrower or such other
guarantor shall not relieve the Guarantor of its obligations or liabilities hereunder, and shall
not impair or affect the rights and remedies, express or implied, or as a matter of law, of the
Lender against the Guarantor. For the purposes hereof “demand” shall include the commencement and
continuance of any legal proceedings.




          SECTION 7.4. Guarantee Absolute and Unconditional.
The Guarantor waives any and all notice of the creation, renewal, extension or accrual of any
of the Obligations and notice of or proof of reliance by the Lender upon this Agreement or
acceptance of this Agreement; the Obligations, and any of them, shall conclusively be deemed to
have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance
upon this Agreement; and all dealings between the Borrower and the Guarantor, on the one hand, and
the Lender, on the other, shall likewise be conclusively presumed to have been had or consummated
in reliance upon this Agreement. The Guarantor waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Borrower and the Guarantor with respect
to the Obligations. This Article shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity, regularity or enforceability of this
Agreement, any other documents executed and delivered in connection herewith, any of the
Obligations or any other collateral security therefor
or guarantee or right of offset with respect thereto at any time or from time to time held by
the Lender, (b) any defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be










 



38

available to or be asserted by the Guarantor against the
Lender, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the
Borrower or the Guarantor) which constitutes, or might be construed to constitute, an equitable or
legal discharge of the Borrower for the Obligations, or of the Guarantor under this Article, in
bankruptcy or in any other instance. When pursuing its rights and remedies hereunder against the
Guarantor, the Lender may, but shall be under no obligation to, pursue such rights and remedies as
it may have against the Borrower or any other Person or against any collateral security or
guarantee for the Obligations or any right of offset with respect thereto, and any failure by the
Lender to pursue such other rights or remedies or to collect any payments from the Borrower or any
such other Person or to realize upon any such collateral security or guarantee or to exercise any
such right of offset, or any release of the Borrower or any such other Person or of any such
collateral security, guarantee or right of offset, shall not relieve the Guarantor of any liability
hereunder, and shall not impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of the Lender against the Guarantor. This Article shall remain in
full force and effect and be binding in accordance with and to the extent of its terms upon the
Guarantor and its successors and assigns, and shall inure to the benefit of the Lender and its
successors, indorsees, transferees and assigns, until all the Obligations and the obligations of
the Guarantor under this Agreement shall have been satisfied by payment in full and the Commitment
shall be terminated, notwithstanding that from time to time during the term of this Agreement the
Borrower may be free from any Obligations.




          SECTION 7.5. Reinstatement.
This Article shall continue to be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by the Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of any Credit Party or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or trustee or similar officer for, any Credit Party or any
substantial part of its property, or otherwise, all as though such payments had not been made.




          SECTION 7.6. Payments.
The Guarantor hereby agrees that all payments required to be made by it hereunder will be made
to the Lender without set-off or counterclaim in accordance with the terms of the Obligations,
including in the currency in which payment is due.




ARTICLE VIII




EVENTS OF DEFAULT



          If any of the following events (“Events of Default”) shall occur:




               (a) the Borrower shall fail to pay any principal of any Loan when and as the same shall
become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof
or otherwise;



               (b) the Borrower shall fail to pay any interest on any Loan or any other amount (other than
an amount referred to in clause (a) of this Article) payable under this









 



39



Agreement or any other Loan Document, when and as the same shall become due and payable, and
such failure shall continue unremedied for a period of five business days;



               (c) any representation or warranty made or deemed made by any Credit Party (or any of its
officers) in or in connection with this Agreement or any amendment or modification hereof, or in
any report, certificate, financial statement or other document furnished pursuant to or in
connection with this Agreement or any amendment or modification hereof, shall prove to have been
incorrect in any material respect when made or deemed made;



               (d) any Credit Party shall fail to observe or perform any covenant, condition or agreement
contained in Section 5.2, 5.3 (with respect to the Credit Parties’ existence), 5.8 or 5.9 or in
Article VI;



               (e) any Credit Party shall fail to observe or perform any covenant, condition or agreement
contained in this Agreement (other than those specified in clause (a), (b) or (d) of this
Article), and such failure shall continue unremedied for a period of 30 days after notice thereof
from the Lender to the Borrower;



               (f) any Credit Party or any Subsidiary shall fail to make any payment (whether of principal
or interest and regardless of amount) in respect of any Material Indebtedness, when and as the
same shall become due and payable (after expiration of any applicable grace or cure period);



               (g) any event or condition occurs that results in any Material Indebtedness becoming due
prior to its scheduled maturity; provided that this clause (g) shall not apply to (i)
secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the
property or assets securing such Indebtedness or (ii) any obligation under a Hedging Agreement
that becomes due as a result of a default by a party thereto other than a Credit Party or a
Subsidiary;



               (h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed
seeking (i) liquidation, reorganization or other relief in respect of any Credit Party or any
Material Subsidiary or its debts, or of a substantial part of its assets, under any Federal,
state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or
(ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar
official for any Credit Party or any Material Subsidiary or for a substantial part of its assets,
and, in any such case, such proceeding or petition shall continue undismissed for 60 days or an
order or decree approving or ordering any of the foregoing shall be entered;



               (i) any Credit Party or any Material Subsidiary shall (i) voluntarily commence any proceeding
or file any petition seeking liquidation, reorganization or other relief under any Federal, state
or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii)
consent to the institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (h) of this Article, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for
the Borrower or any Material Subsidiary or for a substantial part of its assets, (iv) file an
answer admitting the material allegations of a petition filed against









 



40



it in any such proceeding,
(v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose
of effecting any of the foregoing;



               (j) any Credit Party or any Material Subsidiary shall become unable, admit in writing or fail
generally to pay its debts as they become due;



               (k) one or more final judgments for the payment of money shall be rendered against the
Guarantor, the Borrower, any Subsidiary or any combination thereof and either (i) a creditor shall
have commenced enforcement proceedings upon any such judgment in an aggregate amount (to the
extent not covered by insurance as to which the relevant insurance company has not denied
coverage) in excess of $40,000,000 (a “Material Judgment”) or (ii) there shall be a period
of 30 consecutive days during which a stay of enforcement of any Material Judgment shall not be in
effect (by reason of pending appeal or otherwise) (it being understood that, notwithstanding the
definition of “Default”, no “Default” shall be triggered solely by the rendering of such a
judgment or judgments prior to the commencement of enforcement proceedings or the lapse of such 30
consecutive day period, so long as such judgments are capable of satisfaction by payment at any
time);



               (l) an ERISA Event shall have occurred that, in the opinion of the Lender, when taken
together with all other ERISA Events that have occurred, would reasonably be expected to result in
a Material Adverse Effect;



               (m) a Change in Control shall occur;



               (n) the Guarantee contained in Article VII herein shall cease, for any reason, to be in full
force and effect in any material respect or any Credit Party shall so assert;



               (o) the Security Agreement, the Control Agreement or the HSBC TFS Letter shall for any reason
cease to be valid and binding on or enforceable against any Credit Party that is party thereto; or
any Credit Party shall so state in writing or bring an action to limit its obligations or
liabilities thereunder;



               (p) the Security Agreement shall for any reason (other than pursuant to the terms thereof)
cease to create a valid, perfected and first priority security interest in the Collateral purported
to be covered thereby;



               (q) any representation or warranty made or deemed made by any Credit Party in the Security
Agreement, the Control Agreement or the HSBC TFS Letter shall prove to have been incorrect in any
material respect when made or deemed made; or



               (r) any Credit Party shall fail to observe or perform any covenant or agreement (other than as
specified in clauses (o), (p) and (q) of this Article) contained in the Security Agreement, the
Control Agreement or the HSBC TFS Letter;


then, and in every such event (other than an event with respect to the Credit Parties described in
clause (h) or (i) of this Article), and at any time thereafter during the continuance of such
event,








 



41


the Lender may, by notice to the Borrower, take either or both of the following actions, at
the same or different times: (i) terminate the Commitment, and thereupon the Commitment shall
terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole
(or in part, in which case any principal not so declared to be due and payable may thereafter be
declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all fees and other
Obligations of the Credit Parties accrued hereunder, shall become due and payable immediately,
without presentment, demand, protest or other notice of any kind, all of which are hereby waived by
the Credit Parties; and in case of any event with respect to the Credit Parties described in clause
(h) or (i) of this Article, the Commitment shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and other Obligations
of the Credit Parties accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are hereby waived by the
Credit Parties.




ARTICLE IX




[RESERVED]



ARTICLE X




MISCELLANEOUS



          SECTION 10.1. Notices. Except in the case of notices and other communications expressly permitted to be given by
telephone and except as otherwise provided in Sections 2.3, 2.6 and 2.8, all notices and other
communications provided for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopy, as follows:




          (a) if
to the Borrower or the Guarantor, to it at One H&R Block Way, Kansas City, Missouri
64105, Attention of Becky Shulman (Telecopy No. (816) 854-8043), David Staley (Telecopy No. (816)
854-8043) and Andrew Somora (Telecopy No. (816) 802-1043); and


          (b) if to the Lender, to it at HSBC Bank USA, National Association, 452 Fifth Avenue, New
York, New York 10018, attention: Nathalie Majlis, (Telecopy No. (212) 525-2573, with a copy to HSBC
Bank USA, National Association, One HSBC Center, 26th Floor, Buffalo, New York 14203, attention:
Donna Riley and Tina Craiglow, (Telecopy No. (917) 229-5285, HSBC Bank USA, National Association,
26525 N. Riverwoods Boulevard, Mettawa, IL 60045, attention: Senior Vice President and Deputy
General Counsel — Corporate










 



42

(Telecopy No. (224) 552-2945), HSBC Securities (USA) Inc., 425 Fifth
Avenue, Lower Level, New York, N.Y. 10018 (Telecopy No. (212) 525-2570), attention Jimmy Tse, HSBC
Taxpayer Financial Services Inc., 200 Somerset Corporate Boulevard, Bridgewater, N.J. 08807
(Telecopy No. (908) 203-4211, attention: EVP and President, and HSBC Taxpayer Financial Services
Inc., 90 Christiana Road, New Castle, DE 19707 (Telecopy No. (302) 327-2533, attention: General
Counsel); provided, that notices under Section 2.3 need only be given to Mr. Kyle Hartung at
telephone number (224) 544-4023, confirmed by telecopy at (224) 552-4023.



Any party hereto may change its address, telephone number or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and other
communications given to any party hereto in accordance with the provisions of this Agreement shall
be deemed to have been given on the date of receipt. For so long as any Affiliate of the Lender is
a “Lender” under either of the Bank Revolvers, the Lender will accept delivery of any financial
statement or other information to be delivered under Section 5.1(a), (b) and(d) hereunder that is
posted to Intralinks. The Lender, the Borrower or the Guarantor may, in its discretion, agree to
accept notices and other communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be limited to
particular notices or communications.




          SECTION 10.2. Waivers; Amendments.
(a) No failure or delay by the Lender in exercising any right or power hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights and remedies of
the Lender hereunder are cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any departure by the
Credit Parties therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of
whether the Lender may have had notice or knowledge of such Default at the time.




          (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Credit Parties and the
Lender.




          SECTION 10.3. Expenses; Indemnity; Damage Waiver.
(a) The Borrower shall pay all reasonable and documented out-of-pocket expenses incurred by
the Lender, including the reasonable and documented fees, charges and disbursements of any counsel
for the Lender, in connection with the enforcement or protection of its rights in connection with
this Agreement, including its rights under this Section, or in connection with the Loans made
hereunder, including in connection with any workout, restructuring or negotiations in respect
thereof.




          (b) The Credit Parties shall jointly and severally indemnify the Lender and each Related Party
of the Lender (each such Person being called an “Indemnitee”), against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and related










 



43

expenses (each, for purposes of this clause (b) a “loss”), including the fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee
arising out of, in connection with, or as a result of (i) the execution or delivery of the Loan
Documents, the performance by the parties thereto of their respective obligations thereunder, or
the consummation of the Transactions, (ii) any Loan or the use of the proceeds therefrom, (iii) any
actual or alleged presence or release of Hazardous Materials on or from any property owned or
operated by the Credit Parties or any Subsidiaries, or any Environmental Liability related in any
way to the Credit Parties or any Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on contract,
tort or any other theory and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not be available with respect to any Indemnitee to the
extent that (x) such losses are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful misconduct of such
Indemnitee, or (y) such Indemnitee could assert a valid claim for such losses against a Block
Indemnifying Party under Article IV of the Indemnification Agreement (in which case the
Indemnification Agreement shall control as provided therein); provided, further,
that nothing in this Section 10.3(b) is intended or shall be construed to expand the
indemnification rights of the Block Indemnified Parties under the Program Contracts.




          (c) To the extent permitted by applicable law, no party shall assert, and each party hereby
waives, any claim against any other party, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or the use of the proceeds thereof; provided that this
waiver shall not apply with respect to indemnities under clause (b) of this Section 10.3 for third
party claims made against an Indemnitee for special, indirect, consequential or punitive damages.




          (d) All amounts due under this Section shall be payable promptly after written demand
therefor.




          SECTION 10.4. Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns permitted hereby, except that no Credit
Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior
written consent of the Lender (and any attempted assignment or transfer by any Credit Party without
such consent shall be null and void). Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their respective successors and
assigns permitted hereby and, to the extent expressly contemplated hereby, the Related Parties of
the Lender) any legal or equitable right, remedy or claim under or by reason of this Agreement.




          (b) The Lender may assign to one or more assignees all or a portion of its rights under this
Agreement (including all or a portion of the Loans at the time owing to it); provided that
the Borrower must give its prior written consent to such assignment (which consent shall not be
unreasonably withheld); provided, further, that any consent of the Borrower
otherwise required under this paragraph shall not be required if an Event of Default










 



44

has occurred
and is continuing. Any assignment or transfer by the Lender of rights under this Agreement that
does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by
the Lender of a participation in such rights and obligations in accordance with paragraph (c) of
this Section.




          (c) The Lender may, without the consent of any Credit Party, sell participations to one or
more banks or other entities (a “Participant”) in all or a portion of the Lender’s rights
and obligations under this Agreement (including all or a portion of its Commitment and the Loans
owing to it); provided that (i) the Lender’s obligations under this
Agreement shall remain unchanged, (ii) the Lender shall remain solely responsible to the
other parties hereto for the performance of the obligations and (iii) the Credit Parties shall
continue to deal solely and directly with the Lender in connection with the Lender’s rights and
obligations under this Agreement. Any agreement or instrument pursuant to which the Lender sells
such a participation shall provide that the Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision of this Agreement;
provided that such agreement or instrument may provide that such Lender will not, without
the consent of the Participant, agree to any amendment, modification or waiver of or under this
Agreement that shall (i) increase the Commitment, (ii) reduce the principal amount of any Loan or
reduce the rate of interest thereon, (iii) postpone the scheduled date of payment of the principal
amount of any Loan, or any interest thereon, or reduce the amount of, waive or excuse any such
payment, or postpone the scheduled date of expiration or reduction of the Commitment, (iv) release
any security provided for in the Security Agreement, (v) release the guarantee contained in
Article VII or (vi) change any of the provisions of this Section. Subject to paragraph (d) of
this Section, the Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.9 and 2.10 to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section.




          (d) A Participant shall not be entitled to receive any greater payment under Section 2.9 or
2.10 than the Lender would have been entitled to receive with respect to the participation sold to
such Participant, unless the sale of the participation to such Participant is made with the
Borrower’s prior written consent.




          (e) The Lender may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of the Lender, including any such pledge or
assignment to a Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of a
security interest shall release the Lender from any of its obligations hereunder or substitute any
such assignee for the Lender as a party hereto.




          SECTION 10.5. Survival.
All covenants, agreements, representations and warranties made by the Credit Parties herein
and in the certificates or other instruments delivered in connection with or pursuant to this
Agreement shall be considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans regardless of any
investigation made by any such other party or on its behalf and notwithstanding that the Lender may
have had notice or knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as long as the principal
of or any accrued interest on










 



45

any Loan or any other amount payable under this Agreement is
outstanding and unpaid and so long as the Commitment has not expired or terminated. The provisions
of Sections 2.9, 2.10, 10.3, 10.9, 10.10 and 10.15 shall survive and remain in full force and
effect regardless of the consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Commitment or the termination of this Agreement or any
provision hereof.




          SECTION 10.6. Counterparts; Integration; Effectiveness.
This Agreement may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement and the documents provided for herein
constitute the entire contract among the parties relating to the subject matter hereof and
supersede any and all previous agreements and understandings, oral or written, relating to the
subject matter hereof. Except as provided in Section 4.1, this Agreement shall become effective
when it shall have been executed by the Lender and when the Lender shall have received counterparts
hereof which, when taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. Delivery of an executed counterpart of a signature page of this
Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this
Agreement.




          SECTION 10.7. Severability.
Any provision of this Agreement held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and enforceability of the
remaining provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.




          SECTION 10.8. Right of Setoff.
If an Event of Default shall have occurred and be continuing, the Lender is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to set off and apply any
and all indebtedness at any time owing by the Lender to or for the credit or the account of either
Credit Party against any of and all the obligations of such Credit Party now or hereafter existing
under this Agreement held by the Lender, irrespective of whether or not the Lender shall have made
any demand under this Agreement and although such indebtedness may be unmatured. The rights of the
Lender under this Section are in addition to other rights and remedies (including other rights of
setoff) which such Lender may have.




          SECTION 10.9. Governing Law; Jurisdiction; Consent to Service of Process.
(a) This Agreement shall be construed in accordance with and governed by the law of the State
of New York.




          (b) Each Credit Party hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting
in New York County and of the United States District Court of the Southern District of New York,
and any appellate court from any thereof, in connection with any Proceeding, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any
Proceeding may be heard and determined in such New York State or, to the extent permitted by law,
in such Federal court. Each of the parties hereto agrees that










 



46

a final judgment in any such
Proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing in this Agreement shall affect any right that the
Lender may otherwise have to bring any Proceeding relating to this Agreement against any Credit
Party or its properties in the courts of any jurisdiction.




          (c) Each Credit Party hereby irrevocably and unconditionally waives, to the fullest extent it
may legally and effectively do so, any objection which it may now or hereafter have to the laying
of venue of any Proceeding arising out of or relating to this Agreement in any court referred to
in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such
Proceeding in any such court.




          (d) Each party to this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 10.1 in connection with a Proceeding. Nothing in this Agreement
will affect the right of any party to this Agreement to serve process in any other manner
permitted by law in connection with a Proceeding.




          SECTION 10.10. WAIVER OF JURY TRIAL.
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT
OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE
OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.




          SECTION 10.11. Headings.
Article and Section headings and the Table of Contents used herein are for convenience of
reference only, are not part of this Agreement and shall not affect the construction of, or be
taken into consideration in interpreting, this Agreement.




          SECTION 10.12. Confidentiality.
The Lender agrees to maintain the confidentiality of the Information (as defined below),
except that Information may be disclosed (a) to its and its Affiliates’ directors, officers,
employees and agents, including accountants, legal counsel and other advisors (it being understood
that the Persons to whom such disclosure is made will be informed of the confidential nature of
such Information and instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection
with the exercise of any remedies hereunder or any suit, action or proceeding relating to this
Agreement or the enforcement of rights hereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section, to any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations under this Agreement,
(g) with the consent of the










 



47

Borrower or (h) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section by it or (ii) becomes available to the
Lender on a nonconfidential basis from a source other than any
Credit Party; provided, that the Lender may file this Agreement with the Securities and
Exchange Commission. For the purposes of this Section, “Information” means all information
received from any Credit Party relating to any Credit Party or its business, other than any such
information that is available to the Lender on a nonconfidential basis prior to disclosure by such
Credit Party; provided that, in the case of information received from any Credit Party
after the date hereof, such information is clearly identified at the time of delivery as
confidential. The Lender shall be considered to have complied with its obligation under this
Section if it has exercised the same degree of care to maintain the confidentiality of such
Information as it would accord to its own confidential information.




          SECTION 10.13. Interest Rate Limitation.
Notwithstanding anything herein to the contrary, if at any time the interest rate applicable
to any Loan, together with all fees, charges and other amounts which are treated as interest on
such Loan under applicable law (collectively the “Charges”), shall exceed the maximum
lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or
reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest
payable in respect of such Loan hereunder, together with all Charges payable in respect thereof,
shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would
have been payable in respect of such Loan but were not payable as a result of the operation of this
Section shall be cumulated and the interest and Charges payable to the Lender in respect of other
Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated
amount, together with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by the Lender.




          SECTION 10.14. USA Patriot Act. The Lender hereby notifies the Borrower that
pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law
October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that
identifies the Borrower, which information includes the name and address of the Borrower and other
information that will allow the Lender to identify the Borrower in accordance with the Act.




[THIS SPACE LEFT BLANK INTENTIONALLY]











 



 




          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.




	 	 	 	 	 
	 	BLOCK FINANCIAL LLC, as Borrower

 	 
	 	By:  	/s/ Becky S. Shulman
 	 
	 	 	Name:  	Becky S. Shulman 	 
	 	 	Title:  	President and Chief Financial Officer 	 
	 
	 	H&R BLOCK, INC., as Guarantor

 	 
	 	By:  	/s/ Becky S. Shulman
 	 
	 	 	Name:  	Becky S. Shulman 	 
	 	 	Title:  	Senior Vice President and Chief
Financial Officer 	 
	 


Signature
Page to Credit Agreement








 



 

	 	 	 	 	 
	 	HSBC BANK USA, NATIONAL

ASSOCIATION, as Lender

 	 
	 	By:  	/s/ Eesh K. Bansal
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



Signature
Page to Credit Agreement









 



 




SCHEDULE 3.4(a)




Guarantee Obligations




None.










 



 


SCHEDULE 3.6




Disclosed Matters




None.









 



 


SCHEDULE 3.13




Subsidiaries




          The following is a list of the direct and indirect subsidiaries of H&R Block, Inc., a
Missouri corporation.




	 	 	 
	 	 	Domestic
	Company Name
	 	Jurisdiction

	Aculink Mortgage Solutions, LLC

	 	Florida
	AcuLink of Alabama, LLC

	 	Alabama
	Ada Services Corporation

	 	Massachusetts
	BFC Transactions, Inc.

	 	Delaware
	Birchtree Financial Services, Inc.

	 	Oklahoma
	Birchtree Insurance Agency, Inc.

	 	Missouri
	Block Financial LLC

	 	Delaware
	CFS-McGladrey, LLC

	 	Massachusetts
	Cfstaffing, Ltd.

	 	British Columbia
	Cityfront, Inc.

	 	Delaware
	Companion Insurance, Ltd.

	 	Bermuda
	Companion Mortgage Corporation

	 	Delaware
	Creative Financial Staffing of Western Washington, LLC

	 	Massachusetts
	EquiCo, Inc.

	 	California
	Express Tax Service, Inc.

	 	Delaware
	Financial Marketing Services, Inc.

	 	Michigan
	Financial Stop Inc.

	 	British Columbia
	FM Business Services, Inc.

	 	Delaware
	Franchise Partner, Inc.

	 	Nevada
	H&R Block (India) Private Limited

	 	India
	H&R Block (Nova Scotia), Incorporated

	 	Nova Scotia
	H&R Block Bank

	 	Missouri
	H&R Block Canada Financial Services, Inc.

	 	Federally Chartered
	H&R Block Canada, Inc.

	 	Federally Chartered
	H&R Block Eastern Enterprises, Inc.

	 	Missouri
	H&R Block Enterprises LLC

	 	Missouri
	H&R Block Global Solutions (Hong Kong) Limited

	 	Hong Kong
	H&R Block Group, Inc.

	 	Delaware
	H&R Block Insurance Agency, Inc.

	 	Delaware
	H&R Block Limited

	 	New South Wales
	H&R Block Management, LLC

	 	Delaware
	H&R Block Tax and Business Services, Inc.

	 	Delaware
	H&R Block Tax Institute, LLC

	 	Missouri
	H&R Block Tax Services LLC

	 	Missouri
	H&R Block, Inc.

	 	Missouri
	HRB Advance LLC

	 	Delaware
	HRB Center LLC

	 	Missouri
	HRB Concepts LLC

	 	Delaware
	HRB Corporate Enterprises LLC

	 	Delaware












 



 


	 	 	 
	 	 	Domestic
	Company Name
	 	Jurisdiction

	HRB Corporate Services LLC

	 	Missouri
	HRB Digital LLC

	 	Delaware
	HRB Digital Technology Resources LLC

	 	Delaware
	HRB Expertise LLC

	 	Missouri
	HRB Innovations, Inc.

	 	Delaware
	HRB International LLC

	 	Missouri
	HRB Products LLC

	 	Missouri
	HRB Support Services LLC

	 	Delaware
	HRB Tax & Technology Leadership LLC

	 	Missouri
	HRB Tax Group, Inc.

	 	Missouri
	HRB Technology Holding LLC

	 	Delaware
	HRB Technology LLC

	 	Missouri
	McGladrey Capital Markets Canada Inc.

	 	Federally Chartered
	McGladrey Capital Markets Europe Limited

	 	United Kingdom
	McGladrey Capital Markets LLC

	 	Delaware
	OOMC Holdings LLC

	 	Delaware
	OOMC Residual Corporation

	 	New York
	O’Rourke Career Connections, LLC

	 	California
	Pension Resources, Inc.

	 	Illinois
	Provident Mortgage Services, Inc.

	 	Delaware
	RedGear Technologies, Inc.

	 	Missouri
	RSM Employer Services Agency of Florida, Inc.

	 	Florida
	RSM Employer Services Agency, Inc.

	 	Georgia
	RSM EquiCo, Inc.

	 	Delaware
	RSM McGladrey Business Services, Inc.

	 	Delaware
	RSM McGladrey Business Solutions, Inc.

	 	Delaware
	RSM McGladrey Employer Services, Inc.

	 	Georgia
	RSM McGladrey Insurance Services, Inc.

	 	Delaware
	RSM McGladrey TBS, LLC

	 	Delaware
	RSM McGladrey, Inc.

	 	Delaware
	Sand Canyon Acceptance Corporation

	 	Delaware
	Sand Canyon Corporation

	 	California
	Sand Canyon Securities Corp.

	 	Delaware
	Sand Canyon Securities II Corp.

	 	Delaware
	Sand Canyon Securities III Corp.

	 	Delaware
	Sand Canyon Securities IV LLC

	 	Delaware
	ServiceWorks, Inc.

	 	Delaware
	TaxNet Inc.

	 	California
	TaxWorks, Inc.

	 	Delaware
	Vantive Partners LLC

	 	Missouri
	West Estate Investors, LLC

	 	Missouri
	Woodbridge Mortgage Acceptance Corporation

	 	Delaware












 



 


SCHEDULE 6.2




Existing Indebtedness





	•	 	Irrevocable Standby Letter of Credit issued on February 16, 2005 by Comerica in favor of
Chubb National Company for an amount up to $3,500,000.
	 
	•	 	Irrevocable Standby Letter of Credit issued on December 30, 2008 by U.S. Bank N.A. in
favor of Old Republic Insurance Company for an amount up to $2,692,024.
	 
	•	 	Irrevocable Standby Letter of Credit issued on October 23, 2007 by Comerica Bank N.A. in
favor of Axis Insurance Company for an amount up to $500,000.
	 
	•	 	The Guarantor’s and Subsidiaries’ obligations under surety bonds and fidelity bonds
issued pursuant to state mortgage licensing requirements.











 



 


SCHEDULE 6.3




Existing Liens




	 	 	 	 	 	 	 	 	 	 	 
	Secured	 	 	 	 	 	 	 	 	 	 
	Party	 	Debtor	 	State	 	File No.	 	File Date	 	Collateral
	De Lage Landen
Financial Services
Inc.

	 	H&R Block, Inc.
	 	MO
	 	20080099856J
(continuation of
20040003070H;
assigned from
20030110496H by
Steelcase Financial
Services, Inc.)
	 	9/12/08
	 	Leased equipment

under Master Lease

Agreement #23144
	 
	 	 	 	 	 	 	 	 	 	 
	TUO-Houston Long 

Point, LLC

	 	H&R Block, Inc.
	 	MO
	 	20080113972E
	 	10/23/08
	 	Debtor’s property

located at 7918

Long Point Road,

Houston, TX 77055

(excluding client

files)












 



 


SCHEDULE 6.4(b)




Additional Businesses





	•	 	Businesses that offer products and services typically provided by finance companies,
banks and other financial service providers, including consumer finance and mortgage-loan
related products and services, credit products, insurance products, check cashing, money
orders, wire transfers, stored value cards, bill payment services, notary services and
similar products and services.
	 
	•	 	Businesses that offer financial, or financial-related, products and services that can be
marketed, provided or distributed by leveraging the retail locations of Guarantor’s
Subsidiaries or the relationships of such Subsidiaries with their clients as a tax return
preparer or financial advisor or service provider.











 



 


SCHEDULE 6.6




Existing Restrictions





	•	 	Indenture dated as of October 20, 1997, by and between the Credit Parties and Bankers
Trust Company, as trustee (the “October 20, 1997 Indenture”).
	 
	•	 	Any other Indenture entered into by any Credit Party to the extent that (a) the
Indebtedness thereunder is permitted by Section 6.2(d) of this Agreement and (b) such other
Indenture has substantially similar terms to the October 20, 1997 Indenture.
	 
	•	 	Repurchase Agreements of the type referred to in Section 6.2(i) of this Agreement.
	 
	•	 	Certain Subsidiaries must maintain capital requirements which could impair their ability
to pay dividends or other distributions.
	 
	•	 	Bank Revolvers.











 



 


EXHIBIT A




[FORM OF SECURITY AGREEMENT]









 



 


EXHIBIT B




[FORM OF CONTROL AGREEMENT]










 



 


EXHIBIT C




[FORM OF HSBC TFS LETTER]










 



 


EXHIBIT D




[FORM OF OPINION OF STINSON MORRISON HECKER LLP]