Document:

exv10w25

 

Exhibit 10.25

EXECUTION COPY

JOINDER AND FIRST AMENDMENT TO PROGRAM CONTRACTS

     This Joinder and First Amendment to Program Contracts (this “First Amendment”), dated
as of November 10, 2006, is made by and among the following parties (collectively, the
“Parties”):

     HSBC Bank USA, National Association, a national banking association (“HSBC NA”);

     HSBC Trust Company (Delaware), N.A., a national banking association (“HSBC Trust”);

     HSBC Taxpayer Financial Services Inc., a Delaware corporation (“HSBC TFS”);

     Beneficial Franchise Company Inc., a Delaware corporation (“Beneficial Franchise”);

     Household Tax Masters Acquisition Corporation, a Delaware corporation (“HTMAC”);

     H&R Block Services, Inc., a Missouri corporation (“Block Services”);

     H&R Block Tax Services, Inc., a Missouri corporation (“Block Tax Services”);

     H&R Block Enterprises, Inc., a Missouri corporation (“Block Enterprises”);

     H&R Block Eastern Enterprises, Inc., a Missouri corporation (“Block Eastern
Enterprises”);

     H&R Block Digital Tax Solutions, LLC, a Delaware limited liability company (“Block
Digital”);

     H&R Block and Associates, L.P., a Delaware limited partnership (“Block Associates”);

     HRB Royalty, Inc., a Delaware corporation (“Royalty”);

     HSBC Finance Corporation, a Delaware corporation (“HSBC Finance”);

     H&R Block, Inc., a Missouri corporation (“H&R Block”); and

     Block Financial Corporation, a Delaware corporation (“BFC”).

NOTE: CERTAIN MATERIAL HAS BEEN OMMITTED FROM THIS AGREEMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT UNDER RULE 24b-2. THE LOCATIONS OF THESE OMISSIONS ARE INDICATED THROUGHOUT THE AGREEMENT
BY THE FOLLOWING MARKINGS: [***].

 

 

RECITALS

     A. All the Parties hereto other than HSBC Trust and BFC entered into that certain HSBC Retail
Settlement Products Distribution Agreement, dated as of September 23, 2005 (the “Original
Retail Distribution Agreement”).

     B. Pursuant to Sections 2.6(b) and 2.7(a) of the Original Retail Distribution Agreement and
subject to the conditions set forth therein, HSBC NA may assign its rights and Obligations under
the Original Retail Distribution Agreement and other Program Contracts to an Affiliate that is a
national bank.

     C. Pursuant to Section 2.5(b) of the Digital Distribution Agreement (and subject to the
conditions set forth therein), HSBC NA may assign its rights and Obligations thereunder to an
Affiliate that is a national bank.

     D. Pursuant to Section 1.3(b) of the Participation Agreement (and subject to the conditions
set forth therein), HSBC NA may assign its rights and Obligations thereunder to an Affiliate that
is a national bank.

     E. Pursuant to Sections 1.3(b) of the Servicing Agreement (and subject to the conditions set
forth therein), HSBC NA may assign its right and Obligations thereunder to an Affiliate that is a
national bank.

     F. HSBC NA desires to (i) assign to HSBC Trust all of its rights and Obligations under the
Original Retail Distribution Agreement and the other Program Contracts to which it is a party to
serve as the Originator of (A) Retail Settlement Products issued through Block Offices other than
through Block Offices located in the States of California, Delaware, Florida, New Jersey, New York,
Oregon and Washington, the Commonwealths of Massachusetts and Pennsylvania and the District of
Columbia (the “Assigned Locations”), and (B) Digital Settlement Products issued through the
Block Digital Channel, and (ii) retain its rights and obligations under the Retail Distribution
Agreement and the other Program Contracts to which it is a party to serve as the Originator of
Retail Settlement Products issued through Block Offices located in the States of California,
Delaware, Florida, New Jersey, New York, Oregon and Washington, the Commonwealths of Massachusetts
and Pennsylvania and the District of Columbia, (the “Retained Locations”).

     G. HSBC Trust desires to assume all of HSBC NA’s rights and Obligations to serve as the
Originator under (i) the Original Retail Distribution Agreement with respect to Retail Settlement
Products issued through the Assigned Locations and (ii) the Digital Distribution Agreement with
respect to Digital Settlement Products issued through the Block Digital Channel.

2

 

     H. HSBC Trust desires to assume all of HSBC NA’s rights and Obligations as Originator under
the Participation Agreement with respect to Retail Settlement Products issued through Assigned
Locations and Digital Settlement Products issued through the Block Digital Channel.

     I. The Block Companies are willing to consent to the partial assignment of rights and
Obligations from HSBC NA to HSBC Trust.

     J. HSBC Trust is in the process of obtaining all regulatory approvals necessary for it to
carry out its obligations as Originator with respect to the Assigned Locations and the Block
Digital Channel, and the parties desire that no assignment to, or agency appointment by, HSBC Trust
occur until such approvals are obtained.

     K. In connection with HSBC NA’s assignment of its rights and Obligations as Originator to HSBC
Trust with respect to Retail Settlement Products issued through the Assigned Locations and Digital
Settlement Products issued through the Block Digital Channel, HSBC NA desires to terminate the
Block Agents as its Agents with respect to origination activities for Retail Settlement Products
issued through the Assigned Locations and Digital Settlement Products issued through the Block
Digital Channel.

     L. HSBC Trust as Originator desires to appoint the Block Agents as its Agents in connection
with its assumption of origination activities with respect to Retail Settlement Products issued
through the Assigned Locations and Digital Settlement Products issued through the Block Digital
Channel.

     M. The Parties hereto have jointly developed a new “Enhanced IRAL” product and also desire to
amend the Program Contracts to include such product as a type of IRAL that may be offered to
Clients.

     N. The Parties hereto desire to remove HTMAC as a party from all of the Program Contracts to
which it is currently a party and to substitute HSBC TFS in its place.

     O. The Parties hereto desire to enter into this First Amendment to amend the Original Retail
Distribution Agreement and the other Program Contracts to effect the foregoing changes (the
Original Retail Distribution Agreement, as amended by this First Amendment, and all subsequent
amendments and restatements thereof and supplements thereto, is referred to as the “Retail
Distribution Agreement”).

AGREEMENT

     ACCORDINGLY, the Parties to this First Amendment agree as follows:

     Section 1. Definitions. All capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the HSBC Appendix of Defined Terms and
Rules of Construction attached to the Original Retail Distribution Agreement (as hereinafter
amended), as hereinafter amended by this First Amendment.

3

 

     Section 2. Joinder, Assignment, Assumption and Consent.

          (a) HSBC NA hereby assigns to HSBC Trust all of its rights and Obligations under the Retail
Distribution Agreement and the other Program Contracts to which it is a party to serve as the
Originator of (i) Retail Settlement Products issued through the Assigned Locations in the HSBC
Trust States and (ii) Digital Settlement Products issued through the Block Digital Channel.

          (b) HSBC Trust, by execution of this First Amendment, hereby (1) accepts such assignment from
HSBC NA and agrees to become the Originator of (i) Retail Settlement Products issued through the
Assigned Locations in the HSBC Trust States and (ii) Digital Settlement Products issued through the
Block Digital Channel, (2) agrees to be bound by all of the terms and conditions of each of the
Program Contracts applicable to “HSBC Bank” (as such term is amended by this First Amendment) in
its capacity as Originator with respect to the Assigned Locations in the HSBC Trust States and the
Block Digital Channel, and (3) assumes all obligations and liabilities of “HSBC Bank” (as such term
is amended by this First Amendment) in its capacity as Originator with respect to the Assigned
Locations in the HSBC Trust States and the Block Digital Channel under the Program Contracts to
which it is a party.

          (c) The Block Companies hereby consent to the partial assignment of the rights and Obligations
of HSBC NA to HSBC Trust as provided in this First Amendment to the extent such consent is required
under the Program Contracts.

     Section 3. Removal of HTMAC as a Party. HTMAC hereby assigns to HSBC TFS all of its
rights and Obligations under the Retail Distribution Agreement and the other Program Contracts to
which it is a party and ceases to be a party to any of the Program Contracts. HSBC TFS, by
execution of this First Amendment, hereby (1) accepts such assignment from HTMAC and agrees to be
bound by all of the terms and conditions of each of the Program Contracts applicable to “HTMAC”,
and (2) assumes all obligations and liabilities of “HTMAC” under the Program Contracts to which it
is a party. The Parties hereby consent to this assignment and assumption with respect to the
Program Contracts, including those to which HTMAC is currently a party, effective as of the date of
this First Amendment, which include, but are not limited to, the Retail Distribution Agreement, the
Servicing Agreement, the Participation Agreement, the Indemnification Agreement and the HSBC Common
Interest, Joint Defense and Confidentiality Agreement dated as of September 23, 2005 between the
HSBC Companies (as defined prior to the effective date of this First Amendment) and the Block
Companies.

     Section 4. Agency Appointments and Terminations.

          (a) HSBC Trust hereby appoints the Block Agents, and the Block Agents hereby accept such
appointment, to act as agents of HSBC Trust for purposes of offering and distributing Retail
Settlement Products issued through the Assigned Locations in the HSBC Trust States and Digital
Settlement Products issued through the Block Digital Channel.

          (b) HSBC NA hereby terminates the appointment of each of the Block Agents and the Franchisee
Agents as its agent with respect to offering and distributing Retail Settlement

4

 

Products issued through the Assigned Locations in the HSBC Trust States and Digital Settlement
Products issued through the Block Digital Channel.

     Section 5. Amendments.

          (a) The Appendix of Defined Terms and Rules of Construction attached to the Original Retail
Distribution Agreement is hereby amended:

                    (1) by adding thereto the following defined terms (which are added thereto in alphabetical
order:

     “Assigned Locations” shall mean all Block Offices other than Block Offices
located in the States of California, Delaware, Florida and New Jersey, New York,
Oregon and Washington, the Commonwealths of Massachusetts, and Pennsylvania and
the District of Columbia, provided, however, that these
locations may be modified prospectively in accordance with Section 2.8 of the
Retail Distribution Agreement.

     “Enhanced IRAL” shall mean (a) an IRAL issued to a Client who would not
have qualified for an IRAL but for implementation of the credit criteria for
Enhanced IRALs established by the Originator, or (b) an IRAL issued to a Client
in an amount greater than what such Client would have qualified for but for
implementation of the credit criteria for Enhanced IRALs established by the
Originator.

     “HSBC NA States” shall mean, collectively, the States of California,
Delaware, Florida, New Jersey, New York, Oregon and Washington, the
Commonwealths of Massachusetts and Pennsylvania and the District of Columbia,
provided, however, that these states may be modified
prospectively in accordance with Section 2.8 of the Retail Distribution
Agreement.

     “HSBC Trust” shall mean HSBC Trust Company (Delaware), National
Association, a national banking association, and its successors and assigns.

     “HSBC Trust States” shall mean, collectively, all of the states,
commonwealths and territories of the United States of America and other
locations that do not constitute the HSBC NA States, provided,
however, that the states may be modified prospectively in accordance
with Section 2.8 of the Retail Distribution Agreement.

     “RAC Documents” shall mean with respect to each HSBC RAC, any and all other
documents executed and delivered in connection with the origination or
subsequent modification of such HSBC RAC.

     “Retained Locations” shall mean Block Offices located in the States of
California, Delaware, Florida, New Jersey, New York, Oregon and Washington, the
Commonwealths of Massachusetts and Pennsylvania and the District of Columbia,
provided, however, that these locations may be modified

5

 

prospectively in accordance with Section 2.8 of the Retail Distribution
Agreement.

                    (2) by deleting in their entirety the existing definitions of the following defined terms and
inserting in their place the following new definitions:

     “HSBC Bank” shall mean (a) HSBC NA or HSBC Trust, as the case may be, or
(b) in the event that HSBC NA or HSBC Trust shall assign their respective rights
and obligations under the Retail Distribution Agreement and the other Program
Contracts pursuant to Section 2.6(b) or 2.7 of the Retail Distribution
Agreement, and, if assigned pursuant to Section 2.7 of the Retail Distribution
Agreement, subject to the satisfaction of the terms and conditions specified in
Section 2.7(b) of the Retail Distribution Agreement, the national bank, federal
savings association, operating subsidiary or other Affiliate that is the
permitted assignee of HSBC NA or HSBC Trust, it being understood that when “HSBC
Bank” has the ability to act or make a determination under the Program
Contracts, each of the entities then constituting an “HSBC Bank” may do so
independently and no such entity is the agent of the other. For the avoidance
of doubt, the inclusion in the foregoing definition of “HSBC Bank” of references
to Sections of the Retail Distribution Agreement is not intended to, and shall
not, affect the rights of the parties pursuant to such Sections.

     “HSBC Companies” shall mean, collectively, HSBC Bank, HSBC NA, HSBC Trust,
HSBC TFS and Beneficial Franchise.

     “HSBC Indemnifying Parties” shall mean, collectively, HSBC Bank, HSBC TFS
and Beneficial Franchise.

     “IRAL” or “Instant Money” shall mean any of (a) a RAL for which a credit
decision is made prior to Block Services receiving both (i) the IRS Return
Notification and (ii) the Debt Indicator, (b) an Enhanced IRAL or (c) a RAL
designated as such by mutual written agreement of the HSBC Companies and the
Block Companies.

     “Originator” shall mean the originator of Retail Settlement Products
through Block Offices and Digital Settlement Products through the Block Digital
Channel; provided, however, that with respect to Retail Settlement Products
issued through Retained Locations in the HSBC NA States, the term “Originator”
refers only to HSBC NA and its permitted assignees or successors in interest,
and with respect to Retail Settlement Products issued through Assigned Locations
in the HSBC Trust States and Digital Settlement Products issued through the
Block Digital Channel, the term “Originator” refers only to HSBC Trust and its
permitted assignees or successors in interest.

     “RAL Documents” shall mean with respect to each HSBC RAL, the related Note
and the related Security Agreement, if applicable, and any and all

6

 

other documents executed and delivered in connection with the origination
or subsequent modification of such HSBC RAL.

                    (3) The Parties agree that all Program Contracts are hereby amended to incorporate the
amendments to the Appendix of Defined Terms and Rules of Construction pursuant to this Section 4.

          (b) The agency effective dates set forth in Section 2.1(c) and Section 11.1(a) of the Retail
Distribution Agreement are hereby amended to read “November 10, 2006.”

          (c) Section 2.4(a)(iii) to the Retail Distribution Agreement is hereby amended by adding the
phrase “Subject to Section 2.4(c) hereof,” at the beginning thereof.

          (d) A new Section 2.4(c) is hereby added to the Retail Distribution Agreement immediately
following Section 2.4(b) therein as follows:

     (c) Except as otherwise provided in this Retail Distribution Agreement, the
Originator shall Offer Enhanced IRALs through the Block Agents at the Block
Offices, and the Originator and the Block Agents shall comply with the policies
and procedures set forth in the Enhanced IRAL Product Policies and Procedures
Schedule attached hereto as Schedule 2.4(c). Any Client whose
application for an Enhanced IRAL is denied by HSBC Bank will receive free
federal income tax return preparation services from the Block Companies for the
then current tax period.

          (e) Section 2.7 is hereby amended to permit HSBC Trust to assign its rights and Obligations
under the Retail Distribution Agreement and other Program Contracts, on the same terms and subject
to the same restrictions as are applicable to HSBC NA.

          (f) A new Section 2.8 is hereby added to the Retail Distribution Agreement, immediately
following Section 2.7 therein as follows:

     Section 2.8. Future Modifications to Definitions of “Assigned Locations,” “Retained
Locations,” “HSBC NA States” and “HSBC Trust States.”

     (a) After April 15, 2007, the HSBC Companies may, in their reasonable
discretion, modify the definitions of “Assigned Location,” “Retained Location,”
“HSBC NA States” and “HSBC Trust States” to move locations and states from one
category to the other on an annual basis, provided that such modification does not
have a material adverse effect upon any of the Block Companies. Any such
modification shall be effective prospectively only, and shall be in effect for an
entire Tax Period.

     (b) During the Term of the Retail Distribution Agreement, on or before June
30th of each year, the HSBC Companies may notify the Block Companies in
writing of any such changes to such definitions, provided, however,
that (i) the only such change is a movement of an Assigned Location to a Retained
Location, or vice versa, and a corresponding movement of an HSBC

7

 

Trust State to an HSBC NA State, or vice versa, (ii) the changes are done only
for entire states, commonwealths, territories or foreign countries, and (iii) there
are no Retained Locations in an HSBC Trust State or Assigned Locations in any HSBC
NA State. No other modifications to such definitions are authorized under this
Section 2.8. No whole or partial assignment to any other entity is authorized under
this Section 2.8.

     (c) It shall not be necessary for the parties to execute and deliver a
subsequent amendment to Program Contracts to evidence such modification, but the
parties may choose to do so if they deem it desirable.

     (d) The HSBC Companies shall reimburse the Block Companies for all
out-of-pocket expenses reasonably incurred by the Block Companies as a result of any
such modification.

          (g) Section 22.3 of the Retail Distribution Agreement is hereby amended to read as follows:

     Section 22.3 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including prepaid overnight courier, facsimile
transmission or similar writing) and shall be given to such party at its address or
facsimile number set forth in this Section 22.3 or on the signature pages hereof or at such
other address or facsimile number as such party may hereafter specify in writing. Each such
notice, request or other communication shall be effective (a) if given by facsimile, when
transmitted to the facsimile number specified in this Section 22.3 and confirmation of
receipt is received by the sender, (b) if given by mail, upon the earlier of actual receipt
or five (5) Business Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, properly addressed and with proper postage prepaid, (c) one
(1) Business Day after deposit with an internationally reputable overnight courier properly
addressed and with all charges prepaid or (d) when received, if by any other means.

     Notices shall be addressed as follows:

	 	 	 
	If to HSBC TFS:

	 	HSBC Taxpayer Financial Services Inc.
	 

	 	200 Somerset Corporate Blvd.
	 

	 	Bridgewater, NJ 08807
	 

	 	Telephone: 908-203-4441
	 

	 	Facsimile: 908-203-4211
	 

	 	Attention: CEO and Managing Director
	 
	 	 
	With a copy to (which shall not

	 	HSBC Taxpayer Financial Services, Inc.
	constitute notice hereunder):

	 	90 Christiana Road
	 

	 	New Castle, DE 19707
	 

	 	Telephone: 302-327-2507
	 

	 	Facsimile: 302-327-2533
	 

	 	Attention: General Counsel

8

 

	 	 	 
	If to Beneficial Franchise:

	 	Beneficial Franchise Company Inc.
	 

	 	200 Somerset Corporate Blvd.
	 

	 	Bridgewater, NJ 08807
	 

	 	Telephone: 908-203-4441
	 

	 	Facsimile: 908-203-4211
	 

	 	Attention: CEO and Managing Director
	 
	 	 
	With a copy to (which shall not

	 	HSBC Taxpayer Financial Services, Inc.
	constitute notice hereunder):

	 	90 Christiana Road
	 

	 	New Castle, DE 19707
	 

	 	Telephone: 302-327-2507
		 	Facsimile: 302-327-2533
		 	Attention: General Counsel
	 
	 	 
	If to HSBC Finance:

	 	HSBC Finance Corporation
	 

	 	200 Somerset Corporate Blvd.
	 

	 	Bridgewater, NJ 08807
	 

	 	Telephone: 908-203-2222
	 

	 	Facsimile: 908-203-4221
	 

	 	Attention: Patrick Cozza, Group Executive
	 
	 	 
	With a copy to (which shall not

	 	HSBC Finance Corporation
	constitute notice hereunder):

	 	2700 Sanders Road
	 

	 	Prospect Heights, IL 60070
	 

	 	Telephone: 847-564-6268
	 

	 	Facsimile: 847-564-6001
		 	Attention: Deputy General Counsel - Operations
	 
	 	 
	If to HSBC NA:

	 	HSBC Bank USA, National Association
	 

	 	One HSBC Center, 10th Floor
	 

	 	Buffalo, NY 14203
	 

	 	Telephone: 716-841-6197
	 

	 	Facsimile: 716-841-6591
	 

	 	Attention: Executive V.P., Consumer Finance
	 
	 	 
	With a copy to (which shall not

	 	HSBC Bank USA, National Association
	constitute notice hereunder):

	 	452 Fifth Ave., 7th Floor
	 

	 	New York, NY 10018
	 

	 	Telephone: 212-525-6533
		 	Facsimile: 212-525-8447
		 	Attention: General Counsel

9

 

	 	 	 
	If to HSBC Trust:

	 	HSBC Trust Company (Delaware), N.A.
	 

	 	1201 North Market Street
	 

	 	Wilmington, DE 19801
	 

	 	Telephone: 302-657-8429
	 

	 	Facsimile: 302-657-8415
	 

	 	Attention: President
	 
	 	 
	With a copy to (which shall not

	 	HSBC Trust Company (Delaware), N.A.
	constitute notice hereunder):

	 	452 Fifth Ave., 7th Floor
	 

	 	New York, NY 10018
	 

	 	Telephone: 212-525-6533
		 	Facsimile: 212-525-8447
		 	Attention: General Counsel
	 
	 	 
	If to HSBC Bank:

	 	To both HSBC NA and HSBC Trust at the
	 

	 	addresses listed above.
	 
	 	 
	If to Block Services:

	 	H&R Block Services, Inc.
	 

	 	One H&R Block Way
	 

	 	Kansas City, Missouri 64105
	 

	 	Telephone: 816-854-3000
	 

	 	Facsimile: 816-854-8500
	 

	 	Attention: President and General Counsel
	 
	 	 
	With a copy to (which shall not

	 	Stinson Morrison Hecker LLP
	constitute notice hereunder):

	 	1201 Walnut Street
	 

	 	Kansas City, Missouri 64106
	 

	 	Telephone: 816-691-3208
		 	Facsimile: 816-691-3495
		 	Attention: Mike W. Lochmann
	 
	 	 
	If to Block Tax Services:

	 	H&R Block Tax Services, Inc.
	 

	 	One H&R Block Way
	 

	 	Kansas City, Missouri 64105
	 

	 	Telephone: 816-854-3000
	 

	 	Facsimile: 816-854-8500
	 

	 	Attention: President and General Counsel
	 
	 	 
	With a copy to (which shall not

	 	Stinson Morrison Hecker LLP
	constitute notice hereunder):

	 	1201 Walnut Street
	 

	 	Kansas City, Missouri 64106
	 

	 	Telephone: 816-691-3208
		 	Facsimile: 816-691-3495
		 	Attention: Mike W. Lochmann

10

 

	 	 	 
	If to Block Enterprises:

	 	H&R Block Enterprises, Inc.
	 

	 	One H&R Block Way
	 

	 	Kansas City, Missouri 64105
	 

	 	Telephone: 816-854-3000
	 

	 	Facsimile: 816-854-8500
	 

	 	Attention: President and General Counsel
	 
	 	 
	With a copy to (which shall not

	 	Stinson Morrison Hecker LLP
	constitute notice hereunder):

	 	1201 Walnut Street
	 

	 	Kansas City, Missouri 64106
	 

	 	Telephone: 816-691-3208
		 	Facsimile: 816-691-3495
		 	Attention: Mike W. Lochmann
	 
	 	 
	If to Block Eastern Enterprises:

	 	H&R Block Eastern Enterprises, Inc.
	 

	 	One H&R Block Way
	 

	 	Kansas City, Missouri 64105
	 

	 	Telephone: 816-854-3000
	 

	 	Facsimile: 816-854-8500
	 

	 	Attention: President and General Counsel
	 
	 	 
	With a copy to (which shall not

	 	Stinson Morrison Hecker LLP
	constitute notice hereunder):

	 	1201 Walnut Street
	 

	 	Kansas City, Missouri 64106
	 

	 	Telephone: 816-691-3208
		 	Facsimile: 816-691-3495
		 	Attention: Mike W. Lochmann
	 
	 	 
	If to Block Digital:

	 	H&R Block Digital Tax Solutions, LLC
	 

	 	One H&R Block Way
	 

	 	Kansas City, Missouri 64105
	 

	 	Telephone: 816-854-3000
	 

	 	Facsimile: 816-854-8500
	 

	 	Attention: President and General Counsel
	 
	 	 
	With a copy to (which shall not

	 	Stinson Morrison Hecker LLP
	constitute notice hereunder):

	 	1201 Walnut Street
	 

	 	Kansas City, Missouri 64106
	 

	 	Telephone: 816-691-3208
		 	Facsimile: 816-691-3495
		 	Attention: Mike W. Lochmann

11

 

	 	 	 
	If to Block Associates:

	 	H&R Block and Associates, L.P.
	 

	 	One H&R Block Way
	 

	 	Kansas City, Missouri 64105
	 

	 	Telephone: 816-854-3000
	 

	 	Facsimile: 816-854-8500
	 

	 	Attention: President and General Counsel
	 
	 	 
	With a copy to (which shall not

	 	Stinson Morrison Hecker LLP
	constitute notice hereunder):

	 	1201 Walnut Street
	 

	 	Kansas City, Missouri 64106
	 

	 	Telephone: 816-691-3208
		 	Facsimile: 816-691-3495
		 	Attention: Mike W. Lochmann
	 
	 	 
	If to Royalty:

	 	HRB Royalty, Inc.
	 

	 	One H&R Block Way
	 

	 	Kansas City, Missouri 64105
	 

	 	Telephone: 816-854-3000
	 

	 	Facsimile: 816-854-8500
	 

	 	Attention: President and General Counsel
	 
	 	 
	With a copy to (which shall not

	 	Stinson Morrison Hecker LLP
	constitute notice hereunder):

	 	1201 Walnut Street
	 

	 	Kansas City, Missouri 64106
	 

	 	Telephone: 816-691-3208
		 	Facsimile: 816-691-3495
		 	Attention: Mike W. Lochmann
	 
	 	 
	If to BFC:

	 	Block Financial Corporation
	 

	 	One H&R Block Way
	 

	 	Kansas City, Missouri 64105
	 

	 	Telephone: 816-854-3000
	 

	 	Facsimile: 816-854-8500
	 

	 	Attention: President and General Counsel
	 
	 	 
	With a copy to (which shall not

	 	Stinson Morrison Hecker LLP
	constitute notice hereunder):

	 	1201 Walnut Street
	 

	 	Kansas City, Missouri 64106
	 

	 	Telephone: 816-691-3208
		 	Facsimile: 816-691-3495
		 	Attention: Mike W. Lochmann

12

 

	 	 	 
	If to H& R Block:

	 	H&R Block, Inc.
	 

	 	One H&R Block Way
	 

	 	Kansas City, Missouri 64105
	 

	 	Telephone: 816-854-3000
	 

	 	Facsimile: 816-854-8500
	 

	 	Attention: President and General Counsel
	 
	 	 
	With a copy to (which shall not

	 	Stinson Morrison Hecker LLP
	constitute notice hereunder):

	 	1201 Walnut Street
	 

	 	Kansas City, Missouri 64106
	 

	 	Telephone: 816-691-3208
	 

	 	Facsimile: 816-691-3495
	 

	 	Attention: Mike W. Lochmann

     (h) A new Section 22.22 is hereby added to the Retail Distribution Agreement immediately
following Section 22.21 therein as follows:

     “Section 22.22 Press Releases. During the Term of this Retail Distribution
Agreement, if any of the Block Companies or their Affiliates on the one hand, or any of the
HSBC Companies or their Affiliates on the other hand (in either case, an “Issuing
Party”, and the other party, the “Referenced Party”), proposes to:

     (a) provide any written communication to any Governmental Authority or
recognized consumer advocate group, in either case that specifically references, by
name or trade name, the Referenced Party and is reasonably expected to become known
to the general public, then the Issuing Party shall (i) provide to the Referenced
Party, via facsimile or email, a draft of such proposed written communication a
reasonable time (depending upon the circumstances) prior to dissemination thereof,
(ii) give the Referenced Party the opportunity to comment upon such written
communication and (iii) give reasonable consideration to the Referenced Party’s
comments, including making modifications to address the Referenced Party’s concerns
if doing so would be appropriate in the reasonable judgment of the Issuing Party; or

     (b) issue a press release that specifically references, by name or trade name,
the Referenced Party, then the Issuing Party shall not issue any such press release
without the Referenced Party’s prior written consent, which consent shall not be
unreasonably withheld or unreasonably delayed;

provided, however, that for the avoidance of doubt, the foregoing notice and
approval procedures shall not apply to any:

	 	(i)	 	verbal communication;
	 
	 	(ii)	 	media discussion or interview;

13

 

	 	(iii)	 	press release or written communication that
refers to the Program Contracts, the Settlement Product Program or any
Settlement Product, but does not specifically reference, by name or
trade name, any Referenced Party;
	 
	 	(iv)	 	informal or incidental written communication,
including without limitation, e-mails and facsimiles (provided that
such means of communication is not used to circumvent the intent and
purpose of subparagraph (a) above);
	 
	 	(v)	 	filing with or written communication to the
SEC;
	 
	 	(vi)	 	notice or written communication to employees,
shareholders or franchisees;
	 
	 	(vii)	 	written communication to a third party
providing products or services to the Issuing Party;
	 
	 	(viii)	 	written communication to educators, analysts, foundations, “think
tanks” and similar individuals and institutions;
	 
	 	(ix)	 	notice or written communication to the Issuing
Party’s federal or state regulators;
	 
	 	(x)	 	written communication filed or made in any
case, arbitration or other legal or administrative proceeding to which
the Issuing Party or any of its Affiliates is a party or subject; or
	 
	 	(xi)	 	press release or formal written communication
relating to any pending dispute, litigation or arbitration in which any
of the Block Companies or their Affiliates and any of the HSBC
Companies or their Affiliates.”

          (i) The Agreement between H&R Block, Inc and HSBC Finance Corporation dated September 23, 2005
is hereby amended by deleting the definition of “HSBC Parties” and inserting in its place the
following new definition:

     The “HSBC Parties” are: HSBC Bank USA, National Association; HSBC Taxpayer Financial
Services Inc. (f/k/a Household Tax Masters Inc. and Beneficial Tax Masters Inc.); Beneficial
Franchise Company Inc.; Beneficial Tax Centers, Inc., Household International, Inc., n/k/a
HSBC Finance Corporation, Household Finance Corporation, Household Bank, f.s.b.; Beneficial
National Bank, and: (a) any and all of their respective past, present, and future parent
companies, subsidiaries, divisions, affiliates, franchisees, predecessors, successors, and
assigns; (b) their respective present and former directors, officers, employees,
shareholders, and contractors (including, but not limited to, Imperial Capital Bank); and
(c) all persons or entities acting on behalf or at the direction of any of the foregoing.

14

 

     Section 6. Reference to and Effect Upon the Existing Program Contracts.

          (a) Except as explicitly stated in this First Amendment, all terms of the Program Contracts as
in effect immediately preceding execution of this First Amendment shall remain in full force and
effect as provided therein and in accordance with the terms thereof.

          (b) Except as explicitly stated in this First Amendment, the execution, delivery and
effectiveness of this First Amendment shall not operate as a waiver of any right, power or remedy
of any party under the Program Contracts as in effect immediately preceding execution of this First
Amendment, nor constitute a waiver of any provision of the Program Contracts as in effect
immediately preceding execution of this First Amendment.

          (c) Upon the effectiveness of this First Amendment, each reference in each of the Program
Contracts to “this Agreement,” “hereunder,” “hereof,” “herein” or words of similar import shall
mean and be a reference to such Program Contract as amended by this First Amendment.

          (d) Subject to Section 5 above and the other specific provisions of this Section 6, each
reference to any Obligation of HSBC NA in the Program Contracts, either directly or by inclusion of
such entity in the definitions of the terms “HSBC Bank,” “HSBC Companies,” “HSBC Indemnified Party”
or “HSBC Indemnifying Party,” shall be deemed to refer to Obligations of HSBC Trust with respect to
its activities as Originator for the Assigned Locations in the HSBC Trust States and the Block
Digital Channel. For the avoidance of doubt, any reference to an obligation of “Originator” in the
Program Contracts, as amended, shall mean an obligation of either HSBC NA or HSBC Trust, severally.

          (e) Subject to the other terms and provisions of this First Amendment, HSBC Trust hereby makes
each and every representation, warranty and covenant of HSBC NA in its capacity as Originator for
the Assigned Locations in the HSBC Trust States and the Block Digital Channel, whether specified as
a representation, warranty or covenant of “HSBC Bank,” an “HSBC Company,” the “Originator,” an
“HSBC Indemnified Party,” an “HSBC Indemnifying Party,” or otherwise.

          (f) Subject to the other terms and provisions of this First Amendment, each payment obligation
of any Block Company to either HSBC NA or HSBC Trust under the Program Contracts, as amended,
whether specified as a payment obligation to “HSBC Bank,” an “HSBC Company,” the “Originator,” an
“HSBC Indemnified Party” or an “HSBC Indemnifying Party,” or otherwise, shall be computed on an
aggregated basis (without duplication) with respect to both HSBC NA and HSBC Trust.

          (g) Subject to the other terms and provisions of this First Amendment, each payment obligation
payable to any Block Company from either HSBC NA or HSBC Trust under the Program Contracts, as
amended, whether specified as a payment obligation from “HSBC Bank,” an “HSBC Company,” the
“Originator,” an “HSBC Indemnified Party” or an “HSBC Indemnifying Party,” or otherwise, shall be
computed on an aggregate basis (without duplication) with respect to both HSBC NA and HSBC Trust.

15

 

          (h) Notwithstanding any other provision of the Program Contracts or this First Amendment to
the contrary, solely with respect to the assignment to HSBC Trust contemplated hereunder, the
provisions of Section 2.7(b)(iii) and Section 2.7(c) of the Retail Agreement, and of Section 2.6 of
each Franchise Distribution Agreement, shall not be applicable and HSBC NA shall continue to be
party to all Program Contracts and responsible for all of its Obligations that are not specifically
assigned to HSBC Trust hereunder.

     Section 7. Partial Expense Reimbursement Related to Assignment.

          (a) No later than fifteen (15) days following the execution and delivery of this First
Amendment, the HSBC Companies agree to pay to the Block Companies $500,000 to partially reimburse
them for out-of-pocket expenses incurred by them as a result of this assignment.

          (b) The Parties do not agree whether the assignment contemplated by this First Amendment is
pursuant to Section 2.6 or Section 2.7 of the Retail Distribution Agreement. The foregoing
allocation of expenses is for this First Amendment only, and is not a precedent for any future
reorganization, assignment or other amendment to the Program Contracts.

     Section 8. HSBC Guaranty. HSBC Finance acknowledges that HSBC Trust has become an
HSBC Company covered by the HSBC Guaranty, as set forth in Article XX of the Retail Distribution
Agreement.

     Section 9. Further Assurances. The Parties agree to (i) furnish upon request such
further information, (ii) execute and deliver to each other such additional documents and (iii) do
such other acts and things, all as any Party hereto may reasonably request for the purpose of
carrying out the intent of this First Amendment and partial assignment contemplated hereby.

     Section 10. Headings. Headings and captions used in this First Amendment (including
all exhibits and schedules thereto) are included herein for convenience of reference only and shall
not constitute a part of this First Amendment for any other purpose or be given any substantive
effect.

     Section 11. Alternative Dispute Resolution. ANY DISPUTE BETWEEN OR AMONG THE PARTIES
HERETO ARISING OUT OF OR RELATING TO THIS FIRST AMENDMENT OR THE TRANSACTIONS CONTEMPLATED HEREIN
(EXCEPT JUDICIAL ACTION FOR SPECIFIC PERFORMANCE OR INJUNCTIVE RELIEF) SHALL BE RESOLVED AMONG THE
PARTIES TO SUCH DISPUTE BY NEGOTIATIONS, MEDIATION AND ARBITRATION IN ACCORDANCE WITH THE
PROVISIONS OF ARTICLE XXI OF THE RETAIL DISTRIBUTION AGREEMENT, WHICH ARE INCORPORATED HEREIN BY
REFERENCE.

     Section 12. Governing Law; Submission To Jurisdiction. THIS FIRST AMENDMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF MISSOURI. WITHOUT
LIMITING THE EFFECT OF SECTION 11 HEREOF AND ARTICLE XXI OF THE RETAIL DISTRIBUTION AGREEMENT, EACH
OF THE PARTIES HERETO (A) SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND/OR STATE

16

 

COURTS SITTING IN ST. LOUIS, MISSOURI FOR PURPOSES OF ALL LEGAL PROCEEDINGS FOR SPECIFIC
PERFORMANCE OR INJUNCTIVE RELIEF PERMITTED BY SECTION 21.12 OF THE RETAIL DISTRIBUTION AGREEMENT,
(B) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY
CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM,
(C) IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN SUCH PROCEEDING IN THE MANNER PROVIDED FOR
NOTICES IN SECTION 22.3 OF THE RETAIL DISTRIBUTION AGREEMENT, AND (D) AGREES THAT NOTHING IN THIS
FIRST AMENDMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS FIRST AMENDMENT TO SERVE PROCESS IN ANY
SUCH PROCEEDING IN ANY OTHER MANNER PERMITTED BY LAW.

     Section 13. Waiver of Jury Trial. WITHOUT LIMITING THE EFFECT OF SECTION 10 HEREOF,
EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION
ARISING OUT OF OR RELATING TO THIS FIRST AMENDMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

     Section 14. Counterparts. This First Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This First Amendment shall become effective upon the
execution of a counterpart hereof by each of the parties hereto.

[remainder of page intentionally blank]

17

 

THIS FIRST AMENDMENT CONTAINS A BINDING

ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES

     IN WITNESS WHEREOF, the following Parties have caused this Joinder and First Amendment to
Program Contracts to be executed by their respective duly authorized officers as of the date first
set forth above, it being understood that no Party, other than HSBC Trust, shall be deemed to
become a signatory to any Program Contract to which such Party was not previously a signatory as a
result of executing this First Amendment.

	 	 	 	 	 
	 	HSBC BANK USA, NATIONAL ASSOCIATION,

a national banking association

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	HSBC TRUST COMPANY (DELAWARE), N.A.,

a national banking association

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	HSBC TAXPAYER FINANCIAL SERVICES INC.,

a Delaware corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	BENEFICIAL FRANCHISE COMPANY INC.,

a Delaware corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

THIS FIRST AMENDMENT CONTAINS A BINDING

ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES

	 	 	 	 	 
	 	HOUSEHOLD TAX MASTERS ACQUISITION CORPORATION,

a Delaware corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	H&R BLOCK SERVICES, INC.,

a Missouri corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	H&R BLOCK TAX SERVICES, INC.,

a Missouri corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	H&R BLOCK ENTERPRISES, INC.,

a Missouri corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	H&R BLOCK EASTERN ENTERPRISES, INC.,

a Missouri corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

THIS FIRST AMENDMENT CONTAINS A BINDING

ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES

	 	 	 	 	 
	 	H&R BLOCK DIGITAL TAX SOLUTIONS,
LLC,

a Delaware limited liability company

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 	 	 
	 	 	H&R BLOCK AND ASSOCIATES, L.P.,

a Delaware limited partnership	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	HRB Texas Enterprises, Inc.,	 	 
	 

	 	 	 	its General Partner	 	 

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	HRB ROYALTY, INC.,

a Delaware corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

THIS FIRST AMENDMENT CONTAINS A BINDING

ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES

     IN WITNESS WHEREOF, the following Parties hereto have caused this Joinder and First Amendment
to Program Contracts to be executed by their respective duly authorized officers as of the date
first set forth above solely for the limited purpose of acknowledging the amendments set forth
herein in connection with such Parties’ respective guaranties set forth in Article XX, and also for
purposes of Articles XXI and XXII of the Retail Distribution Agreement, and, with respect to HSBC
Finance, the acknowledgement set forth in Section 7 of this Joinder and First Amendment to the
Program Contracts.

	 	 	 	 	 
	 	HSBC FINANCE CORPORATION,

A Delaware corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	H&R BLOCK, INC.,

A Missouri corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

Schedule 2.4(c)

Enhanced IRAL Product Policies and Procedures

[***]exv10w26

 

Exhibit 10.26

EXECUTION COPY

SECOND AMENDMENT TO

PROGRAM CONTRACTS

     This Second Amendment to Program Contracts (this “Second Amendment”), dated as of
November 13, 2006, is made by and among the following parties (collectively, the
“Parties”):

     HSBC Bank USA, National Association, a national banking association (“HSBC NA”);

     HSBC Trust Company (Delaware), N.A., a national banking association (“HSBC Trust”);

     HSBC Taxpayer Financial Services Inc., a Delaware corporation (“HSBC TFS”);

     Beneficial Franchise Company Inc., a Delaware corporation (“Beneficial Franchise”);

     H&R Block Services, Inc., a Missouri corporation (“Block Services”);

     H&R Block Tax Services, Inc., a Missouri corporation (“Block Tax Services”);

     H&R Block Enterprises, Inc., a Missouri corporation (“Block Enterprises”);

     H&R Block Eastern Enterprises, Inc., a Missouri corporation (“Block Eastern
Enterprises”);

     H&R Block Digital Tax Solutions, LLC, a Delaware limited liability company (“Block
Digital”);

     H&R Block and Associates, L.P., a Delaware limited partnership (“Block
Associates”);

     HRB Royalty, Inc., a Delaware corporation (“Royalty”);

     HSBC Finance Corporation, a Delaware corporation (“HSBC Finance”); and

     H&R Block, Inc., a Missouri corporation (“H&R Block”).

NOTE: CERTAIN MATERIAL HAS BEEN OMMITTED FROM THIS AGREEMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT UNDER RULE 24b-2. THE LOCATIONS OF THESE OMISSIONS ARE INDICATED THROUGHOUT THE AGREEMENT
BY THE FOLLOWING MARKINGS: [***].

 

 

RECITALS

     A. All the Parties hereto, other than HSBC Trust, entered into that certain HSBC Retail
Settlement Products Distribution Agreement, dated as of September 23, 2005 (the “Original
Retail Distribution Agreement”).

     B. All the Parties hereto, including HSBC Trust, as well as Block Financial Corporation, a
Delaware corporation (“BFC”), entered into that certain Joinder and First Amendment to
Program Contracts, dated as of November 10, 2006 (the “First Amendment”), which amended the
Original Retail Distribution Agreement and the other Program Contracts (as defined therein).

     C. The Parties hereto desire (i) to include certain pre-file, unsecured loans (referred to
herein as instant money advances or “IMAs”) as a type of Settlement Product that may be
made available to Clients, and (ii) to amend the Original Retail Distribution Agreement and other
Program Contracts, each as amended by the First Amendment, to include IMAs as Settlement Products
offered pursuant to the Settlement Products Program (the Original Retail Distribution Agreement, as
amended by the First Amendment and this Second Amendment, and all subsequent amendments and
restatements thereof and supplemental thereto, is referred to as the “Retail Distribution
Agreement”).

     D. Concurrently with the execution of this Second Amendment, certain of the Parties hereto and
BFC are executing a First Amended and Restated HSBC Refund Anticipation Loan and IMA Participation
Agreement, dated as of the date hereof (the “First A&R Participation Agreement”), and a
First Amended and Restated HSBC Settlement Products Servicing Agreement, dated as of the date
hereof (the “First A&R Servicing Agreement”).

AGREEMENT

     ACCORDINGLY, the Parties to this Second Amendment agree as follows:

     Section 1 Definitions. All capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the HSBC Appendix of Defined Terms and
Rules of Construction attached to the Original Retail Distribution Agreement (the “Appendix of
Defined Terms and Rules of Construction”), as amended by the First Amendment and as hereinafter
amended by this Second Amendment.

     Section 2 Amendments.

          (a) Amendments to the Appendix of Defined Terms and Rules of Construction.

                         (i) The following existing definitions set forth in the Appendix of Defined Terms and Rules of
Construction are hereby amended to read as follows:

2

 

     “Applicant” shall mean a Person who has submitted an Application to the
Originator and such Application shall be deemed to relate to the Calculation
Period in which the applied-for Settlement Product would be deemed to be issued.

     “Applicant Information File” shall mean the electronic file transmitted
to the Originator by an ERO containing information pertaining to an Applicant
including, but not limited to (i) Applicant identification information from
the Applicant’s Application including, but not limited to, the Applicant’s
name, address and telephone number, (ii) the amount of the ERO Charges, if
any, (iii) the amount of the Refund Due (except with respect to IMAs), and
(iv) certain other qualifying Application information as reasonably requested
by the Originator subject to the ability of the ERO to collect and provide
such information, each used by the Originator solely for those purposes set
forth pursuant to the terms and conditions of the Program Contracts.

     “Best in Market Price” shall mean, [***] .

     “Client” shall mean a customer of any Block Office or of the Block
Digital Channel, as applicable, that is rendered tax preparation,
transmission, filing or other similar services at such office or channel.

     “Deposit Account” shall mean a Refund Deposit Account or the General
Collection Deposit Account.

     “Disbursement Check” shall mean, with respect to a Settlement Product, a
cashier’s check drawn on the Originator and payable to or at the direction of
a Settlement Products Client in the amount authorized by the Originator (which
shall not include Delinquent ERO Charges, ERO Charges, RAL Principal Amounts,
IMA Principal Amounts, First Priority Prior Indebtedness, Second Priority
Prior Indebtedness, Other Required Deductions or Authorized Deductions).

     “Electronic Disbursement” shall mean, with respect to any Settlement
Product, any disbursement of proceeds (but excluding Disbursement Checks) of
such product made by the Originator, directly or indirectly, to or at the
direction of a Settlement Products Client in the amount authorized by the
Originator, whether via ACH credit, wire transfer, stored value card, debit
card, secured credit card or other electronic means (which amount shall not
include ERO charges, Delinquent ERO Charges, ERO Charges, RAL Principal
Amounts, IMA Principal Amounts, First Priority Prior Indebtedness, Second
Priority Prior Indebtedness, Other Required Deductions or Authorized
Deductions).

3

 

     “Final Credit Criteria” shall mean, with respect to HSBC RALs and HSBC
IMAs, as applicable, the related final credit criteria for the origination of
HSBC RALs and HSBC IMAs, as applicable, as established by the Originator
pursuant to the terms of the Retail Distribution Agreement.

     “Final Fees” shall mean the final fees for Settlement Products
established by the Originator pursuant to the terms of the Retail Distribution
Agreement including, but not limited to, the Refund Account Fee, the RAL Fee
and the IMA Fee.

     “Initial Credit Criteria” shall mean the initial credit criteria for the
origination of HSBC RALs and HSBC IMAs as established by the Originator
pursuant to the terms of the Retail Distribution Agreement.

     “Initial Fees” shall mean the initial fees for Settlement Products
established by the Originator pursuant to the terms of the Retail Distribution
Agreement including, but not limited to, the Refund Account Fee, the RAL Fee
and the IMA Fee.

     “Late Fee” shall mean, with respect to a Delinquent RAL or a Delinquent
IMA, the late fee that may be charged on such Delinquent RAL or Delinquent IMA
as disclosed to the Settlement Products Client in the Application and/or the
TILA disclosure for such RAL or IMA.

     “Note” shall mean with respect to any HSBC RAL, the promissory note or
other evidence of indebtedness or agreements evidencing the indebtedness of an
Obligor under such HSBC RAL.

     “Obligor” shall mean the Settlement Products Client obligated to make
payments to the Originator with respect to any HSBC RAL or HSBC IMA.

     “Originator” shall mean the originator of Retail Settlement Products
through Block Offices and Digital Settlement Products through the Block
Digital Channel; provided, however, that (i) with respect to
Retail Settlement Products, other than IMAs, issued through the Retained
Locations in the HSBC NA States, the term “Originator” refers only to HSBC NA;
(ii) with respect to Retail Settlement Products, other than IMAs, issued
through the Assigned Locations in the HSBC Trust States and Digital Settlement
Products issued through the Block Digital Channel, the term “Originator”
refers only to HSBC Trust; and (iii) with respect to IMAs issued through any
Block Office, the term “Originator” refers to HSBC NA.

     “Participant” shall mean any Person who has purchased or otherwise owns a
Participation Interest in an HSBC RAL or HSBC IMA.

4

 

     “Participation Interest” shall mean an undivided ownership interest in,
and in an amount equal to the Applicable Percentage of, all of the
Originator’s right, title and interest in and to an HSBC RAL or an HSBC IMA
created on and after the effective date of the Participation Agreement,
including all monies due or to become due with respect thereto and all
collections pertaining thereto and other proceeds (as defined in the UCC as in
effect in the State of Delaware), which interest is created pursuant to, or
contemplated by, the Participation Agreement.

     “Principal Amount” of an HSBC RAL or an HSBC IMA shall mean the dollar
amount, if any, that the Originator lends to a Settlement Products Client
based upon such Client’s Application and the Originator’s credit criteria
(which principal amount shall include all payments of such Client’s ERO
Charges, if any, made by the Originator to such Client’s ERO, RAL Fees or IMA
Fees, as the case may be, and, with respect to HSBC RALs, Refund Account Fees
(unless such charges were paid by the Client at the time of preparation of
such Client’s Return(s)) and all Disbursements made by the Originator directly
to such Client).

     “Prior Debt Indicator File” shall mean a file provided from time to time
upon the request of any Block Company by the HSBC Companies containing a
listing of Persons and their respective social security numbers who owe any
Defaulted HSBC RALs, Defaulted HSBC IMAs, Prior Indebtedness, Delinquent ERO
Charges, or other fees, charges or indebtedness that the HSBC Companies may
seek to collect from such Person whether from the proceeds of any Settlement
Product or otherwise.

     “Prior Indebtedness” shall mean any outstanding obligations of a
Settlement Products Client for (ii) a refund anticipation loan or any other
similar loan product secured by a security interest in a deposit account into
which the borrower’s anticipated tax refund is to be deposited, or (ii) an
unsecured instant money advance loan or any other similar loan product issued
to a borrower based on such borrower’s pay stub prior to the preparation of a
final Return, in either case with all required documentation relating thereto,
which was made to such Settlement Products Client in a prior year by any
originator; provided, however, that prior to the Tax Period
beginning on January 1, 2008, Prior Indebtedness shall not include any instant
money advance loan or similar loan product that would otherwise constitute
Second Priority Prior Indebtedness.

     “RAL Price Reduction” shall mean a reduction in pricing for RALs made
pursuant to Section 9.6(c) of the Retail Distribution Agreement.

5

 

     “Refund Paid” shall mean the amount of the tax refund paid to a
Settlement Products Client by a Governmental Authority.

     “Repurchase Value” of a Participation Interest in an HSBC RAL or an HSBC
IMA shall equal the remainder of (i) the product of (A) the Applicable
Percentage multiplied by (B) the sum of (I) the Principal Amount
plus (II) the Late Fees, minus (ii) any amount remitted to BFC
(or its permitted assignees, successors and assigns pursuant to the
Participation Agreement) pursuant to clauses (ii), (iii) and (iv) of Section
3.4(b) of the Servicing Agreement, with respect to such Participation
Interest.

     “Retail Settlement Products” shall mean, collectively, RALs, RACs, IMAs,
and any similar financial product or service of the Originator offered to
Clients at Block Offices under the Program Contracts.

     “Security Agreement” shall mean, with respect to any HSBC RAL, the
security agreement or other instrument pursuant to which the related Obligor
granted to the Originator a security interest in collateral to secure such
Obligor’s obligations pursuant to the related Note.

                         (ii) The following additional definitions are hereby added to the Appendix of Defined Terms
and Rules of Construction:

     “Calculation Period” shall mean the period beginning on November 1 of a
calendar year and ending on December 31 of the immediately following calendar
year; provided that with respect to any Settlement Product originated in
November or December of any calendar year, such Settlement Product shall be
deemed to have been originated in the first month of the immediately following
calendar year. By way of example, the 2007 Calculation Period will be the
period beginning on November 1, 2006 and ending on December 31, 2007.

     “Defaulted HSBC IMA” shall mean each Participated HSBC IMA which, in
accordance with the IMA Guidelines and HSBC TFS’s customary and usual
servicing procedures for IMAs, the Originator has charged off as
uncollectible; provided, however, that no HSBC IMA originated
during any Calculation Period shall be classified as a Defaulted HSBC IMA
prior to the close of business on the last day of such Calculation Period.

     “Delinquent IMA” shall mean an HSBC IMA which has become due by its terms
and repayment has not been made by the applicable Settlement Products Client
by the applicable due date.

6

 

     “Eligible IMA” shall mean each HSBC IMA:

     (a) that was created by the Originator and is in compliance in all
material respects, with the applicable Distribution Agreement and applicable
Laws;

     (b) for which HSBC TFS supplied a disclosure statement satisfying the
requirements of the TILA to the applicable Agent for distribution to the
Settlement Products Client; and

     (c) as to which, at the time of the sale of the Participation Interest in
such HSBC IMA to any of the Block Companies, or any of their respective
Affiliates, Originator had good and marketable title thereto free and clear of
all Liens arising under or through HSBC TFS or any of its Affiliates.

     “General Collection Deposit Account” shall mean a deposit account or
subaccount established by Servicer for the purpose of depositing collections
received on account of a Settlement Product issued to a Client that are not
otherwise required to be deposited into a Refund Deposit Account in accordance
with Section 3.2.

     “HSBC IMA” shall mean any IMA made by the Originator through a Block
Office pursuant to or under color of (a) the Retail Distribution Agreement or
a Franchisee Distribution Agreement, as applicable, or (b) a referral to the
Originator by a Block Company, a Franchisee or either of their Affiliates
pursuant to a contractual electronic filing arrangement with any other Person.

     “Instant Money Advance” or “IMA” means a loan issued to a Client prior to
the preparation of a final Return with all required documentation relating
thereto, which loan is not secured.

     “IMA Documents” shall mean, with respect to each HSBC IMA, the related
Application, the related loan agreement and disclosure statement and any and
all other documents executed and delivered in connection with the origination
or subsequent modification of such HSBC IMA.

     “IMA Fee” means shall mean the aggregate amount payable to the Originator
by the Settlement Products Client for the privilege of obtaining an HSBC IMA,
the calculation of which is set forth on Schedule 9.3 to the Retail
Distribution Agreement, which amount will include the finance charge. For the
avoidance of doubt, IMA Fees shall not include any account setup fees.

     “IMA Guidelines” shall mean the Originator’s policies and procedures from
time to time relating to the operation of its IMA

7

 

business, including the policies and procedures for determining the
credit worthiness of IMA clients, the extensions of credit to IMA clients and
relating to the collection and charge off of IMAs.

     “IMA Ownership Interest” shall mean Originator’s right, title and
interest in and to each HSBC IMA, including all monies due or to become due
with respect thereto and all collections pertaining thereto and other proceeds
thereof (as defined in the UCC as in effect in the State of Delaware), less
any Participation Interest.

     “IMA Price Reduction” shall mean a reduction in pricing for IMAs made
pursuant to Section 9.6(c) of the Retail Distribution Agreement.

     “IMA Price Reduction Amounts” shall mean, for a specific Calculation
Period, the sum of the IMA Fees that would have been charged if HSBC Bank had
not made an IMA Price Reduction minus the IMA Fees actually charged to
each Settlement Products Client who received an HSBC IMA during such
Calculation Period.

     “IMA Protocol” shall mean the document attached hereto as Exhibit
A which describes the policies and procedures for offering HSBC IMAs in
certain states as agents and in other states as independent contractors of the
Originator.

     “Participated HSBC IMA” shall mean any HSBC IMA in which a Participation
Interest has been sold pursuant to the Participation Agreement and has not
been reassigned to HSBC TFS or repurchased by HSBC TFS pursuant to the
Participation Agreement.

     “Participated HSBC IMA Schedule” shall mean a schedule of certain IMAs
owned and held by the Originator and the Participants which sets forth
information with respect to such IMAs, as amended from time to time by the
parties.

     “Refund Deposit Account” shall mean a deposit account or subaccount
established by HSBC Bank for each Settlement Products Client (other than with
respect to IMAs) in accordance with Section 3.2 of the Servicing Agreement.

     “Unparticipated HSBC IMA” shall mean any HSBC IMA for which no
Participation Interests have been sold.

     (iii) The definition “Preseason Loan” is hereby deleted.

     (iv) The Parties agree that all Program Contracts are hereby amended to
incorporate the amendments to the Appendix of Defined

8

 

Terms and Rules of Construction pursuant to this Section 2(a), as well as
pursuant to the First Amendment.

     (b) Amendments to the Retail Distribution Agreement.

                         (i) Section 2.1(c) of the Retail Distribution Agreement is hereby amended by inserting the
following clause at the beginning of such Section 2.1(c): “Subject to Section 11.1(c),”.

                         (ii) Section 2.4 of the Retail Distribution Agreement is hereby amended by deleting the word
“and” at the end of clause (iv) thereof, deleting the period at the end of clause (v) and replacing
it with a semicolon and the word “and”, and inserting the following new subsection:

                         (vi) IMAs, in accordance with the policies and procedures set forth on
the IMAs Schedule attached hereto as Schedule 2.4(a)(6).

                         (iii) The following new Sections 2.9 and 2.10 are hereby added to the Retail Distribution
Agreement immediately after the existing Section 2.8:

     Section 2.9 HSBC Bank’s Right Not To Offer HSBC IMAs.
Notwithstanding any other provision of this Retail Distribution Agreement or the
other Program Contracts:

     (a) HSBC Bank may, in its sole discretion, at any time and from time
to time during the Term of this Retail Distribution Agreement, elect not
to offer (whether through a physical presence, via the internet or any
computer software program) HSBC IMAs in one or more states, commonwealths,
territories or foreign countries (each, an “HSBC Discontinued
Location”) if HSBC Bank makes a reasonable determination (after good
faith discussions with the Block Companies and good faith attempts to
modify the Program Contracts to address any concerns, pursuant to Section
11.6(a)), that continued inclusion of HSBC IMAs as a type of Settlement
Product offered pursuant to the Settlement Products Program would
jeopardize HSBC Bank’s regulatory standing with the OCC, including any
component of any of its composite CAMEL rating, or the OCC’s assessment of
HSBC Bank’s safe and sound operation, or otherwise would cause the OCC to
raise serious regulatory concerns under applicable Law, including OCC
policies and procedures relating to the conduct of HSBC Bank’s lending
activities (in each case, an “ HSBC Regulatory Concern”). If HSBC
Bank makes a reasonable determination that such HSBC Regulatory Concern
exists in such HSBC Discontinued Location with respect to any other tax
preparer through whom either HSBC Bank or any of its Affiliates offers
instant money advance loans or similar loan products, and the terms of the
arrangement with such

9

 

other tax preparer are not modified to eliminate such HSBC Regulatory
Concern as it relates to such tax preparer, then HSBC Bank or its
Affiliate, as the case may be, shall also discontinue offering such
products through such other tax preparer in such HSBC Discontinued
Location. If HSBC Bank ceases offering HSBC IMAs in an HSBC Discontinued
Location due to an HSBC Regulatory Concern, the Block Agents may offer
IMAs through a lender other than HSBC Bank in such HSBC Discontinued
Location, including, without limitation, IMAs or similar loan products
offered by any third party, any Affiliate of a Block Company or a
financial institution or finance company, owned in whole or in part,
directly or indirectly, by a Block Company or any of its Affiliates. If
HSBC Bank makes a reasonable determination that such HSBC Regulatory
Concern ceases to exist in such HSBC Discontinued Location, HSBC Bank may
recommence offering IMAs through other tax preparers in such HSBC
Discontinued Location, provided that HSBC Bank shall give the Block
Companies notice of such intention to so recommence not later than HSBC
Bank gives notice to any other tax preparer located in such HSBC
Discontinued Location of its intention to so recommence, and shall give
the Block Companies the option to recommence offering HSBC IMAs in such
HSBC Discontinued Location through HSBC Bank at any time during the Term
in accordance with the terms set forth in this Retail Distribution
Agreement.

     (b) Subject to Section 2.9(c), HSBC Bank may in its sole discretion
at any time and from time to time on or before March 16 of any calendar
year during the Term of this Retail Distribution Agreement, elect to
discontinue offering, effective November 1 of such calendar year, HSBC
IMAs in one or more HSBC Discontinued Locations, if, and only if, neither
HSBC Bank nor any of its Affiliates offer instant money advance loans or
similar loan products through any other tax preparer located in, or via
the internet or any computer software program to residents of, such HSBC
Discontinued Locations.

     (c) If HSBC Bank elects to discontinue offering HSBC IMAs in HSBC
Discontinued Locations pursuant to Section 2.9(b) above, then the Block
Agents may, with respect to such HSBC Discontinued Locations, offer IMAs
or similar loan products originated from sources other than HSBC Bank,
including, without limitation, IMAs or similar loan products offered by
any third party, any Affiliate of a Block Company or a financial
institution or finance company, owned in whole or in part, directly or
indirectly, by a Block Company or any of its Affiliates; provided, that,
the Block Agents shall provide written notice to HSBC Bank

10

 

(i) within twenty (20) days following HSBC Bank’s election to
discontinue offering HSBC IMAs in such HSBC Discontinued Locations of the
Block Agents’ intention to so offer IMAs or similar loan products in such
HSBC Discontinued Locations originated from sources other than HSBC Bank,
promptly updating such notice to HSBC Bank if the Block Agents’ intentions
change, and (ii) within 10 days after a Block Company enters into an
agreement with another lender to offer IMAs or makes a final determination
to offer IMAs originated by any Affiliate of a Block Company or a
financial institution or finance company, owned in whole or in party,
directly or indirectly, by a Block Company or any of its Affiliates, of
the Block Agents’ intention to so offer IMAs or similar loan products in
such HSBC Discontinued Locations originated from sources other than HSBC
Bank. If the Block Agents provide a notice to HSBC Bank pursuant to
clause (ii) above of their agreement with another lender to offer IMAs in
such HSBC Discontinued Locations or their intention to in-source IMAs,
HSBC Bank and its Affiliates may offer instant money advance loans or
similar products through other tax preparers located in, or via the
internet or any computer software program to residents of, such HSBC
Discontinued Locations.

Section 2.10 Block Agents’ Right Not To Offer HSBC IMAs.

     (a) Notwithstanding any other provision of this Retail Distribution
Agreement or the other Program Contracts, the Block Agents may, in their
sole discretion, at any time and from time to time during the Term of this
Retail Distribution Agreement, elect not to offer HSBC IMAs in one or more
states, commonwealths, territories or foreign countries (each, a
“Block Discontinued Location”).

     (b) If subsequent thereto, the Block Agents desire to recommence
offering IMAs in any such Block Discontinued Locations, then the Block
Companies shall give HSBC Bank 120 days’ notice in writing of such desire
to recommence offering IMAs in such Block Discontinued Locations. Upon
receipt of such written notice, HSBC Bank (i) shall recommence offering
HSBC IMAs in such Block Discontinued Locations, if at that time HSBC Bank
or any of its Affiliates are offering instant money advance loans or
similar loan products through tax preparers located in, or via the
internet or any computer software program to residents of, such Block
Discontinued Locations, or (ii) have the option (exercisable within thirty
(30) calendar days) to recommence offering HSBC IMAs in such Block
Discontinued Locations, if at that time HSBC Bank or any of such
Affiliates are not offering instant money advance loans or similar loan
products through tax

11

 

preparers located in, or via the internet or any computer software
program to residents of, such Block Discontinued Locations. If HSBC Bank
and the Block Agents recommence offering HSBC IMAs in such Block
Discontinued Locations pursuant to (i) or (ii) of this Section 2.10(b),
then they shall do so in accordance with the terms of this Retail
Distribution Agreement.

     (c) If HSBC Bank does not exercise its option within thirty (30)
calendar days to recommence offering HSBC IMAs in any such Block
Discontinued Locations, then the Block Agents may, with respect to such
Block Discontinued Locations, offer IMAs originated from sources other
than HSBC Bank, including, without limitation, IMAs offered by any third
party, any Affiliate of a Block Company or a financial institution or
finance company, owned in whole or in part, directly or indirectly, by a
Block Company or any of its Affiliates.

                         (iv) Section 5.8 of the Retail Distribution Agreement is hereby amended to read as follows:

Section 5.8 Franchisees in Settlement Products Program.

     (a) Block Tax Services, Royalty and Block Associates shall use commercially
reasonable efforts to cause their respective Franchisees to offer Retail
Settlement Products through the Block Franchisee Offices, and Block Tax Services
and Block Associates shall provide the means for each of their respective
Franchisees to agree to be bound by the terms of its Franchisee Distribution
Agreement.

     (b) On an annual basis, and at other times upon the written request of HSBC
Bank, Block Tax Services, Royalty and Block Associates will provide a report
listing all Franchisees that have electronically accepted and agreed to be bound
by a Franchisee Distribution Agreement that was electronically disseminated to,
and electronically accepted by, the Franchisee via TPS Software and the Block
Companies web-based communication system for Franchisees. The parties acknowledge
that such electronic acceptance is the only form of acceptance being required for
such Franchisees to be legally bound under the terms of such Franchisee
Distribution Agreements. Block Services represents that, with respect to 2007 and
subsequent Tax Periods and Calculation Periods, the TPS Software will not permit a
Franchisee to originate Retail Settlement Products unless the Franchisee has
electronically accepted and agreed to be bound by the Franchisee Distribution
Agreement.

     (c) Block Tax Services, Royalty and Block Associates will provide to HSBC
Bank by January 3rd of each year, and at other times

12

 

upon the written request of HSBC Bank, the address and the e-mail address for
any Franchisee that is a party to a Franchisee Distribution Agreement.

                         (v) A new Section 5.13 is added to the Retail Distribution Agreement immediately after Section
5.12 as follows:

     Section 5.13 IMA Notices to Franchisees. Any notification sent
pursuant to Section 6.1(c) of a Franchisee Distribution Agreement by either a
Block Company or an HSBC Company will be made only with the consent of the other
party, provided, however, that (i) when an HSBC Company exercises
its rights under Section 2.9 above to discontinue or recommence offering a
product, it may give notice to a Franchisee of such discontinuation or
recommencement without obtaining the consent of a Block Company, and (ii) when a
Block Company exercises its rights under Section 2.10 above to discontinue or
recommence offering a product, it may give notice to a Franchisee of such
discontinuation or recommencement without obtaining the consent of a HSBC Company.

                         (vi) Sections 6.8(a)(ii) and 6.8(a)(iii) of the Retail Distribution Agreement are hereby
amended by replacing in every instance therein the term “Preseason Loan” with the term “IMA.”

                         (vii) A new Section 6.12 is added to the Retail Distribution Agreement immediately after
Section 6.11 as follows:

     Section 6.12 Further Regulatory Approvals of IMAs. During the Term
of this Retail Distribution Agreement, the HSBC Companies agree to use
commercially reasonable efforts to obtain, on a timely basis, all necessary
regulatory approvals for HSBC Trust to offer HSBC IMAs through the Block Agents
and the Franchisee Agents at Block Offices located in the HSBC Trust States. This
obligation shall be a continuing annual covenant with respect to each successive
Calculation Period until such regulatory approval is obtained. In making such
commercially reasonable efforts, the HSBC Companies may take into account the
written positions of the regulatory authorities and the impact of such efforts on
the regulatory standing of HSBC Trust, and the other HSBC Companies and their
Affiliates, and their relationships with the regulatory authorities.

                         (viii) Sections 7.6(c), 7.6(d) and 7.6(e) of the Retail Distribution Agreement are hereby
amended to read as follows:

     (c) except with respect to IMAs, provide and require Settlement Product
Clients to complete and sign an authorization permitting the Block Agent to use
the Client’s Return information for the

13

 

application process in accordance with Section 301.7216-3(b) of the United
States Treasury Department Regulations;

     (d) provide and require each Settlement Product Client (except with respect
to IMAs) to complete and sign IRS Form 8453;

     (e) sign each Form 8453 as ERO, except with respect to IMAs;

                         (ix) Section 7.9 of the Retail Distribution Agreement is hereby amended to read as follows:

     Section 7.9. Applicant Copies. Each Block Agent shall provide each
of its Applicants with a copy of such Applicant’s signed Application and, to the
extent applicable, IRS Form 8453, together with any other commercially reasonable
disclosures or documents required to be provided to the Applicant by HSBC Bank.

                         (x) The introductory clause of Section 9.1 of the Retail Distribution Agreement is hereby
amended to read as follows:

     Section 9.1 Form of Application. HSBC Bank shall prepare the form of
Application to be used by the Agents and shall supply such Application to the
Agents no later than September 1 prior to each Tax Period with respect to RALs and
RACs, or August 1 prior to each Calculation Period with respect to IMAs. The form
of Application for RALs and RACs shall include:

                         (xi) The first sentence of Section 9.3 of the Retail Distribution Agreement is hereby amended
to read as follows:

     HSBC Bank and HSBC Trust shall annually make a determination of their
respective Initial Fees, which shall include, but not be limited to, the Refund
Account Fee, the RAL Fee and the IMA Fee.

                         (xii) Section 9.6(b) of the Retail Distribution Agreement is hereby amended to read as
follows:

     (b) The parties share a mutual desire to endeavor to offer the most
compelling customer value proposition which includes factors of price, loan size
and approval rate. With this goal in mind, HSBC Bank will set price with input
from the Block Companies on a mutually agreeable client value proposition when
considering an appropriate balance of price in combination with approval rate and
loan size. During the Term of this Retail Distribution Agreement, [***] .

14

 

                         (xiii) Section 9.6(c) of the Retail Distribution Agreement is hereby amended to read as
follows:

     (c) Upon the written request of Block Services delivered to HSBC Bank prior
to the September 15th immediately preceding any Calculation Period,
[***] .

                         (xiv) The first sentence of Section 9.7 of the Retail Distribution Agreement is hereby amended
to read as follows:

     Upon receipt of each Application, except with respect to IMAs, HSBC Bank
shall establish a Deposit Account in the name of the Settlement Products Client
listed on such Application.

                         (xv) Section 9.14 of the Retail Distribution Agreement is hereby amended to read as follows:

     Section 9.14 Application and Disclosures. HSBC Bank shall create and
provide to the Block Companies initial drafts of pre-approved templates for
applications, forms, disclosures and other documents required for RALs and RACs by
August 1 of each year during the Term of this Retail Distribution Agreement.
After providing the Block Companies with an opportunity to review and provide
comments on the initial drafts of such pre-approved templates, HSBC Bank shall,
provide final pre-approved templates for applications, forms, disclosures and
other documents required for RALs and RACs by September 1 of each year during the
Term of this Retail Distribution Agreement. With respect to IMAs, beginning in
2007, the initial drafts of such pre-approved templates shall be provided by July
1 of each year and final pre-approved templates shall be provided by August 1 of
each year during the Term of this Retail Distribution Agreement.

                         (xvi) Section 9.16 of the Retail Distribution Agreement is hereby amended to read as follows:

    Section 9.16 New Products. During the Term of this Retail
Distribution Agreement, the Block Companies shall have:

   (a) a right [***] ;

   (b) the right, [***] ;

   (c) the right, [***] ; and

   (d) the right, [***] .

15

 

                         (xvii) Section 9.18 of the Retail Distribution Agreement is hereby amended by adding a new
sentence at the end thereof as follows:

     Notwithstanding the above, HSBC Bank shall review and process Applicant
Information Files for IMAs pursuant to the Service Level Thresholds set forth on
Schedule 13.4(i) hereto.

                         (xviii) Section 10.1 of the Retail Distribution Agreement is hereby amended to read as
follows:

     Section 10.1 Forward Applicant Information File with Debt Indicator
Information to HSBC Bank and HSBC Trust. Upon receipt of a copy of an
Applicant Information File for a RAL or RAC, IRS Return Notification and Debt
Indicator from Block Services, HSBC TFS shall electronically transmit to HSBC Bank
or HSBC Trust, as the case may be, a copy of the Applicant Information File and a
copy of the Applicant’s Debt Indicator. Upon receipt of the Applicant Information
File for an IRAL or an IMA, HSBC TFS shall electronically transmit a copy of such
Applicant Information File to HSBC Bank or HSBC Trust, as the case may be,
immediately upon receipt.

                         (xix) Section 10.2 of the Retail Distribution Agreement is hereby amended to read as follows:

     Section 10.2 Disbursement Check Printing Authorization. Subject to
Section 10.3, HSBC TFS shall electronically provide Block Services authorization
to print a Disbursement Check or issue an Electronic Disbursement (a) for each
Applicant who has been approved to receive a RAL or IMA, upon approval thereof,
and (b) for each Applicant who has been approved to receive a RAC, if applicable,
upon HSBC TFS’s crediting of the Refund Paid to such Applicant’s Deposit Account
and after debiting all Authorized Deductions from such Deposit Account in the
manner set forth in the Servicing Agreement. With respect to RALs and RACs,
within four (4) hours after receipt of such Applicant’s Refund Paid, if any funds
remain in the Deposit Account after debiting all Authorized Deductions, HSBC TFS
shall authorize Block Services to print a check or issue an Electronic
Disbursement to the Settlement Products Client in the amount remaining in the
Deposit Account in accordance with such Client’s instructions.

                         (xx) Section 10.5 of the Retail Distribution Agreement is hereby amended to read as follows:

     Section 10.5 Contingent Issuing of Disbursement Checks. If it
becomes infeasible due to events or occurrences beyond the parties’ control for
the Agents to issue and deliver Disbursement Checks or Electronic Disbursements
directly to Settlement Products Clients, then

16

 

HSBC TFS shall issue and mail such Disbursement Checks or Electronic
Disbursements directly to such Settlement Products Clients. With respect to RALs
and IMAs, HSBC TFS shall use commercially reasonable efforts to mail the
Disbursement Check or Electronic Disbursement to the Settlement Products Client or
to the Block Offices for distribution to the Settlement Products Client the same
day as HSBC TFS’s approval of the RAL or IMA; provided, however,
such Application must be received by HSBC TFS by 11:00 a.m. Eastern Standard or
Daylight Savings Time (as the case may be). With respect to RACs, HSBC TFS shall
use commercially reasonable efforts to mail the Disbursement Check or Electronic
Disbursement to the Settlement Products Client within 24 hours following receipt
from the IRS of the Refund Paid.

                         (xxi) The following new Section 10.10 shall be added to the Retail Distribution Agreement
immediately after the existing Section 10.9:

     Section 10.10 Website Development. In addition to the covenants set
forth in Section 2.1(a), 7.18 and 9.16(b) hereof, during the Term of this Retail
Distribution Agreement the HSBC Companies and their Affiliates shall not use any
HTML code that was jointly developed with any Block Company or any of its
Affiliates to design or operate any internet website or similar electronic means
to offer instant money advance loans or similar loans through any tax preparer
other than the Block Agents or the Franchisee Agents. For the avoidance of doubt,
the HSBC Companies and their Affiliates may so use (i) HTML code used in the
performance of this Retail Distribution Agreement that was not jointly developed
with any Block Company or any of its Affiliates, and (ii) similar HTML code that
is developed independently (e.g., to provide similar functionality to another
customer).

                         (xxii) A new Section 11.1(c) is hereby added to Retail Distribution Agreement immediately
following Section 11.1(b) as follows:

     (c) Notwithstanding any other provision of this Retail Distribution Agreement
or the other Program Contracts, the following applies solely with respect to HSBC
IMAs offered through Block Offices from November 2006 through the Term of this
Retail Distribution Agreement:

     (i) pursuant to Section 2.1(c), the Block Agents are appointed as the
agents of HSBC NA for purposes of offering and distributing HSBC IMAs at
Block Offices located in the HSBC NA States. In performing their
specified duties under Article VII of the Retail Distribution Agreement
with regard to distributing HSBC IMAs at Block Offices located in the HSBC
NA States, the Block Agents are acting as agents of HSBC NA; and

17

 

     (ii) notwithstanding Section 2.1(c), HSBC NA does not appoint Block
Enterprises, Block Eastern Enterprises or Block Associates as its agents
for purposes of offering and distributing HSBC IMAs at Block Offices
located in any of the HSBC Trust States. In performing their specified
duties under Article VII of this Retail Distribution Agreement with
respect to distributing HSBC IMAs at Block Offices located in the HSBC
Trust States, Block Enterprises, Block Eastern Enterprises and Block
Associates are acting as independent contractors for HSBC NA. Block
Enterprises, Block Eastern Enterprises and Block Associates shall offer
HSBC IMAs at Block Offices in the HSBC Trust States in accordance with the
IMA Protocol.

                         (xxiii) A new subsection (i) shall be added to Section 13.4 of the Retail Distribution
Agreement to read as follows:

     The HSBC Companies shall be subject to the Service Level Thresholds for IMAs
set forth on Schedule 13.4(i).

                         (xxiv) Section 14.2 of the Retail Distribution Agreement is hereby amended to read as follows:

     Section 14.2 Incremental Bank Product Fee. No later than November 1
of each calendar year, HSBC TFS shall pay to the Block Enterprise Entities, via
wire transfer of immediately available funds to an account designated in writing
by the Block Enterprise Entities, an amount, in the aggregate, equal to [***] .

                         (xxv) Section 14.7(a) of the Retail Distribution Agreement is hereby amended to read as
follows:

     (a) On the first Business Day of January of each Tax Period during the Term
of this Retail Distribution Agreement, HSBC TFS shall pay to the Block Enterprise
Entities the Expense Reimbursement to partially reimburse the Block Companies for
their out-of-pocket expenses incurred in connection with the Settlement Products
Program for the applicable Calculation Period. The Expense Reimbursement shall be
paid by ACH credit to an account designated by the Block Enterprise Entities.

                         (xxvi) Section 14.8 of the Retail Distribution Agreement is hereby amended to read as follows:

     Section 14.8 IRAL and IMA Origination System Servicing Level
Threshold. If HSBC TFS fails to maintain the IRAL Origination System
Servicing Level Threshold set forth in Section 13.4(a) or the IMA origination
system servicing level threshold set forth in Schedule 13.4(i) on any Block
Business Day, except to the extent non-compliance arises from a Force Majeure
Event or a failure by any Block Company to

18

 

perform any material Obligation under this Retail Distribution Agreement,
HSBC TFS shall pay to the Block Enterprise Entities an amount, in the aggregate,
equal to [***] . All amounts payable under this Section 14.8 accrued during any
Calculation Period, shall be payable by HSBC TFS on the last Business Day of such
Calculation Period. HSBC TFS shall pay such amounts via ACH credit to an account
designated in writing by the Block Enterprise Entities. To the extent any failure
by HSBC TFS to maintain the IRAL Origination System Servicing Level Threshold
under this Section 14.8 could not reasonably result in a Material Adverse Effect,
the amount paid by HSBC TFS to the Block Companies under this Section 14.8 shall
constitute the sole remedy for failure to maintain the IRAL Origination System
Servicing Level Threshold. Not later than the last Business Day of the month of
October during such Calculation Period, HSBC TFS shall provide true and correct
reports to the Block Companies setting forth (a) the number of estimated lost IRAL
Clients for each Block Business Day during the Tax Period and lost IMA Clients for
each Block Business Day beginning on the first day that IMAs are offered by the
Block Agents during or prior to the Calculation Period and continuing through that
last day of such Calculation Period, (b) the actual number of IRALs and IMAs
originated during each Block Business Day in the preceding year and (c) the actual
number of IRALs originated during each Block Business Day during the Tax Period
and IMAs originated during each Block Business Day beginning on the first day that
IMAs are offered by the Block Agents during or prior to the Calculation Period and
continuing through that last day of such Calculation Period.

                         (xxvii) Section 14.14(a) of the Retail Distribution Agreement is hereby amended to read as
follows:

     (a) With respect to HSBC RALs or HSBC IMAs originated on or after January 1,
2007, [***] .

                         (xxviii) Section 16.4(b) of the Retail Distribution Agreement is hereby amended to read as
follows:

     (b) To the extent permitted by applicable Law, each HSBC Company agrees to
promptly provide to each Block Company and its Affiliates, upon request, but not
more than twice during any calendar year, a list of all Persons, and their
complete mailing addresses, to whom such HSBC Company made HSBC RALs, HSBC RACs or
HSBC IMAs during the most recently ended Calculation Period. Such list shall be
provided in electronic form and, to the extent reasonably practicable, in a form
typical of mailing lists purchased in the open market. No Block Company or
Affiliate shall use, or permit the use of, such list for purposes of soliciting
Clients for credit related products. The Block Companies and their Affiliates
shall take appropriate action by agreement with third parties

19

 

having access to such list to prohibit such third parties from using such
list for purposes of soliciting Clients for credit related products.

                         (xxix) The Table of Contents to the Retail Distribution Agreement is hereby amended to include
reference to each of the new Sections that were added to the agreement pursuant to this Second
Amendment.

Section 3 Reference to and Effect Upon the Existing Program Contracts.

                    (a) Except as explicitly stated in this Second Amendment, all terms of the Program Contracts
as in effect immediately preceding execution of this Second Amendment shall remain in full force
and effect as provided therein and in accordance with the terms thereof.

                    (b) Except as explicitly stated in this Second Amendment, the execution, delivery and
effectiveness of this Second Amendment shall not operate as a waiver of any right, power or remedy
of any party under the Program Contracts as in effect immediately preceding execution of this
Second Amendment, nor constitute a waiver of any provision of the Program Contracts as in effect
immediately preceding execution of this Second Amendment.

                    (c) Upon the effectiveness of this Second Amendment, each reference in each of the Program
Contracts to “this Agreement”, “hereunder”, “hereof,” “herein” or words of similar import shall
mean and be a reference to such Program Contract as amended by this Second Amendment.

              Section 4 Headings. Headings and captions used in this Second Amendment (including
all exhibits and schedules thereto) are included herein for convenience of reference only and shall
not constitute a part of this Second Amendment for any other purpose or be given any substantive
effect.

              Section 5 Alternative Dispute Resolution. ANY DISPUTE BETWEEN OR AMONG THE PARTIES
HERETO ARISING OUT OF OR RELATING TO THIS SECOND AMENDMENT OR THE TRANSACTIONS CONTEMPLATED HEREIN
(EXCEPT JUDICIAL ACTION FOR SPECIFIC PERFORMANCE OR INJUNCTIVE RELIEF) SHALL BE RESOLVED AMONG THE
PARTIES TO SUCH DISPUTE BY NEGOTIATIONS, MEDIATION AND ARBITRATION IN ACCORDANCE WITH THE
PROVISIONS OF ARTICLE XXI OF THE RETAIL DISTRIBUTION AGREEMENT, WHICH ARE INCORPORATED HEREIN BY
REFERENCE.

             Section 6 Governing Law; Submission To Jurisdiction. THIS SECOND AMENDMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF MISSOURI. WITHOUT
LIMITING THE EFFECT OF SECTION 5 HEREOF AND ARTICLE XXI OF THE RETAIL DISTRIBUTION AGREEMENT, EACH
OF THE PARTIES HERETO (A) SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND/OR STATE COURTS
SITTING IN

20

 

ST. LOUIS, MISSOURI FOR PURPOSES OF ALL LEGAL PROCEEDINGS FOR SPECIFIC PERFORMANCE OR
INJUNCTIVE RELIEF PERMITTED BY SECTION 21.12 OF THE RETAIL DISTRIBUTION AGREEMENT, (B) IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, (C) IRREVOCABLY
CONSENTS TO SERVICE OF PROCESS IN SUCH PROCEEDING IN THE MANNER PROVIDED FOR NOTICES IN SECTION
22.3 OF THE RETAIL DISTRIBUTION AGREEMENT, AND (D) AGREES THAT NOTHING IN THIS SECOND AMENDMENT
WILL AFFECT THE RIGHT OF ANY PARTY TO THIS SECOND AMENDMENT TO SERVE PROCESS IN ANY SUCH PROCEEDING
IN ANY OTHER MANNER PERMITTED BY LAW.

     Section 7 Waiver of Jury Trial. WITHOUT LIMITING THE EFFECT OF SECTION 5 HEREOF, EACH
OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING
OUT OF OR RELATING TO THIS SECOND AMENDMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

     Section 8 Counterparts. This Second Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Second Amendment shall become effective upon the
execution of a counterpart hereof by each of the parties hereto

[remainder of page intentionally blank]

21

 

THIS SECOND AMENDMENT CONTAINS A BINDING

ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES

     IN WITNESS WHEREOF, the following Parties have caused this Second Amendment to Program
Contracts to be executed by their respective duly authorized officers as of the date first set
forth above.

	 	 	 	 	 
	 	HSBC BANK USA, NATIONAL ASSOCIATION,

a national banking association

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	HSBC TRUST COMPANY (DELAWARE), N.A.,

a national banking association

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	HSBC TAXPAYER FINANCIAL SERVICES INC.,

a Delaware corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	BENEFICIAL FRANCHISE COMPANY INC.,

a Delaware corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

THIS SECOND AMENDMENT CONTAINS A BINDING

ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES

	 	 	 	 	 
	 	H&R BLOCK SERVICES, INC.,

a Missouri corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	H&R BLOCK TAX SERVICES, INC.,

a Missouri corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	H&R BLOCK ENTERPRISES, INC.,

a Missouri corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	H&R BLOCK EASTERN ENTERPRISES, INC.,

a Missouri corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	H&R BLOCK DIGITAL TAX SOLUTIONS, LLC,

A Delaware limited liability company

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

THIS SECOND AMENDMENT CONTAINS A BINDING

ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES

	 	 	 	 	 	 	 
	 	 	H&R BLOCK AND ASSOCIATES, L.P.,

a Delaware limited partnership	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	HRB Texas Enterprises, Inc.

its General Partner	 	 

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	HRB ROYALTY, INC.,

a Delaware corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

THIS SECOND AMENDMENT CONTAINS A BINDING

ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES

     IN WITNESS WHEREOF, the following Parties hereto have caused this Second Amendment to Program
Contracts to be executed by their respective duly authorized officers as of the date first set
forth above solely for the limited purpose of acknowledging the amendments set forth herein in
connection with such Parties’ respective guaranties set forth in Article XX, and also for purposes
of Articles XXI and XXII of the Retail Distribution Agreement.

	 	 	 	 	 
	 	HSBC FINANCE CORPORATION,

a Delaware corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	H&R BLOCK, INC.,

a Missouri corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

Schedule 2.4(a)(6)

Instant Money Advance Loan Product Procedures

[***]

 

 

Schedule 13.4(i)

Origination

§  System will be available [***] ,

                November — January                 at least [***] %

§ On daily basis, [***] .

§ [***] .

§ [***] .

§ [***] .

Fee payment

§ [***] .

Check Authorization

§ [***] .

Web site

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Website Availability (EST)	 	 	 	 	 	 	 	 	 	 
	Times	 	Sunday	 	Monday	 	Tuesday	 	Wednesday	 	Thursday	 	Friday	 	Saturday
	Start
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Stop
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 

VRU System

§ Will be available [***] .

§ For customer call, [***] .

§ For client call, [***] .

§ For ERO call, [***] .

§ Toll free number will be provided

§ customer service hours

	 	 	 
	11/1-1/2

	 	[***]
	1/3-1/8

	 	[***]
	1/9-1/22

	 	[***]
	1/23-4/17

	 	[***]

 

 

Exhibit A

IMA PROTOCOL

     This IMA Protocol (this “Protocol”), dated November 13, 2006, sets forth the agreement
of the following parties (collectively, the “Parties”) on the matters set forth herein:

     HSBC Bank USA, National Association, a national banking association (“HSBC NA”);

     HSBC Trust Company (Delaware), N.A., a national banking association (“HSBC Trust”);

     HSBC Taxpayer Financial Services Inc., a Delaware corporation (“HSBC TFS”);

     Beneficial Franchise Company Inc., a Delaware corporation (“Beneficial Franchise”);

     H&R Block Services, Inc., a Missouri corporation (“Block Services”);

     H&R Block Tax Services, Inc., a Missouri corporation (“Block Tax Services”);

     H&R Block Enterprises, Inc., a Missouri corporation (“Block Enterprises”);

     H&R Block Eastern Enterprises, Inc., a Missouri corporation (“Block Eastern
Enterprises”);

     H&R Block Digital Tax Solutions, LLC, a Delaware limited liability company (“Block
Digital”);

     H&R Block and Associates, L.P., a Delaware limited partnership (“Block Associates”);

     HRB Royalty, Inc., a Delaware corporation (“Royalty”);

     HSBC Finance Corporation, a Delaware corporation (“HSBC Finance”); and

     H&R Block, Inc., a Missouri corporation (“H&R Block”).

 

 

RECITALS

     A. All the Parties, other than HSBC Trust, entered into that certain HSBC Retail Settlement
Products Distribution Agreement, dated as of September 23, 2005 (the “Original Retail
Distribution Agreement”).

     B. All the Parties, including HSBC Trust, as well as Block Financial Corporation, a Delaware
corporation (“BFC”), entered into that certain Joinder and First Amendment to Program
Contracts, dated as of November 10, 2006 (the “First Amendment”), which amended the
Original Retail Distribution Agreement and other Program Contracts (as defined therein).

     C. All the Parties entered into that certain Second Amendment to Program Contracts, dated as
of November 13, 2006 (the “Second Amendment”), which amended the Original Retail
Distribution Agreement and other Program Contracts.

     D. Pursuant to the Second Amendment, the Parties are amending the Program Contracts to
include IMAs as a type of Settlement Product under the Settlement Products Program.

     E. This Protocol is intended to set forth the Parties’ agreement as to certain additional
procedures and specifications that apply to the distribution of IMAs and is the IMA Protocol
referred to in Section 11.1(c) of the Retail Distribution Agreement.

     F. All capitalized terms used in this Protocol and not otherwise defined in this Protocol
shall have the meanings assigned to such terms in the HSBC Appendix of Defined Terms and Rules of
Construction attached to the Retail Distribution Agreement, as amended.

PROTOCOL

Part A. IMAs Offered Through Both Agents and Distributors.

     The Parties acknowledge and agree that although HSBC NA is offering IMAs through Block Offices
on a nationwide basis, HSBC NA is doing so in some states through its expressly appointed agents,
the Block Agents, and in other states through independent contractor distributors, Block
Enterprises, Block Eastern Enterprises of Block Associates (when acting in such states as
independent contractors, the “Block Distributors”). While the Block Agents and the Block
Distributors are the same legal entities, they are acting in different capacities in different
states. The appointment by HSBC NA of the Block Agents as its agents in certain states does not
constitute the appointment of such entities as its agents in any other state. This Protocol
clarifies the rights, duties and obligation of HSBC NA, the Block Agents and the Block Distributors
with respect to the offering of IMAs in each state.

Part B. Independent Contractor Distribution of IMAs.

     1. Independent Contractor States. HSBC NA is offering IMAs in the HSBC Trust States
exclusively through independent contractors. For the avoidance of doubt, the HSBC Trust States
include all territories of the United States, Block Offices located in foreign countries, and

 

 

the following states and commonwealths:

	 	 	 
	Alabama 

Alaska 

Arizona 

Arkansas 

Colorado 

Connecticut 

Georgia 

Hawaii 

Idaho 

Illinois 

Indiana 

Iowa 

Kansas 

Kentucky 

Louisiana 

Maine 

Maryland 

Michigan 

Minnesota 

Mississippi 

Missouri
	 	Montana

Nebraska

Nevada

New Hampshire

New Mexico

North Carolina

North Dakota

Ohio

Oklahoma

Rhode Island

South Carolina

South Dakota

Tennessee

Texas

Utah

Vermont

Virginia

West Virginia

Wisconsin

Wyoming

     2. Status. The Parties hereby acknowledge that the Block Distributors are acting as
independent contractors of HSBC NA in the foregoing HSBC Trust States. Unless otherwise provided
herein, no agency, joint venture, partnership or fiduciary relationship exists between HSBC NA and
the Block Distributors in such HSBC Trust States.

     3. Safety and Soundness. In the HSBC Trust States, HSBC NA and the Block Distributors agree
that the offering of IMAs must be conducted consistent with safe and sound banking practices. The
Block Distributors acknowledge that HSBC NA is subject, inter alia, to the OCC Bulletin, “Risk
Management Principles” and may become subject to future regulatory guidance or requirements. The
Block Distributors agree to cooperate with HSBC NA in its efforts to comply with this and other
similar regulatory guidance. Such cooperation shall include, but is not limited to:

     (i) the implementation by the Block Distributors of an independent
contractor distribution program, including training programs and audit
procedures designed by HSBC NA and approved by the Block Companies, which
approval shall not be unreasonably withheld or unreasonably delayed, for the use
of the Block Distributors with respect to the offering of IMAs in the HSBC Trust
States; and

     (ii) the use of Applications and other IMA Documents with respect to the
offering of IMAs in the HSBC Trust States that clearly indicate that the Block

 

 

Distributors are acting as independent contractors, and not agents, of HSBC
NA in such states.

If the OCC raises any objection or concerns with the offering of IMAs, HSBC NA and the Block
Distributors agree to consult and negotiate with each other in good faith to address the
OCC’s objections or concerns, and to make mutually agreeable amendments and modifications to
the offering of IMAs in such states.

Part C. Agency Distribution of IMAs.

     1. Agency States. HSBC NA is offering IMAs in the HSBC NA States exclusively through agents
appointed pursuant to the Retail Distribution Agreement. For the avoidance of doubt, the following
is a list of all such states, commonwealths and territories:

California

Delaware

Florida

Massachusetts

New Jersey

New York

Oregon

Pennsylvania

Washington

District of Columbia

     2. Status. The Parties hereby acknowledge that the Block Agents are acting as agents of HSBC
NA in the foregoing states.

     3. Safety and Soundness. In the HSBC NA States, Article XI of the Retail Distribution
Agreement governs the relationship between HSBC NA and the Block Agents.

Part D. Timing. HSBC NA, the Block Distributors and the Block Agents are offering IMAs in
the period from on or about November 13, 2006 through January 31, 2007, pursuant to the
terms and conditions of the Program Contracts, as amended by the First Amendment and Second
Amendment, and this IMA Protocol. With respect to the offering of IMAs in future years,
the terms of this Protocol shall be applicable unless the Parties otherwise agree in
writing.

Part E. Conflict. If any provision contained in this IMA Protocol conflicts with any
provision in any of the Program Contracts, as amended by the First Amendment and Second
Amendment, the provision contained in this Protocol shall govern and control.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00119-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00119-of-00352.parquet"}]]